---

---




UNITED
   STATES


SECURITIES 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 March 31, 2000





OR





 ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE
   SECURITIES EXCHANGE ACT OF 1934





For
   the transition period from
    to





Commission file
   number 001-14879











BAY VIEW CAPITAL
   CORPORATION


(Exact name of
   registrant as specified in its charter)





|Delaware                             |  | 94-3078031              
|------------------------------------ |  | ------------------------
|(State or other
     jurisdiction of |  | (I.R.S.
     Employer   
|incorporation or
     organization)  |  | 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
   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
     April 30, 2000
|--------------------------------- |  | ----------------------------------
|(Title of
     Class)             |  | 32,563,734
     shares            




---

---




FORM
   10-Q





INDEX





BAY VIEW CAPITAL
   CORPORATION





|                                                                                                               |  | Page(s)
|-------------------------------------------------------------------------------------------------------------- |  | -------
|                                                                                                              
|PART
     I.    FINANCIAL INFORMATION                                                                         
|                                                                                                               | 
|Item
       1.    Financial Statements (Unaudited):                                                            |  |        
|                                                                                                              
|Consolidated Statements of Financial Condition                                                                 |  | 4      
|                                                                                                              
|Consolidated Statements of Income and Comprehensive
       Income                                              |  | 5      
|                                                                                                              
|Consolidated Statements of Stockholders
       Equity                                                         |  | 6      
|                                                                                                              
|Consolidated Statements of Cash Flows                                                                          |  | 7-8    
|                                                                                                              
|Notes to Consolidated Financial Statements                                                                     |  | 9-14   
|                                                                                                              
|Item 2.    Managements
       Discussion and Analysis of Financial Condition and Results of
       Operations |  | 15-39  
|                                                                                                              
|Item 3.    Quantitative and
       Qualitative Disclosures About Market Risk                                   |  | 39-42  
|                                                                                                              
|PART
       II.    OTHER INFORMATION                                                                          
|                                                                                                               | 
|Other Information                                                                                              |  | 43     
|                                                                                                              
|Signatures                                                                                                     |  | 44     







Forward-Looking Statements





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





| |  | the demand for
         our products;
| | - | -------------------------------------




| |  | actions taken
         by our competitors;
| | - | ------------------------------------------




| |  | tax rate
         changes, new tax laws and revised tax law interpretations;
| | - | ----------------------------------------------------------------------------




| |  | adverse changes
         occurring in the securities markets;
| | - | -------------------------------------------------------------




| |  | inflation and
         changes in prevailing interest rates that reduce our margins or the
         fair value of the financial instruments we hold;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------




| |  | economic or
         business conditions, either nationally or in our market areas, that
         are worse than we expect;
| | - | ---------------------------------------------------------------------------------------------------------------------------




| |  | legislative or
         regulatory changes that adversely affect our business;
| | - | ------------------------------------------------------------------------------




| |  | our inability
         to securitize and/or sell assets;
| | - | --------------------------------------------------------




| |  | the timing,
         impact and other uncertainties of our acquisitions and our success or
         failure in the integration of their operations;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------




| |  | our ability to
         enter new geographic and product markets successfully and capitalize
         on growth opportunities;
| | - | ------------------------------------------------------------------------------------------------------------------------------




| |  | technological
         changes that are more difficult or expensive than we
         expect;
| | - | --------------------------------------------------------------------------------------------




| |  | increases in
         delinquencies and defaults by our borrowers and other loan
         delinquencies;
| | - | --------------------------------------------------------------------------------------------------------




| |  | increases in
         our provision for losses on loans and leases;
| | - | -------------------------------------------------------------------




| |  | our inability
         to sustain or improve the performance of our subsidiaries;
| | - | ---------------------------------------------------------------------------------




| |  | our inability
         to achieve the financial goals in our strategic plans, including any
         financial goals related to both contemplated and consummated
         acquisitions;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| |  | the outcome of
         lawsuits or regulatory disputes;
| | - | --------------------------------------------------------




| |  | credit and
         other risks of lending, leasing and investment activities;
         and
| | - | -------------------------------------------------------------------------------------------




| |  | our inability
         to use the net operating loss carryforwards we currently
         have.
| | - | ----------------------------------------------------------------------------------------------




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





PART I.    FINANCIAL INFORMATION





Item
       1.    Financial Statements





BAY VIEW
       CAPITAL CORPORATION AND SUBSIDIARIES





CONSOLIDATED
       STATEMENTS OF FINANCIAL CONDITION


(Unaudited)





|                                                                                                                                                                                                                                       |  | March 31,
       
       2000 |   | December 31,
       
       1999
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | - | --------------------------------
|
|ASSETS                                                                                                                                                                                                                                 |  |                               |   |                                 
|                                                                                                                                                                                                                                       |  |                               |   |                                 
|                                                                                                                                                                                                                                      
|Cash and cash
         equivalents:                                                                                                                                                                                                    |  |                               |   |                                 
|Cash and due
         from depository institutions                                                                                                                                                                                     |  | $    385,854                  |   |                                 
|Short-term
         investments                                                                                                                                                                                                        |  | 4,703                         |   |                                 
|                                                                                                                                                                                                                                       |  |                               |   |                                 
|                                                                                                                                                                                                                                       |  | 390,557                       |   |                                 
|Securities
         available-for-sale:                                                                                                                                                                                                |  |                               |   |                                 
|Investment
         securities                                                                                                                                                                                                         |  | 50,293                        |   |                                 
|Mortgage-backed
         securities                                                                                                                                                                                                    |  | 10,121                        |   |                                 
|Securities
         held-to-maturity:                                                                                                                                                                                                  |  |                               |   |                                 
|Investment
         securities                                                                                                                                                                                                         |  | 20,295                        |   |                                 
|Mortgage-backed
         securities                                                                                                                                                                                                    |  | 900,969                       |   |                                 
|Loans and
         leases held-for-sale                                                                                                                                                                                                |  | 239,431                       |   |                                 
|Loans and
         leases held-for-investment, net                                                                                                                                                                                     |  | 3,676,122                     |   |                                 
|Investment in
         operating lease assets, net                                                                                                                                                                                     |  | 504,168                       |   |                                 
|Investment in
         stock of the Federal Home Loan Bank of San Francisco                                                                                                                                                            |  | 78,987                        |   |                                 
|Investment in
         stock of the Federal Reserve Bank                                                                                                                                                                               |  | 19,590                        |   |                                 
|Real estate
         owned, net                                                                                                                                                                                                        |  | 544                           |   |                                 
|Premises and
         equipment, net                                                                                                                                                                                                   |  | 25,877                        |   |                                 
|Intangible
         assets                                                                                                                                                                                                             |  | 338,434                       |   |                                 
|Other
         assets                                                                                                                                                                                                                  |  | 188,221                       |   |                                 
|                                                                                                                                                                                                                                       |  |                               |   |                                 
|Total assets                                                                                                                                                                                                                           |  | $6,443,609                    |   |                                 
|                                                                                                                                                                                                                                       |  |                               |   |                                 
|LIABILITIES
         AND STOCKHOLDERS EQUITY                                                                                                                                                                                          |  |                               |   |                                 
|                                                                                                                                                                                                                                       |  |                               |   |                                 
|                                                                                                                                                                                                                                      
|Deposits:                                                                                                                                                                                                                              |  |                               |   |                                 
|Transaction
         accounts                                                                                                                                                                                                          |  | $1,728,979                    |   |                                 
|Retail
         certificates of deposit                                                                                                                                                                                                |  | 1,638,283                     |   |                                 
|Brokered
         certificates of deposit                                                                                                                                                                                              |  | 346,750                       |   |                                 
|                                                                                                                                                                                                                                       |  |                               |   |                                 
|                                                                                                                                                                                                                                       |  | 3,714,012                     |   |                                 
|Advances from
         the Federal Home Loan Bank of San Francisco                                                                                                                                                                     |  | 1,241,800                     |   |                                 
|Short-term
         borrowings                                                                                                                                                                                                         |  | 498,455                       |   |                                 
|Subordinated
         Notes, net                                                                                                                                                                                                       |  | 149,518                       |   |                                 
|Other
         borrowings                                                                                                                                                                                                              |  | 2,513                         |   |                                 
|Other
         liabilities                                                                                                                                                                                                             |  | 118,130                       |   |                                 
|                                                                                                                                                                                                                                       |  |                               |   |                                 
|Total liabilities                                                                                                                                                                                                                      |  | 5,724,428                     |   |                                 
|                                                                                                                                                                                                                                       |  |                               |   |                                 
|Guaranteed
         Preferred Beneficial Interest in our Junior Subordinated Debentures
         (Capital Securities)                                                                                                                |  | 90,000                        |   |                                 
|Stockholders equity:                                                                                                                                                                                                                  |  |                               |   |                                 
|Serial
         preferred stock; authorized, 7,000,000 shares; outstanding,
         none                                                                                                                                              |  |                              |   |                                 
|Common stock
         ($.01 par value); authorized, 60,000,000 shares; issued,
         200032,629,056;
       

                   
           199932,629,056 shares; outstanding,
         200032,563,734; 199932,562,942 shares |  | 326                           |   |                                 
|Additional
         paid-in capital                                                                                                                                                                                                    |  | 455,952                       |   |                                 
|Retained
         earnings (substantially restricted)                                                                                                                                                                                  |  | 176,360                       |   |                                 
|Treasury stock,
         at cost, 200065,322 shares; 199966,114 shares                                                                                                                                                               |  | (1,081                        | ) |                                 
|Accumulated
         other comprehensive income:                                                                                                                                                                                       |  |                               |   |                                 
|Unrealized loss
         on securities available-for-sale, net of tax                                                                                                                                                                  |  | (111                          | ) |                                 
|Debt of
         Employee Stock Ownership Plan                                                                                                                                                                                         |  | (2,265                        | ) |                                 
|                                                                                                                                                                                                                                       |  |                               |   |                                 
|Total stockholders
         equity                                                                                                                                                                                                    |  | 629,181                       |   |                                 
|                                                                                                                                                                                                                                       |  |                               |   |                                 
|Total liabilities and
         stockholders equity                                                                                                                                                                                    |  | $6,443,609                    |   |                                 
|                                                                                                                                                                                                                                       |  |                               |   |                                 




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





BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIES





CONSOLIDATED
       STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


(Unaudited)





|                                                                                                                                                                                                                                              |  | For the
         Three Months
       
       Ended
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------
|
|
|Interest
         income:                                                                                                                                                                                                                     |  |                                                   
|Interest
         on loans and leases                                                                                                                                                                                                         |  | $  97,193                                         
|Interest
         on mortgage-backed securities                                                                                                                                                                                               |  | 12,207                                            
|Interest
         and dividends on investment securities                                                                                                                                                                                      |  | 5,065                                             
|                                                                                                                                                                                                                                              |  |                                                   
|                                                                                                                                                                                                                                              |  | 114,465                                           
|Interest
         expense:                                                                                                                                                                                                                    |  |                                                   
|Interest
         on deposits                                                                                                                                                                                                                 |  | 39,908                                            
|Interest
         on borrowings                                                                                                                                                                                                               |  | 27,651                                            
|Interest
         on Senior Debentures and Subordinated Notes                                                                                                                                                                                 |  | 3,715                                             
|                                                                                                                                                                                                                                              |  |                                                   
|                                                                                                                                                                                                                                              |  | 71,274                                            
|Net interest
         income                                                                                                                                                                                                                  |  | 43,191                                            
|Provision for
         losses on loans and leases                                                                                                                                                                                             |  | 8,000                                             
|                                                                                                                                                                                                                                              |  |                                                   
|Net interest
         income after provision for losses on loans and leases                                                                                                                                                                   |  | 35,191                                            
|Noninterest
         income:                                                                                                                                                                                                                  |  |                                                   
|Leasing
         income                                                                                                                                                                                                                       |  | 22,470                                            
|Loan fees
         and charges                                                                                                                                                                                                                |  | 4,055                                             
|Account
         fees                                                                                                                                                                                                                         |  | 1,914                                             
|Sales
         commissions                                                                                                                                                                                                                    |  | 1,370                                             
|Gain on
         sale of loans and leases and securities, net                                                                                                                                                                                 |  | 3,198                                             
|Other,
         net                                                                                                                                                                                                                           |  | 1,465                                             
|                                                                                                                                                                                                                                              |  |                                                   
|                                                                                                                                                                                                                                              |  | 34,472                                            
|Noninterest
         expense:                                                                                                                                                                                                                 |  |                                                   
|General
         and administrative                                                                                                                                                                                                           |  | 41,356                                            
|Leasing
         expense                                                                                                                                                                                                                      |  | 15,381                                            
|Dividend
         expense on Capital Securities                                                                                                                                                                                               |  | 2,233                                             
|Real
         estate owned operations, net                                                                                                                                                                                                    |  | (15                                               
|Net
         losses on real estate                                                                                                                                                                                                            |  | 28                                                
|Amortization of intangible assets                                                                                                                                                                                                             |  | 6,307                                             
|                                                                                                                                                                                                                                              |  |                                                   
|                                                                                                                                                                                                                                              |  | 65,290                                            
|Income before
         income tax expense                                                                                                                                                                                                     |  | 4,373                                             
|Income tax
         expense                                                                                                                                                                                                                   |  | 3,855                                             
|                                                                                                                                                                                                                                              |  |                                                   
|Net
         income                                                                                                                                                                                                                           |  | $      518                                        
|                                                                                                                                                                                                                                              |  |                                                   
|Basic earnings
         per share                                                                                                                                                                                                             |  | $      0.02                                       
|                                                                                                                                                                                                                                              |  |                                                   
|Diluted
         earnings per share                                                                                                                                                                                                           |  | $      0.02                                       
|                                                                                                                                                                                                                                              |  |                                                   
|Weighted-average basic shares outstanding                                                                                                                                                                                                     |  | 32,629                                            
|                                                                                                                                                                                                                                              |  |                                                   
|Weighted-average diluted shares outstanding                                                                                                                                                                                                   |  | 32,636                                            
|                                                                                                                                                                                                                                              |  |                                                   
|Net
         income                                                                                                                                                                                                                           |  | $      518                                        
|Other
         comprehensive income, net of tax:                                                                                                                                                                                              |  |                                                   
|Change in
         unrealized loss on securities available-for-sale, net of tax expense
         of $132 and $49
       

                   
            for the three months ended March 31, 2000 and March
         31, 1999, respectively |  | 182                                               
|                                                                                                                                                                                                                                              |  |                                                   
|Comprehensive income                                                                                                                                                                                                                          |  | $      700                                        
|                                                                                                                                                                                                                                              |  |                                                   

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





BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIES





CONSOLIDATED
       STATEMENTS OF STOCKHOLDERS EQUITY


(Unaudited)





|                                                                                                                      |  | Number of
       
       Shares
       
       Issued |  | Common
       
       Stock |  | Additional
       
       Paid-in
       
       Capital |   | Retained
       
       Earnings(1) |          | Treasury
       
       Stock |  | Unrealized
       
       Gain
       
       (Loss) on
       
       Securities
       
       Available-
       
       for-Sale,
       
       Net of Tax |   | Debt of
       
       Employee
       
       Stock
       
       Ownership
       
       Plan |       | Total
       
       Stockholders
       
       Equity
|--------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------- |  | --------------------------- |  | -------------------------------------------------------- | - | ----------------------------------- | -------- | ----------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------------- | ----- | --------------------------------------------------------
|
|Balance at
         December 31, 1998                                                                                 |  | 20,376                                                |  | $204                        |  | $251,010                                                 |   |                                     | $155,715 |                               |  | $(25,157                                                                                                                                                       | ) |                                                                                                   | $(202 | )                                                       
|Issuance of
         common stock (FMAC
       
           acquisition):                                              |  |                                                       |  |                             |  |                                                          |   |                                     |          |                               |  |                                                                                                                                                                |   |                                                                                                   |       |                                                         
|From shares
         held in
       

                   
           treasury                                         |  |                                                      |  |                            |  |                                                         |   |                                     |         |                               |  | 32,444                                                                                                                                                         |   |                                                                                                   |      |                                                         
|From authorized
         but unissued
       

                   
           shares                                  |  | 12,212                                                |  | 122                         |  | 204,456                                                  |   |                                     |         |                               |  |                                                                                                                                                               |   |                                                                                                   |      |                                                         
|Repurchase of
         common stock                                                                                   |  |                                                      |  |                            |  |                                                         |   |                                     |         |                               |  | (8,381                                                                                                                                                         | ) |                                                                                                   |      |                                                         
|Exercise of
         stock options,
       
           including tax benefits                                         |  | 41                                                    |  |                            |  | 498                                                      |   |                                     |         |                               |  |                                                                                                                                                               |   |                                                                                                   |      |                                                         
|Cash dividends
         declared ($0.30 per
       
           share)                                                 |  |                                                      |  |                            |  |                                                         |   |                                     | (5,579   | )                             |  |                                                                                                                                                               |   |                                                                                                   |      |                                                         
|Change in
         unrealized loss on
       
           securities available-for-sale, net
       
           of tax |  |                                                      |  |                            |  |                                                         |   |                                     |         |                               |  |                                                                                                                                                               |   |                                                                                                   | (91   | )                                                       
|Repayment of
         debt                                                                                            |  |                                                      |  |                            |  |                                                         |   |                                     |         |                               |  |                                                                                                                                                               |   |                                                                                                   |      |                                                         
|Net
         income                                                                                                   |  |                                                      |  |                            |  |                                                         |   |                                     | 28,964   |                               |  |                                                                                                                                                               |   |                                                                                                   |      |                                                         
|                                                                                                                      |  |                                                       |  |                             |  |                                                          |   |                                     |          |                               |  |                                                                                                                                                                |   |                                                                                                   |       |                                                         
|Balance at
         December 31, 1999                                                                                 |  | 32,629                                                |  | 326                         |  | 455,964                                                  |   |                                     | 179,100  |                               |  | (1,094                                                                                                                                                         | ) |                                                                                                   | (293  | )                                                       
|Distribution of
         restricted shares                                                                            |  |                                                      |  |                            |  | (12                                                      | ) |                                     |         |                               |  | 13                                                                                                                                                             |   |                                                                                                   |      |                                                         
|Cash dividends
         declared ($0.10 per
       
           share)                                                 |  |                                                      |  |                            |  |                                                         |   |                                     | (3,258   | )                             |  |                                                                                                                                                               |   |                                                                                                   |      |                                                         
|Change in
         unrealized loss on
       
           securities available-for-sale, net
       
           of tax |  |                                                      |  |                            |  |                                                         |   |                                     |         |                               |  |                                                                                                                                                               |   |                                                                                                   | 182   |                                                         
|Repayment of
         debt                                                                                            |  |                                                      |  |                            |  |                                                         |   |                                     |         |                               |  |                                                                                                                                                               |   |                                                                                                   |      |                                                         
|Net
         income                                                                                                   |  |                                                      |  |                            |  |                                                         |   |                                     | 518      |                               |  |                                                                                                                                                               |   |                                                                                                   |      |                                                         
|                                                                                                                      |  |                                                       |  |                             |  |                                                          |   |                                     |          |                               |  |                                                                                                                                                                |   |                                                                                                   |       |                                                         
|Balance at
         March 31, 2000                                                                                    |  | 32,629                                                |  | $326                        |  | $455,952                                                 |   |                                     | $176,360 |                               |  | $  (1,081                                                                                                                                                      | ) |                                                                                                   | $(111 | )                                                       
|                                                                                                                      |  |                                                       |  |                             |  |                                                          |   |                                     |          |                               |  |                                                                                                                                                                |   |                                                                                                   |       |                                                         




|(1) | Substantially
         restricted.
|--- | ----------------------------------




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





BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIES





CONSOLIDATED
       STATEMENTS OF CASH FLOWS


(Unaudited)





|                                                                                                                                            |  | For the
         Three Months
       
       Ended
|------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------
|
|
|CASH FLOWS FROM
         OPERATING ACTIVITIES                                                                                               |  |                                                   
|Net
         income                                                                                                                         |  | $        518                                      
|Adjustments to
         reconcile net income to net cash provided by operating
         activities:                                         |  |                                                   
|Amortization of intangible assets                                                                                                           |  | 6,307                                             
|Increase in franchise and multi-family loans
         held-for-sale                                                                         |  | (323,300                                          
|Proceeds from securitizations and/or sales of loans and leases
         held-for-sale                                                       |  | 774,725                                           
|Provision for losses on loans and leases and real estate
         owned                                                                     |  | 8,028                                             
|Depreciation and amortization of premises and
         equipment                                                                            |  | 2,523                                             
|Depreciation and amortization of investment in operating lease
         assets                                                              |  | 14,064                                            
|Amortization of premiums, net of discount accretion                                                                                         |  | 4,173                                             
|Gain on sale of loans and leases and securities, net                                                                                        |  | (3,198                                            
|(Increase) decrease in other assets                                                                                                         |  | (23,588                                           
|Increase in other liabilities                                                                                                               |  | 5,991                                             
|Other, net                                                                                                                                  |  | (3,584                                            
|                                                                                                                                            |  |                                                   
|Net
         cash provided by operating activities                                                                                          |  | 462,659                                           
|                                                                                                                                            |  |                                                   
|                                                                                                                                           
|CASH FLOWS FROM
         INVESTING ACTIVITIES                                                                                               |  |                                                   
|Acquisition of
         factoring assets and operations                                                                                     |  | (26,491                                           
|Net (increase)
         decrease in loans and leases held-for-investment resulting from
       
            originations, net of repayments |  | (44,921                                           
|Purchases of
         loans and leases, net                                                                                                 |  | (4,332                                            
|Purchases of
         mortgage-backed securities                                                                                            |  | (278,203                                          
|Purchases of
         investment securities                                                                                                 |  | (14,803                                           
|Principal
         payments on mortgage-backed securities                                                                                   |  | 21,551                                            
|Proceeds from
         sale of real estate owned                                                                                            |  | 1,920                                             
|Additions to
         premises and equipment                                                                                                |  | (1,184                                            
|(Increase)
         decrease in investment in stock of the Federal Home Loan Bank of San
       
            Francisco                      |  | (1,152                                            
|Increase in
         investment in stock of the Federal Reserve Bank                                                                        |  | (6,114                                            
|                                                                                                                                            |  |                                                   
|Net
         cash used in investing activities                                                                                              |  | (353,729                                          
|                                                                                                                                            |  |                                                   




BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIES





CONSOLIDATED
       STATEMENTS OF CASH FLOWS (Continued)


(Unaudited)





|                                                                                 |  | For the
         Three Months
       
       Ended
|-------------------------------------------------------------------------------- |  | --------------------------------------------------
|
|
|CASH FLOWS FROM
         FINANCING ACTIVITIES                                    |  |                                                   
|Net (decrease)
         increase in deposits                                     |  | $    (15,768                                      
|Proceeds from
         advances from the Federal Home Loan Bank of San Francisco |  | 544,000                                           
|Repayment of
         advances from the Federal Home Loan Bank of San Francisco  |  | (669,500                                          
|Proceeds from
         reverse repurchase agreements                             |  | 171,536                                           
|Repayment of
         reverse repurchase agreements                              |  | (17,883                                           
|Net increase in
         warehouse lines outstanding                             |  | (70,619                                           
|Net decrease in
         other borrowings                                        |  | (781                                              
|Repurchase of
         common stock                                              |  |                                                  
|Dividends paid
         to stockholders                                          |  | (3,263                                            
|                                                                                 |  |                                                   
|Net
         cash provided by (used in) financing activities                     |  | (62,278                                           
|                                                                                 |  |                                                   
|Net increase
         (decrease) in cash and cash equivalents                    |  | 46,652                                            
|Cash and cash
         equivalents at beginning of year                          |  | 343,905                                           
|                                                                                 |  |                                                   
|Cash and cash
         equivalents at end of year                                |  | $    390,557                                      
|                                                                                 |  |                                                   
|                                                                                
|Cash paid
         during the year for:                                          |  |                                                   
|Interest                                                                         |  | $      73,159                                     
|Income taxes                                                                     |  | $       
          2,321                          
|                                                                                
|Supplemental
         non-cash investing and financing activities:               |  |                                                   
|Loans transferred to real estate owned                                           |  | $         
              9                        
|Loans transferred from held-for-investment to
         held-for-sale             |  | $    620,153                                      
|                                                                                
|The
         acquisitions of subsidiaries involved the following:                |  |                                                   
|                                                                                
|Liabilities assumed                                                              |  | $         
                                      
|Fair value of assets acquired, other than cash and cash
         equivalents     |  | (17,491                                           
|Goodwill                                                                         |  | (9,000                                            
|                                                                                 |  |                                                   
|Net
         cash and cash equivalents paid                                      |  | $    (26,491                                      
|                                                                                 |  |                                                   




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





BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIES





NOTES TO
       CONSOLIDATED FINANCIAL STATEMENTS


March 31,
       2000


(Unaudited)





Note
       1.    Basis of Presentation





The
       accompanying unaudited consolidated financial statements include the
       accounts of Bay View Capital Corporation, a bank holding company
       incorporated under the laws of the state of Delaware, and our wholly
       owned subsidiaries: Bay View Bank, N.A., a national bank; Bay View
       Securitization Corporation, a Delaware corporation; Bay View Capital I,
       a Delaware business trust; and FMAC Insurance Services, a Delaware
       corporation. Bay View Bank includes its wholly owned subsidiaries: Bay
       View Acceptance Corporation, a Nevada corporation; Bay View Commercial
       Finance Group, a California corporation; Bay View Franchise Mortgage
       Acceptance Company, a California corporation; Bankers Mutual, a
       California corporation; MoneyCare, Inc., a California corporation; and
       Bay View Auxiliary Corporation, a California corporation. Bay View
       Acceptance Corporation includes its wholly owned subsidiary, LFS-BV,
       Inc., a Nevada corporation. Effective March 1, 1999, Bay View Capital
       Corporation contributed the capital stock of Bay View Commercial Finance
       Group to Bay View Bank in conjunction with the March 1, 1999 conversion
       of Bay View Bank from a federally chartered capital stock savings bank
       to a national bank. Bay View Commercial Finance Group was previously a
       wholly owned subsidiary of Bay View Capital Corporation. Effective June
       14, 1999, Bay View Credit and Ultra Funding, Inc., previously wholly
       owned subsidiaries of Bay View Acceptance Corporation, were merged into
       Bay View Acceptance Corporation. All significant intercompany accounts
       and transactions have been eliminated.





On
       November 1, 1999, we acquired Franchise Mortgage Acceptance Company,
       sometimes referred as FMAC, which included the operations of Bay View
       Franchise Mortgage Acceptance Company, Bankers Mutual, and FMAC
       Insurance Services. The assets, liabilities, and operations of these
       subsidiaries are included in our consolidated financial statements for
       the first quarter of 2000. The assets, liabilities, and operations of
       these subsidiaries are not included in our results for the first quarter
       of 1999. See Note 5 for a pro forma presentation of the combined
       operations of Bay View Capital Corporation and FMAC for the first
       quarter of 1999.





The
       information provided in these interim financial statements reflects all
       adjustments which are, in the opinion of management, necessary for a
       fair presentation of our financial condition as of March 31, 2000 and
       December 31, 1999, the results of our operations for the three-month
       periods ended March 31, 2000 and 1999, and our cash flows for the
       three-month periods ended March 31, 2000 and 1999. These adjustments are
       of a normal, recurring nature unless otherwise disclosed in this Form
       10-Q. As necessary, reclassifications have been made to prior period
       amounts to conform to the current period presentation. These
       reclassifications had no effect on our financial condition, results of
       operations or stockholders equity. These interim financial
       statements have been prepared in accordance with the instructions to
       Form 10-Q, and therefore do not include all of the necessary information
       and footnotes for a presentation in conformity with generally accepted
       accounting principles.





The
       information included in Managements Discussion and Analysis
       of Financial Condition and Results of Operations was written
       assuming that you have read or have access to our 1999 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, 1999 and 1998 and
       Results of Operations for the years ended December 31, 1999, 1998 and
       1997. 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 March 31,
       2000 are not necessarily indicative of the results that may be expected
       for the entire fiscal year or any other interim period.


BAY VIEW
       CAPITAL CORPORATION AND SUBSIDIARIES





NOTES TO
       CONSOLIDATED FINANCIAL STATEMENTS(Continued)








Note 2.    Earnings Per Share





Basic
       earnings per share are calculated by dividing net earnings for the
       period by the weighted-average common shares outstanding for that
       period. There is no adjustment to the number of outstanding shares for
       potential dilutive instruments, such as stock options. Diluted earnings
       per share takes into account the potential dilutive impact of such
       instruments and uses the average share price for the period in
       determining the number of incremental shares to add to the
       weighted-average number of shares outstanding.





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





|                                                       |  | For the Three Months
          Ended,
|------------------------------------------------------ |  | -------------------------------------
|
|
|Net earnings
         available to common stockholders |  | $  518                               
|Weighted-average basic shares outstanding              |  | 32,629                               
|Add: Dilutive
         potential common shares         |  | 7                                    
|                                                       |  |                                      
|Weighted-average diluted shares outstanding            |  | 32,636                               
|                                                       |  |                                      
|Basic earnings
         per share                      |  | $  0.02                              
|                                                       |  |                                      
|Diluted
         earnings per share                    |  | $  0.02                              
|                                                       |  |                                      




Note
       3.    Stock Options





As of
       March 31, 2000, we had six stock option plans: the Amended and
       Restated 1986 Stock Option and Incentive Plan, the Amended
       and Restated 1995 Stock Option and Incentive Plan, the
       Amended and Restated 1989 Non-Employee Director Stock Option and
       Incentive Plan, the 1998-2000 Performance Stock Plan,
       the 1998 Non-Employee Director Stock Option and Incentive
       Plan, and the 1999 FMAC Stock Option, Deferred Stock and
       Restricted Stock Plan which authorize the issuance of up to
       1,759,430, 2,500,000, 550,000, 400,000, 200,000, and 270,576 shares of
       common stock, respectively.





The
       following table illustrates the stock options available for grant as of
       March 31, 2000:





|                                      |  | 1986
       
       Stock
       
       Option
       
       and
       
       Incentive
       
       Plan |   | 1995
       
       Stock
       
       Option
       
       and
       
       IncentivePlan |            | 1989 Non-
       
       EmployeeDirector
       
       Stock
       
       Option and
       
       Incentive
       
       Plan |  | 1998-2000
       
       Performance
       
       Stock Plan |   | 1998 Non-
       
       Employee
       
       Director
       
       Stock
       
       Option and
       
       Incentive
       
       Plan |         | 1999 FMAC
       
       Stock Option,
       
       Deferred Stock
       
       and Restricted
       
       Stock Plan |  | Total  
|------------------------------------- |  | --------------------------------------------------------------------------------------------------------------- | - | ----------------------------------------------------------------------------------------------- | ---------- | ------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | ---------------------------------------------------------------------------------------------------------------------------- |  | -------
|Shares reserved
         for issuance |  | 1,759,430                                                                                                       |   |                                                                                                 | 2,500,000  |                                                                                                                                       |  | 550,000                                                        |   |                                                                                                                                                       | 400,000 |                                                                                                                              |  | 200,000
|Granted                               |  | (2,048,816                                                                                                      | ) |                                                                                                 | (2,957,250 | )                                                                                                                                     |  | (570,000                                                       | ) |                                                                                                                                                       | (93,000 | )                                                                                                                            |  | (82,000
|Forfeited                             |  | 298,574                                                                                                         |   |                                                                                                 | 731,348    |                                                                                                                                       |  | 70,000                                                         |   |                                                                                                                                                       | 4,000   |                                                                                                                              |  |       
|Expired                               |  | (9,188                                                                                                          | ) |                                                                                                 |           |                                                                                                                                       |  | (50,000                                                        | ) |                                                                                                                                                       |        |                                                                                                                              |  |       
|                                      |  |                                                                                                                 |   |                                                                                                 |            |                                                                                                                                       |  |                                                                |   |                                                                                                                                                       |         |                                                                                                                              |  |        
|Total available
         for grant    |  |                                                                                                                |   |                                                                                                 | 274,098    |                                                                                                                                       |  |                                                               |   |                                                                                                                                                       | 311,000 |                                                                                                                              |  | 118,000
|                                      |  |                                                                                                                 |   |                                                                                                 |            |                                                                                                                                       |  |                                                                |   |                                                                                                                                                       |         |                                                                                                                              |  |        




BAY VIEW
       CAPITAL CORPORATION AND SUBSIDIARIES





NOTES TO
       CONSOLIDATED FINANCIAL STATEMENTS(Continued)








At March 31, 2000, we had outstanding options under the plans with
       expiration dates ranging from the year 2001 through 2010, as illustrated
       in the following table:





|                                          |  | Number of
       
       Option Shares |   | Exercise
         Price
       
       Range |                       | Weighted-
       
       Average
       
       Exercise Price
|----------------------------------------- |  | -------------------------------------- | - | -------------------------------------------- | --------------------- | --------------------------------------------------------------
|Outstanding at
         December 31, 1997 |  | 1,758,400                              |   |                                              | 7.88-34.41            |                                                               
|Granted                                   |  | 629,000                                |   |                                              | 17.94-35.20           |                                                               
|Exercised                                 |  | (160,101                               | ) |                                              | 7.88-28.44            |                                                               
|Forfeited                                 |  | (81,599                                | ) |                                              | 8.69-35.20            |                                                               
|                                          |  |                                        |   |                                              |                       |                                                               
|Outstanding at
         December 31, 1998 |  | 2,145,700                              |   |                                              | 7.88-35.20            |                                                               
|Granted                                   |  | 1,254,826                              |   |                                              | 13.81-19.53           |                                                               
|Exercised                                 |  | (40,500                                | ) |                                              | 14.72-20.50           |                                                               
|Forfeited                                 |  | (452,250                               | ) |                                              | 8.75-35.20            |                                                               
|                                          |  |                                        |   |                                              |                       |                                                               
|Outstanding at
         December 31, 1999 |  | 2,907,776                              |   |                                              | $
         7.88-34.41 |                                                               
|Granted                                   |  | 250,000                                |   |                                              | 8.56-10.03            |                                                               
|Forfeited                                 |  | (188,857                               | ) |                                              | 11.85-31.56           |                                                               
|                                          |  |                                        |   |                                              |                       |                                                               
|Outstanding at
         March 31, 2000    |  | 2,968,919                              |   |                                              | $  7.88-34.41         |                                                               
|                                          |  |                                        |   |                                              |                       |                                                               
|Exercisable at
         March 31, 2000    |  | 1,689,074                              |   |                                              | $  7.88-34.41         |                                                               
|                                          |  |                                        |   |                                              |                       |                                                               




Note
       4.    Dividend Declaration





We
       declared a quarterly cash dividend on our common stock of $0.10 per
       share on January 3, 2000, which was paid on January 28, 2000 to common
       stockholders of record as of January 14, 2000.





Note
       5.    Merger and Acquisition-Related
       Activity





| | Franchise
         Mortgage Acceptance Company
| | ----------------------------------------------




We
       completed our acquisition of Franchise Mortgage Acceptance Company and
       its wholly owned division, Bankers Mutual, collectively referred to as
       FMAC, on November 1, 1999. Under the terms of the agreement, as amended,
       we acquired all of the common stock of FMAC for consideration valued at
       approximately $285 million. Each share of FMAC common stock was
       exchanged for, at the election of the holder, either $9.80 in cash or
       0.5444 shares of our common stock. In total, cash elections were limited
       to 15% of the shares of FMAC common stock outstanding immediately prior
       to closing and the elections for our common stock were limited to 85% of
       the shares of FMAC common stock outstanding immediately prior to
       closing. We paid approximately $48 million in cash, including payments
       for certain acquisition costs, and issued 13,868,805 shares of our
       common stock, a portion of which were issued from our shares in
       treasury. Upon consummation of the acquisition, we contributed
       substantially all of FMACs assets and liabilities to newly formed
       subsidiaries of Bay View Bank.





The
       acquisition of FMAC was accounted for under the purchase method of
       accounting effective November 1, 1999. The amount of goodwill recorded
       in connection with this acquisition was approximately $208 million, and
       is being amortized on a straight-line basis over 15 years. This goodwill
       amount represents the excess of the total purchase price over the
       estimated fair value of net assets acquired.


BAY VIEW
       CAPITAL CORPORATION AND SUBSIDIARIES





NOTES TO
       CONSOLIDATED FINANCIAL STATEMENTS(Continued)








The following table illustrates the allocation of the purchase
       price:





|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | (Dollars in thousands)
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------
|Cash
         paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | $  44,058             
|Common stock
         issued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 237,022               
|Acquisition
         costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | 4,281                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                       
|Total purchase
         price                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | 285,361               
|Fair value of
         assets acquired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | 316,868               
|Fair value of
         liabilities assumed                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | 238,652               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                       
|Net assets
         acquired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 78,216                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                       
|Purchase price
         in excess of net assets acquired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | $207,145              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                       
|The pro forma
         financial information in the following table illustrates the combined
         results of our operations and the operations of FMAC for the three
         months ended March 31, 1999 as if the acquisition of FMAC had occurred
         as of January 1, 1999. The pro forma financial information is
         presented for informational purposes and is not necessarily indicative
         of the results of operations which would have occurred if we had
         constituted a single entity as of January 1, 1999. The pro forma
         financial information is also not necessarily indicative of the future
         results of operations of the combined company. In particular, our
         opportunity to achieve certain cost savings as a result of the
         acquisition has not been included in the pro forma financial
         information. | 
|
|
|Net interest
          income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | $  39,996             
|Provision for
          losses on loans and leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | (5,573                
|Noninterest
          income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 36,648                
|Noninterest
          expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | (55,246               
|Income tax
          expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | (8,352                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                       
|Net
          income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | $    7,473            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                       
|Basic earnings
          per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | $      0.23           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                       
|Diluted
          earnings per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | $      0.23           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                       




The
        pro forma combined net income for the first quarter of 1999 of $7.5
        million consists of our net income of $7.1 million and FMACs net
        income of $5.1 million, less pro forma adjustments of $4.7 million.
        Significant pro forma adjustments include the reduction in net interest
        income from a sale of a portion of Bay View Banks loan portfolio
        in contemplation of the acquisition, the interest and other costs
        associated with the issuance of $50 million in Subordinated Notes by
        Bay View Bank to partially finance the acquisition, the amortization
        expense relating to goodwill generated as a result of the acquisition,
        and the income tax benefit associated with the pro forma
        adjustments.


BAY VIEW
        CAPITAL CORPORATION AND SUBSIDIARIES





NOTES TO
        CONSOLIDATED FINANCIAL STATEMENTS(Continued)








| | Goodman Factors, Inc.
| | ---------------------




On
        February 1, 2000, we acquired the assets and operations of Goodman
        Factors, Inc., a Texas-based general purpose factoring company. The
        average balance of the factoring receivable assets acquired was
        approximately $17.5 million. The amount of goodwill related to this
        acquisition was approximately $9.0 million, which is being amortized on
        a straight-line basis over 12 years. This goodwill amount represents
        the excess of the total purchase price over the estimated fair value of
        net assets acquired.





Note
        6.    Segment and Related
        Information





We
        have two operating segments that we refer to as business platforms. The
        platforms were determined primarily based upon the characteristics of
        our interest-earning assets and their respective distribution channels
        and reflect the way that we monitor, measure, and evaluate our
        primarily business activities. Our platforms are as
        follows:





A
        Retail Platform which is comprised of single-family real estate loans,
        home equity loans and lines of credit, auto loans and leases,
        mortgage-backed securities and other investments, and consumer banking
        products and services. The Retail Platforms revenues are derived
        from customers throughout the United States.





A
        Commercial Platform which is comprised of multi-family and commercial
        real estate loans, franchise loans, asset-based loans, factoring loans,
        commercial leases, and business banking products and services. The
        Commercial Platforms revenues are derived from customers
        throughout the United States.





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





In
        computing net interest income by platform, the interest expense
        associated with our warehouse lines, which are used primarily to fund
        franchise and multifamily mortgage loans, is allocated directly to the
        Commercial Platform. The interest expense associated with our remaining
        funding sources, including the noninterest expense associated with our
        9.76% Capital Securities, is allocated to each platform on a pro-rata
        basis determined by the relative amount of average interest-bearing
        liabilities, excluding warehouse lines, that are required to fund the
        platforms interest-earning assets.





The
        Retail Platform incurs the direct general and administrative expenses
        related to operating our branch network which serves primarily to
        generate deposits used to fund interest-earning assets in the Retail
        and Commercial Platforms. A portion of these direct general and
        administrative expenses is allocated to the Commercial Platform based
        upon the relative amount of average interest-bearing liabilities that
        are required to fund the platforms interest-earning
        assets.





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


BAY VIEW
        CAPITAL CORPORATION AND SUBSIDIARIES





NOTES TO
        CONSOLIDATED FINANCIAL STATEMENTS(Continued)








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





|                                                                           |  | For the
          Three Months Ended
        
        March 31, 2000
|-------------------------------------------------------------------------- |  | --------------------------------------------------------------------
|
|
|Interest
          income                                                  |  | $      58,364                                                       
|Interest
          expense                                                 |  | (40,764                                                             
|Provision for
          losses on loans and leases                         |  | (5,200                                                              
|Noninterest
          income                                               |  | 30,402                                                              
|Direct general
          and administrative expenses(1)                    |  | (19,341                                                             
|Allocation of
          branch network general and administrative expenses |  | 3,879                                                               
|Leasing
          expenses                                                 |  | (15,381                                                             
|Dividend
          expense on Capital Securities                           |  | (1,367                                                              
|Net expense on
          real estate owned                                 |  | (6                                                                  
|Amortization
          of intangible assets                                |  | (2,265                                                              
|                                                                           |  |                                                                     
|Contribution
          by platform                                         |  | $       
           8,321                                           
|                                                                           |  |                                                                     
|Indirect
          corporate overhead(1)                                   |  |                                                                     
|Income tax
          expense                                               |  |                                                                     
|                                                                           |  |                                                                     
|Net
          income                                                       |  |                                                                     
|                                                                           |  |                                                                     
|At March 31,
          2000:                                              
|Interest-earning assets plus operating lease assets                        |  | $3,033,740                                                          
|                                                                           |  |                                                                     
|Noninterest-earning assets                                                 |  |                                                                     
|                                                                           |  |                                                                     
|Total assets                                                               |  |                                                                     
|                                                                           |  |                                                                     




|                                                                           |  | For the
          Three Months Ended
        
        March 31, 1999
|-------------------------------------------------------------------------- |  | --------------------------------------------------------------------
|
|
|Interest
          income                                                  |  | $      68,089                                                       
|Interest
          expense                                                 |  | (42,952                                                             
|Provision for
          losses on loans and leases                         |  | (5,251                                                              
|Noninterest
          income(1)                                            |  | 15,673                                                              
|Direct general
          and administrative expenses(1)                    |  | (19,049                                                             
|Allocation of
          branch network general and administrative expenses |  | 3,208                                                               
|Leasing
          expenses                                                 |  | (6,681                                                              
|Dividend
          expense on Capital Securities                           |  | (1,621                                                              
|Net expense on
          real estate owned                                 |  | (19                                                                 
|Amortization
          of intangible assets                                |  | (2,541                                                              
|                                                                           |  |                                                                     
|Contribution
          by platform                                         |  | $       
           8,856                                           
|                                                                           |  |                                                                     
|Indirect
          corporate overhead(1)                                   |  |                                                                     
|Income tax
          expense                                               |  |                                                                     
|                                                                           |  |                                                                     
|Net
          income                                                       |  |                                                                     
|                                                                           |  |                                                                     
|At March 31,
          1999:                                              
|Interest-earning assets plus operating lease assets                        |  | $3,749,421                                                          
|                                                                           |  |                                                                     
|Noninterest-earning assets                                                 |  |                                                                     
|                                                                           |  |                                                                     
|Total assets                                                               |  |                                                                     
|                                                                           |  |                                                                     




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




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





Strategic
        Overview





Bay
        View Capital Corporation is a diversified financial services company
        headquartered in San Mateo, California. Our principal subsidiary is Bay
        View Bank, N.A. We operate two distinct business platforms representing
        the two basic distribution channels of our primary businesses, retail
        and commercial banking.





Our
        Retail Platform includes single-family real estate loans, home equity
        loans and lines of credit, auto loans and leases, mortgage-backed
        securities and other investments, and consumer banking products and
        services. The platforms results include the income and expenses
        related to these business activities.





Our
        Commercial Platform includes multi-family and commercial real estate
        loans, franchise loans, asset-based loans, factoring loans, commercial
        leases, and business banking products and services. The platforms
        results include the income and expenses related to these business
        activities.





Throughout 1999, we reported on four business platforms: a
        Banking Platform, a Home Equity Platform, an Auto Platform and a
        Commercial Platform. The Banking Platform included single-family,
        multi-family and commercial real estate loans, franchise loans,
        asset-based commercial participation loans, mortgage-backed securities
        and other investments, and retail and business banking deposit products
        and services. The franchise lending operations and related assets were
        added in November 1999 through our acquisition of FMAC, along with the
        assets and operations of FMACs wholly owned division, Bankers
        Mutual, a multi-family loan originator and seller-servicer. The Home
        Equity Platform included home equity loans and lines of credit. The
        Auto Platform included auto loans and leases. The Commercial Platform
        included asset-based loans, factoring and commercial leases. Effective
        January 1, 2000, we reduced our number of business platforms in order
        to reflect how to measure, monitor, and evaluate our primary business
        activities. Our prior period platform results were revised to reflect
        the reduced number of business platforms. Intercompany revenues and
        expenses are eliminated in the measurement of platform
        contribution.





Mission/Strategies





Our
        mission is to create a diversified financial services company by
        investing in and developing niche businesses with risk-adjusted returns
        that enhance shareholder value. Our strategy is centered on the
        continued development of our commercial banking activities and the
        related ongoing change-out of our balance sheet to expand our net
        interest margin. In order to realize this objective, our actions
        include the following:





| |  | Replacing
          lower-yielding mortgage-based loans and investments on our balance
          sheet with consumer and commercial loans and leases with higher
          risk-adjusted returns, shorter maturities, less geographic
          concentration risk, and less interest rate sensitivity.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| |  | Enhancing and
          expanding Bay View Banks deposit base by attracting and
          retaining lower-cost transaction accounts, including commercial and
          business checking accounts, offering competitively priced
          certificates of deposit and capitalizing on strategic branch or
          deposit acquisition opportunities.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| |  | Developing a
          consistent franchise whole loan sale market to supplement our
          franchise loan securitizations.
| | - | ------------------------------------------------------------------------------------------------------------------------------




| |  | Maintaining
          the capital levels of both Bay View Bank and Bay View Capital
          Corporation at or above the well-capitalized level, as defined for
          regulatory purposes.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| |  | Implementing
          cost savings and other efficiencies related to our acquisitions and
          the realignment of our business platforms.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------




Retail Platform Strategy





One
        of the principal businesses of the Retail Platform is Bay View
        Banks 58 full service branch banking network. A primary objective
        of the Retail Platform is to enhance the value of our deposit franchise
        by focusing on deposit growth, expanding and enhancing products and
        services and capitalizing on strategic branch and deposit acquisition
        opportunities. A primary component of the Retail Platforms
        deposit growth strategy is to focus on lower-cost transaction accounts
        (e.g., checking, savings and money market accounts) as a source of
        financing. We also offer a full array of consumer banking products and
        services.





The
        Retail Platform includes our single-family loan portfolio. We
        discontinued originating single-family loans in 1996 to reduce our
        concentration risk and facilitate the change-out of our balance sheet
        from mortgage-based assets to higher-yielding commercial bank-like
        assets. As a result, the portfolio of single-family loans is decreasing
        over time as these loans repay or are sold.





The
        Retail Platforms home equity loan portfolio includes conventional
        home equity loans and lines of credit and high loan-to-value home
        equity loans. We define conventional home equity loans and lines of
        credit as having combined loan-to-value ratios of less than or equal to
        100% and high loan-to-value home equity loans as having combined
        loan-to-value ratios of greater than 100%. Our home equity loan
        production efforts are focused on conventional home equity loans and
        lines of credit originated through our branch banking network. The high
        loan-to-value home equity loans were purchased primarily in 1997 and
        1998 and the balances are decreasing as these loans repay.





The
        Retail Platform originates and purchases fixed-rate loans and leases
        secured by new and used autos. In executing our strategy, we identify
        product niches which are not the primary focus of traditional
        competitors in the auto lending area, such as banks and captive finance
        companies. One such niche includes auto loans where a highly qualified
        borrower desires a higher relative loan amount and/or a longer term
        than is offered by many other more traditional auto financing sources.
        In return for the flexibility of the products offered, we charge higher
        interest rates while still applying traditional underwriting criteria
        to mitigate any potential loan losses.





Commercial
        Platform Strategy





Our
        strategy to change-out our balance sheet from lower-yielding
        mortgage-based loans and investments to consumer and commercial loans
        and leases with higher risk-adjusted returns has led to the development
        of our Commercial Platform. The Commercial Platforms strategy is
        to increase our earnings potential and enhance our deposit franchise by
        providing commercial bank-like products and services to small and
        middle-market businesses on a nationwide basis.





The
        Commercial Platform originates loans and leases including multi-family
        and commercial real estate loans, asset-based loans, factoring loans,
        equipment leases, and franchise loans. We also offer a full array of
        business banking products and services.





As a
        result of our acquisition of FMAC in November of 1999, we are now one
        of the nations leading small business lenders specializing in
        franchise lending, with significant franchise loan origination
        capabilities. Our primary markets are franchised quick-service and
        casual dining restaurants, such as Burger King, Wendys, Pizza
        Hut, KFC, TGI Fridays, Applebees and Dennys, and
        retail energy businesses which include service stations, convenience
        stores, truck stops, car washes, and quick lube businesses. Our
        strategy is to portfolio a portion of the commercial franchise loans we
        originate and to securitize and/or sell the remainder of our franchise
        loan production. Our earnings are largely dependent upon our franchise
        loan sales and securitizations.





Our
        acquisition of FMAC also included Bankers Mutual, one of the nations
        leading multi-family lenders. Bankers Mutual, now a wholly owned
        subsidiary of Bay View Bank, sells its multi-family loan production
        through seller-servicer programs administered by Fannie Mae and Freddie
        Mac.





During the first quarter of 2000, we purchased Goodman Factors, Inc., a
        Texas-based factoring company. This addition of approximately $17.5
        million in factoring receivables solidifies our position as one of the
        largest general-purpose factoring companies in the country.





Results of
        Operations





Net
        income for the first quarter of 2000 was $0.5 million, or $0.02 per
        diluted share, as compared with $7.1 million, or $0.37 per diluted
        share, for the first quarter of 1999. First quarter 2000 earnings
        included certain special mention expenses which amounted to
        approximately $0.04 per diluted share, as discussed elsewhere
        herein.





As a
        result of our acquisition of FMAC, our earnings are largely dependent
        upon franchise loan sales and securitizations. Until our franchise
        whole loan sales complement our securitization activities on a regular
        basis, earnings are expected to be inconsistent. Although we did not
        securitize or sell any franchise loans during the first quarter, we
        have accumulated a pool of fixed-rate franchise loans, which we have
        hedged to reduce the corresponding interest rate risk. We continue to
        add to this pool in anticipation of a securitization during the second
        quarter.





Net Interest
        Income and Net Interest Margin





Net
        interest income for the first quarter of 2000 was $43.2 million as
        compared with $40.8 million for the first quarter of 1999. Net interest
        margin was 3.16% for both the first quarter of 2000 and the first
        quarter of 1999. The following table illustrates net interest income
        and net interest margin, by platform, for the periods
        indicated:





|                              |  | For the
          Three Months Ended (Unaudited)
|----------------------------- |  | ------------------------------------------------
|
|
|
|Retail
          Platform(1)  |  | $17,600                                         
|Commercial
          Platform |  | 25,591                                          
|                              |  |                                                 
|Total                         |  | $43,191                                         
|                              |  |                                                 




|(1) | The Retail
          Platforms net interest margin and net interest income presented
          above do not include the revenue impact of our auto leasing
          activities, which is included in noninterest income, but do include
          the associated funding costs.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




The
        increase in net interest income for the first quarter of 2000, as
        compared with the first quarter of 1999, was due to increases in
        average interest-earning assets and average yields. The increase in
        average interest-earning assets was due primarily to higher franchise
        loan balances. Average yields increased in connection with the rising
        interest rate environment and as a result of the continued change-out
        of our assets from lower-yielding mortgage-based loans to
        higher-yielding commercial and consumer loans and leases. The net
        interest margin for the first quarter of 2000, as compared with the
        first quarter of 1999, remained constant as our increasing yields were
        offset by higher funding costs associated with the rising interest rate
        environment.





Net
        interest income and net interest margin by platform reflect our
        continued shift in asset mix toward more commercial bank-like products
        (see the following table illustrating interest-earning assets),
        specifically franchise loans. This shift in our asset mix to
        higher-yielding assets helped maintain our total net interest margin
        despite the rising rate environment. For more detail, see discussion of
        Interest Income by platform and Interest
        Expense.





The following table illustrates average interest-earning assets,
        excluding our auto-related operating lease assets, by platform, for the
        periods indicated:





|                              |  | Average
          Balances for the
        
        Three Months Ended (Unaudited)
|----------------------------- |  | ----------------------------------------------------------------------------------
|
|
|Retail
          Platform     |  | $3,026,683                                                                        
|Commercial
          Platform |  | 2,419,753                                                                         
|                              |  |                                                                                   
|Total                         |  | $5,446,436                                                                        
|                              |  |                                                                                   

The
        decrease in the Retail Platforms average interest-earning assets
        and the corresponding increase in the Commercial Platforms
        average interest-earning assets reflects our continued shift in asset
        mix toward more commercial bank-like products, specifically franchise
        loans. The Retail Platforms average interest-earning assets were
        significantly impacted from March of 1999 to March of 2000 by loan
        sales and securitizations throughout 1999 and during the first quarter
        of 2000 as discussed elsewhere herein or previously
        disclosed.

The
        following table illustrates interest-earning assets, excluding our
        auto-related operating lease assets, by platform, as of the dates
        indicated:

|                              |  | (Unaudited)
|----------------------------- |  | -----------
|
|
|Retail
          Platform     |  | $2,529,572 
|Commercial
          Platform |  | 2,520,283  
|                              |  |            
|Total                         |  | $5,049,855 
|                              |  |            




The
        significant decrease in the Retail Platforms interest-earning
        assets, excluding our auto-related operating lease assets, at March 31,
        2000, as compared with December 31, 1999, was due primarily to the sale
        of $251 million of single-family mortgage loans and the securitization
        and sale of $357 million of auto loans at the end of the first quarter
        of 2000. These transactions were capital management driven and helped
        maintain our regulatory well-capitalized status as of March
        31, 2000.





Average Balance Sheet





The
        following table illustrates 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 periods indicated. Average
        balances of interest-earning assets and interest-bearing liabilities
        were calculated by averaging the relevant month-end amounts for the
        respective periods.





|                                                     |  | AVERAGE
          BALANCES, YIELDS AND RATES (Unaudited)
|---------------------------------------------------- |  | --------------------------------------------------------
|
|
|
|Assets                                              
|                                                     |  |                                                         
|                                                    
|Interest-earning assets:                            
|Loans and leases                                     |  | $ 4,487,208                                             
|Mortgage-backed
          securities(1)              |  | 711,793                                                 
|Investments(1)                                       |  | 247,435                                                 
|                                                     |  |                                                         
|Total
          interest-earning assets              |  | 5,446,436                                               
|                                                     |  |                                                         
|Other
          assets                               |  | 1,085,179                                               
|                                                     |  |                                                         
|Total
          assets                               |  | $  6,531,615                                            
|                                                     |  |                                                         
|                                                    
|Liabilities
          and Stockholders Equity       |  |                                                         
|                                                    
|Interest-bearing liabilities:                       
|Deposits                                             |  | $  3,685,356                                            
|Borrowings(2)                                        |  | 1,989,810                                               
|                                                     |  |                                                         
|Total
          interest-bearing liabilities         |  | 5,675,166                                               
|                                                     |  |                                                         
|Other
          liabilities                          |  | 226,942                                                 
|                                                     |  |                                                         
|Total
          liabilities                          |  | 5,902,108                                               
|Stockholders equity                                 |  | 629,507                                                 
|                                                     |  |                                                         
|Total
          liabilities and stockholders equity |  | $  6,531,615                                            
|                                                     |  |                                                         
|Net interest
          income/net interest spread    |  |                                                         
|                                                     |  |                                                         
|Net
          interest-earning assets (liabilities)  |  | $    (228,730                                           
|                                                     |  |                                                         
|Net interest
          margin(3)                     |  |                                                         
|                                                     |  |                                                         




|(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 includes interest expense on interest rate
          swaps of $159,000 and $1.0 million for the three months ended March
          31, 2000 and 1999, respectively. Interest expense for borrowings
          excludes expenses related to our Capital Securities.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Annualized net
          interest income divided by average interest-earning
          assets.
|--- | ----------------------------------------------------------------------------------------------







Interest Income





Interest income was $114.5 million for the first quarter of 2000
        as compared with $100.0 million for the first quarter of 1999. The
        average yield on interest-earning assets was 8.41% for the first
        quarter of 2000 as compared with 7.84% for the first quarter of 1999.
        The following table illustrates interest income, by platform, for the
        periods indicated:





|                               |  | For the
          Three Months Ended (Unaudited)
|------------------------------ |  | ------------------------------------------------
|
|
|
|Retail
          platform:     |  |                                                 
|Loans                          |  | $2,103,002                                      
|Mortgage-backed securities     |  | 711,793                                         
|Investments                    |  | 211,888                                         
|                               |  |                                                 
|Total retail platform          |  | 3,026,683                                       
|                               |  |                                                 
|Commercial
          platform: |  |                                                 
|Loans                          |  | 2,384,206                                       
|Investments                    |  | 35,547                                          
|                               |  |                                                 
|Total commercial platform      |  | 2,419,753                                       
|                               |  |                                                 
|Total                          |  | $5,446,436                                      
|                               |  |                                                 




| | Retail
          Platform
| | -------------------------




Interest income for the Retail Platform was $58.4 million for the
        first quarter of 2000 as compared with $68.1 million for the first
        quarter of 1999. The average yield on interest-earning assets for the
        Retail Platform was 7.74% for the first quarter of 2000 as compared
        with 7.48% for the first quarter of 1999.





The
        Retail Platforms interest income on loans was $42.8 million for
        the first quarter of 2000 as compared with $55.2 million for the first
        quarter of 1999. The Retail Platforms average loan yield was
        8.18% for the first quarter of 2000 as compared with 7.96% for the
        first quarter of 1999. The decrease in interest income on loans for the
        first quarter of 2000, as compared with the first quarter of 1999, was
        due to lower average loan balances, as previously discussed, partially
        offset by an increase in the platforms average loan yield, which
        was primarily due to a change in the mix of average retail loans from
        single-family mortgage loans to relatively higher-yielding auto loans
        and home equity loans and lines of credit combined with the impact
        related to the higher interest rate environment.





The
        Retail Platforms interest income on mortgage-backed securities
        was $12.2 million for the first quarter of 2000 as compared with $9.4
        million for the first quarter of 1999. The Retail Platforms
        average yield on mortgage-backed securities was 6.86% for the first
        quarter of 2000 as compared with 6.28% for the first quarter of 1999.
        The increase in interest income on mortgage-backed securities for the
        first quarter of 2000, as compared to the first quarter of 1999, was
        due to increases in both average balances and yields. The increases in
        average balances and yields were due to purchases of Government
        National Mortgage Association (sometimes referred to as GNMA)securities
        during the fourth quarter of 1999 and the first quarter of 2000. These
        securities, which have a zero risk-based capital requirement, also
        helped maintain our regulatory well-capitalized
        status.





The
        Retail Platforms interest income on investment securities, which
        consist primarily of short-term investments and our retained interests
        in auto loan securitizations, was $3.4 million for the first quarter of
        2000 as compared with $3.5 million for the first quarter of 1999. The
        Retail Platforms average yield on investment securities was 6.75%
        for the first quarter of 2000 as compared with 5.13% for the first
        quarter of 1999. The

      
      slight decrease in interest income on investments was due to lower
        average balances partially offset by an increase in average yield
        related to the higher interest rate environment and an increase in the
        average residual interest balance as a result of our December 1999 auto
        securitization, which has a higher yield relative to the total
        investment securities portfolio.





| | Commercial
          Platform
| | -----------------------------




Interest income for the Commercial Platform was $56.1 million for
        the first quarter of 2000 as compared with $31.9 million for the first
        quarter of 1999. The average yield on interest-earning assets for the
        Commercial Platform was 9.24% for the first quarter of 2000 as compared
        with 8.72% for the first quarter of 1999.





The
        Commercial Platforms interest income on loans was $54.4 million
        for the first quarter of 2000 as compared with $31.9 million for the
        first quarter of 1999. The Commercial Platforms average loan and
        lease yield was 9.09% for the first quarter of 2000 as compared with
        8.72% for the first quarter of 1999. The increase in net interest
        income on loans and leases for the first quarter of 2000, as compared
        with the first quarter of 1999, was due to higher average loan and
        lease balances, as previously discussed, and an increase in the
        platforms average loan and lease yield, which was a result of the
        positive impact of the shift from lower-yielding multi-family
        mortgage-based loans to higher-yielding franchise and commercial
        business loans combined with the impact related to the higher interest
        rate environment.





The
        Commercial Platforms interest income on investment securities,
        which consist of asset-backed securities and residual interests in
        franchise loan securitizations, was $1.7 million for the first quarter
        of 2000. There were no investment securities in the Commercial Platform
        for the first quarter of 1999. The Commercial Platforms average
        yield on investment securities was 19.29% for the first quarter of
        2000.





Interest
        Expense





| | Deposits
| | --------




Interest expense on our deposits was $39.9 million for first
        quarter of 2000 as compared with $33.6 million for the first quarter of
        1999. The average cost of deposits was 4.36% for the first quarter of
        2000 as compared with 4.13% for the first quarter of 1999. The increase
        in interest expense on deposits was due to both higher average deposit
        balances and an increase in the cost of deposits. The increase in the
        cost of our deposits was primarily associated with the rising interest
        rate environment. Despite the rising interest rate environment, the
        average cost of transaction accounts, which comprise more than 51% of
        our total deposits, remained relatively constant, as compared with the
        fourth quarter of 1999 and the first quarter of 1999.





The
        following table summarizes our deposit costs by type and our
        transaction accounts as a percentage of retail deposits for the periods
        indicated:





|                                                                  |  | At or For
          the Three Months Ended
|----------------------------------------------------------------- |  | ------------------------------------------
|
|Transaction
          accounts                                    |  | 3.30                                      
|Retail
          certificates of deposit                          |  | 4.99                                      
|                                                                  |  |                                           
|Total retail
          deposits                                   |  | 4.18                                      
|Brokered
          certificates of deposit                        |  | 6.29                                      
|                                                                  |  |                                           
|Total deposits                                                    |  | 4.36                                      
|                                                                  |  |                                           
|Transaction
          accounts as a percentage of retail deposits |  | 51.3                                      
|                                                                  |  |                                           




| | Borrowings
| | ----------




Interest expense on our borrowings was $31.4 million for the
        first quarter of 2000 as compared with $25.6 million for the first
        quarter of 1999. The average cost of borrowings was 6.28% for the first
        quarter of 2000 as compared with 5.70% for the first quarter of 1999.
        In accordance with generally accepted accounting principles, sometimes
        referred to as GAAP, these amounts exclude the expense associated with
        our Capital Securities. The increase in interest expense on borrowings
        for the first quarter of 2000, as compared with first quarter of 1999,
        was due to both higher average borrowing balances and an increase in
        borrowing costs. The increase in average balances was due to increased
        funding needs and largely represented additional, higher-cost funding
        sources related to our balance sheet expansion, including warehouse
        lines established during the latter half of 1999 primarily to fund our
        franchise loan production. The increase in borrowing costs was due to
        the higher interest rate environment combined with the utilization of
        warehouse lines, which carry higher costs relative to our more
        traditional borrowing sources, and an increase in the cost of our
        long-term debt. Our $50 million 8.42% Senior Debentures matured on June
        1, 1999, and Bay View Bank issued $50 million of 10% Subordinated Notes
        on August 18, 1999, a portion of which was used to partially finance
        our acquisition of FMAC.





The
        following table illustrates the changes in net interest income due to
        changes in the rate and volume of our interest-earning assets and
        interest-bearing liabilities for the first quarter of 2000 as compared
        with the first quarter of 1999. Changes in rate and volume which cannot
        be segregated (e.g., changes in average interest rate multiplied by
        average portfolio balance) have been allocated proportionately between
        the change in rate and the change in volume.





|                              |  | For the
          Three Months Ended
        
        March 31, 2000 vs. 1999
        
        (Unaudited)
|----------------------------- |  | ----------------------------------------------------------------------------------------------------------
|
|
|Interest
          income:    |  |                                                                                                           
|Loans and leases              |  | $5,100                                                                                                    
|Mortgage-backed securities    |  | 922                                                                                                       
|Investment securities         |  | 1,670                                                                                                     
|                              |  |                                                                                                           
|                              |  | 7,692                                                                                                     
|                              |  |                                                                                                           
|Interest
          expense:   |  |                                                                                                           
|Deposits                      |  | 2,021                                                                                                     
|Borrowings                    |  | 2,932                                                                                                     
|                              |  |                                                                                                           
|                              |  | 4,953                                                                                                     
|                              |  |                                                                                                           
|Net interest
          income |  | $2,739                                                                                                    
|                              |  |                                                                                                           




Provision for Losses on Loans and Leases





The
        provision for losses on loans and leases for the first quarter of 2000
        was $8.0 million as compared with $5.3 million for the first quarter of
        1999. The increase in the provision for losses on loans and leases for
        the first quarter of 2000, as compared with the first quarter of 1999,
        was due to higher provision levels within the Commercial Platform
        related to the increase in franchise loan balances throughout 1999 and
        the first quarter of 2000 combined with higher net charge-offs within
        the commercial equipment lease portfolio. A significant portion of the
        first quarter 2000 provision in the Retail Platform relates to our
        remaining high loan-to-value home equity portfolio. The following table
        illustrates the provision for losses on loans and leases, by platform,
        for the periods indicated:





|                              |  | For the
          Three Months Ended
        
        (Unaudited)
|----------------------------- |  | -----------------------------------------------------------------
|
|
|Retail
          Platform     |  | $5,200                                                           
|Commercial
          Platform |  | 2,800                                                            
|                              |  |                                                                  
|Total                         |  | $8,000                                                           
|                              |  |                                                                  




Noninterest
        Income





Noninterest income for the first quarter of 2000 was $34.5
        million as compared with $16.0 million for the first quarter of 1999.
        The increase in noninterest income for the first quarter of 2000, as
        compared with the first quarter of 1999, was largely attributable to
        higher auto leasing income in the Retail Platform resulting from the
        continued growth in our auto leasing activities, combined with higher
        loan servicing and fee income in the Commercial Platform related to our
        acquisition of FMAC. Noninterest income for the first quarter of 2000
        included a $2.1 million gain for the Retail Platform associated with
        the sale of servicing rights and $1.3 million in gains for the
        Commercial Platform from the sales of $130.8 million in Bankers Mutual
        multi-family mortgage loans to Fannie Mae and Freddie Mac. The Retail
        Platforms noninterest income for the first quarter of 1999
        included a $1.1 million state tax refund resulting from a favorable
        ruling on a tax refund claim for taxable years otherwise closed. The
        following table illustrates noninterest income, by platform, for the
        periods indicated:





|                              |  | For the
          Three Months Ended
        
        (Unaudited)
|----------------------------- |  | -----------------------------------------------------------------
|
|
|Retail
          Platform     |  | $30,402                                                          
|Commercial
          Platform |  | 4,070                                                            
|                              |  |                                                                  
|Total                         |  | $34,472                                                          
|                              |  |                                                                  




Noninterest
        Expense





| | General and
          Administrative Expenses
| | ---------------------------------------------




General and administrative expenses for the first quarter of 2000
        were $41.4 million as compared with $26.2 million for the first quarter
        of 1999. General and administrative expenses for the first quarter of
        2000 included $2.4 million in special mention items largely related to
        FMAC transition costs and other operational restructuring charges.
        Specifically during the quarter, we consolidated certain loan servicing
        operations and closed one FMAC satellite loan production office to
        achieve efficiencies. In addition, we outsourced our internal audit
        function to KPMG LLP as a means of realizing efficiencies and to take
        advantage of their industry expertise. General and administrative
        expenses for the first quarter of 1999 included $933,000 in special
        mention items related to operational restructuring costs,
        collection-based fees associated with a $1.1 million state tax refund
        (as mentioned in Noninterest Income) and third-party Year
        2000

      
      compliance-related costs. Special mention items generally include items
        recognized during the period that we believe are significant and/or
        unusual in nature and therefore useful to you in evaluating our
        performance and trends. These items may or may not be nonrecurring in
        nature.





Excluding special mention items, the increase in general and
        administrative expenses for the first quarter of 2000, as compared with
        the first quarter of 1999, was primarily attributable to expenses
        related to our acquisition of FMAC on November 1, 1999, combined with
        inflationary pressures.





The
        following table illustrates general and administrative expenses, by
        platform (not reflecting the allocation of branch network general and
        administrative expenses), for the periods indicated:





|                                         |  | Three
          Months Ended
        
        (Unaudited)
|---------------------------------------- |  | ---------------------------------------------------------
|
|
|Retail
          Platform                |  | $19,341                                                  
|Commercial
          Platform            |  | 15,231                                                   
|                                         |  |                                                          
|Subtotal                                 |  | 34,572                                                   
|Indirect
          corporate overhead(1) |  | 6,784                                                    
|                                         |  |                                                          
|Total                                    |  | $41,356                                                  
|                                         |  |                                                          




|(1) | Amount
          represents indirect corporate expenses not specifically identifiable
          with, or allocable to, our business platforms.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------




The
        following table illustrates general and administrative expenses,
        excluding the special mention items as previously discussed, by
        platform (not reflecting the allocation of branch network general and
        administrative expenses), for the periods indicated:





|                                         |  | Excluding Special Mention
        
        Items for the Three Months Ended
        
        (Unaudited)
|---------------------------------------- |  | --------------------------------------------------------------------------------------------------------
|
|
|Retail
          Platform                |  | $18,655                                                                                                 
|Commercial
          Platform            |  | 14,198                                                                                                  
|                                         |  |                                                                                                         
|Subtotal                                 |  | 32,853                                                                                                  
|Indirect
          corporate overhead(1) |  | 6,135                                                                                                   
|                                         |  |                                                                                                         
|Total                                    |  | $38,988                                                                                                 
|                                         |  |                                                                                                         




|(1) | Amount
          represents indirect corporate expenses not specifically identifiable
          with, or allocable to, our business platforms.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------




| | Retail
          Platform
| | -------------------------




The
        Retail Platforms general and administrative expenses, excluding
        special mention items, for the first quarter of 2000, as compared with
        the first quarter of 1999, remained relatively constant as cost savings
        initiatives implemented and other efficiencies realized were partially
        offset by inflationary pressures, including annual salary increases
        which were effective March 1, 2000 and 1999.





| | Commercial
          Platform
| | -----------------------------




The
        increase in the Commercial Platforms general and administrative
        expenses, excluding special mention items, for the first quarter of
        2000, as compared with the first quarter of 1999, were directly
        attributable to our acquisition of FMAC effective November 1,
        1999.





| | Indirect Corporate Overhead
| | ---------------------------




The
        increase in indirect corporate overhead, excluding special mention
        items, for the first quarter of 2000, as compared with the first
        quarter of 1999, was due to inflationary pressures, including annual
        salary increases which were effective March 1, 2000 and 1999, and
        higher expenses in the bank holding company necessary to support our
        expanding business activities (primarily related to FMAC), which were
        partially offset by cost savings initiatives.





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:





|                                                                                                                                                            |  | Three
          Months Ended
        
        (Unaudited)
|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------
|
|
|General and
          administrative expenses                                                                                                               |  | $      41,356                                            
|Average total
          assets, including auto-related securitized assets                                                                                   |  | $6,646,183                                               
|                                                                                                                                                            |  |                                                          
|Annualized
          general and administrative expenses to average total assets, including
        
             auto-related securitized
          assets |  | 2.49                                                     
|                                                                                                                                                            |  |                                                          




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 tables illustrate the efficiency ratio for the periods
        indicated:





|                                              |  | Three
          Months Ended
        
        (Unaudited)
|--------------------------------------------- |  | ---------------------------------------------------------
|
|
|General and
          administrative expenses |  | $41,356                                                  
|Operating
          revenues, as defined      |  | $61,720                                                  
|                                              |  |                                                          
|Efficiency
          ratio(1)                 |  | 67.0                                                     
|                                              |  |                                                          




|(1) | Prior to
          November 1, 1999, for the purpose of calculating the efficiency
          ratio, other noninterest income excluded gains or losses from
          securitizations and/or sales of loans and securities.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




The
        increase in the efficiency ratio for the first quarter of 2000, as
        compared with the first quarter of 1999, was due to higher general and
        administrative expenses, primarily associated with FMAC, partially
        offset by higher net interest income, higher net leasing-related rental
        income and higher noninterest income.





| | Leasing
          Expenses
| | --------------------------




Leasing expenses represent 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. Leasing expenses were $15.4
        million for the first quarter of 2000 as compared with $6.7 million for
        the first quarter of 1999. The increase in leasing expenses was due to
        growth in our auto-related operating lease portfolio.





| | Capital Securities
| | ------------------




On
        December 21, 1998, we issued $90 million in Capital Securities through
        Bay View Capital I, a business trust formed to issue the securities.
        The Capital Securities pay quarterly cumulative cash distributions at
        an annual rate of 9.76% of the liquidation value of $25 per share.
        Dividend expense on the Capital Securities was $2.2 million for both
        the first quarter of 2000 and the first quarter of 1999.





| | Amortization of Intangible Assets
| | ---------------------------------




Amortization expense related to intangible assets was $6.3
        million for the first quarter of 2000 as compared with $2.9 million for
        the first quarter of 1999. The increase in amortization expense was due
        to higher amortization expense in the Commercial Platform, primarily
        related to our acquisitions of FMAC during the fourth quarter of 1999
        and, to a much lesser degree, Goodman Factors during the first quarter
        of 2000.





| | Income Tax
          Expense
| | ----------------------------




Income tax expense was $3.9 million for the first quarter of 2000
        as compared with $6.3 million for the first quarter of 1999. Our
        effective tax rate was 88.2% for the first quarter of 2000 as compared
        with 46.9% for the first quarter of 1999. The increase in the effective
        tax rate was primarily due to an increase in nondeductible goodwill
        amortization related to the aforementioned acquisitions and a decrease
        in our income before income tax expense.





Non-GAAP
        Performance Measures





The
        following measures of earnings excluding amortization of intangible
        assets, normalized net interest income and normalized net interest
        margin, and their corresponding ratios, are not measures of performance
        in accordance with GAAP. These measures should not be considered
        alternatives to net income, net interest income and net interest margin
        as indicators of our operating performance. These measures are included
        because we believe they are useful tools to assist you in assessing our
        performance and trends. These measures may not be comparable to
        similarly titled measures reported by other companies.





Earnings
        Excluding Amortization of Intangible Assets





Earnings excluding amortization of intangible assets represent
        net income excluding charges related to the amortization of intangible
        assets, largely goodwill. This illustration is intended to approximate
        what our earnings would have been excluding the non-cash expense
        associated with amortization of goodwill and other intangible assets
        generated from our acquisitions, all of which have been accounted for
        under the purchase method of accounting.





Goodwill is generated from acquisitions accounted for under the
        purchase method of accounting. Under the purchase method of accounting,
        the assets acquired and liabilities assumed are recorded at their fair
        values. The excess of the consideration paid for the acquisition,
        including certain acquisition-related costs, over the fair value of net
        assets acquired is recorded as goodwill. This goodwill is then
        amortized as an expense in the acquiring companys income
        statement over a period not exceeding 40 years.





The
        purchase method of accounting differs significantly from the
        pooling-of-interests method of accounting for acquisitions. Under the
        pooling-of-interests method of accounting, the assets and liabilities
        of the company being acquired are combined with the assets and
        liabilities of the acquiring company at their recorded cost and, as a
        result, no goodwill is generated. As no goodwill is generated, a
        company that has accounted for its acquisitions under the
        pooling-of-interests method of accounting incurs no goodwill
        amortization expense.





The
        purchase and the pooling-of-interests methods of accounting are not
        alternatives for accounting for acquisitions. Instead, generally
        accepted accounting principles prescribe which method must be applied
        depending upon the characteristics of the underlying acquisition.





As a result of the two distinct methods of accounting for acquisitions
        discussed above, it may be difficult for investors and other interested
        parties to compare the operating results of companies that have
        accounted for acquisitions under the purchase method of accounting with
        companies that have accounted for acquisitions under the
        pooling-of-interests method of accounting.





In
        response to this situation, we have illustrated what our earnings would
        have been excluding the non-cash expense associated with amortization
        of the intangible assets generated from our acquisitions. While this
        disclosure is not intended to represent what our operating results
        would have been had our acquisitions been accounted for under the
        pooling-of-interests method of accounting, due to other differences
        between the two methods, we do believe it represents a reasonable
        approximation of what our results would have been.





The
        following tables illustrate the reconciliation of net income to
        earnings excluding amortization of intangible assets, and the
        corresponding annualized performance return measures, for the periods
        indicated:





|                                                                                         |  | Three
          Months Ended
        
        (Unaudited)
|---------------------------------------------------------------------------------------- |  | ---------------------------------------------------------
|
|
|Net
          income(1)                                                                  |  | $  518                                                   
|Amortization
          of intangible assets, net of tax                                  |  | 5,696                                                    
|                                                                                         |  |                                                          
|Earnings
          excluding amortization                                                |  | $6,214                                                   
|                                                                                         |  |                                                          
|Earnings per
          diluted share                                                     |  | $  0.02                                                  
|                                                                                         |  |                                                          
|Earnings
          excluding amortization per diluted share                              |  | $  0.19                                                  
|                                                                                         |  |                                                          
|Return on
          average assets(2)                                                    |  | 0.03                                                     
|                                                                                         |  |                                                          
|Return on
          average equity(2)                                                    |  | 0.33                                                     
|                                                                                         |  |                                                          
|Earnings
          excluding amortizationreturn on average assets(3)                    |  | 0.38                                                     
|                                                                                         |  |                                                          
|Earnings
          excluding amortizationreturn on average equity(3)                    |  | 3.95                                                     
|                                                                                         |  |                                                          
|Earnings
          excluding amortizationreturn on average tangible
          assets(4) |  | 0.40                                                     
|                                                                                         |  |                                                          
|Earnings
          excluding amortizationreturn on average tangible
          equity(4) |  | 8.32                                                     
|                                                                                         |  |                                                          




|(1) | Net income for
          the periods indicated includes certain special mention items, as
          discussed above.
|--- | --------------------------------------------------------------------------------------------------------------------

|(2) | Return on
          average assets is defined as net income divided by average assets.
          Return on average equity is defined as net income divided by average
          equity.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Earnings
          excluding amortizationreturn on average assets is defined as
          earnings excluding amortization of intangible assets divided by
          average assets. Earnings excluding amortizationreturn on
          average equity is defined as earnings excluding amortization of
          intangible assets divided by average equity.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Earnings
          excluding amortizationreturn on average tangible assets is
          defined as earnings excluding amortization of intangible assets
          divided by average tangible assets. Earnings excluding
          amortizationreturn on average tangible equity is defined as
          earnings excluding amortization of intangible assets divided by
          average tangible equity. Average tangible assets are defined as
          average assets less average intangible assets. Average tangible
          equity is defined as average equity less average intangible
          assets.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Normalized Net Interest Income and Net Interest Margin





Normalized net interest income and net interest margin include
        net rental income from our auto leasing activities (that is, the excess
        of rental income over depreciation expenses on auto-related lease
        assets), which are principally funded by our deposits, and also include
        expenses related to our Capital Securities. Because our auto leases are
        accounted for as operating leases, the rental income is reflected as
        noninterest income and the related expenses, including depreciation
        expense, are reflected as noninterest expenses, in accordance with
        GAAP. Normalized net interest income also excludes certain nonrecurring
        interest income and interest expense items.





Normalized net interest income for first quarter of 2000 was
        $49.7 million as compared with $42.4 million for the first quarter of
        1999. Normalized net interest margin for the first quarter of 2000 was
        3.33% as compared with 3.15% for the first quarter of 1999. The
        following table illustrates normalized net interest income and net
        interest margin, by platform, for the periods indicated:





|                              |  | For the
          Three Months Ended (Unaudited)
|----------------------------- |  | ------------------------------------------------
|
|
|
|Retail
          Platform     |  | $24,941                                         
|Commercial
          Platform |  | 24,725                                          
|                              |  |                                                 
|Total                         |  | $49,666                                         
|                              |  |                                                 






The
        increases in normalized net interest income and net interest margin for
        the first quarter of 2000, as compared with the first quarter of 1999,
        were largely attributable to higher net rental income from our auto
        leasing activities, higher asset yields, increases in average
        interest-earning assets and the continued change-out of our balance
        sheet, as previously discussed, partially offset by higher funding
        costs, as previously discussed.





The
        following table illustrates average interest-earning assets, including
        our auto-related operating lease assets, by platform, for the periods
        indicated:





|                              |  | Average
          Interest-Earning
        
        Assets for the Three Months
        
        Ended (Unaudited)
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------
|
|
|Retail
          Platform     |  | $3,518,942                                                                                                        
|Commercial
          Platform |  | 2,419,753                                                                                                         
|                              |  |                                                                                                                   
|Total                         |  | $5,938,695                                                                                                        
|                              |  |                                                                                                                   

The decrease
        in the Retail Platform's average interest-earning assets, including our
        auto-related operating lease assets, and the corresponding increase in
        the Commercial Platform's average interest-earning assets reflects our
        continued shift in asset mix toward more commercial bank-like products,
        specifically franchise loans. The Retail Platform's average
        interest-earning assets were significantly impacted from March of 1999
        to March of 2000 by loan sales and securitizations throughout 1999 and
        during the first quarter of 2000 as discussed elsewhere herein or
        previously disclosed.




The following table illustrates interest-earning assets, including our
        auto-related operating lease assets, by platform, as of the dates
        indicated:





|                              |  | (Unaudited)
|----------------------------- |  | -----------
|
|
|Retail
          Platform     |  | $3,033,740 
|Commercial
          Platform |  | 2,520,283  
|                              |  |            
|Total                         |  | $5,554,023 
|                              |  |            

The significant decrease in
        the Retail Platform's interest-earning assets, including our
        auto-related operating lease assets, at March 31, 2000, as compared
        with December 31, 1999, was due primarily to the sale of $251 million
        of single-family mortgage loans and the securitization and sale of $357
        million of auto loans at the end of the first quarter of 2000. These
        transactions were capital management driven and helped maintain our
        regulatory "well-capitalized" status as of March 31,
        2000.


Balance Sheet
        Analysis





Our
        total assets were $6.4 billion at March 31, 2000 as compared with $6.5
        billion at December 31, 1999. The slight decrease in total assets
        relates primarily to certain capital management-driven transactions we
        executed towards the end of the first quarter of 2000 in order to help
        maintain our regulatory well-capitalized status.
        Specifically, we sold $251.4 million of single-family mortgage loans
        and securitized and sold $356.6 million of auto loans during the first
        quarter of 2000. These activities were partially offset by our loan and
        lease orginations and our investment of $288.3 million in additional
        securities during the quarter. Securities





Our
        securities activities are primarily conducted by Bay View Bank. Bay
        View Bank has historically purchased securities to supplement our loan
        production. The majority of the securities purchased are high-quality
        mortgage-backed securities, including securities issued by GNMA, Fannie
        Mae and Freddie Mac and senior tranches of private issue collateralized
        mortgage obligations, or CMOs. In addition to these securities, we also
        hold retained interests in loan and lease securitizations and hold
        investment securities such as U.S. government agency notes and other
        short-term securities.





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





|                                                      |  | (Unaudited)
|----------------------------------------------------- |  | -----------
|
|
|
|Available-for-sale                                   
|Federal
          National Mortgage Association stock |  | $      579 
|Asset-backed
          securities                     |  | 5,421      
|Retained
          interests in securitizations       |  | 44,332     
|                                                      |  |            
|Total investment securities                           |  | 50,332     
|                                                      |  |            
|Mortgage-backed securities:                          
|Issued by GNMA                                        |  | 9,493      
|Issued by Freddie Mac and Fannie Mae                  |  | 429        
|CMOs                                                  |  | 324        
|                                                      |  |            
|Total mortgage-backed securities                      |  | 10,246     
|                                                      |  |            
|Total securities available-for-sale                   |  | 60,578     
|                                                      |  |            
|Held-to-maturity                                     
|Federal Home
          Loan Bank callable notes       |  | 20,295     
|                                                      |  |            
|Total
          investment securities                 |  | 20,295     
|                                                      |  |            
|Mortgage-backed securities:                          
|Issued by GNMA                                        |  | 448,530    
|Issued by Freddie Mac and Fannie Mae                  |  | 286,779    
|Issued by other financial intermediaries              |  | 17,605     
|CMOs                                                  |  | 148,055    
|                                                      |  |            
|Total mortgage-backed securities                      |  | 900,969    
|                                                      |  |            
|Total securities held-to-maturity                     |  | 921,264    
|                                                      |  |            
|                                                      |  | $981,842   
|                                                      |  |            




We
        purchased $278 million of GNMA securities for our held-to maturity
        portfolio during the first quarter of 2000 due to their favorable
        regulatory capital risk-weighting. We also purchased $10.3 million of
        Federal Home Loan Bank callable notes. In addition, securities
        available-for-sale increased during the first quarter of 2000 due to
        the retained interest generated from our March securitization and sale
        of auto loans, partially offset by cash payments received and purchase
        accounting adjustments related to FMAC. There were no sales of
        investment securities during the first quarter of 2000.





Mortgage-backed securities pose risks not associated with fixed
        maturity bonds, primarily related to the ability of the borrower to
        prepay the underlying loan with or without penalty. This risk, known as
        prepayment risk, may cause the mortgage-backed securities to remain
        outstanding for a period of time different than that assumed at the
        time of purchase. When interest rates decline, prepayments generally
        tend to increase, causing the average expected remaining maturity of
        the mortgage-backed securities to decline. Conversely, if interest
        rates rise, prepayments tend to decrease, lengthening the average
        expected remaining maturity of the mortgage-backed
        securities.





Loans and Leases





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





|                                                                   |  | (Unaudited) 
|------------------------------------------------------------------ |  | ------------
|
|
|Loans and
          Leases Receivable:                            
|Retail:                                                           
|Single-family mortgage loans                                       |  | $    639,488
|Home equity loans and lines of credit                              |  | 625,300     
|Auto loans(1)                                                      |  | 171,920     
|                                                                   |  |             
|Total retail loans                                                 |  | 1,436,708   
|Commercial:                                                       
|Multi-family mortgage loans                                        |  | 628,301     
|Commercial mortgage loans                                          |  | 308,204     
|Franchise loans                                                    |  | 1,227,298   
|Asset-based loans, factoring loans and commercial
          leases |  | 283,465     
|Business loans                                                     |  | 37,244      
|                                                                   |  |             
|Total commercial loans and leases                                  |  | 2,484,512   
|                                                                   |  |             
|Gross loans
          and leases                                   |  | 3,921,220   
|Premiums and
          discounts and deferred fees and costs, net  |  | 43,677      
|Allowance for
          losses on loans and leases                 |  | (49,344     
|                                                                   |  |             
|Net loans and
          leases                                     |  | $3,915,553  
|                                                                   |  |             




|(1) | Amounts
          exclude auto-related operating lease assets reported separately from
          loans and leases totaling $504.2 million at March 31, 2000 and $463.1
          million at December 31, 1999.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




During the first quarter of 2000, we sold $251.4 million of
        single-family loans and securitized and sold $356.6 million of auto
        loans. These capital management-driven transactions occurred toward the
        end of the quarter and helped maintain our regulatory
        well-capitalized status. Additionally, during the first
        quarter we sold $22.1 million of commercial equipment
        leases.





The
        reduction of single-family loans also reduces our geographic
        concentration risk and is consistent with our continuing efforts to
        replace lower-yielding mortgage-based assets with higher-yielding
        commercial bank-like assets.





Our strategy is to focus our loan and lease production efforts on
        high-quality consumer and commercial loans and leases with higher
        risk-adjusted yields relative to mortgage loans. In 1999, we
        supplemented our originations with a significant amount of loan and
        lease purchases. The franchise loans purchased in 1999 were originated
        by FMAC. The following table illustrates our loan and lease production
        for the periods indicated:





|                                                                   |  | Three
          Months Ended (Unaudited)
|------------------------------------------------------------------ |  | ----------------------------------------
|
|
|Loan and Lease
          Production:                              
|Originations:                                                     
|Home equity loans and lines of credit                              |  | $ 16,129                                
|Auto loans and leases(1)                                           |  | 133,077                                 
|Mortgage loans                                                     |  | 38,319                                  
|Franchise loans                                                    |  | 192,527                                 
|Bankers Mutual multi-family loans(2)                               |  | 130,774                                 
|Asset-based loans, factoring loans and commercial
          leases |  | 38,179                                  
|Business loans                                                     |  | 14,845                                  
|                                                                   |  |                                         
|Total originations                                                 |  | 563,850                                 
|                                                                   |  |                                         
|Purchases:                                                        
|Home equity loans                                                  |  |                                        
|Auto loans                                                         |  | 2,836                                   
|Mortgage loans                                                     |  | 1,496                                   
|Franchise loans                                                    |  |                                        
|                                                                   |  |                                         
|Total purchases                                                    |  | 4,332                                   
|                                                                   |  |                                         
|Total loan and lease production                                    |  | $568,182                                
|                                                                   |  |                                         




|(1) | Includes
          auto-related operating lease assets totaling $62.5 million for the
          first quarter of 2000 and $87.7 million for the first quarter of 1999
          which are not included in our total loan and lease portfolio in
          accordance with GAAP.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | 100% of
          Bankers Mutual multi-family mortgage loans are originated and sold
          through seller-servicer programs administered by Fannie Mae and
          Freddie Mac.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




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. Troubled debt restructurings
        are defined as loans that have been modified (due to borrower financial
        difficulties) to allow a stated interest rate and/or a monthly payment
        rate lower than those prevailing in the market. We do not record
        interest on nonaccrual loans and leases.





Overall credit quality has continued to remain strong as evidenced by the
        low nonperforming assets and delinquencies presented below. The
        following table illustrates our nonperforming assets and troubled debt
        restructurings as of the dates indicated:





|                                       |  | (Unaudited)
|-------------------------------------- |  | -----------
|
|
|Nonaccrual
          loans and leases  |  | $25,744    
|Real estate
          owned            |  | 544        
|Other
          repossessed assets     |  | 306        
|                                       |  |            
|Nonperforming
          assets         |  | 26,594     
|Troubled debt
          restructurings |  | 1,041      
|                                       |  |            
|Total                                  |  | $27,635    
|                                       |  |            




The
        increase in nonaccrual loans and leases at March 31, 2000, as compared
        with December 31, 1999, was primarily due to one specific asset-based
        loan within the Commercial Platform.





The
        following table illustrates, by platform, nonperforming assets and
        nonperforming assets as a percentage of total assets, excluding loans
        and leases held-for-sale:





|                                                                                                       |  | Nonperforming Assets
        
        as a Percentage of Consolidated Assets (Unaudited)
|------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------
|
|
|Retail
          Platform:                                                                            
|Single-family mortgage                                                                                 |  | $  3,875                                                                                
|Home equity                                                                                            |  | 2,888                                                                                   
|Auto                                                                                                   |  | 585                                                                                     
|                                                                                                       |  |                                                                                         
|Total retail platform                                                                                  |  | 7,348                                                                                   
|Commercial
          Platform:                                                                        
|Multi-family mortgage                                                                                  |  | 433                                                                                     
|Commercial real estate                                                                                 |  | 2,050                                                                                   
|Franchise                                                                                              |  | 9,703                                                                                   
|Asset-based loans, factoring loans and
        

                    
               commercial leases |  | 7,060                                                                                   
|Business loans                                                                                         |  |                                                                                        
|                                                                                                       |  |                                                                                         
|Total commercial platform                                                                              |  | 19,246                                                                                  
|                                                                                                       |  |                                                                                         
|Total                                                                                                  |  | $26,594                                                                                 
|                                                                                                       |  |                                                                                         




The
        following table illustrates, by platform, loans and leases delinquent
        60 days or more as a percentage of gross loans and leases, excluding
        loans and leases held-for-sale:





|                              |  | Loans and
          Leases Delinquent 60 Days or More
        
        as a Percentage of Gross Loans and Leases
        
        (Unaudited)
|----------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|
|
|Retail
          Platform     |  | $12,510                                                                                                                                      
|Commercial
          Platform |  | 15,158                                                                                                                                       
|                              |  |                                                                                                                                              
|Total                         |  | $27,668                                                                                                                                      
|                              |  |                                                                                                                                              




Allowance for Loan and Lease Losses





Credit risk is defined as the possibility of sustaining a loss
        because other parties to the financial instrument fail to perform in
        accordance with the terms of the contract. While we follow underwriting
        and credit monitoring procedures which we believe are appropriate in
        both growing and managing the loan and lease portfolio, in the event of
        nonperformance by these other parties, our potential exposure to credit
        losses could significantly affect our consolidated financial position
        and results of operations.





Lending money involves an inherent risk of nonpayment. Management
        seeks to reduce such credit risk by administering lending policies and
        underwriting procedures combined with its monitoring of the loan and
        lease portfolio. The allowance for losses on loans and leases
        represents managements estimate of probable inherent losses which
        have occurred as of the date of the financial statements. The process
        of determining the necessary levels of allowances for loan and lease
        losses is subjective and requires considerable judgement. In accordance
        with applicable guidelines, this process results in an allowance for
        losses on loans and leases that consists of three components as
        described below:





| | 1.  Reserves for loans and leases that have been
          individually evaluated and identified as loans or leases which have
          probable losses.    These loans and leases
          are generally larger-balance commercial or income producing real
          estate loans or leases which are evaluated on an individual basis.
          Reserves for these loans and leases are attributable to specific
          weaknesses in these loans or leases evidenced by factors such as a
          deterioration in the borrowers ability to meet its obligations,
          a deterioration in the quantity or quality of the collateral securing
          the loan or lease, payment delinquency, or other events of default
          under the terms of the loan or lease agreement or promissory
          note.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | 2.Reserves for groups of smaller-balance
          homogenous loans and leases that are collectively evaluated for
          impairment and for groups of performing larger-balance loans and
          leases which currently exhibit no identifiable
          weaknesses.    The smaller-balance homogenous
          loans and leases generally consist of single-family mortgage loans
          and consumer loans, including auto loans, home equity loans and lines
          of credit and unsecured personal loans. The larger-balance loans and
          leases generally consist of commercial or income producing real
          estate loans and leases. These loans and leases have specific
          characteristics which indicate that it is probable that a loss has
          been incurred in a group of loans or leases with those similar
          characteristics. Reserves for these groups of loans and leases are
          determined based on a combination of factors including historical
          loss experience, asset concentrations, levels and trends of
          classified assets, and loan and lease delinquencies. Reserves for
          these groups of loans and leases also include an additional reserve
          for certain products we have introduced more recently, such as high
          loan-to-value home equity loans and franchise loans and leases, where
          we do not have extensive historical data, other than industry
          experience, upon which to base its reserve levels. This additional
          reserve is intended to provide for those situations where our
          experience may be different than industry experience.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | 3.Unallocated
          Reserves.    Management determines the
          unallocated portion of the allowance for losses on loans and leases
          based on factors that are not necessarily associated with a specific
          credit, group of loans or leases or loan or lease category. These
          factors include, but are not limited to, managements evaluation
          of economic conditions in regions where we lend money, loan and lease
          concentrations, lending policies or underwriting procedures, and
          trends in delinquencies and nonperforming assets. The unallocated
          portion of the allowance for losses on loans and leases reflects
          managements efforts to ensure that the overall allowance
          appropriately reflects the probable losses inherent in the loan and
          lease portfolio.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




The
        allowance for losses on loans and leases at March 31, 2000 was $49.3
        million as compared with $52.2 million at December 31, 1999. The
        decrease in the allowance for losses on loans and leases was primarily
        related to our loan sales during the first quarter of 2000.





The following table illustrates the allowance for losses on loans and
        leases as a percentage of both nonperforming assets and gross loans and
        leases, excluding loans and leases held-for-sale:





|                                                                                             |  | Allowance
          for Losses on Loans and Leases as a
        
        Percentage of Specified Assets (Unaudited)
|-------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------
|
|
|
|Nonperforming
          assets                                                               |  | $      26,594                                                                                                      
|Gross loans
          and leases, excluding loans and leases held-
        
        for-sale |  | $3,681,789                                                                                                         




The
        following table illustrates the changes in the allowance for losses on
        loans and leases for the periods indicated:





|                                                                   |  | (Unaudited)
|------------------------------------------------------------------ |  | -----------
|
|
|Beginning
          balance                                        |  | $52,161    
|Reserves
          related to acquisitions                         |  |           
|Transfers of
          loans to held-for-sale                      |  | (4,149     
|Charge-offs:                                                      
|Mortgage                                                           |  | (64        
|Home Equity                                                        |  | (4,948     
|Auto                                                               |  | (1,456     
|Asset-based loans, factoring loans and commercial
          leases |  | (1,030     
|Franchise(1)                                                       |  | (643       
|                                                                   |  |            
|                                                                   |  | (8,141)    
|Recoveries:                                                       
|Mortgage                                                           |  | 18         
|Home Equity                                                        |  | 743        
|Auto                                                               |  | 403        
|Asset-based loans, factoring loans and commercial
          leases |  | 103        
|Franchise(1)                                                       |  | 206        
|                                                                   |  |            
|                                                                   |  | 1,473      
|Net
          charge-offs                                          |  | (6,668     
|Provision for
          losses on loans and leases                 |  | 8,000      
|                                                                   |  |            
|Ending
          balance                                           |  | $49,344    
|                                                                   |  |            
|Net
          charge-offs to average loans and leases (annualized) |  | 0.59       
|                                                                   |  |            




|(1) | Represents
          franchise amounts subsequent to the acquisition of FMAC on November
          1, 1999.
|--- | -----------------------------------------------------------------------------------------------------------




The
        decrease in the annualized percentage of net charge-offs to average
        loans and leases for the first quarter of 2000, as compared with the
        year ended December 31, 1999, was due primarily to an increase in
        average loan and lease balances and slightly lower annualized net
        charge-offs.





Deposits





As a
        primary part of our business, we generate deposits for the purpose of
        funding loans, leases and securities. The following table illustrates
        deposits as of the dates indicated:





|                                           |  | (Unaudited)
|------------------------------------------ |  | -----------
|
|
|
|Transaction
          accounts             |  | $1,728,979 
|Retail
          certificates of deposit   |  | 1,638,283  
|                                           |  |            
|Total retail
          deposits            |  | 3,367,262  
|Brokered
          certificates of deposit |  | 346,750    
|                                           |  |            
|Total                                      |  | $3,714,012 
|                                           |  |            




Borrowings





In
        addition to deposits, we utilize collateralized advances from the
        Federal Home Loan Bank of San Francisco and other borrowings, such as
        subordinated debt, capital securities, warehouse lines, and securities
        sold under agreements to repurchase (also known as reverse repurchase
        agreements), on a collateralized and noncollateralized basis, for
        various purposes including the funding of loans, leases and securities
        as well as to support the execution of our business
        strategies.





The
        following table illustrates outstanding borrowings as of the dates
        indicated:





|                                                                    |  | (Unaudited)
|------------------------------------------------------------------- |  | -----------
|
|
|Advances from
          the Federal Home Loan Bank of San Francisco |  | $1,241,800 
|Securities
          sold under agreements to repurchase            |  | 171,536    
|Warehouse
          lines                                           |  | 326,919    
|Subordinated
          Notes, net                                   |  | 149,518    
|Other
          borrowings                                          |  | 2,513      
|Capital
          Securities                                        |  | 90,000     
|                                                                    |  |            
|Total                                                               |  | $1,982,286 
|                                                                    |  |            




On
        August 18, 1999, Bay View Bank issued $50 million of 10% Subordinated
        Notes, which mature in August 2009. During 1999, two warehouse lines
        with initial committed amounts totaling $600 million were secured. Both
        lines have maturities of one year or less. One warehouse line of $500
        million was established to provide financing for franchise loans and
        the other of $100 million was established to fund Bankers Mutual
        multi-family loan production.





The
        lower borrowing level at March 31, 2000, as compared with December 31,
        1999, was due primarily to a decrease in warehouse lines and the
        paydown of Federal Home Loan Bank advances associated with the sale of
        single-family mortgage loans and the securitization and sale of auto
        loans during the first quarter of 2000, partially offset by an increase
        in securities sold under agreements to repurchase. We anticipate that
        the balances of our Federal Home Loan Bank advances will continue to
        decline due to the decrease in eligible mortgage-based collateral
        resulting from the continuing change-out of our balance sheet.





Liquidity





The
        objective of our liquidity management program is to ensure that funds
        are available in a timely manner to meet loan demand and
        depositors needs, and to service other liabilities as they come
        due, without causing an undue amount of cost or risk, and without
        causing a disruption to normal operating conditions.





We
        regularly assess the amount and likelihood of projected funding
        requirements through a review of factors such as historical deposit
        volatility and funding patterns, present and forecasted market and
        economic conditions, and existing and planned business activities. Our
        Asset and Liability Committee provides oversight to the liquidity
        management process and recommends policy guidelines, subject to Board
        of Directors approval, and courses of action to address our actual and
        projected liquidity needs.





The
        ability to attract a stable, low-cost base of deposits is a significant
        source of liquidity. Other sources of liquidity available to us include
        short-term borrowings, which consist of advances from the Federal Home
        Loan Bank of San Francisco, reverse repurchase agreements, warehouse
        lines and other short-term borrowing arrangements. Our liquidity
        requirements can also be met through the use of our portfolio of liquid
        assets. Liquid assets, as defined by us, include cash and cash
        equivalents in excess of the minimum levels necessary to carry out
        normal business operations, federal funds sold, commercial paper, and
        other short-term investments.





To
        assist you in analyzing our liquidity, you should review our
        Consolidated Statements of Cash Flows at Item 1. Financial
        Statements and Supplementary Data.





Capital
        Resources





Management seeks to maintain adequate capital to support
        anticipated asset growth and credit risks, and to ensure that Bay View
        Capital Corporation and Bay View Bank are in compliance with all
        regulatory capital guidelines. Stockholders equity totaled $629.2
        million at March 31, 2000 as compared with $631.2 million at December
        31, 1999. This decrease was largely due to dividends declared partially
        offset by earnings for the first quarter of 2000. Tangible
        stockholders equity, which excludes intangible assets, was $290.7
        million at March 31, 2000 as compared with $302.2 million at December
        31, 1999. This decrease was largely due to additional intangible assets
        related to our acquisitions and dividends declared, partially offset by
        our earnings for the first quarter of 2000 combined with the
        amortization of intangible assets.





The
        following table illustrates the reconciliation of our
        stockholders equity to tangible stockholders equity as of
        the dates indicated:





|                                        |  | (Unaudited)
|--------------------------------------- |  | -----------
|
|
|Stockholders equity                    |  | $629,181   
|Intangible
          assets             |  | (338,434   
|                                        |  |            
|Tangible
          stockholders equity |  | $290,747   
|                                        |  |            
|Book value per
          share          |  | $    19.32 
|                                        |  |            
|Tangible book
          value per share |  | $      8.93
|                                        |  |            




The following table illustrates the changes in our tangible
        stockholders equity for the periods indicated:





|                                                                                                                                                     |  | (Unaudited)
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|
|
|Beginning
          tangible stockholders equity                                                                                                    |  | $302,189   
|Net
          income                                                                                                                                 |  | 518        
|Equity issued
          in connection with acquisitions                                                                                              |  |           
|Additional
          intangible assets related to acquisitions accounted for under
        
             the purchase method of
          accounting |  | (15,736    
|Intangible
          assets generated from branch acquisitions                                                                                       |  |           
|Amortization
          of intangible assets                                                                                                          |  | 6,307      
|Repurchase of
          common stock                                                                                                                 |  |           
|Exercise of
          stock options                                                                                                                  |  |           
|Cash dividends
          declared                                                                                                                    |  | (3,258     
|Other                                                                                                                                                |  | 727        
|                                                                                                                                                     |  |            
|Ending
          tangible stockholders equity                                                                                                       |  | $290,747   
|                                                                                                                                                     |  |            




Intangible assets generated from our acquisitions accounted for
        under the purchase method of accounting are deducted from
        stockholders equity in the above calculation to arrive at
        tangible stockholders equity. Conversely, the amortization of
        intangible assets increases tangible stockholders equity as well
        as Bay View Capital Corporations and Bay View Banks Tier 1
        regulatory capital.





Bay
        View Bank is subject to various regulatory capital guidelines
        administered by the Office of the Comptroller of the Currency. Under
        these capital guidelines, the minimum total risk-based capital ratio
        and Tier 1 risk-based capital ratio requirements are 8.00% and 4.00%,
        respectively, of risk-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.





Bay
        View Banks regulatory capital levels at March 31, 2000 exceeded
        both the minimum requirements as well as the requirements necessary to
        be considered well-capitalized as illustrated in the following
        table:





|                            |  | (Unaudited)
|--------------------------- |  | -----------
|
|
|
|Tier 1
          Leverage   |  | $367,803   
|Tier 1
          Risk-based |  | $367,803   
|Total
          Risk-based  |  | $466,455   




Bay View Capital Corporations regulatory capital levels at March
        31, 2000 exceeded both the Federal Reserve Boards minimum
        requirements as well as the requirements necessary to be considered
        well-capitalized by the Federal Reserve Board as illustrated in the
        following table:





|                            |  | (Unaudited)
|--------------------------- |  | -----------
|
|
|
|Tier 1
          Leverage   |  | $376,663   
|Tier 1
          Risk-based |  | $376,663   
|Total
          Risk-based  |  | $575,525   




Share
        Repurchase Program





In
        August 1998, our Board of Directors authorized the repurchase of up to
        $50 million in shares of our common stock. During 1999 we repurchased
        460,000 shares of our common stock for $8.3 million at an average price
        of $18.22 per share. We did not repurchase any shares of our common
        stock during the first quarter of 2000. In November 1999, our treasury
        shares were reissued in conjunction with the acquisition of FMAC. At
        March 31, 2000, we had approximately $17.6 million in remaining
        authorization available for future share repurchases.





Impact of New
        Accounting Standards





In
        June 1998, the Financial Accounting Standards Board issued Statement of
        Financial Accounting Standards No. 133, Accounting for Derivative
        Instruments and Hedging Activities, which establishes accounting
        and reporting standards for derivative instruments and for hedging
        activities. It requires that an entity recognize all derivatives as
        either assets or liabilities in the statement of financial condition
        and measure those instruments at fair value. The accounting for changes
        in the fair value of derivatives depends on the intended use of the
        derivative. We currently utilize interest rate derivatives to hedge
        mismatches in the rate and maturity of loans, leases and securities and
        their funding sources and to reduce interest rate risk on anticipated
        transactions, including loan and lease securitizations and/or sales. To
        the extent these interest rate derivatives qualify as a cash flow hedge
        under Statement No. 133, the effective portion of the derivatives
        gain or loss would be initially reported as a component of other
        comprehensive income (outside of earnings) and subsequently
        reclassified into earnings when the forecasted transaction affected
        earnings. Statement No. 133, as amended by Statement of Financial
        Accounting Standards No. 137, will be effective for the fiscal quarter
        beginning January 1, 2001. At this time, we are in the process of
        evaluating the impact of the adoption of Statement 133, and have not
        determined the effect the standard will have on our consolidated
        financial condition, results of operations and cash flows.





Item 3.    Quantitative and Qualitative
        Disclosures About Market Risk





Asset and
        Liability Management





The
        objective of our asset and liability management activities is to
        improve our earnings by adjusting the type and mix of assets and
        liabilities to effectively address changing conditions and risks.
        Through overall management of our balance sheet and by controlling
        various risks, we seek to optimize our financial returns within safe
        and sound parameters. Our operating strategies for attaining this
        objective include managing net interest margin through appropriate
        risk/return pricing of assets and liabilities and emphasizing growth in
        retail deposits, as a percentage of interest-bearing liabilities, to
        reduce our cost of funds. Our strategy includes originating and
        purchasing quality assets with higher risk-adjusted yields and selling
        assets with lower
      risk-adjusted yields or repricing characteristics that do not meet our
        objectives for managing interest rate risk. We also seek to improve
        earnings through controlling noninterest expense, enhancing noninterest
        income and utilizing improved information systems to facilitate our
        analysis of the profitability of our business platforms. We utilize
        derivative financial instruments to hedge mismatches in the rate and
        maturity of our assets and their funding sources and to reduce interest
        rate risk on anticipated transactions. Finally, we perform internal
        analyses to measure, evaluate and monitor risk.





Interest Rate
        Risk





A
        key objective of asset and liability management is to manage interest
        rate risk associated with changing asset and liability cash flows and
        market interest rate movements. Interest rate risk occurs when interest
        rate sensitive assets and liabilities do not reprice simultaneously and
        in equal volumes. Our Asset and Liability Committee provides oversight
        to our interest rate risk management process and recommends policy
        guidelines regarding exposure to interest rates for approval by our
        Board of Directors. Adherence to these policies is monitored on an
        ongoing basis, and decisions related to the management of interest rate
        exposure are made when appropriate in accordance with our policy
        guidelines.





Financial institutions are subject to interest rate risk to the
        degree that interest-bearing liabilities reprice or mature on a
        different basis and at different times than interest-earning assets.
        Our strategy has been to reduce the sensitivity of our earnings to
        interest rate fluctuations by more closely matching the effective
        maturities or repricing characteristics of our assets and liabilities.
        Certain assets and liabilities, however, may react in different degrees
        to changes in market interest rates. Further, interest rates on certain
        types of assets and liabilities may fluctuate prior to changes in
        market interest rates, while rates on other types may lag behind.
        Additionally, certain assets, such as adjustable rate mortgages, have
        features, including payment and rate caps, which restrict changes in
        their interest rates. We consider the anticipated effects of these
        factors when implementing our interest rate risk management
        objectives.





| | Interest
          Rate Exchange Agreements (Swaps)
| | ---------------------------------------------------




We
        use interest rate exchange agreements, or swaps, to hedge mismatches in
        the rate and maturity of certain of our assets and their funding
        sources. Interest rate swaps involve the exchange of fixed-rate and
        variable-rate interest payment obligations without the exchange of the
        underlying notional amounts. We were a party to interest rate swaps
        with notional principal amounts of $256.5 million at both March 31,
        2000 and December 31, 1999 which involve the receipt of floating
        interest rates (based on the three-month London Interbank Offered Rate,
        sometimes referred to as LIBOR) and payment of fixed interest rates on
        the underlying notional amounts.





| | Treasury
          Futures Contracts
| | ------------------------------------




We
        periodically securitize and/or sell fixed- and variable-rate loans and
        leases. To mitigate the risk of the effects of interest rate
        fluctuations on the value of our fixed-rate loans classified as
        held-for-sale, we will in certain cases hedge our interest rate risk
        related to these assets by entering into United States Treasury futures
        contracts. We had open positions with notional amounts of $178.8
        million at March 31, 2000 and $32.5 million at December 31, 1999
        related to the United States Treasury futures contracts used to hedge
        fixed-rate franchise loans classified as held-for-sale.





Interest rate risk is the most significant market risk impacting
        us; however, other types of market risk also affect us in the normal
        course of our business activities. The impact on us resulting from
        other market risks is deemed immaterial and no separate disclosure of
        quantitative information related to such market risks is deemed
        necessary. We do not maintain a portfolio of trading securities and do
        not intend to engage in such activities in the foreseeable
        future.





Interest Rate Sensitivity





Our
        monitoring activities related to managing interest rate risk include
        both interest rate sensitivity gap analysis and the use of
        a simulation model. While traditional gap analysis provides a simple
        picture of the interest rate risk embedded in the balance sheet, it
        provides only a static view of interest rate sensitivity at a specific
        point in time and does not measure the potential volatility in
        forecasted results relating to changes in market interest rates over
        time. Accordingly, we combine the use of gap analysis with the use of a
        simulation model which provides a dynamic assessment of interest rate
        sensitivity.





The
        interest rate sensitivity gap is defined as the difference between the
        amount of interest-earning assets anticipated to reprice within a
        specific time period and the amount of interest-bearing liabilities
        anticipated to reprice within that same time period. A gap is
        considered positive when the amount of interest rate sensitive assets
        repricing within a specific time period exceeds the amount of
        interest-bearing liabilities repricing within that same time period.
        Positive cumulative gaps suggest that earnings will increase when
        interest rates rise. Negative cumulative gaps suggest that earnings
        will increase when interest rates fall.





The
        following table illustrates our combined asset and liability repricing
        as of March 31, 2000:





|                                                                                                             |  | Repricing
          Period (Unaudited)
|------------------------------------------------------------------------------------------------------------ |  | --------------------------------------
|
|
|                                                                                                            
|Assets:                                                                                                      |  |                                       
|                                                                                                             |  |                                       
|Cash and
          investments                                                                               |  | $    111,889                          
|Mortgage-backed securities and loans and
        
             leases(1)                                     |  | 2,421,498                             
|                                                                                                             |  |                                       
|Total interest rate sensitive
        

                    
                    
               assets      |  | $2,533,387                            
|                                                                                                             |  |                                       
|Liabilities:                                                                                                
|                                                                                                             |  |                                       
|Deposits:                                                                                                   
|Transaction accounts                                                                                         |  | $1,034,571                            
|Retail certificates of deposit                                                                               |  | 1,434,263                             
|Brokered certificates of deposit                                                                             |  | 346,750                               
|Borrowings(2)                                                                                                |  | 1,145,317                             
|                                                                                                             |  |                                       
|Total interest rate sensitive
        

                    
                    
               liabilities |  | $3,960,901                            
|                                                                                                             |  |                                       
|Repricing
          gap-positive (negative) before
        
             impact of derivatives               |  | $(1,427,514                           
|                                                                                                             |  |                                       
|Impact of
          derivatives                                                                              |  | 335,300                               
|                                                                                                             |  |                                       
|                                                                                                             |  | $(1,092,214                           
|                                                                                                             |  |                                       
|Cumulative
          repricing gap-positive
        
             (negative)                                 |  | $(1,092,214                           
|                                                                                                             |  |                                       




|(1) | Based on
          assumed annual prepayment and amortization rates, which approximate
          our historical experience.
|--- | ---------------------------------------------------------------------------------------------------------------------------

|(2) | Includes
          Capital Securities.
|--- | --------------------------------------




The simulation model discussed above also provides the Asset and
        Liability Committee with the ability to simulate our net interest
        income. In order to measure, at March 31, 2000, the sensitivity of our
        forecasted net interest income to changing interest rates, both a
        rising and falling interest rate scenario were projected and compared
        to a base market interest rate forecast derived from the current
        treasury yield curve. For the rising and falling interest rate
        scenarios, the base market interest rate forecast was increased or
        decreased, on an instantaneous and sustained basis, by 100 and 200
        basis points. At March 31, 2000, our net interest income exposure
        related to these hypothetical changes in market interest rates was
        within our policy guidelines as illustrated in the following
        table:





|                                                                                                |  | Increase/(Decrease) in Net Interest Income
        
        (Unaudited)
|----------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------
|
|
|Projected
          effect:                                                                    
|Net interest
          income without swaps                                                     |  | $202,965                                                               
|Net interest
          income with swaps                                                        |  | $195,025                                                               
|Impact of
          swaps                                                                       |  | $  (7,940                                                              
|% Increase
          (decrease) from base net interest income, with
        
             swaps |  | 10.15                                                                  
|Policy
          guidelines                                                                     |  | (15.00                                                                 




The
        computation of prospective effects of hypothetical interest rate
        changes are based on numerous assumptions, including relative levels of
        market interest rates, asset prepayments and deposit decay, and should
        not be relied upon as indicative of actual results. Further, the
        computations do not contemplate any actions we may undertake in
        response to changes in interest rates. Actual amounts may differ from
        those projections set forth above should market conditions vary from
        the underlying assumptions used.





PART II.    OTHER INFORMATION





Item
        1.    Legal Proceedings





None





Item
        2.    Changes in Securities





None





Item
        3.    Defaults Upon Senior
        Securities





None





Item
        4.    Submission of Matters to a Vote of
        Security Holders





None





Item
        5.    Other Information





None





Item
        6.    Exhibits and Reports on Form
        8-K





| | a  (i) Computation of Ratios of Earnings to Fixed
          Charges (Exhibit 12)
| | --------------------------------------------------------------------------------




| | a  (ii) Financial Data Schedule (Exhibit
          27)
| | ------------------------------------------------------




| | b  (i) The Registrant filed the following report on
          Form 8-K dated February 15, 2000 during the three
| | ---------------------------------------------------------------------------------------------------------------

| | months ended
          March 31, 2000:
| | --------------------------------------




The
        Board of Directors established April 27, 2000 as the date of the Annual
        Meeting of Stockholders.





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: May 12,
        2000


| | /s/    SCOTT
        H. RAY
| | ---------------------------

| | By:
| | ---

| | 
| | 

| | Scott H.
          Ray
| | ----------------------

| | Executive
          Vice President and Chief Financial Officer (Principal Financial
          Officer)
| | ------------------------------------------------------------------------------------------------------




| | 
| | 




| | /s/    JEFFREY
        O. BUTCHER
| | ---------------------------------

| | By:
| | ---

| | 
| | 

| | Jeffrey O.
          Butcher
| | ----------------------------

| | Senior Vice
          President and Controller (Principal Accounting
          Officer)
| | ---------------------------------------------------------------------------------------