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, 1999

                                          Commission File Number 2-76003

                                                BAY AREA BANCSHARES


                                              California #94-2779021

                                    900 Veterans Blvd., Redwood City, CA 94063
                                             Telephone (650) 562-3238


         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



         1,009,141 Shares of Common Stock Outstanding as of  March 31, 1999













<PAGE>





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


<TABLE>
<CAPTION>




ASSETS                                              3/31/99                3/31/98
<S>                                                  <C>                  <C>                
Cash and due from banks                                11,059              $ 9,608
Federal Funds Sold                                     16,000               19,200
             
     Cash and cash equivalents                         27,059               28,808
Investment securities available for sale
  (market value approximates book value)                1,686                1,775
Investment securities held to maturity
  (market value of $13,129 in 1999 and $13,563 
in 1998)                                               13,033               13,442
Loans, net of reserve for possible loan losses
    of $2,131 in 1999 and $2,075 in 1998              112,245              108,116
Premises and equipment,net                                374                  419
Real estate owned                                           0                    0
Interest receivable and other assets                    2,759                2,764
    
    
     Total assets                                    $157,156             $155,324
                                                 





LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits
   Demand                                            $35,307               $33,558
   Interest-bearing transaction                       55,426                59,044
   Savings                                            10,173                 9,145
   Time                                               35,861                34,708
                                                       -                       -
     Total Deposits                                  136,767               136,455
Interest payable and other liabilities                 2,908                 2,004
Federal funds purchased                                    0                     0
Federal Home Loan Bank advances                        2,500                 2,500
                                                        -                      -
     Total liabilities                               142,175               140,959
                                                        -                      -
Shareholders' equity:

 Common stock, no par value:
 Authorized - 20,000,000 shares; issued & 
 outstanding                                          4,896                  4,896
 1,009,141  in 1999 and 1,004,141 in 1998
   Unrealized (loss) gain on securities held for sale     1                     (2)
   Additonal paid in capital                            957                     900
   Retained earnings                                  9,127                   8,571
                                                         -    
     Total shareholders' equity                      14,981                  14,365
                                                                                 
     Total liabilities and shareholders' equity    $157,156                $155,324
                                                            
</TABLE>
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                                                                     (1)




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

                                                    Three Months        Three Months
                                                        Ended                Ended
                                                       3/31/99              3/31/98
<S>                                                  <C>                  <C>   
Interest Income:                             

     Interest and fees on loans                         $2,806               $2,248
     Interest on investment securities                     213                  232
     Interest on federal funds sold                        101                  135
                                                                        
             Total Interest Income                       3,120                2,615
Interest Expense:                                      
     Interest on interest-bearing transaction amounts      372                  299
     Interest on savings deposits                           99                   70
     Interest on time deposits                             433                  438
     Interest on short-term borrowing                       36                   16
     Interest on notes payable and redeemable debentures     0                    0
    
             Total Interest Expense                        940                  823
                                                                            
             Net interest income                         2,180                1,792
Provision for possible loan losses                          60                   40
                                                                           
Net interest income after provision for possible 
loan losses                                             2,120                 1,752
Noninterest income: 
     Service charges on deposit accounts                   67                    60
     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                     0
     Other  Mortgage Banking Revenue                       14                    49
     ATM network revenue                                  527                   451
     Other                                                 15                    35
                          
             Total noninterest income                     623                   595
Noninterest expense:                                                                                    
     Salaries and related benefits                        789                   672
     Occupancy                                            171                   124
     Equipment                                            112                   125
     Professional fees                                     53                    77
     Stationery and supplies                               21                    25
     Other                                                510                   519
                                                                                           
             Total noninterest expense                  1,656                 1,542
  
Income before provision for income taxes                1,087                   805
Provision for income taxes                                443                   330

Net Income                                                644                   475
                               
Comprehensive income:Unrealized gain (loss) on investment
     securities held-for- sale, net                         3                     2
 
Comprehensive Income                                     $647                  $477

                   
Earnings per share:
Average common and equivalent shares outstanding- 
Primary                                             1,009,141               981,695
 Average common and equivalent shares outstanding- 
Fully Diluted                                       1,040,000             1,010,000
                                            

     Earnings Per Common Share                          $0.64                 $0.48
                          
     Earnings Per Common Share - Assuming Dilution      $0.62                 $0.47
                                                                         
</TABLE>


                                                               (2)
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Part 1 Item 1
                             BAY AREA BANCSHARES
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                      (UNAUDITED, DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>


                                                           Three Months        Three Months
                                                              Ended              Ended
                                                             3/31/99           3/31/98
<S>                                                          <C>                 <C>
Cash flows from operating activities:                                           

    Net Income                                                  $644              $475
    Adjustments to reconcile net income to net cash provided
    by operating activities:

      Depreciation of premises and equipment                      81                90
      Provision for possible loan losses                          60                40
      Net gain loss on sale of assets                              0                 0
      Net loss on sale of investment securities                    0                 0
      Net ammortization and accretion of investment premiums 
      and discounts                                               35                30
      Net decrease (increase) in interest receivable and 
      other assets                                                 5               (86)
      Net  increase in interest payable and other liabilities    904                49
      Net  (increase) decrease in deferred loan fees            (122)               31
      
          Total adjustments                                      963               154
                       

          Net cash provided by operating activities            1,607               629

Cash flows from investing activities:
    Proceeds from sale of investment securities                    0                 0
    Proceeds from the maturity of investment securities
        held for sale                                              0                 0
    Proceeds from the maturity of investment securities
        held to maturity                                       1,000               500
    Mortgage backed securities principal payments                873               316
    Purchase of investment securities held to maturity        (1,410)             (440)
    Purchase of investment securities held for sale                0                 0
    Net increase in gross loans                               (4,065)           (3,165)
    Proceeds from the sale of Real Estate Owned                    0                 0
    Capital expenditures                                         (36)              (22)
     
    Net cash used in investing activities                     (3,638)           (2,811)

Cash flows from financing activities:
    Net  increase in demand deposits,transaction and savings    (841)            3,240
    Net increase in time deposits                              1,153             1,463
    Additional Piad in Capital                                    57                 0
    Net proceeds of Federal Home Loan Bank advances                0                 0
    Proceeds from stock warrants and options exercised            24                20
    Cash Dividends paid                                         (111)              (98)
                                                            
   Net cash  provided by financing activities                    282             4,625
                            
Net  (decrease) increase in cash and cash equivalents         (1,749)            2,443

Cash and cash equivalents,beginning of period                 28,808            18,964
      
Cash and cash equivalents,end of period                      $27,059           $21,407
                
</TABLE>

There were no loans transferred to Real Estate Owned  in 1999 or 1998
respectively.

                                                    (3)

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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, 1999 results of
operations  for the three month period ended March 31, 1999 and the statement of
cash flows for the three month period  ended March 31, 1999 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, 1998.

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



                                                  (4)

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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 and Investments)  decreased $2.5 million
or 5.1% to $41.8  million over the three month period from  December 31, 1998 to
March 31, 1999. At year-end, total liquid assets as a percentage of total assets
was 28.3%, whereas on March 31, 1999 it had decreased to 26.6%.

Cash and due from banks  increased  $1.5  million over the first three months of
1999 to $11.1 million at March 31, 1999.  During the first three months of 1999,
cash and due from banks averaged  $12.1  million.  The portion of the total cash
and due from banks  representing ATM ("Automatic  Teller Machine")  network cash
inventory has averaged  approximately $3.1 million during 1999 and averaged $2.6
in the first three quarters of 1998.

Both average and period end loans and deposits  outstanding are at record levels
for the Company.  During the first three months of 1999 gross loans  outstanding
has  averaged  $115.0  million as compared  to $86.5  million in the first three
months of 1998, an increase of 33%. Gross loans were $114.3 million at March 31,
1999  representing  a $4.5 million or 4.1% increase over the balance at December
31, 1998.

Deposits  have averaged  $132.8  million in the first three months of 1999 while
they averaged  $108.7 million during the first three months of 1998, an increase
of 22.1%.  Deposits  were  $136.8  million at March 31,  1999,  an  increase  of
$312,000 over year end 1998.

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.


                                                        (5)



<PAGE>




Capital

Consolidated  equity capital plus reserves increased $672,000 in the first three
months of 1999 from $16.4  million or 10.36% of total  gross  assets at December
31, 1998 to $17.1 million or 10.9% of total gross assets at March 31, 1999. Bank
capital plus reserves  totaled $15.9 million on March 31, 1999 or 10.0% of total
adjusted  assets as compared to capital plus  reserves of $15.2 million or 9.67%
of total  adjusted  assets at  December  31,  1998.  At March 31,  1999 the Bank
maintained  a tier one capital  ratio of 10.92% and a tier two capital  ratio of
12.17% as compared to 11.41% and 12.66% respectively at December 31, 1998.

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  declared no dividends to the Parent  company in the first three months
of 1999 and the Company declared a cash dividend to common  shareholders of $.11
per share in March of 1999. The first quarter dividend  represents the thirtieth
consecutive   quarterly  cash  dividend   declared  by  the  Parent  company  to
shareholders.


Item 2B  Results of Operations

Results of Operations

Consolidated operating profits for the first quarter of 1999 were $647,000 ($.62
per common share assuming  dilution  compared to $.47 in the same quarter of the
prior year). This represents the highest first quarter earnings in the Company's
history and a $169,000 or 35.4% increase over the first quarter of 1998 when net
income was $477,000.

The increase in first  quarter  earnings in 1999 compared with the first quarter
of 1998 is a result of an  increase  in pretax  earnings  of  $282,000  which is
comprised of an increase in net  interest  income of $388,000 and an increase in
other income of $28,000 offset in part by an increase in noninterest  expense of
$114,000 and an increase in loan loss provisions of $20,000.

The  growth in net  interest  income of 21.2% in the  first  quarter  of 1999 is
primarily  a result  of  growth  in total  earning  assets  offset  in part by a
decrease in net  interest  margin (Net  interest  margin is computed by dividing
annualized net interest  income by average  earning assets during the respective
period).  Average  earning  assets in the  first  quarter  of 1999  were  $138.6
million,  a $28.0 million or 21.2%  increase over the first quarter of 1998 when
earning assets averaged $114.4 million. Net interest margin in the first quarter
of 1999 was  approximately  6.29% as compared  to 6.43% in the first  quarter of
1998.

The modest decline in net interest margin that has occurred throughout the first
three  months of 1999 is a result of a decrease  in the yield on earning  assets
offset in part by a decrease in the cost of deposits and advances.  The yield on
earning assets  decreased in the first three months of 1999 to 9.04% as compared
to 9.39% in the first three months of 1998. The cost of the Bank's  deposits and
advances (including demand deposits), which averaged $135.2 million in the first
three  months of 1999,  fell to 2.78% as  compared  to 3.00% in the first  three
months of 1998, when the deposits and advances averaged $109.7 million.

                                                        (6)
<PAGE>


Loan loss  provisions  were $60,000 in the first  quarter of 1999 and $40,000 in
the first quarter of 1998. Non performing assets at March 31, 1999 were $145,000
or .09% of total assets and 6.8% of loan loss reserves. Non performing assets at
December  31, 1998 were also  $145,000 or .09% of total  assets and 7.0% of loan
loss reserves.

 There have been  $25,000 in loans  charged off during the first three months of
1999 and  $21,000 in  recoveries  of loans  previously  charged  off.  Loan loss
reserves of $2.13 million at March 31, 1999  represent a ratio of 1.86% of gross
loans  outstanding as compared to a loan loss reserve of $2.075 million or 1.88%
of gross loans at December 31, 1998.

The Bank's ATM revenues were up $76,000 or 16.9% in the first quarter of 1999 in
comparison to the first quarter of 1998. Revenue per machine has averaged $3,444
per month thus far in 1999 an increase  of 7.6% over the first  three  months of
1998 in which  average  revenue per machine  was $3,185.  The average  number of
machines in operation was approximately 51 in the first three months of 1999 and
1998.

Non  interest  expense was up  $114,000 or 7.4% in the first  quarter of 1999 as
compared to the first quarter of 1998. This increase was comprised  primarily of
additional salaries and benefits which are up $117,000 or 17% in the first three
months of 1999.

For information  regarding the Company's Year 2000 computer  programming  status
see the discussion contained in the Company's Annual Report on Form 10-K for the
fiscal year ended  December  31, 1998 (Part I, Item 1(C) Bay Area Bank - Company
Subsidiary "Year 2000 Computer Programming Status").



                                                        (7)
<PAGE>





Part II

ITEM 5.  OTHER INFORMATION

Proposed Merger of Holding Companies

         On January 26,  1999,  the  Company  and Greater Bay Bancorp  signed an
Agreement  and  Plan  of  Reorganization  for a  merger  of the  two  companies.
Following  the  transaction,  Bay Area  Bank,  will  operate  as a wholly  owned
subsidiary of Greater Bay Bancorp,  along with Greater Bay Bancorp's  other bank
subsidiaries,  Mid-Peninsula  Bank,  Cupertino National Bank,  Peninsula Bank of
Commerce and Golden Gate Bank.  The  combined  company will have total assets of
approximately $1.8 billion and equity of approximately $107 million.

         The terms of the agreement  provide for the Company's  shareholders  to
receive  shares of Greater Bay Bancorp  stock in a tax-free  exchange  for their
shares of the Company.  For each outstanding  share of the Company,  Greater Bay
Bancorp will issue 1.38682  shares if the market price of its stock is $30.00 or
more at closing, or 1.44271 shares if the market price of its stock is less than
$30.00 at the closing.  Following the merger,  the  shareholders  of the Company
will own approximately 12.7% of the combined company, after giving effect to all
outstanding options.

         The  merger is  expected  to be  accretive  to  Greater  Bay  Bancorp's
earnings  in  1999  based  on  reductions  in  operating  expenses  and  revenue
enhancements  resulting  from an expanded  product  line and  increased  lending
capacity  that can be  utilized  at the Bank.  Management  of the  organizations
believe  that  significant  opportunities  exist  to  enhance  the  spectrum  of
financial services offered to both existing and future clients of the Bank while
also increasing market penetration in the San Francisco Peninsula market areas.

         Greater Bay Bancorp's Board of Directors will be expanded to 15 members
with the addition of one current director of the Company. The Board of Directors
of Bay Area Bank will continue and will include David L. Kalkbrenner,  President
and Chief  Executive  Officer of  Greater  Bay  Bancorp.  Frank  Bartaldo,  Jr.,
President  and Chief  Executive  Officer of Bay Area Bank,  will  remain in that
capacity.

         The merger is subject to certain  conditions  and will be accounted for
as a pooling of interests.  Subject to these conditions,  the merger is expected
to be completed May 21, 1999.

         Greater Bay Bancorp and its financial services subsidiaries,  Cupertino
National Bank,  Mid-Peninsula  Bank,  Peninsula Bank of Commerce and Golden Gate
Bank,  along with its operating  divisions,  Greater Bay Bank Santa Clara Valley
Commercial  Banking  Group,  Greater Bay Corporate  Finance  Group,  Greater Bay
International  Banking  Division,  Greater Bay Trust Company,  Pacific  Business
Funding and Venture Banking Group,  serve clients throughout Silicon Valley, the
San  Francisco  Peninsula and the Contra Costa Tri Valley  Region,  with offices
located in San Jose, Cupertino, Santa Clara, Palo Alto, Redwood City, San Mateo,
Millbrae, San Bruno, San Francisco and Walnut Creek.


ITEM 6
(a)  Exhibits.

2.1  Agreement and Plan of  Reorganization  By And Among Greater Bay Bancorp and
Bay Area Bancshares dated January 26, 1999 (incorporated by reference to Exhibit
2.1 of the  Company's  Annual  Report on Form  10-K for the  fiscal  year  ended
December 31, 1998).

          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)


(b)   Reports on Form 8-K

         None.
                                                        (8)


<PAGE>




                                                     SIGNATURES


Pursuant to the  requirements  of the 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 13, 1999



 /s/ Robert R. Haight
 ----------------------------------------
 Robert R. Haight
 President and Chief Executive Office


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






                                                       (9)





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