UNITED STATES
 SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q



|[X] |  | QUARTERLY
     REPORT PURSUANT TO SECTION 13 OR 15(d)
   OF THE SECURITIES EXCHANGE ACT OF 1934
|--- |  | -----------------------------------------------------------------------------------------------

For the quarterly period ended September 30, 1999

OR

|[__] |  | TRANSITION
     REPORT PURSUANT TO SECTION 13 OR 15(d)
   OF THE SECURITIES EXCHANGE ACT OF 1934
|---- |  | ------------------------------------------------------------------------------------------------

For the transition period from______to_____
 
 Commission file number 001-14879

BAY VIEW CAPITAL CORPORATION(Exact name of registrant as specified in its charter)



Registrant's telephone number, including area code
   (650) 312-7200

Indicate by check mark whether the registrant (1) has filed all
   reports required to be filed by Section 13 or 15(d) of the
   Securities Exchange Act of 1934 during the preceding 12 months (or
   for such shorter period that the registrant was required to file
   such reports) and (2) has been subject to such filing requirements
   for the past 90 days. Yes X
   No____

Indicate the number of shares outstanding of each of the
   registrant's classes of common stock, as of the latest practicable
   date.

|Common Stock, Par Value $.01
   
   (Title of Class) | Outstanding at October 29, 1999
   
   18,684,137 shares
|---------------------------------------------------- | --------------------------------------------------------

FORM 10-QINDEX

BAY VIEW CAPITAL CORPORATION

|PART I.  | Page(s)                                                                                   
|-------- | ------------------------------------------------------------------------------------------
|Item 1.  | Financial Statements (Unaudited):                                                         
|         | Consolidated Statements of Financial Condition                                            
|         | Consolidated Statements of Income and Comprehensive
     Income                           
|         | Consolidated Statements of Stockholders' Equity                                           
|         | Consolidated Statements of Cash Flows                                                     
|         | Notes to Consolidated Financial Statements                                                
|         |                                                                                           
|Item 2.  | Management's Discussion and Analysis of Financial
     Condition and Results of Operations
|         |                                                                                           
|Item 3.  | Quantitative and Qualitative Disclosures About Market
     Risk                           
|         |                                                                                           
|PART II. | OTHER INFORMATION                                                                         
|         | Other Information                                                                         
|         |                                                                                           
|         | Signatures                                                                                



Forward-Looking Statements

This Form 10-Q contains forward-looking statements which describe
   our future plans, strategies and expectations. All forward-looking
   statements are based on assumptions and involve risks and
   uncertainties, many of which are beyond our control and which may
   cause our actual results, performance or achievements to differ
   materially from the results, performance or achievements that we
   anticipate. Factors that might affect forward-looking statements
   include, among other things:

- the demand for our products;
- actions taken by our competitors;
- tax rate changes, new tax laws and revised tax law interpretations;
- adverse changes occurring in securities markets;
- inflation and changes in prevailing interest rates that reduce our
   margins or the fair value of the financial instruments we hold;
- economic or business conditions, either nationally or in our
   market areas, that are worse than we expect;
- legislative or regulatory changes that adversely affect our
   business;
- our inability to identify suitable future acquisition candidates;
- the timing, impact and other uncertainties of our future
   acquisitions and our success or failure in the integration of their
   operations;
- our ability to enter new geographic and product markets
   successfully and capitalize on available growth opportunities;
- technological changes, including the year 2000 issue, that are
   more difficult or expensive than we expect;
- increases in delinquencies and defaults by our borrowers;
- increases in our provision for losses on loans and leases;
- increased costs or other difficulties relating to the acquisition
   of Franchise Mortgage Acceptance Company;
- our inability to sustain or improve the performance of our
   subsidiaries;
- our inability to achieve the financial goals in our strategic
   plans, including any financial goals related to both contemplated
   and consummated acquisitions;
- the outcome of lawsuits or regulatory disputes;
- credit and other risks of lending, leasing and investment
   activities; and
- our inability to use the net operating loss carryforwards we
   currently have.

As a result of the above, we cannot assure you that our future
   results of operations or financial condition or any other matters
   will be consistent with those presented in any forward-looking
   statements. Accordingly, we caution you not to rely on these
   forward-looking statements. We do not undertake, and specifically
   disclaim any obligation, to update these forward-looking statements,
   which speak only as of the date made.



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BAY VIEW CAPITAL CORPORATION AND
   SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL CONDITION(Unaudited)





The accompanying notes are an integral part of these
   consolidated financial statements.



BAY VIEW CAPITAL CORPORATION AND
   SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME(Unaudited)





The accompanying notes are an integral part of these
   consolidated financial statements










The accompanying notes are an integral part of these
   consolidated financial statements.



BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
 (Unaudited)





* Substantially restricted

The accompanying notes are an integral part of these
   consolidated financial statements.





BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

|                                                                                                        |             |  |          
|------------------------------------------------------------------------------------------------------- | ----------- |  | ---------
|                                                                                                       
|                                                                                                       
|                                                                                                       
|CASH FLOWS FROM OPERATING
     ACTIVITIES                                                               |             |  |          
|Net income                                                                                              | $23,703     |  | $15,320  
|Adjustments to reconcile net income
     to net cash provided by                                        |             |  |          
|(used in)
     operating activities:                                                                    |             |  |          
|Amortization of intangible
     assets                                                                  | 8,532       |  | 8,475    
|Proceeds from sale of loans
     and leases held-for-sale                                               | 456,679     |  | -        
|Provision for losses on loans
     and leases and real estate owned                                     | 19,128      |  | 5,025    
|Depreciation and amortization
     of premises and equipment                                            | 5,523       |  | 4,979    
|Depreciation and amortization
     of investment in operating leased assets                             | 23,785      |  | 2,691    
|Amortization of premiums, net
     of discounts                                                         | 18,159      |  | 9,936    
|Gain on sale of loans and
     leases and securities, net                                               | (2,379)     |  | (1,067)  
|Decrease (increase) in other
     assets                                                                | 17,226      |  | (20,498) 
|(Decrease) increase in other
     liabilities                                                           | 7,179       |  | (33,238) 
|Other, net                                                                                              | (5,421)     |  | (3,248)  
|                                                                                                        |             |  |          
|Net cash provided by (used in)
     operating activities                                                | 572,114     |  | (11,625) 
|                                                                                                        |             |  |          
|CASH FLOWS FROM INVESTING
     ACTIVITIES                                                               |             |  |          
|Acquisition of a subsidiary, net of
     cash and cash equivalents received                             | -           |  | 82,129   
|Acquisition of deposits, net of
     premium paid                                                       | 110,807     |  | -        
|Net decrease in loans and leases
     resulting from principal payments, net
   
       of originations | 32,068      |  | 434,764  
|Purchase of loans and leases, net                                                                       | (1,040,266) |  | (985,454)
|Purchase of investment securities                                                                       | (9,997)     |  | (1,956)  
|Purchase of mortgage-backed securities                                                                  | (80,474)    |  | (67,703) 
|Principal payments on mortgage-backed
     securities                                                   | 125,866     |  | 223,411  
|Proceeds from the sale of
     mortgage-backed securities available-for-sale                            | -           |  | 234,080  
|Proceeds from the sale of investment
     securities available-for-sale                                 | -           |  | 2,357    
|Proceeds from maturity or call of
     investment securities held-to-maturity                           | -           |  | 5,000    
|Proceeds from the sale of real estate
     owned                                                        | 3,063       |  | 3,310    
|Additions to premises and equipment                                                                     | (2,650)     |  | (10,356) 
|(Increase) decrease in investment in
     stock of the FHLB of San Francisco                            | 8,949       |  | (4,227)  
|Increase in investment in stock of
     the Federal Reserve Bank                                        | (13,395)    |  | -        
|                                                                                                        |             |  |          
|Net cash used in investing activities                                                                   | (866,029)   |  | (84,645) 
|                                                                                                        |             |  |          



The accompanying notes are an integral part of
   these consolidated financial statements.



BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED(Unaudited)





|                                                                         |             |  |            
|------------------------------------------------------------------------ | ----------- |  | -----------
|                                                                        
|                                                                        
|                                                                        
|CASH FLOWS FROM FINANCING
     ACTIVITIES                                |             |  |            
|Net increase (decrease) in deposits                                      | $295,903    |  | $(459,834) 
|Proceeds from advances from the FHLB
     of San Francisco               | 2,898,600   |  | 4,312,700  
|Repayment of advances from the FHLB
     of San Francisco                | (3,090,200) |  | (3,814,490)
|Proceeds from reverse repurchase
     agreements                         | 218,001     |  | 352,511    
|Repayment of reverse repurchase
     agreements                          | (214,554)   |  | (382,264)  
|Issuance of Subordinated Notes                                           | 50,000      |  | -          
|Maturity of Senior Debentures                                            | (50,000)    |  | -          
|Net increase (decrease) in other
     borrowings                         | 114,045     |  | (10,941)   
|Repurchase of common stock                                               | (8,381)     |  | (15,462)   
|Proceeds from issuance of common stock                                   | 396         |  | 3,127      
|Dividends paid to stockholders                                           | (5,762)     |  | (6,043)    
|                                                                         |             |  |            
|Net cash provided by (used in)
     financing activities                 | 208,048     |  | (20,696)   
|                                                                         |             |  |            
|                                                                         |             |  |            
|Net decrease in cash and cash
     equivalents                           | (85,867)    |  | (116,966)  
|Cash and cash equivalents at
     beginning of period                    | 205,186     |  | 231,822    
|                                                                         |             |  |            
|Cash and cash equivalents at end of
     period                          | $119,319    |  | $ 114,856  
|                                                                         |             |  |            
|Cash paid for:                                                           |             |  |            
|Interest                                                                 | $187,346    |  | $195,377   
|Income taxes                                                             | $-          |  | $-         
|                                                                         |             |  |            
|Supplemental non-cash investing and
     financing activities:           |             |  |            
|Loans
     transferred to real estate owned                              | $2,049      |  | $4,203     
|Loans
     transferred from held-for-investment to held-for-sale         | $510,730    |  | $-         
|                                                                         |             |  |            
|The acquisition of a subsidiary
     involved the following:             |             |  |            
|Common stock
     issued                                                 | $-          |  | $210,000   
|Liabilities
     assumed                                                 | -           |  | 2,103,341  
|Fair value
     of assets acquired, other than cash and cash equivalents | -           |  | (2,128,109)
|Goodwill                                                                 | -           |  | (103,103)  
|                                                                         |             |  |            
|Net cash and
     cash equivalents received                              | $-          |  | $ 82,129   
|                                                                         |             |  |            

The accompanying notes are an integral part of these
   consolidated financial statements.



BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSSEPTEMBER 30, 1999(Unaudited)

Note 1 - Basis of Presentation

The accompanying unaudited consolidated financial statements
   include the accounts of Bay View Capital Corporation, a diversified
   financial services holding company incorporated in 1989 under the
   laws of the state of Delaware, and our wholly owned subsidiaries:
   Bay View Bank, N.A., a national bank (sometimes referred to as "
   Bay View Bank"); Bay View Securitization Corporation, a
   Delaware corporation; and Bay View Capital I, a Delaware business
   trust. Bay View Bank includes its wholly owned subsidiaries: Bay
   View Acceptance Corporation, a Nevada corporation; Bay View
   Commercial Finance Group, a California corporation; MoneyCare, Inc.,
   a California corporation; and Bay View Auxiliary Corporation, a
   California corporation. Bay View Acceptance Corporation includes its
   wholly owned subsidiary, LFS-BV, Inc., a Nevada corporation. Bay
   View Credit and Ultra Funding, Inc., formerly wholly owned
   subsidiaries of Bay View Acceptance Corporation, were merged into
   Bay View Acceptance Corporation effective June 14, 1999 and as a
   result, the businesses of Bay View Credit and Ultra Funding, Inc.
   are now conducted by Bay View Acceptance Corporation directly. All
   significant intercompany accounts and transactions have been
   eliminated in consolidation.

Effective March 1, 1999, Bay View Capital Corporation contributed
   the capital stock of Bay View Commercial Finance Group to Bay View
   Bank in conjunction with the March 1, 1999 conversion of Bay View
   Bank from a federally chartered capital stock savings bank to a
   national bank. Bay View Commercial Finance Group was previously a
   wholly owned subsidiary of Bay View Capital Corporation.

The information provided in these interim financial statements
   reflects all adjustments which are, in the opinion of management,
   necessary for a fair presentation of our financial condition as of
   September 30, 1999 and December 31, 1998, the results of our
   operations for the three- and nine-month periods ended September 30,
   1999 and 1998, and our cash flows for the nine-month periods ended
   September 30, 1999 and 1998. These adjustments are of a normal,
   recurring nature unless otherwise disclosed in this Form 10-Q. As
   necessary, reclassifications have been made to prior period amounts
   to conform to the current period presentation. These
   reclassifications had no effect on our financial condition, results
   of operations or stockholders' equity. These interim financial
   statements have been prepared in accordance with the instructions to
   Form 10-Q, and therefore do not include all of the necessary
   information and footnotes for a presentation in conformity with
   generally accepted accounting principles.

The information included in "Management's Discussion and
   Analysis of Financial Condition and Results of Operations" was
   written assuming that you have read or have access to our 1998
   Annual Report on Form 10-K, as amended, which contains the latest
   audited consolidated financial statements and notes, along with
   Management's Discussion and Analysis of Financial Condition as of
   December 31, 1998 and 1997 and Results of Operations for the years
   ended December 31, 1998, 1997 and 1996. Accordingly, only certain
   changes in financial condition and results of operations are
   discussed in this Form 10-Q. Furthermore, the interim financial
   results for the three- and nine-month periods ended September 30,
   1999 are not necessarily indicative of the results that may be
   expected for the entire fiscal year or any other interim period.



BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSSEPTEMBER 30, 1999(Unaudited)

Note 2 - Earnings per Share

Statement of Financial Accounting Standards No. 128, "
   Measurement of Earnings Per Share," establishes standards for
   computing and reporting basic earnings per share and diluted
   earnings per share. Basic earnings per share is calculated by
   dividing net earnings for the period by the weighted-average common
   shares outstanding for that period. There is no adjustment to the
   number of outstanding shares for potential dilutive instruments,
   such as stock options. Diluted earnings per share takes into account
   the potential dilutive impact of such instruments and uses the
   average share price for the period in determining the number of
   incremental shares to add to the weighted-average number of shares
   outstanding.

The following table illustrates the
   calculation of basic and diluted earnings per share for the periods
   indicated:



|                                                              |                                                       |  |                                |  |                                |  |                               
|------------------------------------------------------------- | ----------------------------------------------------- |  | ------------------------------ |  | ------------------------------ |  | ------------------------------
|                                                              | Three Months Ended                                    |  | Nine Months Ended             
|                                                              | September
     30,
   
   1999                        |  | September
     30,
   
   1998 |  | September
     30,
   
   1999 |  | September
     30,
   
   1998
|                                                              | (Amounts in
     thousands, except per share amounts)
|Net earnings available to common
   
       stockholders      | $9,034                                                |  | $5,025                         |  | $23,703                        |  | $15,320                       
|Weighted-average common shares
   
       outstanding         | 18,749                                                |  | 20,095                         |  | 18,884                         |  | 20,224                        
|Add: Dilutive potential common
   
       shares              | 116                                                   |  | 240                            |  | 137                            |  | 346                           
|                                                              |                                                       |  |                                |  |                                |  |                               
|Diluted weighted-average common
   
       shares outstanding | 18,865                                                |  | 20,335                         |  | 19,021                         |  | 20,570                        
|                                                              |                                                       |  |                                |  |                                |  |                               
|Basic earnings per share                                      | $0.48                                                 |  | $0.25                          |  | $1.25                          |  | $0.76                         
|                                                              |                                                       |  |                                |  |                                |  |                               
|Diluted earnings per share                                    | $0.48                                                 |  | $0.25                          |  | $1.25                          |  | $0.74                         
|                                                              |                                                       |  |                                |  |                                |  |                               

Note 3 - Stock Options

At September 30, 1999, Bay View Capital Corporation had five
   stock-based incentive plans: the "Amended and Restated 1986
   Stock Option and Incentive Plan," the "Amended and
   Restated 1995 Stock Option and Incentive Plan," the "
   Amended and Restated 1989 Non-Employee Director Stock Option and
   Incentive Plan," the "1998-2000 Performance Stock Plan,
   " and the "1998 Non-Employee Director Stock Option and
   Incentive Plan."



BAY VIEW
   CAPITAL CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
   FINANCIAL STATEMENTSSEPTEMBER 30, 1999(Unaudited)

The following table
   illustrates the stock options available for grant as of September
   30, 1999:



|                             | 1986 Stock
   
   Option and
   
   Incentive Plan |  | 1995 Stock
   
   Option and
   
   IncentivePlan |  | 1989 Non-Employee
   
   Director Stock
   
   Option and
   
   Incentive Plan |  | 1998-2000
   
   Performance
   
   Stock Plan |  | 1998 Non-
   
   EmployeeDirector Stock
   
   Option and
   
   Incentive Plan
|---------------------------- | -------------------------------------------------- |  | ------------------------------------------------- |  | ------------------------------------------------------------------------------- |  | ---------------------------------------------- |  | -------------------------------------------------------------------------------
|Shares reserved for issuance | 1,759,430                                          |  | 2,000,000                                         |  | 550,000                                                                         |  | 400,000                                        |  | 200,000                                                                        
|Granted                      | (2,048,816)                                        |  | (2,100,000)                                       |  | (570,000)                                                                       |  | (93,000)                                       |  | (42,000)                                                                       
|Forfeited                    | 290,574                                            |  | 300,299                                           |  | 20,000                                                                          |  | -                                              |  | -                                                                              
|Expired                      | (1,188)                                            |  | -                                                 |  | -                                                                               |  | -                                              |  | -                                                                              
|                             |                                                    |  |                                                   |  |                                                                                 |  |                                                |  |                                                                                
|Total available for grant    | -                                                  |  | 200,299                                           |  | -                                                                               |  | 307,000                                        |  | 158,000                                                                        
|                             |                                                    |  |                                                   |  |                                                                                 |  |                                                |  |                                                                                

At September 30, 1999, we had
   outstanding options under the plans with expiration dates ranging
   from the years 2000 through 2009, as illustrated in the following
   table:



|                                       | Number ofOption Shares |  | Exercise PriceRange |  | Weighted-Average
   
   Price
|-------------------------------------- | ---------------------- |  | ------------------- |  | -----------------------------
|Outstanding at December 31, 1998       | 2,145,700              |  | $ 7.88 - 35.20      |  | $ 21.55                      
|Granted                                | 337,000                |  | 18.17 - 19.53       |  | 18.95                        
|Exercised                              | (30,500)               |  | 8.72 - 17.00        |  | 12.99                        
|Forfeited                              | (140,700)              |  | 17.00 - 34.41       |  | 26.64                        
|                                       |                        |  |                     |  |                              
|Outstanding
     at September 30, 1999 | 2,311,500              |  | $ 7.88 - 35.20      |  | $ 20.97                      
|                                       |                        |  |                     |  |                              

On October 14, 1999, our shareholders
   approved an additional 500,000 shares available for grant under the
   Amended and Restated 1995 Stock Option and Incentive Plan subject to
   the close of our acquisition of Franchise Mortgage Acceptance
   Corporation, sometimes referred to as FMAC, which occurred on
   November 1, 1999 (see Note 5).

Note 4 - Dividend Declaration

Bay View Capital Corporation declared
   a quarterly common stock cash dividend of $0.10 per common share on
   September 23, 1999, which was paid on October 22, 1999 to common
   stockholders of record as of October 8, 1999. The dividend, totaling
   approximately $2.0 million, was accrued as of September 30, 1999 and
   is reflected in the accompanying interim consolidated financial
   statements.

Note 5 - Acquisition of Franchise
   Mortgage Acceptance Company

On March 11, 1999, we signed a
   definitive merger agreement with southern California-based FMAC. The
   merger closed on November 1, 1999. Under the terms of the definitive
   agreement, as amended on August 25, 1999, we acquired all of the
   common stock of FMAC for consideration valued at approximately $275
   million. Each share of FMAC common stock was exchanged for, at the
   election of the holder, either $9.80 in cash or 0.5444 shares stock.
   In total, the elections for cash were limited to



BAY VIEW CAPITAL
   CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
   FINANCIAL STATEMENTSSEPTEMBER 30, 1999(Unaudited)

15% of the shares of FMAC common stock
   outstanding immediately prior to closing and the elections for our
   common stock were limited to 85% of the shares of FMAC common stock
   outstanding immediately prior to closing. Upon consummation of the
   merger, we contributed substantially all of FMAC's assets and
   liabilities to newly formed subsidiaries of Bay View Bank.

Note 6 - Segment and Related
   Information

We have four operating
   segments, referred to as business platforms. The platforms were
   determined primarily based upon the characteristics of the
   underlying interest-earning assets. Each platform is comprised of
   interest-earning assets with similar characteristics, including
   marketing and distribution channels, pricing, credit risk, and
   interest rate sensitivity. Our platforms are as follows:

A Banking Platform which is comprised
   of single-family, multi-family and commercial mortgage loans,
   mortgage-backed securities, retail and business deposit products and
   services, and asset-based commercial participation loans. The
   Banking Platform also includes franchise loans purchased during the
   first nine months of 1999 in connection with our acquisition of
   FMAC. The Banking Platform's revenues are substantially derived from
   customers in northern California.

A Home Equity Platform which is
   comprised of home equity loans and lines of credit. The Home Equity
   Platform's revenues are derived from customers throughout the United
   States.

An Auto Platform which is comprised of
   motor vehicle loans and leases. The Auto Platform's revenues are
   substantially derived from customers in California and the western
   United States.

A Commercial Platform which is
   comprised of asset-based lending (excluding asset-based commercial
   participation loans), factoring and commercial leasing activities.
   The Commercial Platform's revenues are derived from customers
   throughout the United States.

Each of our business platforms
   contributes to our overall profitability. We evaluate the
   performance of our segments based on contribution by platform.
   Contribution by platform is defined as each platform's net interest
   income and noninterest income less each platform's allocated
   provision for losses on loans and leases, direct general and
   administrative expenses, including certain direct expense
   allocations, and other noninterest expense, including the
   amortization of intangible assets.

In computing net interest income by
   platform, funding costs are allocated to each platform based on the
   duration of its interest-earning assets and auto-related operating
   leased assets and, specifically, by matching these assets with
   interest-bearing liabilities with similar durations. Accordingly,
   the Auto Platform's and the Commercial Platform's funding costs were
   determined based on our average cost of transaction accounts for the
   appropriate period. The Banking Platform's and the Home Equity
   Platform's funding costs were determined based on the average cost
   of our remaining funding sources, including the noninterest expense
   associated with our 9.76% Capital Securities issued on December 21,
   1998.



BAY VIEW CAPITAL
   CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED
   FINANCIAL STATEMENTSSEPTEMBER 30, 1999(Unaudited)

All indirect general and
   administrative expenses not specifically identifiable with, or
   allocable to, our business platforms are included in indirect
   corporate overhead. Indirect corporate overhead includes both
   recurring items, such as our administrative and support functions,
   and certain special mention items, such as expenses associated with
   corporate-wide process and systems re-engineering projects and
   third-party Year 2000 compliance-related activities.

Our prior period platform results were
   revised to reflect an expanded number of business platforms and to
   reflect the methodology discussed above. We continue to enhance our
   cost allocation methodology and anticipate further enhancements
   during future periods. Intercompany revenues and expenses are
   eliminated in the measurement of platform contribution.

The following tables illustrate each
   platform's contribution for the periods indicated. The tables also
   illustrate the reconciliation of total contribution by platform to
   our consolidated net income for the periods indicated. Reconciling
   items generally include indirect corporate overhead and income tax
   expense.



|                                                              |                                                        |  |                |  |                  |  |                |  |                 
|------------------------------------------------------------- | ------------------------------------------------------ |  | -------------- |  | ---------------- |  | -------------- |  | ----------------
|                                                              | Three Months Ended
     September 30, 1999 (Unaudited)
|                                                              | Banking                                                |  | Home Equity    |  | Auto             |  | Commercial     |  | Total           
|                                                              | (Dollars in thousands)                                
|                                                              |                                                        |  |                |  |                  |  |                |  |                 
|Net interest income
     (1)                                  | $23,608                                                |  | $8,320         |  | $6,437           |  | $3,925         |  | $42,290         
|Provision for
     losses on loans and leases                 | -                                                      |  | (5,050)        |  | (1,650)          |  | (300)          |  | (7,000)         
|Noninterest income
     (2)                                   | 7,014                                                  |  | 21             |  | 16,828           |  | 392            |  | 24,255          
|Direct general and administrative
   
     expenses (1)       | (14,702)                                               |  | (1,071)        |  | (3,258)          |  | (2,102)        |  | (21,133)        
|Leasing
     expenses (2)                                     | -                                                      |  | -              |  | (11,313)         |  | -              |  | (11,313)        
|Dividend
     expense on Capital Securities                   | (1,877)                                                |  | (356)          |  | -                |  | -              |  | (2,233)         
|Net income on
     real estate owned                          | 83                                                     |  | -              |  | -                |  | -              |  | 83              
|Amortization
     of intangible assets                        | (2,055)                                                |  | -              |  | (340)            |  | (350)          |  | (2,745)         
|                                                              |                                                        |  |                |  |                  |  |                |  |                 
|Contribution by
     platform                                 | $12,071                                                |  | $1,864         |  | $6,704           |  | $1,565         |  | 22,204          
|                                                              |                                                        |  |                |  |                  |  |                |  |                 
|Indirect
     corporate overhead (1)                          |                                                        |  |                |  |                  |  |                |  | (5,636)         
|Income tax expense                                            |                                                        |  |                |  |                  |  |                |  | (7,534)         
|                                                              |                                                        |  |                |  |                  |  |                |  |                 
|Net income                                                    |                                                        |  |                |  |                  |  |                |  | $9,034          
|                                                              |                                                        |  |                |  |                  |  |                |  |                 
|                                                              |                                                        |  |                |  |                  |  |                |  |                 
|At September 30, 1999:                                        |                                                        |  |                |  |                  |  |                |  |                 
|Interest-earning assets plus operating
   
     leased assets | $
     3,667,598                                       |  | $
     737,132 |  | $
     1,133,069 |  | $
     148,526 |  | $
     5,686,325
|                                                              |                                                        |  |                |  |                  |  |                |  |                 
|Noninterest-earning
     assets                               |                                                        |  |                |  |                  |  |                |  | 259,679         
|                                                              |                                                        |  |                |  |                  |  |                |  |                 
|Total assets                                                  |                                                        |  |                |  |                  |  |                |  | $
     5,946,004
|                                                              |                                                        |  |                |  |                  |  |                |  |                 



BAY VIEW CAPITAL
   CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 SEPTEMBER 30, 1999(Unaudited)



|                                                     |                                                   |  |             |  |           |  |            |  |            
|---------------------------------------------------- | ------------------------------------------------- |  | ----------- |  | --------- |  | ---------- |  | -----------
|                                                     | Three Months Ended September 30, 1998 (Unaudited)
|                                                     | Banking                                           |  | Home Equity |  | Auto      |  | Commercial |  | Total      
|                                                     | (Dollars in thousands)                           
|                                                     |                                                   |  |             |  |           |  |            |  |            
|Net
     interest income                             | $21,923                                           |  | $7,362      |  | $7,232    |  | $2,747     |  | $39,264    
|Provision for losses on loans and leases             | -                                                 |  | (925)       |  | (1,829)   |  | -          |  | (2,754)    
|Noninterest income (2)                               | 4,661                                             |  | 19          |  | 4,077     |  | 239        |  | 8,996      
|Direct general and administrative expenses (1)       | (16,094)                                          |  | (750)       |  | (4,041)   |  | (2,252)    |  | (23,137)   
|Leasing
     expenses (2)                            | -                                                 |  | -           |  | (2,459)   |  | -          |  | (2,459)    
|Net income on real estate owned                      | 2                                                 |  | -           |  | 4         |  | 2          |  | 8          
|Amortization of intangible assets                    | (2,212)                                           |  | -           |  | (289)     |  | (363)      |  | (2,864)    
|                                                     |                                                   |  |             |  |           |  |            |  |            
|Contribution by platform                             | $8,280                                            |  | $5,706      |  | $2,695    |  | $373       |  | 17,054     
|                                                     |                                                   |  |             |  |           |  |            |  |            
|Indirect
     corporate overhead (1)                 |                                                   |  |             |  |           |  |            |  | (7,109)    
|Income
     tax expense                              |                                                   |  |             |  |           |  |            |  | (4,920)    
|                                                     |                                                   |  |             |  |           |  |            |  |            
|Net
     income                                      |                                                   |  |             |  |           |  |            |  | $5,025     
|                                                     |                                                   |  |             |  |           |  |            |  |            
|                                                     |                                                   |  |             |  |           |  |            |  |            
|At
     September 30, 1998:                          |                                                   |  |             |  |           |  |            |  |            
|Interest-earning assets plus operating leased assets | $ 3,886,015                                       |  | $ 598,771   |  | $ 663,222 |  | $ 83,381   |  | $ 5,231,389
|                                                     |                                                   |  |             |  |           |  |            |  |            
|Noninterest-earning assets                           |                                                   |  |             |  |           |  |            |  | 290,985    
|                                                     |                                                   |  |             |  |           |  |            |  |            
|Total
     assets                                    |                                                   |  |             |  |           |  |            |  | $ 5,522,374
|                                                     |                                                   |  |             |  |           |  |            |  |            



|                                               |                                                       |  |             |  |          |  |            |  |         
|---------------------------------------------- | ----------------------------------------------------- |  | ----------- |  | -------- |  | ---------- |  | --------
|                                               | Nine Months Ended September 30, 1999
     (Unaudited)
|                                               | Banking                                               |  | Home Equity |  | Auto     |  | Commercial |  | Total   
|                                               | (Dollars in thousands)                               
|                                               |                                                       |  |             |  |          |  |            |  |         
|Net
     interest income (1)                   | $71,478                                               |  | $25,021     |  | $18,834  |  | $10,486    |  | $125,819
|Provision for losses on loans and leases       | -                                                     |  | (13,658)    |  | (4,700)  |  | (753)      |  | (19,111)
|Noninterest income (1) (2)                     | 16,967                                                |  | 62          |  | 40,421   |  | 887        |  | 58,337  
|Direct general and administrative expenses (1) | (43,205)                                              |  | (3,110)     |  | (10,760) |  | (6,082)    |  | (63,157)
|Leasing
     expenses (2)                      | -                                                     |  | -           |  | (26,932) |  | -          |  | (26,932)
|Dividend expense on Capital Securities         | (5,687)                                               |  | (1,015)     |  | -        |  | -          |  | (6,702) 
|Net income on real estate owned                | 106                                                   |  | -           |  | -        |  | -          |  | 106     
|Amortization of intangible assets              | (6,483)                                               |  | -           |  | (973)    |  | (1,076)    |  | (8,532) 
|                                               |                                                       |  |             |  |          |  |            |  |         
|Contribution by platform                       | $33,176                                               |  | $7,300      |  | $15,890  |  | $3,462     |  | 59,828  
|                                               |                                                       |  |             |  |          |  |            |  |         
|Indirect
     corporate overhead (1)           |                                                       |  |             |  |          |  |            |  | (15,647)
|Income
     tax expense                        |                                                       |  |             |  |          |  |            |  | (20,478)
|                                               |                                                       |  |             |  |          |  |            |  |         
|Net
     income                                |                                                       |  |             |  |          |  |            |  | $23,703 
|                                               |                                                       |  |             |  |          |  |            |  |         

BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 SEPTEMBER 30, 1999
 
 (Unaudited)





|                                                    |                                                       |             |          |            |         
|--------------------------------------------------- | ----------------------------------------------------- | ----------- | -------- | ---------- | --------
|                                                    | Nine
     Months Ended September 30, 1998 (Unaudited)
|                                                    | Banking                                               | Home Equity | Auto     | Commercial | Total   
|                                                    | (Dollars
     in thousands)                          
|                                                    |                                                       |             |          |            |         
|Net interest income                                 | $71,511                                               | $14,491     | $20,706  | $7,834     | $114,542
|Provision for losses on loans and
     leases       | -                                                     | (1,470)     | (3,644)  | -          | (5,114) 
|Noninterest income (2)                              | 12,192                                                | 198         | 6,385    | 552        | 19,327  
|Direct general and administrative
     expenses (1) | (47,612)                                              | (1,665)     | (12,602) | (6,164)    | (68,043)
|Leasing expenses (2)                                | -                                                     | -           | (3,167)  | -          | (3,167) 
|Net income on real estate owned                     | 88                                                    | -           | 4        | 102        | 194     
|Amortization of intangible assets                   | (6,517)                                               | -           | (869)    | (1,089)    | (8,475) 
|                                                    |                                                       |             |          |            |         
|Contribution by platform                            | $29,662                                               | $11,554     | $6,813   | $1,235     | 49,264  
|                                                    |                                                       |             |          |            |         
|Indirect corporate overhead (1)                     |                                                       |             |          |            | (19,175)
|Income tax expense                                  |                                                       |             |          |            | (14,769)
|                                                    |                                                       |             |          |            |         
|Net income                                          |                                                       |             |          |            | $15,320 
|                                                    |                                                       |             |          |            |         

(1)  Amounts include certain special mention items
   which are discussed at "Net Interest Income and Net Interest
   Margin", "Noninterest Income" and "General and
   Administrative Expenses." Special mention items generally
   include income and expense items recognized during the period that
   we believe are significant and/or unusual in nature and therefore
   useful to you in evaluating our performance and trends. These items
   may or may not be nonrecurring in nature.

(2)  The Auto Platform commenced its leasing
   activities effective April 1, 1998. The Auto Platform commenced its
   leasing activities effective April 1, 1998.



Item 2. Management's Discussion and Analysis of Financial Condition
   and Results of Operations

Strategic Overview

Bay View Capital Corporation is a diversified financial services
   company that operates distinct business platforms. Each platform is
   comprised of interest-earning assets with similar characteristics
   including, among other things, marketing and distribution channels,
   pricing, credit risk, and interest rate sensitivity.

Throughout 1998, we reported on three business platforms: a Banking
   Platform, a Consumer Platform and a Commercial Platform. The Banking
   Platform included single-family, multi-family and commercial
   mortgage loans, mortgage-backed securities, and retail and business
   deposit products and services. The Consumer Platform included motor
   vehicle loans and leases and home equity loans. The Commercial
   Platform included asset-based lending, factoring and commercial
   leasing activities.

Effective January 1, 1999, we expanded to four business platforms
   in order to facilitate a more effective presentation and analysis of
   our different business activities. These platforms are as follows:

- A Banking Platform comprised of single-family, multi-family
   and commercial mortgage loans, mortgage-backed securities, retail
   and business deposit products and services, and asset-based
   commercial participation loans. The Banking Platform also includes
   franchise loans purchased during the first nine months of 1999 in
   connection with our acquisition of FMAC. We anticipate presenting
   the FMAC franchise lending activities as a separate business
   platform beginning January 1, 2000.
- A Home Equity Platform comprised of home equity loans and
   lines of credit.
- An Auto Platform comprised of motor vehicle loans and leases.
- A Commercial Platform comprised of asset-based lending,
   factoring and commercial leasing activities.

Mission/Strategies

Our mission is to build a diversified financial services company by
   investing in niche businesses with risk-adjusted returns that
   enhance shareholder value. Our strategies center around our
   continued transition to commercial banking activities and the
   expected expansion of our net interest margin. In order to realize
   this objective, our actions include the following:

- Replacing lower-yielding mortgage loans and mortgage-backed
   securities on our balance sheet with consumer and commercial loans
   and leases with higher risk-adjusted returns, shorter maturities and
   less sensitivity to interest rate changes.
- Enhancing and expanding Bay View Bank's deposit base by
   attracting and retaining lower-cost transaction accounts, including
   commercial and small business checking accounts, and certificates of
   deposit combined with selected branch acquisitions.
- Redeploying our excess capital in businesses intended to
   generate assets with higher risk-adjusted returns than those
   typically provided by mortgage loans and mortgage-backed securities.



- Maintaining the capital level of both Bay View Bank and Bay
   View Capital Corporation at or above the well-capitalized level, as
   defined for regulatory purposes, and returning excess capital at Bay
   View Bank to the holding company, as necessary, for redeployment.

Banking Platform Strategy

The Banking Platform's primary objective is enhancing the value of
   Bay View Bank's retail branch franchise through internal growth, new
   and enhanced products and services, acquisitions, and purchases of
   deposits. At September 30, 1999, the Banking Platform had
   approximately $3.7 billion in interest-earning assets as compared
   with approximately $3.8 billion at December 31, 1998.

A primary component of the Banking Platform's strategy is
   increasing lower-cost transaction accounts (e.g., checking, savings
   and money market accounts) as a source of financing for Bay View
   Capital Corporation and its subsidiaries. Transaction accounts at
   Bay View Bank as a percentage of total retail deposits increased to
   52.0% at September 30, 1999 as compared with 49.8% at December 31,
   1998. Total retail deposits at Bay View Bank were $3.4 billion at
   September 30, 1999 as compared with $3.3 billion at December 31,
   1998.

On July 8, 1999, we announced a definitive agreement with Luther
   Burbank Savings, a savings bank headquartered in Santa Rosa,
   California, to acquire Luther Burbank Savings' Mill Valley and
   Novato, California branches. These two branches represent
   approximately $117 million in deposits. In accordance with the
   agreement, we paid a 5.25% deposit premium. The transaction closed
   on September 25, 1999 and these two branches are now operating as
   Bay View Bank branches

Effective March 1, 1999, Bay View Bank converted from a savings
   institution regulated by the Office of Thrift Supervision to a
   national bank regulated by the Office of the Comptroller of the
   Currency and Bay View Capital Corporation converted from a savings
   and loan holding company regulated by the Office of Thrift
   Supervision to a bank holding company regulated by the Federal
   Reserve Board. These conversions represent a critical step in our
   transformation to a commercial bank. The new national bank charter
   provides us with the ability to continue, as well as expand, our
   focus on traditional commercial banking activities.

Home Equity Platform Strategy

The Home Equity Platform originates and purchases home equity loans
   and lines of credit with higher risk-adjusted returns than
   traditional mortgage loans. At September 30, 1999, the Home Equity
   Platform had approximately $737 million in interest-earning assets
   as compared with approximately $657 million at December 31, 1998.
   The Home Equity Platform's portfolio included $446 million in high
   loan-to-value home equity loans at September 30, 1999 as compared
   with $488 million at December 31, 1998. We do not anticipate
   increasing our exposure to high loan-to-value home equity loans
   beyond their current levels.

Auto Platform Strategy

The Auto Platform underwrites and purchases high-quality,
   fixed-rate loans and leases secured by new and used motor vehicles.
   The platform commenced its leasing activities effective April 1,
   1998. At September 30, 1999, the Auto Platform had approximately
   $1.1 billion in interest-earning assets and operating leased assets
   as compared with approximately $754 million at December 31, 1998.



In executing its strategy, the Auto Platform identifies product
   niches which are not the primary focus of traditional competitors in
   the auto lending area. One such niche includes motor vehicle loans
   where the borrower desires a higher relative loan amount and/or a
   longer term than is offered by many other motor vehicle financing
   sources. In return for the flexibility of the product it offers, the
   Auto Platform charges interest rates in this niche which are higher
   than those typically offered by traditional sources of motor vehicle
   financing, such as banks and captive finance companies, while
   applying its traditional underwriting criteria to mitigate any
   potential loan losses. The Auto Platform also pursues geographic and
   product niches in its more conventional loan and lease financing
   businesses.

Our strategic alliance with Lendco Financial Services for the
   purchase of motor vehicle loans and leases, which began in the
   second quarter of 1998, provided us with an option to acquire Lendco
   Financial Services. While we did not exercise this option, we intend
   to continue purchasing motor vehicle loans and leases from Lendco
   Financial Services through June 30, 2000, when our contractual
   agreement expires.

Commercial Platform Strategy

The Commercial Platform's strategy focuses on being a nationwide
   provider of commercial lending and leasing products and services. In
   December 1997, we expanded our Commercial Platform by forming an
   asset-based lending group known as Bay View Financial Corporation.
   Specifically, we added personnel with significant industry
   experience, relocated the asset-based lending business to southern
   California, one of the top asset-based lending markets in the
   country, and added new and enhanced products to the asset-based
   lending segment's product array. At September 30, 1999, the
   Commercial Platform had approximately $149 million in
   interest-earning assets as compared with approximately $95 million
   at December 31, 1998. The Commercial Platform also originates
   asset-based commercial participation loans for the Banking Platform.
   These loans totaled approximately $59 million at September 30, 1999
   and $18 million at December 31, 1998.

Acquisition of FMAC

FMAC is one of the nation's leading small business lenders
   specializing in franchise concept loans. Bankers Mutual, a division
   of FMAC, is one of the nation's leading multi-family lenders. Since
   the merger, FMAC and Bankers Mutual have operated as separate
   subsidiaries of Bay View Bank. FMAC's insurance agency service will
   operate as a separate subsidiary of our holding company, Bay View
   Capital Corporation. The acquisition provides us with significant
   asset generation capabilities consistent with our strategic
   direction. In addition, the acquisition provides us with a
   significant small business platform focused on franchised
   quick-service restaurants, such as Burger King, Wendy's, Pizza Hut,
   and KFC, and casual dining restaurants, such as TGI Friday's,
   Applebees and Denny's. The acquisition also provides us established
   lending groups focused on retail energy businesses (service
   stations, convenience stores, truck stops, car washes, and quick
   lube businesses) and funeral home and cemetery owners. In addition,
   Bankers Mutual, which was acquired by FMAC in April of 1998, is one
   of the nation's leading multi-family lenders and we expect to
   continue to expand that business. We intend to portfolio a
   significant portion of the commercial franchise loans originated,
   accelerating the transformation of our balance sheet to consumer and
   commercial assets with higher risk-adjusted yields. Bankers Mutual
   has historically sold its multi-family loan production through
   seller-servicer programs administered by Fannie Mae and Freddie Mac,
   which we intend to continue prospectively.



Results of Operations

Net income for the third quarter of 1999 was $9.0 million, or $0.48
   per diluted share, as compared with $5.0 million, or $0.25 per
   diluted share, for the third quarter of 1998. Net income for the
   first nine months of 1999 was $23.7 million, or $1.25 per diluted
   share, as compared with $15.3 million, or $0.74 per diluted share,
   for the first nine months of 1998. The increases in net income and
   earnings per diluted share, as compared with the respective prior
   periods, were primarily driven by higher net interest income, higher
   noninterest income and lower general and administrative expenses.

Contribution by Platform

Each of our business platforms contributes to our overall
   profitability. Contribution by platform is defined as each
   platform's net interest income and noninterest income less each
   platform's allocated provision for losses on loans and leases,
   direct general and administrative expenses, including certain direct
   expense allocations, and other noninterest expense, including the
   amortization of intangible assets.

In computing net interest income by platform, funding costs are
   allocated to each platform based on the duration of its
   interest-earning assets and auto-related operating leased assets
   and, specifically, by matching these assets with interest-bearing
   liabilities with similar durations. Accordingly, the Auto Platform's
   and the Commercial Platform's funding costs were determined based on
   our average cost of transaction accounts for the appropriate period.
   The Banking Platform's and the Home Equity Platform's funding costs
   were determined based on the average cost of our remaining funding
   sources, including the noninterest expense associated with our 9.76%
   Capital Securities issued on December 21, 1998.

All indirect general and administrative expenses not specifically
   identifiable with, or allocable to, our business platforms are
   included in indirect corporate overhead. Indirect corporate overhead
   includes both recurring items, such as our administrative and
   support functions, and certain special mention items, such as
   expenses associated with corporate-wide process and systems
   re-engineering projects and third-party Year 2000 compliance-related
   activities.

Our prior period platform results were revised to reflect the
   expanded number of business platforms and to reflect the methodology
   discussed above. We continue to enhance our cost allocation
   methodology and anticipate further enhancements during future
   periods. Intercompany revenues and expenses are eliminated in the
   measurement of platform contribution.



The following tables illustrate each platform's contribution for
   the periods indicated. The tables also illustrate the reconciliation
   of total contribution by platform to our net income for the periods
   indicated. Reconciling items generally include indirect corporate
   overhead and income tax expense.



|                                                    |                                                        |             |         |            |         
|--------------------------------------------------- | ------------------------------------------------------ | ----------- | ------- | ---------- | --------
|                                                    | Three Months
     Ended September 30, 1999 (Unaudited)
|                                                    | Banking                                                | Home Equity | Auto    | Commercial | Total   
|                                                    | (Dollars in thousands)                                
|                                                    |                                                        |             |         |            |         
|Net interest income (1)                             | $23,608                                                | $8,320      | $6,437  | $3,925     | $42,290 
|Provision for losses on loans and
     leases       | -                                                      | (5,050)     | (1,650) | (300)      | (7,000) 
|Noninterest income (2)                              | 7,014                                                  | 21          | 16,828  | 392        | 24,255  
|Direct general and administrative
     expenses (1) | (14,702)                                               | (1,071)     | (3,258) | (2,102)    | (21,133)
|Dividend expense on Capital Securities              | (1,877)                                                | (356)       | -       | -          | (2,233) 
|Net income on real estate owned                     | 83                                                     | -           | -       | -          | 83      
|Amortization of intangible assets                   | (2,055)                                                | -           | (340)   | (350)      | (2,745) 
|                                                    |                                                        |             |         |            |         
|Contribution by platform                            | $12,071                                                | $1,864      | $6,704  | $1,565     | 22,204  
|                                                    |                                                        |             |         |            |         
|Indirect corporate overhead (1)                     |                                                        |             |         |            | (5,636) 
|Income tax expense                                  |                                                        |             |         |            | (7,534) 
|                                                    |                                                        |             |         |            |         
|Net income                                          |                                                        |             |         |            | $9,034  
|                                                    |                                                        |             |         |            |         





|                                                    |          |        |         |         |         
|--------------------------------------------------- | -------- | ------ | ------- | ------- | --------
|                                                   
|                                                   
|                                                   
|                                                    |          |        |         |         |         
|Net interest income                                 | $21,923  | $7,362 | $7,232  | $2,747  | $39,264 
|Provision for losses on loans and
     leases       | -        | (925)  | (1,829) | -       | (2,754) 
|Noninterest income (2)                              | 4,661    | 19     | 4,077   | 239     | 8,996   
|Direct general and administrative
     expenses (1) | (16,094) | (750)  | (4,041) | (2,252) | (23,137)
|Leasing expenses (2)                                | -        | -      | (2,459) | -       | (2,459) 
|Net income on real estate owned                     | 2        | -      | 4       | 2       | 8       
|Amortization of intangible assets                   | (2,212)  | -      | (289)   | (363)   | (2,864) 
|                                                    |          |        |         |         |         
|Contribution by platform                            | $8,280   | $5,706 | $2,695  | $373    | 17,054  
|                                                    |          |        |         |         |         
|Indirect corporate overhead (1)                     |          |        |         |         | (7,109) 
|Income tax expense                                  |          |        |         |         | (4,920) 
|                                                    |          |        |         |         |         
|Net income                                          |          |        |         |         | $5,025  
|                                                    |          |        |         |         |         

|                                                    |          |          |          |         |         
|--------------------------------------------------- | -------- | -------- | -------- | ------- | --------
|                                                   
|                                                   
|                                                   
|                                                    |          |          |          |         |         
|Net interest income (1)                             | $71,478  | $25,021  | $18,834  | $10,486 | $125,819
|Provision for losses on loans and
     leases       | -        | (13,658) | (4,700)  | (753)   | (19,111)
|Noninterest income (1) (2)                          | 16,967   | 62       | 40,421   | 887     | 58,337  
|Direct general and administrative
     expenses (1) | (43,205) | (3,110)  | (10,760) | (6,082) | (63,157)
|Leasing expenses (2)                                | -        | -        | (26,932) | -       | (26,932)
|Dividend expense on Capital Securities              | (5,687)  | (1,015)  | -        | -       | (6,702) 
|Net income on real estate owned                     | 106      | -        | -        | -       | 106     
|Amortization of intangible assets                   | (6,483)  | -        | (973)    | (1,076) | (8,532) 
|                                                    |          |          |          |         |         
|Contribution by platform                            | $33,176  | $7,300   | $15,890  | $3,462  | 59,828  
|                                                    |          |          |          |         |         
|Indirect corporate overhead (1)                     |          |          |          |         | (15,647)
|Income tax expense                                  |          |          |          |         | (20,478)
|                                                    |          |          |          |         |         
|Net income                                          |          |          |          |         | $23,703 
|                                                    |          |          |          |         |         















|                                                    |          |         |          |         |         
|--------------------------------------------------- | -------- | ------- | -------- | ------- | --------
|                                                   
|                                                   
|                                                   
|                                                    |          |         |          |         |         
|Net interest income                                 | $71,511  | $14,491 | $20,706  | $7,834  | $114,542
|Provision for losses on loans and
     leases       | -        | (1,470) | (3,644)  | -       | (5,114) 
|Noninterest income (2)                              | 12,192   | 198     | 6,385    | 552     | 19,327  
|Direct general and administrative
     expenses (1) | (47,612) | (1,665) | (12,602) | (6,164) | (68,043)
|Leasing expenses (2)                                | -        | -       | (3,167)  | -       | (3,167) 
|Net income on real estate owned                     | 88       | -       | 4        | 102     | 194     
|Amortization of intangible assets                   | (6,517)  | -       | (869)    | (1,089) | (8,475) 
|                                                    |          |         |          |         |         
|Contribution by platform                            | $29,662  | $11,554 | $6,813   | $1,235  | 49,264  
|                                                    |          |         |          |         |         
|Indirect corporate overhead (1)                     |          |         |          |         | (19,175)
|Income tax expense                                  |          |         |          |         | (14,769)
|                                                    |          |         |          |         |         
|Net income                                          |          |         |          |         | $15,320 
|                                                    |          |         |          |         |         

(1) Amounts include certain special mention items which are
   discussed at "Net Interest Income and Net Interest Margin"
   , "Noninterest Income" and "General and
   Administrative Expenses." Special mention items generally
   include income and expense items recognized during the period that
   we believe are significant and/or unusual in nature and therefore
   useful to you in evaluating our performance and trends. These items
   may or may not be nonrecurring in nature.

(2)
 The Auto Platform commenced its leasing activities effective April 1,
   1998.

A discussion of each of the significant components of contribution
   by platform follows:





- Reserves for loans and
    leases that have been individually evaluated and identified as
    loans or leases which have probable losses. These loans and
    leases are generally larger-balance commercial or income producing
    real estate loans or leases which are evaluated on an individual
    basis. Reserves for these loans and leases are attributable to
    specific weaknesses in these loans or leases evidenced by factors
    such as a deterioration in the borrower's ability to meet its
    obligations, a deterioration in the quantity or quality of the
    collateral securing the loan or lease, payment delinquency, or
    other events of default under the terms of the loan or lease
    agreement or promissory note.
- Reserves for groups of
    smaller-balance homogenous loans and leases that are collectively
    evaluated for impairment and for groups of performing
    larger-balance loans and leases which currently exhibit no
    identifiable weaknesses. The smaller-balance homogenous loans
    and leases generally consist of single-family mortgage loans and
    consumer loans, including auto loans, home equity loans and lines
    of credit and unsecured personal loans. The larger-balance loans
    and leases generally consist of commercial or income producing real
    estate loans and leases. These loans and leases have specific
    characteristics which indicate that it is probable that a loss has
    been incurred in a group of loans or leases with those similar
    characteristics. Reserves for these groups of loans and leases are
    determined based on a combination of factors including historical
    loss experience, asset concentrations, levels and trends of
    classified assets, and loan and lease delinquencies. Reserves for these groups of loans and
    leases also include an additional reserve for certain products
    introduced more recently by us, such as high loan-to-value home
    equity loans, where we do not have extensive historical data, other
    than industry experience, upon which to base our reserve levels.
    This additional reserve is intended to provide for those situations
    where our experience may be different than industry experience. 3.Unallocated
    Reserves. Management determines the unallocated portion of the
    allowance for loan and lease losses based on factors that are not
    necessarily associated with a specific credit, group of loans or
    leases or loan or lease category. These factors include, but are
    not limited to, management's evaluation of economic conditions in
    regions where we lend money, loan and lease concentrations, lending
    policies or underwriting procedures, and trends in delinquencies
    and nonperforming assets. The unallocated portion of the allowance
    for loan and lease losses reflects management's efforts to ensure
    that the overall allowance appropriately reflects the probable
    losses inherent in the loan and lease portfolio.
  The allowance for losses on loans and
    leases at September 30, 1999 was $45.3 million as compared with
    $45.4 million at December 31, 1998. The slight decrease in the
    allowance for losses on loans and leases was due to net charge-offs
    exceeding the provision for losses on loans and leases during the
    first nine months of 1999.
  The following table illustrates the
    allowance for losses on loans and leases as a percentage of
    nonperforming assets and gross loans and leases, excluding loans
    and leases held-for-sale:
  Allowance for Losses on Loans and Leases as a
    
    Percentage of Specified Assets (Unaudited)September 30, 1999
    December 31, 1998(Dollars in
      thousands)Assets
    Percent
    Assets
    PercentNonperforming assets
    $13,640
    332%
    $18,020
    252%Gross loans and leases, excluding loans and leases held-for-sale
    $4,387,690
    1.03%
    $4,191,465
    1.08%
  The following table illustrates the
    changes in the allowance for losses on loans and leases for the
    periods indicated:
  (Unaudited)Three Months
    Ended
    September 30,
    
    1999
    Nine Months
    Ended
    September 30,
    
    1999
    Year
      Ended December 31,
    
    1998(Dollars in thousands)Beginning balance
    $44,453
    $45,405
    $38,458Reserves related to acquisitions
    -
    -
    11,374Charge-offs:Real Estate and Other
    (78)
    (666)
    (2,480)Home Equity
    (4,236)
    (14,165)
    (7,152)Auto
    (1,654)
    (5,651)
    (8,604)Commercial
    (976)
    (1,536)
    (828)(6,944)
    (22,018)
    (19,064)Recoveries:Real Estate and Other
    11
    330
    2,290Home Equity
    356
    959
    456Auto
    419
    1,388
    2,599Commercial
    51
    171
    178837
    2,848
    5,523Net charge-offs
    (6,107)
    (19,170)
    (13,541)Provision for losses on loans and leases
    7,000
    19,111
    9,114Ending balance
    $45,346
    $45,346
    $45,405Net charge-offs to average loans and leases (annualized)
    0.55%
    0.58%
    0.32%The increase in the percentage of net
    charge-offs to average loans and leases for the first nine months
    of 1999, as compared with the year ended December 31, 1998, was due
    to an increase in annualized net charge-offs partially offset by an
    increase in average loan and lease balances. The increase in
    annualized net charge-offs was due to the continued change-out of
    our balance sheet toward higher-risk, yet higher-yielding, consumer
    and commercial assets.
  
  Deposits
  As a primary part of our business, we
    generate deposits for the purpose of funding loans, leases and
    securities. The following table illustrates deposits as of the
    dates indicated:(Unaudited)September 30, 1999
    December 31, 1998Amount
    % of
    
    Total Deposits
    WeightedAverageRate
    Amount
    % ofTotal
    
    Deposits
    WeightedAverageRate(Dollars in thousands)Transaction accounts
    $ 1,755,989
    47.8%
    3.26%
    $ 1,627,275
    49.8%
    3.15%Retail
      certificates of deposit
    1,620,784
    44.1
    4.81
    1,642,362
    50.2
    5.20Brokered certificates of deposit
    299,574
    8.1
    5.54 5.03
    -
    -
    -Total
    $ 3,676,347
    100.0%
    4.11%
    $ 3,269,637
    100.0%
    4.20%Borrowings
  We utilize collateralized advances
    from the Federal Home Loan Bank of San Francisco and other
    borrowings, such as senior and subordinated debt, capital
    securities, warehouse lines, and securities sold under agreements
    to repurchase (also known as reverse repurchase agreements), on a
    collateralized and noncollateralized basis, for various purposes
    including the funding of loans, leases and securities as well as to
    support the execution of our business strategies.
  The following table illustrates
    outstanding borrowings as of the dates indicated:
  (Unaudited)September 30, 1999
    December 31, 1998(Dollars in
      thousands)Advances from the
      Federal Home Loan Bank of San Francisco
    $
      1,461,700
    $1,653,300Securities sold under agreements to
      repurchase
    28,749
    25,302Other borrowings)
    119,122
    5,077Subordinated Notes, net
    149,485
    99,437Senior Debentures
    -
    50,000Capital Securities
    90,000
    90,000Total
    $
      1,849,056
    $1,923,116
  Our $50 million of 8.42% Senior
    Debentures matured on June 1, 1999. On July 15, 1999, Bay View
    Bank, our wholly owned subsidiary, obtained an initial $350 million
    warehouse facility. The committed facility, which has a one-year
    term, was established to provide financing for franchise loans. The
    balance of the warehouse line was $115.6 million at September 30,
    1999. On August 18, 1999, Bay View Bank issued $50 million of 10%
    Subordinated Notes, which mature in August 2009. The lower
    borrowing level at September 30, 1999, as compared with December
    31, 1998, was due primarily to the paydown of Federal Home Loan
    Bank advances, related primarily to the sale of $450 million in
    multi-family COFI-based loans that were pledged as underlying
    collateral, and higher deposit balances, largely attributable to
    the acquisition of the Luther Burbank Savings branches, internal
    deposit growth, and the use of brokered certificates of deposit as
    an alternative funding source. We anticipate that the balances
  Liquidity
  The objective of our liquidity
    management program is to ensure that funds are available in a
    timely manner to meet loan demand and depositors' needs, and to
    service other liabilities as they come due, without causing an
    undue amount of cost or risk, and without causing a disruption to
    normal operating conditions.
  We regularly assess the amount and
    likelihood of projected funding requirements through a review of
    factors such as historical deposit volatility and funding patterns,
    present and forecasted market and economic conditions, and existing
    and planned business activities. Our Asset and Liability Committee
    provides oversight to the liquidity management process and
    recommends policy guidelines, subject to Board of Directors
    approval, and courses of action to address our actual and projected
    liquidity needs.
  The ability to attract a stable,
    low-cost base of deposits is a significant source of liquidity.
    Other sources of liquidity available to us include short-term
    borrowings, which consist of advances from the Federal Home Loan
    Bank of San Francisco, reverse repurchase agreements, warehouse
    lines, and other short-term borrowing arrangements. Our liquidity
    requirements can also be met through the use of our portfolio of
    liquid assets. Liquid assets, as defined by us, include cash and
    cash equivalents in excess of the minimum levels necessary to carry
    out normal business operations, federal funds sold, commercial
    paper, and other short-term investments.
  Capital Resources
  Management seeks to maintain adequate
    capital to support anticipated asset growth and credit risks, and
    to ensure that Bay View Capital Corporation and Bay View Bank are
    in compliance with all regulatory capital guidelines. The primary
    sources of new capital during the third quarter of 1999 were the
    retention of earnings and $50 million in Subordinated Notes issued
    by Bay View Bank, our wholly owned subsidiary, on August 18, 1999.
    The Subordinated Notes, which mature in August 2009, qualify as
    Tier 2 capital for regulatory purposes. The proceeds from the notes
    were used for, among other things, the payment of dividends to us
    to partially fund our acquisition of FMAC and for our general
    corporate purposes.
  On December 21, 1998, we issued $90
    million in Capital Securities through Bay View Capital I. The
    Capital Securities, which were sold in an underwritten public
    offering, pay quarterly cumulative cash distributions at an annual
    rate of 9.76% of the liquidation value of $25 per share. We used
    $50 million of the proceeds to repay our 8.42% Senior Debentures
    upon their maturity in June 1999 and the remainder for general
    corporate purposes. The Capital Securities have the added benefit
    of qualifying as Tier 1 capital for regulatory purposes. The
    Capital Securities are presented as a separate line item in our
    consolidated balance sheet under the caption "Guaranteed
    Preferred Beneficial Interest in the Company's Junior Subordinated
    Debentures."
  Stockholders' equity totaled $388.7
    million at September 30, 1999 as compared with $377.8 million at
    December 31, 1998. This increase was largely due to our earnings
    during the first nine months of 1999, partially offset by dividends
    declared and common stock repurchased.Tangible stockholders' equity, which excludes intangible
    assets, was $257.4 million at September 30, 1999 as compared with
  $243.7 million at December 31, 1998. This increase was largely due to
    our earnings combined with the amortization of intangible assets,
    partially offset by dividends declared and common stock repurchased.
  The following table illustrates the
    reconciliation of our stockholders' equity to tangible
    stockholders' equity as of the dates indicated:
  (Unaudited)AtSeptember 30,1999
    AtDecember 31,
    
    1998(Dollars in thousands)Stockholders' equity
    $ 388,652
    $ 377,811Intangible assets
    (131,300)
    (134,088)Tangible stockholders' equity
    $ 257,352
    $ 243,723Book value per share
    $ 20.80
    $ 19.77Tangible book value per share
    $ 13.77
    $ 12.75The following table illustrates the
    changes in our tangible stockholders' equity for the periods
    indicated:
  
  
  (Unaudited)Nine Months
    
    Ended
    
    September 30,
    
    1999
    Year
    
    Ended
    
    December 31,
    
    1998(Dollars in
      thousands)Beginning tangible
      stockholders' equity
    $ 243,723
    $ 144,120Net income
    23,703
    22,719Acquisition of AFEH
    -
    210,000Intangible assets generated from
      acquisitions accounted for under the purchase method of
      accounting
    -
    (115,734)Intangible assets generated
      from branch acquisitions
    (6,154)
    -Amortization of intangible
      assets
    8,532
    11,372Repurchase of common stock
    (8,381)
    (24,063)Exercise of stock options
    396
    3,269Cash dividends declared
    (5,748)
    (8,069)Other
    1,281
    109Ending tangible stockholders' equity
    $ 257,352
    $ 243,723Intangible assets generated from our acquisitions
    accounted for under the purchase method of accounting are deducted
    from stockholders' equity in the above calculation to arrive at
    tangible stockholders' equity. Conversely, the amortization of
    intangible assets increases tangible stockholders' equity as well
    as Bay View Capital Corporation's and Bay View Bank's Tier 1
    regulatory capital.
  Bay View Bank is subject to various regulatory capital guidelines
    administered by the Office of the Comptroller of the Currency.
    Under these capital guidelines, the minimum total risk-based
    capital ratio and Tier 1 risk-based capital ratio requirements are 8.00% and 4.00%, respectively, of
    risk-weightedassets and certain off-balance sheet
    items. The minimum Tier 1 leverage ratio requirement is 4.00% of
    quarterly average assets, as adjusted.
  Additionally, the Federal Deposit
    Insurance Corporation Improvement Act of 1991 defines five capital
    tiers: well-capitalized, adequately-capitalized, undercapitalized,
    significantly undercapitalized, and critically undercapitalized,
    depending upon the capital level of the institution. Each federal
    banking agency, including the Office of the Comptroller of the
    Currency, is required to implement prompt corrective actions for
    "undercapitalized" institutions that it regulates.
  Bay View Bank's regulatory capital
    levels at September 30, 1999 exceeded both the minimum requirements
    as well as the requirements necessary to be considered
    well-capitalized as illustrated in the following table:
  (Unaudited)Actual
    
    Minimum
    
    Requirement
    
    Well-Capitalized
    
    RequirementAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Tier 1
      Leverage
    $399,795
    
    7.02%
    
    $227,792
    
    4.00%
    
    $284,740
    
    5.00%Tier 1
      Risk-based
    $399,795
    
    8.57%
    
    $186,625
    
    4.00%
    
    $279,938
    
    6.00%Total
      Risk-based
    $495,141
    
    10.61%
    
    $373,251
    
    8.00%
    
    $466,564
    
    10.00%Bay View Capital Corporation's
    regulatory capital levels at September 30, 1999 exceeded both the
    Federal Reserve Board's minimum requirements as well as the
    requirements necessary to be considered well-capitalized by the
    Federal Reserve Board as illustrated in the following table:
  (Unaudited)Actual
    
    Minimum
    
    Requirement
    
    Well-Capitalized
    
    RequirementAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Tier 1
      Leverage
    $343,572
    
    5.98%
    
    $229,749
    
    4.00%
    
    -
    
    -Tier 1
      Risk-based
    $343,572
    
    7.24%
    
    $189,794
    
    4.00%
    
    $284,691
    
    6.00%Total
      Risk-based
    $542,510
    
    11.43%
    
    $379,588
    
    8.00%
    
    $474,485
    
    10.00%Share Repurchase
    Program
  In August 1998, our Board of
    Directors authorized a total of $50 million in share repurchases.
    Since August 1998, we have repurchased 1,656,500 shares at an
    average cost of $19.59. At September 30, 1999, we had approximately
    $17.6 million in remaining authorization available for future share
    repurchases. We intend to continue share repurchases prospectively,
    subject to our projected and actual capital needs, and to measure
    acquisition and other investment opportunities relative to the
    risk-free returns associated with share repurchases.
  
  Year 2000
  General
  The Year 2000 issue is the result of
    computer programs being written using two digits rather than four
    to define the applicable year. As a result, any of our computer
    programs that have date-sensitive software may recognize a date
    using "00" as the year 1900 rather than the year 2000
    which, in turn, could result in system failures or miscalculations
    causing disruptions in our operations and the operations of our
    suppliers and customers.
  The potential impact of Year 2000
    compliance issues on the financial services industry could be
    material, as virtually every aspect of the industry and processing
    of transactions will be affected. Due to the size of the task
    facing the financial services industry and the interdependent
    nature of its transactions, we may be adversely affected by this
    problem, depending on whether we and the entities with which we do
    business address the issue successfully. The impact of Year 2000
    issues on us will depend not only on corrective actions that we
    take, but also on the way in which Year 2000 issues are addressed
    by governmental agencies, businesses and other third parties that
    provide services or data to us, or receive services or data from
    us, or whose financial condition or operational capability is
    important to us.
  Financial institution regulators have
    continued to increase their focus upon Year 2000 compliance issues
    and have issued guidance concerning the responsibilities of an
    institution's senior management and directors. The Federal
    Financial Institutions Examination Council, an oversight authority
    for financial institutions, has issued several interagency
    statements on Year 2000 project management awareness. These
    statements require financial institutions to, among other things,
    examine the Year 2000 implications of their reliance on vendors and
    the potential impact of Year 2000 issues on their customers,
    suppliers and borrowers. These statements also require each
    federally regulated financial institution to survey its exposure,
    measure its risk and prepare a plan to address the Year 2000 issue.
    In addition, federal banking regulators have issued safety and
    soundness guidelines to be followed by insured depository
    institutions, such as Bay View Bank. The federal banking agencies
    have asserted that Year 2000 testing and certification is a key
    safety and soundness issue in conjunction with regulatory
    examinations and thus, that an institution's failure to
    appropriately address the Year 2000 issue could result in
    supervisory action, including a reduction of the institution's
    supervisory ratings, the denial of applications for approval of
    mergers or acquisitions or the imposition of civil monetary
    penalties.
  Our State of Readiness
  We rely upon third-party software
    vendors and data processing service providers for the majority of
    our electronic data processing and do not operate any proprietary
    programs which are critical to our operations. Thus, our focus is
    to monitor the progress of our primary software and data processing
    service providers toward resolving Year 2000 compliance issues and
    perform tests associated with our actual data in simulated
    processing of future-sensitive dates.
  Our Year 2000 compliance program has
    been divided into the following phases:
  Inventorying Year 2000 items;
  Assessing the Year 2000 compliance
    of items determined to be material to us;
  Upgrading or replacing material
    items that are determined not to be Year 2000 compliant and testing
    material items;
  Designing and implementing
    contingency and business continuation plans; and
  5.  
    Assessing the status of third-party risks. In the first phase, we conducted a thorough
    evaluation of current information technology systems, software and
    embedded technologies, resulting in the identification of 16
    mission critical systems that could be affected by Year 2000
    issues. Non-information technology systems such as climate control
    systems, elevators and vault security equipment were also surveyed.
    This phase of the Year 2000 compliance program is complete.
  In the second phase, results from the
    systems inventory were assessed to determine the Year 2000 impact
    and what actions were required to obtain Year 2000 compliance. For
    our internal systems, actions needed ranged from third-party vendor
    application upgrades to PC, server and network equipment
    replacement. Further, we surveyed information regarding Year 2000
    readiness for our material third-party suppliers of information
    systems and services. This phase of the Year 2000 compliance
    program is complete.
  The third phase includes the
    upgrading, replacement and/or refinement of systems and testing.
    The software conversion of our mission critical systems is
    substantially complete. Each of the upgrades or replacements, to
    the extent economically feasible, is tested to see how well it
    integrates with our overall data processing environment. Final
    "future-date" testing of system upgrades and replacements
    is complete.
  The fourth phase relates to
    contingency plans. While we are reasonably certain that our
    internal Year 2000 compliance program will be successful, there
    could be other external operational issues regarding the Year 2000
    process that may prevent us from successfully implementing our Year
    2000 compliance program. If these other external operational issues
    occur and remain unresolved, we could be required to implement a
    contingency plan for Year 2000 compliance. Our Year 2000
    contingency plans are complete, although we continue to evaluate
    them as needed.
  The final phase, assessing external
    third-party risks, includes the process of identifying and
    prioritizing critical suppliers and customers at the direct
    interface level, as well as other material relationships with third
    parties, including various exchanges, clearing houses, other banks,
    telecommunication companies, and public utilities. This evaluation
    includes communicating with the third parties about their plans and
    progress in addressing Year 2000 issues. Detailed evaluations of
    the most critical third parties are complete with follow-up reviews
    scheduled through the remainder of 1999.
  Our total costs associated with
    required modifications to become Year 2000 compliant are estimated
    at approximately $1.9 million, a portion of which has been, and
    will continue to be, a reallocation of internal resources and,
    therefore, does not represent incremental expense to us. The total
    amount of pre-tax costs incurred through September 30, 1999 related
    to the Year 2000 issue was approximately $1.3 million.
  Risks
  Failure to correct a material Year
    2000 problem could result in an interruption in, or a failure of,
    certain normal business activities or operations. Such failures
    could materially and adversely affect our results of operations,
    liquidity and financial condition. Due to the general uncertainty
    inherent in the Year 2000 problem, resulting primarily from the
    uncertainty of the Year 2000 readiness of third-party suppliers and
    customers, we are unable to determine at this time whether the
    consequences of Year 2000
  failures will have a material impact on our results of operations,
    liquidity and financial condition. Our Year 2000 compliance program
    will reduce levels of uncertainty about Year 2000 issues including
    questions as to the compliance and readiness of our material
    third-party providers. We believe that the implementation of new
    and/or upgraded business systems and completion of the Year 2000
    compliance program has significantly reduced the possibility of
    major interruptions to normal operations.
  Impact of New
    Accounting Standards
  In June 1998, the Financial
    Accounting Standards Board issued Statement of Financial Accounting
    Standards No. 133, "Accounting for Derivative Instruments and
    Hedging Activities," which establishes accounting and
    reporting standards for derivative instruments and for hedging
    activities. It requires that an entity recognize all derivatives as
    either assets or liabilities in the statement of financial
    condition and measure those instruments at fair value. The
    accounting for changes in the fair value of derivatives depends on
    the intended use of the derivative. We currently utilize interest
    rate exchange agreements to hedge cash flows associated with
    current and anticipated transactions. To the extent these interest
    rate exchange agreements qualify as a cash flow hedge under
    Statement No. 133, the effective portion of the derivative's gain
    or loss would be initially reported as a component of other
    comprehensive income (outside of earnings) and subsequently
    reclassified into earnings when the forecasted transaction affected
    earnings. Statement No. 133, as amended by Statement of Financial
    Accounting Standards No. 137, will be effective for the fiscal
    quarter beginning January 1, 2001. We are in the process of
    evaluating the impact that the adoption of Statement No. 133 will
    have on our consolidated financial condition, results of operations
    or cash flows. Although the acquisition of FMAC was consummated
    prior to the filing of this document, management has not had
    sufficient opportunity to address the impact of this statement with
    respect to FMAC.
  In October 1998, the Financial
    Accounting Standards Board issued Statement of Financial Accounting
    Standards No. 134, "Accounting for Mortgage-Backed Securities
    Retained after the Securitization of Mortgage Loans Held for Sale
    by a Mortgage Banking Enterprise," which amends the disclosure
    requirements of Statement of Financial Accounting Standards No. 65,
    "Accounting for Certain Mortgage Banking Activities."
    Statement No. 134 conforms the subsequent accounting for securities
    retained after the securitization of mortgage loans by a mortgage
    banking enterprise with the subsequent accounting for securities
    retained after the securitization of other types of assets by a
    nonmortgage banking enterprise. Statement No. 134 was effective
    January 1, 1999 and had no material impact on our consolidated
    financial condition, results of operations or cash flows.
  
  Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Asset and Liability
    Management
  The objective of our asset and
    liability management activities is to improve earnings by adjusting
    the type and mix of assets and liabilities to effectively address
    changing conditions and risks. Through overall management of our
    balance sheet and by controlling various risks, we seek to optimize
    our financial returns within safe and sound parameters. Our
    operating strategies for attaining this objective include managing
    net interest margin through appropriate risk/return pricing of
    assets and liabilities, increasing transaction accounts as a
    percentage of interest-bearing liabilities and reducing our cost of
    funds, utilizing our capital position to boost our earnings power
    through the origination or purchase of quality assets with higher
    risk-adjusted yields, controlling noninterest expense, enhancing
    noninterest income, and utilizing improved information systems to
    facilitate the analysis of the profitability of business platforms.
    We also utilize interest rate exchange agreements and other hedging
    strategies to reduce our exposure to fluctuations in interest rates
    and perform internal analyses to measure, evaluate and monitor risk.
  Interest Rate Risk
  A key objective of asset and
    liability management is to manage interest rate risk associated
    with changing asset and liability cash flows and market interest
    rate movements. Interest rate risk occurs when interest rate
    sensitive assets and liabilities do not reprice simultaneously and
    in equal volumes. Our Asset and Liability Committee provides
    oversight to our interest rate risk management process and
    recommends policy guidelines regarding exposure to interest rates
    for approval by our Board of Directors. Adherence to these policies
    is monitored on an ongoing basis, and decisions related to the
    management of interest rate exposure are made when appropriate in
    accordance with our policies.
  Financial institutions are subject to
    interest rate risk to the degree that interest-bearing liabilities
    reprice or mature on a different basis and at different times than
    interest-earning assets. Our strategy has been to reduce the
    sensitivity of our earnings to interest rate fluctuations by more
    closely matching the effective maturities or repricing
    characteristics of our assets and liabilities. Certain assets and
    liabilities, however, may react in different degrees to changes in
    market interest rates. Further, interest rates on certain types of
    assets and liabilities may fluctuate prior to changes in market
    interest rates, while rates on other types may lag behind.
    Additionally, certain assets, such as adjustable-rate mortgages,
    have features, including payment and rate caps, which restrict
    changes in their interest rates. We consider the anticipated
    effects of these factors when implementing our interest rate risk
    management objectives.
  We pursue both on- and off-balance
    sheet strategies that should, in the long run, mitigate our
    exposure to fluctuations in interest rates. We have initiated
    numerous actions over the past few years which have significantly
    reduced our exposure to fluctuations in interest rates. Our
    interest rate risk should continue to be reduced in the future as
    we continue to transition to less interest rate sensitive consumer
    and commercial assets, as we continue to increase transaction
    accounts and as we continue our efforts to match maturities on our
    Federal Home Loan Bank advances and other funding sources with the
    durations of our interest-earning assets.
  Interest Rate Exchange Agreements
    (Swaps)
  We use interest rate exchange
    agreements (i.e., swaps) to reduce the interest rate risk related
    to certain assets and liabilities. Interest rate swaps involve the
    exchange of fixed-rate and floating-rate
  interest payment obligations without the exchange of the underlying
    notional amounts. We were a party to interest rate swaps with
    notional principal amounts of $257 million at September 30, 1999
    and $366 million at December 31, 1998 which involve the receipt of
    floating interest rates (based on three-month LIBOR) and payment of
    fixed interest rates on the underlying notional amounts.
  Interest rate risk is the most
    significant market risk impacting us; however, other types of
    market risk also affect us in the normal course of our business
    activities. The impact on us resulting from other market risks is
    immaterial and no separate quantitative information related to such
    market risks is necessary. We do not maintain a portfolio of
    trading securities and do not intend to engage in such activities
    in the foreseeable future.
  Interest Rate Sensitivity
  Our monitoring activities related to
    managing interest rate risk include both interest rate sensitivity
    "gap" analysis and the use of a simulation model. While
    traditional gap analysis provides a simple picture of the interest
    rate risk embedded in the balance sheet, it provides only a static
    view of interest rate sensitivity at a specific point in time and
    does not measure the potential volatility in forecasted results
    relating to changes in market interest rates over time.
    Accordingly, we combine the use of gap analysis with the use of a
    simulation model which provides a dynamic assessment of interest
    rate sensitivity.
  The interest rate sensitivity gap is
    defined as the difference between the amount of interest-earning
    assets anticipated to reprice within a specific time period and the
    amount of interest-bearing liabilities anticipated to reprice
    within that same time period. A gap is considered positive when the
    amount of interest rate sensitive assets repricing within a
    specific time period exceeds the amount of interest-bearing
    liabilities repricing within that same time period. Positive
    cumulative gaps suggest that earnings will increase when interest
    rates rise. Negative cumulative gaps suggest that earnings will
    increase when interest rates fall.
  
  The following table illustrates our
    combined asset and liability repricing as of September 30, 1999:
  Repricing Period (Unaudited)Under
    
    One
    
    Year
    
    Between
    
    One and
    
    Three Years
    
    Between Three and
    
    Five Years
    
    Over
    
    Five
    
    Years
    
    Total(Dollars in thousands)Assets:Cash and investments
    $159,890
    
    $-
    
    $-
    
    $23,392
    
    $183,282Mortgage-backed securities and loans and leases (1)
    2,653,020
    
    1,901,760
    
    564,332
    
    383,931
    
    5,503,043Total interest rate sensitive assets
    $2,812,910
    
    $1,901,760
    
    $564,332
    
    $407,323
    
    $5,686,325LiabilitiesDeposits:Transaction accounts
    $1,071,166
    
    $489,162
    
    $130,441
    
    $65,220
    
    $1,755,989Certificates of deposit
    1,371,214
    
    240,394
    
    7,580
    
    1,596
    
    1,620,784Brokered certificates of deposit
    299,574
    
    -
    
    -
    
    -
    
    299,574Borrowings (2)
    889,922
    
    262,203
    
    324,444
    
    372,487
    
    1,849,056Total interest rate sensitive liabilities
    $3,631,876
    
    $991,759
    
    $462,465
    
    $439,303
    
    $5,525,403Repricing gap-positive (negative) before impact of interest rate
      swaps
    $(818,966)
    
    $910,001
    
    $101,867
    
    $(31,980)
    
    $160,922Impact of interest rate swaps
    231,500
    
    (129,000)
    
    (25,000)
    
    (77,500)$(587,466)
    
    781,001
    
    76,867
    
    (109,480)Cumulative repricing gap-positive (negative)
    $(587,466)
    
    $193,535
    
    $270,402
    
    $160,922(1)
  Based on assumed annual prepayment and amortization rates which
    approximate our historical experience(2)
  Includes Capital Securities
  
  The simulation model discussed above
    also provides the Asset and Liability Committee with the ability to
    simulate our net interest income. In order to measure, as of
    September 30, 1999, the sensitivity of our forecasted net interest
    income to changing interest rates, both a rising and falling
    interest rate scenario were projected and compared to a base market
    interest rate forecast derived from the current treasury yield
    curve. For the rising and falling interest rate scenarios, the base
    market interest rate forecast was increased or decreased, on an
    instantaneous and sustained basis, by 100 and 200 basis points. At
    September 30, 1999, our net interest income exposure related to
    these hypothetical changes in market interest rates was within our
    policy guidelines as illustrated in the following table:
  Increase/(Decrease) in Net Interest Income (Unaudited)Projected effect:
    -200
      bp
    -100
      bp
    +100
      bp
    +200
      bpNet
      interest income without swaps
    $207,040
    $197,370
    $179,537
    $168,854Net
      interest income with swaps
    $200,714
    $193,131
    $179,470
    $170,873Impact
      of swaps
    $(6,326)
    $(4,239)
    $(67)
    $2,019%
      Increase (decrease) from basenet interest
      income, with swaps
    7.45%
    3.39%
    (3.92%)
    (8.52%)Policy
      guideline
    (15.00%)
    (10.00%)
    (10.00%)
    (15.00%)The computation of prospective
    effects of hypothetical interest rate changes are based on numerous
    assumptions, including relative levels of market interest rates,
    asset prepayments and deposit decay, and should not be relied upon
    as indicative of actual results. Further, the computations do not
    contemplate any actions we may undertake in response to changes in
    interest rates. Actual amounts may differ from those projections
    set forth above should market conditions vary from the underlying
    assumptions used.
  
  
  PART II.
    OTHER INFORMATIONItem 1.
    Legal ProceedingsNoneItem 2.
    Changes in
      SecuritiesNoneItem 3.
    Defaults Upon
      Senior SecuritiesNoneItem 4.
    Submission of
      Matters to a Vote of Security HoldersNoneItem 5.
    Other InformationNoneItem 6.
    Exhibits and
      Reports on Form 8-Ka(i) Amendment No. One to Bay View
    Capital Corporation's Amended and Restated 1986 Stock Option and
    Incentive Plan effective July 22, 1999 (Exhibit 10)
  Amendment No. One to Bay View Capital
    Corporation's Amended and Restated 1995 Stock Option and Incentive
    Plan effective July 22, 1999 (Exhibit 10.1)
  Amendment No. Two to Bay View Capital
    Corporation's Amended and Restated 1995 Stock Option and Incentive
    Plan effective October 14, 1999 (Exhibit 10.2)
  Bylaws of Bay View Capital
    Corporation (Exhibit 10.3)
  a(ii). Computation of Ratios of
    Earnings to Fixed Charges (Exhibit 12)
  a(iii). Financial Data Schedule
    (Exhibit 27)
  b(i) The Registrant filed the
    following report on Form 8-K dated June 22, 1999 during the three
    months ended September 30, 1999:
  The Registrant entered into an
    Election and Registration Agreement with FMAX Holdings, L.L.C. in
    connection with the merger of FMAC into Bay View Capital
    Corporation. Pursuant to the Agreement, FMAX agreed to elect to
    receive cash consideration in the merger with respect to all shares
    of FMAC common stock owned by FMAX, and we agreed to file a
    registration statement under the Securities Act of 1933, as
    amended, relating to any shares of our common stock to be received
    by FMAX in the merger.
  b(ii) The Registrant filed the
    following report on Form 8-K dated August 25, 1999 during the three
    months ended September 30, 1999:
  The Registrant entered into an
    Amendment to the Agreement and Plan of Reorganization, dated as of
    March 11, 1999, by and between FMAC and Bay View Capital
    Corporation.
  
  Pursuant to the Amendment, each FMAC
    shareholder will have the option to elect to receive for each share
    of FMAC common stock held either $9.80 in cash or .5444 shares of
    Bay View common stock, provided that the FMAC shareholder elections
    are subject to the aggregate number of shares of FMAC common stock
    to be exchanged for Bay View common stock being equal to 85% of the
    number of shares of FMAC common stock outstanding immediately prior
    to closing. The Merger Agreement provisions (i) limiting Bay View
    common stock ownership by any FMAC shareholder immediately
    following the merger to 9.99% of the Bay View common stock on a pro
    forma basis, and (ii) providing FMAC with a termination right in
    the event the average Bay View common stock price is below $17.50,
    have been eliminated.
  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 VIEW CAPITAL CORPORATIONRegistrantDATE:
      November 12, 1999
    
    BY:/s/ David A. Heaberlin
    
          David A. Heaberlin
    Executive Vice President and Chief Financial Officer (Principal Financial Officer)BY:/s/ Scott H. RayScott H. RaySenior Vice President and Controller(Principal Accounting Officer)
- Inventorying Year 2000 items;
- Assessing the Year 2000 compliance
    of items determined to be material to us;
- Upgrading or replacing material
    items that are determined not to be Year 2000 compliant and testing
    material items;
- Designing and implementing
    contingency and business continuation plans; and