A California thrift holding company is selling off the car leases and loans of a recently acquired thrift.

The plan is to convert the acquisition, California Thrift and Loan, Santa Barbara, into a finance company that would focus on auto loans but sell them to investors.

San Mateo-based Bay View Capital Corp. bought the thrift in June for $62 million in cash. It is selling $65 million in leases and securitizing $250 million in auto loans.

Officials said they decided to take the step after realizing that the portfolio could net a higher price than previously expected.

"There's a thirst for assets out there," said David A. Heaberlin, chief financial officer of $3.4 billion-asset Bay View.

California Thrift and Loan has historically originated high-quality loans, he said, and Bay View is finding strong demand for such assets. "We're in one of these crazy markets where there's plenty of liabilities but not enough high-quality, high-yield assets."

Bay View's move is typical of what many thrifts in California and around the country would like to do, said Campbell K. Chaney, bank analyst at Sandler O'Neill & Partners in San Francisco.

Facing ever-increasing competition and tight pricing for traditional mortgage lending, the thrifts want to expand into more profitable business lines, such as auto finance or equipment leasing, while securitizing their loans.

In the past, that's been more the domain of independent finance companies than of banks or thrifts.

After Bay View completes the changes, for example, the finance subsidiary will still have $14 million in capital but will be earning several million dollars per year, sending return on equity "through the roof," Mr. Chaney said.

"What they've done is kind of unique and exciting," Mr. Chaney said. "They're getting back most of the capital they used to buy this institution."

The company has filed a registration with the Securities and Exchange Commission for an offering of up to $500 million in asset-backed securities. Officials anticipate completing the first securitization of the existing auto loans by early January, and then following up with quarterly securitizations of about $50 million each in new loans throughout 1997.

"We want to try to do this in a consistent fashion that results in a relatively steady stream of earnings," Mr. Heaberlin explained.

The thrift has also reached a preliminary sale agreement for the $65 million in leases, which officials expect to close by the end of the year. Bay View did not disclose the buyer.

The sale and securitization are expected to yield about $48 million in capital, officials said. Together with existing excess capital and cash, Bay View would have about $80 million to use for future growth.

Officials plan to use some of the cash generated from the sales to redeem California Thrift and Loan's high-cost deposits, while the lower- cost funds are transferred along with California Thrift and Loan's San Jose branch to Bay View's primary thrift subsidiary.

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