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


        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


889,781 Shares of Common Stock Outstanding as of September 30, 1997




<PAGE>

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

<TABLE>
<CAPTION>


ASSETS                                                                        9/30/97                     12/31/96
<S>                                                                         <C>                          <C>                       
Cash and due from banks                                                      $12,436                      $11,011
Federal Funds Sold                                                            10,500                        6,850
                                                                                                 
     Cash and cash equivalents                                                22,936                       17,861
Time deposits with other financial institutions                                    0                          100
Investment securities available for sale
  (market value approximates book value)                                       1,589                        2,588
Investment securities held to maturity
  (market value of $13,870 in 1997 and $12,203 in 1996)                        13,703                       12,081
Loans, net of reserve for possible loan losses
    of $1,587 in 1997 and $1,493 in 1996                                       79,309                       67,012
Loans held for sale                                                                 0                          723
Premises and equipment,net                                                        674                          811
Real estate owned                                                                   0                            0
Interest receivable and other assets                                            2,033                        2,011

   
     Total assets                                                            $120,244                     $103,187
                                                                      

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits
   Demand                                                                     $32,879                      $23,599
   Interest-bearing transaction                                                39,241                       44,493
   Savings                                                                      7,114                        5,551
   Time                                                                        28,208                       19,325
                                                                  
     Total Deposits                                                           107,442                       92,968
Interest payable and other liabilities                                          1,165                          938
Federal funds purchased                                                             0                            0
Federal Home Loan Bank advances                                                 1,000                            0
                                                                     
     Total liabilities                                                        109,607                       93,906
                                                                     
 Sharehoders' equity:

   Common stock, no par value:
     Authorized - 20,000,000 shares; issued & outstanding                       4,352                        4,143
      889,781  in 1997 and 839,638 in 1996
   Unrealized (loss) gain on securities held for sale                              (8)                          (5)
   Retained earnings                                                            6,293                        5,143
                                                                 
     Total shareholders' equity                                                10,637                        9,281
                                                                                                 
     Total liabilities and shareholders' equity                              $120,244                     $103,187
                                                                    

</TABLE>



                                                           (1)
<PAGE>


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


                                                                            Three Months                 Three Months
                                                                                 Ended                       Ended
                                                                                9/30/97                     9/30/96
<S>                                                                            <C>                           <C>  
Interest Income:                                                    

     Interest and fees on loans                                                $2,148                        1,815
     Interest on investment securities                                            252                          211
     Interest on federal funds sold                                               116                          123
     Interest on time deposits with other financial institutions                    0                            1
                                                                     
             Total Interest Income                                              2,516                        2,150
Interest Expense:                                                     
     Interest on interest-bearing transaction amounts                             361                          338
     Interest on savings deposits                                                  69                           55
     Interest on time deposits                                                    340                          251
     Interest on short-term borrowing                                              14                            7
     Interest on notes payable and redeemable debentures                            0                            0
                                                                                                 
             Total Interest Expense                                               784                          651
                                                                     
             Net interest income                                                1,732                        1,499
Provision for possible loan losses                                                 60                          150
                                                                     
             Net interest income after provision for possible loan losses       1,672                        1,349
Noninterest income:                                                   
     Service charges on deposit accounts                                           55                           56
     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                           56
     Other  Mortgage Banking Revenue                                               24                           26
     ATM network revenue                                                          536                          532
     Other                                                                         34                           32
                                                                      
             Total noninterest income                                             649                          702
Noninterest expense:                                                 
     Salaries and related benefits                                                642                          635
     Occupancy                                                                    116                           95
     Equipment                                                                    134                          139
     Professional fees                                                             77                           65
     Stationery and supplies                                                       30                           26
     Other                                                                        506                          457
                                                                     
             Total noninterest expense                                          1,505                        1,417
                                                                     
Income before provision for income taxes                                          816                          634
Provision for income taxes                                                        346                          260
                                                                     
Net Income                                                                       $470                         $374
                                                                     
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                                                  $0.49                        $0.39
                                                                      
     Fully Diluted Net income per share                                            $0.49                        $0.39
                                                                     
</TABLE>
<PAGE>
                                                             (2)


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

                                                                           Nine Months                     Nine Months
                                                                               Ended                       Ended
                                                                             9/30/97                       9/30/96
<S>                                                                            <C>                           <C>  
Interest Income:                                                      

     Interest and fees on loans                                                $5,994                        5,429
     Interest on investment securities                                            732                          611
     Interest on federal funds sold                                               319                          229
     Interest on time deposits with other financial institutions                    2                            4
                                                                      
             Total Interest Income                                              7,047                        6,273
Interest Expense:                                                     
     Interest on interest-bearing transaction amounts                           1,049                          982
     Interest on savings deposits                                                 186                          167
     Interest on time deposits                                                    891                          715
     Interest on short-term borrowing                                              14                           16
     Interest on notes payable and redeemable debentures                            0                            0
                                                                      
             Total Interest Expense                                             2,140                        1,880
                                                                      
             Net interest income                                                4,907                        4,393
Provision for possible loan losses                                                180                          385
                                                                      
             Net interest income after provision for possible loan losses       4,727                        4,008
Noninterest income:                                                   
     Service charges on deposit accounts                                          153                          162
     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                          364
     Other  Mortgage Banking Revenue                                               99                          118
     ATM network revenue                                                        1,531                        1,374
     Other                                                                         83                          107
                                                                          
             Total noninterest income                                           1,878                        2,127
Noninterest expense:                                                 
     Salaries and related benefits                                              1,798                        2,004
     Occupancy                                                                    348                          290
     Equipment                                                                    369                          407
     Professional fees                                                            190                          178
     Stationery and supplies                                                       88                           90
     Other                                                                      1,552                        1,343
                                                                     
             Total noninterest expense                                          4,345                        4,312
                                                                      
Income before provision for income taxes                                        2,260                        1,823
Provision for income taxes                                                        946                          761
                                                                      
Net Income                                                                     $1,314                                      =
Earnings per share:
     Average common and equivalent shares outstanding- Primary                 960,000                      940,000
                                                                    

     Average common and equivalent shares outstanding- Fully Diluted           960,000                      940,000
                                                                      

     Primary Net income per share                                                  $1.37                        $1.13
                                                                      
     Fully Diluted Net income per share                                            $1.37                        $1.13
</TABLE>
                                                                     
<PAGE>
                                                             (3)




Part 1 Item 1
                               BAY AREA BANCSHARES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                        (UNAUDITED, DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>


                                                                              Nine Months                 Nine Months
                                                                                Ended                       Ended
                                                                               9/30/97                     9/30/96
<S>                                                                           <C>                          <C>   
Cash flows from operating activities:                               


    Net Income                                                                 $1,314                       $1,062
    Adjustments to reconcile net income to net cash provided
    by operating activities:

      Depreciation of premises and equipment                                      275                          336
      Provision for possible loan losses                                          180                          385
      Net gain loss on sale of assets                                               0                           (2)
      Funding of loans held for sale                                             (947)                     (11,192)
      Proceeds from the sale of loans held for sale                             1,682                       11,020
      Net gain on sale of loans held for sale                                     (12)                        (376)
      Net loss on sale of investment securities                                     0                            0
      Net ammortization and accretion of investment premiums and discounts         69                           50
      Net decrease in interest receivable and other assets                        (22)                      (1,163)
      Net  increase in interest payable and other liabilities                     227                          558
      Net  (decrease)  increase in deferred loan fees                             (28)                          35
                                                                      
          Total adjustments                                                     1,424                         (349)
                                                                    
          Net cash provided by operating activities                             2,738                          713

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 for sale                                                           1,000                            0
    Proceeds from the maturity of investment securities
        held to maturity                                                        1,585                        1,755
    Mortgage backed securities principal payments                                 449                          899
    Purchase of investment securities held to maturity                         (3,733)                      (3,952)
    Purchase of investment securities held for sale                                 0                            0
    Net increase in gross loans                                               (12,653)                      (4,976)
    Proceeds from the sale of Real Estate Owned                                   226                            0
    Capital expenditures                                                         (138)                        (188)
                                                                     
                                   Net cash used in investing activities      (13,164)                      (6,459)

Cash flows from financing activities:
    Net  increase in demand deposits,transaction and savings                    5,591                        7,310
    Net increase in time deposits                                               8,883                        2,619
    Repayment of Federal Funds Purchased                                            0                       (1,000)
    Net proceeds of Federal Home Loan Bank advances                             1,000                            0
    Proceeds from stock warrants and options exercised                            263                           62
    Cash Dividends paid                                                          (236)                        (134)
                                                                      
                                   Net cash  provided by financing activities  15,501                        8,857   
Net  increase in cash and cash equivalents                                      5,075                        3,111

Cash and cash equivalents,beginning of period                                  17,861                       18,076
                                                                     
Cash and cash equivalents,end of period                                       $22,936                      $21,187
                                                                     

There were $639 and $130 in loans transferred to Real Estate Owned  in 1997 and 
1996 respectively.

</TABLE>
                                                   (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 September 30, 1997, results of
operations for the three and nine month periods ended September 30, 1997 and the
statement of cash flows for the nine month period ended  September 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.

In  February  1997,  the FASB issued SFAS No.  128,  "Earning  per Share."  This
statement  establishes standards for computing and presenting earnings per share
("EPS") and applies to entities with publicly held common stock.  This statement
simplifies the standards for computing EPS  previously  found in APB Opinion No.
15,  "Earnings  Per  Share",  and makes them  comparable  to  international  EPS
standards.  It replaces the  presentation  of primary EPS with a presentation of
basic EPS. It also  requires dual  presentation  of basic and diluted EPS on the
face of the income  statements for all entities with complex capital  structures
and requires a reconciliation  of the numerator and denominator of the basic EPS
computation  to the numerator and  denominator  of the diluted EPS  computation.
This statement is effective for financial  statements  issued for periods ending
after December 15, 1997; earlier  application is not permitted.  Management does
not believe that the  application of this statement will have a material  impact
on the Corporation's financial statements.

In June 1997, the FASB issued SFAS No. 130,  "Reporting  Comprehensive  Income",
and SFAS No.  131,  "Disclosures  About  Segments of an  Enterprise  and Related
Information."  SFAS No. 130  establishes  standards for reporting and display of
comprehensive  income  and  its  components.  SFAS  No.  131  specifies  revised
guidelines for determining an entity's operating segments and the type and level
of financial information to be disclosed. SFAS No. 130 and 131 are effective for
financial  statements  issued for periods  beginnng  after  December  15,  1997.
Management does not believe that the application of these statements will have a
material impact on the Company's financial statements.

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)  increased  $5.6 million or 17% to $38.2 million
over the nine month  period from  December 31, 1996 to  September  30, 1997.  At
year-end, total liquid assets as a percentage of total assets was 31.6%, whereas
on September 30, 1997 it had increased slightly to 31.8%.

Cash & due from banks  increased $1.4 million over the first nine months of 1997
to $12.5  million at September  30,  1997.  During the first nine 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 September
30, 1997 ATM cash was approximately $3.3 million.

The increase in total liquid  assets,  during the first nine months of 1997, was
primarily a result of an increase in deposits and  advances of $15.5  million or
17%,  offset in part by an  increase  in gross  loans of $12.3  million  or 18%.
Deposits have averaged  $98.6 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  $74.2 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 $1.4 million in the first
nine  months  of 1997  from  $10.8  million  or 10.3% of total  gross  assets at
December  31, 1996 to $12.3  million or 10.0% of total gross assets at September
30, 1997.

Bank capital plus  reserves  totaled $11.8 million on September 30, 1997 or 9.7%
of total assets as compared to capital plus  reserves of $10.8  million or 10.3%
of total  adjusted  assets at December 31, 1996.  At September 30, 1997 the Bank
maintained  a tier one capital  ratio of 11.7% and a tier two  capital  ratio of
12.9% as compared to a tier one capital ratio of 11.9%



                                                        (6)
<PAGE>

and a tier two capital ratio of 13.1% 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  $450,000 in dividends to the Parent  company in the first
nine months of 1997 and the  Company  also  declared  cash  dividends  to common
shareholders  of $.09 per share in March,  June and September of 1997. The third
quarter dividend  represents  twenty four  consecutive  quarterly cash dividends
declared by the Parent company to shareholders.


Item 2B           Results of Operations

Results of Operations

Consolidated  operating  profits were $470,000 ($.49 per fully diluted share vs.
$.39 in the prior year) for the third quarter of 1997, the highest third quarter
earnings in the Company's  history.  This represents a $96,000 or 25.7% increase
over the third quarter of 1996 when net income was $374,000.

Consolidated  operating  profits were $1,314,000  ($1.37 per fully diluted share
vs. $1.13 in the prior year) for the first nine months of 1997, the highest nine
month total in the Company's history. This represents a $252,000 or 24% increase
over the first nine months of 1996 in which net income was $1,062,000.

The increase in third quarter  earnings in 1997 versus the third quarter of 1996
is a result of an increase in pretax  earnings of $182,000 which is comprised of
an  increase  in net  interest  income of  $233,000  and a decrease in loan loss
provisions  of $90,000,  offset in part by a decrease in  noninterest  income of
$53,000 and an increase in non interest expense of $88,000.

The increase in earnings for the first nine months of 1997 versus the first nine
months of 1996 is a result of an increase in pretax  earnings of $437,000  which
is comprised of an increase in net interest income of $514,000 and a decrease in
loan loss  provisions of $205,000,  offset in part by a decrease in  noninterest
income of $249,000 and a increase in noninterest expense of $33,000.

The  growth in net  interest  income of 15.5% in the third  quarter  of 1997 and
11.7% in the first nine 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 third quarter of 1997 were $103.2 million, a $14.9 million
or 16.9%  increase over the third quarter of 1996 when earning  assets  averaged
$88.3  million.   Net  interest   margin  in  the  third  quarter  of  1997  was
approximately 6.71% as compared to 6.79% in the third quarter of 1996.


                                                        (7)
<PAGE>

Average  earning assets in the first nine months of 1997 were $97.4  million,  a
$10.5 million or 13.4%  increase over the first nine months of 1996 when earning
assets  averaged $85.9 million.  Net interest margin in the first nine months of
1997 was approximately 6.72% as compared to 6.82% in the first half of 1996.

The yield on earning  assets rose slightly in the third quarter of 1997 to 9.75%
as compared to 9.74% in the third quarter of 1996.  The yield on earning  assets
was down in the first nine  months of 1997 to 9.65% as  compared to 9.74% in the
first nine months of 1996.

The cost of the Bank's deposits and advances  (including demand deposits ) which
averaged  $103.9  million in the third quarter of 1997 rose to 3.02% as compared
to 2.88% in the third  quarter of 1996 when the deposits  and advances  averaged
$90.3  million.  Throughout  the first nine months of 1997 deposits and advances
have  averaged  $98.9  million  and cost 2.88% while in the first nine months of
1996 the average was $86.7 million and cost 2.89%.

The decrease in loan loss provisions  throughout 1997, despite the 18% growth in
loans  outstanding  since  December 31, 1996,  is primarily a result of improved
loan portfolio  performance.  Non  performing  assets at September 30, 1997 were
$707,000 or .59% of total assets and 45% 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 have been $113,000 in loans charged off during the
first nine months of 1997 as  compared to $467,000  during the first nine months
of 1996.  Loan loss reserves of $1.59 million at September 30, 1997  represent a
ratio of 2.04% 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 $53,000 in the third quarter of 1997 and
$249,000  in the first  nine  months 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 relatively flat in the third quarter,  up $4,000 or
1% over the third  quarter of 1996,  but up  $157,000  or 11% for the first nine
months  of 1997 as  compared  to the same  period in 1996.  The lack of  revenue
growth in the third  quarter can be  attributed  to a  reduction  in machines in
operation.  Average  revenue  per  machine was up from $9,700 per machine in the
third quarter of 1996 to $11,700 per machine in the third quarter of 1997. There
was an average of 55 machines in operation in the third quarter of 1996 but just
46 operating in the third quarter of 1997. The reduction in machine was a result
of certain  contracts  that expired in 1997.  The Bank hopes to find  acceptable
machines  sites to  redeploy  all or some of the excess  machines  in the coming
months.  The department has contributed  $249,000 to pretax profits in the first
nine months of 1997 as compared to $173,000 in the first nine months of 1996.

Non  interest  expense  was up $88,000 or 6.2% in the third  quarter but up only
$33,000, less than 1%, for the first none months of 1997.

                                                        (8)

<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)

                                                        (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:  November 10, 1997


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


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


<PAGE>