Bidding to become the first banking company to make a significant move into the hot high-loan-to-value mortgage business, Bay View Capital Corp. said Wednesday it would buy PSB Lending Corp. for $300 million.
PSB, based in Carlsbad, is the third-largest originator of the controversial second-mortgage loans, which enable homeowners to borrow more than the value of their homes. PSB originated over $750 million in such loans in 1997.
The deal includes an up-front payment of $53 million in cash and $100 million in stock, with an additional $143 million to be paid to PSB's owner, Pacific Southwest Bank, Dallas, if the unit hits certain performance targets.
The deal satisfies Bay View's "tremendous thirst for assets," said chief executive Edward H. Sondker in a conference call and will double Bay View's portfolio.
Bay View Capital's stock closed Wednesday down $0.625, to $30.375
Following the deal's close, expected in the fourth quarter of 1998, PSB Lending will be renamed Bay View Consumer Finance Corp. It will be a subsidiary of Bay View Bank, the company's banking unit.