Here's the latest on Bay View Capital Corp.: Analysts and investors see a turnaround in the making at the $3 billion- asset thrift.

That view emerged Feb. 5, when Bay View announced it had agreed to buy CTL Credit Inc., a $496 million-asset consumer finance company based in Santa Barbara, for $65 million in cash.

In the week after that deal, four of the eight analysts who cover San Mateo-based Bay View increased their ratings to "buy." Bay View's stock rose 14%, to $31.25 a share, its high for the year. And even the big, bad bear of bank investors, Michael Price's Heine Securities Corp., was impressed.

"The acquisition looks like it's a pretty good deal," said Raymond Garea, a vice president and bank stock specialist at Heine.

All of which should come as a great relief to Bay View's new chief executive, Edward H. Sondker, who joined in August after the thrift's board had forced out his predecessor, John E. Brubaker.

Mr. Brubaker had been CEO of Bay View for three years. He is praised for firming up credit standards at the 27-branch, Bay Area thrift.

The problem was that, under Mr. Brubaker, Bay View's earnings growth and stock performance were unimpressive. Its relatively strong asset quality was constrained by high expenses and low interest margins. Mr. Brubaker also seemed to some influential investors to be uninterested in finding a suitor who would pay a high premium.

Frustration grew, and finally boiled over at last year's annual meeting, at which Mr. Price demanded that Bay View either shape up or sell itself. When Mr. Price had made similar demands on Michigan National Corp. and Chase Manhattan Corp., mergers followed.

Enter Mr. Sondker, 46, the former head of Michigan National's West Coast operations. His plan: Strengthen Bay View's balance sheet, improve its retail business, and cut costs.

The results are starting to show. Last year, payroll dropped from 480 to 402. At yearend, Bay View also took $18 million of charges to cover prepayments of high-cost borrowings and hedges that Mr. Sondker's chief financial officer, David A. Heaberlin, said cut Bay View's exposure to rising interest rates by 90%.

Bay View also wrote off some bad loans and the costs associated with its earthquake-damaged headquarters, and it began looking for new assets.

Its portfolio includes about $1 billion of multifamily real estate (it is the third-largest multifamily lender in the Bay Area), $700 million of mortgage-backed securities, $700 million of one-family home mortgages, $300 million of commercial loans, and a smattering of other assets.

Mr. Heaberlin said Bay View needed more consumer assets to balance the risk of its wholesale and commercial assets. This is where CTL comes in.

CTL's book of consumer loans, primarily on automobiles, was just the kind of consumer assets Mr. Sondker wanted.

Besides, the CTL acquisition will add 10 cents to 15 cents to earnings immediately after closing in June, Mr. Heaberlin said.

Bay View will operate CTL as a separate unit in its holding company. This would help if a buyer wants to acquire Bay View Federal Bank but not CTL. Bay View also expects to be able to boost CTL's earnings by funding some of its assets with Bay View's cheap deposits.

Meanwhile, Bay View plans to start emulating other thrifts by selling more checking accounts to reduce funding costs further and increase fee income. Mr. Sondker said Bay View plans to increase its transaction accounts to 25% of total deposits by yearend, from 20% now. He said Bay View stands a good chance of succeeding since so few of its mortgage customers have checking accounts. This means there is low-hanging fruit for cross-sales.

Mr. Sondker said his view is that Bay View doesn't necessarily have to sell itself. But he and Mr. Heaberlin added that they see a distinct chance that as earnings improve potential buyers will get interested.

"As the stock price starts to rise, as it has with this institution, all of a sudden it comes up on somebody's radar screen and gets taken out," Mr. Heaberlin said.

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