425 1 rule425.txt RULE 425 FILING 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- side margin] 2 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- side margin] 3 TRANSACTION SUMMARY HOLDING COMPANY NAME: Business Bancorp SUBSIDIARY NAME: Business Bank of California -------------------------------------------------------------------------------- HEADQUARTERS: Northern California -------------------------------------------------------------------------------- PRO FORMA SIZE: $582.2 Million in Assets $55 Million in Market Capitalization -------------------------------------------------------------------------------- FIXED EXCHANGE RATIO: 1.1763 BZBC Shares for each MCB Share -------------------------------------------------------------------------------- IMPLIED VALUE TO MCB (1): $17.35 -------------------------------------------------------------------------------- PREMIUM TO MCB'S MARKET PRICE: 31.4% -------------------------------------------------------------------------------- AGGREGATE TRANSACTION VALUE: $29.0 million -------------------------------------------------------------------------------- PRO FORMA OWNERSHIP: Business Bancorp 52% MCB Financial Corp. 48% -------------------------------------------------------------------------------- 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. [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 4 TRANSACTION SUMMARY SENIOR MANAGEMENT OF Chairman Timothy Jorstad BUSINESS BANCORP: Vice Chairman John Duckworth CEO Alan Lane President & COO Charles Hall CFO Patrick Phelan -------------------------------------------------------------------------------- SENIOR MANAGEMENT OF Chairman John Duckworth BUSINESS BANK OF CALIFORNIA: Vice Chairman Timothy Jorstad CEO Charles Hall President Alan Lane CFO Patrick Phelan -------------------------------------------------------------------------------- BOARD OF DIRECTORS: Equal board representation (7 members from each organization) -------------------------------------------------------------------------------- CROSS OPTIONS: 19.9% Cross option agreement -------------------------------------------------------------------------------- TIMING: Subject to regulatory and shareholder approval Targeted to close fourth quarter 2001 [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 5 REVIEW OF COMBINED ORGANIZATION o 15 Branch Locations [Map of California with Branch Locations appears here] [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 6
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 ----------------------------------------------------------------------------------------------------------------------------- JOB GROWTH 13.7% 17.1% 18.1% 18.3% 2.1% 7.3% 9.5% 6.3% ----------------------------------------------------------------------------------------------------------------------------- HOUSING 0.40% 0.92% 0.66% 0.44% 0.35% 0.47% 0.33% 0.41% PERMITS/CAPITA ----------------------------------------------------------------------------------------------------------------------------- HOME OWNERSHIP 63.3% 68.9% 62.9% 53.3% 34.5% 67.6% 62.1% 55.6% -----------------------------------------------------------------------------------------------------------------------------
Source: www.census.gov for period 1990-2000 [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 7 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 --------------- [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 8 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 --------------- [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 9 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 [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 10 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 [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 11 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 [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 12 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 [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 13 PRO FORMA FINANCIAL REVIEW [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 14 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 [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 15
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 ------------------------------------------------------------------------------------------------------------------- Loans (Gross) 183,108 167,645 350,753 ------------------------------------------------------------------------------------------------------------------- Intangibles 7,276 0 16,507 23,783 ------------------------------------------------------------------------------------------------------------------- Deposits 282,217 207,051 489,268 ------------------------------------------------------------------------------------------------------------------- Equity 25,430 13,293 16,157 54,880 -------------------------------------------------------------------------------------------------------------------
(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 - $13.20 [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 16 STRONG BALANCE SHEET 6/30/01 ($ in thousands) (New) Business Bancorp ------------------------------------------- Common equity $54,880 -------------------------------------------------------------------------------- Trust Preferred Securities 13,000 -------------------------------------------------------------------------------- Intangibles 23,783 -------------------------------------------------------------------------------- Tier 1 Capital 42,265 -------------------------------------------------------------------------------- Total Risk-Based Capital 46,277 -------------------------------------------------------------------------------- Tier 1 Capital 10.22% -------------------------------------------------------------------------------- Total Capital 11.19% -------------------------------------------------------------------------------- Leverage Ratio 7.71% [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 17 PRO FORMA ASSET QUALITY 6/30/01 ($ in thousands) (New) Business Bancorp ------------------------------------------ Loan Loss Reserve $4,012 -------------------------------------------------------------------------------- Non-Performing Assets $2,131 -------------------------------------------------------------------------------- NP As/Assets 0.38% -------------------------------------------------------------------------------- Reserve/Loans 1.14% -------------------------------------------------------------------------------- [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 18 CORPORATE GOALS o Credit Quality o Core Deposit Growth o Net Interest Margin o Top Line Revenue o Efficiency [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 19 CORPORATE GOALS Cash EPS Growth 12%-15% ------------------------------------------------------------------------ Cash Return on Equity 15%-17% ------------------------------------------------------------------------ Cash Return on Tangible Equity 20%-25% ------------------------------------------------------------------------ [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 20 APPENDIX [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 21 BALANCE SHEET 6/30/01 ($ 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 -------- -------- Total Assets $225,718 $340,113 ======== ======== Total Deposits $207,051 $282,217 Total Borrowings 750 19,825 Other Liabilities 1,624 2,641 -------- -------- Total Liabilities $209,425 $304,683 Trust Preferred Securities 3,000 10,000 Total Equity 13,293 25,430 -------- -------- Total Liability and Equity $225,718 $340,113 ======== ======== Source: SNL Securities, L.C. [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 22
LOAN COMPOSITION 6/30/01 LOANS: BUSINESS BANCORP MCB FINANCIAL PRO FORMA ---------------- -------------- ------------- 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 -------- -------- -------- TOTAL LOANS $181,135 $165,606 $346,741 ======== ======== ========
[Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 23 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] [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 24
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 $489,268
Source: Provided by Management. [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 25 DEPOSIT COMPOSITION 6/30/01 BUSINESS BANCORP MCB FINANCIAL CORP. [Graph appears here] [Graph appears here] PRO FORMA [Graph appears here] [Legend of Graphs appears here] [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 26 CAPITAL RATIOS 6/30/01 MCB BUSINESS FINANCIAL BANCORP --------- --------- Core Capital/ Risk-adj Assets 9.40% 10.99% Total Capital Ratio 10.56% 12.85% Leverage Ratio 7.50% 7.42% [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 27 CREDIT QUALITY 6/30/01 ($ 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% [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 28
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. [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 29
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. [Map of California and "MERGER OF EQUALS BUSINESS BANCORP & MCB FINANCIAL CORP." appears on the left-side margin] 30