##### Table of Contents



UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, 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 June 30, 2003

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | 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)


|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 94-3078031
(I.R.S. Employer
Identification No.)

1840 Gateway Drive, San Mateo, California 94404
(Address of principal executive offices)     (Zip Code)

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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). 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 |  | Outstanding at July 31, 2003
|(Title of Class)             |  | 63,674,626 shares           

1



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TABLE OF CONTENTS



|                              |                                                                                               |                                                                                     |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              |                                                                                               | Consolidated Statements of Net Assets (Liquidation Basis)                          
|                              |                                                                                               | Consolidated Statements of Changes in Net Assets in Liquidation (Liquidation Basis)
|                              |                                                                                               | Consolidated Statements of Operations and Comprehensive Loss                       
|                              |                                                                                               | Consolidated Statement of Stockholders Equity (Going Concern Basis)               
|                              |                                                                                               | 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                           
|                              | Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION   
|SIGNATURES                   
|Exhibit 31.1                 
|Exhibit 31.2                 
|Exhibit 32.1                 
|Exhibit 32.2                 



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##### Table of Contents



FORM 10-Q
INDEX

BAY VIEW CAPITAL CORPORATION

|                                                                                              |                                                                                     |  |         |       | 
|--------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- |  | ------- | ----- | 
|                                                                                              |                                                                                     |  | Page(s)
|                                                                                              |                                                                                     |  |        
|PART I. FINANCIAL INFORMATION                                                                 |                                                                                     |  |         |      
|Item 1. Financial Statements (Unaudited):                                                     |                                                                                     |  |         |      
|                                                                                              | Consolidated Statements of Net Assets (Liquidation Basis)                           |  |         | 4     | 
|                                                                                              | Consolidated Statements of Changes in Net Assets in Liquidation (Liquidation Basis) |  |         | 5     | 
|                                                                                              | Consolidated Statements of Operations and Comprehensive Loss                        |  |         | 6-7   | 
|                                                                                              | Consolidated Statements of Stockholders Equity (Going Concern Basis)               |  |         | 8     | 
|                                                                                              | Consolidated Statements of Cash Flows                                               |  |         | 9-10  | 
|                                                                                              | Notes to Consolidated Financial Statements                                          |  |         | 11-17 | 
|Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations |                                                                                     |  | 18-33   |      
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |                                                                                     |  | 34      |      
|Item 4. Controls and Procedures                                                               |                                                                                     |  | 34      |      
|PART II. OTHER INFORMATION                                                                    |                                                                                     |  |         |      
|                                                                                              | Other Information                                                                   |  |         | 35    | 
|                                                                                              | Signatures                                                                          |  |         | 37    | 

2



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##### Table of Contents



Forward-Looking Statements

This Form 10-Q contains forward-looking statements that describe the
implementation and timing of the Plan of Dissolution and Stockholder Liquidity
(the Plan) adopted by the stockholders of Bay View Capital Corporation (the
Company) on October 3, 2002. These forward-looking statements are based on
assumptions as of the date of this Form 10-Q and involve risks and
uncertainties. Accordingly, the results of the Companys dissolution and the
timing and amounts of stockholder distributions may differ materially from
those that the Company currently anticipates. The factors that may affect
these forward-looking statements include the following:



| |  | The distributions the Company proposes to make in the future to its
stockholders are subject to a number of contingencies. The factors that
could reduce the amounts ultimately distributed or that could cause a
delay in making the distributions include the following:
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̈ |  | Until the dissolution of Bay View Bank, N.A. (the Bank) is
completed later this year, a number of actions the Company and the Bank
intend to take, including distributions to the Companys stockholders,
cannot be taken unless approvals are obtained from the Board of
Governors of the Federal Reserve System (the FRB) in the case of the
Company and the Office of the Comptroller of the Currency (the OCC) in
the case of the Bank;                                                      
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  ̈ |  | Unforeseen delays in the disposition of the assets of the Company and
the Bank and their formal dissolution may occur;                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  ̈ |  | The realization of the Companys deferred tax assets could be less
than the Company currently projects;                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  ̈ |  | The Company and the Bank may encounter difficulty in selling some of
their assets, and certain assets may not be able to be sold for the
prices the Company and the Bank currently anticipate;                                                                                                                                                                                                                                                                                                         
|
| |  ̈ |  | The Company and the Bank may not be able to discharge certain
liabilities for the amounts the Company and the Bank currently estimate;                                                                                                                                                                                                                                                                                                                                                                 
|
| |  ̈ |  | The Company and the Bank may incur or discover presently
unanticipated claims, liabilities or expenses;                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  ̈ |  | The amounts the Bank is able to distribute to the Company and the
amounts the Company is able to distribute to its stockholders could be
adversely affected by the results of operations of the Companys and the
Banks remaining operations, particularly in the case of Bay View
Acceptance Corporation (BVAC) while the dissolution process is being
implemented;                                                                                                                                
|
| |  ̈ |  | These estimates of the distribution amounts include projections of
future events and performance as distant as 2006 and, accordingly, are
inherently subject to many uncertainties;                                                                                                                                                                                                                                                                                                                    
|
| |  ̈ |  | The expenses of the disposition of assets and the dissolution
proceeds may exceed the amounts currently estimated; and                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  ̈ |  | Court proceedings could restrict or delay distributions to
stockholders if claimants or creditors satisfy the court that the
amounts to be distributed by the Bank or the Company to stockholders are
needed to provide for the payment of expenses and liabilities of the
Company or the Bank; or, if the amounts ultimately required to discharge
the expenses and liabilities of the Company or the Bank in full exceeds
the value of the remaining assets of the Company or the Bank,
respectively.



| |  | The Companys stockholders could be liable to the extent they receive
distributions in the event the Company does not make adequate provision
for all of its expenses and liabilities, including its contingent
liabilities, as part of its dissolution.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As a result of the foregoing factors, there can be no assurance that the
anticipated stockholder distributions from the implementation of the Plan will
be consistent with those described in any forward-looking statements.
Accordingly, no stockholder should place undue reliance on any forward-looking
statements. The Company does not undertake, and specifically disclaims, any
obligation to update any forward-looking statements and all forward-looking
statements speak only as of the date made.

3



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##### Table of Contents






PART I. FINANCIAL INFORMATION




Item 1. Financial Statements




Bay View Capital Corporation and Subsidiaries
Consolidated Statements of Net Assets (Liquidation Basis)
(Unaudited)

|                                                                                                                |                                           |   |                        |        |                   |   |         |         | 
|--------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | - | ---------------------- | ------ | ----------------- | - | ------- | ------- | 
|                                                                                                                |                                           |   | June 30, 2003          |        | December 31, 2002
|                                                                                                                |                                           |   |                        |        |                  
|                                                                                                                |                                           |   | (Dollars in thousands)
|ASSETS                                                                                                          |                                           |   |                        |        |                   |   |         |        
|Cash and cash equivalents:                                                                                      |                                           |   |                        |        |                   |   |         |        
|                                                                                                                | Cash and due from depository institutions |   | $                      | 35,981 |                   |   | $       | 71,611  | 
|                                                                                                                | Short-term investments                    |   |                        | 46,640 |                   |   |         | 151,684 | 
|                                                                                                                |                                           |   |                        |        |                   |   |         |        
|                                                                                                                |                                           |   | 82,621                 |        |                   |   | 223,295 |        
|Securities available-for-sale:                                                                                  |                                           |   |                        |        |                   |   |         |        
|                                                                                                                | Investment securities                     |   |                        | 31,491 |                   |   |         | 38,137  | 
|                                                                                                                | Mortgage-backed securities                |   |                        | 24,011 |                   |   |         | 32,516  | 
|Loans and leases held-for-sale                                                                                  |                                           |   | 265,929                |        |                   |   | 311,014 |        
|Investment in operating lease assets, net                                                                       |                                           |   | 117,716                |        |                   |   | 191,005 |        
|Investment in stock of the Federal Home Loan Bank of San Francisco                                              |                                           |   | 499                    |        |                   |   | 16,075  |        
|Investment in stock of the Federal Reserve Bank                                                                 |                                           |   | 13,659                 |        |                   |   | 13,659  |        
|Real estate owned, net                                                                                          |                                           |   | 8,518                  |        |                   |   | 2,402   |        
|Premises and equipment, net                                                                                     |                                           |   | 477                    |        |                   |   | 1,327   |        
|Repossessed vehicles                                                                                            |                                           |   | 225                    |        |                   |   | 502     |        
|Income taxes, net                                                                                               |                                           |   | 6,500                  |        |                   |   |        |        
|Other assets                                                                                                    |                                           |   | 41,212                 |        |                   |   | 45,613  |        
|                                                                                                                |                                           |   |                        |        |                   |   |         |        
|Total assets                                                                                                    |                                           | $ | 592,858                |        |                   | $ | 875,545 |        
|                                                                                                                |                                           |   |                        |        |                   |   |         |        
|LIABILITIES                                                                                                     |                                           |   |                        |        |                   |   |         |        
|Deposits:                                                                                                       |                                           |   |                        |        |                   |   |         |        
|                                                                                                                | Brokered certificates of deposit          |   |                        |       |                   |   |         | 224,189 | 
|                                                                                                                |                                           |   |                        |        |                   |   |         |        
|                                                                                                                |                                           |   |                       |        |                   |   | 224,189 |        
|Other borrowings                                                                                                |                                           |   | 47,546                 |        |                   |   | 61,969  |        
|Income taxes, net                                                                                               |                                           |   |                       |        |                   |   | 8,646   |        
|Deferred gain                                                                                                   |                                           |   | 12,817                 |        |                   |   | 12,817  |        
|Other liabilities                                                                                               |                                           |   | 17,366                 |        |                   |   | 23,907  |        
|Reserve for estimated costs during the period of liquidation                                                    |                                           |   | 15,265                 |        |                   |   | 43,953  |        
|                                                                                                                |                                           |   |                        |        |                   |   |         |        
|Total liabilities                                                                                               |                                           |   | 92,994                 |        |                   |   | 375,481 |        
|                                                                                                                |                                           |   |                        |        |                   |   |         |        
|Guaranteed Preferred Beneficial Interest in the Companys
Junior Subordinated Debentures (Capital Securities) |                                           |   | 90,000                 |        |                   |   | 90,000  |        
|                                                                                                                |                                           |   |                        |        |                   |   |         |        
|Net assets in liquidation                                                                                       |                                           | $ | 409,864                |        |                   | $ | 410,064 |        
|                                                                                                                |                                           |   |                        |        |                   |   |         |        

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

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Bay View Capital Corporation and Subsidiaries
Consolidated Statements of Changes in Net Assets in Liquidation (Liquidation Basis)
(Unaudited)

|                                                      |  |                        |         |               |  |   |         |  
|----------------------------------------------------- |  | ---------------------- | ------- | ------------- |  | - | ------- | -
|                                                      |  | For the Three          |         | For the Six  
|                                                      |  | Months Ended           |         | Months Ended 
|                                                      |  |                        |         |              
|                                                      |  | June 30, 2003          |         | June 30, 2003
|                                                      |  |                        |         |              
|                                                      |  | (Dollars in thousands)
|Net assets in liquidation at beginning of period      |  | $                      | 410,964 |               |  | $ | 410,064 |  
|Pre-tax income from operations                        |  |                        | 720     |               |  |   | 2,135   |  
|Changes in estimated values of assets and liabilities |  |                        | (924    | )             |  |   | (2,588  | )
|Income tax benefit                                    |  |                        | 786     |               |  |   | 1,588   |  
|                                                      |  |                        |         |               |  |   |         |  
|Net income from operations                            |  |                        | 582     |               |  |   | 1,135   |  
|Dividends on Capital Securities                       |  |                        | (2,251  | )             |  |   | (4,502  | )
|Other changes in net assets in liquidation            |  |                        | 569     |               |  |   | 3,167   |  
|                                                      |  |                        |         |               |  |   |         |  
|Net assets in liquidation at end of period            |  | $                      | 409,864 |               |  | $ | 409,864 |  
|                                                      |  |                        |         |               |  |   |         |  

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

5



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Bay View Capital Corporation and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)

|                                                                                             |                                                 |   |                                         |        |               |   |         |        | 
|-------------------------------------------------------------------------------------------- | ----------------------------------------------- | - | --------------------------------------- | ------ | ------------- | - | ------- | ------ | 
|                                                                                             |                                                 |   | For the Three                           |        | For the Six  
|                                                                                             |                                                 |   | Months Ended                            |        | Months Ended 
|                                                                                             |                                                 |   |                                         |        |              
|                                                                                             |                                                 |   | June 30, 2002                           |        | June 30, 2002
|                                                                                             |                                                 |   |                                        
|                                                                                             |                                                 |   | Going Concern Basis                    
|                                                                                             |                                                 |   |                                        
|                                                                                             |                                                 |   | (Amounts in thousands, except per share
|                                                                                             |                                                 |   | amounts)                               
|Interest income:                                                                             |                                                 |   |                                         |        |               |   |         |       
|                                                                                             | Interest on loans and leases                    |   | $                                       | 45,563 |               |   | $       | 92,034 | 
|                                                                                             | Interest on mortgage-backed securities          |   |                                         | 3,014  |               |   |         | 6,565  | 
|                                                                                             | Interest and dividends on investment securities |   |                                         | 3,906  |               |   |         | 7,577  | 
|                                                                                             |                                                 |   |                                         |        |               |   |         |       
|                                                                                             |                                                 |   | 52,483                                  |        |               |   | 106,176 |       
|Interest expense:                                                                            |                                                 |   |                                         |        |               |   |         |       
|                                                                                             | Interest on deposits                            |   |                                         | 13,529 |               |   |         | 28,531 | 
|                                                                                             | Interest on borrowings                          |   |                                         | 1,792  |               |   |         | 3,624  | 
|                                                                                             | Interest on Subordinated Notes                  |   |                                         | 3,715  |               |   |         | 7,430  | 
|                                                                                             |                                                 |   |                                         |        |               |   |         |       
|                                                                                             |                                                 |   | 19,036                                  |        |               |   | 39,585  |       
|Net interest income                                                                          |                                                 |   | 33,447                                  |        |               |   | 66,591  |       
|Provision for losses on loans and leases                                                     |                                                 |   | 3,600                                   |        |               |   | 8,500   |       
|                                                                                             |                                                 |   |                                         |        |               |   |         |       
|Net interest income after provision for losses on loans and leases                           |                                                 |   | 29,847                                  |        |               |   | 58,091  |       
|Noninterest income:                                                                          |                                                 |   |                                         |        |               |   |         |       
|                                                                                             | Leasing income                                  |   |                                         | 18,953 |               |   |         | 39,302 | 
|                                                                                             | Loan fees and charges                           |   |                                         | 1,193  |               |   |         | 2,486  | 
|                                                                                             | Loan servicing income                           |   |                                         | 208    |               |   |         | 413    | 
|                                                                                             | Account fees                                    |   |                                         | 1,983  |               |   |         | 3,919  | 
|                                                                                             | Sales commissions                               |   |                                         | 1,944  |               |   |         | 3,784  | 
|                                                                                             | Gain on sale of assets and liabilities, net     |   |                                         | 203    |               |   |         | 535    | 
|                                                                                             | Other, net                                      |   |                                         | 916    |               |   |         | 1,143  | 
|                                                                                             |                                                 |   |                                         |        |               |   |         |       
|                                                                                             |                                                 |   | 25,400                                  |        |               |   | 51,582  |       
|Noninterest expense:                                                                         |                                                 |   |                                         |        |               |   |         |       
|                                                                                             | General and administrative                      |   |                                         | 30,536 |               |   |         | 61,328 | 
|                                                                                             | Litigation settlement expense                   |   |                                         | 13,100 |               |   |         | 13,100 | 
|                                                                                             | Leasing expenses                                |   |                                         | 16,066 |               |   |         | 31,073 | 
|                                                                                             | Real estate owned operations, net               |   |                                         | 328    |               |   |         | 868    | 
|                                                                                             | Provision for losses on real estate owned       |   |                                         |       |               |   |         | 204    | 
|                                                                                             | Amortization of intangible assets               |   |                                         | 331    |               |   |         | 662    | 
|                                                                                             |                                                 |   |                                         |        |               |   |         |       
|                                                                                             |                                                 |   | 60,361                                  |        |               |   | 107,235 |       
|Income (loss) from operations                                                                |                                                 |   | (5,114                                  | )      |               |   | 2,438   |       
|Income tax benefit                                                                           |                                                 |   | (3,658                                  | )      |               |   | (5,593  | )     
|Dividends on Capital Securities                                                              |                                                 |   | 2,626                                   |        |               |   | 5,199   |       
|                                                                                             |                                                 |   |                                         |        |               |   |         |       
|Income (loss) before cumulative effect of change in accounting principle                     |                                                 |   | (4,082                                  | )      |               |   | 2,832   |       
|Cumulative effect of change in accounting principle, net of applicable
taxes of $2.3 million |                                                 |   |                                        |        |               |   | (18,920 | )     
|                                                                                             |                                                 |   |                                         |        |               |   |         |       
|Net loss                                                                                     |                                                 | $ | (4,082                                  | )      |               | $ | (16,088 | )     
|                                                                                             |                                                 |   |                                         |        |               |   |         |       

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Bay View Capital Corporation and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss (continued)
(Unaudited)

|                                                                                      |                                                                                                                                                        |   |                                         |     |               |   |         |   | 
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------ | - | --------------------------------------- | --- | ------------- | - | ------- | - | 
|                                                                                      |                                                                                                                                                        |   | For the Three                           |     | For the Six  
|                                                                                      |                                                                                                                                                        |   | Months Ended                            |     | Months Ended 
|                                                                                      |                                                                                                                                                        |   |                                         |     |              
|                                                                                      |                                                                                                                                                        |   | June 30, 2002                           |     | June 30, 2002
|                                                                                      |                                                                                                                                                        |   |                                        
|                                                                                      |                                                                                                                                                        |   | Going Concern Basis                    
|                                                                                      |                                                                                                                                                        |   |                                        
|                                                                                      |                                                                                                                                                        |   | (Amounts in thousands, except per share
|                                                                                      |                                                                                                                                                        |   | amounts)                               
|Basic earnings per share before cumulative effect of change in
accounting principle   |                                                                                                                                                        | $ | (0.07                                   | )   |               | $ | 0.04    |  
|Cumulative effect of change in accounting principle, net                              |                                                                                                                                                        |   |                                        |     |               |   | (0.30   | )
|                                                                                      |                                                                                                                                                        |   |                                         |     |               |   |         |  
|Net basic loss per share                                                              |                                                                                                                                                        | $ | (0.07                                   | )   |               | $ | (0.26   | )
|                                                                                      |                                                                                                                                                        |   |                                         |     |               |   |         |  
|Diluted earnings per share before cumulative effect of change in
accounting principle |                                                                                                                                                        | $ | (0.07                                   | )   |               | $ | 0.04    |  
|Cumulative effect of change in accounting principle, net                              |                                                                                                                                                        |   |                                        |     |               |   | (0.30   | )
|                                                                                      |                                                                                                                                                        |   |                                         |     |               |   |         |  
|Net diluted loss per share                                                            |                                                                                                                                                        | $ | (0.07                                   | )   |               | $ | (0.26   | )
|                                                                                      |                                                                                                                                                        |   |                                         |     |               |   |         |  
|Weighted-average basic shares outstanding                                             |                                                                                                                                                        |   | 62,715                                  |     |               |   | 62,697  |  
|                                                                                      |                                                                                                                                                        |   |                                         |     |               |   |         |  
|Weighted-average diluted shares outstanding                                           |                                                                                                                                                        |   | 62,715                                  |     |               |   | 63,216  |  
|                                                                                      |                                                                                                                                                        |   |                                         |     |               |   |         |  
|Net loss                                                                              |                                                                                                                                                        | $ | (4,082                                  | )   |               | $ | (16,088 | )
|Other comprehensive income (loss), net of tax:                                        |                                                                                                                                                        |   |                                         |     |               |   |         |  
|                                                                                      | Change in unrealized gain on securities available-for-sale,
net of tax expense of $219 and $4 for the three- and
six-month periods ended June 30, 2002 |   |                                         | 302 |               |   |         | 5 | 
|                                                                                      |                                                                                                                                                        |   |                                         |     |               |   |         |  
|Other comprehensive income (loss)                                                     |                                                                                                                                                        |   | 302                                     |     |               |   | 5       |  
|                                                                                      |                                                                                                                                                        |   |                                         |     |               |   |         |  
|Comprehensive loss                                                                    |                                                                                                                                                        | $ | (3,780                                  | )   |               | $ | (16,083 | )
|                                                                                      |                                                                                                                                                        |   |                                         |     |               |   |         |  

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

7



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##### Table of Contents






Bay View Capital Corporation and Subsidiaries
Consolidated Statement of Stockholders Equity (Going Concern Basis)
(Unaudited)



|                                                                       |  |                                                  |        |        |  |         |     |             |  |          |         |  |  |   |          |   |  |   |      |  
|---------------------------------------------------------------------- |  | ------------------------------------------------ | ------ | ------ |  | ------- | --- | ----------- |  | -------- | ------- |  |  | - | -------- | - |  | - | ---- | -
|                                                                       |  | Number                                           |        |        |  |         |     | Additional  |  |          |         |  |  |   |          |  
|                                                                       |  | of Shares                                        |        | Common |  | Paid-in |     | Accumulated |  | Treasury
|                                                                       |  | Issued                                           |        | Stock  |  | Capital |     | Deficit     |  | Stock   
|                                                                       |  |                                                  |        |        |  |         |     |             |  |         
|                                                                       |  | (Amounts in thousands, except per share amounts)
|Balance at December 31, 2001                                           |  |                                                  | 62,628 |        |  | $       | 626 |             |  | $        | 595,258 |  |  | $ | (258,047 | ) |  | $ | (808 | )
|Exercise of stock options, including tax benefits                      |  |                                                  | 85     |        |  |         | 1   |             |  |          | 417     |  |  |   |         |   |  |   |     |  
|Distribution of directors retirement plan shares                      |  |                                                  | 24     |        |  |         |    |             |  |          | 45      |  |  |   |         |   |  |   |     |  
|Exercise of stock warrants                                             |  |                                                  | 10     |        |  |         |    |             |  |          | 165     |  |  |   |         |   |  |   |     |  
|Expense recognized on stock options with below
market strike price     |  |                                                  |       |        |  |         |    |             |  |          | 1,343   |  |  |   |         |   |  |   |     |  
|Change in unrealized gain on securities
available-for-sale, net of tax |  |                                                  |       |        |  |         |    |             |  |          |        |  |  |   |         |   |  |   |     |  
|Change in debt of ESOP                                                 |  |                                                  |       |        |  |         |    |             |  |          |        |  |  |   |         |   |  |   |     |  
|Net loss                                                               |  |                                                  |       |        |  |         |    |             |  |          |        |  |  |   | (16,088  | ) |  |   |     |  
|Other                                                                  |  |                                                  |       |        |  |         |    |             |  |          |        |  |  |   | 5        |   |  |   |     |  
|                                                                       |  |                                                  |        |        |  |         |     |             |  |          |         |  |  |   |          |   |  |   |      |  
|Balance at June 30, 2002                                               |  |                                                  | 62,747 |        |  | $       | 627 |             |  | $        | 597,228 |  |  | $ | (274,130 | ) |  | $ | (808 | )
|                                                                       |  |                                                  |        |        |  |         |     |             |  |          |         |  |  |   |          |   |  |   |      |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                       |  |                                                  |     |             |  |           |      |               |  |   |        |   |  |   |         |  
|---------------------------------------------------------------------- |  | ------------------------------------------------ | --- | ----------- |  | --------- | ---- | ------------- |  | - | ------ | - |  | - | ------- | -
|                                                                       |  | Unrealized                                       |     |             |  |           |      |               |  |   |        |   |  |  
|                                                                       |  | Gain on                                          |     | Minimum     |  | Debt of   |      |               |  |  
|                                                                       |  | Securities                                       |     | Pension     |  | Employee  |      |               |  |  
|                                                                       |  | Available-for-                                   |     | Liability   |  | Stock     |      | Total        
|                                                                       |  | Sale,                                            |     | Adjustment, |  | Ownership |      | Stockholders
|                                                                       |  | Net of Tax                                       |     | Net of Tax  |  | Plan      |      | Equity       
|                                                                       |  |                                                  |     |             |  |           |      |              
|                                                                       |  | (Amounts in thousands, except per share amounts)
|Balance at December 31, 2001                                           |  | $                                                | 523 |             |  | $         | (294 | )             |  | $ | (1,071 | ) |  | $ | 336,187 |  
|Exercise of stock options, including tax benefits                      |  |                                                  |    |             |  |           |     |               |  |   |       |   |  |   | 418     |  
|Distribution of directors retirement plan shares                      |  |                                                  |    |             |  |           |     |               |  |   |       |   |  |   | 45      |  
|Exercise of stock warrants                                             |  |                                                  |    |             |  |           |     |               |  |   |       |   |  |   | 165     |  
|Expense recognized on stock options with below
market strike price     |  |                                                  |    |             |  |           |     |               |  |   |       |   |  |   | 1,343   |  
|Change in unrealized gain on securities
available-for-sale, net of tax |  |                                                  | 5   |             |  |           |     |               |  |   |       |   |  |   | 5       |  
|Change in debt of ESOP                                                 |  |                                                  |    |             |  |           |     |               |  |   | 1,071  |   |  |   | 1,071   |  
|Net loss                                                               |  |                                                  |    |             |  |           |     |               |  |   |       |   |  |   | (16,088 | )
|Other                                                                  |  |                                                  |    |             |  |           |     |               |  |   |       |   |  |   | 5       |  
|                                                                       |  |                                                  |     |             |  |           |      |               |  |   |        |   |  |   |         |  
|Balance at June 30, 2002                                               |  | $                                                | 528 |             |  | $         | (294 | )             |  | $ |       |   |  | $ | 323,151 |  
|                                                                       |  |                                                  |     |             |  |           |      |               |  |   |        |   |  |   |         |  

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

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Bay View Capital Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

|                                                                                                                                 |                                                                                               |   |                          |         |          |   |         |         |  
|-------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | - | ------------------------ | ------- | -------- | - | ------- | ------- | -
|                                                                                                                                 |                                                                                               |   | For the Six Months Ended
|                                                                                                                                 |                                                                                               |   |                         
|                                                                                                                                 |                                                                                               |   | June 30,                 |         | June 30,
|                                                                                                                                 |                                                                                               |   | 2003                     |         | 2002    
|                                                                                                                                 |                                                                                               |   |                          |         |         
|                                                                                                                                 |                                                                                               |   | (Dollars in thousands)  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                                             |                                                                                               |   |                          |         |          |   |         |        
|Net loss and certain changes in net assets in liquidation                                                                        |                                                                                               | $ | (3,367                   | )       |          | $ | (16,088 | )      
|Adjustments to reconcile net loss and certain changes in net assets in
liquidation to net cash provided by operating activities: |                                                                                               |   |                          |         |          |   |         |        
|                                                                                                                                 | Amortization of intangible assets                                                             |   |                          |        |          |   |         | 662     |  
|                                                                                                                                 | Net increase in loans and leases held-for-sale resulting from
originations, net of repayments |   |                          | (73,494 | )        |   |         |        |  
|                                                                                                                                 | Proceeds from sales of loans and leases held-for-sale                                         |   |                          | 115,466 |          |   |         | 37,859  |  
|                                                                                                                                 | Provision for losses on loans and leases and real estate owned                                |   |                          |        |          |   |         | 8,704   |  
|                                                                                                                                 | Depreciation and amortization of premises and equipment                                       |   |                          | 298     |          |   |         | 1,844   |  
|                                                                                                                                 | Depreciation and amortization of investment in operating lease assets                         |   |                          | 16,572  |          |   |         | 24,581  |  
|                                                                                                                                 | Accretion of retained interests in securitizations                                            |   |                          | (1,489  | )        |   |         |        |  
|                                                                                                                                 | Amortization of premiums, net of discount accretion                                           |   |                          | (3,107  | )        |   |         | 5,674   |  
|                                                                                                                                 | (Gain) loss on sale of assets and liabilities, net                                            |   |                          | 32      |          |   |         | (535    | )
|                                                                                                                                 | Increase in other assets                                                                      |   |                          | (2,089  | )        |   |         | (34,093 | )
|                                                                                                                                 | Decrease in other liabilities                                                                 |   |                          | (15,187 | )        |   |         | (24,057 | )
|                                                                                                                                 | Decrease in reserve for estimated costs during the period of liquidation                      |   |                          | (26,616 | )        |   |         |        |  
|                                                                                                                                 | Adjustment for liquidation basis                                                              |   |                          | 2,588   |          |   |         |        |  
|                                                                                                                                 | Cumulative effect of change in accounting principle, net of taxes                             |   |                          |        |          |   |         | 18,920  |  
|                                                                                                                                 | Other, net                                                                                    |   |                          | 1,232   |          |   |         | 3,490   |  
|                                                                                                                                 |                                                                                               |   |                          |         |          |   |         |        
|Net cash provided by operating activities                                                                                        |                                                                                               |   | 10,839                   |         |          |   | 26,961  |        
|                                                                                                                                 |                                                                                               |   |                          |         |          |   |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                                             |                                                                                               |   |                          |         |          |   |         |        
|Net increase in loans and leases held-for-investment resulting from
originations, net of repayments                              |                                                                                               |   |                         |         |          |   | 52,733  |        
|Decrease
in investment in operating lease assets                                                                                 |                                                                                               |   | 51,085                   |         |          |   |        |        
|Purchases of mortgage-backed securities                                                                                          |                                                                                               |   |                         |         |          |   | (59,984 | )      
|Purchases of investment securities                                                                                               |                                                                                               |   |                         |         |          |   | (54,930 | )      
|Principal payments on mortgage-backed securities                                                                                 |                                                                                               |   | 7,965                    |         |          |   | 88,040  |        
|Principal payments on investment securities                                                                                      |                                                                                               |   | 5,156                    |         |          |   | 28,118  |        
|Proceeds from sale of mortgage-backed securities available-for-sale                                                              |                                                                                               |   | 130                      |         |          |   | 92,633  |        
|Proceeds from sale of investment securities available-for-sale                                                                   |                                                                                               |   | 2,735                    |         |          |   |        |        
|Proceeds from sale of real estate owned                                                                                          |                                                                                               |   | 2                        |         |          |   | 4,302   |        
|Additions to premises and equipment                                                                                              |                                                                                               |   | (17                      | )       |          |   | (116    | )      
|Decrease in investment in stock of the Federal Home Loan Bank
of San Francisco                                                   |                                                                                               |   | 15,576                   |         |          |   | 8,545   |        
|Increase in investment in stock of the Federal Reserve Bank                                                                      |                                                                                               |   |                         |         |          |   | (1,438  | )      
|Other, net                                                                                                                       |                                                                                               |   |                         |         |          |   | (12     | )      
|                                                                                                                                 |                                                                                               |   |                          |         |          |   |         |        
|Net cash provided by investing activities                                                                                        |                                                                                               |   | 82,632                   |         |          |   | 157,891 |        
|                                                                                                                                 |                                                                                               |   |                          |         |          |   |         |        

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Bay View Capital Corporation and Subsidiaries
Consolidated Statements of Cash Flows (continued)
(Unaudited)

|                                                                        |                                                             |                                       |          |                          |          |          |            |        |          |  
|----------------------------------------------------------------------- | ----------------------------------------------------------- | ------------------------------------- | -------- | ------------------------ | -------- | -------- | ---------- | ------ | -------- | -
|                                                                        |                                                             |                                       |          | For the Six Months Ended
|                                                                        |                                                             |                                       |          |                         
|                                                                        |                                                             |                                       |          | June 30,                 |          | June 30,
|                                                                        |                                                             |                                       |          | 2003                     |          | 2002    
|                                                                        |                                                             |                                       |          |                          |          |         
|                                                                        |                                                             |                                       |          | (Dollars in thousands)  
|CASH FLOWS FROM FINANCING ACTIVITIES                                    |                                                             |                                       |          |                          |          |          |            |       
|Net decrease in deposits                                                |                                                             | $                                     | (224,189 | )                        |          | $        | (202,126   | )     
|Proceeds from advances from the Federal Home Loan Bank of San Francisco |                                                             |                                       |         |                          |          |          | 2,490,000  |       
|Repayment of advances from the Federal Home Loan Bank of San Francisco  |                                                             |                                       |         |                          |          |          | (2,490,000 | )     
|Net increase in warehouse lines outstanding                             |                                                             |                                       | 13,137   |                          |          |          |           |       
|Net decrease in other borrowings                                        |                                                             |                                       | (26,260  | )                        |          |          | (41,543    | )     
|Proceeds from issuance of common stock                                  |                                                             |                                       | 3,167    |                          |          |          | 628        |       
|                                                                        |                                                             |                                       |          |                          |          |          |            |       
|                                                                        |                                                             | Net cash used in financing activities |          |                          | (234,145 | )        |            |        | (243,041 | )
|                                                                        |                                                             |                                       |          |                          |          |          |            |       
|Net decrease in cash and cash equivalents                               |                                                             |                                       | (140,674 | )                        |          |          | (58,189    | )     
|Cash and cash equivalents at beginning of period                        |                                                             |                                       | 223,295  |                          |          |          | 521,388    |       
|                                                                        |                                                             |                                       |          |                          |          |          |            |       
|Cash and cash equivalents at end of period                              |                                                             | $                                     | 82,621   |                          |          | $        | 463,199    |       
|                                                                        |                                                             |                                       |          |                          |          |          |            |       
|Cash paid during the period for:                                        |                                                             |                                       |          |                          |          |          |            |       
|                                                                        | Interest                                                    |                                       | $        | 7,343                    |          |          | $          | 39,979 |         
|                                                                        | Income taxes                                                |                                       | $        | 13,603                   |          |          | $          | 854    |         
|Supplemental non-cash investing and financing activities:               |                                                             |                                       |          |                          |          |          |            |       
|                                                                        | Loans transferred to real estate owned                      |                                       | $        | 6,970                    |          |          | $          |       |         
|                                                                        | Loans
transferred from held-for-investment to held-for-sale |                                       | $        |                         |          |          | $          | 24,255 |         

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

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2003
(Unaudited)

Note 1. Basis of Presentation

The information provided in the consolidated financial statements as of
and for the three- and six-month periods ended June 30, 2003 reflects our
adoption of liquidation basis accounting effective September 30, 2002 in
accordance with accounting principles generally accepted in the United States
of America (GAAP). Liquidation basis accounting requires us to value our
assets at their estimated net realizable values and our liabilities to include
accruals for estimated costs associated with carrying out the Plan of
Dissolution and Stockholder Liquidity (the Plan). The consolidated statement
of operations and comprehensive loss for the three- and six-month periods ended
June 30, 2002, the consolidated statement of stockholders equity for the six
months ended June 30, 2002, and the consolidated statement of cash flows for
the six months ended June 30, 2002 have been prepared using the historical cost
(going concern) basis of accounting on which the Company had previously
reported its financial position and results of operations.

The consolidated financial statements include the accounts of Bay View
Capital Corporation (the Company), a bank holding company incorporated under
the laws of the state of Delaware, and our wholly-owned subsidiaries: Bay View
Bank, N.A. (the Bank), a national bank; Bay View Securitization Corporation,
a Delaware corporation; Bay View Capital I, a Delaware business trust; FMAC
Insurance Services, a Delaware corporation; FMAC 2000-A Holding Company, a
California corporation; and FMAC Franchise Receivables Corporation, a
California corporation. The Bank includes its wholly-owned subsidiaries: Bay
View Acceptance Corporation (BVAC), a Nevada corporation; Bay View Commercial
Finance Group, a California corporation; XBVBKRS, Inc., a California
corporation; MoneyCare, Inc., a California corporation; and Bay View Auxiliary
Corporation, a California corporation. All significant intercompany accounts
and transactions have been eliminated.

Through BVAC, the Bank continues to operate its auto finance business in
24 states. In 2003, we intend to transfer BVAC from the Bank to the Company,
subject to regulatory approval. The Company believes this will allow for a
full liquidation of the Bank while BVAC continues to originate new loans and
expand geographically during the Companys liquidation period, which is
anticipated to be completed by September 2005. The Company intends to spin off
BVAC to stockholders or sell it at the end of the liquidation period.

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 net assets in liquidation as of June 30, 2003, the changes
in net assets in liquidation for the three- and six-month periods ended June
30, 2003, the results of our operations for the three- and six-month periods
ended June 30, 2002, and cash flows for the six-month periods ended June 30,
2003 and 2002. These adjustments are primarily liquidation basis
mark-to-market adjustments and expense accruals. 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 position and results of operations. 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 GAAP.

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 2002 Annual Report on Form 10-K, which contains
the latest audited consolidated financial statements and notes, along with
Managements Discussion and Analysis of Financial Condition as of December 31,
2002 and 2001 and Results of Operations for the years ended December 31, 2002,
2001 and 2000. 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-month period ended June 30, 2003 are
not necessarily indicative of the results that may be expected for the entire
fiscal year or any other interim period.

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2003
(Unaudited)

Recent Accounting Pronouncements

In April 2003, the
Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 149,
Amendment of Statement 133 on Derivative Instruments and
Hedging Activities. This statement amends and clarifies
financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities
under Statement No. 133. This statement is effective for
contracts entered into or modified after June 30, 2003. The
Company believes that Statement No. 149 will not have a
significant impact on its financial statements.

In May 2003, the FASB
issued Statement of Financial Accounting Standards No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. This statement
establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a
financial instrument that is within its scope as a liability (or an
asset in some circumstances). Many of those instruments were
previously classified as equity. This statement is effective for
financial instruments entered into or modified after May 31,
2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15,
2003. Based on Statement No. 150, the liability associated with
the Companys Guaranteed Preferred Beneficial Interest in the
Companys Junior Subordinated Debentures has been classified as
a liability in the consolidated financial statements effective
July 1, 2003.

Note 2. Plan of Dissolution and Stockholder Liquidity

On October 3, 2002, a majority of the Companys common stockholders
approved the Companys Plan and the sale of the Banks retail banking assets to
U.S. Bank, N.A. (U.S. Bank). As a result of these approvals and the close of
the U.S. Bank transaction on November 1, 2002, we adopted liquidation basis
accounting effective September 30, 2002 in accordance with GAAP. Accordingly,
assets have been valued at their estimated net realizable values and
liabilities include accruals for estimated costs associated with carrying out
the Plan. In accordance with liquidation basis accounting, our stockholders
equity was transferred to net assets in liquidation. Our net assets in
liquidation totaled $409.9 million at June 30, 2003 or $6.37 in net assets in
liquidation per outstanding share based on 64,351,924 diluted common shares in
liquidation.

The Plan outlines the steps necessary to fully liquidate the Company. We
completed the sale of the Banks retail banking assets to U.S. Bank on November
1, 2002. Our remaining assets are being disposed of in an orderly manner;
remaining liabilities, including our outstanding debt, the Capital Securities
and other liabilities will be repaid.

On June 30, 2003, the Bank commenced a plan of dissolution and liquidation
under which the Bank will sell all of its assets, satisfy or discharge all of
its known and currently due and payable liabilities and distribute the
remaining proceeds to the Company, the Banks sole shareholder. Under this
plan, persons that may have claims that are not currently due and payable or
are otherwise contingent will have such claims satisfied or discharged by the
Bank or such claims will be assigned to and assumed by the Company. The
dissolution and liquidation of the Bank is contemplated by the Companys Plan.
The Company currently anticipates completing the dissolution of the Bank during
the fourth quarter of 2003.

We recorded net charges of $0.9 million and $2.6 million for additional
liquidation valuation adjustments during the three- and six-month periods ended
June 30, 2003, respectively, due to the declining net realizable values of our
assets in liquidation, primarily the residual values of our auto lease
portfolio.

Under liquidation basis accounting, we have estimated future liabilities
associated with carrying out the Plan. We have not reflected any future
revenues and expenses of an operating nature, as such revenues and expenses
will be recognized when realized.

Note 3. Earnings Per Share

Basic earnings per share are calculated by dividing net earnings or loss
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.
Under liquidation basis accounting, earnings per share information is not
presented. Accordingly, the earnings per share information set forth
below is
only for the three- and six-month periods ended June 30, 2002.

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2003
(Unaudited)

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

|                                                     |  |                           |        |               |  |   |         |  
|---------------------------------------------------- |  | ------------------------- | ------ | ------------- |  | - | ------- | -
|                                                     |  | For the Three             |        | For the Six  
|                                                     |  | Months Ended              |        | Months Ended 
|                                                     |  |                           |        |              
|                                                     |  | June 30, 2002             |        | June 30, 2002
|                                                     |  |                           |        |              
|                                                     |  | (Amounts in thousands,   
|                                                     |  | except per share amounts)
|Net earnings (loss) available to common stockholders |  | $                         | (4,082 | )             |  | $ | (16,088 | )
|Weighted-average basic shares outstanding            |  |                           | 62,715 |               |  |   | 62,697  |  
|Add: Dilutive potential common shares                |  |                           |       |               |  |   | 519     |  
|                                                     |  |                           |        |               |  |   |         |  
|Weighted-average diluted shares outstanding          |  |                           | 62,715 |               |  |   | 63,216  |  
|                                                     |  |                           |        |               |  |   |         |  
|Basic earnings (loss) per share                      |  | $                         | (0.07  | )             |  | $ | (0.26   | )
|                                                     |  |                           |        |               |  |   |         |  
|Diluted earnings (loss) per share                    |  | $                         | (0.07  | )             |  | $ | (0.26   | )
|                                                     |  |                           |        |               |  |   |         |  

Note 4. Stock Options

As of June 30, 2003, we had five employee stock option plans and three
non-employee director stock option plans. The employee stock option plans
include the Amended and Restated 1986 Stock Option and Incentive Plan, the
Amended and Restated 1995 Stock Option and Incentive Plan, the 1998-2000
Performance Stock Plan, the 1999 FMAC Stock Option, Deferred Stock and
Restricted Stock Plan, and the 2001 Stock Option and Incentive Plan, which
authorize the issuance of 1,759,430, 2,500,000, 400,000, 270,576 and 3,200,000
shares of common stock, respectively. The non-employee director stock option
plans include the Amended and Restated 1989 Non-Employee Director Stock Option
and Incentive Plan, the 1998 Non-Employee Director Stock Option and Incentive
Plan, and the 2001 Non-Employee Director Stock Option Plan, which authorize
the issuance of up to 550,000, 200,000, and 500,000 shares of common stock,
respectively.

The following table illustrates the stock options available for grant as
of June 30, 2003:

|                             |  |                       |            |                  |  |                       |            |   |  |  |             |  
|---------------------------- |  | --------------------- | ---------- | ---------------- |  | --------------------- | ---------- | - |  |  | ----------- | -
|                             |  |                       |            |                  |  | Non-Employee Director |            |   |  | 
|                             |  | Employee Stock Option |            | Stock Option and |  |                       |            |  
|                             |  | and Incentive Plans   |            | Incentive Plans  |  | Total                
|                             |  |                       |            |                  |  |                      
|Shares reserved for issuance |  |                       | 8,130,006  |                  |  |                       | 1,250,000  |   |  |  | 9,380,006   |  
|Granted                      |  |                       | (9,239,892 | )                |  |                       | (1,137,000 | ) |  |  | (10,376,892 | )
|Forfeited                    |  |                       | 3,027,981  |                  |  |                       | 235,000    |   |  |  | 3,262,981   |  
|Expired                      |  |                       | (426,688   | )                |  |                       | (166,000   | ) |  |  | (592,688    | )
|                             |  |                       |            |                  |  |                       |            |   |  |  |             |  
|Total available for grant    |  |                       | 1,491,407  |                  |  |                       | 182,000    |   |  |  | 1,673,407   |  
|                             |  |                       |            |                  |  |                       |            |   |  |  |             |  

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2003
(Unaudited)

At June 30, 2003, we had outstanding options under the plans with
expiration dates ranging from the year 2003 through 2014, as illustrated in the
following table:

|                                 |  |               |           |                |  |                  |            |  |  |   |       | 
|-------------------------------- |  | ------------- | --------- | -------------- |  | ---------------- | ---------- |  |  | - | ----- | 
|                                 |  | Number of     |           | Exercise Price |  | Weighted-Average
|                                 |  | Option Shares |           | Range          |  | Exercise Price  
|                                 |  |               |           |                |  |                 
|Outstanding at December 31, 2002 |  |               | 5,201,104 |                |  | $                | 4.59-34.41 |  |  | $ | 8.80  | 
|Granted                          |  |               |          |                |  |                  |           |  |  |   |      | 
|Exercised                        |  |               | (827,500  | )              |  |                  | 4.59-5.41  |  |  |   | 4.64  | 
|Forfeited                        |  |               | (405,222  | )              |  |                  | 5.41-31.63 |  |  |   | 13.98 | 
|                                 |  |               |           |                |  |                  |            |  |  |   |       | 
|Outstanding at June 30, 2003     |  |               | 3,968,382 |                |  | $                | 4.59-34.41 |  |  | $ | 9.17  | 
|                                 |  |               |           |                |  |                  |            |  |  |   |       | 
|Exercisable at June 30, 2003     |  |               | 3,968,382 |                |  | $                | 4.59-34.41 |  |  | $ | 9.17  | 
|                                 |  |               |           |                |  |                  |            |  |  |   |       | 

All of our stock option plans define a change in control as including a
sale of all or substantially all of our assets, and all of our stock option
plans provide for the automatic acceleration of the exercisability of stock
options in the event of a change in control with the exception of our 2001
Stock Option and Incentive Plan (the 2001 Plan). The 2001 Plan provides for
the acceleration of the exercisability of stock options in such circumstances
as the stock option committee of our Board of Directors determines to be
appropriate. On October 3, 2002, the Board of Directors authorized such
acceleration. The acceleration of the exercisability of stock options
resulting from the change in control for all other plans had an insignificant
impact on our consolidated financial statements.

Our stock options generally cancel automatically 90 days after termination
of employment and, notwithstanding any other provisions of our stock option
plans, all outstanding stock options will automatically cancel on the final
record date. The Stock Option Agreement of all holders of options under the
2001 Plan whose employment with the Company terminated or terminates on or
after November 15, 2002 were amended to provide that the optionee shall have
the right to exercise options under the 2001 Plan within a period of 18 months
following termination.

A substantial number of our employees have terminated their employment
with us to become employees of U.S. Bank and a number of other employees have
and will be terminated as part of our downsizing and cost reduction program.
To prevent our employees from losing the value in their stock options as a
result of the termination of their employment and to motivate our remaining
employees throughout the dissolution process, our Board of Directors has
amended our stock option plans, to the extent necessary, to permit the exercise
of the options on a net issuance basis. This right entitles the holder to
elect to receive from us, in exchange for the shares subject to the stock
option, that number of shares of our common stock that has a value equal to the
total amount by which the market price of the shares on the date the option is
exercised exceeds the total exercise price of the shares subject to the option.

Stock-Based Compensation

We adopted the disclosure requirements of Statement of Financial
Accounting Standards No. 148, Accounting for Stock-Based Compensation 
Transition and Disclosure, which amends Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation. Management
believes that adoption of this statement has no impact on the disclosures for
the consolidated financial statements as of and for the three- and six-month
periods ended June 30, 2003, as these consolidated financial statements are
prepared based on the liquidation basis of accounting, and no
earnings per share information is required.

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2003
(Unaudited)

Statement No. 123 establishes financial accounting and reporting standards
for stock-based compensation plans, including employee stock purchase plans,
stock options and restricted stock. Statement No. 123 encourages all entities
to adopt a fair value method of accounting for stock-based compensation plans,
whereby compensation cost is measured at the grant date based upon the fair
value of the award and is realized as an expense over the service or vesting
period. However, Statement No. 123 also allows an entity to continue to
measure compensation cost for these plans using the intrinsic value method of
accounting prescribed by Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees.

We account for our stock-based awards to employees and directors using the
intrinsic value method of accounting in accordance with Accounting Principles
Board Opinion No. 25. Under the intrinsic value method, compensation cost is
generally the excess, if any, of the quoted market price of the stock at the
grant or other measurement date over the exercise price.

Had compensation cost related to our stock option awards to employees and
directors been determined under the fair value method prescribed under
Statement No. 123, our net loss and loss per share on a going-concern basis
would have been the pro forma amounts illustrated in the table below for the
periods indicated:

|                              |                                                                                              |  |                                   |        |               |  |   |         |  
|----------------------------- | -------------------------------------------------------------------------------------------- |  | --------------------------------- | ------ | ------------- |  | - | ------- | -
|                              |                                                                                              |  | For the Three                     |        | For the Six  
|                              |                                                                                              |  | Months Ended                      |        | Months Ended 
|                              |                                                                                              |  |                                   |        |              
|                              |                                                                                              |  | June 30, 2002                     |        | June 30, 2002
|                              |                                                                                              |  |                                   |        |              
|                              |                                                                                              |  | (Dollars in thousands, except per
|                              |                                                                                              |  | share amounts)                   
|                              | As reported net loss in Consolidated Statement of
Operations and Comprehensive Loss          |  | $                                 | (4,082 | )             |  | $ | (16,088 | )
|                              | Stock-based employee compensation expense
(determined
under fair value method, net of taxes) |  |                                   | (644   | )             |  |   | (1,314  | )
|                              |                                                                                              |  |                                   |        |               |  |   |         |  
|                              | Pro forma net loss, after stock-based employee
compensation expense                          |  | $                                 | (4,726 | )             |  | $ | (17,402 | )
|                              |                                                                                              |  |                                   |        |               |  |   |         |  
|Net loss per share - basic:   |                                                                                              |  |                                   |        |               |  |   |        
|                              | As reported                                                                                  |  | $                                 | (0.07  | )             |  | $ | (0.26   | )
|                              | Pro forma                                                                                    |  | $                                 | (0.08  | )             |  | $ | (0.28   | )
|Net loss per share - diluted: |                                                                                              |  |                                   |        |               |  |   |        
|                              | As reported                                                                                  |  | $                                 | (0.07  | )             |  | $ | (0.26   | )
|                              | Pro forma                                                                                    |  | $                                 | (0.08  | )             |  | $ | (0.28   | )

Note 5. Agreements with Regulatory Agencies

During the third quarter of 2000, we entered into formal agreements with
the Office of the Comptroller of the Currency (OCC) and the Federal Reserve
Bank of San Francisco.

The agreement between the Bank and the OCC was dated September 6, 2000.
A provision of the agreement states that the Bank may not declare or
distribute any dividends without the prior written approval of the OCC.

The agreement between the Company and the Federal Reserve Bank of San
Francisco was dated September 28, 2000. The agreement states that we may not
declare or pay any cash or stock dividends or make any interest payments on
our Capital Securities without the prior written approval of the Federal
Reserve Bank of San Francisco. The agreement further requires the prior
written approval of the Federal Reserve Bank of San Francisco to increase the
principal balance of any category of debt above the levels outstanding as of
June 30,

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2003
(Unaudited)

2000. Finally, we may not repurchase any stock without the prior written
approval of the Federal Reserve Bank of San Francisco.

At June 30, 2003, the Companys regulatory capital levels exceeded minimum
regulatory capital requirements while the Banks regulatory capital levels
exceeded the requirements necessary to be considered well-capitalized.

Note 6. Investment in Operating Lease Assets

Leasing expense represents expenses related to our auto leasing
activities. Because the leases are accounted for as operating leases, the
corresponding assets are capitalized and depreciated to their estimated
residual values over their lease terms. This depreciation expense is included
in leasing expenses, along with the amortization of capitalized initial direct
lease costs and impairment charges. Leasing expenses were $8.0 million for the
second quarter of 2003 as compared to $16.1 million for the second quarter of
2002. Leasing expenses were $17.4 million for the first six months of 2003 as
compared to $31.1 million for the first six months of 2002.

The Company performs a quarterly impairment analysis of its automobile
operating lease portfolio in accordance with Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. A lease is considered impaired if its gross future undiscounted cash
flows are less than the net book value of the lease. The net book value of the
lease is defined as the original capitalized cost of the automobile, including
initial direct capitalized costs, less the cumulative amount of depreciation
recorded against the automobile and the cumulative amount of amortization of
the initial direct capitalized costs recorded since the inception of the lease
and less any impairment charges recorded-to-date on that lease.

In determining gross future undiscounted cash flows, the Company contracts
with Automotive Lease Guide, commonly referred to as ALG, to provide estimates
of the residual value of the underlying automobiles at the end of their lease
terms assuming that the vehicles are in average condition. The Company then
estimates the probability that i.) the automobiles will be purchased by the
lessee prior to the end of the lease term, ii.) the automobile will be
purchased by the lessee at the end of the lease term, either at a discount or
at the full contractual residual amount, or iii.) the automobile will be
returned to the lessor at the end of the lease term. These probabilities are
estimated using a number of factors, including the Companys experience-to-date
and industry experience.

Using the projected ALG residual values, the Companys experience-to-date
relative to the projected ALG residual values (for example, for vehicle classes
where actual amounts realized were less than what ALG had projected, the
Company reduced the projected ALG residual values to equal the Companys
experience-to-date), and the probabilities of each of the three disposition
scenarios discussed above occurring, the Company determines a
probability-weighted gross future undiscounted cash flow for each automobile
lease. For those leases where the gross future undiscounted cash flows are
less than net book value, the lease is considered impaired.

For those leases considered impaired, the Company then estimates the fair
value of the lease. The fair value is determined by calculating the present
value of the future estimated cash flows, again assuming the probabilities of
each of the three disposition scenarios. The present value is calculated using
current market rates which are similar

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2003
(Unaudited)

to the original contract lease rate. For those impaired leases where the
estimated fair value is less than the net book
value, an impairment charge is recorded for the difference. Since the
inception of the lease portfolio in June 1998, the Company has recorded
additional monthly depreciation charges, also included in leasing expense, to
provide for losses that may be incurred at the end of the lease terms. During
the first six months of 2003, we recorded $4.8 million of additional
mark-to-market writedowns on the auto lease portfolio.

Note 7. Income Taxes

The Company recorded tax benefits of $0.8 million and $1.6 million for the
second quarter and the first six months of 2003, respectively. The effective
tax rate used in computing the tax benefit for the first six months of 2003 was
32.1%. The income tax benefit includes the deduction of the dividends
on Capital Securities. This expected 2003 effective tax rate is lower than the federal
statutory rate primarily due to tax benefits from state income and franchise
taxes.

For the second quarter and the first six months of 2002, the Company
recorded tax benefits of $3.7 million and $5.6 million, respectively. The tax
benefit for the first six months of 2002 included a tax benefit of $1.6 million
on a pre-tax loss of $2.8 million and a tax benefit of $4.0 million related to
the impact of a change in U.S. Treasury regulations in 2002 with respect to a
loss on the sale of a subsidiary in 2001. The effective tax rate used in
computing the $1.6 million tax benefit for the first six months of 2002 was
57.7%.

As a result of the Companys Plan, as of December 31, 2002, the Company
had recorded a valuation allowance of $21.5 million, which remained unchanged
at June 30, 2003. The computation of deferred tax assets, net of the valuation
allowance, is based on the projection of future operating income, primarily
from the Companys auto finance business, available to absorb existing deferred
tax benefits.

Note 8. Commitments and Contingencies

We are involved as plaintiff or defendant in various legal actions and are
occasionally exposed to unasserted claims arising in the normal course of
business. In the opinion of management, after consultation with counsel, the
resolution of these legal actions will not have a material adverse effect on
our consolidated financial condition or results of operations.

Note 9. Reserve for Estimated Costs during the Period of Liquidation

The reserve for estimated costs during the period of liquidation includes
accruals for severance payments and costs related to facility closures,
investment banking and other professional fees and estimated litigation expense
and settlements. These expense accruals are reviewed for adequacy on a
quarterly basis. Changes to the accruals, if necessary, are recorded as
adjustments in liquidation basis in future periods.

At June 30, 2003, the reserve for estimated costs during the period of
liquidation was $15.3 million, including accruals for facilities and severance
of $8.3 million and $3.4 million, respectively.

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

Strategic Overview

Bay View Capital Corporation (the Company) is a commercial bank holding
company headquartered in San Mateo, California. Our principal subsidiary is
Bay View Bank, N.A. (the Bank).

Plan of Dissolution and Stockholder Liquidity

On August 6, 2002, our Board of Directors approved a plan of dissolution
and stockholder liquidity (the Plan). Under the Plan, we intend to dispose
of our remaining assets in an orderly manner and to collect all additional
monies owed to us. We have made and will continue to make adequate reserves
for the payment of all of our liabilities and obligations, including all
expenses related to the sale of our assets and the Plan. Our Board of
Directors, at its discretion, may also set aside a contingency reserve to pay
any claims that may arise against us, whether known or unknown. We anticipate
making seven liquidating distributions to our stockholders, representing the
net proceeds of our asset sales. Any liquidating distributions will be made to
our stockholders based on their pro rata ownership of our common stock as of
the record date to be established for each distribution.

It is not possible at this time to indicate an exact amount for the
distributions we intend to make to our stockholders for a number of reasons,
including: the need to obtain the Board of Governors of the Federal Reserve
System (FRB) and Office of the Comptroller of the Currency (OCC) approval
to make any distributions; the proceeds that we in fact receive from the
disposition of other assets that are not yet subject to purchase commitments
could be less than we currently anticipate; and our expenses and other
obligations prior to liquidation could be greater than we currently anticipate.
As a result, no assurance can be given as to the amount of the distributions
that will be made to our stockholders, either in cash or in the stock of
operating companies.

On October 3, 2002, our stockholders approved the Plan and the sale of the
Banks retail banking assets to U.S. Bank, N.A. (U.S. Bank). Also on October
3, 2002, holders of the Capital Securities of Bay View Capital I approved a
waiver of those provisions of the legal instruments governing the Capital
Securities and the Companys 9.76% Junior Subordinated Deferrable Interest
Debentures that would, absent the waiver, prevent us from disposing of all of
our assets pursuant to the Plan.

As a result of the stockholders approval of the Plan and the close of the
U.S. Bank transaction on November 1, 2002, we adopted liquidation basis
accounting, effective September 30, 2002, in accordance with accounting
principles generally accepted in the United States of America (GAAP).

On June 30, 2003, the Bank commenced a plan of dissolution and liquidation
under which the Bank will sell all of its assets, satisfy or discharge all of
its known and currently due and payable liabilities and distribute the
remaining proceeds to the Company, the Banks sole shareholder. Under this
plan, persons that may have claims that are not currently due and payable or
are otherwise contingent will have such claims satisfied or discharged by the
Bank or such claims will be assigned to and assumed by the Company. The
dissolution and liquidation of the Bank is contemplated by the Companys Plan.
The Company currently anticipates completing the dissolution of the Bank during
the fourth quarter of 2003.

Segments

Prior to September 30, 2002, we operated two distinct business platforms
representing the two basic distribution channels of our primary businesses,
retail and commercial banking. However, with our adoption of the Plan, we are
now focused on the dissolution and liquidation of the Companys assets and
liabilities, and no longer operate the individual retail and commercial banking
businesses or segments. Accordingly, the results for the three- and six-month
periods ended June 30, 2002 have been reclassified to conform to the current
period presentation.

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Critical Accounting Policies

We have identified the most critical accounting policies upon which our
financial status depends. We determined the critical policies by considering
accounting principles that involve the most complex or subjective decisions or
assessments. We have identified our most critical accounting policies to be
those related to our investment in operating lease assets, income taxes and the
valuation of assets and liabilities in liquidation and the reserve for
estimated costs during the period of liquidation.

Investment in Operating Lease Assets

The Company performs a quarterly impairment analysis of its automobile
operating lease portfolio in accordance with Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. A lease is considered impaired if its gross future undiscounted cash
flows are less than the net book value of the lease. The net book value of the
lease is defined as the original capitalized cost of the automobile, including
initial direct capitalized costs, less the cumulative amount of depreciation
recorded against the automobile and the cumulative amount of amortization of
the initial direct capitalized costs recorded since the inception of the lease
and less any impairment charges recorded-to-date on that lease.

In determining gross future undiscounted cash flows, the Company contracts
with Automotive Lease Guide, commonly referred to as ALG, to provide estimates
of the residual value of the underlying automobiles at the end of their lease
terms assuming that the vehicles are in average condition. The Company then
estimates the probability that i.) the automobiles will be purchased by the
lessee prior to the end of the lease term, ii.) the automobile will be
purchased by the lessee at the end of the lease term, either at a discount or
at the full contractual residual amount, or iii.) the automobile will be
returned to the lessor at the end of the lease term. These probabilities are
estimated using a number of factors, including the Companys experience-to-date
and industry experience.

Using the projected ALG residual values, the Companys experience-to-date
relative to the projected ALG residual values (for example, for vehicle classes
where actual amounts realized were less than what ALG had projected, the
Company reduced the projected ALG residual values to equal the Companys
experience-to-date), and the probabilities of each of the three disposition
scenarios discussed above occurring, the Company determines a
probability-weighted gross future undiscounted cash flow for each automobile
lease. For those leases where the gross future undiscounted cash flows are
less than net book value, the lease is considered impaired.

For those leases considered impaired, the Company then estimates the fair
value of the lease. The fair value is determined by calculating the present
value of the future estimated cash flows, again assuming the probabilities of
each of the three disposition scenarios. The present value is calculated using
current market rates which are similar to the original contract lease rate.
For those impaired leases where the estimated fair value is less than the net
book value, an impairment charge is recorded for the difference. Since the
inception of the lease portfolio in June 1998, the Company has recorded
additional monthly depreciation charges, also included in leasing expense, to
provide for losses that may be incurred at the end of the lease terms.

Income Taxes

As a result of the Companys Plan, as of December 31, 2002, the Company
had recorded a valuation allowance of $21.5 million, which remained unchanged
at June 30, 2003. The computation of deferred tax assets, net of the valuation
allowance, is based on the projection of future operating income, primarily
from the Companys auto finance business, available to absorb existing deferred
tax benefits.

Liquidation Basis Accounting

We adopted liquidation basis accounting effective September 30, 2002 in
accordance with GAAP. Accordingly, assets have been valued at their estimated
net realizable values and liabilities include accruals for estimated costs
associated with carrying out the Plan. We have not reflected any future
revenues and expenses of

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an operating nature; as such revenues and expenses will be recognized when
realized. In accordance with liquidation basis accounting, our stockholders
equity was transferred to net assets in liquidation.

The reserve for estimated costs during the period of liquidation includes
accruals for severance payments and facility closures, investment banking and
other professional fees and estimated litigation expense. These expense
accruals are reviewed for adequacy and adjusted, if necessary, on a quarterly
basis.

Recent Accounting Pronouncements

In April 2003, the
Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 149,
Amendment of Statement 133 on Derivative Instruments and
Hedging Activities. This statement amends and clarifies
financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities
under Statement No. 133. This statement is effective for
contracts entered into or modified after June 30, 2003. The
Company believes that Statement No. 149 will not have a
significant impact on its financial statements.

In May 2003, the FASB
issued Statement of Financial Accounting Standards No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. This statement
establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a
financial instrument that is within its scope as a liability (or an
asset in some circumstances). Many of those instruments were
previously classified as equity. This statement is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15,
2003. The Company believes that Statement No. 150
will not have a significant impact on its financial statements.

Results of Operations

Under the liquidation basis of accounting, we are reporting the value of,
and the changes in, net assets available for distribution to stockholders (net
assets in liquidation) instead of results from continuing operations.
Accordingly, the Companys consolidated financial statements as of June 30,
2003 and December 31, 2002 and for the three- and six-month periods ended June
30, 2003 have been prepared under the liquidation basis of accounting; the
Consolidated Statement of Operations and Comprehensive Loss have been replaced
with the Consolidated Statement of Changes in Net Assets in Liquidation. The
Companys consolidated financial statements presented for periods prior to
September 30, 2002, (i.e., for the three- and six-month periods ended June 30,
2002) are presented on a going concern basis of accounting. The Company is
providing, herein, (1) Consolidated Statements of Net Assets (Liquidation
Basis) as of June 30, 2003 and December 31, 2002, (2) Consolidated Statements of
Changes in Net Assets in Liquidation (Liquidation Basis) for the three- and
six-month periods ended June 30, 2003 and (3) Consolidated Statements of
Operations and Comprehensive Loss for the three- and six-month periods ended
June 30, 2002 (Going Concern Basis).

Liquidation Basis

Changes in Net Assets in Liquidation  Three- and Six-Month Periods Ended June
30, 2003

Our net assets in liquidation at June 30, 2003 totaled $409.9 million, or
$6.37 in net assets in liquidation per outstanding diluted share as compared to
$411.0 million, or $6.41 in net assets in liquidation per outstanding diluted
share and $410.1 million, or $6.43 in net assets in liquidation per outstanding
diluted share at March 31, 2003 and December 31, 2002, respectively. The
decreases in net assets in liquidation were primarily the result of dividends
paid on our Capital Securities that were in excess of income from operations.

Dividends paid on the Capital Securities totaled $2.3 million during the
second quarter. The dividend payments were partially offset by second quarter
net income from operations of $0.6 million and proceeds from stock options and
warrants exercised during the quarter of $0.6 million.

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Net income for the second quarter consisted of $0.7 million of pre-tax
income from operations, $0.9 million of net charges for changes in estimated
values of assets and liabilities which were largely attributable to writedowns
on the auto lease and liquidating loan portfolios, and a tax benefit of $0.8
million.

The dividends paid on our Capital Securities totaled $4.5 million for the
first six months of 2003. The distributions were partially offset by net
income from operations for the first six months of 2003 totaling $1.1 million
and proceeds from stock options and warrants exercised of $3.2 million.

The net income from operations for the first six months of 2003 consisted
of $2.1 million of pre-tax income from operations, $2.6 million of net charges
for changes in estimated values of assets and liabilities, and a tax benefit of
$1.6 million.

The net charges for changes in estimated values of assets and liabilities
consisted primarily of $4.8 million of additional mark-to-market writedowns on
the auto lease portfolio as the residual values on these autos declined on
continued weakness in used car resale values. This was partially offset by a
$1.3 million gain associated with the financing secured by our auto lease cash
flows resulting from favorable experience with the underlying cash flows, and a
$1.0 million reduction of an accrual related to the settlement of litigation
that was negotiated during the first quarter of 2003.

The decrease in net assets in liquidation per outstanding diluted share
was primarily due to an increase of 605,000 diluted common shares outstanding
resulting from exercises of stock options and warrants during the first six
months of 2003.

During the second
quarter, Bay View Acceptance Corporation (BVAC), our
auto finance company, completed a study of its loan production and
servicing operations, and identified a number of opportunities to
increase efficiencies without compromising existing underwriting and
servicing standards. To this end, the Chicago and Houston loan
production offices are being consolidated into the Covina, California
office. In addition, BVAC is reducing the size of its loan servicing
and collections staff while expanding its lending operations from
five to seven days per week. Headcount, which was 141 full-time
equivalent employees at June 30, 2003, is expected to be reduced to approximately 110 by September 30, 2003. Second quarter
results include a pre-tax charge of $675 thousand for the costs of
the restructuring.

Leasing Expenses

Leasing expense represents expenses related to our auto lease portfolio.
Because the leases are accounted for as operating leases, the corresponding
assets are capitalized and depreciated to their estimated residual values over
their lease terms. This depreciation expense is included in leasing expenses,
along with the amortization of capitalized initial direct lease costs and
impairment charges. Leasing expenses were $8.0 million for the second quarter
of 2003 as compared to $16.1 million for the second quarter of 2002, and $17.4
million for the first six months of 2003 as compared to $31.1 million for the
first six months of 2002. The decreases in leasing expenses, as compared to
the prior periods, were primarily due to lower depreciation expense associated
with the declining balance of our lease portfolio. We ceased purchasing auto
leases in June 2000.

At June 30, 2003, approximately 5,005 of the 8,469 vehicles in our
automobile lease portfolio, or 59%, were considered impaired under Statement
No. 144. This impairment is subject to a number of significant assumptions
that could change in the near term, and adversely affect the valuation of the
automobile lease portfolio. These assumptions were previously described under
Critical Accounting Policies, Investment in Operating Lease Assets. Two of
these assumptions  including the residual values of individual leases that are
projected by ALG and the relative probabilities of the three alternatives for
disposing of vehicles  are particularly susceptible to changes in market
conditions. As an illustration of the sensitivity of these assumptions  if
the market values of the individual vehicles declined by $250, an additional 5%
of the leases would be deemed to be impaired and, therefore, potentially
subject to an impairment charge. Furthermore, if the percentage of vehicles
returned to the Company were greater than was projected at year-end, the
impairment charge could increase because the proceeds realized under this
disposition scenario is normally less than if the lessee purchased the
automobile prior to the end of the lease term.

Income Taxes

We recorded tax benefits of $0.8 million and $1.6 million for the second
quarter and the first six months of 2003, respectively. The effective tax rate
used in computing the tax benefit for the first six months of 2003 was 32.1%.
The income tax benefit includes the deduction of the dividends on
Capital Securities. This expected 2003 effective tax rate is lower than the federal statutory rate
primarily due to the tax benefits from state income and franchise taxes.

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For the second quarter and the first six months of 2002, we recorded tax
benefits of $3.7 million and $5.6 million, respectively. The tax benefit for
the first six months of 2002 included a tax benefit of $1.6 million on a
pre-tax loss of $2.8 million and a tax benefit of $4.0 million related to the
impact of a change in U.S. Treasury regulations in 2002 with respect to a loss
on the sale of a subsidiary in 2001. The effective tax rate used in computing
the $1.6 million tax benefit for the first six months of 2002 was 57.7%.

Going Concern Basis

Results of Operations  Three- and Six-Month Periods Ended June 30, 2002

Our net loss for the second quarter of 2002 was $4.1 million, or $0.07 per
diluted share. Our second quarter results include a special pre-tax charge of
$13.1 million related to the settlement of litigation. On June 25, 2002, the
Company entered into a settlement agreement with JP Morgan Chase Bank relating
to a complaint filed against Bay View Franchise Mortgage Acceptance Company
which the Company sold during 2001. The settlement resulted in this charge to
second quarter earnings and included the removal of approximately $12 million
of nonperforming franchise loans from our consolidated balance sheet.

Net loss for the first six months of 2002 was $16.1 million, or $0.26 per
diluted share. Year-to-date results were adjusted to include $18.9 million in
goodwill impairment charges, net of taxes, that was recorded during the third
quarter of 2002 but was recognized as the cumulative effect of a change in
accounting principle as of January 1, 2002. Year-to-date earnings before this
cumulative effect of a change in accounting principle were $2.8 million, or
$0.04 per diluted share.

On June 5, 2002, we completed the sale of our San Mateo-based factoring
business, Bay View Funding, to a group of investors led by the factoring
companys management team. Through this transaction, we converted
approximately $6.5 million of goodwill to tangible equity.

Net Interest Income and Net Interest Margin

Our net interest income and net interest margin for the second quarter of
2002 were $33.4 million and 4.23%, respectively. Our net interest income and
net interest margin for the first six months of 2002 were $66.6 million and
4.19%, respectively. Our interest-earning assets, excluding our auto-related
operating lease assets, totaled $3.1 billion at June 30, 2002. The average
interest-earning assets, excluding our auto-related operating lease assets,
totaled $3.2 billion for both the three- and six-month periods ended June 30,
2002.

Average Balance Sheet

The following tables illustrate average yields on our interest-earning
assets and average rates on our interest-bearing liabilities for the periods
indicated. These average yields and rates were calculated by dividing interest
income by the average balance of interest-earning assets and by dividing
interest expense by the average balance of interest-bearing liabilities, for
the period indicated. Average balances of interest-earning assets and
interest-bearing liabilities were calculated by averaging the relevant
month-end amounts for the period.

22



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|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |      |  
|------------------------------------------ | ----------------------------- | - | ---------------------------------- | --------- | -------- | - | ---------- | ------ | ------- |  | ---- | ---- | -
|                                           |                               |   | AVERAGE BALANCES, YIELDS AND RATES
|                                           |                               |   |                                   
|                                           |                               |   | For the Three Months Ended        
|                                           |                               |   | June 30, 2002                     
|                                           |                               |   |                                   
|                                           |                               |   | Average                            |           |          |   |            |        | Average
|                                           |                               |   | Balance                            |           | Interest |   | Yield/Rate
|                                           |                               |   |                                    |           |          |   |           
|                                           |                               |   | (Dollars in thousands)            
|Assets                                     |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Interest-earning assets:                   |                               |   |                                    |           |          |   |            |        |         |  |      |     
|                                           | Loans and leases              |   | $                                  | 2,432,969 |          |   | $          | 45,563 |         |  |      | 7.50 | %
|                                           | Mortgage-backed securities(1) |   |                                    | 256,972   |          |   |            | 3,014  |         |  |      | 4.69 |  
|                                           | Investments(1)                |   |                                    | 473,678   |          |   |            | 3,906  |         |  |      | 3.29 |  
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Total interest-earning assets              |                               |   | 3,163,619                          |           |          |   | 52,483     |        |         |  | 6.64 | %   
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Other assets                               |                               |   | 634,271                            |           |          |   |            |        |         |  |      |     
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Total assets                               |                               | $ | 3,797,890                          |           |          |   |            |        |         |  |      |     
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Liabilities and Stockholders Equity       |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Interest-bearing liabilities:              |                               |   |                                    |           |          |   |            |        |         |  |      |     
|                                           | Deposits                      |   | $                                  | 3,029,865 |          |   | $          | 13,529 |         |  |      | 1.79 | %
|                                           | Borrowings(2)                 |   |                                    | 294,156   |          |   |            | 5,507  |         |  |      | 7.49 |  
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |      |  
|Total interest-bearing liabilities         |                               |   | 3,324,021                          |           |          |   | 19,036     |        |         |  | 2.30 | %   
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Other liabilities                          |                               |   | 127,651                            |           |          |   |            |        |         |  |      |     
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Total liabilities                          |                               |   | 3,451,672                          |           |          |   |            |        |         |  |      |     
|Stockholders equity                       |                               |   | 346,218                            |           |          |   |            |        |         |  |      |     
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Total liabilities and stockholders
equity |                               | $ | 3,797,890                          |           |          |   |            |        |         |  |      |     
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Net interest income/net interest spread    |                               |   |                                    |           |          | $ | 33,447     |        |         |  | 4.34 | %   
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Net interest-bearing liabilities           |                               | $ | (160,402                           | )         |          |   |            |        |         |  |      |     
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Net interest margin(3)                     |                               |   |                                    |           |          |   |            |        |         |  | 4.23 | %   
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     



|(1) |  | Average balances and yields for securities and other
investments classified as available-for-sale are based on
historical amortized cost.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Interest expense for borrowings excludes expenses related to
our Capital Securities.                                                     
|   
|(3) |  | Annualized net interest income divided by average
interest-earning assets.                                                               

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|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |      |  
|------------------------------------------ | ----------------------------- | - | ---------------------------------- | --------- | -------- | - | ---------- | ------ | ------- |  | ---- | ---- | -
|                                           |                               |   | AVERAGE BALANCES, YIELDS AND RATES
|                                           |                               |   |                                   
|                                           |                               |   | For the Six Months Ended          
|                                           |                               |   | June 30, 2002                     
|                                           |                               |   |                                   
|                                           |                               |   | Average                            |           |          |   |            |        | Average
|                                           |                               |   | Balance                            |           | Interest |   | Yield/Rate
|                                           |                               |   |                                    |           |          |   |           
|                                           |                               |   | (Dollars in thousands)            
|Assets                                     |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Interest-earning assets:                   |                               |   |                                    |           |          |   |            |        |         |  |      |     
|                                           | Loans and leases              |   | $                                  | 2,428,918 |          |   | $          | 92,034 |         |  |      | 7.61 | %
|                                           | Mortgage-backed securities(1) |   |                                    | 270,338   |          |   |            | 6,565  |         |  |      | 4.85 |  
|                                           | Investments(1)                |   |                                    | 480,316   |          |   |            | 7,577  |         |  |      | 3.15 |  
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |      |  
|Total interest-earning assets              |                               |   | 3,179,572                          |           |          |   | 106,176    |        |         |  | 6.70 | %   
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Other assets                               |                               |   | 656,476                            |           |          |   |            |        |         |  |      |     
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Total assets                               |                               | $ | 3,836,048                          |           |          |   |            |        |         |  |      |     
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Liabilities and Stockholders Equity       |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Interest-bearing liabilities:              |                               |   |                                    |           |          |   |            |        |         |  |      |     
|                                           | Deposits                      |   | $                                  | 3,078,326 |          |   | $          | 28,531 |         |  |      | 1.87 | %
|                                           | Borrowings(2)                 |   |                                    | 286,830   |          |   |            | 11,054 |         |  |      | 7.73 |  
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |      |  
|Total interest-bearing liabilities         |                               |   | 3,365,156                          |           |          |   | 39,585     |        |         |  | 2.37 | %   
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Other liabilities                          |                               |   | 128,061                            |           |          |   |            |        |         |  |      |     
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Total liabilities                          |                               |   | 3,493,217                          |           |          |   |            |        |         |  |      |     
|Stockholders equity                       |                               |   | 342,831                            |           |          |   |            |        |         |  |      |     
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Total liabilities and stockholders
equity |                               | $ | 3,836,048                          |           |          |   |            |        |         |  |      |     
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Net interest income/net interest spread    |                               |   |                                    |           |          | $ | 66,591     |        |         |  | 4.33 | %   
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Net interest-bearing liabilities           |                               | $ | (185,584                           | )         |          |   |            |        |         |  |      |     
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     
|Net interest margin(3)                     |                               |   |                                    |           |          |   |            |        |         |  | 4.19 | %   
|                                           |                               |   |                                    |           |          |   |            |        |         |  |      |     



|(1) |  | Average balances and yields for securities and other
investments classified as available-for-sale are based on
historical amortized cost.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Interest expense for borrowings excludes expenses related to
our Capital Securities.                                                     
|   
|(3) |  | Annualized net interest income divided by average
interest-earning assets.                                                               

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Interest Income

Interest income was $52.5 million for the second quarter of 2002 and
$106.2 million for the first six months of 2002. The average yield on
interest-earning assets was 6.64% for the second quarter of 2002 and 6.70% for
the first six months of 2002. The following table illustrates interest income,
by type of interest-earning assets, for the periods indicated:

|                           |  |                            |           |                          |  |         |        |         |  |          |      |         |  |   |           |  |  |   |         |  |  |  |      |  
|-------------------------- |  | -------------------------- | --------- | ------------------------ |  | ------- | ------ | ------- |  | -------- | ---- | ------- |  | - | --------- |  |  | - | ------- |  |  |  | ---- | -
|                           |  | For the Three Months Ended |           | For the Six Months Ended
|                           |  | June 30, 2002              |           | June 30, 2002           
|                           |  |                            |           |                         
|                           |  | Average                    |           | Interest                 |  | Average |        | Average |  | Interest |      | Average
|                           |  | Balance                    |           | Income                   |  | Yield   |        | Balance |  | Income   |      | Yield  
|                           |  |                            |           |                          |  |         |        |         |  |          |      |        
|                           |  | (Dollars in thousands)    
|Interest-earning assets:   |  |                            |           |                          |  |         |        |         |  |          |      |         |  |   |           |  |  |   |         |  |  |  |      |  
|Loans                      |  | $                          | 2,432,969 |                          |  | $       | 45,563 |         |  |          | 7.50 | %       |  | $ | 2,428,918 |  |  | $ | 92,034  |  |  |  | 7.61 | %
|Mortgage-backed securities |  |                            | 256,972   |                          |  |         | 3,014  |         |  |          | 4.69 |         |  |   | 270,338   |  |  |   | 6,565   |  |  |  | 4.85 |  
|Investments                |  |                            | 473,678   |                          |  |         | 3,906  |         |  |          | 3.29 |         |  |   | 480,316   |  |  |   | 7,577   |  |  |  | 3.15 |  
|                           |  |                            |           |                          |  |         |        |         |  |          |      |         |  |   |           |  |  |   |         |  |  |  |      |  
|Total                      |  | $                          | 3,163,619 |                          |  | $       | 52,483 |         |  |          | 6.64 | %       |  | $ | 3,179,572 |  |  | $ | 106,176 |  |  |  | 6.70 | %
|                           |  |                            |           |                          |  |         |        |         |  |          |      |         |  |   |           |  |  |   |         |  |  |  |      |  

Interest Expense

Deposits

Interest expense on our deposits was $13.5 million for the second quarter
of 2002 and $28.5 million for the first six months of 2002. The average cost
of deposits was 1.79% for the second quarter of 2002 and 1.87% for the first
six months of 2002. The following table summarizes our deposit costs by type
for the periods indicated:

|                                 |  |                        |           |                     |  |                 |      |              |  |   |           |  |  |  |      |  
|-------------------------------- |  | ---------------------- | --------- | ------------------- |  | --------------- | ---- | ------------ |  | - | --------- |  |  |  | ---- | -
|                                 |  | For the Three Months   |           | For the Six Months 
|                                 |  | Ended June 30, 2002    |           | Ended June 30, 2002
|                                 |  |                        |           |                    
|                                 |  | Average Balance        |           | Average Rate        |  | Average Balance |      | Average Rate
|                                 |  |                        |           |                     |  |                 |      |             
|                                 |  | (Dollars in thousands)
|Savings                          |  | $                      | 160,987   |                     |  |                 | 0.62 | %            |  | $ | 161,352   |  |  |  | 0.51 | %
|Money Market                     |  |                        | 954,232   |                     |  |                 | 1.64 |              |  |   | 1,030,169 |  |  |  | 1.71 |  
|Checking accounts                |  |                        | 780,850   |                     |  |                 | 0.90 |              |  |   | 736,149   |  |  |  | 0.85 |  
|                                 |  |                        |           |                     |  |                 |      |              |  |   |           |  |  |  |      |  
|Total transaction accounts       |  |                        | 1,896,069 |                     |  |                 | 1.25 |              |  |   | 1,927,670 |  |  |  | 1.28 |  
|Retail certificates of deposit   |  |                        | 1,133,796 |                     |  |                 | 2.70 |              |  |   | 1,150,656 |  |  |  | 2.85 |  
|Brokered certificates of deposit |  |                        |          |                     |  |                 |     |              |  |   |          |  |  |  |     |  
|                                 |  |                        |           |                     |  |                 |      |              |  |   |           |  |  |  |      |  
|Total deposits                   |  | $                      | 3,029,865 |                     |  |                 | 1.79 | %            |  | $ | 3,078,326 |  |  |  | 1.87 | %
|                                 |  |                        |           |                     |  |                 |      |              |  |   |           |  |  |  |      |  

Borrowings

Interest expense on our borrowings was $5.5 million for the second quarter
of 2002 and $11.1 million for the first six months of 2002. The average cost
of borrowings was 7.49% for the second quarter of 2002 and 7.73% for the first
six months of 2002. These amounts exclude the expense associated with our
Capital Securities.

Provision for Losses on Loans and Leases

The provision for losses on loans and leases was $3.6 million for the
second quarter of 2002 and $8.5 million for the first six months of 2002. Our
year-to-date provision reflects the impact of a $2.6 million recovery on the
sale of charged-off high loan-to-value home equity loans during the fourth
quarter of 2001.

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##### Table of Contents



Noninterest Income and Noninterest Expense

Noninterest income totaled $25.4 million for the second quarter of 2002
and $51.6 million for the first six months of 2002.

General and Administrative Expenses

General and administrative expenses were $30.5 million for the second
quarter of 2002 and $61.3 million for the first six months of 2002. The
following table illustrates the ratio of general and administrative expenses to
average total assets, including auto-related securitized assets, on an
annualized basis for the periods indicated:

|                                                                                                                  |  |                        |           |               |  |   |           |  
|----------------------------------------------------------------------------------------------------------------- |  | ---------------------- | --------- | ------------- |  | - | --------- | -
|                                                                                                                  |  | For the Three          |           | For the Six  
|                                                                                                                  |  | Months Ended           |           | Months Ended 
|                                                                                                                  |  |                        |           |              
|                                                                                                                  |  | June 30, 2002          |           | June 30, 2002
|                                                                                                                  |  |                        |           |              
|                                                                                                                  |  | (Dollars in thousands)
|General and administrative expenses                                                                               |  | $                      | 30,536    |               |  | $ | 61,328    |  
|Average total assets, including auto-related
securitized assets                                                   |  | $                      | 3,955,434 |               |  | $ | 4,010,205 |  
|                                                                                                                  |  |                        |           |               |  |   |           |  
|Annualized general and administrative expenses
to
average total assets, including auto-related
securitized assets |  |                        | 3.09      | %             |  |   | 3.06      | %
|                                                                                                                  |  |                        |           |               |  |   |           |  

Another measure that management uses to monitor our level of general and
administrative expenses is the efficiency ratio. The efficiency ratio is
calculated by dividing the amount of general and administrative expenses by
operating revenues, defined as net interest income, as adjusted to include
expenses associated with our Capital Securities, the excess of our
leasing-related rental income over leasing-related depreciation expense, and
other noninterest income. This ratio reflects the level of general and
administrative expenses required to generate $1 of operating revenue.

The following table illustrates the efficiency ratio for the periods
indicated:

|                                    |  |                        |        |               |  |   |        |  
|----------------------------------- |  | ---------------------- | ------ | ------------- |  | - | ------ | -
|                                    |  | For the Three          |        | For the Six  
|                                    |  | Months Ended           |        | Months Ended 
|                                    |  |                        |        |              
|                                    |  | June 30, 2002          |        | June 30, 2002
|                                    |  |                        |        |              
|                                    |  | (Dollars in thousands)
|General and administrative
expenses |  | $                      | 30,536 |               |  | $ | 61,328 |  
|Operating revenues, as defined      |  | $                      | 44,355 |               |  | $ | 88,393 |  
|                                    |  |                        |        |               |  |   |        |  
|Efficiency ratio                    |  |                        | 68.8   | %             |  |   | 69.4   | %
|                                    |  |                        |        |               |  |   |        |  

Leasing Expenses

Leasing expense is attributable to our auto leasing activities. Because
the leases are accounted for as operating leases, the corresponding assets are
capitalized and depreciated to their estimated residual values over their lease
terms. This depreciation is included in leasing expenses, along with the
amortization of capitalized initial direct lease costs and impairment charges.
Leasing expenses were $16.1 million for the second quarter of 2002 and $31.1
million for the first six months of 2002. We ceased purchasing auto leases in
June 2000.

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##### Table of Contents



Real Estate Owned

The net operating expense related to our real estate owned was $0.3
million for the second quarter of 2002 and $0.9 million for the first six
months of 2002. Additionally, we recorded $0.2 million of provision for losses
on real estate owned during the first quarter of 2002.

Amortization of Intangible Assets

As of January 1, 2002, we adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets, which requires that
certain goodwill and intangible assets with indefinite useful lives no longer
be amortized but instead be tested for impairment at least annually. For the
six-month period ending June 30, 2002, no goodwill or intangible assets were
acquired, impaired and/or written off. Goodwill of $6.5 million related to the
San Mateo-based factoring business was realized as a result of the sale of this
unit in June 2002. Amortization expense related to intangible assets was $0.3
million for the second quarter of 2002 and $0.7 million for the first six
months of 2002.

We completed the first and second steps of the transitional goodwill
impairment test as of June 30, 2002 and September 30, 2002, respectively. We
recorded $18.9 million in impairment charges, net of taxes, for goodwill not
expected to be realized upon the disposition of our Asset-based lending,
Factored Receivables and Commercial leasing businesses. As required by the
transitional provisions of Statement No. 142,
the impairment loss is measured and recorded as of the date of adoption and
recognized as the cumulative effect of a change in accounting principle as of
January 1, 2002.

Income Taxes

We recorded a tax benefit of $3.7 million and $5.6 million for the second
quarter of 2002 and the first six months of 2002, respectively. The tax
benefit for the first six months of 2002 included a tax benefit of $1.6 million
on a pre-tax loss of $2.8 million and a tax benefit of $4.0 million related to
the loss incurred on the 2001 stock sale by Bay View Bank of the legal entity
BVFMAC. The $4.0 million tax benefit was a result of a change in federal tax
law that occurred in the first quarter of 2002 allowing us to deduct a portion
of the loss associated with the sale of BVFMAC. The effective tax rate used in
computing the $1.6 million tax benefit for the first six months of 2002 was
57.7%.

Capital Securities

On December 21, 1998, we issued $90 million of Capital Securities through
Bay View Capital I, a business trust formed to issue the securities. The
Capital Securities accrue quarterly cumulative distributions at an annual rate
of 9.76% of the liquidation value of $25 per share. Dividend expense on the
Capital Securities was $2.6 million for the second quarter of 2002 and $5.2
million for the first six months of 2002.

In September of 2000, we entered into an agreement with the FRB which
required that we obtain their approval prior to disbursing any dividends
associated with our Capital Securities. Beginning with the third quarter of
2000, we began deferring distributions quarterly in accordance with the terms
of the Capital Securities. During this period, deferred distributions were
accrued at an annual rate of 9.76% of the liquidation amount of $25 per Capital
Security, plus accumulated additional distributions at the same rate,
compounded quarterly, on any unpaid distributions. Deferred distributions and
interest, which were fully accrued, was $19.2 million at June 30, 2002.

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##### Table of Contents



Balance Sheet Analysis

Our total assets were $592.9 million at June 30, 2003 as compared to
$875.5 million at December 31, 2002. The decrease in total assets was
primarily a result of utilizing cash and cash equivalents to repay maturing
brokered CDs, reduce borrowings  specifically the financing secured by our
auto lease contractual cash flows, and pay down other liabilities
 including
the reserve for estimated costs during the period of liquidation.

Securities

The following table illustrates our securities portfolio as of the dates
indicated:

|                                           |                                     |   |                        |        |              |   |        |        | 
|------------------------------------------ | ----------------------------------- | - | ---------------------- | ------ | ------------ | - | ------ | ------ | 
|                                           |                                     |   | June 30,               |        | December 31,
|                                           |                                     |   | 2003                   |        | 2002        
|                                           |                                     |   |                        |        |             
|                                           |                                     |   | (Dollars in thousands)
|Available-for-sale                         |                                     |   |                        |        |              |   |        |       
|Asset-backed securities                    |                                     | $ | 255                    |        |              | $ | 6,267  |       
|Retained interests in auto securitizations |                                     |   | 31,236                 |        |              |   | 31,870 |       
|                                           |                                     |   |                        |        |              |   |        |       
|Total investment securities                |                                     |   | 31,491                 |        |              |   | 38,137 |       
|                                           |                                     |   |                        |        |              |   |        |       
|Mortgage-backed securities:                |                                     |   |                        |        |              |   |        |       
|                                           | Fannie Mae                          |   |                        | 13,299 |              |   |        | 18,096 | 
|                                           | Freddie Mac                         |   |                        | 10,058 |              |   |        | 13,335 | 
|                                           | Collateralized mortgage obligations |   |                        | 654    |              |   |        | 1,085  | 
|                                           |                                     |   |                        |        |              |   |        |       
|Total mortgage-backed securities           |                                     |   | 24,011                 |        |              |   | 32,516 |       
|                                           |                                     |   |                        |        |              |   |        |       
|Total securities available-for-sale        |                                     | $ | 55,502                 |        |              | $ | 70,653 |       
|                                           |                                     |   |                        |        |              |   |        |       

In accordance with liquidation basis accounting, our investment securities
are classified as available-for-sale and recorded at their net realizable
value. Adjustments to net realizable value, if any, are recorded on a
quarterly basis in earnings through the changes in estimated values of assets
and liabilities.

There were no sales of investment securities during the second quarter of
2003. We sold $2.7 million of asset-backed securities and $0.1 million of
mortgage-backed securities during the first six months of 2003. Gross losses
of $33,000 were realized on the sales. There were no purchases of investment
securities during the first six months of 2003.

Loans and Leases

The following table illustrates our loan and lease portfolio as of the
dates indicated:

|                                   |                               |                                                                                 |         |                        |        |                   |         |         |         | 
|---------------------------------- | ----------------------------- | ------------------------------------------------------------------------------- | ------- | ---------------------- | ------ | ----------------- | ------- | ------- | ------- | 
|                                   |                               |                                                                                 |         | June 30, 2003          |        | December 31, 2002
|                                   |                               |                                                                                 |         |                        |        |                  
|                                   |                               |                                                                                 |         | (Dollars in thousands)
|Loans and leases receivable:       |                               |                                                                                 |         |                        |        |                   |         |        
|                                   | Auto installment contracts(1) |                                                                                 | $       | 216,724                |        |                   | $       | 142,357 |        
|                                   | Other loans:                  |                                                                                 |         |                        |        |                   |         |         |        
|                                   |                               | Multi-family mortgage loans                                                     |         |                        | 9      |                   |         |         | 2,443   | 
|                                   |                               | Commercial mortgage loans                                                       |         |                        | 2,675  |                   |         |         | 7,712   | 
|                                   |                               | Franchise loans                                                                 |         |                        | 31,827 |                   |         |         | 46,928  | 
|                                   |                               | Asset-based loans, syndicated loans, factored receivables
and commercial leases |         |                        | 8,829  |                   |         |         | 104,362 | 
|                                   |                               | Business loans                                                                  |         |                        | 5,865  |                   |         |         | 7,212   | 
|                                   |                               |                                                                                 |         |                        |        |                   |         |         |        
|                                   |                               | Total other loans                                                               |         |                        | 49,205 |                   |         |         | 168,657 | 
|                                   |                               |                                                                                 |         |                        |        |                   |         |         |        
|Loans and leases receivable(2) (3) |                               | $                                                                               | 265,929 |                        |        | $                 | 311,014 |        
|                                   |                               |                                                                                 |         |                        |        |                   |         |         |        



|(1) |  | Amounts exclude auto-related operating lease assets reported separately
from loans and leases totaling $117.7 million at
June 30, 2003 and $191.0 million at December 31, 2002.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | All loans and leases are classified as held-for-sale at June 30, 2003 and
December 31, 2002.                                                                                   
|   
|(3) |  | Includes mark-to-market valuation reserves of $16.6 million and $35.1
million at June 30, 2003 and December 31, 2002,
respectively.                                            

28



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The decrease in loans and leases receivable at June 30, 2003, as compared
to December 31, 2002 was primarily due to the impact of loan sales and
repayments during the first six months of 2003 pursuant to the Plan. During
the first six months of 2003, we completed the sale of approximately $115.4
million of loans and received an additional $71.1 million in loan repayments.
These loan sales and repayments, totaling $186.5 million, were comprised of
$83.5 million of asset-based loans, $74.0 million of auto installment
contracts, $10.8 million of syndicated loans, $7.9 million of franchise loans,
$4.3 million of commercial real estate loans, $3.8 million of multi-family
mortgage loans and $2.2 million of business loans, factored receivables and
commercial leases. At June 30, 2003, our remaining investment in loans to be
liquidated was reduced to approximately $49 million from $169 million at
December 31, 2002. In connection with the Plan, our loans and leases
receivable is classified as held-for-sale at June 30, 2003.

We continue to purchase auto installment contracts through BVAC but ceased all other
loan production activities during the fourth quarter of 2002. BVAC purchased
$145.2 million of auto installment contracts on new and used vehicles for the
first six months of 2003. Purchases during the first half of the year
consisted of 5,154 contracts with weighted average contract rates of 8.60% and
weighted average FICO credit scores of 729. At June 30, 2003, BVAC was
servicing 33,700 contracts representing $590 million.

The following tables illustrate the activity in our loan and lease
portfolio for the periods indicated:

|                                           |                                  |                                                                                 |   |                            |        |               |   |         |        | 
|------------------------------------------ | -------------------------------- | ------------------------------------------------------------------------------- | - | -------------------------- | ------ | ------------- | - | ------- | ------ | 
|                                           |                                  |                                                                                 |   | For the Three Months Ended
|                                           |                                  |                                                                                 |   |                           
|                                           |                                  |                                                                                 |   | June 30, 2003              |        | June 30, 2002
|                                           |                                  |                                                                                 |   |                            |        |              
|                                           |                                  |                                                                                 |   | (Dollars in thousands)    
|Loan and lease purchases and originations: |                                  |                                                                                 |   |                            |        |               |   |        
|                                           |                                  | Auto installment contracts                                                      |   | $                          | 73,594 |               |   | $       | 86,635 | 
|                                           |                                  | Home equity loans and lines of credit                                           |   |                            |       |               |   |         | 30,582 | 
|                                           |                                  | Multi-family and commercial mortgage loans                                      |   |                            |       |               |   |         | 77,504 | 
|                                           |                                  | Asset-based loans, syndicated loans, factored receivables and
commercial leases |   |                            |       |               |   |         | 8,539  | 
|                                           |                                  | Business loans                                                                  |   |                            |       |               |   |         | 15,753 | 
|                                           |                                  |                                                                                 |   |                            |        |               |   |         |        | 
|                                           | Total purchases and originations |                                                                                 | $ | 73,594                     |        |               | $ | 219,013 |       
|                                           |                                  |                                                                                 |   |                            |        |               |   |         |        | 

|                                           |                                  |                                                                                 |   |                          |         |               |   |         |         | 
|------------------------------------------ | -------------------------------- | ------------------------------------------------------------------------------- | - | ------------------------ | ------- | ------------- | - | ------- | ------- | 
|                                           |                                  |                                                                                 |   | For the Six Months Ended
|                                           |                                  |                                                                                 |   |                         
|                                           |                                  |                                                                                 |   | June 30, 2003            |         | June 30, 2002
|                                           |                                  |                                                                                 |   |                          |         |              
|                                           |                                  |                                                                                 |   | (Dollars in thousands)  
|Loan and lease purchases and originations: |                                  |                                                                                 |   |                          |         |               |   |        
|                                           |                                  | Auto installment contracts                                                      |   | $                        | 145,229 |               |   | $       | 169,037 | 
|                                           |                                  | Home equity loans and lines of credit                                           |   |                          |        |               |   |         | 54,460  | 
|                                           |                                  | Multi-family and commercial mortgage loans                                      |   |                          |        |               |   |         | 190,683 | 
|                                           |                                  | Asset-based loans, syndicated loans, factored receivables and
commercial leases |   |                          |        |               |   |         | 16,791  | 
|                                           |                                  | Business loans                                                                  |   |                          |        |               |   |         | 22,584  | 
|                                           |                                  |                                                                                 |   |                          |         |               |   |         |         | 
|                                           | Total purchases and originations |                                                                                 | $ | 145,229                  |         |               | $ | 453,555 |        
|                                           |                                  |                                                                                 |   |                          |         |               |   |         |         | 

29



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##### Table of Contents



Credit Quality

We define nonperforming assets as nonaccrual loans and leases, real estate
owned, defaulted mortgage-backed securities and other repossessed assets. We
define nonaccrual loans and leases as loans and leases 90 days or more
delinquent as to principal and interest payments (unless the principal and
interest are well secured and in the process of collection) and loans and
leases less than 90 days delinquent designated as nonperforming when we
determine that the full collection of principal and/or interest is doubtful.
We do not record interest on nonaccrual loans and leases.

The following table illustrates our nonperforming assets as of the dates
indicated:

|                            |  |                        |        |              |  |   |        | 
|--------------------------- |  | ---------------------- | ------ | ------------ |  | - | ------ | 
|                            |  | June 30,               |        | December 31,
|                            |  | 2003                   |        | 2002        
|                            |  |                        |        |             
|                            |  | (Dollars in thousands)
|Nonaccrual loans and leases |  | $                      | 11,234 |              |  | $ | 24,683 | 
|Real estate owned           |  |                        | 8,518  |              |  |   | 2,402  | 
|Other repossessed assets    |  |                        | 70     |              |  |   | 183    | 
|                            |  |                        |        |              |  |   |        | 
|Nonperforming assets        |  | $                      | 19,822 |              |  | $ | 27,268 | 
|                            |  |                        |        |              |  |   |        | 

The decrease in total nonperforming assets at June 30, 2003, as compared
to December 31, 2002, was primarily due to decreases in nonaccruing franchise
loans and syndicated loans, primarily resulting from loan sales and prepayments
partially offset by an increase in real estate owned. We transferred $7.0
million of nonperforming franchise loans to real estate owned and recognized a
loss of $0.5 million during the first six months of 2003. Our nonperforming
assets include mark-to-market valuation reserves of $7.4 million and $16.4
million at June 30, 2003 and December 31, 2002, respectively. Nonperforming
assets excluding franchise-related assets were $3.9 million at June 30, 2003,
as compared to $6.3 million at December 31, 2002, while non-franchise
nonaccrual loans and leases were $2.2 million at June 30, 2003 as compared to
$5.9 million at December 31, 2002.

The following table illustrates nonperforming assets and nonperforming
assets as a percentage of consolidated total assets by their original loan and
lease type:

|                              |                                                                                 |   |                                              |        |                   |  |                        |      |   |   |        |        |  |  |      |      |  
|----------------------------- | ------------------------------------------------------------------------------- | - | -------------------------------------------- | ------ | ----------------- |  | ---------------------- | ---- | - | - | ------ | ------ |  |  | ---- | ---- | -
|                              |                                                                                 |   | Nonperforming Assets                        
|                              |                                                                                 |   | as a Percentage of Consolidated Total Assets
|                              |                                                                                 |   |                                             
|                              |                                                                                 |   | June 30, 2003                                |        | December 31, 2002
|                              |                                                                                 |   |                                              |        |                  
|                              |                                                                                 |   |                                              |        |                   |  | (Dollars in thousands) |      |   |   |       
|Original loan and lease type: |                                                                                 |   |                                              |        |                   |  |                        |      |   |   |        |        |  |  |      |     
|                              | Auto installment contracts                                                      |   | $                                            | 101    |                   |  |                        | 0.02 | % |   | $      | 284    |  |  |      | 0.03 | %
|                              | Multi-family mortgage loans                                                     |   |                                              | 9      |                   |  |                        | 0.00 |   |   |        | 84     |  |  |      | 0.01 |  
|                              | Commercial real estate loans                                                    |   |                                              | 1,659  |                   |  |                        | 0.28 |   |   |        | 948    |  |  |      | 0.11 |  
|                              | Franchise loans                                                                 |   |                                              | 15,901 |                   |  |                        | 2.68 |   |   |        | 21,005 |  |  |      | 2.40 |  
|                              | Asset-based loans,
syndicated loans, factored
receivables
and commercial leases |   |                                              | 2,060  |                   |  |                        | 0.35 |   |   |        | 4,850  |  |  |      | 0.55 |  
|                              | Business loans                                                                  |   |                                              | 92     |                   |  |                        | 0.01 |   |   |        | 97     |  |  |      | 0.01 |  
|                              |                                                                                 |   |                                              |        |                   |  |                        |      |   |   |        |        |  |  |      |      |  
|Total                         |                                                                                 | $ | 19,822                                       |        |                   |  | 3.34                   | %    |   | $ | 27,268 |        |  |  | 3.11 | %   
|                              |                                                                                 |   |                                              |        |                   |  |                        |      |   |   |        |        |  |  |      |      |  

Total loans and leases delinquent 60 days or more were $2.8 million at
June 30, 2003 as compared to $17.8 million at December 31, 2002. Delinquent
franchise related loans were $1.9 million at June 30, 2003 as compared to $15.5
million at December 31, 2002. Total loans and leases delinquent 60 days or
more as a percentage of loans and leases receivable was 1.06% at June 30, 2003
as compared to 5.71% at December 31, 2002.

30



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##### Table of Contents



Deposits

The following table illustrates deposits as of the dates indicated:

|                                 |  |               |   |                   |  |                        |   |       |  |   |         |  |  |  |      |  
|-------------------------------- |  | ------------- | - | ----------------- |  | ---------------------- | - | ----- |  | - | ------- |  |  |  | ---- | -
|                                 |  | June 30, 2003 |   | December 31, 2002
|                                 |  |               |   |                  
|                                 |  | Amount        |   | Rates             |  | Amount                 |   | Rates
|                                 |  |               |   |                   |  |                        |   |      
|                                 |  |               |   |                   |  | (Dollars in thousands) |   |       |  |  
|Brokered certificates of deposit |  | $             |  |                   |  |                        |  | %     |  | $ | 224,189 |  |  |  | 2.35 | %
|                                 |  |               |   |                   |  |                        |   |       |  |   |         |  |  |  |      |  
|Total                            |  | $             |  |                   |  |                        |  | %     |  | $ | 224,189 |  |  |  | 2.35 | %
|                                 |  |               |   |                   |  |                        |   |       |  |   |         |  |  |  |      |  

The $224.2 million of brokered CDs matured during the first quarter of
2003.

Borrowings

At June 30, 2003, our borrowings totaled $47.5 million and included the
remaining balance of the financing secured by our auto lease contractual cash
flows, totaling $34.4 million, and an outstanding balance of $13.1 million on
BVACs newly-acquired warehouse line.

As previously announced, BVAC closed a $250 million revolving receivables
warehouse credit facility during the quarter. The facility, provided by
Sheffield Receivables Corporation, an asset-backed commercial paper vehicle
sponsored by Barclays Bank, PLC, will be used to fund BVACs purchases and
warehousing of installment contracts. Borrowings will be repaid with the
proceeds from securitizations or sales of installment contracts.

Capital Securities

As announced in 2002, the holders of the Capital Securities approved an
early redemption of the Capital Securities at the option of individual security
holders. On August 8, 2003, we notified holders of the Capital Securities of
an optional redemption offer being made to each holder of the Capital Securities of
Bay View Capital I whereby Bay View Capital I will redeem, at $25.00 per
Capital Security plus accrued and unpaid distributions through the date of
redemption, all the Capital Securities of any holder accepting this offer. The
offer expires on September 8, 2003.

Liquidity

The objective of our liquidity management program is to ensure that funds
are available in a timely manner to finance BVACs purchases and warehousing of
installment contracts, 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. 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.

Prior to the assumption of our retail deposits by U.S. Bank on November 1,
2002, our retail deposits and ability to borrow from the Federal Home Loan Bank
of San Francisco had been our principal source of liquidity. With our
stockholders authorization of the Plan and the completion of the U.S. Bank
transaction, our sources of liquidity have been limited. Since the U.S. Bank
transaction, we have relied upon the proceeds from our liquidation and the
disposition of our assets to fund BVACs purchases and warehousing of
installment contracts; repay maturing brokered certificates of deposit and
other liabilities; and to meet other working capital needs.

On September 6, 2000, the Bank entered into an agreement with the OCC, in
which the Bank may not declare or distribute dividends without the prior
consent of the Office of the Comptroller of the Currency. On September 29,
2000, the Company entered into an agreement with the FRB of San Francisco in
which the Company is required to obtain the prior consent of the FRB of San
Francisco in order to pay common stock dividends and disburse distributions
associated with our Capital Securities.

31



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##### Table of Contents



On December 31, 2002, following approval by the FRB of San Francisco, we
paid cumulative deferred distributions, interest on the deferred distributions
and the current quarterly distribution on our Capital Securities. We continue
to be required to obtain approval from the FRB of San Francisco for future
quarterly distributions until such time as the agreement is terminated.

At June 30, 2003, we had cash and cash equivalents of $82.6 million. At
this same date, we had $183 million of obligations for borrowings, the Capital
Securities, and other liabilities. The funding to repay these obligations will
be generated from proceeds from additional loan repayments, asset dispositions,
securitizations and sales of installment contracts. During the quarter, BVAC
closed a $250 million revolving receivables warehouse credit facility, as
previously discussed or discussed elsewhere herein, which will be used to fund
BVACs purchases and warehousing of installment contracts.

Capital Resources

Management seeks to maintain adequate capital to support anticipated
credit risks and to ensure that the Company and the Bank are in compliance with
all regulatory capital guidelines.

With our adoption of liquidation basis accounting effective September 30,
2002, our stockholders equity was transferred to net assets in liquidation.
Our net assets in liquidation totaled $409.9 million at June 30, 2003 or $6.37
in net assets in liquidation per outstanding share based on 64,351,924 diluted
common shares in liquidation. At December 31, 2002, our net assets in
liquidation totaled $410.1 million, or $6.43 in net assets in liquidation per
outstanding share at December 31, 2002 based on 63,747,157 diluted common
shares in liquidation.

The Bank is subject to various regulatory capital guidelines administered
by the OCC. 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-weighted assets 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.

The Banks regulatory capital levels at June 30, 2003 exceeded the
requirements necessary to be considered well-capitalized as illustrated in the
following table:

|                  |  |                        |         |             |  |             |       |       |  |         |        |                  |  |  |      |   |  |   |        |  |  |  |       |  
|----------------- |  | ---------------------- | ------- | ----------- |  | ----------- | ----- | ----- |  | ------- | ------ | ---------------- |  |  | ---- | - |  | - | ------ |  |  |  | ----- | -
|                  |  |                        |         |             |  |             |       |       |  | Minimum |        | Well-Capitalized
|                  |  | Actual                 |         | Requirement |  | Requirement
|                  |  |                        |         |             |  |            
|                  |  | Amount                 |         | Ratio       |  | Amount      |       | Ratio |  | Amount  |        | Ratio           
|                  |  |                        |         |             |  |             |       |       |  |         |        |                 
|                  |  | (Dollars in thousands)
|Tier 1 leverage   |  | $                      | 487,219 |             |  |             | 87.24 | %     |  | $       | 22,338 |                  |  |  | 4.00 | % |  | $ | 27,923 |  |  |  | 5.00  | %
|Tier 1 risk-based |  | $                      | 487,219 |             |  |             | 92.84 | %     |  | $       | 20,992 |                  |  |  | 4.00 | % |  | $ | 31,487 |  |  |  | 6.00  | %
|Total risk-based  |  | $                      | 487,219 |             |  |             | 92.84 | %     |  | $       | 41,983 |                  |  |  | 8.00 | % |  | $ | 52,479 |  |  |  | 10.00 | %

Similarly, the Company is subject to various regulatory capital guidelines
administered by the Board of Governors of the Federal Reserve. The capital
guidelines provide definitions of regulatory capital ratios and the methods of
calculating capital and each ratio for bank holding companies. The federal
banking agencies require a minimum ratio of qualifying total risk-based capital
to risk-adjusted assets of 8% and a minimum ratio of Tier 1 capital to
risk-adjusted assets of 4%. In addition to the risk-based guidelines, federal
banking regulators require banking organizations to maintain a minimum amount
of Tier 1 capital to total average assets, referred to as the leverage ratio.

32



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##### Table of Contents



At June 30, 2003, the Companys regulatory capital levels exceeded the
requirements necessary to be considered adequately capitalized as illustrated
in the following table:

|                  |  |        |         |             |  |                        |       |       |  |         |        |  |  |  |      |  
|----------------- |  | ------ | ------- | ----------- |  | ---------------------- | ----- | ----- |  | ------- | ------ |  |  |  | ---- | -
|                  |  |        |         |             |  |                        |       |       |  | Minimum
|                  |  | Actual |         | Requirement
|                  |  |        |         |            
|                  |  | Amount |         | Ratio       |  | Amount                 |       | Ratio
|                  |  |        |         |             |  |                        |       |      
|                  |  |        |         |             |  | (Dollars in thousands) |       |       |  |        
|Tier 1 leverage   |  | $      | 499,842 |             |  |                        | 84.99 | %     |  | $       | 23,526 |  |  |  | 4.00 | %
|Tier 1 risk-based |  | $      | 499,842 |             |  |                        | 91.05 | %     |  | $       | 21,958 |  |  |  | 4.00 | %
|Total risk-based  |  | $      | 499,842 |             |  |                        | 91.05 | %     |  | $       | 43,917 |  |  |  | 8.00 | %

Share Repurchase Program

Our outstanding shares of common stock were 63,657,590 at June 30, 2003
and 62,947,396 at December 31, 2002. The outstanding shares in liquidation
(including potential dilutive common shares) used for computing net assets in
liquidation per outstanding share at June 30, 2003 and December 31, 2002 were
64,351,924 and 63,747,157 shares, respectively.

In August 1998, our Board of Directors authorized the repurchase of up to
$50 million in shares of our common stock. At June 30, 2003, we had
approximately $17.6 million in remaining authorization available for future
share repurchases. Pursuant to our agreement with the FRB of San Francisco, we
must obtain prior written approval before repurchasing shares.

33



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##### Table of Contents






Item 3. Quantitative and Qualitative Disclosures About Market Risk

Asset and Liability Management

The objective of our asset and liability management has historically been
to measure interest rate and liquidity risks in order to manage the type and
mix of our interest-earning assets and interest-bearing liabilities within safe
and sound parameters - thereby optimizing net interest income and the market
value of equity. To measure interest rate risk, we used simulation analysis as
well as asset and liability repricing or gap analysis.

As a result of the decision to proceed with the Plan, the Company and the
Bank have been primarily engaged in asset disposition activities. Since
November 1, 2002, the Bank has not operated any branches, accepted deposits,
nor otherwise conducted traditional banking activities. With the liquidation
that has been accomplished through June 30, 2003, - in which we have sold the
Banks retail banking assets and repaid all deposits  the Bank substantively
no longer operates as a financial institution. By June 30, 2003, approximately
69% of consolidated assets were funded by equity capital.

BVAC, our auto finance company, is the only significant subsidiary of the
Company that is currently conducting on-going operations. As a result of the
liquidation, it is now operating as an independent finance company rather than
a portfolio-lending unit of the Bank. BVAC is purchasing auto installment
contracts for sale or securitization and anticipates completing such sales or
securitizations approximately semi-annually. Prior to sale or securitization,
we anticipate funding these contracts through a combination of a revolving line
of credit facility and equity capital, and hedging our market value risk in
these loans between the origination and sale or securitization dates.

The Company is proceeding with the liquidation of all other assets and
liabilities. With the exception of our investment in operating lease assets,
we anticipate that this liquidation process will be substantially completed by
the end of 2003. The operating lease assets are fixed rate auto leases, which
are funded by a combination of fixed rate debt and equity capital. The
liquidation of these assets will be completed by the end of the third quarter
of 2005.

For these reasons, management believes that the Companys remaining
sensitivity to interest rates has been minimized. Accordingly, management no
longer considers our historical asset and liability management process to be a
relevant element of our current financial management process. Furthermore, the
Company no longer retains the capacity to actively manage the composition of
interest-earning assets and interest-bearing liabilities, beyond the
liquidation of existing assets and repayment of existing liabilities, because
of the limitations of the liquidation process. Accordingly, our previous
disclosures of interest rate sensitivity, including the results of our
simulation and gap analyses, are no longer being provided.




Item 4. Controls and Procedures



| | (a) |  | Evaluation of disclosure controls and procedures. The Companys
principal executive officer and its principal financial officer, after
evaluating the effectiveness of the Companys disclosure controls and
procedures (as defined in Exchange Act Rules 12(a)  and 15(d)- 14(c))
as of a date within 90 days of the filing of this quarterly report, have
concluded that, as of such date, the Companys disclosure controls and
procedures were adequate and effective to ensure that material
information relating to the Company and its consolidated subsidiaries
would be made known to them by others within those entities.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Changes in internal controls. There have been no changes in the
Companys internal controls or in the other factors that could
significantly affect the Companys disclosure controls and procedures
subsequent to the date of their evaluation, nor were there any
significant deficiencies or material weaknesses in the Companys
internal controls. As a result, no corrective actions were required or
undertaken.                                                                                                                                                                                                              

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##### Table of Contents






PART II. OTHER INFORMATION



| | Item 1. | Legal Proceedings                                                                                                                                                                                                                                                                                                                                                            
| | ------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |         | We are involved as plaintiff or defendant in various legal actions and
are occasionally exposed to unasserted claims arising in the normal
course of business. In the opinion of management, after consultation
with counsel, the resolution of these legal actions will not have a
material adverse effect on our consolidated financial condition or
results of operations.
|
| | Item 2. | Changes in Securities
None                                                                                                                                                                                                                                                                                                                                                   
|
| | Item 3. | Defaults Upon Senior
Securities
None                                                                                                                                                                                                                                                                                                                                         
|
| | Item 4. | Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                                                                                                                          
|
| |         | At the annual meeting of our stockholders, held April 24, 2003, the
stockholders considered the following proposals:                                                                                                                                                                                                                                                         



| |  | I. | The election of two directors of Bay View Capital
Corporation:                 
| |  | -- | -------------------------------------------------------------------------------
|
| |  |    | The following were re-elected:                                                 
| |  |    | Thomas M. Foster

Charles G. Cooper                                            
|
| |  |    | The vote on the election of the directors at the annual meeting
was as follows:

|                  |  |     |                     |  |  |  |           | 
|----------------- |  | --- | ------------------- |  |  |  | --------- | 
|                  |  | For | Withheld or Against
|Thomas M. Foster  |  |     | 56,852,122          |  |  |  | 1,605,633 | 
|Charles G. Cooper |  |     | 56,696,803          |  |  |  | 1,760,952 | 



| | Item 5. | Other Information
None          
| | ------- | --------------------------------
|
| | Item 6. | Exhibits and Reports on Form 8-K

|     |              |                                                                                                                                                   
|---- | ------------ | --------------------------------------------------------------------------------------------------------------------------------------------------
|a(i) | Exhibit 31.1 | Certification of Chief Executive Officer pursuant to Rules 13a-14 and
15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
|     |              |                                                                                                                                                   
|     | Exhibit 31.2 | Certification of Chief Financial Officer pursuant to Rules 13a-14 and
15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002
|     |              |                                                                                                                                                   
|     | Exhibit 32.1 | Certification of Chief Executive Officer pursuant to 18
U.S.C. section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 
|     |              |                                                                                                                                                   
|     | Exhibit 32.2 | Certification of Chief Financial Officer pursuant to 18
U.S.C. section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 

|     |  |                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------
|b(i) |  | The Registrant filed the following report on Form 8-K dated
April 28, 2003 during the three months ended June 30, 2003:  
|     |  |                                                                                                                          
|     |  | On April 28, 2003, the Registrant filed Exhibit 99.1 a copy of its
earnings release for the quarter ended March 31, 2003.

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|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|b(ii) |  | The Registrant filed the following report on Form 8-K dated
June 27, 2003 during the three months ended June 30, 2003:                                                                                                                                                                                                                                                                                                                                                                                                                                           
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|      |  | On June 26, 2003, the Bank, the Registrants principal subsidiary,
adopted a Plan of Dissolution and Liquidation under which it will sell
all of its assets, pay, satisfy or discharge all of its known and
currently due and payable liabilities and distribute the remaining
proceeds to the Company, the Banks sole shareholder. Under the Plan,
persons that may have claims that are not currently due or are
otherwise contingent will have such claims satisfied or discharged by
the Bank or such claims will be assigned to and assumed by the
Company.

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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 CORPORATION
Registrant

|                      |  |     |  |                                                                                                                            
|--------------------- |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------
|DATE: August 14, 2003 |  | BY: |  | /s/ John Okubo
John Okubo
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

37