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 March 31, 1997

                         Commission File Number 2-76003

                               BAY AREA BANCSHARES


                             California #94-2779021

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


         The registrant (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


846,088 Shares of Common Stock Outstanding as of March 31, 1997









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

<TABLE>
<CAPTION>


ASSETS                                                                        3/31/97                    12/31/96
<S>                                                                          <C>                          <C>     
Cash and due from banks                                                       $12,378                      $11,011
Federal Funds Sold                                                              9,800                        6,850
                                                                              _______                      _______
     Cash and cash equivalents                                                 22,178                       17,861

Time deposits with other financial institutions                                   100                          100
Investment securities available for sale
  (market value approximates book value)                                        2,596                        2,588
Investment securities held to maturity
  (market value of $12,273 in 1997 and $12,203 in 1996)                        12,180                       12,081
Loans, net of reserve for possible loan losses
    of $1,540 in 1997 and $1,493 in 1996                                       67,006                       67,012
Loans held for sale                                                                 0                          723
Premises and equipment,net                                                        758                          811
Real estate owned                                                                 499                            0
Interest receivable and other assets                                            2,040                        2,011
                                                                               ______                      _______

     Total assets                                                            $107,357                     $103,187
                                                                              =======                      =======



LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Deposits
   Demand                                                                     $25,601                      $23,599
   Interest-bearing transaction                                                44,971                       44,493
   Savings                                                                      5,569                        5,551
   Time                                                                        20,436                       19,325
                                                                               ------                       ------
     Total Deposits                                                            96,577                       92,968
Interest payable and other liabilities                                          1,078                          938
Federal funds purchased                                                             0                            0
Federal Home Loan Bank advances                                                     0                            0
                                                                               ------                       ------
     Total liabilities                                                         97,655                       93,906
                                                                               ------                       ------
Shareholders' equity:

   Common stock, no par value:
     Authorized - 20,000,000 shares; issued & outstanding                       4,177                        4,143
      846,088  in 1997 and 839,638 in 1996
   Unrealized (loss) gain on securities held for sale                             (8)                          (5)
   Retained earnings                                                            5,533                        5,143
                                                                                -----                        -----
     Total shareholders' equity                                                 9,702                        9,281
                                                                                -----                      -------
     Total liabilities and shareholders' equity                              $107,357                     $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
                                                                               3/31/97                     3/31/96
<S>                                                                          <C>                           <C>  
Interest Income:                                                      

     Interest and fees on loans                                                $1,856                        1,822
     Interest on investment securities                                            227                          205
     Interest on federal funds sold                                               111                           37
     Interest on time deposits with other financial institutions                    1                            2
                                                                                -----                        -----
             Total Interest Income                                              2,195                        2,066
Interest Expense:                                                               -----                        -----
     Interest on interest-bearing transaction amounts                             339                          320
     Interest on savings deposits                                                  58                           56
     Interest on time deposits                                                    264                          219
     Interest on short-term borrowing                                               0                            2
     Interest on notes payable and redeemable debentures                            0                            0
                                                                                -----                         ----
             Total Interest Expense                                               661                          597
                                                                                -----                        -----
             Net interest income                                                1,534                        1,469
Provision for possible loan losses                                                 40                           85
                                                                                -----                        -----
             Net interest income after provision for possible loan              1,494                        1,384
losses
Noninterest income:                                                             -----                        -----
     Service charges on deposit accounts                                           48                           53
     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                          150
     Other  Mortgage Banking Revenue                                               24                           47
     ATM network revenue                                                          481                          398
     Other                                                                         21                           48
                                                                                -----                         ----
             Total noninterest income                                             586                          698
Noninterest expense:                                                            -----                         ----
     Salaries and related benefits                                                637                          716
     Occupancy                                                                    110                           98
     Equipment                                                                    131                          134
     Professional fees                                                             46                           64
     Stationery and supplies                                                       28                           33
     Other                                                                        447                          444
                                                                                -----                        -----
             Total noninterest expense                                          1,399                        1,489
                                                                                -----                        -----
Income before provision for income taxes                                          681                          593
Provision for income taxes                                                        289                          250
                                                                                -----                        -----
Net Income                                                                       $392                         $343
                                                                                =====                        =====
Earnings per share:
     Average common and equivalent shares outstanding- Primary                960,000                      920,000
                                                                              =======                      =======

     Average common and equivalent shares outstanding- Fully Diluted          960,000                      920,000
                                                                              =======                      =======

     Primary Net income per share                                               $0.41                        $0.37
                                                                              =======                      =======
     Fully Diluted Net income per share                                         $0.41                        $0.37
                                                                              =======                      =======
</TABLE>

                                                             (2)

<PAGE>


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

<TABLE>
<CAPTION>

                                                                               Three Months                Three Months
                                                                                 Ended                       Ended
                                                                                3/31/97                     3/31/96
<S>                                                                             <C>                          <C>  
Cash flows from operating activities:                                 

    Net Income                                                                   $392                         $343
    Adjustments to reconcile net income to net cash provided
    by operating activities:

      Depreciation of premises and equipment                                       97                          108
      Provision for possible loan losses                                           40                           85
      Net gain loss on sale of assets                                               0                          (2)
      Funding of loans held for sale                                            (947)                      (5,732)

      Proceeds from the sale of loans held for sale                             1,682                        5,076
      Net gain on sale of loans held for sale                                    (12)                        (150)
      Net loss on sale of investment securities                                     0                            0
      Net ammortization and accretion of investment premiums and                   40                           15
discounts
      Net decrease in interest receivable and other assets                       (29)                         (37)
      Net  increase in interest payable and other liabilities                     140                          150
      Net  (decrease)  increase in deferred loan fees                            (52)                           27
                                                                                -----                        -----
          Total adjustments                                                       959                        (460)
                                                                                -----                        -----
          Net cash provided by (used in) operating activities                   1,351                        (117)

Cash flows from investing activities:
    Net decrease in time deposits with other financial institutions                 0                            3
    Proceeds from sale of investment securities                                     0                            0
    Proceeds from the maturity of investment securities
        held to maturity                                                          500                          500
    Mortgage backed securities principal payments                                  95                           50
    Purchase of investment securities held to maturity                          (754)                        (722)
    Purchase of investment securities held for sale                                 0                            0
    Net decrease  in gross loans                                                (398)                      (5,945)
    Proceeds from the sale of Real Estate Owned                                     0                            0
    Capital expenditures                                                         (44)                         (69)
                                                                                -----                       ------
    Net cash used in investing                                                  (601)                      (6,183)
activities

Cash flows from financing activities:
    Net  increase (decrease) in demand deposits,transaction and                 2,498                        (116)
savings
    Net increase in time deposits                                               1,111                        1,355
    Repayment of Federal Funds Purchased                                            0                            0
    Net proceeds of Federal Home Loan Bank advances                                 0                            0
    Proceeds from stock warrants and options exercised                             34                           38
    Cash Dividends paid                                                          (76)                         (67)
                                                                                -----                        -----
                                   Net cash  provided by financing              3,567                        1,210
activities
                                                                                -----                        -----
Net  increase (decrease) in cash and cash equivalents                           4,317                      (5,090)

Cash and cash equivalents,beginning of period                                  17,861                       18,076
                                                                               ------                      -------
Cash and cash equivalents,end of period                                       $22,178                      $12,986
                                                                               ======                       ======
</TABLE>

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

                                                       (3)
                                                       




<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 March 31, 1997,  results of
operations  for the three month period ended March 31, 1997 and the statement of
cash flows for the three month period  ended March 31, 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.
























                                                        (4)


<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)  increased  $4.4 million or 14% to $37.1 million
over the three  month  period  from  December  31,  1996 to March 31,  1997.  At
year-end, total liquid assets as a percentage of total assets was 31.6%, whereas
on March 31, 1997 it had  increased  to 34.5%.  The  increase in  percentage  of
liquid  assets to total  assets was  tempered by an increase of $4.2  million or
4.0% in total assets.

Cash & due from banks increased $1.4 million over the first three months of 1997
to $12.4  million at March 31, 1997.  During the first three months of 1997 cash
and due from banks averaged  $11.9 million.  The portion of the total cash & due
from banks  representing ATM ("Automatic Teller Machine") network cash inventory
has averaged  approximately  $3.7 million  during 1997 and at March 31, 1997 ATM
cash was approximately $3.5 million.

The increase in total liquid assets,  during the first three months of 1997, was
a primarily  a result of an  increase in deposits of $3.6  million or 3.9% and a
decrease of  $729,000 or 1% in net loans  outstanding.  Deposits  have  averaged
$95.0  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  $69.4 million thus far in 1997 as compared to $66.2  million  averaged
throughout 1997.

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 $422,000 in the first three
months of 1997 from $10.8 million or 10.3% of total gross assets at December 31,
1996 to $11.2 million or 10.3% of total gross assets at December 31, 1996.

Bank capital plus reserves  totaled $11.2 million on March 31, 1997 or 10.32% of
total  adjusted  assets as compared to capital plus reserves of $10.8 million or
10.33% of total adjusted assets at December 31, 1996. At March 31, 1996 the Bank
maintained  a tier one capital  ratio of 12.75% and a tier two capital  ratio of
14.00% as compared to a tier one capital ratio of 11.86%




                                                        (5)


<PAGE>




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

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  $50,000 in  dividends to the Parent  company in the first
three  months of 1997 and the Company  also  declared  cash  dividends to common
shareholders  of $.09 per  share in each of March  of 1997.  The  first  quarter
dividend represents twenty two consecutive  quarterly cash dividends declared by
the Parent company to shareholders.


Item 2B           Results of Operations

Results of Operations

Consolidated  operating  profits were $392,000 ($.41 per fully diluted share vs.
$.37 in the prior year) for the first quarter of 1996, the highest first quarter
in the company's  history.  This represents a $49,000 or 14.2% increase over the
first quarter of 1996 in when net income was $343,000.

The increase in first quarter  earnings in 1997 versus the first quarter of 1996
is a result of an increase in pretax  earnings of $88,000  which is comprised of
an  increase  in net  interest  income  of  $64,000,  a  decrease  in loan  loss
provisions of $45,000, and a decrease in noninterest expense of $90,000;  offset
in part by a decrease in non interest income of $112,000.

The  growth  in net  interest  income of 4.4% in the  first  quarter  of 1997 as
compared to the first  quarter of 1996 is  primarily a result of growth in total
earning assets in the first quarter of 1997, offset in part by a decrease in net
interest  margin.  Average earning assets in the first three months of 1997 were
$92.7 million a $10.8  million or 13.2%  increase over the first three months of
1996 when earning assets  averaged $81.9  million.  The $65,000  increase in net
interest margin in the first quarter of 1997 as compared to the first quarter of
1996 was comprised of a $129,000 increase in interest income offset in part by a
$64,000 increase in interest expense.  Year to date net interest income to total
average  earning assets (net interest  margin) has been 6.62% in the first three
months of 1997 as  compared  to 7.18% in the  first  three  months of 1996.  The
interest margin  compression  has been primarily  caused by an increase in lower
yielding liquid assets. In the first quarter of 1996 the Bank averaged just $2.9
million  in Fed Funds Sold while in the first  quarter of 1997 the  average  was
$8.0  million.   Competition  for  quality  loans  and  the  resulting   pricing
concessions the Bank has made to grow the loan portfolio also contributed to the
compression in net interest  margin as the yield on loans was 11.2% in the first
quarter of 1996 and 10.7% in the first quarter of 1997.







                                                        (6)



<PAGE>



The decrease in loan loss  provisions in the first quarter of 1997 of $45,000 as
compared  to the first  quarter  of 1996 is  primarily  a result of the  Board's
current  projection  that the Bennet  Leasing  Assets  (book  value of  $548,000
included  in  nonaccrual  loans at March  31,  1997)  will not  require  further
reserves.  A proposed  settlement  is still being  reviewed by the Bank's  legal
counsel and will most likely require  certain  revisions if it is to be accepted
by the Bank.


Non  performing  assets at March 31,  1997 were $1.53  million or 1.43% of total
assets and 99% of loan loss reserves. Non performing assets at December 31, 1996
were  $1.67  million or 1.61% of total  assets  and 112% of loan loss  reserves.
There  were no loans  charged  off  during  the  first  three  months of 1996 as
compared to $68,000 during the first three months of 1996. Loan loss reserves of
$1.54  million  at March  31,  1997  represent  a ratio of 2.23% 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 $112,000 in the first quarter of 1997 as
compared to the first  quarter of 1996 was  primarily a result of the closing of
the Bank's mortgage  department in February 1997.  Mortgage  Department revenues
were down $161,000 in the first quarter of 1997 as compared to the first quarter
of 1996. 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 $83,000 or 21% to $481,000 in the first quarter
of 1997 as compared to the first quarter of 1996. The department has contributed
$96,000 to pretax  profits  in 1997 as  compared  to $36,000 in the first  three
months of 1996.

Non  interest  expense  was down  $90,000 or 6.0%  primarily  as a result of the
closing of the Mortgage Department.



















                                                        (7)


<PAGE>

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)




                                   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:  May  12, 1997



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



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