SECURITIES AND EXCHANGE COMMISSION

                                              WASHINGTON, D. C. 20549



                                                     FORM 10-Q

                               QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                                          SECURITIES EXCHANGE ACT OF 1934
                                        FOR THE QUARTER ENDED June 30, 1997

                                          Commission File Number 2-76003

                                                BAY AREA BANCSHARES


                                              California #94-2779021

                                    900 Veterans Blvd., Redwood City, CA 94063
                                             Telephone (415) 367-1600


         Theregistrant  (1) has filed all  reports  required  by  Section  13 or
            15(d) of the Securities Exchange Act during the preceding 12 months,
            and

                                x  Yes           No

        (2)  has been subject to such filing requirements for the past 90 days.
                                x  Yes           No


883,399 Shares of Common Stock Outstanding as of June 30, 1997
<PAGE>


Part 1 Item 1
                       BAY AREA BANCSHARES & SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                            (UNAUDITED, IN THOUSANDS)




<TABLE>
<CAPTION>


                                                                    6/30/97                 12/31/96
<S>                                                                 <C>                   <C>                    
ASSETS
Cash and due from banks                                              $10,039               $11,011
Federal Funds Sold                                                     1,600                 6,850
                                                                                      
     Cash and cash equivalents                                        11,639                17,861
Time deposits with other financial institutions                            0                   100
Investment securities available for sale
  (market value approximates book value)                               2,095                 2,588
Investment securities held to maturity
  (market value of $13,459 in 1997 and $12,203 in 1996)               13,324                12,081
Loans, net of reserve for possible loan losses
    of $1,593 in 1997 and $1,493 in 1996                              79,175                67,012
Loans held for sale                                                        0                   723
Premises and equipment,net                                               721                   811
Real estate owned                                                          0                     0
Interest receivable and other assets                                   1,962                 2,011
                                                                                      

     Total assets                                                   $108,916              $103,187
                                                                                    





LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits
   Demand                                                            $25,231              $ 23,599
   Interest-bearing transaction                                       45,568                44,493
   Savings                                                             5,846                 5,551
   Time                                                               21,681                19,325
                                                                                      
     Total Deposits                                                   98,326                92,968
Interest payable and other liabilities                                   414                   938
Federal funds purchased                                                    0                     0
Federal Home Loan Bank advances                                            0                     0
                                                                                      
     Total liabilities                                                98,740                93,906
                                                                                      
Sharehoders' equity:

   Common stock, no par value:
     Authorized - 20,000,000 shares; issued & outstanding              4,354                 4,143
      883,339  in 1997 and 839,638 in 1996
   Unrealized (loss) gain on securities held for sale                     (8)                   (5)
   Retained earnings                                                   5,830                 5,143
                                                                                      
     Total shareholders' equity                                       10,176                 9,281
                                                                                      
     Total liabilities and shareholders' equity                     $108,916              $103,187
                                                                                      
</TABLE>




                                                     (1)

<PAGE>


Part 1 Item 1
                       BAY AREA BANCSHARES & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                    Three Months             Three Months
                                                                    Ended                    Ended
                                                                  6/30/97                  6/30/96
<S>                                                                  <C>                       <C>    
Interest Income:                                                                      
     Interest and fees on loans                                       $1,990                     1,792
     Interest on investment securities                                   253                       195
     Interest on federal funds sold                                       92                        69
     Interest on time deposits with other financial institutions           1                         1
                                                                                      
             Total Interest Income                                     2,336                     2,057
Interest Expense:                                                                     
     Interest on interest-bearing transaction amounts                    349                       324
     Interest on savings deposits                                         59                        56
     Interest on time deposits                                           287                       245
     Interest on short-term borrowing                                      0                         7
     Interest on notes payable and redeemable debentures                   0                         0
                                                                                      
             Total Interest Expense                                      695                       632
                                                                                     
             Net interest income                                       1,641                     1,425
Provision for possible loan losses                                        80                       150
                                                                                      
Net interest income after provision for possible loan loss             1,561                     1,275
Noninterest income:                                                                  
     Service charges on deposit accounts                                  50                        54
     Net loss on sales of securities                                       0                         0
     Net gain on disposal of assets                                        0                         0
     Net gain on sale of loans held for sale                               0                       158
     Other  Mortgage Banking Revenue                                      51                        45
     ATM network revenue                                                 514                       445
     Other                                                                28                        27
                                                                                      
             Total noninterest income                                    643                       729
Noninterest expense:                                                                  
     Salaries and related benefits                                       519                       654
     Occupancy                                                           122                        97
     Equipment                                                           104                       134
     Professional fees                                                    67                        49
     Stationery and supplies                                              30                        31
     Other                                                               599                       442
                                                                                      
             Total noninterest expense                                 1,441                     1,407
                                                                                      
Income before provision for income taxes                                 763                       597
Provision for income taxes                                               312                       250
                                                                                      
Net Income                                                              $451                      $347
                                                                                      
Earnings per share:


 Average common and equivalent shares outstanding- Primary           960,000                   945,000
                                                                                      
 Average common and equivalent shares outstanding-Fully Diluted      960,000                   945,000
                                                                                      
Primary Net income per share                                           $0.47                     $0.37
                                                                                      
     Fully Diluted Net income per share                                $0.47                     $0.37
                                                                                      
</TABLE>

                                                      (2)

<PAGE>


Part 1 Item 1
                       BAY AREA BANCSHARES & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                Six Months               Six Months
                                                                   Ended                    Ended
                                                                  6/30/97                  6/30/96
<S>                                                                  <C>                       <C>    
Interest Income:                                                                      
     Interest and fees on loans                                       $3,846                     3,614
     Interest on investment securities                                   480                       400
     Interest on federal funds sold                                      203                       106
     Interest on time deposits with other financial institutions           2                         3
                                                               -                       -
             Total Interest Income                                     4,531                     4,123
Interest Expense:                                              -                       -
     Interest on interest-bearing transaction amounts                    688                       644
     Interest on savings deposits                                        117                       112
     Interest on time deposits                                           551                       464
     Interest on short-term borrowing                                      0                         9
     Interest on notes payable and redeemable debentures                   0                         0
                                                               -                       -
             Total Interest Expense                                    1,356                     1,229
                                                               -                       -
             Net interest income                                       3,175                     2,894
Provision for possible loan losses                                       120                       235
                                                               -                       -
      Net interest income after provision for possible loan loss       3,055                     2,659
Noninterest income:                                            -                       -
     Service charges on deposit accounts                                  98                       106
     Net loss on sales of securities                                       0                         0
     Net gain on disposal of assets                                        0                         2
     Net gain on sale of loans held for sale                              12                       308
     Other  Mortgage Banking Revenue                                      75                        92
     ATM network revenue                                                 995                       842
     Other                                                                49                        75
                                                               -                       -
             Total noninterest income                                  1,229                     1,425
Noninterest expense:                                           -                       -
     Salaries and related benefits                                     1,156                     1,369
     Occupancy                                                           232                       195
     Equipment                                                           235                       268
     Professional fees                                                   113                       113
     Stationery and supplies                                              58                        64
     Other                                                             1,046                       886
                                                               -                       -
             Total noninterest expense                                 2,840                     2,895
                                                               -                       -
Income before provision for income taxes                               1,444                     1,189
Provision for income taxes                                               601                       500
                                                               -                       -
Net Income                                                              $843                      $689
                                                                                      
Earnings per share:

  Average common and equivalent shares outstanding- Primary          960,000                   945,000
                                                                                      
  Average common and equivalent shares outstanding- Fully Diluted    960,000                   945,000
                                                                                      

     Primary Net income per share                                      $0.88                     $0.73
                                                                                      
     Fully Diluted Net income per share                                $0.88                     $0.73
                                                                                      
</TABLE>

                                                      (3)


<PAGE>


Part 1 Item 1
                               BAY AREA BANCSHARES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                Six Months               Six Months
                                                                   Ended                    Ended
                                                                  6/30/97                  6/30/96
<S>                                                                  <C>                        <C>    
Cash flows from operating activities:                                                 

    Net Income                                                          $843                      $689
    Adjustments to reconcile net income to net cash provided
    by operating activities:

      Depreciation of premises and equipment                             216                       221
      Provision for possible loan losses                                 140                       235
      Net gain loss on sale of assets                                      0                        (2)
      Funding of loans held for sale                                    (947)                   (8,948)
      Proceeds from the sale of loans held for sale                    1,682                     8,661
      Net gain on sale of loans held for sale                            (12)                     (308)
      Net loss on sale of investment securities                            0                         0
      Net ammortization and accretion of investment premiums and 
      discounts                                                            8                        31
      Net decrease in interest receivable and other assets                49                        46
      Net  increase in interest payable and other liabilities           (524)                      (48)
      Net  (decrease)  increase in deferred loan fees                    (97)                        0
                                                                                      
          Total adjustments                                              515                      (112)
                                                                                      
          Net cash provided by (used in) operating activities          1,358                       577

Cash flows from investing activities:
    Net decrease in time deposits with other financial institutions      100                         3
    Proceeds from sale of investment securities                            0                         0
    Proceeds from the maturity of investment securities
        held to maturity                                               1,715                     1,170
    Mortgage backed securities principal payments                        256                       748
    Purchase of investment securities held to maturity                (2,741)                   (2,183)
    Purchase of investment securities held for sale                        0                         0

    Net decrease  in gross loans                                     (12,197)                   (3,463)
    Proceeds from the sale of Real Estate Owned                            0                         0
    Capital expenditures                                                (126)                     (102)
                                                                                      
                  Net cash used in investing activit                 (12,993)                   (3,827)

Cash flows from financing activities:
 Net increase (decrease) in demand deposits,transaction and savings    3,002                     1,508
    Net increase in time deposits                                      2,356                     2,965
    Repayment of Federal Funds Purchased                                   0                    (1,000)
    Net proceeds of Federal Home Loan Bank advances                        0                       500
    Proceeds from stock warrants and options exercised                   211                        62
    Cash Dividends paid                                                 (156)                     (134)
                                                                                      
                  Net cash  provided by financing actities             5,413                     3,901
                                                                                      
Net  increase (decrease) in cash and cash equivalents                 (6,222)                      651

Cash and cash equivalents,beginning of period                         17,861                    18,076
                                                                                      
Cash and cash equivalents,end of period                              $11,639                   $18,727
                                                                                      
</TABLE>

There were $499 and $0 in loans transferred to Real Estate Owned  in 1997 and 
1996 respectively.

                                                                           (4)

<PAGE>


BAY AREA BANCSHARES & SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


All  adjustments,  which in the opinion of  management  are necessary for a fair
statement of the  Company's  financial  condition  at June 30, 1997,  results of
operations  for the three  and six month  periods  ended  June 30,  1997 and the
statement  of cash flows for the six month  period ended June 30, 1997 have been
included. These adjustments are of a normal and recurring nature. The results of
operations  and  statement of cash flows are not  necessarily  indicative of the
results for a full year's activity.

The accompanying  unaudited  financial  statements have been prepared on a basis
consistent  with  the  accounting  principles  and  policies  reflected  in  the
Company's Annual Report for the year ended December 31, 1996.

All references to the "Bank" are in reference to the Company's  sole, and wholly
owned, subsidiary Bay Area Bank.





                                                        (5)

<PAGE>




BAY AREA BANCSHARES & SUBSIDIARIES

ITEM 2

Management's Discussion and Analysis of Financial Condition and Results of 
Operations

Item 2A           Financial Condition

Liquidity

Liquid assets  (Cash,  Federal  Funds Sold,  Time Deposits with other  Financial
Institutions  and  Investments)  decreased  $5.6 million or 17% to $32.6 million
over the six month period from  December 31, 1996 to June 30, 1997. At year-end,
total liquid assets as a percentage  of total assets was 31.6%,  whereas on June
30, 1997 it had decreased to 24.8%.

Cash & due from banks  decreased  $972,000  over the first six months of 1997 to
$10.0 million at June 30, 1997. During the first six months of 1997 cash and due
from banks  averaged  $11.6  million.  The  portion of the total cash & due from
banks  representing ATM ("Automatic  Teller Machine") network cash inventory has
averaged  approximately  $3.6 million  during 1997 and at June 30, 1997 ATM cash
was approximately $3.1 million.

The decrease in total liquid assets,  during the first six months of 1997, was a
primarily  a result of an  increase  in gross  loans of $11.4  million  or 
16.8%, offset in part by an increase in deposits of $5.4 million or 5.8%. 
Deposits have averaged $96.3 million thus far in 1997 while they averaged $88.1 
million during the twelve month period ending December 31, 1996.  Gross loans  
outstanding have averaged $71.7 million thus far in 1997 as compared to $66.2  
million  averaged throughout 1996.

Management believes current liquid assets and current available credit lines are
adequate  to cover the  working  capital  requirements  of the  Company  and any
reasonable needs arising from deposit withdrawals.


Capital

Consolidated  equity capital plus reserves  increased  $949,000 in the first six
months of 1997 from $10.8 million or 10.3% of total gross assets at December 31,
1996 to $11.8 million or 10.6% of total gross assets at June 30, 1997.

Bank capital plus  reserves  totaled  $11.5 million on June 30, 1997 or 10.4% of
total  adjusted  assets as compared to capital plus reserves of $10.8 million or
10.3% of total  adjusted  assets at December 31, 1996. At June 30, 1997 the Bank
maintained  a tier one capital  ratio of 11.62% and a tier two capital  ratio of
12.87% as compared to a tier one capital ratio of 11.86%





                                                        (6)


<PAGE>




and a tier two capital ratio of 13.11% at December 31, 1996.

On May 27,1997 the Company announced it had adopted a stock repurchase plan to 
repurchase up to 5% of the Company's outstanding stock or $500,000 (whichever is
less). The company  did  repurchase  3,000  shares in the open market in July at
a price of approximately $21.00 per share.

The Bank's capital level continues to exceed State and Federal Deposit Insurance
Corporation  requirements  and satisfies  the Federal  Reserve  Board's  current
risk-based capital Guidelines.


The Bank has declared  $225,000 in dividends to the Parent  company in the first
six  months of 1997 and the  Company  also  declared  cash  dividends  to common
shareholders  of $.09 per share in March and June of 1997.  The  second  quarter
dividend  represents twenty three consecutive  quarterly cash dividends declared
by the Parent company to shareholders.


Item 2B           Results of Operations

Results of Operations

Consolidated  operating  profits were $451,000 ($.47 per fully diluted share vs.
$.37 in the prior  year) for the second  quarter  of 1997,  the  highest  second
quarter earnings in the Company's  history.  This represents a $104,000 or 29.9%
increase over the second quarter of 1996 in when net income was $347,000.

Consolidated  operating  profits were $843,000 ($.88 per fully diluted share vs.
$.73 in the prior year) for the first six months of 1997, the highest first half
of  earnings  in the  Company's  history.  This  represents  a $154,000 or 22.4%
increase over the first half of 1996 in which net income was $689,000.

The  increase in second  quarter  earnings in 1997 versus the second  quarter of
1996 is a  result  of an  increase  in  pretax  earnings  of  $166,000  which is
comprised  of an  increase in net interest  income of $216,000 and a decrease in
loan loss  provisions  of $70,000,  offset in part by a decrease in  noninterest
income of $86,000 and an increase in non interest expense of $34,000.

The  increase in earnings  for the first six months of 1997 versus the first six
months of 1996 is a result of an increase in pretax  earnings of $255,000  which
is comprised of an increase in net interest income of $281,000 and a decrease in
loan loss  provisions  of  $115,000  and a decrease  in  noninterest  expense of
$55,000, offset in part by a decrease in noninterest income of $196,000.

The growth in net  interest  income of 15.1% in the  second  quarter of 1997 and
9.7% in the first six  months of 1997 is  primarily  a result of growth in total
earning  assets  offset in part by a decrease in net  interest  margin.  Average
earning assets in the second quarter of 1997 were $96.2 million, a $10.1 million
or 11.8% increase over the second  quarter of 1996 when earning assets  averaged
$86.1  million.   Net  interest  margin  in  the  second  quarter  of  1997  was
approximately 6.82% as compared to 7.55% in the second quarter of 1996.

                                                        (7)


<PAGE>



Average  earning  assets in the first six months of 1997 were  $94.4  million, a
$10.5  million or 12.5%  increase over the first six months of 1996 when earning
assets  averaged $83.9 million.  Net interest  margin in the first six months of
1997 was approximately 6.72% as compared to 6.89% in the first half of 1996.

Yields on earning assets rose in the second quarter of 1997 to 9.71% as compared
to 9.56% in the second quarter of 1996. Yields on earning assets are down in the
first six months of 1997 to 9.60% as  compared  to 9.82% in the first six months
of 1996.

The decrease in loan loss provisions  throughout 1997,  despite the 16.8% growth
in loans  outstanding  since  December  31, 1996,  is a result of improved  loan
portfolio  performance and the Board's current judgement that the Bennet Leasing
Assets (book value of $548,000  included in  nonaccrual  loans at June 30, 1997)
would not require further reserves.  A settlement was indeed reached in
July of 1997. The Bank received a payment of approximately  $465,000 and expects
additional  payments of approximately  $200,000  pursuant to the agreement.  The
Bank  ultimately  expects  to recover  approximately  $117,000  of the  $318,000
written off in 1996.

Non  performing  assets  at June  30,  1997  (adjusted  for the  Bennet  funding
settlement  in July) were  $816,000 or .74% of total assets and 51% of loan loss
reserves.  Non  performing  assets  at  December  31,  1996 were  $1.67  million
(including Bennet) or 1.61% of total assets and 112% of loan loss reserves.There
were  $42,000  in loans  charged  off  during  the first  six  months of 1997 as
compared to $68,000  during the first six months of 1996.  Loan loss reserves of
$1.59  million  at June 30,  1997  represent  a ratio  of  1.96% of gross  loans
outstanding  as  compared  to a loan loss  reserve of $1.49  million or 2.14% of
gross loans at December 31, 1996.


The  reduction in non interest  income of $86,000 in the second  quarter of 1997
and $196,000 in the first half of 1997 was a result of the closing of the Bank's
mortgage  department in February 1997. The department was closed  primarily as a
result of intense  competition  which affected the profit margins for such loans
sold in the marketplace.  The department never reached its budgeted  performance
goals or contributed a  satisfactory  return given the risk of operations or the
time that was committed by Bank management.

The Bank's ATM  revenues  were up  $69,000 or 15.5% for the second  quarter  and
$153,000 or 18% for the first half of 1997 as  compared  to the same  periods in
1996. The department has contributed $148,000 to pretax profits in the first six
months of 1997 as compared to $93,000 in the first six months of 1996.

Non interest expense was up $34,000 in the second quarter but still down $55,000
in the first six months of 1997 as compared to 1996 primarily as a result of the
closing of the Mortgage Department.


                                                        (8)



<PAGE>



Part 2, Item 4

(a) The 1997 Annual  Meeting of the  Shareholders  of the Registrant was held on
May 20, 1997.

(b) The following table shows the votes for, against or withheld, and the broker
nonvotes as to each candidate for director. Each candidate was elected.
<TABLE>
<CAPTION>

Name                       Votes For                Votes Against or Withheld               Broker Nonvotes

<S>                        <C>                                <C>                               <C>
Mario A. Biagi             654,209                            11.803                             0
John O. Brooks             655,809                            10,203                             0
Gary S. Goss               665,942                                70                             0
Robert R. Haight           653,109                            12,903                             0
Stanley A. Kangas          643,029                            22,983                             0
David J. Macdonald         655,530                            10,483                             0
Thorwald A. Madsen         653,109                            12,903                             0
Dennis W. Royer            643,029                            22,983                             0

</TABLE>


ITEM 6
(a)  Exhibits.

3.1 Restated Articles of Incorporation of the Company (incorporated by reference
to Exhibit 3.1 of the  Company's  Annual Report on Form 10-K for the fiscal year
ended December 31, 1988).

3.2 Amendment to Restated  Articles of  Incorporation
(incorporated by reference to Exhibit 3.2 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1989).

3.3 Bylaws of the Company, as
amended (incorporated by reference to Exhibit 3.2 of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1987).

3.4  Amendment to
Bylaws of Company  (incorporated  by reference  to Exhibit 3.3 of the  Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1987).

27 Financial Data Schedule (filed herewith).


                                                       (9)



<PAGE>



                                                     SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.





BAY AREA BANCSHARES
Registrant

Dated:  August 11, 1997


/s/Robert R. Haight
   Robert R. Haight
President and Chief Executive Officer



/s/Anthony J. Gould                                     
   Anthony J. Gould
Chief Accounting Officer