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Bay View Capital Corporation Announces Third Quarter Results
SAN MATEO, Calif., Nov. 3 /PRNewswire-FirstCall/ -- Bay View Capital
Corporation (the "Company") today reported a third quarter 2004 net loss of
$1.4 million, or $0.22 per diluted share, compared to a second quarter 2004 net
loss of $121 thousand, or $.02 per diluted share. Comparable data is not
available for the third quarter of 2003 when the Company was using the
liquidation basis of accounting. The per share data reflects the 1-for-10
reverse split on June 30, 2004.
Results of Operations
The Company's results of operations reflect primarily the results of operations
of Bay View Acceptance Corporation ("BVAC"), the Company's wholly owned
indirect auto finance subsidiary. The most important components of the
Company's results of operations are its net interest income, its noninterest
income and its noninterest expense.
Net interest income totaled $3.8 million for the third quarter of 2004 compared
to $3.0 million for the second quarter of 2004. The increase in net interest
income was primarily the result of decreased interest expense due to the
redemption of the Company's 9.76% Cumulative Capital Securities on June 30,
2004.
Noninterest income was $1.5 million for the third quarter of 2004 compared to
$6.3 million for the second quarter of 2004. The decrease in noninterest
income was principally the result of unrealized losses on interest rate swaps
used by BVAC. Noninterest income for the third quarter of 2004 reflects $1.4
million of unrealized losses on interest rate swaps, while the second quarter
of 2004 included $2.8 million of unrealized gains on interest rate swaps. This
volatility is primarily due to decreased intermediate term interest rates
during the third quarter of 2004 compared to increases during the second
quarter of 2004.
BVAC employs the interest rate swaps as part of its hedging activity designed
to protect the economic value of its warehouse inventory of auto contracts from
exposure to rising interest rates. While BVAC's hedging activity has provided
an effective economic hedge since it was commenced in the third quarter of
2003, the unrealized gains or losses from hedging, which are reflected in
BVAC's results of operations as incurred, produce volatility in
quarter-to-quarter earnings. For the nine months ended September 30, 2004,
BVAC had $1.2 million of unrealized gains on interest rate swaps, reflecting
the increase in intermediate term rates that occurred since the beginning of
the year.
Financial Condition
The Company's total assets were $390.7 million at September 30, 2004, compared
to $364.1 million at December 31, 2003, reflecting $111.2 million of net growth
in auto loan contracts, partially offset by $50.1 million payoffs on the
Company's auto leasing business.
At September 30, 2004, the Company had deferred tax assets of approximately
$17.7 million, consisting of net deferred tax assets of $39.2 million less a
valuation allowance of $21.5 million.
On September 30, 2004, the Company distributed $16.5 million in cash, or $2.50
per share, to the holders of its stock.
BVAC
BVAC acquires auto installment contracts from a network of approximately 7,000
manufacturer-franchised and independent auto dealers in 33 states. BVAC 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, BVAC
offers specialized products such as extended term financing and larger advances
for high credit quality customers and uses these products to establish
relationships with automobile dealers.
As previously announced, on September 7, 2004, Prodyodth K. "PK" Chatterjee
joined the Company as President and Chief Executive Officer of BVAC and as
Executive Vice President and Director of Retail Operations for the Company.
"While PK has been with us only a very short time, he has already begun
implementation of initiatives to improve production and enhance risk-based
pricing," stated Charles G. Cooper, the Company's Chief Executive Officer.
BVAC's net interest income for the third quarter of 2004 improved to $3.6
million from $3.4 million in the second quarter of 2004, primarily due to an
increased inventory of auto contracts. During the third quarter of 2004, BVAC
purchased $69.5 million of auto contracts compared to $75.9 million in the
second quarter of 2004. BVAC attributes this decline to lower auto sales and
aggressive marketing programs launched by auto manufacturers. BVAC's purchases
of auto contracts in the third quarter of 2004 increased 3.9% from purchases of
$66.9 million in the third quarter of 2003. For the third quarter of 2004,
purchased contract rates averaged 8.06% compared to second quarter rates that
averaged 7.86%.
BVAC's credit quality indicators also improved in the third quarter of 2004.
FICO scores for the quarter averaged 742, compared to an average of 734 for
second quarter 2004 production. Net chargeoffs declined to 1.01% of managed
contracts in the third quarter of 2004 compared to 1.21% for the second quarter
of 2004.
During the third quarter and first nine months of 2004, BVAC sold $9.3 million
and $24.8 million of auto contracts, respectively, on a "whole loan" basis with
servicing retained. At September 30, 2004, BVAC was servicing 28,146 auto
contracts with an aggregate outstanding balance of $556.8 million compared to
29,057 auto contracts with an aggregate outstanding balance of $561.6 million
at June 30, 2004.
Liquidation Activities
The Company continues to dispose of the assets and satisfy the liabilities it
assumed from Bay View Bank, N.A., whose dissolution was effective on September
30, 2003. Since December 31, 2003, $87.9 million of these assets have been
liquidated and $51.8 million of liabilities have been discharged. At September
30, 2004, remaining assets to be liquidated, including restricted cash, auto
leases, commercial loans and foreclosed real estate, totaled approximately
$65.8 million compared to $153.6 million at December 31, 2003. Remaining
liabilities to be satisfied, including a $3.6 million financing secured by cash
flow from remaining auto leases, totaled $7.3 million at September 30, 2004
compared to $59.0 million at December 31, 2003.
Nonperforming assets, net of market-to-market valuation allowances, were $5.6
million at September 30, 2004. Total loans that were delinquent 60 days or
more were $1.2 million at September 30, 2004.
Other
During the fourth quarter of 2003, the Company's Board of Directors amended the
Plan of Dissolution and Stockholder Liquidity (the "Plan"), which the Company
adopted in October 2002, to become a plan of partial liquidation. As a result,
the Company discontinued its use of the liquidation basis of accounting and
re-adopted the going concern basis of accounting effective October 1, 2003.
Accordingly, the Company is providing the following financial statements
herein:
Financial Condition: Consolidated Statements of Financial Condition as of
September 30, 2004 and December 31, 2003
Results of Operations / Change in Net Assets: Consolidated Statements of
Operations and Comprehensive Loss for the three- and nine-month periods ended
September 30, 2004 and the three-month period ended June 30, 2004 and a
Consolidated Statement of Changes in Net Assets in Liquidation (Liquidation
Basis) for the three- and nine-month periods ended September 30, 2003.
The Company will host a conference call at 2:00 p.m. PST on November 4, 2004 to
discuss its financial results. Analysts, media representatives and the public
are invited to listen to this discussion by calling 888-793-6954 and
referencing the password "BVC." An audio replay of this conference call will
be available through Friday, December 3, 2004 and can be accessed by dialing
800-489-7535.
Bay View Capital Corporation is a financial services company headquartered in
San Mateo, California and 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
(Unaudited)
September 30, December 31,
2004 2003
(Dollars in thousands)
ASSETS
Cash and cash equivalents:
Cash and due from depository institutions $6,724 $11,434
Short-term investments 19 129
6,743 11,563
Restricted cash 32,749 32,240
Securities available-for-sale:
Retained interests in securitizations 24,680 28,590
Mortgage-backed and other securities -- 6,139
Loans held-for-sale:
Installment contracts 129,371 165,874
Other loans 925 12,074
Installment contracts held-for-investment, net 147,703 --
Investment in operating lease assets, net 16,510 66,657
Real estate owned, net 4,179 4,955
Premises and equipment, net 580 371
Repossessed vehicles 500 438
Income taxes, net 16,840 21,031
Goodwill 1,846 1,846
Other assets 8,098 12,340
Total assets $390,724 $364,118
LIABILITIES AND STOCKHOLDERS' EQUITY
Borrowings:
Warehouse credit facility $246,006 $138,221
Other borrowings 3,608 16,055
Junior Subordinated Deferrable
Interest Debentures -- 24,784
Other liabilities 11,774 17,500
Liquidation reserve 8,377 11,626
Total liabilities 269,765 208,186
Stockholders' equity:
Common stock ($.01 par value);
authorized, 80,000,000 shares;
issued, 2004 - 6,593,870 shares; 2003 -
6,579,333 shares; outstanding, 2004 -
6,590,427 shares; 2003 - 6,575,890 shares 66 658
Additional paid-in capital 124,420 156,588
Accumulated deficit (3,058) (673)
Treasury stock, at cost; 2004 - 11,078
shares; 2003 - 3,443 shares (587) (587)
Accumulated other comprehensive gain (loss) 118 (54)
Total stockholders' equity 120,959 155,932
Total liabilities and stockholders' equity $390,724 $364,118
Bay View Capital Corporation
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
For the Nine
For the Three Months Ended Months Ended
September 30, June 30, September 30,
2004 2004 2004
(Dollars in thousands, except per share amounts)
Interest income:
Interest on loans and leases $5,217 $4,508 $13,880
Interest on mortgage-
backed securities -- 2 31
Interest and dividends
on investment securities 743 702 2,173
5,960 5,212 16,084
Interest expense:
Interest on borrowings 2,147 2,163 6,252
2,147 2,163 6,252
Net interest income 3,813 3,049 9,832
Provision for losses
on installment contracts 331 521 852
Net interest income after
provision for losses on
installment contracts 3,482 2,528 8,980
Noninterest income:
Leasing income 2,510 3,596 11,334
Loan servicing income 720 852 2,519
Unrealized gains (losses)
on interest rate
swap agreements (1,433) 2,809 1,162
Unrealized losses on
installment contracts
and other loans (249) (1,100) (1,354)
Loan fees and charges 239 224 963
Loss on sale of assets
and liabilities, net (367) (8) (907)
Other, net 68 (117) 1,168
1,488 6,256 14,885
Noninterest expense:
General and administrative 6,009 6,146 18,696
Leasing expenses 1,190 2,848 8,705
Real estate owned
operations, net 109 (11) 389
7,308 8,983 27,790
Loss before income tax benefit (2,338) (199) (3,925)
Income tax benefit (917) (78) (1,540)
Net loss $(1,421) $(121) $(2,385)
Basic loss per share $(0.22) $(0.02) $(0.36)
Diluted loss per share $(0.22) $(0.02) $(0.36)
Weighted-average basic
shares outstanding 6,588 6,586 6,583
Weighted-average diluted
shares outstanding 6,588 6,586 6,583
Net loss $(1,421) $(121) $(2,385)
Other comprehensive income
(loss), net of tax:
Change in unrealized
gain (loss) on securities
available-for-sale, net
of tax expense (benefit)
of ($254), $(24) and
$110 for the three months
ended September 30, 2004
and June 30, 2004 and the
nine months ended
September 30, 2004,
respectively (398) (38) 172
Other comprehensive income (loss) (398) (38) 172
Comprehensive loss $(1,819) $(159) $(2,213)
Bay View Capital Corporation
Consolidated Statement of Changes in Net Assets in Liquidation (Liquidation
Basis)
(Unaudited)
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
2003 2003
(Dollars in thousands)
Net assets in liquidation at
beginning of period $409,864 $410,064
Pre-tax loss from operations (2,228) (4,595)
Changes in estimated values
of assets and liabilities (3,407) (5,995)
Income tax benefit 4,664 6,252
Net loss from operations (971) (4,338)
Other changes in net assets in liquidation(A) 921 4,088
Net assets in liquidation at end of period $409,814 $409,814
(A) Primarily represents proceeds from stock options and warrants exercised.
BAY VIEW CAPITAL CORPORATION
SELECTED FINANCIAL DATA
(Unaudited)
For the Nine For the Nine
For the Three Months Ended Months Ended Months Ended
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2004 2004 2003 2004 2003
Going Concern Basis Liquidation Going Liquidation
Basis Concern Basis
Basis
(Dollars in thousands)
Selected Results of
Operations/Changes
in Net Assets in Liquidation
Information:
Net interest
income(A) $3,813 $3,049 $2,463 $9,832 $9,540
Provision for
losses on
installment
contracts (331) (521) -- (852) --
Leasing income 2,510 3,596 8,805 11,334 32,578
Loan servicing
income 720 852 1,119 2,519 3,689
Unrealized gains
(losses) on
interest rate
swap agreements (1,433) 2,809 (1,448) 1,162 (1,448)
Unrealized losses
on installment
contracts and
other loans (249) (1,100) -- (1,354) --
Loan fees
and charges 239 224 270 963 1,007
Gain (loss) on
sale of assets and
liabilities, net (367) (8) 819 (907) 787
Other income, net 68 (117) 193 1,168 474
General and
administrative
expenses (6,009) (6,146) (7,336) (18,696) (26,338)
Leasing expense (1,190) (2,848) (7,009) (8,705) (24,421)
Other expense (109) 11 (104) (389) (463)
Pre-tax loss
from operations (2,338) (199) (2,228) (3,925) (4,595)
Changes in
estimated
liquidation values
of assets and
liabilities -- -- (3,407) -- (5,995)
Income tax benefit 917 78 4,664 1,540 6,252
Other changes in
net assets
in liquidation -- -- 921 -- 4,088
Change in net assets
in liquidation -- -- $(50) -- $(250)
Net loss $(1,421) $(121) $(2,385)
At Sept. 30, At June 30, At Sept. 30,
2004 2004 2003
Going Concern Basis Liquidation Basis
(Dollars in thousands)
Installment Contracts
and Loans Receivable:
Auto installment contracts(B)
Installment contracts
held-for-sale $129,371 $149,637 $122,715
Installment contracts
held-for-investment 147,703 102,502 --
Total auto installment
contracts 277,074 252,139 122,715
Other loans and leases:
Commercial mortgage loans -- -- 2,642
Franchise loans 593 4,856 23,998
Asset-based loans, syndicated
loans, factored receivables
and commercial leases 332 456 2,434
Business loans -- -- 4,882
Total other loans and leases 925 5,312 33,956
Installment contracts and
loans receivable(C) $277,999 $257,451 $156,671
Credit Quality (Liquidating Portfolio):
Nonperforming assets -
total(D) $5,104 $5,672 $ 11,223
Nonperforming assets -
franchise $4,602 $5,045 $8,467
Loans and leases delinquent
60 days or more $925 $1,418 $1,103
Loans and leases delinquent
60 days or more - franchise $593 $961 $1,106
BAY VIEW CAPITAL CORPORATION
SELECTED FINANCIAL DATA (continued)
(Unaudited)
At Sept. 30, At June 30, At Sept. 30,
2004 2004 2003
Going Concern Basis Liquidation
Basis
(Dollars in thousands, except per share amounts)
Per Share Data:
Book value per share(E) $ 18.35 $ 21.17 N/A
Net assets in liquidation
per diluted share outstanding(E) N/A N/A $ 63.60
Other Data:
Full-time equivalent
employees, including BVAC 128 128 149
(A) Effective July 1, 2003, the Company adopted Statement of Financial
Accounting Standards No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity"
and, accordingly, dividend expense on the Capital Securities has
been reflected in interest on borrowings.
(B) Excludes auto-related operating lease assets reported separately
from loans and leases totaling $16.5 million, $27.0 million, and
$86.3 million at September 30, 2004, June 30, 2004 and September 30,
2003, respectively.
(C) Includes allowances for mark-to-market valuation reserves and credit
losses of $2.0 million, $2.5 million and $11.7 million at September
30, 2004, June 30, 2004 and September 30, 2003, respectively.
(D) Nonperforming assets include mark-to-market valuation reserves of
$1.2 million, $0.8 million and $4.1 million at September 30, 2004,
June 30, 2004 and September 30, 2003, respectively.
(E) Book value per share and net assets in liquidation per diluted share
outstanding are presented on a post-reverse stock split basis.
BAY VIEW ACCEPTANCE CORPORATION
At Sept. 30, At June 30, At Sept. 30,
2004 2004 2003
Going Concern Basis
(Dollars in thousands)
Selected Balance Sheet Information:
Cash and cash equivalents $5,226 $5,345 $6,928
Restricted cash 9,768 8,440 5,394
Retained interest in
auto loan securitization 24,680 26,718 29,855
Installment contracts
held-for-sale 129,371 149,637 122,715
Installment contracts
held-for-investment, net 147,703 102,502 --
Other assets 8,215 7,265 5,982
Total assets $324,963 $299,907 $170,874
Advances from parent $4,220 $2,764 $100,982
Warehouse line 246,006 220,941 --
Other liabilities 12,247 12,915 10,335
Total liabilities 262,473 236,620 111,317
Stockholder's equity 62,490 63,287 59,557
Total liabilities and
stockholder's equity $324,963 $299,907 $170,874
BAY VIEW ACCEPTANCE CORPORATION (Continued)
For the Nine For the Nine
For the Three Months Ended Months Ended Months Ended
Sept. 30, June 30, Sept. 30, Sept. 30, Sept 30,
2004 2004 2003 2004 2003
Going Concern Basis
(Dollars in thousands)
Selected Results of
Operations Information:
Interest on
auto contracts $ 5,170 $ 4,394 $ 2,450 $13,477 $ 8,638
Interest on
investment
securities 638 652 677 1,956 2,319
Interest expense
on borrowings (2,177) (1,688) (1,126) (5,184) (2,924)
Net interest income 3,631 3,358 2,001 10,249 8,033
Provision for
losses on installment
contracts (331) (521) -- (852) --
Loan servicing income 712 821 1,038 2,472 2,828
Unrealized gains
(losses) on interest
rate swap
agreements (1,433) 2,809 (1,448) 1,162 (1,448)
Unrealized gains
(losses) on
installment contracts
held-for-sale 181 (1,100) 1,077 (924) 1,082
Loan fees and
charges 204 191 208 610 673
Loss on sale of
assets, net (863) (16) (218) (1,318) (363)
Other income, net 50 (187) 962 126 1,060
General and
administrative
expenses (2,668) (2,746) (2,949) (8,324) (9,550)
Income (loss)
before income
taxes (517) 2,609 671 3,201 2,315
Income tax benefit
(expense) 166 (1,070) (280) (1,359) (967)
Net income (loss) $(351) $1,539 $391 $ 1,842 $ 1,348
Selected Production Information:
Dollar value
of contracts
purchased $69,474 $75,874 $66,879 $214,658 $212,107
Number of contracts
purchased 2,364 2,501 2,316 7,154 7,470
Average balance of
contracts purchased $29.4 $30.3 $28.9 $30.0 $28.4
Weighted-average
contract rate 8.06% 7.86% 8.12% 7.94% 8.45%
Average FICO
credit score 742 734 734 737 731
Selected Credit Quality Information:
Net chargeoffs on
managed contracts
for period $1,409 $1,690 $1,543 $4,838 $5,308
Net chargeoffs as
a percentage of
average managed
contracts
(annualized) 1.01% 1.21% 1.07% 1.15% 1.18%
Contracts delinquent
30 days or more as
a percentage of
managed contracts
(as of period-end) 0.30% 0.31% 0.40% 0.30% 0.40%
Average Managed
Contracts $557,744 $559,982 $578,962 $561,332 $601,257
At Sept. 30, At June 30, At Sept. 30,
2004 2004 2003
(Dollars in thousands)
Managed Assets:
Total managed contracts $556,802 $561,585 $573,114
Total number of contracts 28,146 29,057 32,040
Other Data:
Full-time equivalent employees 101 99 105
DATASOURCE: Bay View Capital Corporation
CONTACT: John Okubo, +1-650-294-7778, for Bay View Capital Corporation
Web site: http://www.bayviewcapital.com/