As filed with the Securities and Exchange Commission on July 19, 1999
Registration No. 333-
------
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
Registration Statement Under the Securities Act of 1933
BAY VIEW CAPITAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 94-3078031
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
<TABLE>
<S> <C>
ROBERT J. FLAX, ESQ.
Bay View Capital Corporation
1840 Gateway Drive 1840 Gateway Drive
San Mateo, CA 94404 San Mateo, CA 94404
(650) 312-7200 (650) 312-7200
(Address, including zip code, and telephone (Name, address, including zip code,
number, including area code, of registrant's and telephone number, including area
principal executive offices) code, of agent for service)
</TABLE>
Please send copies of all communications to:
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<S> <C> <C>
CHRISTOPHER R. KELLY, P.C. IRWIN L. GUBMAN TODD H. BAKER, ESQ.
Silver, Freedman & Taff, L.L.P. General Counsel Gibson, Dunn & Crutcher LLP
(A Limited Liability Partnership Including Imperial Credit Industries, Inc. One Montgomery Street
Professional Corporations) 23550 Hawthorne Boulevard Telesis Tower
1100 New York Avenue, N.W. Building 1, Suite 110 San Francisco, CA 94104-4505
Seventh Floor, East Tower Torrance, CA 90505 (415) 393-8200
Washington, D.C. 20005 (310) 373-1704
(202) 414-6100
</TABLE>
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |_|
If the Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
Calculation of Registration Fee
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<S> <C> <C> <C> <C>
Proposed maximum Proposed maximum
Title of each class of Amount to offering price aggregate offering Amount of
securities to be registered be registered per unit price registration fee
=============================== ================ ================ ================== =================
Common Stock, $.01 par value(1) 2,792,955 shares $19.85(2) $55,440,156 $15,413
=============================== ================ ================ ================== =================
</TABLE>
(1) Includes one attached Right per share to purchase preferred stock upon the
occurrence of certain events. See "Description of Capital Stock."
(2) Estimated solely for the purpose of calculating the registration fee. The
registration fee has been computed pursuant to Rule 457(c) based on the
average of the high and low sales prices of the common stock, $.01 par
value, of Bay View Capital Corporation, as reported on the New York Stock
Exchange, on July 15, 1999.
<PAGE>
Subject to completion, dated , 1999
The information in this prospectus is not completSubjectatobcompletion, datedy
not sell these sec,r1999s until the Securities and Exchange Commission declares
our registration statement effective. This prospectus is 2,792,955fSharessell
these securities and is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
Bay View Capital Corporation
[LOGO]
Common Stock
$ per share
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<S> <C>
o A stockholder of Bay View Capital Corporation o Our common stock is traded on the New
is offering 2,792,955 shares. York Stock Exchange. The last reported
sale price for a share of our common
o We will not receive any of the proceeds for any stock was $20.00 on July 15, 1999.
of the shares sold in this offering, unless the
underwriters' over-allotment option is exercised. o Trading symbol: New York Stock
Exchange -- BVC
</TABLE>
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This investment involves risk. See "Risk Factors" beginning on page 14.
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Per Share Total
------------------ ---------
Public offering price....................... $ $
Underwriting discount....................... $ $
Proceeds to selling stockholder............. $ $
================================================================================
The underwriters have a 30-day option to purchase up to 418,943 additional
shares of common stock from us to cover over-allotments, if any.
The shares of common stock offered are not deposits, savings accounts or other
obligations of a bank or savings association and are not insured by the Federal
Deposit Insurance Corporation or any other governmental agency.
Neither the Securities and Exchange Commission, the Office of the Comptroller of
the Currency nor any state securities commission or other regulatory body has
approved of anyone's investment in these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
U.S. Bancorp Piper Jaffray
Dain Rauscher Wessels
a division of Dain Rauscher Incorporated
PaineWebber Incorporated
The date of this prospectus is , 1999.
<PAGE>
EXPLANATORY NOTE
This prospectus will not be used by the selling stockholder until Bay View
Capital Corporation's pending acquisition of Franchise Mortgage Acceptance
Company is completed. Therefore, most of the non-financial information in the
prospectus concerning Bay View Capital Corporation is presented in a manner that
assumes the pending acquisition has already been completed. This prospectus also
assumes that our subsidiary Bay View Bank, N.A., has completed its proposed
offering of subordinated notes.
TABLE OF CONTENTS
Page
Introductory Matters................................................... 2
Forward-Looking Information............................................ 3
Summary................................................................ 4
Risk Factors........................................................... 14
Use of Proceeds........................................................ 20
Market Prices and Dividends............................................ 21
Capitalization......................................................... 22
Unaudited Pro Forma Condensed Combined Financial Data................... 23
Management.............................................................. 28
Selling Stockholder..................................................... 30
Underwriting............................................................ 31
Legal Matters........................................................... 32
Experts................................................................. 32
Where You Can Find More Information..................................... 32
You should rely only on the information incorporated by reference or contained
in this prospectus. We have not, and the underwriters have not, authorized any
other person to provide you with different information. This prospectus is not
an offer to sell, nor is it seeking an offer to buy, these securities in any
state where the offer or sale is not permitted. The information in this
prospectus is complete and accurate only as of the date on the front cover, and
the information may have changed since that date.
INTRODUCTORY MATTERS
Unless we tell you otherwise, all of the information in this prospectus assumes
that the underwriters do not exercise their over-allotment option. References to
"we," "our" and "Bay View" generally refer to Bay View Capital Corporation and
its subsidiaries on a consolidated basis, unless the context otherwise requires.
2
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FORWARD-LOOKING INFORMATION
Some of the statements contained in or incorporated into this prospectus by
reference are "forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995. All forward-looking
statements involve risks and uncertainties. In particular, any statements about
our expectations with respect to future revenues are subject to known and
unknown risks, uncertainties and contingencies, many of which are beyond our
control, which may cause our actual results, performance or achievements to
differ materially from anticipated results, performance or achievements. Factors
that might affect such forward-looking statements include, among other things:
o the demand for our products;
o competitive factors in the businesses in which we compete;
o changes in tax requirements, including tax rate changes, new tax laws
and revised tax law interpretations;
o adverse changes occurring in the securities markets;
o inflation and changes in the interest rate environment that reduce
margins or the fair value of financial instruments;
o general economic or business conditions, either nationally or in our
combined company's market areas, that are worse than expected;
o legislative or regulatory changes that adversely affect our business;
o the timing, impact and other uncertainties of future acquisitions by
us; or the success or failure in the integration of their operations;
o the ability to enter new markets successfully and capitalize on growth
opportunities;
o technological changes, including the Year 2000 compliance issue, that
are more difficult or expensive than we expect;
o increases in defaults by borrowers and other loan delinquencies;
o increases in our provision for losses on loans and leases;
o increased costs or other difficulties relating to our acquisition of
Franchise Mortgage Acceptance Company;
o the inability to sustain or improve the performance of our
subsidiaries;
o the inability to identify suitable future acquisition candidates;
o the inability to achieve the assumptions defined in our strategic
plans, including any assumptions related to both contemplated and
consummated acquisitions;
o the outcome of pending or threatened legal or regulatory disputes and
proceedings;
o credit and other risks of lending, leasing and investment activities;
and
o the inability to use net operating loss carryforwards.
For additional information about Bay View, see "Where You Can Find More
Information."
3
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SUMMARY
The items in the following summary are described in more detail later in this
prospectus or in the documents incorporated in this prospectus. This summary
provides an overview of selected information and does not contain all of the
information you should consider. Therefore, you should also read the more
detailed information set out in this prospectus, the financial statements and
the other information incorporated by reference into this prospectus.
Business of Bay View Capital Corporation
Bay View is a diversified financial services holding company. Our primary
subsidiary is Bay View Bank, N.A., a national bank with 55 branches serving the
San Francisco Bay area and one branch in southern California. Bay View Bank
currently has the largest deposit franchise of any bank exclusively serving the
San Francisco Bay area. As of March 31, 1999, we had $5.8 billion of total
assets, $4.4 billion of net loans and leases, $3.3 billion of deposits and
stockholders' equity of $378 million.
For most of its history, Bay View Bank operated as a traditional savings and
loan, specializing in the origination and retention of single-family and
multi-family first mortgage loans, funded by longer-term, relatively high-cost
certificates of deposit. During the latter half of 1995, we began a series of
initiatives designed to enhance the value of our business and recruited a new
management team with significant commercial banking experience. Since that time,
we have been transitioning our business by emphasizing commercial banking
activities. In January 1998, we acquired America First Eureka Holdings, Inc. and
its wholly owned subsidiary, EurekaBank, a savings bank with approximately $2.3
billion in total assets. We then merged EurekaBank with Bay View Bank, which
significantly expanded our banking and depository presence in the San Francisco
Bay area and allowed us to realize operational efficiencies. On March 1, 1999,
Bay View Bank formalized its transformation to a commercial banking entity by
converting from a federal stock savings bank to a national bank.
As discussed below, on , 1999, we acquired Franchise Mortgage Acceptance
Company, or FMAC, one of the nation's leading small business lenders
specializing in franchise concept loans, for a combination of our common stock
and approximately $121 million in cash. The transaction was valued at
approximately $ million on the date of closing. For further information about
our acquisition of FMAC, see "Recent Developments" below.
Mission/Strategies
Our mission is to build a diversified financial services company by investing in
niche banking businesses with risk-adjusted returns which enhance our
stockholder value. Our strategies center around our continued transition to
commercial banking activities and the expected expansion of our net interest
margin. In order to realize our goals, our management seeks to:
o replace lower-yielding single-family mortgage loans and
mortgage-backed securities on our balance sheet with consumer and
commercial loans and leases with higher risk-adjusted returns, shorter
maturities and less sensitivity to interest rate changes;
o lower our funding costs by reducing higher-cost certificates of
deposit and expanding lower-cost transaction accounts, such as
checking, savings and money market accounts, by emphasizing
relationship banking and capitalizing on cross-selling opportunities
with customers;
o de-emphasize the less profitable elements of our business activities,
including ceasing single-family first mortgage loan originations and
reducing our wholesale activities; and
o maintain our capital level at or above the "well-capitalized" level as
defined for bank regulatory purposes.
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4
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Business Platforms
At December 31, 1998, we reported on three business platforms: a Banking
Platform, a Consumer Platform and a Commercial Platform. The Banking Platform
included single-family, multi-family and commercial mortgage loans,
mortgage-backed securities and retail and business deposit products and
services. The Consumer Platform included motor vehicle loans and leases and home
equity loans. The Commercial Platform included asset-based lending, factoring
and commercial leasing activities. Effective January 1, 1999, we expanded the
number of our business platforms to four in order to facilitate a more effective
presentation and analysis of our different business activities. Our current
platforms are outlined below.
Our Banking Platform includes single-family, multi-family and commercial
mortgage loans, mortgage-backed securities, retail and business deposit products
and services and asset-based commercial loan participations. The Banking
Platform also includes loans to small and medium-sized businesses (primarily
franchise operators) purchased from FMAC. We expect to present our franchise
lending activities as a separate business platform in future periods. Through
our Banking Platform, we seek to enhance the value of our retail branch system
through internal growth, new and enhanced products and services, acquisitions
and purchases of deposits. The Banking Platform also seeks to increase
lower-cost transaction accounts, such as checking, savings and money market
accounts, as a source of funding for our overall business. Transaction accounts
represented 53.2% of our total retail deposits as of March 31, 1999, as compared
to 21.3% as of December 31, 1995, a transition which has contributed to our
declining cost of funds. As of March 31, 1999, the Banking Platform had loans
outstanding of $3.1 billion, representing 70.4% of our total gross loan and
lease portfolio, including $327.1 million of franchise loans purchased from
FMAC.
Our Home Equity Platform includes high loan-to-value home equity loans that we
purchase from other lenders and home equity loans and lines of credit originated
by our branch network. Home equity loans are secured by a lien, which is
generally junior in priority to a senior lien on the borrower's home. High
loan-to-value home equity loans that we purchase may have, when added to
existing senior lien balances, a post-funding combined loan-to-value ratio of up
to 125% of the value of the home securing the loan. Home equity loans that we
originate generally have a combined loan-to-value ratio of 80% or less. At March
31, 1999, the combined loan-to-value ratio for our high loan-to-value home
equity loan portfolio was approximately 114%. We seek to minimize the risk of
high loan-to-value home equity loans by focusing on loans to better quality
borrowers. Our underwriting standards for high loan-to-value home equity loans
focus on the borrower's ability to repay, as demonstrated by debt-to-income
ratios at the time of origination, as well as the borrower's willingness to
repay, as measured by Fair, Isaac & Company, Incorporated, or FICO, scores. At
March 31, 1999, our high loan-to-value home equity loan portfolio had an average
borrower debt-to-income ratio of approximately 39% and an average FICO score of
approximately 670. At March 31, 1999, the Home Equity Platform had loans
outstanding of $611.4 million, representing 14.0% of our total gross loan and
lease portfolio, of which $471.3 million, or 10.8% of our total gross loan and
lease portfolio, were high loan-to-value home equity loans.
Our Auto Platform includes high-quality, fixed-rate motor vehicle loans and
leases purchased and underwritten by Bay View Bank's wholly owned subsidiary,
Bay View Acceptance Corporation. Through our Auto Platform, we seek to identify
product niches which are not the primary focus of traditional competitors in the
auto lending area. For example, we offer motor vehicle loans to borrowers who
desire a higher loan amount and/or a longer term than is typically available
from other sources. In return for this flexibility, we charge borrowers higher
interest rates than those typically offered by traditional sources of motor
vehicle financing. We also pursue geographic and product niches in our
conventional auto loan and auto lease financing businesses. The motor vehicle
loans generated by our Auto Platform during the first quarter of 1999 had an
average FICO score of 715 and the operating leased assets generated by our Auto
Platform during the first quarter of 1999 had an average FICO score of 734. At
March 31, 1999, the Auto Platform had motor vehicle loans outstanding of $578.4
million, representing 13.2% of our total gross loan and lease portfolio.
Additionally, the Auto Platform had $261.2 million in operating leased assets at
March 31, 1999.
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5
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Our Commercial Platform includes the asset-based lending, factoring and
commercial leasing activities of Bay View Bank's wholly owned subsidiary, Bay
View Commercial Finance Group. In December 1997, the Commercial Platform was
expanded by the formation of a new asset-based lending group known as Bay View
Financial Corporation. We added personnel with significant industry experience,
relocated our asset-based lending business to southern California, one of the
top asset-based lending markets in the country, and added new and enhanced
products to the asset-based lending segment's product array. As of March 31,
1999, the Commercial Platform had loans and leases outstanding of $106.4
million, representing 2.4% of our total gross loan and lease portfolio.
Recent Developments
Acquisition of FMAC. On , 1999, we acquired FMAC,
one of the nation's leading small business lenders specializing in franchise
concept loans, for a combination of our common stock and approximately
$121 million in cash. After the acquisition, we contributed
substantially all of FMAC's assets and liabilities to new operating subsidiaries
of Bay View Bank, which are operating the FMAC businesses under the "Franchise
Mortgage Acceptance Company" and "Bankers Mutual" names. The acquisition
provides us with a new business platform focused on lending to franchised
quick-service restaurants, such as Burger King, Wendy's, Pizza Hut and KFC, and
casual dining restaurants, such as TGI Friday's, Applebees and Denny's. The
acquisition also provides us with established lending groups focused on retail
energy businesses, such as service stations, convenience stores, truck stops,
car washes and quick lube businesses, and funeral home and cemetery owners. In
addition, Bankers Mutual, which was acquired by FMAC in April 1998, is one of
the nation's leading multi-family lenders and we expect to continue to expand
that business.
We believe that the acquisition of FMAC will accelerate the strategic
transformation of our balance sheet by allowing us to:
o replace more of our single-family mortgage and multi-family assets
with franchise loans with higher risk-adjusted yields;
o use our deposit base to reduce FMAC's historical funding costs;
o increase our interest income by reducing FMAC's historical dependency
on securitizations by retaining a portion of their franchise loan
originations; and
o use FMAC's loan originations to diversify our loan products and
geographic concentration.
FMAC's loan originations totaled $2.1 billion during the year ended December 31,
1998 and $451 million during the first quarter of 1999. The average initial loan
balance of franchise loans originated during 1998 and the first quarter of 1999
was $3.6 million and $4.7 million, respectively. Historically, substantially all
of FMAC's loan originations were securitized or sold. FMAC's loss experience has
historically been low, due in part to its lending to experienced operators,
detailed industry knowledge, relationships with both franchisors and franchisees
system-wide, active oversight of its existing servicing portfolio, strict
underwriting criteria and its ability to attract qualified replacement
franchisees/borrowers to assume delinquent loans. From January 1, 1994 to March
31, 1999, FMAC incurred only $1.8 million of net charge-offs on loans in its
servicing portfolio. At March 31, 1999, its servicing portfolio totaled $5.7
billion, of which $2.8 billion were commercial franchise loans and $2.9 billion
were multi-family loans. FMAC's business is, however, subject to a number of
risks, including those described on page 17 under the caption "Risks Related to
the Acquisition of FMAC." At March 31, 1999, FMAC had total assets of $632
million and stockholders' equity of $152 million.
Branch Purchases. On July 8, 1999, we announced the pending purchase of two
branches representing approximately $125 million in deposits from Luther Burbank
Savings. We will pay a 5.25% deposit premium. The transaction is expected to
close on September 25, 1999. We expect these new branches in Mill Valley and
Novato, California to increase our market share ranking in Marin County from
tenth to sixth.
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6
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Subordinated Notes Offering. On , 1999, Bay View Bank issued $100 million of %
subordinated notes due 2009. The proceeds from the subordinated notes are being
used for general corporate purposes, including, among other things, the payment
of dividends to Bay View to partially fund our acquisition of FMAC. The
subordinated notes qualify as Tier 2 capital for regulatory purposes.
Office Location
Our principal executive offices are located at 1840 Gateway Drive, San Mateo,
California 94404 and our telephone number is (650) 312-7200.
The Offering
Common stock offered by the selling stockholder... 2,792,955 shares
Common stock outstanding after the offering....... (1)
Offering price.................................... $ per share
Use of proceeds................................... We will not receive any
proceeds from the sale of
the shares being offered by
the selling stockholder. In
the event that the
underwriters exercise their
option to purchase additional
shares of common stock from
us, we will use any net
proceeds from that sale for
our general corporate
purposes. We may also use
the proceeds for acquisitions
of complementary businesses.
New York Stock Exchange symbol.................... BVC
(1) Excludes 2,365,450 shares of common stock which may be issued under stock
options outstanding at July 15, 1999 with a weighted average exercise price
of $20.99 per share.
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7
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Summary Consolidated Financial Data of Bay View
(in thousands, except per share data)
The following financial information is derived in part from our audited
financial statements for 1994 through 1998. The information at or for the
three-month periods ended March 31, 1999 and 1998 is unaudited and was derived
from our unaudited consolidated quarterly financial statements. However, in the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation at such dates and for such
periods have been made. The results of operations for the three-month period
ended March 31, 1999 are not necessarily indicative of results that may be
expected for the full fiscal year. All information is presented in accordance
with generally accepted accounting principles, or GAAP. The per common share
data has been restated to reflect the issuance of stock dividends. The
information is only a summary and you should read it in conjunction with our
historical financial statements and related notes contained in the annual
reports and other information that we have filed with the SEC. This historical
financial information has also been incorporated into this prospectus by
reference. We have listed the documents that we incorporate by reference under
the heading "Where You Can Find More Information."
<TABLE>
<CAPTION>
At or For the Three
Months Ended
March 31, At or For the Year Ended December 31,
----------------------- ------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ------------ ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Financial
Condition Data(1):
Total assets.................... $5,763,551 $5,341,413 $5,596,232 $3,246,476 $3,300,262 $3,004,496 $3,166,529
Mortgage-backed
securities.................. 583,247 882,773 635,389 470,261 577,613 731,378 921,680
Loans and leases, net........... 4,392,979 3,934,008 4,191,269 2,373,113 2,474,717 2,062,268 2,054,563
Deposits........................ 3,343,286 3,491,957 3,269,637 1,677,135 1,763,967 1,819,840 1,707,376
Borrowings...................... 1,921,787 1,416,807 1,833,116 1,355,976 1,245,537 941,465 1,219,958
Capital securities.............. 90,000 -- 90,000 -- -- -- --
Stockholders' equity............ 378,083 388,705 377,811 173,627 200,062 207,977 217,315
Operating Data(1)(2):
Interest income................. 100,021 99,063 406,363 242,244 241,755 216,463 197,326
Interest expense................ (59,238) (62,129) (251,762) (154,908) (160,773) (160,547) (130,401)
----------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income............. 40,783 36,934 154,601 87,336 80,982 55,916 66,925
Provision for losses on
loans and leases............ (5,311) (660) (9,114) (1,952) (1,898) (4,284) (2,367)
Gain (loss) on sale of
loans and securities........ -- 112 1,060 925 (1,453) (2,510) (1,081)
Leasing income.................. 9,658 -- 11,341 -- -- -- --
Other noninterest income........ 6,309 4,091 18,671 11,830 10,017 8,652 8,619
General and administrative
expenses.................... (26,156) (27,742) (113,567) (71,913) (58,955) (57,016) (47,287)
Dividend expense on Capital
securities.................. (2,235) -- (244) -- -- -- --
Leasing expense................. (6,681) -- (7,682) -- -- -- --
SAIF recapitalization
assessment.................. -- -- -- -- (11,750) -- --
Income from real estate
owned, net...................... (17) (37) 181 543 4,806 1,081 95
</TABLE>
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<CAPTION>
At or For the Three
Months Ended
March 31, At or For the Year Ended December 31,
------------------------ ----------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------ ----------- ------------ ----------- ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data(1)(2):
Recovery of (provision
for) losses on real
estate...................... $ (17) $ 24 $ 59 $ 585 $ 103 $ (749) $ (145)
Amortization of
intangible assets........... (2,904) (2,746) (11,372) (4,088) (2,606) (3,944) (2,418)
-------- --------- -------- -------- --------- ---------- --------
Income (loss) before income
tax expense/benefit......... 13,429 9,976 43,934 23,266 19,246 (2,854) 22,341
Income tax (expense)
benefit..................... (6,296) (4,916) (21,215) (9,245) (8,277) 708 (7,828)
Extraordinary items, net
of tax...................... -- -- -- -- -- (2,544) --
-------- --------- -------- -------- --------- ---------- --------
Net income (loss)............... $ 7,133 $ 5,060 $ 22,719 $ 14,021 $ 10,969 $ (4,690) $ 14,513
======== ========= ======== ======== ========= ========== ========
Earnings (loss) per diluted share:
Income (loss) before
extraordinary items...... $0.37 $0.24 $1.12 $1.06 $0.79 $(0.15) $1.01
Net income (loss).......... $0.37 $0.24 $1.12 $1.06 $0.79 $(0.32) $1.01
Other Data(1)(2):
Net interest margin(3).......... 3.16% 2.90% 3.03% 2.86% 2.57% 1.86% 2.34%
Efficiency ratio(4)............. 53.70 67.44 63.88 71.85 64.79 88.30 62.60
Return on average assets(5)..... 0.51 0.38 0.41 0.45 0.34 (0.15) 0.49
Return on average equity(5)..... 7.51 5.24 5.87 7.32 5.39 (2.11) 6.79
Ratio of total equity to 6.56 7.28 6.75 5.35 6.06 6.92 6.86
total assets(6).............
Book value per share(7)......... $ 20.10 $ 19.20 $ 19.77 $ 14.38 $ 14.98 $ 14.65 $ 15.16
Dividend payout ratio(8)........ 26.89% 40.16% 35.57% 30.53% 38.61% (93.75)% 29.70%
Nonperforming assets(9)......... $16,502 $ 19,468 $ 18,020 $ 15,766 $ 24,310 $ 38,811 $ 50,577
Ratio to total assets........... 0.29% 0.36% 0.32% 0.49% 0.74% 1.29% 1.60%
Troubled debt
restructurings(10).......... $ 772 $ 388 $ 777 $ 731 $ 509 $ 15,641 $ 13,948
Ratio to total assets........... 0.01% 0.01% 0.01% 0.02% 0.02% 0.52% 0.44%
<FN>
(1) Includes the acquisitions of Bay View Credit, effective June 1, 1996; Bay
View Commercial Finance Group, effective April 1, 1997; Ultra Funding,
effective October 1, 1997; and America First Eureka Holdings, Inc.
effective January 2, 1998.
(2) You should also review our non-GAAP performance measures contained in our
historical financial information, which is incorporated into this
prospectus by reference, for further discussion of net income (loss), net
interest margin, return on average assets, and return on average equity.
(3) Defined as net interest income divided by average interest-earning assets.
(4) Calculated by dividing general and administrative expenses by operating
revenues, defined as net interest income, loan fees and charges, the excess
of leasing-related rental income over leasing-related depreciation expense,
and other noninterest income, excluding securities gains and losses.
(5) Calculated by dividing net income (loss) by average assets and average
equity, respectively. In calculating these ratios, net income for the three
months ended March 31, 1999 and March 31, 1998 has been annualized.
(6) Calculated by dividing total equity by total assets.
(7) Calculated by dividing total equity by total common shares outstanding.
(8) Calculated by dividing dividends declared by net income (loss).
(9) Defined as nonaccrual loans, real estate owned through foreclosure and
other repossessed assets. Nonaccrual loans are defined as loans 90 days or
more delinquent as to principal and interest payments (unless both are well
secured and in the process of collection) and loans less than 90 days
delinquent designated as nonperforming when we determine that the full
collection of principal and/or interest is doubtful.
(10) Defined as loans that have been modified (due to borrower financial
difficulties) to allow a stated interest rate and/or a monthly payment
lower than those prevailing in the market.
</FN>
</TABLE>
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9
<PAGE>
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Summary Consolidated Financial Data of FMAC
(in thousands, except per share data)
We derived the following financial information in part from FMAC's audited
financial statements for 1994 through 1998. The information at or for the
three-month periods ended March 31, 1999 and 1998 is unaudited and was derived
from FMAC's unaudited consolidated quarterly financial statements. However, in
the opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation at such dates and for such
periods have been made. The results of operations for the three-month period
ended March 31, 1999 are not necessarily indicative of results that may be
expected for the full fiscal year. All information is presented in accordance
with GAAP. The information is only a summary and you should read it in
conjunction with FMAC's historical financial statements and related notes
contained in the annual reports and other information that FMAC has filed with
the SEC. This historical financial information has also been incorporated into
this prospectus by reference. We have listed the documents that we incorporate
by reference under the heading "Where You Can Find More Information."
<TABLE>
<CAPTION>
At March 31, At December 31, Predecessor
---------------------- ------------------------------------------------- -----------
1999 1998 1998 1997(1) 1996(1) 1995(1) 1994(1)
---------- ----------- ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Financial Condition
Data(2):
Cash and cash equivalents.............. $ 54,989 $ 61,126 $ 33,425 $ 7,335 $ -- $ -- $ 102
Securities available for sale.......... 16,664 2,335 16,818 22,870 39,349 -- 9,541
Loans and leases held for sale......... 251,225 478,656 325,727 343,200 98,915 181,254 --
Loans and leases held for 154,329 -- 162,928 -- -- -- --
investment..........................
Retained interest in loan
securitizations...................... 30,037 19,070 29,952 21,652 6,908 -- --
Servicing rights....................... 32,545 2,126 29,905 2,213 -- -- --
Goodwill............................... 49,670 4,200 37,353 4,315 4,332 4,226 --
Accrued interest receivable............ 2,351 2,103 2,587 2,758 560 1,108 138
Other assets........................... 40,315 11,804 37,619 17,889 10,112 2,460 467
--------- --------- ----------- ---------- --------- ---------- --------
Total assets........................... 632,125 581,420 676,314 422,232 160,176 189,048 10,248
Overdraft ............................. -- -- -- -- 171 445 --
Payable to Imperial Credit
Industries, Inc...................... -- -- -- -- 17,728 -- --
Borrowings............................. 422,669 404,482 483,763 256,220 125,240 181,632 13,548
Deferred income taxes.................. 21,221 19,383 18,045 14,160 -- -- --
Other liabilities...................... 36,268 11,918 27,801 13,430 (2,580) 3,198 1,543
--------- --------- ----------- ---------- ---------- ---------- -------
Total liabilities...................... 480,158 435,783 529,609 283,810 145,719 185,275 15,091
Minority interest in subsidiary........ 59 -- (8) -- -- -- --
Members' equity (deficit).............. -- -- -- -- $ 14,457 $ 3,773 $ (4,843)
Total stockholders' equity............. $151,908 $145,637 $146,713 $138,422 -- -- --
</TABLE>
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10
<PAGE>
<TABLE>
<CAPTION>
Predecessor
Six -------------------
Months Six Year
Ended Months Ended
Three Months Year Ended December Ended December
Ended March 31, December 31, 31, June 30, 31,
--------------------- ------------------------------- ---------- -------- ----------
1999 1998 1998(4) 1997(1) 1996(1) 1995(1) 1995(1) 1994(1)
--------- ----------- ---------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Data(2):
Revenues:
Gain on sale of loans and leases(3)... $11,210 $16,741 $40,146 $52,117 $18,671 $ -- $ -- $4,052
Net interest income................... 2,649 4,202 17,119 5,156 1,641 239 154 37
Loan servicing income................. 6,512 1,254 18,507 3,314 1,191 349 326 306
Trading income(3)..................... 1,641 -- -- -- -- -- -- --
Insurance services income............. 1,127 -- -- -- -- -- -- --
Loss on transfer of loans to held
for investment.................... -- -- (8,845) -- -- -- -- --
Other income (loss)................... 191 (42) 650 (111) 63 -- -- 68
--------- ---------- --------- --------- -------- --------- ------- --------
Total revenues........................ 23,330 22,155 67,577 60,476 21,566 588 480 4,463
-------- -------- -------- -------- -------- --------- ------- -------
Expenses:
Personnel............................. 8,455 5,165 26,306 13,636 8,270 356 931 1,723
General and administrative............ 6,283 4,553 27,460 11,119 3,972 891 1,460 3,468
--------- --------- -------- -------- -------- --------- ------- -------
Total expenses........................ 14,738 9,718 53,766 24,755 12,242 1,247 2,391 5,191
-------- --------- -------- -------- -------- -------- ------- -------
Income (loss) before income taxes
and minority interest in 8,592 12,437 13,811 35,721 9,324 (659) (1,911) (728)
subsidiary........................
Minority interest in subsidiary....... 67 -- (8) -- -- -- -- --
Income tax expense.................... 3,410 5,223 5,528 15,001 -- -- -- --
--------- --------- --------- -------- -------- --------- ------- -------
Net income (loss)..................... $ 5,115 $ 7,214 $ 8,291 $20,720 $ 9,324 $ (659) $(1,911) $ (728)
======= ======= ======= ====== ======= ======= ====== ======
Basic income per share................ $ 0.18 $ 0.25 $ 0.29 $ 0.91
======== ======== ======== ========
Diluted income per share.............. $ 0.18 $ 0.25 $ 0.29 $ 0.91
======== ======== ======== ========
Weighted-average basic shares
outstanding....................... 28,734 28,716 28,716 22,670
======== ======== ======== =======
Weighted-average diluted shares
outstanding....................... 28,737 28,805 28,976 22,670
======== ======== ======== =======
<FN>
(1) From July 1, 1995 through November 18, 1997, FMAC qualified to be treated
as a limited liability company, which is similar to a partnership, for
federal and state income tax purposes. As a result of terminating FMAC's
limited liability company status upon completion of its initial public
offering, FMAC was required to record a one-time non-cash charge of $11.0
million against historical earnings for deferred income taxes. This charge
occurred in the quarter ended December 31, 1997 and the year ended December
31, 1997. The selected balance sheet information at December 31, 1994 and
the selected results of operations for the year ended December 31, 1994 and
for the six months ended March 31, 1995 represent FMAC's predecessor
entity.
(2) Includes the acquisition of Bankers Mutual effective April 1, 1998.
(3) Gain on sale for the years ended December 31, 1998, 1997 and 1996 includes
$35.3 million, $56.2 million and $11.5 million of cash gains before hedge
gains (losses) of ($34.0) million, ($5.1) million and $0.4 million, of
which $13.4 million, $6.6 million and $7.8 million, respectively,
represented loan fees. The gain on sale of loans for the December 1995
securitization was not recognized until the first quarter of 1996. Gain on
sale for the three months ended March 31, 1999 and 1998 includes $11.2
million and $17.5 million of cash gains before hedge losses of $1.1 million
for the three months ended March 31, 1998, of which $2.4 million and $2.4
million, respectively, represented loan fees. Prior to December 31, 1998,
FMAC deferred its hedge gains and losses and recorded them as an addition
or reduction to the gain on sale. Effective January 1, 1999, trading income
is recorded directly through operations as FMAC's financial instruments
used to hedge its loans and leases are classified as trading.
(4) Includes $34.0 million in hedge losses incurred primarily during the third
and fourth quarters of 1998.
</FN>
</TABLE>
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11
<PAGE>
- --------------------------------------------------------------------------------
Summary Unaudited Pro Forma Condensed Combined Financial Data
(in thousands, except per share data)
The following summary unaudited pro forma condensed combined financial data has
been prepared to illustrate the effect on our historical financial condition and
results of operations of the acquisition of FMAC, which will be accounted for
under the purchase method of accounting, and the issuance of $100 million in
subordinated notes by Bay View Bank. See "Recent Developments." The pro forma
operating data for the year ended December 31, 1998 and for the three-months
ended March 31, 1999 assume that both the merger and the issuance of the
subordinated notes occurred as of January 1, 1998. The pro forma financial
condition data is as of March 31, 1999.
This summary unaudited pro forma condensed combined financial data is based on a
number of assumptions, estimates and uncertainties and should be read in
conjunction with our historical financial statements and accompanying
disclosures and the notes to the unaudited pro forma condensed combined
financial data beginning on page 27.
As a result of these assumptions, estimates and uncertainties, the accompanying
summary unaudited pro forma condensed combined financial data does not purport
to describe the actual financial condition or results of operations that would
have been achieved had the merger and the issuance of subordinated notes in fact
occurred on the dates indicated, nor does it purport to predict our future
financial condition or results of operations.
<TABLE>
<CAPTION>
Three Months Year Ended
Ended March 31, 1999 December 31, 1998(1)
-------------------- ----------------
<S> <C> <C>
Pro Forma Operating Data:
Interest income.................................. $108,181 $457,915
Interest expense................................. 67,950 299,582
--------- --------
Net interest income.............................. 40,231 158,333
Provision for losses on loans and leases......... 5,573 11,758
--------- ---------
Net interest income after provision for losses... 34,658 146,575
Noninterest income............................... 36,648 81,530
Noninterest expense.............................. 55,212 195,239
-------- -------
Income before income tax expense and minority
interest in subsidiary......................... 16,094 32,866
Minority interest in subsidiary.................. 67 (8)
Income tax expense............................... 8,383 21,207
--------- ---------
Net income....................................$ 7,644 $ 11,667
======== =======
Basic earnings per share......................... $0.27 $0.40
==== ====
Diluted earnings per share....................... $0.27 $0.39
==== ====
Weighted-average basic shares outstanding........ 28,522 29,395
======== ========
Weighted-average diluted shares outstanding...... 28,695 29,695
======== ========
<FN>
(1) FMAC's historical results for the year ended December 31, 1998 included
$34.0 million in hedge losses incurred primarily during the third and
fourth quarters of 1998.
</FN>
</TABLE>
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12
<PAGE>
- --------------------------------------------------------------------------------
At
March 31,
1999
-----------
Pro Forma Financial Condition Data:
Assets............................................................. $6,539,679
Loans, net......................................................... 3,873,533
Securities......................................................... 1,529,843
Deposits........................................................... 3,343,286
Advances from the FHLB of San Francisco............................ 1,744,900
Subordinated notes, net............................................ 199,453
Senior debentures.................................................. 50,000
Other borrowings................................................... 427,056
Capital securities................................................. 90,000
Minority interest in subsidiary.................................... 59
Stockholders' equity............................................... 565,293
Total liabilities and stockholders' equity......................... 6,539,679
- --------------------------------------------------------------------------------
13
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors before you decide to
buy our common stock. You should also consider the other information in this
prospectus, as well as the other documents incorporated by reference.
Risks Related to Bay View's Current Business Activities
As we continue to transition our business to commercial banking activities, a
gradual increase in our consolidated credit risk is likely to occur, which means
that there is a greater risk that borrowers will be unable to repay their loans
from us or make all required lease payments to us. Borrower defaults resulting
in losses in excess of our allowance for loan and lease losses could have a
material adverse effect on our business, profitability and financial condition.
Our business strategy centers around our continued transition to commercial
banking activities and the anticipated increase of our net interest margin. In
order to realize this objective, one of our main strategies is to replace
lower-yielding single-family mortgage loans and mortgage-backed securities with
consumer and commercial loans and leases with higher risk-adjusted returns,
shorter maturities and less sensitivity to interest rate fluctuations. These
assets are funded with our low cost deposit base. As this process takes place, a
gradual increase in our consolidated credit risk is likely to occur, which means
that there is a greater risk that borrowers will be unable to repay their loans
from us or make all required lease payments to us. Borrower defaults resulting
in losses in excess of our allowance for loan and lease losses could have a
material adverse effect on our business, profitability and financial condition.
Single-Family Mortgage Loans. Single-family mortgage loans still comprise the
largest component of our loan and lease portfolio and are secured primarily by
properties located in northern California. Our concentration of these loans
results in lower yields and lower profitability for us. These loans are
generally made on the basis of the borrower's ability to make repayments from
his or her employment and the value of the property securing the loan. Despite
our decision to discontinue the origination of single-family mortgage loans in
1996, our exposure to these lower-yielding, and relatively low risk assets, has
actually increased to approximately $1.4 billion, or 31.0% of our total gross
loan and lease portfolio, at March 31, 1999 from $551 million, or 22.9%, at
December 31, 1997, primarily due to the acquisition of EurekaBank.
Multi-Family Mortgage and Commercial Real Estate Loans. Multi-family mortgage
and commercial real estate loans are generally considered to be riskier than
single-family mortgage loans because multi-family mortgage and commercial real
estate loans typically have larger balances to a single borrower or group of
related borrowers. In addition, the borrower's ability to repay multi-family
mortgage and commercial real estate loans typically depends upon the successful
operation of the property or business conducted on the property securing the
loan as opposed to a desire by the borrower to continue to occupy the residence
on the property securing the loan. These loans may therefore be more adversely
affected by conditions in the real estate markets or in the economy generally.
For example, if the cash flow from the project is reduced due to leases not
being obtained or renewed, the borrower's ability to repay the loan may be
impaired. Multi-family mortgage and commercial real estate loans totaled $1.3
billion, or 30.5% of our total gross loan and lease portfolio, at March 31,
1999. These loans represent our second largest loan concentration and are also
primarily secured by properties located in northern California.
Motor Vehicle Loans and Leases. Because our primary focus for motor vehicle
loans and leases is on the credit quality of the customer rather than the value
of the collateral, the collectibility of a motor vehicle loan or lease is more
likely than a single-family first mortgage loan to be affected by adverse
personal circumstances. We rely on the borrower's continuing financial
stability, rather than on the value of the vehicle, for the repayment of a motor
vehicle loan and for payment of all required amounts under a motor vehicle
lease. Because motor vehicles usually rapidly depreciate in value, it is
unlikely that a repossessed vehicle will cover repayment of the outstanding loan
balance or unpaid amounts under the terms of the lease.
In one particular niche that we operate, the typical motor vehicle loan customer
desires a longer term and/or higher relative loan amount than is offered by many
automobile financing sources. We have therefore been able to charge interest
rates of 200 to 300 basis points over the rates typically offered by traditional
sources of motor vehicle financing such as banks and captive finance companies.
The higher interest rate and longer maturity of the loans increases the risk
that the borrower will be unable to repay the loan.
14
<PAGE>
We retain a residual interest in our motor vehicle-related operating leased
assets. The estimated fair market value of the motor vehicle at the end of the
contract term of the lease, if any, is reflected as an asset on our balance
sheet over the term of the lease. At March 31, 1999, the residual values related
to our motor vehicle-related operating leases totaled $157.1 million. Our
profitability depends, to some degree, upon our ability to realize these
residual values. Realization of residual values depends on many factors, several
of which are outside our control, including general market conditions at the
time of expiration of the lease, whether there has been unusual wear and tear
on, or use of, the motor vehicle and the cost of a comparable new motor vehicle.
If, upon the expiration of a lease, we sell or refinance the underlying motor
vehicle and the amount realized is less than the recorded value of the residual
interest in the motor vehicle, we will recognize a loss reflecting the
difference. If we fail to realize our aggregate recorded residual values, our
financial condition and profitability could be adversely affected.
At March 31, 1999, motor vehicles loans totaled $578.4 million, which was
approximately 13.2% of our total gross loan and lease portfolio. Additionally,
operating leased assets totaled $261.2 million at March 31, 1999.
Home Equity Loans. High loan-to-value home equity loans are subject to increased
risk of delinquency and default as compared to single-family first mortgage
loans. High loan-to-value home equity loans, which totaled $471.3 million as of
March 31, 1999, are secured by a lien, generally junior in priority to a senior
lien on the borrower's home. High loan-to-value home equity loans may have, when
added to existing senior lien balances, a post-funding combined loan-to-value
ratio of up to 125% of the value of the home securing the loan. If a borrower
defaults on a high loan-to-value home equity loan, our security interest will be
subordinate to all senior lien balances. It is therefore likely that in the case
of default, the collateral for the loan will not be sufficient to cover the
principal amount of the loan. In addition, the market value of the properties
securing these loans may decline, especially in an economic slowdown or
recession. We do not intend to increase our exposure to high loan-to-value home
equity loans.
Our home equity loans, including high loan-to-value home equity loans, totaled
approximately $611.4 million, or 14.0% of our total gross loan and lease
portfolio, as of March 31, 1999. At March 31, 1999, the average loan-to-value
ratio of our high loan-to-value home equity loan portfolio was 114%. Because of
this loan-to-value ratio, we rely principally on the creditworthiness of the
borrower for repayment of our high loan-to-value loans and receive interest on
these loans at a rate which is higher than the interest rate we receive on
single-family first mortgage loans.
Commercial Loans and Leases. Our commercial loans and leases, which are
comprised primarily of asset-based loans, factoring and equipment leases, entail
higher risk and are typically made on the value of the collateral provided by
the borrower to secure the loan or lease. Most often, this collateral is
accounts receivable, although at times we also rely upon collateral such as
inventory or machinery. There is little additional credit support provided by
the borrower for most of these loans and leases and the probability of repayment
is based almost solely on the liquidation of the pledged collateral. As a
result, in the case of loans and leases secured by accounts receivable, the
availability of funds for the repayment of such loans and leases may be
substantially dependent on the ability of the borrower to collect amounts due
from its customers. The collateral securing other loans and leases may
depreciate over time, may be difficult to appraise and may fluctuate in value
based on the success of the business. In addition, these loans and leases carry
much higher rates of interest than those charged by traditional small business
lenders, such as commercial banks, to compensate for the greater risk that our
borrowers will be unable to repay their loans or leases. The higher interest
rates charged on these loans and leases increase the risk that the borrower will
be unable to repay the loan or lease. Commercial loans and leases were $106.4
million, or 2.4% of our total gross loan and lease portfolio, as of March 31,
1999.
Franchise Loans to Small and Medium-Sized Businesses. Loans to small and
medium-sized businesses are generally riskier than single-family mortgage loans.
Typically, the success of a small or medium-sized business depends on the
management talents and efforts of one or two persons or a small group of
persons, and the death, disability or resignation of one or more of these
persons could have a material adverse impact on the business. In addition, small
and medium-sized businesses frequently have smaller market shares than their
competition, may be more vulnerable to economic downturns, often need
substantial additional capital to expand or compete and may experience
substantial variations in operating results, any of which may impair a
borrower's ability to repay a loan or make payments on a lease. We purchased
from FMAC approximately $330 million of loans to small and medium-sized
businesses, primarily franchise operations, during the first quarter of 1999.
These loans represented 7.5% of our total gross loan and lease portfolio at
March 31, 1999. We anticipate that ultimately franchise loans may comprise up to
30% of our total consolidated assets.
15
<PAGE>
Unfavorable or worsened economic conditions or natural disasters in northern
California could significantly increase the number of borrowers unable to timely
repay their loans, and could result in a decline in the value of the properties
securing our loans, which could have a material adverse effect on us.
Our current loan portfolio is concentrated in certain geographic regions,
particularly northern California. The number of borrowers unable to repay their
loans may be affected by changes in local economic and business conditions.
Unfavorable or worsened economic conditions in northern California could
significantly increase the number of borrowers unable to timely repay their
loans, and could result in a decline in the value of the properties securing our
loans, which could have a material adverse effect on us. In addition, the
northern California area has been, and may in the future be, subject to
earthquakes. We usually do not require our borrowers to maintain earthquake
insurance on properties securing mortgage loans. Accordingly, earthquake damage
to properties securing mortgage loans or to properties we own could have a
material adverse effect on us.
Changes in interest rates could have a material adverse effect on our
profitability.
Our ability to make a profit, like that of most financial institutions,
substantially depends upon our net interest income, which is the difference
between the interest income we earn on our interest-earning assets, such as
loans, and the interest expense we pay on our interest-bearing liabilities, such
as deposits. Changes in interest rates could have a material adverse effect on
our profitability. Certain assets and liabilities may react in different degrees
to changes in market interest rates. Interest rates on some types of assets and
liabilities may fluctuate prior to changes in broader market interest rates,
while rates on other types may lag behind. Additionally, some of our assets,
such as adjustable rate mortgages, have features, including payment and rate
caps, which restrict changes in their interest rates. As a result, our net
interest margin would be adversely impacted by a rise in interest rates where
actual rates on adjustable rate loans do not rise as rapidly as the cost of our
funds.
Factors such as inflation, recession, unemployment, money supply, international
disorders, instability in domestic and foreign financial markets, and other
factors beyond our control may affect interest rates. Changes in market interest
rates will also affect the level of voluntary prepayments on our loans and
payments on our mortgage-backed securities resulting in the receipt of proceeds
that may be reinvested at a lower rate than the loan or mortgage-backed security
being prepaid. Although we pursue an asset-liability management strategy
designed to control our risk from changes in market interest rates, changes in
interest rates could still have a material adverse effect on our profitability.
The competition we face could adversely affect our profitability.
We face competition both in originating loans and leases and in attracting
deposits. The competition we face could adversely affect our profitability.
Competition in originating multi-family and commercial real estate mortgage
loans comes primarily from savings institutions, commercial banks, mortgage
bankers and insurance companies. We compete for these mortgage loans based on
interest rates, types of products, loan fees charged and the quality of customer
service that we provide to our borrowers. Competition in attracting deposits
comes primarily from savings institutions, commercial banks, brokerage firms,
mutual funds, credit unions and various types of investment companies. We also
experience competition for our motor vehicle loan and leasing programs,
primarily from large well-capitalized lending institutions and finance
companies, as well as from financing provided directly by automobile
manufacturers. Competition for factoring clients comes primarily from small
local factors or factors specializing in a specific industry segment, such as
trucking or personnel agencies. Competition for asset-based loans comes
primarily from small, locally-based commercial finance companies, large national
commercial finance companies and commercial banks. Competition for franchise
loans comes primarily from commercial banks, thrift institutions, diversified
finance companies, asset-based lenders, speciality franchise finance companies
and real estate investment trusts, among others. Due to their size, some of our
competitors may achieve economies of scale and, as a result, offer a broader
range of products and services and lower pricing than we currently offer.
Changes in the regulatory structure or the statutes or regulations applicable to
us could have a material impact on our operations.
We are subject to extensive regulation, supervision and examination by the
Federal Reserve Board and the Office of the Comptroller of the Currency and by
the Federal Deposit Insurance Corporation, which insures our deposits up to
applicable limits. Regulatory authorities have extensive discretion in carrying
out their supervisory and enforcement responsibilities, and regulations have
been implemented which have increased capital requirements, increased
16
<PAGE>
insurance premiums and resulted in increased administrative, professional and
compensation expenses. Any change in the regulatory structure or the applicable
statutes or regulations could have a material impact on our operations.
Additional legislation and regulations may be enacted or adopted in the future
which could significantly affect our powers, authority and operations, and our
competitors which in turn could have a material adverse effect on our
operations.
Any computer problems due to the Year 2000 issue could adversely affect our
business.
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. As a result, any of our
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000 which, in turn, could result in
system failures or miscalculations causing disruptions in our operations and the
operations of our suppliers and customers. Any computer problems due to the Year
2000 issue could adversely affect our business.
The potential impact of the Year 2000 issue on the financial services industry
could be material, as virtually every aspect of the industry and processing of
transactions will be affected. Due to the size of the task facing the financial
services industry and the interdependent nature of its transactions, we may be
adversely affected by this problem, depending on whether we and the entities
with which we do business address the issue successfully. The impact of the Year
2000 issue on us will depend not only on corrective actions that we take, but
also on the way in which the Year 2000 issue is addressed by governmental
agencies, businesses and other third parties that provide services or data to
us, or receive services or data from us, or whose financial condition or
operational capability is important to us.
We rely upon third-party software vendors and data processing service providers
for the majority of our electronic data processing and do not operate any
proprietary programs which are critical to our operations. Thus, our focus is to
monitor the progress of our primary software and data processing service
providers toward resolving the Year 2000 issue.
Failure to correct a material Year 2000 problem could result in an interruption
in, or a failure of, certain normal business activities or operations. Such
failures could materially and adversely affect our results of operations,
liquidity and financial condition. Due to the general uncertainty of the Year
2000 readiness of third-party suppliers and customers, we are unable to
determine at this time whether the consequences of Year 2000 failures will have
a material impact on our results of operations, liquidity and financial
condition. Our Year 2000 compliance program will reduce levels of uncertainty
about the Year 2000 issue including questions as to the compliance and readiness
of our material third-party providers. We believe that, with the implementation
of new and/or upgraded business systems and completion of the Year 2000
compliance program, the possibility of significant interruptions of normal
operations has been significantly reduced. For additional information regarding
our Year 2000 compliance program, see "Where You Can Find More Information."
Risks Related to the Acquisition of FMAC
We may experience greater than expected difficulties in operating FMAC's
businesses.
Our recent acquisition of FMAC involves the combination of entities that have
previously operated independently. We may experience greater than expected
difficulties in operating FMAC's businesses, which could have an adverse effect
on our ability to realize the expected benefits of the acquisition.
There are many things that could go wrong and adversely affect our business and
profitability after the acquisition. We cannot predict the full range of
post-acquisition problems that may occur. Some possible difficulties include:
o diversion of our management's attention to the detriment of other
parts of our business;
o the failure to retain key personnel of FMAC;
o the failure to satisfactorily assimilate the business culture of FMAC
into our own;
o increased competition in FMAC's businesses, including competition from
companies with more financial resources than we have; and
17
<PAGE>
o risks associated with unanticipated events or liabilities at FMAC.
We may not be permitted to own some assets or operate some businesses owned by
FMAC for regulatory reasons. We may have to sell the assets or businesses on
unfavorable terms or modify business operations in a way that will make them
less profitable.
In connection with its approval of the FMAC acquisition, the Federal Reserve
Board has required us, within the two years following the FMAC acquisition, to
divest or conform to regulatory requirements FMAC's businesses and activities
that are impermissible for us to engage in for regulatory purposes. The affected
FMAC assets include equity interests in restaurant franchises. We cannot be sure
that we will be able to sell these assets on favorable terms. In addition, in
order to continue to engage in the insurance agency business we are required to
modify FMAC's insurance agency operations, and these modifications could make
those operations less profitable to us.
The Bankers Mutual division of FMAC participates in the Fannie Mae delegated
underwriting and servicing program. Because of Bankers Mutual's current loss
sharing arrangement with Fannie Mae, under federal banking regulations we will
be required to hold capital against all loans sold under the program as if we
owned 100% of these loans. We cannot be sure that we will successfully limit our
potential liability under the Fannie Mae program or otherwise limit the
additional capital requirements to which we would be subject. If we determine,
for regulatory purposes or otherwise, that it is in our best interests to sell
the Fannie Mae servicing portfolio, we cannot be sure that we will be able to do
so on favorable terms.
FMAC is dependent on securitizations. Any impairment of FMAC's ability to
complete securitizations could have a material adverse effect on our business.
FMAC has historically pooled and sold through securitizations substantially all
of the franchise loans which it originates, as well as many other loans. Upon
consummation of the acquisition of FMAC, we retained a portion of FMAC's
commercial franchise loans for our portfolio, and we intend to sell or
securitize the remainder. Under FMAC's securitization structure, FMAC sells a
pool of loans on a non-recourse basis to a single purpose trust, which then
issues to investors securities collateralized by the loans. While FMAC's
dependency on securitizations has been reduced now that FMAC is operating as one
of our subsidiaries, any impairment in FMAC's ability to complete
securitizations could have a material adverse effect on our business. Factors
affecting FMAC's ability to complete securitizations of its loans include:
o conditions in the securities markets generally;
o conditions in the asset-backed securities markets specifically;
o the performance of the securities issued in connection with FMAC's
securitizations;
o the credit quality of FMAC's loans;
o compliance of FMAC's loans with the eligibility requirements for a
particular securitization;
o FMAC's ability to adequately service its loans; and
o any material negative rating agency action pertaining to certificates
issued in FMAC's securitizations.
The "gain on sale" from the sale of loans in securitizations has historically
been the largest component of FMAC's revenues, and retained interests in loan
securitizations are typically established as balance sheet assets in connection
with securitizations, based in part upon estimates of future credit losses. FMAC
has also retained subordinated securities issued in connection with its
securitization program. We are currently attempting to sell these securities. If
actual credit losses on securitized loans exceed the estimates made at the time
of the securitizations, we could be required to record an expense to reduce the
carrying value of the retained interests and securities classified as
available-for-sale, if any, on our balance sheet. Any expense of this type could
be material to our earnings if the credit performance of securitized loans
deteriorates significantly. At March 31, 1999, the retained interests in loan
securitizations held by FMAC totaled $30.0 million and securities classified as
available-for-sale totaled $16.7 million.
18
<PAGE>
In addition, the securitization market for FMAC's loans and leases is relatively
undeveloped and may be more susceptible to market fluctuations or other adverse
changes than more developed capital markets. To the extent FMAC makes loans and
leases in new industry sectors or to different types of entities in existing
industry sectors, there is a risk that these loans and leases will not be
securitizable or will be securitizable only on terms unfavorable to FMAC.
FMAC advances funds in connection with its securitization activities. If FMAC is
unable to recover a significant amount of these advances, it could have a
material adverse effect on our business, profitability and growth prospects.
In connection with its securitization activity, FMAC serviced approximately $2.8
billion in commercial franchise loans as of March 31, 1999. As the servicer,
FMAC periodically advances funds, and is sometimes required to advance funds in
accordance with its servicing agreements, to the trustees of the securitizations
or directly to other parties, including the underlying franchisees/borrowers.
The advances may be the result of cash flow shortfalls attributable to
delinquent loan payments or the result of other factors. While FMAC is entitled
in accordance with its servicing agreements to recover some of these advances
prior to distributing payments to security holders, to the extent FMAC does not
recover its advances, there could be a material adverse effect on our business,
profitability and growth prospects. Under some circumstances, these advances are
also recovered under work-out arrangements which may include a loan
restructuring, sale of the underlying franchise, concessions from the
franchisor, or restructuring of the securitization. In most instances, the
work-out arrangements are developed with the cooperation of the franchisor. At
March 31, 1999, FMAC had outstanding advances of approximately $9.8 million
related to its securitizations.
FMAC recently completed a loan restructuring in connection with approximately $5
million in funds it advanced on behalf of an operator that owns 130 Pizza Hut
restaurants which secure loans included in a securitization pool. These loans
were not originated by FMAC and the current operator was recruited by FMAC to
replace the original borrower. While the operator's $64 million in loans in the
securitization pool are current, the loan restructuring was necessary to enable
the operator to continue to service these loans. The loan restructuring resulted
in holders of securities from this securitization pool who are affiliated with
the selling stockholder incurring losses as a result of a $14.0 million
reduction in the operator's loan balance. FMAC's equity interest in the
securitization had previously been written off. Under the loan restructuring
FMAC's advances should be repaid prior to the final payment date of the
restructured loans in 2008. This resolution could affect the current investment
ratings of the securities issued pursuant to the securitization that includes
these loans. Before completion of the loan restructuring, a rating agency, Fitch
IBCA, placed all classes of notes issued under the securitization that includes
these loans on RatingAlert Negative. Fitch noted that its action was prompted by
the negative performance of the $64 million in loans that were not originated by
FMAC, does not impact any other securitizations of FMAC and was in no way
associated with FMAC in its function as servicer and/or special servicer under
the securitization. Fitch also noted that it may take further rating action on
some or all of the note classes upon completion of the loan restructuring.
Risks Related to an Investment in the Common Stock
The price of our common stock may decrease rapidly and prevent stockholders from
selling their stock at a profit.
The market price of our common stock could decrease in price rapidly at any time
and prevent stockholders from selling their shares at a profit. The market price
of our common stock has fluctuated in recent years. Since January 1, 1998, the
market price has ranged from a low of $12.50 per share to a high of $38.00 per
share. Fluctuations may occur, among other reasons, in response to:
o operating results;
o announcements by competitors;
o regulatory changes;
o economic changes;
19
<PAGE>
o general market conditions; and
o legislative changes.
The trading price of our common stock could continue to be subject to wide
fluctuations in response to the factors set forth above and other factors, many
of which are beyond our control. The stock market in recent years has
experienced extreme price and trading volume fluctuations that often have been
unrelated or disproportionate to the operating performance of individual
companies. You should consider the likelihood of these market fluctuations
before investing in our stock.
The sale of a substantial amount of our common stock after the FMAC merger could
adversely affect the market price of our common stock.
Of the shares of our common stock that FMAC stockholders received in the merger,
shares may be sold immediately and without restriction. The sale of a
substantial amount of our common stock after the merger could adversely affect
the market price of our stock.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares being offered by
the selling stockholder. We estimate that the net proceeds to be received by us
in the event the underwriters' over-allotment option is exercised in full will
be $ million. We intend to use any such net proceeds for general corporate
purposes. We may also use the net proceeds to acquire complementary businesses,
although we are not currently a party to any agreements or understandings
regarding any potential business acquisitions.
20
<PAGE>
MARKET PRICES AND DIVIDENDS
Our common stock is traded on the New York Stock Exchange under the symbol
"BVC." Prior to April 1, 1999, our common stock traded on the Nasdaq National
Market under the symbol "BVCC." The following table sets forth, for the periods
indicated, the high and low sale prices of our common stock on the New York
Stock Exchange.
Price Range
-----------------
High Low
-------- --------
1997
First Quarter......................................... $28.63 $20.63
Second Quarter........................................ 26.75 22.63
Third Quarter......................................... 28.13 24.88
Fourth Quarter........................................ 36.25 27.69
1998
First Quarter......................................... 37.25 29.38
Second Quarter........................................ 38.00 29.50
Third Quarter......................................... 31.75 17.00
Fourth Quarter........................................ 21.69 12.50
1999
First Quarter......................................... 21.06 17.44
Second Quarter........................................ 20.50 16.25
Third Quarter (through July 15, 1999)................. 20.00 19.19
On July 15, 1999, the last reported sale price per share of our common stock on
the New York Stock Exchange was $20.00. At July 15, 1999, there were 1,483
holders of record of our common stock.
We expect to declare regularly scheduled dividends consistent with our recent
historical practices. The declaration of any dividends and the amount of any
dividends, however, will depend on a number of factors, including our financial
condition, regulatory capital requirements, funds from operations, future
business prospects and such other factors as our board of directors may deem
relevant. We are a holding company and our ability to pay cash dividends is
dependent on our ability to receive cash dividends, advances and other payments
from our subsidiaries.
21
<PAGE>
CAPITALIZATION
The following table sets forth our consolidated capitalization and our
regulatory capital ratios as of March 31, 1999:
o without adjustment,
o as adjusted to give effect to the sale of the subordinated notes and
the dividend of the net proceeds from Bay View Bank to us, and
o as further adjusted for the acquisition of FMAC on a pro forma basis
as if the acquisition had occurred as of March 31, 1999.
This information should be read in conjunction with the historical financial
statements and related notes of Bay View and FMAC incorporated into this
prospectus by reference. In each case we have assumed that the underwriters'
over-allotment option is not exercised.
<TABLE>
<CAPTION>
At March 31, 1999
-------------------------------------------------------------
As Further
As Adjusted Adjusted for the
Without for the Acquisition of
Adjustment Notes Offering FMAC
-------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Deposits........................................... $3,343,286 $3,343,286 $3,343,286
========== ========== ==========
Borrowings:
Advances from FHLB of San Francisco............... $1,744,900 $1,744,900 $1,744,900
Securities sold under agreements to repurchase.... 23,047 23,047 23,047
Senior debentures................................. 50,000 50,000 50,000
Subordinated notes................................ 99,453 199,453 199,453
Other borrowings.................................. 4,387 4,387 427,056
------------- ------------ ----------
Total borrowings............................... 1,921,787 2,021,787 2,444,456
---------- --------- ---------
Guaranteed Preferred Beneficial Interests in
Bay View's Junior Subordinated
Debentures....................................... 90,000 90,000 90,000
------------ ----------- -----------
Stockholders' Equity:
Common stock ($.01 par value)..................... 204 204 298
Additional paid-in capital........................ 251,010 251,010 438,126
Retained earnings (substantially restricted)...... 160,930 160,930 160,930
Treasury stock, at cost........................... (30,669) (30,669) (30,669)
Unrealized loss on securities available-for-sale,
net of tax...................................... (133) (133) (133)
Debt of Employee Stock Ownership Plan............. (3,259) (3,259) (3,259)
------------- -------------- --------------
Total stockholders' equity........................ 378,083 378,083 565,293
------------ ------------ ------------
Total capitalization.............................. $2,389,870 $2,489,870 $3,099,749
========== ========== ==========
Our Regulatory Capital Ratios:
Tier 1 Leverage................................... 5.66% 5.66% 5.03%
Tier 1 risk-based................................. 7.38 7.38 6.46
Total risk-based(1)............................... 11.12 13.50 12.16
Bay View Bank Regulatory Capital Ratios:
Tier 1 Leverage................................... 6.96% 5.13% 5.47%
Tier 1 risk-based................................. 9.21 6.78 7.21
Total risk-based(1)............................... 10.28 10.28 10.46
- -----------------------
<FN>
(1) The subordinated notes are structured to qualify as Tier 2 capital, which
is included in the calculation of total risk-based capital ratio.
</FN>
</TABLE>
22
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following unaudited pro forma condensed combined financial data is based on
the historical financial statements of Bay View and FMAC and has been prepared
to illustrate the effect of the merger and an issuance of $100 million in
subordinated notes by Bay View Bank.
The unaudited pro forma condensed combined statement of financial condition is
as of March 31, 1999. The unaudited pro forma condensed combined statements of
income for the year ended December 31, 1998 and for the three-month period ended
March 31, 1999 assume that both the merger and the issuance of the subordinated
notes occurred as of January 1, 1998.
The unaudited pro forma condensed combined financial data should be read in
conjunction with the historical financial statements and accompanying
disclosures contained in our first quarter 1999 Form 10-Q/A and 1998 Form 10-K/A
and FMAC's first quarter 1999 Form 10-Q and 1998 Form 10-K/A, which are
incorporated into this prospectus by reference.
The merger was accounted for under the purchase method of accounting. Under the
purchase method of accounting, assets acquired and liabilities assumed are
recorded at their estimated fair values. Goodwill is generated to the extent
that the merger consideration, including certain acquisition and closing costs,
exceeds the fair value of net assets acquired. Based on the information
currently available, the merger initially generated approximately $206 million
in goodwill, excluding the $22.5 million remaining potential obligation under
the "earn-out" agreement entered into between FMAC and Bankers Mutual in
connection with FMAC's 1998 acquisition of Bankers Mutual. We estimate that this
goodwill will be amortized on a straight-line basis over 15 years.
The actual goodwill arising from the merger was based on the merger
consideration, including certain acquisition and closing costs, and fair values
of assets and liabilities on the date the merger was consummated. No assurance
can be given that the final goodwill amount arising from the merger or the
goodwill amortization period will not be more or less than the amount or period
currently contemplated in the unaudited pro forma condensed combined financial
data.
We have incurred underwriting and other costs in connection with issuing the
subordinated notes which were capitalized, and post-combination integration
expenses as a result of combining our companies which were expensed and which
were not reflected in the unaudited pro forma condensed combined financial data.
The unaudited pro forma condensed combined financial data is based on a number
of assumptions, estimates and uncertainties including, but not limited to,
estimates of the fair values of assets acquired and liabilities assumed, the
number of FMAC common shares outstanding immediately prior to the merger
consummation and estimated acquisition and closing costs. The unaudited pro
forma condensed combined financial data assumes the issuance of approximately
9.4 million of our common shares to effect the merger.
As a result of these assumptions, estimates and uncertainties, the accompanying
unaudited pro forma condensed combined financial data does not purport to
describe the actual financial condition or results of operations that would have
been achieved had the merger and the issuance of subordinated notes in fact
occurred on the dates indicated, nor does it purport to predict our future
financial condition or results of operations.
23
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF FINANCIAL CONDITION
MARCH 31, 1999
(in thousands)
Pro Forma Adjustments
--------------------------------------- Pro Forma
Bay View FMAC Debit Credit Total Bay View
----------- ----------- ----------- ------------ -------------- -------------
Assets:
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents..................... $ 147,918 $ 54,989 $100,000 $134,033 $(34,033) (1) $ 168,874
Securities available-for-sale:
Investment securities....................... 4,932 16,664 925,000 925,000 (2) 946,596
Mortgage-backed securities.................. 12,783 -- -- 12,783
Securities held-to-maturity:
Investment securities....................... -- -- -- --
Mortgage-backed securities.................. 570,464 -- -- 570,464
Loans and leases held-for-sale................ -- 251,225 -- 251,225
Loans and leases held-for-investment, net of
allowance for losses........................ 4,392,979 154,329 925,000 (925,000) (2) 3,622,308
Investment in operating leased assets, net.... 261,237 -- -- 261,237
Investment in stock of the FHLB of San
Francisco................................... 87,245 -- -- 87,245
Investment in stock of the Federal Reserve
Bank........................................ 12,154 -- -- 12,154
Real estate owned, net........................ 2,070 -- -- 2,070
Premises and equipment, net................... 23,797 6,968 -- 30,765
Intangible assets............................. 131,517 49,670 205,706 49,670 156,036 (3) 337,223
Other assets.................................. 116,455 98,280 22,000 22,000 (4) 236,735
------------ --------- --------- ------------
Total assets.................................. $5,763,551 $632,125 $ 144,003 $6,539,679
========== ======== ========= ==========
Liabilities and Stockholders' Equity:
Liabilities
Deposits...................................... $3,343,286 -- -- $3,343,286
Advances from the FHLB of San
Francisco................................... 1,744,900 -- -- 1,744,900
Securities sold under agreements to
repurchase.................................. 23,047 -- -- 23,047
Subordinated notes, net....................... 99,453 -- 100,000 100,000 (5) 199,453
Senior debentures............................. 50,000 -- -- 50,000
Other borrowings.............................. 4,387 422,669 -- 427,056
Other liabilities............................. 30,395 57,489 8,701 8,701 (6) 96,585
------------ --------- --------- ------------
Total liabilities........................... 5,295,468 480,158 108,701 5,884,327
Capital securities............................ 90,000 -- -- 90,000
Minority interest in subsidiary............... -- 59 -- 59
Stockholders' equity.......................... 378,083 151,908 151,908 187,210 35,302 (7) 565,293
------------ --------- --------- ------------
Total liabilities and stockholders' equity.... $5,763,551 $632,125 $ 144,003 $6,539,679
========== ======== ========= ==========
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1998
(in thousands, except per share amounts)
Pro Forma Adjustments Pro
--------------------------------------- Forma
Bay View FMAC Debit Credit Total Bay View
----------- ----------- -------- --------- --------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Interest income................................. $406,363 $55,439 $3,887 $ (3,887) (8) $457,915
Interest expense................................ 251,762 38,320 9,500 9,500 (9) 299,582
--------- -------- ---------- --------
Net interest income............................. 154,601 17,119 (13,387) 158,333
Provision for losses on loans and leases........ 9,114 2,644 -- 11,758
----------- --------- ----------- --------
Net interest income after provision for losses.. 145,487 14,475 (13,387) 146,575
Noninterest income.............................. 31,072 50,458 -- 81,530
Noninterest expense:
General and administrative expenses........... 113,567 48,900 -- 162,467
Other noninterest expense..................... 7,686 -- -- 7,686
Amortization of intangible assets............. 11,372 2,222 13,714 $2,222 11,492 (10) 25,086
---------- --------- --------- --------
Total noninterest expense....................... 132,625 51,122 11,492 195,239
--------- -------- --------- --------
Income before income tax expense and minority
interest in subsidiary.......................... 43,934 13,811 (24,879) 32,866
Minority interest in subsidiary................. -- (8) -- (8)
Income tax expense.............................. 21,215 5,528 5,536 (5,536) (11) 21,207
---------- --------- ---------- --------
Net income...................................... $ 22,719 $ 8,291 $(19,343) (12) $ 11,667
========= ======== ======== ========
Basic earnings per share ....................... $1.13 $0.29 (12) $0.40
===== ===== ========
Diluted earnings per share...................... $1.12 $0.29 (12) $0.39
===== ===== ========
Weighted-average basic shares outstanding....... 20,035 28,716 29,395
========== ======== ========
Weighted-average diluted shares outstanding..... 20,335 28,976 29,695
========== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial data.
25
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1999
(in thousands, except per share amounts)
Pro Forma Adjustments
-------------------------------- Pro Forma
Bay View FMAC Debit Credit Total Bay View
------------- ---------- -------- ------ ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Interest income.................................... $100,021 $ 8,986 $ 826 $ (826) (8) $108,181
Interest expense................................... 59,238 6,337 2,375 2,375 (9) 67,950
---------- -------- -------- ----------
Net interest income................................ 40,783 2,649 (3,201) 40,231
Provision for losses on loans and leases........... 5,311 262 -- 5,573
----------- --------- -------- ----------
Net interest income after provision for losses..... 35,472 2,387 (3,201) 34,658
Noninterest income................................. 15,967 20,681 -- 36,648
Noninterest expense:
General and administrative expenses.............. 26,156 13,774 -- 39,930
Other noninterest expense........................ 8,950 -- -- 8,950
Amortization of intangible assets................ 2,904 702 3,428 $702 2,726 (10) 6,332
----------- --------- -------- ----------
Total noninterest expense...................... 38,010 14,476 2,726 55,212
---------- ------- -------- ----------
Income before income tax expense and
minority interest in subsidiary.................. 13,429 8,592 (5,927) 16,094
Minority interest in subsidiary.................... -- 67 -- 67
Income tax expense................................. 6,296 3,410 1,323 (1,323) (11) 8,383
----------- -------- -------- ----------
Net income......................................... $ 7,133 $ 5,115 $ (4,604) (12) $ 7,644
========== ======= ========= ==========
Basic earnings per share .......................... $ 0.37 $0.18 (12) $0.27
=========== ===== =====
Diluted earnings per share......................... $ 0.37 $0.18 (12) $0.27
=========== ===== =====
Weighted-average basic shares outstanding.......... 19,162 28,734 28,522
========== ======= =========
Weighted-average diluted shares outstanding........ 19,335 28,737 28,695
========== ======= =========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial data.
26
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL DATA
1. Pro forma adjustments reflect the $100 million in cash proceeds to be
generated from the issuance of subordinated notes by Bay View Bank and the
cash portion of the merger consideration of approximately $134 million. The
$134 million adjustment also includes payments for certain acquisition and
other closing costs.
2. Pro forma adjustment reflects the securitization and/or sale of a portion
of Bay View Bank's loan portfolio in connection with the restructuring of
Bay View Bank's balance sheet resulting from the FMAC acquisition as
contemplated in Bay View's applications and notices filed with its
regulatory agencies. The securitization and/or sale should reduce the level
of risk-weighted assets and generate additional excess regulatory capital
at Bay View Bank that can be upstreamed to Bay View Capital Corporation
(See also Note 5). The $925 million in proceeds is anticipated to be
invested in investment grade agency securities.
3. Pro forma adjustment reflects the excess of the merger consideration,
including certain acquisition and closing costs, over the estimated fair
value of net assets acquired (i.e., goodwill), which was initially
estimated at approximately $206 million, excluding the $22.5 million
remaining potential obligation under the "earn-out" agreement entered into
between FMAC and Bankers Mutual in connection with FMAC's 1998 acquisition
of Bankers Mutual, net of FMAC's pre-acquisition goodwill eliminated as of
March 31, 1999.
4. Pro forma adjustment reflects the $22 million estimated fair value of
non-mortgage servicing assets relating to FMAC's $2.2 billion franchise
loan servicing portfolio, excluding FMAC loans purchased by Bay View Bank.
5. Pro forma adjustments reflect the issuance of $100 million in subordinated
notes by Bay View Bank. The proceeds from the subordinated notes issuance
along with other excess capital at Bay View Bank were upstreamed to us in
the form of a special cash dividend to fund both a portion of the FMAC
acquisition price and for general corporate purposes. After the
acquisition, we contributed substantially all of the asssets and
liabilities of FMAC to subsidiaries of Bay View Bank.
6. Pro forma adjustment reflects the deferred taxes relating to the purchase
accounting adjustments.
7. Pro forma adjustment reflects the issuance of our common stock to the
stockholders of FMAC, net of FMAC's pre-acquisition stockholders' equity
eliminated as of March 31, 1999.
8. Pro forma adjustment reflects the reduction in interest income from the
securitization and/or sale of a portion of Bay View Bank's loan portfolio,
partially offset by the interest income generated from the anticipated
reinvestment of the $925 million in proceeds in investment grade agency
securities.
9. Pro forma adjustment reflects the interest and other costs associated with
the issuance of $100 million in subordinated notes by Bay View Bank (all-in
cost of approximately 9.5%).
10. Pro forma adjustment reflects the amortization associated with the $206
million in estimated goodwill generated from the merger, excluding the
$22.5 million remaining potential obligation under the "earn-out" agreement
entered into between FMAC and Bankers Mutual in connection with FMAC's 1998
acquisition of Bankers Mutual, net of the amortization associated with
FMAC's pre-acquisition goodwill written off as of March 31, 1999. The
goodwill is assumed to be amortized on a straight-line basis over 15 years.
11. Pro forma adjustment reflects the income tax benefit associated with the
pro forma adjustments.
12. The pro forma net income and earnings per share amounts reflected herein do
not purport to be indicative of the actual results that would have been
achieved had the merger and the issuance of subordinated notes in fact
occurred on the dates indicated, nor do they purport to be indicative of
future results of operations. We incurred post-combination integration
costs as a result of combining our companies which were not reflected in
the pro forma information. FMAC's historical results for the year ended
December 31, 1998 included $34.0 million in hedge losses incurred primarily
during the third and fourth quarters of 1998.
27
<PAGE>
MANAGEMENT
The following table sets forth information regarding our directors and
principal executive officers. Approximately one-third of our directors are
elected annually. Directors are elected to serve for a three-year period or
until their respective successors have been elected and qualified. All
executive officers serve at the discretion of the board of directors.
Director
or
Officer
Name Age(1) Positions Held With Bay View Since(2)
- ---------------------- -------- --------------------------------------- --------
John R. McKean 69 Chairman of the Board 1984
Paula R. Collins 49 Director 1993
Thomas M. Foster 57 Director 1993
Robert M. Greber 61 Director 1996
George H. Krauss 57 Director 1998
Stephen T. McLin 52 Director 1998
Edward H. Sondker 51 Director, President and Chief Executive 1995
Officer
W. Blake Winchell 46 Director 1996
Richard E. Arnold 58 Executive Vice President and Director 1997
of Sales and Banking Administration
James A. Badame, Jr. 56 President, Bay View Acceptance 1998
Corporation
John N. Buckley 41 Executive Vice President and 1994
Chief Credit Administrator
Matthew L. Carpenter 39 President and Chief Executive Officer, 1997
Bay View Commercial Finance Group
Robert J. Flax 50 Executive Vice President, General 1985
Counsel and Secretary
David A. Heaberlin 49 Executive Vice President and Chief 1995
Financial Officer
Scott H. Ray 34 Senior Vice President and Controller 1998
Ronald L. Reed 52 Executive Vice President, Director of 1997
MIS and Loan Servicing
Carolyn Williams-Goldman 37 Executive Vice President and 1996
Director of Administration
- ------------------------
(1) As of June 30, 1999.
(2) Includes service with Bay View Bank.
The business experience of each of the directors and executive officers is as
follows:
John R. McKean. Mr. McKean has served as Chairman of the Board of Bay View
Capital Corporation and Bay View Bank since January 1994. Mr. McKean is the
President of John R. McKean & Co. (CPAs), San Francisco, California.
Paula R. Collins. Ms. Collins is a principal of The WDG Companies, San
Francisco, California, a real estate development firm she founded in 1982, and
Chief Executive Officer of WDG Ventures, Inc., a subsidiary of The WDG
Companies.
28
<PAGE>
Thomas M. Foster. Mr. Foster is an independent financial consultant with over 20
years of banking and financial experience. Mr. Foster was the President of
Aircraft Technical Publishers, Brisbane, California, an aircraft maintenance
library services company, from February 1989 until August 1992.
Robert M. Greber. Mr. Greber is Chairman of the Board and Chief Executive
Officer of the Pacific Exchange. Mr. Greber is also a director of Sonic
Solutions, Inc., Novato, California.
George H. Krauss. Mr. Krauss is an attorney and serves as of counsel to Kutak
Rock, a national law firm headquartered in Omaha, Nebraska. Mr. Krauss has
practiced law with Kutak Rock since 1972 and served as managing partner of the
firm from 1983 to 1993. In 1996, Mr. Krauss became an independent business
consultant to America First Companies. Mr. Krauss also serves as a director of
Gateway 2000, Inc., a computer manufacturing firm, and of America First Mortgage
Investments, Inc.
Stephen T. McLin. Mr. McLin has been President and Chief Executive Officer of
America First Financial Corporation, San Francisco, California, since 1987.
America First offers merger and acquisition advice to the financial services
industry. Prior to joining America First, Mr. McLin was Executive Vice President
of BankAmerica Corporation and Bank of America NT&SA. Mr. McLin also serves as a
director of Charles Schwab & Co., Inc.
Edward H. Sondker. Mr. Sondker has served as President and Chief Executive
Officer of Bay View Capital Corporation and Bay View Bank since August 1995.
Prior to joining Bay View, he was President and Chief Executive Officer of
Independence One Bank of California from October 1990 until June 1995. Mr.
Sondker is a director of Sunstone Hotel Investors, Inc., San Clemente,
California.
W. Blake Winchell. Mr. Winchell is Managing Director of Fremont Ventures, LLC, a
venture investment group. In 1996, Mr. Winchell served as Chief Executive
Officer of Kleer-Vu Industries and prior thereto he was a General Partner of the
Channel Investment Group.
Richard E. Arnold. Mr. Arnold, Executive Vice President, has served as Director
of Sales and Banking Administration since 1997. Prior to joining Bay View, he
served as an Executive Vice President of First Interstate Bank and was
responsible for all branch banking activities in northern California. Prior to
joining First Interstate Bank in 1990, he held executive and management
positions at Security Pacific Bank in a career that spanned over 30 years.
James A. Badame, Jr. Mr. Badame has served as President of Bay View Acceptance
Corporation since 1998. Prior to joining Bay View Acceptance Corporation, he
served as Director of Operations for Triad Financial Corporation. He has over 25
years of experience in the indirect automobile financing business during which
time he has held management and executive positions with Bank of America and
Marine Midland Banks. Mr. Badame has also held sales, business and general
management positions in the retail automobile industry.
John N. Buckley. Mr. Buckley, Executive Vice President, has served as Chief
Credit Administrator since 1995 and Manager of Credit Administration and Asset
Management since 1994. He joined us in September 1993. Previously, he served at
Bank of America in various capacities from 1985 to 1993. His last position was
Vice President and Regional Credit Administrator for the Real Estate Industries
Division at Bank of America.
Matthew L. Carpenter. Mr. Carpenter has served as President and Chief Executive
Officer of Bay View Commercial Finance Group since January 1999. Prior to
becoming President and Chief Executive Officer, Mr. Carpenter served as Chief
Operating Officer of Bay View Commercial Finance Group from the time of its
acquisition by Bay View on March 17, 1997. Prior to the acquisition, Mr.
Carpenter served as Chief Financial Officer of Concord Growth Corporation, the
predecessor of Bay View Commercial Finance Group, from 1991 until March 17,
1997, and as President of EXXE Data Corporation, the holding company of Concord
Growth Corporation, from 1993 until March 17, 1997.
29
<PAGE>
Robert J. Flax. Mr. Flax, Executive Vice President, has served us in various
capacities since joining us in 1980, including as Bay View Bank's General
Counsel since 1985 and as General Counsel and Corporate Secretary of Bay View
Capital Corporation since its formation in 1989. Before joining us, he was a
trial attorney in private practice in San Francisco from 1976 to 1980.
David A. Heaberlin. Mr. Heaberlin, Executive Vice President, has served as Chief
Financial Officer of Bay View Capital Corporation since 1995 and as Chief
Operating Officer of Bay View Bank since 1997. Previously, he served as Senior
Vice President and Chief Financial Officer for First California/Mortgage Service
America. During 1993 and 1994, he was Executive Vice President and Treasurer of
ITT Residential Capital Corporation. Prior to his service with ITT, he was a
financial executive for various entities including Bowery Bank, Exchange
National Bank of Chicago, Financial Corporation of Santa Barbara, and Numerica
Financial. He has over 20 years experience in commercial banking, savings banks
and the financial services industry. Mr. Heaberlin is a Certified Public
Accountant.
Scott H. Ray. Mr. Ray, Senior Vice President, has served as Controller of Bay
View Capital Corporation and as Chief Financial Officer of Bay View Bank since
1998. Previously, he served as Executive Vice President and Chief Financial
Officer for Silicon Valley Bancshares. Mr. Ray is a Certified Public Accountant
and has 14 years of professional experience in both public accounting and
private industry, including 12 years affiliated with the financial services
industry.
Ronald L. Reed. Mr. Reed, Executive Vice President, has served as Director of
Management Information Systems and Loan Servicing since 1997. Previously, he
served as Chief Information Officer for Weyerhaeuser and WMC Mortgage
Corporation. He has over 30 years of corporate management, information
technology and servicing experience, including senior management positions with
Technology Management Corporation, American Savings Bank and Home Savings of
America/HF Ahmanson.
Carolyn Williams-Goldman. Ms. Williams-Goldman, Executive Vice President, has
served as Director of Administration since 1998 and Director of Human Resources
since 1995. She joined us as Associate Counsel in 1994. Previously, she served
as Vice President and Counsel at First Nationwide Bank in San Francisco. Prior
to her service with First Nationwide Bank, she was an Associate in the Business
Law and Banking Practice Groups of Winthrop, Stimson, Putnam & Roberts. She is a
member of the State Bars of California and New York.
SELLING STOCKHOLDER
The table below sets forth certain information about the selling stockholder,
FMAX Holdings, LLC, and its beneficial ownership of shares of our common stock.
Except as specified in the table below, neither the selling stockholder nor any
of its affiliates hold any positions, or offices or had any other material
relationships with us, or any of our predecessors or affiliates, during the past
three years.
Shares
Beneficially Owned
Prior to the
Offering Shares
-------------------- Shares to be Beneficially Owned
Number Percentage Sold After the Offering
-------- ----------- ------------- ------------------
FMAX Holdings, LLC
23350 Hawthorne Boulevard
Building 1, Suite 240
Torrance, California 90505 % None
All of the shares that may be sold hereunder were originally issued by us in
connection with our acquisition of FMAC. FMAX Holdings is a subsidiary of
Imperial Credit Industries, Inc. The shares are being registered by us pursuant
to an election and registration agreement with the selling stockholder, dated as
of June 27, 1999. Under the terms of that agreement, we have agreed to pay the
fees and expenses incurred in connection with the
30
<PAGE>
registration, except that we will not pay any underwriting discount and fees and
disbursements of third parties incurred directly by the selling stockholder
attributable to the sale of the shares.
UNDERWRITING
The underwriters named below have agreed to buy, subject to the terms of the
purchase agreement, the number of shares listed opposite their names below. The
underwriters are committed to purchase and pay for all of the shares if any are
purchased, other than those shares covered by the over-allotment option
described below.
Number
Underwriters of Shares
U.S. Bancorp Piper Jaffray.........................................
Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated.....................................................
PaineWebber Incorporated...........................................
---------
Total............................................................ 2,792,955
=========
The underwriters have advised us and the selling stockholder that they propose
to offer the shares to the public at $ per share. The underwriters propose to
offer the shares to certain dealers at the same price less a concession of not
more than $ per share. The underwriters may allow, and the dealers may reallow,
a concession of not more than $ per share on sales to certain other brokers and
dealers. After the offering, these figures may be changed by the
representatives.
We have granted to the underwriters an option to purchase up to 418,943 shares
of common stock from us at the same price to the public, and with the same
underwriting discount, as set forth in the table on the cover page of this
prospectus. The underwriters may exercise this option any time during the 30-day
period after the date of this prospectus, but only to cover over-allotments, if
any. To the extent the underwriters exercise the option, each underwriter will
become obligated, subject to certain conditions, to purchase approximately the
same percentage of the additional shares as it was obligated to purchase under
the purchase agreement.
The following table shows the underwriting fees to be paid to the underwriters
in connection with this offering. These amounts are shown assuming both no
exercise and full exercise of the over-allotment option.
No Exercise Full Exercise
Per share........................................ $ $
Total............................................ $ $
We and the selling stockholder have agreed to indemnify the underwriters against
certain liabilities, including civil liabilities under the Securities Act of
1933, or to contribute to payments that the underwriters may be required to make
in respect of those liabilities.
We and each of our directors and executive officers have agreed to certain
restrictions on our ability to sell additional shares of our common stock for a
period of 90 days after the date of this prospectus. We and each of our
directors and executive officers have agreed not to directly or indirectly offer
for sale, sell, contract to sell, grant any option for the sale of, or otherwise
issue or dispose of, any shares of common stock, options or warrants to acquire
shares of common stock, or any related security or instrument, without the prior
written consent of U.S. Bancorp Piper Jaffray. The agreements provide exceptions
for (1) sales to underwriters pursuant to the purchase agreement, (2) our sales
in connection with the exercise of options granted and the granting of options
to purchase shares under our existing stock option plans and (3) other
exceptions.
31
<PAGE>
To facilitate the offering, the underwriters may engage in transactions that
stabilize, maintain or otherwise affect the price of the common stock during and
after the offering. Specifically, the underwriters may over-allot or otherwise
create a short position in the common stock for their own account by selling
more shares of common stock than have been sold to them by the selling
stockholder. The underwriters may elect to cover any such short position by
purchasing shares of common stock in the open market or by exercising the
over-allotment option granted to the underwriters. In addition, the underwriters
may stabilize or maintain the price of the common stock by bidding for or
purchasing shares of common stock in the open market and may impose penalty
bids. If penalty bids are imposed, selling concessions allowed to syndicate
members or other broker-dealers participating in the offering are reclaimed if
shares of common stock previously distributed in the offering are repurchased,
whether in connection with stabilization transactions or otherwise. The effect
of these transactions may be to stabilize or maintain the market price of the
common stock at a level above that which might otherwise prevail in the open
market. The imposition of a penalty bid may also affect the price of the common
stock to the extent that it discourages resales of the common stock. The
magnitude or effect of any stabilization or other transactions is uncertain.
These transactions may be effected on the New York Stock Exchange or otherwise
and, if commenced, may be discontinued at any time.
U.S. Bancorp Piper Jaffray and Dain Rauscher Wessels served as managing
underwriters of our offering of capital securities in December 1998 and managing
underwriters of Bay View Bank's offering of its subordinated notes, completed in
the third quarter of 1999.
LEGAL MATTERS
Certain legal matters, including the legality of the shares of common stock
being offered hereby, will be passed upon for Bay View by Silver, Freedman &
Taff, L.L.P., Washington, D.C. Certain legal matters related to this offering
will be passed upon for the underwriters by Gibson, Dunn & Crutcher LLP, San
Francisco, California.
EXPERTS
The consolidated financial statements of Bay View as of December 31, 1998, and
for the year then ended, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Bay View as of December 31, 1997, and
for the years ended December 31, 1997 and 1996, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report dated January 26,
1998, which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
The consolidated financial statements of FMAC as of December 31, 1998 and 1997,
and for each of the years in the three-year period ended December 31, 1998, have
been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file, and before its acquisition by us FMAC filed, annual, quarterly and
special reports, proxy statements and other information with the SEC. The SEC
filings are available to the public over the Internet at the SEC's web site at
http//www.sec.gov. You may also read and copy any document filed with the SEC at
its public reference facilities at 450 Fifth Street, N.W., Washington, D.C.
20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You
can also obtain copies of the documents at prescribed rates by writing to the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference facilities.
32
<PAGE>
We "incorporate by reference" into this prospectus the information we file and
FMAC filed with the SEC, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus and information that we file
subsequently with the SEC will automatically update this prospectus. We
incorporate by reference the documents listed below and any filings we make with
the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act
of 1934 after initial filing of the registration statement that contains this
prospectus and prior to the time that we sell all the securities offered by this
prospectus.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933 to register the shares of common stock discussed in this
document. As permitted by the rules and regulations of the SEC, this prospectus
does not contain all the information set forth in the registration statement and
the exhibits thereto. Such additional information may be inspected and copied as
set forth above.
All of the documents filed with the SEC by Bay View (File No. 000-14879) and
FMAC (File No. 000-23283) pursuant to the Securities Exchange Act of 1934 since
the end of its fiscal year ended December 31, 1998 through the termination of
this offering are incorporated by reference in this document. These documents
include the following:
o Bay View's Annual Report on Form 10-K for the year ended December 31,
1998, as amended on Form 10-K/A filed with the SEC on July 13, 1999.
o Bay View's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999, as amended on Form 10-Q/A filed with the SEC on July 13,
1999.
o Bay View's Current Reports on Form 8-K filed March 12 and March 19,
1999.
o FMAC's Annual Report on Form 10-K for the year ended December 31,
1998, as amended on Form 10-K/A filed with the SEC on April 22, 1999.
o FMAC's Quarterly Report on Form 10-Q for the quarter ended March 31,
1999.
o FMAC's Current Report on Form 8-K filed March 12, 1999.
This document also incorporates by reference the description of our common stock
and the associated rights under our stockholder protection rights agreement set
forth under "Description of Capital Stock-Common Stock," "Section 203 of the
Delaware Law" and "Certain Provisions of the Amended and Restated Certificate of
Incorporation and Bylaws" contained in our prospectus dated October 19, 1998,
filed pursuant to Rule 424(b) of the Securities Act together with a prospectus
supplement on December 16, 1998, and incorporated in our registration statement
on Form 8-A dated March 3, 1999.
You may request a copy of these filings (other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing)
at no cost, by writing to or telephoning us at the following address:
Bay View Capital Corporation
1840 Gateway Drive
San Mateo, California 94404
Attention: Robert J. Flax
(650) 312-7200
33
<PAGE>
2,792,955 Shares
BAY VIEW CAPITAL CORPORATION
Common Stock
[LOGO]
PROSPECTUS
U.S. Bancorp Piper Jaffray
Dain Rauscher Wessels
a division of Dain Rauscher Incorporated
PaineWebber Incorporated
July , 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses in connection with
the sale and distribution of the securities being registered hereby, other than
underwriting discounts and commissions. All amounts are estimates except the SEC
registration fee.
Amount to be Paid
-----------------
SEC Registration fee........................................... $ 15,413
Blue sky fees and expenses..................................... 5,000
Printing expenses.............................................. 27,500
Postage........................................................ 5,000
Legal fees and expenses........................................ 175,000
Accounting fees and expenses................................... 95,000
Transfer agent and registrar fees.............................. 5,000
Miscellaneous.................................................. $ 22,087
------------
TOTAL................................................. $ 350,000
============
We will bear all of the foregoing fees and expenses.
Item 15. Indemnification of Directors and Officers
Section 9 of Bay View's Restated Certificate of Incorporation provides for
indemnification of any director or officer of Bay View against any and all
expense, liability and loss (including attorneys' fees, judgments, fines and
amounts paid in settlement) reasonably incurred or suffered by him or her in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, to the fullest extent
authorized by Delaware law, subject to certain limitations set forth in the
Restated Certificate of Incorporation. Section 9 also authorizes Bay View to
purchase insurance on behalf of directors and officers against liabilities
incurred in their capacities as such.
Section 145 of the General Corporation Law of the State of Delaware
authorizes a corporation's board of directors to grant indemnity under certain
circumstances to directors and officers, when made, or threatened to be made,
parties to certain proceedings by reason of such status with the corporation,
against judgments, fines, settlements and expenses, including attorneys' fees.
In addition, under certain circumstances such persons may be indemnified against
expenses actually and reasonably incurred in defense of a proceeding by or on
behalf of the corporation. Similarly, the corporation, under certain
circumstances, is authorized to indemnify directors and officers of other
corporations or enterprises who are serving as such at the request of the
corporation, when such persons are made, or threatened to be made, parties to
certain proceedings by reason of such status, against judgments, fines,
settlements and expenses, including attorneys' fees; and under certain
circumstances, such persons may be indemnified against expenses actually and
reasonably incurred in connection with the defense or settlement of a proceeding
by or in the name of such other corporation or enterprise.
Indemnification is permitted where such person acted in good faith, and in
a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, such person had no reasonable cause to believe his or her conduct
was unlawful.
Unless ordered by a court, indemnification may be made only following a
determination that such indemnification is permissible because the person being
indemnified has met the requisite standard of conduct. Such
<PAGE>
determination may be made (i) by the corporation's board of directors by a
majority vote of directors not at the time parties to such proceeding, even if
less than a quorum; or (ii) by a committee of such directors designated by
majority vote of such directors, even if less than a quorum; or (iii) if there
are no such directors, or if such directors so direct, by independent legal
counsel in a written opinion; or (iv) by the stockholders.
Section 145 also permits expenses incurred by directors and officers in
defending a proceeding to be paid by the corporation in advance of the final
disposition of such proceedings upon the receipt of an undertaking by the
director or officer to repay such amount if it is ultimately determined that he
or she is not entitled to be indemnified by the corporation against such
expenses.
Under a directors' and officers' liability insurance policy, directors and
officers of Bay View are insured against certain liabilities, including certain
liabilities under the Securities Act of 1933.
Item 16. Exhibits
The exhibits listed on the accompanying Index to Exhibits are filed as part
of this Registration Statement.
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of securities registered hereby, a post-effective
amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement;
provided, however, that the undertakings set forth in
paragraph (i) and (ii) above do not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned registrant hereby understands that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934
(and where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to
<PAGE>
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrants pursuant to the
foregoing provisions, or otherwise, the registrants have been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants
will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the questions whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of the
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Mateo, State of California, on July 19, 1999.
BAY VIEW CAPITAL CORPORATION
By:/S/ EDWARD H. SONDKER
--------------------------------
Edward H. Sondker
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Edward H. Sondker and Robert J. Flax, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and re-substitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-facts and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all said
attorney-in-facts and agents or their substitutes or substitute may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ EDWARD H. SONDKER Date: July 19, 1999
- ------------------------------------- --------------
Edward H. Sondker
President, Chief Executive Officer
and Director
(Principal Executive Officer)
/s/ DAVID A. HEABERLIN Date: July 19, 1999
- ------------------------------------- --------------
David A. Heaberlin
Executive Vice President and Chief Financial
Officer
(Principal Financial Officer)
/s/ SCOTT H. RAY Date: July 19, 1999
- ------------------------------------- --------------
Scott H. Ray
Senior Vice President and Controller
(Principal Accounting Officer)
- ------------------------------------- --------------
John R. McKean, Director
<PAGE>
- ------------------------------------- --------------
Stephen T. McLin, Director
/s/ W. BLAKE WINCHELL Date: July 19, 1999
- ------------------------------------- --------------
W. Blake Winchell, Director
/s/ ROBERT M. GREBER Date: July 19, 1999
- ------------------------------------- --------------
Robert M. Greber, Director
/s/ PAULA R. COLLINS Date: July 19, 1999
- ------------------------------------- --------------
Paula R. Collins, Director
Date:
- ------------------------------------- --------------
Thomas M. Foster, Director
/s/ GEORGE H. KRAUSS Date: July 19, 1999
- ------------------------------------- --------------
George H. Krauss, Director
<PAGE>
INDEX TO EXHIBITS
The following exhibits are filed in connection with the Registration
Statement of Bay View Capital Corporation on Form S-3, pursuant to the
requirements of Item 601 of Regulation S-K:
Exhibit
Number Description
- ------ ------------
1 Form of Underwriting Agreement*
4.1 Restated Certificate of Incorporation of the Company, together with
Certificate of Amendment of Restated Certificate of Incorporation
(incorporated by reference to the Company's Registration Statement on Form
S-3 filed on June 20, 1997 (No. 333-29757))
4.2 By-Laws of the Company (incorporated by reference to the Company's Current
Report on Form 8-K filed on January 10, 1994 (File No. 0-17901))
4.3 Stockholder Protection Rights Agreement (the "Rights Agreement") dated as
of July 31, 1990 between the Company and ChaseMellon Shareholder Services,
L.L.C., as successor rights agent (incorporated by reference to the
Company's Registration Statement on Form 8 filed on March 9, 1993
(Amendment No. 2 to the Company's Registration Statement on Form 8-A filed
on August 6, 1990 (File No. 0-17901)))
4.4 First Amendment to the Rights Agreement dated February 26, 1993
(incorporated by reference to the Company's Registration Statement on Form
8 filed on March 9, 1993 (Amendment No. 2 to the Company's Registration
Statement on Form 8-A filed on August 6, 1990 (File No. 0-17901))) 4.5
Second Amendment to the Rights Agreement dated October 10, 1997
(incorporated by reference to the Company's Registration Statement on Form
8-A12G/A filed on October 15, 1997 (Amendment No. 3 to the Company's
Registration Statement on Form 8-A filed on August 6, 1990 (File No.
0-17901)))
4.6 Third Amendment to the Rights Agreement (incorporated by reference to the
Company's Registration Statement on Form 8-A12G/A filed on September 29,
1998 (Amendment No. 4 to the Company's Registration Statement on Form 8-A
filed on August 6, 1990 (File No. 0-17901)))
4.7 Specimen Form of common stock certificate of the Company (incorporated by
reference to the Company's Registration Statement on Form S-8 filed on July
26, 1991 (File No. 33-41924))
4.8 Form of Rights Certificate and Election to Exercise pursuant to Rights
Agreement (incorporated by reference to the Company's Registration
Statement on Form 8 filed on March 9, 1993 (Amendment No. 2 to the
Company's Registration Statement on Form 8-A filed on August 6, 1990 (File
No. 0-17901)))
5 Opinion and Consent of Silver, Freedman & Taff, L.L.P.
23.1 Consent of KPMG LLP with respect to Bay View
23.2 Consent of KPMG LLP with respect to FMAC
23.3 Consent of Deloitte & Touche LLP
23.4 Consent of Silver, Freedman & Taff, L.L.P. (included in Exhibit 5)
24 Power of attorney (included on signature page)
- ------------------
* To be filed by amendment.
EXHIBIT 5
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W., 7th Floor
Washington, DC 20005-3934
Telephone:(202)414-6100 Facsimile: (202)682-0354
July 19, 1999
Board of Directors
Bay View Capital Corporation
1840 Gateway Drive
San Mateo, California 94404
Members of the Board:
We have acted as counsel to Bay View Capital Corporation (the
"Corporation") in connection with the preparation and filing with the Securities
and Exchange Commission of a registration statement on Form S-3 under the
Securities Act of 1933 (the "Registration Statement") relating to the
registration of 2,792,955 shares of the Corporation's common stock to be offered
by the selling stockholder described in the Registration Statement (the
"Secondary Shares"). In this connection, we have reviewed the Corporation's
Restated Certificate of Incorporation, its Bylaws and certain resolutions of its
Board of Directors.
Based upon the foregoing, it is our opinion that the Secondary Shares will
be, when and if issued, validly issued, fully paid and nonassessable shares of
common stock of the Corporation.
We hereby consent to the inclusion of our opinion as Exhibit 5 of the
Registration Statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/S/ SILVER, FREEDMAN & TAFF, L.L.P.
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SILVER, FREEDMAN & TAFF, L.L.P.
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors
Bay View Capital Corporation:
We consent to the use of our report relating to the consolidated statement of
financial condition of Bay View Capital Corporation and subsidiaries as of
December 31, 1998, and the related consolidated statements of income and
comprehensive income, stockholders' equity and cash flows for the year then
ended incorporated herein by reference and to the reference to our firm under
the heading "Experts" in the Prospectus.
KPMG LLP
San Francisco, California
July 19, 1999
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EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Franchise Mortgage Corporation
We consent to the incorporation by reference in the registration statement on
Form S-3 of Bay View Capital Corporation of our report dated January 19, 1999,
except as to notes 22, 23, and 20 to the consolidated financial statements,
which are as of February 16, 1999, March 10, 1999 and March 29, 1999,
respectively, with respect to the consolidated balance sheets of Franchise
Mortagage Acceptance Company as of December 31, 1998 and 1997, and the related
consolidated statements of income, changes in stockholders' or members' equity
and cash flows for each of the years in the three-year period ended December 31,
1998, which report appears in the December 31, 1998 annual report on Form 10-K
of Franchise Mortgage Acceptance Company.
KPMG LLP
Los Angeles, California
July 16, 1999
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EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Bay View Capital Corporation on Form S-3 of our report dated January 26, 1998
appearing in the Annual Report on Form 10-K/A of Bay View Capital Corporation
for the year ended December 31, 1998 and to the reference to us under the
heading "Experts" in the Prospectus, which is a part of this Registration
Statement.
DELOITTE & TOUCHE LLP
San Francisco, California
July 19, 1999
