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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 23, 1997
BAY VIEW CAPITAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-17901 94-3078031
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(State or other (Commission File No.) (IRS Employer)
jurisdiction of Identification
incorporation) No.)
2121 South El Camino Real, San Mateo, California 94403
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(415) 573-7300
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N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
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General
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On May 8, 1997, Bay View Capital Corporation (the "Company" or
"Bay View" or "BVCC"), a Delaware corporation and the holding
company for Bay View Bank ("BVB"), Bay View Securitization
Corporation, California Thrift & Loan, Concord Growth Corporation
and Regent Financial Corporation, announced the execution of a
definitive agreement to acquire America First Eureka Holdings, Inc.
("AFEH") and AFEH's wholly owned subsidiary, EurekaBank, A Federal
Savings Bank ("EurekaBank"). The acquisition will be accounted for
using the purchase accounting method and is expected to be
completed on or about December 31, 1997 or January 1, 1998.
Under the terms of the definitive agreement, America First
Financial Fund 1987-A Limited Partnership (the "Partnership"), the
sole shareholder of AFEH, will receive Bay View common stock valued
at $210 million (subject to possible adjustment) and $90 million in
cash. Pursuant to the agreement, AFEH will be merged into the
Company, with the Company as the surviving corporation, and
EurekaBank will be merged into BVB, with BVB as the surviving
institution (collectively, the "Merger"). Consummation of the
Merger is subject to the satisfaction of a number of conditions set
forth in the agreement, including approval of the Company's
stockholders and the beneficial unit certificate holders of the
Partnership and the regulatory approval of the Office of Thrift
Supervision.
Forward-Looking Statements
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This Current Report on Form 8-K contains forward-looking
statements with respect to the financial condition, results of
operations and business of Bay View, including but not limited to
statements relating to the expected impact of the Merger on the pro
forma financial condition and results of operations of the combined
company. See "Pro Forma Financial Information." These forward-
looking statements involve certain risks and uncertainties.
Factors that may cause actual results to differ materially from
those contemplated by such forward-looking statements include,
among others, the following possibilities: (1) expected cost
savings or revenue enhancements from the Merger cannot be fully
realized; (2) deposit attrition, customer loss or revenue loss
following the Merger is greater than expected; (3) competitive
pressure in the banking and financial services industry increases
significantly; (4) changes in the interest rate environment reduce
margins; (5) costs or difficulties related to the integration of
the businesses of Bay View and AFEH and their subsidiaries are
greater than expected; (6) the impact of regulatory changes is
other than expected; (7) changes in business conditions and
inflation; (8) changes in the securities market; (9) changes in
the terms of the Merger, including the possibility that the Company
may have to increase the number of shares of common stock issued to
consummate the Merger; and (10) changes in general economic
conditions, either nationally or in the state of California, are
less favorable than expected.
Pro Forma Financial Information
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Set forth herein below is the unaudited pro forma financial
information relating to Bay View's acquisition of AFEH prepared in
accordance with Article 11 of Regulation S-X.
The unaudited pro forma condensed combined statement of
financial condition as of March 31, 1997 is based on the historical
consolidated statements of financial condition of the Company and
AFEH giving effect to the accounting for the acquisition of AFEH
using the purchase method of accounting and assumes the acquisition
occurred as of March 31, 1997.
The unaudited pro forma condensed combined statements of
operations for the year ended December 31, 1996 and for the three
months ended March 31, 1997 are based on the historical
consolidated statements of operations of the Company and AFEH
giving effect to the accounting for the acquisition of AFEH using
the purchase method of accounting and assume the acquisition
occurred as of January 1, 1996.
The unaudited pro forma condensed combined statement of
financial condition and statements of operations should be read in
conjunction with the historical consolidated financial statements
and the accompanying notes contained in the Company's Form 10-Q for
the quarter ended March 31, 1997 and the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996 and the
historical consolidated financial statements and the accompanying
notes contained in AFEH's unaudited consolidated financial
statements for the quarter ended March 31, 1997 and AFEH's audited
financial statements for the year ended December 31, 1996 included
in the Company's other Current Report on Form 8-K dated June 23,
1997.
The pro forma adjustments are based on certain assumptions and
preliminary estimates of goodwill which represents the excess of
the acquisition cost over the fair value of assets acquired and
liabilities assumed. No adjustments have been made where fair
value information is not yet available. The actual goodwill
arising from the acquisition will be based on the fair values of
the assets and liabilities on the date the transaction is
consummated and no assurance can be given that actual goodwill will
not be more or less than the estimated amount set forth herein.
The unaudited pro forma condensed combined financial statements are
based upon a number of other assumptions and estimates, and are
subject to a number of other uncertainties, relating to the
proposed acquisition of AFEH and related matters, including, among
other things, estimates, assumptions and uncertainties regarding
(i) the amount of expense accruals for direct acquisition costs and
the amount of expenses associated with branch closings, settlement
of existing contracts and severance pay (ii) the amount of and the
interest rate on anticipated additional borrowings and (iii) the
amount of the deferred tax asset resulting from AFEH's tax loss
carryforwards. The unaudited pro forma condensed combined
financial statements also assume that the Company will issue
8,077,000 shares of its common stock to the Partnership in
connection with the proposed Merger. However, the actual number of
shares issued will depend upon the market price of the Company's
common stock prior to the Merger and the number of shares issued
therefore may be more or less than the foregoing amount.
Accordingly, the unaudited pro forma condensed combined financial
statements do not purport to be indicative of the actual results of
operations or financial condition that would have been achieved had
the Merger in fact occurred on the date(s) indicated, nor do they
purport to be indicative of the results of operations or financial
condition that may be achieved in the future.<PAGE>
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BAY VIEW CAPITAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL CONDITION
MARCH 31, 1997
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Assets BVCC AFEH Adjustments Combined
- ---------------------------- -------- ------ ----------- ---------
<S> <C> <C> <C> <C>
(Dollars in Thousands)
Cash and Cash Equivalents:
- - Cash and Cash Due from
Depository Institutions $ 18,840 $ 22,574 $ --- $ 41,414
- - Interest-bearing Deposits and
Short-term Investments 29,459 19,300 4,000(1) 52,759
------- ------- ------
48,299 41,874 94,173
Loans Held for Sale 79,184 1,404 --- 80,588
Securities Available for Sale
- - Investment Securities 9,497 --- --- 9,497
- - Mortgage-backed Securities 79,959 43,007 --- 122,966
Securities Held to Maturity
- - Investment Securities 15,004 --- --- 15,004
- - Mortgage-backed Securities 478,231 592,108 --- 1,070,339
Loans Receivable, Net 2,213,093 1,427,635 --- 3,640,728
Investment in Stock of the
FHLB of San Francisco 52,727 22,180 --- 74,907
Real Estate Owned, Net 8,895 1,996 --- 10,891
Premises and Equipment, Net 7,547 8,688 --- 16,235
Intangible Assets 9,520 2,562 101,752(2) 113,834
Other Assets 42,654 38,809 77,302(3) 158,765
------ ------ -------
Total Assets $3,044,610 $2,180,263 $5,407,927
========= ========= =========
Liabilities and Pro Forma Pro Forma
Stockholders' Equity BVCC AFEH Adjustments Combined
- --------------------------- ------------ --------- ------------ ---------
Customer Deposits $ 1,655,840 $1,890,504 $ --- $3,546,344
Advances from the FHLB
Of San Francisco 890,762 75,181 --- 965,943
Securities Sold Under
Agreements to Repurchase 198,556 --- --- 198,556
Senior Debentures 50,000 --- (50,000)(4) ---
Anticipated Borrowings --- --- 150,000(4) 150,000
Other Borrowings 17,122 --- --- 17,122
Other Liabilities 40,196 36,757 50,875(5) 127,828
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Total Liabilities 2,852,476 2,002,442 --- 5,005,793
Stockholders' Equity 192,134 177,821 32,179(6) 402,134
----------- ---------- ----------
Total Liabilities and
Stockholders' Equity $ 3,044,610 $2,180,263 $5,407,927
========= ========= ==========
See accompanying Notes to Pro Forma Condensed Combined Financial Statements
</TABLE>
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BAY VIEW CAPITAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Pro Forma Pro Forma
BVCC AFEH Adjustments Combined
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<S> <C> <C> <C> <C>
(Dollars in thousands except per share amounts)
Interest Income:
Interest on Loans
Receivable $46,664 $26,762 $ --- $73,426
Interest on Mortgage-
Backed Securities 9,231 11,320 --- 20,551
Interest and Dividends
On Investments 2,261 835 3,096
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58,156 38,917 97,073
Interest Expenses:
Interest on Customer
Deposits 19,594 21,490 --- 41,084
Interest on Senior
Debentures 1,114 --- (1,114)(7) ---
Interest on
Borrowings and
Other Interest
Expense 16,393 2,211 3,364(7) 21,968
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37,101 23,701 63,052
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Net Interest Income: 21,055 15,216 --- 34,021
Provision for Losses
on Loans 565 252 --- 817
Net Interest Income after
Provision for Losses ------ ------ --------
on Loans 20,490 14,964 --- 33,204
Noninterest Income:
Loan Fees and
Charges 1,158 295 --- 1,453
Gain on Sale of
Loans and Securities 925 62 --- 987
Other 1,500 1,359 --- 2,859
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3,583 1,716 5,299
Noninterest Expense:
General and
Administrative 14,620 9,922 --- 24,542(8)
Real Estate Owned (470) --- --- (470)
Amortization of
Intangibles 677 290 1,406(9) 2,373
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14,827 10,212 26,445
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Income Before Income
Tax Expense 9,246 6,468 12,058
Income Tax Expense 3,984 320 1,337(10) 5,641
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Net Income $ 5,262 $ 6,148 $ 6,417(11)
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Adjusted for a 2 for 1
Stock Split on
June 2, 1997
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Primary Earnings
Per Share $ 0.39 --- --- $ 0.30(11)
Average Shares
Outstanding (including
Common Stock
Equivalents) 13,552,000 --- 8,077,000(12) 21,629,000
</TABLE>
See accompanying Notes to Pro Forma Condensed Combined Financial Statements
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BAY VIEW CAPITAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Assets BVCC AFEH Adjustments Combined
- --------------- -------- ------ ----------- --------
<S> <C> <C> <C> <C>
(Dollars in thousands except per share amounts)
Interest Income:
Interest on Loans
Receivable $192,443 $107,157 --- $299,600
Interest on
Mortgage-Backed
Securities 42,081 50,161 --- 92,242
Interest and
Dividends on
Investments 7,231 4,565 --- 11,796
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241,755 161,883 403,638
Interest Expense:
Interest on
Customer Deposits 100,225 81,982 --- 182,207
Interest on
Senior Debentures 2,623 --- (2,623)(7) ---(7)
Interest on
Borrowings and
Other Interest
Expense 57,925 19,689 11,623(7) 89,237(7)
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160,773 101,671 --- 271,444
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Net Interest Income 80,982 60,212 --- 132,194
Provision for
Losses on Loans 1,898 965 --- 2,863
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Net Interest Income
after Provision for
Losses on Loans 79,084 59,247 129,331
Noninterest Income:
Loan Fees
and Charges 4,930 1,379 --- 6,309
Gain on Sale
of Loans
and Securities (1,453) 307 --- (1,146)
Other 5,087 6,714 --- 11,801
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8,564 8,400 --- 16,964
Noninterest Expense:
General and
Administrative 58,955 44,317 --- 103,272(8)
SAIF Recapitalization
Assessment 11,750 11,000 --- 22,750
Real Estate
Owned (4,909) 270 --- (4,639)
Amortization of
Intangibles 2,606 1,213 5,573(9) 9,392(9)
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68,402 56,800 130,775
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Income Before
Income Tax Expense 19,246 10,847 15,520
Income Tax Expense
(Benefit) 8,277 (20,870) 22,373(10) 9,780
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Net Income $ 10,969 $ 31,717 $ 5,740(11)
======== ======== ========
Adjusted for a 2 for 1
Stock Split on
June 2, 1997
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Primary Earnings
Per Share $ 0.79 $ 0.26(11)
Average Shares
Outstanding
(including Common
Stock Equivalents) 13,900,000 8,077,000(12) 21,977,000
See accompanying Notes to Pro Forma Condensed Combined Financial Statements
</TABLE>
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS
1. The adjustment represents the $150 million received from
anticipated borrowings described in Note (4) below net of (i)
estimated issuance costs, (ii) the retirement of $50 million in
Senior Debentures and (iii) the $90 million payment for the cash
portion of the purchase price.
2. The adjustment represents the excess of acquisition cost over
the estimated fair value of net assets acquired (i.e. goodwill)
net of the AFEH pre-acquisition goodwill written-off. Goodwill
is preliminarily assumed to be amortized on a straight-line basis
over a period of 15 years. The goodwill amount reflected herein
is not necessarily indicative of the amount which will be
recorded when the transaction is consummated. Based on BVCC's
acquisition analysis, management has estimated that the goodwill
to be recorded as of the consummation date will be approximately
$112 million. The actual goodwill arising from the acquisition
will be based on the fair values of the assets and liabilities on
the date the transaction is consummated. No adjustments have
been made to such assets and liabilities in the pro forma
condensed combined financial statements where fair value
information is not available.
3. These adjustments represent deferred taxes arising from the
tax loss carryforwards of AFEH, deferred issuance costs of the
anticipated borrowings described in Note (4) below and tax
receivable related to expense accruals in Note (5) below.
4. These adjustments represent the anticipated borrowings which
are expected to be utilized to retire the existing $50 million
Senior Debentures.
5. This adjustment represents direct acquisition costs and
expense accruals for certain estimated expenses associated with
branch closings, amounts for settlement of obligations under
existing contracts and severance pay for involuntary
terminations.
6. This adjustment represents the issuance of $210 million of
BVCC's common stock to the shareholder of AFEH offset by the
elimination of AFEH's equity for consolidation purposes.
7. This adjustment represents the impact of the retirement of
the Senior Debentures described in Note (4) above and the
estimated expense attributable to the anticipated new borrowings.
This adjustment assumes that the interest rate on such
anticipated new borrowings will be 9.0% per annum. However, the
actual interest rate on such borrowings will depend upon market
conditions and there can be no assurance that the actual interest
rate will not be greater or less than such assumed rate.
8. No adjustments have been made to general and administrative
expenses for expected annualized cost savings which the Company
believes will be derived primarily from the elimination of
duplicative administrative functions and consolidation of loan
servicing functions and the cessation of EurekaBank's residential
loan origination activities.
9. This adjustment reflects the goodwill preliminarily assumed
to be amortized on a straight-line basis over a period of 15
years offset by the reversal of the amortization of pre-
acquisition AFEH goodwill. The goodwill amortization is not
necessarily indicative of the amount which will be recorded when
the transaction is consummated. See Note (2) above.
10. This adjustment represents the reversal of tax benefits
recognized by AFEH associated with tax loss carryforwards
partially offset by tax benefit related to the interest expense
on the anticipated borrowings described in Note (4) above. See
Notes (4) and (7) above.
11. The net income and earnings per share amounts reflected
herein are not necessarily indicative of the amounts which will
be reflected when the transaction is consummated. The historical
and pro forma net income and earnings per share amounts include
the impact of a charge relating to a one-time SAIF
recapitalization assessment for both BVB and EurekaBank (full
year 1996,$22.8 million pretax; first quarter 1997, none). In
addition, no adjustments have been made to general and
administrative expenses for expected annualized cost savings as
described in Note (8) above.
The actual goodwill arising from the acquisition will be
based on the excess of the acquisition cost over the fair values
of the assets and liabilities on the date the transaction is
consummated. No adjustments have been made to such assets and
liabilities in the pro forma condensed financial statements where
fair value information is not available. Further, no pro forma
cost savings adjustments are reflected in the Unaudited Pro Forma
Combined Condensed Statements of Operations as any expected cost
savings will be realized prospectively.
12. The number of shares of BVCC's common stock issued to the
Partnership is calculated based on the common stock portion of
the purchase price of $210 million divided by an assumed stock
price of $26 per share (adjusted for 2 for 1 stock split on June
2, 1997). The actual number of shares of BVCC common stock
issued in the Merger will be determined by dividing (i) $210
million by (ii) the average closing sale price of one share of
BVCC Common Stock on the Nasdaq National Market for the 20
consecutive full trading days ending on the fifth business day
immediately prior to the Merger closing date, but not in excess
of $26.00 or less than $21.00 (subject to possible adjustment in
the event the average price is below $21.00). As a result, the
actual number of shares issued in the Merger will depend upon the
market price of BVCC's common stock prior to the Merger date and
may be more or less than the number of shares reflected herein.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned hereunto duly authorized.
BAY VIEW CAPITAL CORPORATION
Date: June 23, 1997 By:/s/ DAVID A. HEABERLIN
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David A. Heaberlin
Executive Vice President
and Chief Financial Officer
