Rule 425
Filer: MCB Financial Corporation
Issuer: Business Bancorp
Commission File Number: 001-15479
[Business Bancorp Company Logo [MCB Financial Corp Company Logo
Goes Here] Goes Here]
MERGER OF EQUALS
"AN EXCEPTIONAL PLATFORM TO
GROW SMALL BUSINESS LENDING"
AUGUST 17, 2001
BZBC MCB
SAFE HARBOR STATEMENT
During the course of this presentation, we may make forward-looking statements
regarding future events or the future financial performance of each company. We
wish to caution you that such forward-looking statements are just predictions
subject to certain risks and uncertainties that could cause actual events or
results to materially differ, either better or worse, from those projected. A
Discussion of risk factors that may affect the actual outcomes relating to such
forward-looking statements and each company's results of operations in general
is included in each company's annual report on form 10-KSB and other filings
with the securities and exchange Commission. specific risks in this press
release include the timing of the proposed merger, expected cost savings and
other synergies following the merger, the actual amount of the merger, related
expense and the market price of each company's stock following the merger. each
company assumes no obligation to update or supplement forward-looking statements
that become untrue because of subsequent events.
[MERGER OF EQUALS BUSINESS BANCORP & MCB Financial Corp. appears on the left-
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CREATING AN EXCEPTIONAL COMPANY
o Initial step to creating a statewide, middle-market business bank
o Presence in two of California's fastest growing markets
o Attractive platform for other California financial institutions to
join
o Creates a broader, more stable and diversified earnings base
o Creates a more visible investment opportunity in California for
national bank investors
[MERGER OF EQUALS BUSINESS BANCORP & MCB Financial Corp. appears on the left-
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TRANSACTION SUMMARY
HOLDING COMPANY NAME: Business Bancorp
SUBSIDIARY NAME: Business Bank of California
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HEADQUARTERS: Northern California
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PRO FORMA SIZE: $582.2 Million in Assets
$55 Million in Market Capitalization
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FIXED EXCHANGE RATIO: 1.1763 BZBC Shares for each MCB Share
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IMPLIED VALUE TO MCB (1): $17.35
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PREMIUM TO MCB'S MARKET PRICE: 31.4%
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AGGREGATE TRANSACTION VALUE: $29.0 million
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PRO FORMA OWNERSHIP: Business Bancorp 52%
MCB Financial Corp. 48%
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STRUCTURE: -- Merger of Equals
-- Purchase Accounting
-- Tax-Free Exchange
(1) Based on the closing stock prices of BZBC and MCB as of 8/15/01.
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TRANSACTION SUMMARY
SENIOR MANAGEMENT OF Chairman Timothy Jorstad
BUSINESS BANCORP: Vice Chairman John Duckworth
CEO Alan Lane
President & COO Charles Hall
CFO Patrick Phelan
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SENIOR MANAGEMENT OF Chairman John Duckworth
BUSINESS BANK OF CALIFORNIA: Vice Chairman Timothy Jorstad
CEO Charles Hall
President Alan Lane
CFO Patrick Phelan
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BOARD OF DIRECTORS: Equal board representation (7 members from
each organization)
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CROSS OPTIONS: 19.9% Cross option agreement
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TIMING: Subject to regulatory and shareholder approval
Targeted to close fourth quarter 2001
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REVIEW OF COMBINED ORGANIZATION
o 15 Branch Locations
[Map of California with Branch Locations appears here]
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DYNAMIC AND VIBRANT MARKETS
SAN BERNARDINO RIVERSIDE SONOMA ALAMEDA SAN FRANCISCO CONTRA COSTA MARIN CALIFORNIA
POPULATION 20.5% 32.0% 18.1% 10.7% 7.3% 18.1% 7.5% 13.6%
INCREASES
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JOB GROWTH 13.7% 17.1% 18.1% 18.3% 2.1% 7.3% 9.5% 6.3%
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HOUSING 0.40% 0.92% 0.66% 0.44% 0.35% 0.47% 0.33% 0.41%
PERMITS/CAPITA
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HOME OWNERSHIP 63.3% 68.9% 62.9% 53.3% 34.5% 67.6% 62.1% 55.6%
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Source: www.census.gov for period 1990-2000
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FOCUSED AND STRONG MANAGEMENT TEAM
----------------------
(NEW) BUSINESS BANCORP
BOARD OF DIRECTORS
50/50
----------------------
|
|
|
|
-------------------------
|
|
---------------- -----------------
ALAN LANE CHARLES HALL
CHIEF EXECUTIVE <------------------------ PRESIDENT & CHIEF
OFFICER OPERATING OFFICER
---------------- -----------------
^
--------------- |
PATRICK PHELAN |
CHIEF FINANCIAL ----------
OFFICER
---------------
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FOCUSED AND STRONG MANAGEMENT TEAM
---------------------------
BUSINESS BANK OF CALIFORNIA
BOARD OF DIRECTORS
50/50
---------------------------
|
|
|
|
-------------------------
|
|
---------------- -----------------
CHARLES HALL ALAN LANE
CHIEF EXECUTIVE <------------------------ PRESIDENT
OFFICER -----------------
---------------- ^
|
--------------- |
PATRICK PHELAN |
CHIEF FINANCIAL ----------
OFFICER
---------------
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CONSISTENT STRATEGIES
o Consistent Credit and Operating Philosophy
o Consistent Business Lines
o Compatible Risk Philosophy
o Strong Business Focus
o Financial discipline
o Efficient Branch Network
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LOW RISK -- HIGH REWARD
IMPACT ON
BUSINESS LINES EACH PARTNER
------------
o Lending Strength Improved
* Distribution Improved
* Lending Limit Improved
* Product Mix Improved
* Client Mix Improved
* Cross sell opportunities Improved
FINANCIAL
o Cash EPS Improved
o Growth Rate of Net Income Improved
o Reserve Coverage Improved
o Capacity to Generate Execess Capital Improved
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STRATEGIC AND COMPELLING FOR SHAREHOLDERS
o Intention to trade on Nasdaq National Market under the symbol "BZBC"
o Combined market cap gives shareholders more liquidity
o Positioned for superior financial performance
o Compatible, disciplined management team
o Leverages best practices, products and people of each partner
o One bank and one brand
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DISCIPLINED FINANCIAL OPERATING PHILOSOPHY
o Culture of expense control and positive operating leverage
o Financial performance driven-- focused on quality growth
o Cash earnings will be used as basis for future reporting
o Traditions of excellent customer service and community support
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PRO FORMA FINANCIAL REVIEW
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SHAREHOLDER VALUE CREATED
o Accretive to cash EPS in 2002 for shareholders of MCB Financial and
Business Bancorp
o Committed to reviewing the organization's cost structure to capturing
cost savings going forward
o Assumptions are conservative
* Cost saves -- 5.7% of combined expenses
* No revenue enhancements
* Measured approach to integration
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BALANCE SHEET IMPACT 6/30/01
MCB
($ in thousands) Business Bancorp Financial (1) Merger Adjustments (2) Pro Forma
---------------- ------------- ---------------------- ----------
Assets $340,113 $225,718 $16,507 $582,338
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Loans (Gross) 183,108 167,645 350,753
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Intangibles 7,276 0 16,507 23,783
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Deposits 282,217 207,051 489,268
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Equity 25,430 13,293 16,157 54,880
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(1) Adjusted to reflect the repurchase of 43,011 shares and options exercised
of MCB stock on 7/3/01.
(2) Reflects the closing stock price as of 8/15/01. BZBC - $14.75, MCB - $13.20
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STRONG BALANCE SHEET 6/30/01
($ in thousands) (New) Business Bancorp
-------------------------------------------
Common equity $54,880
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Trust Preferred Securities 13,000
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Intangibles 23,783
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Tier 1 Capital 42,265
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Total Risk-Based Capital 46,277
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Tier 1 Capital 10.22%
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Total Capital 11.19%
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Leverage Ratio 7.71%
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PRO FORMA ASSET QUALITY 6/30/01
($ in thousands) (New) Business Bancorp
------------------------------------------
Loan Loss Reserve $4,012
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Non-Performing Assets $2,131
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NP As/Assets 0.38%
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Reserve/Loans 1.14%
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CORPORATE GOALS
o Credit Quality
o Core Deposit Growth
o Net Interest Margin
o Top Line Revenue
o Efficiency
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CORPORATE GOALS
Cash EPS Growth 12%-15%
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Cash Return on Equity 15%-17%
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Cash Return on Tangible Equity 20%-25%
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APPENDIX
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BALANCE SHEET
6/30/01
($ in thousands) MCB BUSINESS
FINANCIAL BANCORP
--------- --------
Total Net Loans $165,606 $181,135
Total Investment Securities 35,468 115,924
Other Assets 6,656 43,054
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Total Assets $225,718 $340,113
======== ========
Total Deposits $207,051 $282,217
Total Borrowings 750 19,825
Other Liabilities 1,624 2,641
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Total Liabilities $209,425 $304,683
Trust Preferred Securities 3,000 10,000
Total Equity 13,293 25,430
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Total Liability and Equity $225,718 $340,113
======== ========
Source: SNL Securities, L.C.
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LOAN COMPOSITION
6/30/01
LOANS: BUSINESS BANCORP MCB FINANCIAL PRO FORMA
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Construction $33,272 18% $22,313 13% $55,585 16%
Residential R/E 14,715 8% 2,780 2% 17,495 5%
Commercial R/E 88,333 48% 116,082 69% 204,415 58%
Commercial 38,724 21% 24,068 14% 62,792 18%
Consumer 9,103 5% 2,593 2% 11,696 3%
------- --- ------- --- ------- ---
$184,147 $167,836 $351,983
LESS:
Deferred Loan Fees $1,039 $191 $1,230
Allowance for loan losses 1,973 2,039 4,012
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TOTAL LOANS $181,135 $165,606 $346,741
======== ======== ========
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LOAN COMPOSITION
6/30/01
BUSINESS BANCORP MCB FINANCIAL CORP.
[Graph appears here] [Graph appears here]
PRO FORMA
[Graph appears here]
[Legend of Graphs appears here]
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DEPOSIT COMPOSITION
6/30/01
DEPOSITS: BUSINESS BANCORP MCB FINANCIAL PRO FORMA
---------------- -------------- -------------
Demand Deposits $100,140 36% $50,716 24% $151,126 31%
Savings & NOW 63,191 22% 15,433 7% 78,624 16%
MMDA 39,358 14% 101,371 49% 140,729 29%
Time deposits => $100K 34,234 12% 30,637 15% 64,871 13%
Time deposits < $100K 45,024 16% 8,894 4% 53,918 11%
------- --- ------- --- ------- ---
$282,217 $207,051 $489,268
Source: Provided by Management.
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DEPOSIT COMPOSITION
6/30/01
BUSINESS BANCORP MCB FINANCIAL CORP.
[Graph appears here] [Graph appears here]
PRO FORMA
[Graph appears here]
[Legend of Graphs appears here]
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CAPITAL RATIOS
6/30/01
MCB BUSINESS
FINANCIAL BANCORP
--------- ---------
Core Capital/ Risk-adj Assets 9.40% 10.99%
Total Capital Ratio 10.56% 12.85%
Leverage Ratio 7.50% 7.42%
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CREDIT QUALITY
6/30/01
($ in thousands) MCB BUSINESS
FINANCIAL BANCORP
--------- --------
Total Gross Loans $167,645 $183,108
Total Allowance for Loan Losses 2,039 1,973
Total Nonperforming Assets 40 2,091
NPAs/Loans & OREO 0.00% 1.14%
Reserves/ Loans 1.22% 1.08%
Reserves/ NPAs NM% 94.36%
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MCB FINANCIAL CORP.
CAGR
FINANCIAL INFORMTION 1997 1998 1999 2000 2001YTD (97 - 01 YTD)
- -------------------- ------------------------------------------------------------------------- -----------
Total Assets $139,877 $169,496 $196,119 $209,254 $225,718 14.7%
Total Investment Securities 35,556 42,078 36,118 27,100 35,468 -0.1%
Total Net Loans 87,179 109,958 136,474 162,884 165,606 20.1%
Total Deposits 126,132 154,904 179,784 188,585 207,051 15.2%
Total Equity 11,967 13,082 14,397 15,106 13,293 3.0%
Net Income 1,350 1,621 2,333 3,070 2,978(1) 25.4%
RATIO ANALYSIS
- --------------
ROAA .097% 1.03% 1.30% 1.51% 1.39%
ROAE 12.22% 12.61% 17.12% 19.78% 20.75%
Efficiency Ratio 70.16% 70.18% 62.39% 57.81% 58.37%
Total Equity/Total Assets 8.56% 7.72% 7.34% 7.22% 5.88%
Loans/Deposits 69.92% 71.71% 76.74% 87.40% 80.97%
(1) Second quarter 2001 net income annualized.
Year to date equals 6/30/01.
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BUSINESS BANCORP
CAGR
FINANCIAL INFORMTION 1997 1998 1999 2000 2001YTD (97 - 01 YTD)
- -------------------- ------------------------------------------------------------------------- -----------
Total Assets $152,468 $182,455 $225,443 $311,541 $340,113 25.8%
Total Investment Securities 11,551 27,539 84,506 93,341 115,924 93.3%
Total Net Loans 99,554 104.465 115,141 178,525 181,135 18.7%
Total Deposits 136,685 163,843 186,808 264,927 282,217 23.0%
Total Equity 15,047 17,443 19,031 23,543 25,430 17.0%
Net Income 842 1,857 1,940 2,270 2,482(1) 31.0%
RATIO ANALYSIS
- --------------
ROAA .66% 1.11% .98% .85% .75%
ROAE 5.91% 12.32% 11.37% 11.17% 10.08%
Efficiency Ratio 77.07% 71.76% 74.89% 74.10% 74.91%
Total Equity/Total Assets 9.64% 9.37% 8.44% 7.56% 7.48%
Loans/Deposits 72.78% 63.40% 61.40% 64.72% 64.18%
(1) Second quarter 2001 net income annualized.
Year to date equals 6/30/01.
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