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Bay View Capital Corporation Announces Second Quarter Results
SAN MATEO, Calif., July 26 /PRNewswire-FirstCall/ -- Bay View Capital
Corporation (the "Company") (NYSE:BVC) today reported a second quarter 2005 net
loss of $1.5 million, or $0.23 per diluted share, compared to a first quarter
2005 net loss of $334 thousand, or $0.05 per diluted share, and a second
quarter 2004 net loss of $177 thousand, or $0.03 per diluted share. Net loss
for the six months ended June 30, 2005 was $1.9 million, or $0.29 per diluted
share, compared to $1.1 million, or $0.16 per diluted share, for the six months
ended June 30, 2004. Per share data reflects a 1-for-10 reverse stock split
that was effective June 30, 2004.
Second Quarter Results of Operations
Record loan purchase volumes by Bay View Acceptance Corporation ("BVAC"), the
Company's auto finance subsidiary, increased net interest income and reduced
noninterest expense highlighted the second quarter results. However,
intermediate and long-term interest rates, which had been steadily rising
through the first quarter of 2005, reversed course in the second quarter. This
decline in rates resulted in an unrealized mark-to-market loss of $1.1 million
in the Company's interest rate derivatives for the second quarter of 2005. In
addition, to support its growing portfolio of auto contracts, the Company
recorded a provision for credit losses of $1.8 million during the second
quarter of 2005 compared to $0.8 million for the first quarter of 2005. The
Company's auto contracts held-for-investment increased by $106.5 million during
the second quarter due to the record loan purchases.
Net interest income increased to $4.0 million for the second quarter of 2005
from $3.4 million for the first quarter of 2005 and $3.0 million for the second
quarter of 2004 on $180.6 million of growth in average earning assets for the
first six months of 2005. Although net interest income expanded during the
quarter, net interest margin decreased as floating rate funding costs on BVAC's
warehouse credit facility rose more rapidly than yields on purchased auto
contracts. Interest expense for the second quarter of 2005 also reflected the
benefit of $0.6 million of savings in connection with early redemption of the
remaining $22.0 million of Capital Securities in mid-2004.
Noninterest income was $1.1 million for the second quarter of 2005 compared to
$4.1 million for the first quarter of 2005 and $6.2 million for the second
quarter of 2004, largely due to the aforementioned loss on the Company's
derivative instruments and reduced leasing income as that portfolio runs off.
The Company's interest rate derivatives, designated as fair value hedges, have
produced quarter-to-quarter fluctuations in noninterest income. During the
second quarter of 2005, the Company recorded $1.1 million of unrealized loss on
its interest rate derivatives compared to $1.5 million of unrealized gain in the
first quarter of 2005 and $2.7 million of unrealized gain in the second quarter
of 2004. Leasing income declined by $1.8 million compared to the second
quarter of 2004.
Noninterest expense decreased to $5.8 million for the second quarter of 2005
from $7.1 million for the first quarter of 2005 and $9.0 million for the second
quarter of 2004 primarily due to lower leasing expense on the Company's
liquidating auto lease portfolio.
Financial Condition
Total assets increased to $605.2 million at June 30, 2005 from $423.3 million
at December 31, 2004, primarily as a result of $173.6 million of growth in auto
contract receivables. During the first half of 2005, the Company liquidated an
additional $8.6 million of its remaining auto lease portfolio, reducing the
balance at June 30, 2005 to $1.4 million. At June 30, 2005, the Company had
tax assets of $18.4 million, consisting of net tax assets of $39.9 million less
a valuation allowance of $21.5 million. Outstanding borrowings at June 30, 2005
included $284.1 million of outstandings on BVAC's warehouse credit facility and
other short-term borrowings, and $200.5 million of securitization notes payable.
Bay View Acceptance Corporation
BVAC acquires retail auto installment contracts from a network of approximately
7,000 manufacturer-franchised and independent auto dealers in 32 states and has
positioned itself in the market as a lender for well-qualified borrowers.
While BVAC competes with other lenders for good credit quality auto loans, it
offers specialized products including extended term financing and larger
advances for good credit quality customers and uses these products to establish
its relationships with automobile dealers.
BVAC's purchases of auto contracts continued to grow, producing a new record
for quarterly volume due largely to the success of its efforts to broaden its
market for good credit quality customers. Second quarter purchases totaled
$144.8 million, a 26% increase over first quarter 2005 purchases of $114.9
million and a 91% increase over second quarter 2004 purchases of $75.9 million.
BVAC's second quarter 2005 net loss was $864 thousand compared to first quarter
2005 net income of $788 thousand and second quarter 2004 net income of $1.5
million. As previously noted, the second quarter 2005 results were impacted by
the $1.1 million unrealized loss on interest rate derivatives and increased
provision for credit losses. BVAC's second quarter 2005 net interest income
increased to $3.9 million from $3.3 million for the first quarter of 2005 and
$3.4 million for the second quarter of 2004 as a result of growth in earning
assets offset, in part, by decreased net interest margin.
For the second quarter of 2005, BVAC's purchased contract rate averaged 8.88%
compared to 8.30% for the first quarter of 2005 and 7.86% for the second
quarter of 2004 -- an increase of 102 basis points year-over-year. FICO credit
scores averaged 734 for both second quarter 2005 and second quarter 2004
production. Net chargeoffs improved to an annualized rate of 0.92% of managed
contracts in the second quarter of 2005 from 1.11% in the first quarter of 2005
and 1.21% in the second quarter of 2004.
On June 20, 2005, BVAC secured a $450.0 million floating-rate, revolving
warehouse credit facility to replace a maturing $350.0 million facility
obtained in 2004. The facility is for a term of 364 days. The $100.0 million
increase in borrowing capacity provides BVAC with additional liquidity and
greater flexibility to manage its warehouse inventory, allowing BVAC to
maintain additional auto contracts in its warehouse inventory and increase net
interest income.
At June 30, 2005, BVAC was servicing 33,500 auto contracts with an aggregate
outstanding balance of $683.9 million compared to 29,100 auto contracts with an
aggregate outstanding balance of $561.6 million at June 30, 2004.
Other
As discussed in the Company's first quarter Form 10-Q, filed with the
Securities and Exchange Commission on May 10, 2005, the Company indicated that
it would not make a first quarter cash distribution to stockholders while its
Board of Directors was evaluating whether it could better maximize stockholder
value with an acquisition. The Company's Board is continuing to evaluate
strategic alternatives including a possible merger or the restoration of
capital distributions to stockholders.
The Company will host a conference call at 2:00 p.m. PDT on July 27, 2005 to
discuss its financial results. Analysts, media representatives and the public
are invited to listen to this discussion by calling 1-888-793-6954 and
referencing the password "BVC." An audio replay of this conference call will
be available through Friday, August 26, 2005 and can be accessed by dialing
1-866-396-6268.
Bay View Capital Corporation is a financial services company headquartered in
San Mateo, California. Its common stock is listed on the NYSE: BVC. For more
information, visit the Company's website at http://www.bayviewcapital.com/.
Forward-Looking Statements
All statements contained in this release that are not historic facts are based
on current expectations. Such statements are forward-looking statements (as
defined in the Private Securities Litigation Reform Act of 1995) in nature and
involve a number of risks and uncertainties. Although the Company currently
believes that the assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could prove inaccurate and, therefore, there
can be no assurance that the results contemplated by the forward-looking
statements will be realized. For information regarding factors that could
cause the results contemplated by the forward-looking statements to differ from
expectations, such as the inability to achieve the financial goals of both the
Company's plan of partial liquidation, including any financial goals related to
contemplated asset resolution, and the Company's plan for the continuing
operation of the auto business, including the inability to use net operating
loss carryforwards that the Company currently has, please refer to the
Company's Reports on Forms 10-K and 10-Q filed with the Securities and Exchange
Commission. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such statements
should not be regarded as a representation by the Company or any other person.
The Company disclaims any obligation to update such forward-looking statements
or to announce publicly the results of any revisions to any of the
forward-looking statements included herein to reflect future events or
developments.
Bay View Capital Corporation
Consolidated Statements of Financial Condition
June 30, December 31,
2005 2004
(Unaudited)
(Dollars in thousands)
ASSETS
Cash $9,361 $4,447
Restricted cash 39,359 26,845
Retained interests in securitizations
available-for-sale 21,244 22,636
Auto installment contracts and
loans held-for-sale:
Auto installment contracts 101,545 75,021
Other loans -- 902
Auto installment contracts
held-for-investment, net 197,185 252,863
Securitized auto installment
contracts held-for-investment, net 202,743 --
Investment in operating lease assets, net 1,426 10,041
Real estate owned, net 2,654 3,379
Premises and equipment, net 683 733
Repossessed vehicles 296 439
Current and deferred income taxes, net 18,424 16,977
Goodwill 1,846 1,846
Other assets 8,441 7,199
Total assets $605,207 $423,328
LIABILITIES AND STOCKHOLDERS' EQUITY
Borrowings:
Warehouse credit facility and
other short-term borrowings $284,006 $298,755
Securitization notes payable 200,503 --
Other borrowings 94 1,895
Other liabilities 9,762 9,629
Liquidation reserve 8,291 8,856
Total liabilities 502,656 319,135
Stockholders' equity:
Common stock ($.01 par value);
authorized, 80,000,000 shares;
issued, 2005 - 6,597,303 shares;
2004 - 6,597,303 shares;
outstanding, 2005 - 6,595,886 shares;
2004 - 6,593,860 shares 66 66
Additional paid-in capital 109,243 109,578
Accumulated deficit (6,465) (4,585)
Treasury stock, at cost;
2005 - 1,417 shares; 2004 - 3,443 shares (252) (587)
Accumulated other comprehensive loss (41) (279)
Total stockholders' equity 102,551 104,193
Total liabilities and stockholders' equity $605,207 $423,328
Bay View Capital Corporation
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
For the Three Months Ended
June 30, March 31, June 30,
2005 2005 2004
(In thousands, except per share amounts)
Interest income:
Interest on auto installment
contracts and other loans $8,276 $6,350 $4,508
Interest on short-term
investments and retained
interests in securitizations 844 721 704
9,120 7,071 5,212
Interest expense:
Interest on warehouse
credit facility 2,608 2,194 1,040
Interest on securitization
notes payable 2,440 1,260 --
Other interest expense 58 224 1,123
5,106 3,678 2,163
Net interest income 4,014 3,393 3,049
Provision for credit losses 1,793 837 521
Net interest income after
provision for credit losses 2,221 2,556 2,528
Noninterest income:
Leasing income 1,843 2,070 3,596
Loan servicing income 472 552 852
Loan fees 193 183 224
Unrealized gain (loss) on
derivative instruments (1,106) 1,480 2,717
Loss on auto installment
contracts and other loans
held-for-sale, and retained
interests in
securitizations, net (585) (449) (1,340)
Other, net 279 242 115
1,096 4,078 6,164
Noninterest expense:
General and administrative 5,630 6,606 6,146
Leasing expense 156 515 2,848
Real estate owned, net 24 4 (11)
5,810 7,125 8,983
Loss before income tax benefit (2,493) (491) (291)
Income tax benefit (947) (157) (114)
Net loss $(1,546) $(334) $(177)
Basic loss per share $(0.23) $(0.05) $(0.03)
Diluted loss per share $(0.23) $(0.05) $(0.03)
Weighted-average basic
shares outstanding 6,596 6,594 6,591
Weighted-average diluted
shares outstanding 6,596 6,594 6,591
Net loss $(1,546) $(334) $(177)
Other comprehensive income
(loss), net of tax:
Change in unrealized gain
(loss) on securities
available-for-sale, net of
tax expense (benefit) of
$77, $76 and ($24) for the
three month periods ended
June 30, 2005, March 31, 2005
and June 30, 2004,
respectively 120 118 (38)
Comprehensive loss $(1,426) $(216) $(215)
Bay View Capital Corporation
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
For the Six Months Ended
June 30, June 30,
2005 2004
(In thousands, except per
share amounts)
Interest income:
Interest on auto installment
contracts and other loans $14,626 $8,663
Interest on short-term investments
and retained interests in securitizations 1,565 1,461
16,191 10,124
Interest expense:
Interest on warehouse credit facility 4,802 1,933
Interest on securitization notes payable 3,700 --
Other interest expense 282 2,172
8,784 4,105
Net interest income 7,407 6,019
Provision for credit losses 2,630 521
Net interest income after provision
for credit losses 4,777 5,498
Noninterest income:
Leasing income 3,913 8,824
Loan servicing income 1,024 1,799
Loan fees 376 724
Unrealized gain on derivative instruments 374 2,409
Loss on auto installment contracts
and other loans held-for-sale, and
retained interests in securitizations, net (1,034) (1,645)
Other, net 521 1,099
5,174 13,210
Noninterest expense:
General and administrative 12,236 12,687
Leasing expense 671 7,515
Real estate owned, net 28 280
12,935 20,482
Loss before income tax benefit (2,984) (1,774)
Income tax benefit (1,104) (696)
Net loss $(1,880) $(1,078)
Basic loss per share $(0.29) $(0.16)
Diluted loss per share $(0.29) $(0.16)
Weighted-average basic shares outstanding 6,595 6,581
Weighted-average diluted shares outstanding 6,595 6,581
Net loss $(1,880) $(1,078)
Other comprehensive income, net of tax:
Change in unrealized gain on securities
available-for-sale, net of tax expense
of $154 and $364 for the six month
periods ended June 30, 2005 and
June 30, 2004, respectively 238 570
Comprehensive loss $(1,642) $(508)
BAY VIEW CAPITAL CORPORATION
SELECTED FINANCIAL DATA
(Unaudited)
At June 30, At December 31, At June 30,
2005 2004 2004
(Dollars in thousands except per share amounts)
Auto Installment Contracts
and Other Loans Receivable:
Auto installment contracts
Auto installment contracts
held-for-sale $101,545 $75,021 $149,637
Auto installment contracts
held-for-investment, net 197,185 252,863 102,502
Securitized auto
installment contracts
held-for-investment, net 202,743 -- --
Total auto installment
contracts 501,473 327,884 252,139
Other loans:
Franchise loans -- 583 4,856
Asset-based loans -- 319 456
Total other loans -- 902 5,312
Auto installment contracts and
other loans receivable (A) $501,473 $328,786 $257,451
Credit Quality
(Liquidating Portfolio):
Nonperforming assets -
total (B) (C) $2,654 $4,282 $5,672
Nonperforming assets -
franchise $2,484 $3,792 $5,045
Loans delinquent 60 days
or more $-- $902 $1,418
Loans delinquent 60 days
or more - franchise $-- $583 $961
Per Share Data:
Book value per share (D) $15.55 $15.80 $21.12
Other Data:
Full-time equivalent
employees, including BVAC 111 125 128
(A) Includes allowances for mark-to-market valuation reserves and credit
losses of $3.3 million, $2.7 million and $2.5 million at
June 30, 2005, December 31, 2004 and June 30, 2004, respectively.
(B) Consists entirely of real estate owned at June 30, 2005.
(C) Nonperforming assets include mark-to-market valuation reserves of
$1.2 million and $0.8 million at December 31, 2004 and June 30, 2004,
respectively.
(D) Book value per share is presented on a post-reverse stock split
basis.
BAY VIEW ACCEPTANCE CORPORATION
(Unaudited)
At June 30, At December 31, At June 30,
2005 2004 2004
(Dollars in thousands)
Selected Balance
Sheet Information:
Cash $4,581 $3,278 $5,345
Restricted cash 22,490 7,540 8,440
Retained interests in
securitizations
available-for-sale 21,244 22,636 26,718
Auto installment contracts
held-for-sale 101,545 75,021 149,637
Auto installment contracts
held-for-investment, net 197,185 252,863 102,502
Securitized auto
installment contracts
held-for-investment, net 202,743 -- --
Advances to parent -- 3,010 --
Other assets 9,813 7,969 7,078
Total assets $559,601 $372,317 $299,720
Warehouse credit facility and
other short-term borrowings $284,006 $298,755 $220,941
Securitization notes payable 200,503 -- --
Advances from parent 142 -- 2,764
Current and deferred taxes, net 6,969 6,947 7,422
Other liabilities 5,482 4,277 5,461
Total liabilities 497,102 309,979 236,588
Stockholder's equity 62,499 62,338 63,132
Total liabilities and
stockholder's equity $559,601 $372,317 $299,720
BAY VIEW ACCEPTANCE CORPORATION (Continued)
For the Three Months Ended For the Six
Months Ended
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
(Dollars in thousands)
Selected Results of
Operations Information:
Interest income on
auto installment
contracts $8,276 $6,350 $4,394 $14,626 $8,307
Interest income on
short-term investments
and retained interests
in securitizations 731 630 652 1,361 1,318
Interest expense
on borrowings (5,100) (3,659) (1,688) (8,759) (3,007)
Net interest income 3,907 3,321 3,358 7,228 6,618
Provision for
credit losses (1,793) (837) (521) (2,630) (521)
Loan servicing income 468 543 821 1,011 1,760
Loan fees 160 150 191 310 406
Unrealized gain
(loss) on derivative
instruments (1,106) 1,480 2,717 374 2,409
Loss on auto
installment contracts
held-for-sale and
retained interests
in securitizations (356) (520) (1,116) (876) (2,055)
Other income
(expense), net 51 44 (187) 95 570
General and
administrative
expenses (2,810) (2,822) (2,746) (5,632) (5,656)
Income (loss) before
income taxes (1,479) 1,359 2,517 (120) 3,531
Income tax
(expense) benefit 615 (571) (1,034) 44 (1,452)
Net income (loss) $(864) $788 $1,483 $(76) $2,079
Selected Production
Information:
Dollar value of
auto installment
contracts
purchased $144,785 $114,879 $75,874 $259,664 $145,184
Number of auto
installment
contracts purchased 6,089 4,701 2,501 10,790 4,790
Average balance of
auto installment
contracts purchased $23.8 $24.6 $30.3 $24.1 $30.3
Weighted-average
contract rate 8.88% 8.30% 7.86% 8.63% 7.88%
Average FICO
credit score 734 742 734 738 734
Selected Credit
Quality Information:
Net chargeoffs on
managed contracts
for period $1,525 $1,680 $1,690 $3,205 $3,429
Net chargeoffs as a
percentage of
average managed
contracts
(annualized) 0.92% 1.11% 1.21% 1.02% 1.22%
Contracts delinquent
30 days or more as
a percentage of
managed contracts
(as of period-end) 0.40% 0.41% 0.31% 0.40% 0.31%
Average Managed
Contracts $660,429 $598,190 $559,982 $629,313 $563,151
At June 30, At December 31, At June 30,
2005 2004 2004
(Dollars in thousands)
Managed Contracts (period-end):
Total outstanding
managed contracts $683,899 $570,864 $561,585
Total number of contracts 33,500 28,300 29,100
Other Data:
Full-time equivalent employees 93 104 104
DATASOURCE: Bay View Capital Corporation
CONTACT: John Okubo, +1-650-294-7778, for Bay View Capital Corporation
Web site: http://www.bayviewcapital.com/