Bay View Capital Corp. Announces Reduced Risk Profile.

SAN MATEO, Calif.--(BUSINESS WIRE)--Feb. 26, 1996--Bay View Capital Corp., the holding company for Bay View Federal Bank, announced that the primary elements of its risk profile, as measured by interest rate risk, credit quality and impediments to future earnings enhancement, improved significantly during 1995.

Edward H. Sondker, President and Chief Executive Officer, indicated that "The Company's historically strong credit culture combined with cost reduction efforts begun in the first half of 1995 and our fourth quarter financial reengineering efforts have allowed us to dramatically improve the Company's aggregate risk profile."

Interest Rate Risk Reduced Dramatically

Interest rate risk, as measured by the change in the net portfolio value of equity as a percentage of assets from an immediate 200 basis points change in interest rates, has reduced to approximately 0.79% ($24 million) as of Dec. 31, 1995 from 3.02% ($93 million) a year ago. David A. Heaberlin, Executive Vice President, Chief Financial Officer, and Treasurer, said, "The prepayment of $190 million of high cost short-term borrowings combined with the $300 million of interest rate swaps, primarily executed in December 1995, allowed us to simultaneously reduce the Company's exposure to interest rate risk and significantly expand the Company's net interest margin prospectively." In January 1996, following the Company's fourth quarter reengineering, the net interest margin improved to 2.22% from 2.05% in December 1995.

Credit Quality Continues to Improve

Credit quality has continued to improve in 1995 as nonperforming assets declined to $38.8 million at Dec. 31, 1995 from $50.6 million at Dec. 31, 1994. Nonperforming assets at Jan. 31, 1996 improved further to $35.5 million. The allowance for losses on loans and securities as a percentage of nonperforming assets at Dec. 31, 1995 and 1994 were 78% and 62%, respectively. The allowance for losses on loans increased to 279% of nonperforming loans at Dec. 31, 1995 from 80% a year ago. Another indicator of the improvement in the credit quality is the decrease in loan delinquencies. Loans delinquent 60 days or more have declined from $48.5 million to $20.2 million year-to-year. As a result, loan delinquencies as a percentage of total loans have declined from 2.33% to 0.96%.

Eliminate Impediments to Future Earnings Enhancement

The Company has previously reported nonrecurring charges of approximately $18 million in the fourth quarter of 1995. The nonrecurring charges were consistent with the Company's goal to eliminate future performance impediments which included the following:

-- Prepayment penalties of $4.4 million related to the prepayment of

the $190 million high cost short-term borrowings. In conjunction

with the prepayment of these borrowings, the Company executed

$200 million of interest rate swaps to provide interest rate risk

protection for the short-term lower cost borrowings used to

replace the borrowings prepaid.

-- Write downs of $7.6 million related to the corporate office

complex and fixed assets, including expenses for the

refurbishment of certain banking centers.

-- Additional provision for loan losses on a large loan classified

as a troubled debt restructuring and other write downs related to

the accelerated disposal of certain foreclosed properties totaling

$2.0 million.

-- An accrual of $1.2 million for severance payments related to

workforce reductions and termination of the Company's pension

plans.

-- Total charges of $2.8 million related to the impairment of core

deposit intangibles and goodwill associated with past branch

acquisitions, capitalized excess servicing and other assets.

General and Administrative Expenses Continue Downward Trend

Excluding nonrecurring charges, general and administrative expenses for 1995 were $44.3 million compared with $47.3 million in 1994. In 1996, the Company intends to hold its general and administrative expenses to $42 million or below (assuming the recapitalization of the Savings Association Insurance Fund on which legislation is pending and excluding the one-time special assessment of approximately $14.5 million to $16.0 million associated therewith.)

The estimated deposit insurance premiums prior to the enactment of the legislation for each quarter in 1996 is $1.2 million (based on 26 cents for every $100 of deposits) versus $0.4 million (assuming 8 cents for every $100 of deposits) after the enactment date.

Throughout 1995, the Company has implemented workforce reductions arising from right sizing and co-sourcing opportunities. The Company had 402 employees at year-end 1995, down from 481 employees at year-end 1994.

Transfer of Securities from Held to Maturity to Available for Sale

In December 1995, the Company transferred approximately $148 million of its mortgage-backed securities from the held-to-maturity category to the available for sale category as a result of adopting the implementation guide to Statement of Financial Accounting Standards No. 115. In February 1996, the Company sold $24 million of these mortgage-backed securities.

Stock Repurchase Program

Consistent with the Company's prior announcement to repurchase up to 800,000 shares of its common stock, open-market purchases of approximately 555,000 shares have been completed to date.

Pending Acquisition of High Quality, High Yielding Assets

In February 1996, the Company and CTL Credit, Inc. ("CTLC"), the holding company for California Thrift and Loan, signed a definitive agreement under which the Company will acquire CTLC. Under the terms of the definitive agreement, CTLC shareholders will receive $18.00 per share in cash for each share of common stock held or an aggregate price of approximately $65 million including acquisition costs. The acquisition of CTLC will be accounted for as a purchase and is expected to be completed by June 30, 1996. The transaction is subject to the approval of CTLC shareholders and all applicable regulatory authorities.

California Thrift and Loan underwrites and purchases primarily high quality, high yielding consumer loans and has successfully carved out a niche in the increasingly competitive auto finance industry. The Company expects this transaction to immediately enhance earnings per share and provide significant earnings per share growth opportunities beyond 1996.

The Company intends to continue to redeploy its excess capital, improve the attractiveness of its community banking franchise and continually evaluate opportunities to enhance shareholder value.

Additional discussion of factors affecting the Company's business and prospects is contained in the Company's periodic filings with the Securities and Exchange Commission.

Bay View Federal Bank has $3.0 billion in assets and is headquartered in San Mateo, California. The Bank operates 27 full service community banking centers throughout the San Francisco Bay Area.

CONTACT: Bay View Capital Corp.

David A. Heaberlin, 415/312-7272