##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period fromto
 Commission file number 001-14879
 BAY VIEW CAPITAL CORPORATION
  Delaware
(State or other jurisdiction of
incorporation or organization)
    
    94-3078031
(I.R.S. Employer
Identification No.)
 
  þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
 o þ
  Common Stock, Par Value $.01
(Title of Class)
    
    Outstanding at March 31, 2006
6,613,099




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##### Table of Contents



FORM 10-Q
INDEX
 BAY VIEW CAPITAL CORPORATION
 Page(s)PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited):Condensed Consolidated Statements of Financial Condition
    
    4Condensed Consolidated Statements of Operations and Comprehensive Loss
    
    5Condensed Consolidated Statement of Stockholders Equity
    
    6Condensed Consolidated Statements of Cash Flows
    
    7-8Notes to Condensed Consolidated Financial Statements
    
    9-17Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    18-30Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    31-32Item 4. Controls and Procedures
    
    33PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    34Item 1A. Risk Factors
    
    34Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    34Item 3. Defaults Upon Senior Securities
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    34Item 5. Other Information
    
    34Item 6. Exhibits
    
    34Signatures
    
    35EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
 2




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Forward-Looking Statements
    
    
    expected cost savings from the merger may not be realized within the expected time frame or at all;
    
    revenues may be lower than expected following the merger;
    
    the merger may not be approved by the requisite vote of BVCCs or GLBs stockholders;
    
    the amendments to BVCCs certificate of incorporation may not be approved by the
requisite vote of BVCCs stockholders;
    
    the sale of BVAC may not be approved by the requisite vote of BVCCs stockholders;
    
    competitive pressure among financial services companies is intense;
    
    general economic conditions may be less favorable than expected;
    
    political conditions and related actions by the United States military abroad may
adversely affect economic conditions as a whole;
    
    changes in the interest rate environment may reduce interest margins and impact funding sources;
    
    changes in market rates and prices may adversely impact the value of financial products and assets;
    
    legislation or changes in the regulatory environment may adversely affect the businesses
in which BVCC and GLB are engaged; and
    
    litigation liabilities, including costs, expenses, settlements and judgments, may
adversely affect either company or their businesses.
   3




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Bay View Capital Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Financial Condition
 (Unaudited)
 March 31,
    
    
    December 31,2006
    
    
    2005(Dollars in thousands)ASSETSCash and cash equivalents
    
    $
    5,198
    
    
    $
    8,898Restricted cash
    
    
    36,063
    
    
    
    35,138Retained interests in securitizations available-for-sale
    
    
    19,935
    
    
    
    20,107Auto installment contracts held-for-investment:Auto installment contracts held-for-investment, net
    
    
    208,648
    
    
    
    106,822Securitized auto installment contracts held-for-investment, net
    
    
    477,204
    
    
    
    526,799Real estate owned, net
    
    
    460
    
    
    
    552Premises and equipment, net
    
    
    449
    
    
    
    536Repossessed vehicles
    
    
    411
    
    
    
    542Goodwill
    
    
    1,846
    
    
    
    1,846Other assets
    
    
    10,991
    
    
    
    13,521Total assets
    
    $
    761,205
    
    
    $
    714,761LIABILITIES AND STOCKHOLDERS EQUITYBorrowings:Warehouse credit facility
    
    $
    196,798
    
    
    $
    99,727Securitization notes payable
    
    
    472,749
    
    
    
    521,568Current income taxes, net
    
    
    4,048
    
    
    
    4,048Other liabilities
    
    
    11,808
    
    
    
    11,133Liquidation reserve
    
    
    7,392
    
    
    
    7,770Total liabilities
    
    
    692,795
    
    
    
    644,246Stockholders equity:Common stock ($.01 par value); authorized, 80,000,000 shares;
issued 2006  6,614,516 shares; 2005  6,614,516 shares;
outstanding, 2006  6,613,099 shares; 2005  6,613,099 shares
    
    
    66
    
    
    
    66Additional paid-in capital
    
    
    109,779
    
    
    
    109,585Accumulated deficit
    
    
    (41,472
    )
    
    
    (39,035
    )Treasury stock, at cost; 2006  1,417 shares; 2005  1,417 shares
    
    
    (252
    )
    
    
    (252
    )Accumulated other comprehensive gain
    
    
    289
    
    
    
    151Total stockholders equity
    
    
    68,410
    
    
    
    70,515Total liabilities and stockholders equity
    
    $
    761,205
    
    
    $
    714,761
  4




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Bay View Capital Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Operations and Comprehensive Loss
 (Unaudited)
 For the Three Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005(Dollars in thousands, except per shareamounts)Interest income:Interest on auto installment contracts
    
    $
    12,124
    
    
    $
    6,350Interest on retained interests in securitizations and other investments
    
    
    1,339
    
    
    
    72113,463
    
    
    
    7,071Interest expense:Interest on securitization notes payable
    
    
    6,621
    
    
    
    1,260Interest on warehouse credit facility and other short-term borrowings
    
    
    2,173
    
    
    
    2,4188,794
    
    
    
    3,678Net interest income
    
    
    4,669
    
    
    
    3,393Provision for credit losses
    
    
    1,880
    
    
    
    837Net interest income after provision for credit losses
    
    
    2,789
    
    
    
    2,556Noninterest income:Loan fees
    
    
    334
    
    
    
    183Loan servicing income
    
    
    294
    
    
    
    552Leasing income
    
    
    106
    
    
    
    2,070Gain on derivative instruments, net
    
    
    235
    
    
    
    1,480Gain (loss) on auto installment contracts and other loans
held-for-sale and retained interests in securitizations, net
    
    
    99
    
    
    
    (449
    )Other, net
    
    
    44
    
    
    
    2421,112
    
    
    
    4,078Noninterest expense:General and administrative
    
    
    6,294
    
    
    
    6,606Leasing expense
    
    
    
    
    
    
    515Real estate owned, net
    
    
    111
    
    
    
    46,405
    
    
    
    7,125Loss before income tax benefit
    
    
    (2,504
    )
    
    
    (491
    )Income tax benefit
    
    
    (67
    )
    
    
    (157
    )Net loss
    
    $
    (2,437
    )
    
    $
    (334
    )Basic loss per share
    
    $
    (0.37
    )
    
    $
    (0.05
    )Diluted loss per share
    
    $
    (0.37
    )
    
    $
    (0.05
    )Weighted-average basic shares outstanding
    
    
    6,613
    
    
    
    6,594Weighted-average diluted shares outstanding
    
    
    6,613
    
    
    
    6,594Net loss
    
    $
    (2,437
    )
    
    $
    (334
    )Other comprehensive income, net of tax:Change in unrealized gain on securities available-for-sale, net of
tax expense
of $88 and $77 for the three months ended March 31, 2006 and 2005,
respectively
    
    
    138
    
    
    
    118Comprehensive loss
    
    $
    (2,299
    )
    
    $
    (216
    )
  5




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Bay View Capital Corporation and Subsidiaries
 
 Condensed Consolidated Statement of Stockholders Equity
 (Unaudited)
 AccumulatedNumber
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    Totalof Shares
    
    
    Common
    
    
    Paid-in
    
    
    Accumulated
    
    
    Treasury
    
    
    Comprehensive
    
    
    StockholdersIssued
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    Stock
    
    
    Gain
    
    
    Equity(In thousands)Balance at December 31, 2005
    
    
    6,615
    
    
    $
    66
    
    
    $
    109,585
    
    
    $
    (39,035
    )
    
    $
    (252
    )
    
    $
    151
    
    
    $
    70,515Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,437
    )
    
    
    
    
    
    
    
    
    
    
    (2,437
    )Unrealized gain on retained interests in securitizations
available-for-sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    138
    
    
    
    138Stock-based compensation expense  options
    
    
    
    
    
    
    
    
    
    
    194
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    194Balance at March 31, 2006
    
    
    6,615
    
    
    $
    66
    
    
    $
    109,779
    
    
    $
    (41,472
    )
    
    $
    (252
    )
    
    $
    289
    
    
    $
    68,410
  6




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Bay View Capital Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 For the Three Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005(Dollars in thousands)CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (2,437
    )
    
    $
    (334
    )Adjustments
to reconcile net loss to net cash provided by (used in) operating activities:Net increase in auto installment contracts held-for-sale resulting from purchases,
net of repayments
    
    
    
    
    
    
    (40,912
    )Proceeds from sales and/or securitizations of auto installment contracts and
other loans held-for-sale
    
    
    
    
    
    
    6,493Provision for credit losses
    
    
    1,880
    
    
    
    837Amortization of premium and accretion of discount
    
    
    1,891
    
    
    
    826Accretion of retained interests in securitizations
    
    
    (613
    )
    
    
    (515
    )Depreciation and amortization of premises and equipment
    
    
    79
    
    
    
    86Depreciation and amortization of investment in operating lease assets
    
    
    
    
    
    
    624Non-cash stock-based compensation expense
    
    
    194
    
    
    
    (Gain) loss on auto installment contracts and other loans held-for-sale, and
retained interests in securitizations and investments available-for-sale, net
    
    
    (99
    )
    
    
    449Income tax benefit
    
    
    (67
    )
    
    
    (157
    )Change in fair value of derivative instruments
    
    
    (235
    )
    
    
    1,480Increase in restricted cash
    
    
    (925
    )
    
    
    (6,267
    )(Increase) decrease in other assets
    
    
    2,760
    
    
    
    (330
    )Increase (decrease) in other liabilities
    
    
    977
    
    
    
    (2,151
    )Decrease in reserve for estimated costs during the period of liquidation
    
    
    (378
    )
    
    
    (88
    )Other, net
    
    
    (1,179
    )
    
    
    (625
    )Net cash provided by (used in) operating activities
    
    
    1,848
    
    
    
    (40,584
    )CASH FLOWS FROM INVESTING ACTIVITIESNet increase in auto installment contracts held-for-investment resulting from
purchases, net of repayments
    
    
    (54,934
    )
    
    
    (42,230
    )Proceeds from principal payments on retained interests in securitizations
    
    
    1,012
    
    
    
    1,329Decrease in investment in operating lease assets
    
    
    
    
    
    
    3,585Proceeds from sale of real estate owned
    
    
    
    
    
    
    725Disposals (additions) to premises and equipment, net
    
    
    8
    
    
    
    (63
    )Net cash used in investing activities
    
    
    (53,914
    )
    
    
    (36,654
    )
 
 7




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Bay View Capital Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (continued)
(Unaudited)
 For the Three Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005(Dollars in thousands)(continued from prior page)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from warehouse credit facility
    
    $
    111,949
    
    
    $
    105,405Repayment of warehouse credit facility
    
    
    (14,878
    )
    
    
    (243,856
    )Issuance of securitization notes payable
    
    
    
    
    
    
    233,168Repayment of securitization notes payable
    
    
    (48,705
    )
    
    
    (12,559
    )Net decrease in other borrowings
    
    
    
    
    
    
    (1,288
    )Net cash provided by financing activities
    
    
    48,366
    
    
    
    80,870Net (decrease) increase in cash and cash equivalents
    
    
    (3,700
    )
    
    
    3,632Cash and cash equivalents at beginning of period
    
    
    8,898
    
    
    
    4,447Cash and cash equivalents at end of period
    
    $
    5,198
    
    
    $
    8,079Cash paid during the period for:Interest
    
    $
    9,388
    
    
    $
    4,360Income taxes
    
    $
    21
    
    
    $
    43
  8




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Bay View Capital Corporation and Subsidiaries
 
 Notes to Condensed Consolidated Financial Statements
 March 31, 2006
(Unaudited)
 Note 1. Summary of Significant Accounting Policies
 Basis of Presentation
      Stock-based Compensation
  9




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Bay View Capital Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
    For the Three Months Ended March 31, 2006As ReportedUnder SFAS
    
    
    Under APBNo. 123R
    
    
    No. 25
    
    
    Difference(Dollars in thousands, except per share amounts)Loss before income tax benefit
    
    $
    (2,504
    )
    
    $
    (2,340
    )
    
    $
    (164
    )Income tax benefit
    
    
    (67
    )
    
    
    (63
    )
    
    
    (4
    )Net loss
    
    $
    (2,437
    )
    
    $
    (2,277
    )
    
    $
    (160
    )Basic loss per share
    
    $
    (0.37
    )
    
    $
    (0.35
    )
    
    $
    (0.02
    )Diluted loss per share
    
    $
    (0.37
    )
    
    $
    (0.35
    )
    
    $
    (0.02
    )
   10




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Bay View Capital Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
   For the Three Months EndedMarch 31, 2005(Dollars in thousands,except per share amounts)Net loss as reported
    
    $
    (334
    )Stock-based employee compensation included in net
loss as reported
    
    
    Stock-based employee compensation expense
determined under fair value method, net of tax
    
    
    (19
    )Pro forma net loss, after stock-based employee
compensation expense
    
    $
    (353
    )Net loss per share  basic:As reported
    
    $
    (0.05
    )Pro forma
    
    $
    (0.05
    )Net loss per share  diluted:As reported
    
    $
    (0.05
    )Pro forma
    
    $
    (0.05
    )
 Recent Accounting Pronouncements
  11




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Bay View Capital Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
   Reclassifications
  12




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Bay View Capital Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
 Note 2. Proposed Merger and Sale
 Definitive Agreement to Merge with GLB
    Definitive Agreement to Sell BVAC to AFS
  13




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Bay View Capital Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
 Note 3. Loss per Share
   For the Three Months EndedMarch 31, 2006
    
    
    March 31, 2005(Dollars in thousands,except per share amounts)Net loss
    
    $
    (2,437
    )
    
    $
    (334
    )Weighted-average basic shares outstanding
    
    
    6,613
    
    
    
    6,594Add: Dilutive potential common shares
    
    
    
    
    
    
    Weighted-average diluted shares outstanding
    
    
    6,613
    
    
    
    6,594Basic loss per share
    
    $
    (0.37
    )
    
    $
    (0.05
    )Diluted loss per share
    
    $
    (0.37
    )
    
    $
    (0.05
    )
 Note 4. Auto Installment Contracts
  As of
    
    
    As ofMarch 31, 2006
    
    
    December 31, 2005(Dollars in thousands)Auto installment contracts held-for-investment
    
    $
    205,580
    
    
    $
    105,120Securitized auto installment contracts held-for-investment
    
    
    471,908
    
    
    
    520,387Premiums, discounts and deferred fees and costs, net
    
    
    15,162
    
    
    
    14,393Allowance for credit losses
    
    
    (6,798
    )
    
    
    (6,279
    )Auto installment contracts held-for-investment, net
    
    $
    685,852
    
    
    $
    633,621
  14




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Bay View Capital Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
 Note 5. Securitization Notes Payable
   Original
    
    
    
    
    
    
    NoteWeighted-
    
    
    
    
    
    
    Balance,Original
    
    
    Average
    
    
    Pledged
    
    
    Net atFinal Scheduled
    
    Note
    
    
    Interest
    
    
    Contracts
    
    
    March 31,Transaction
    
    Issue Date
    
    Payment Date(1)
    
    Amount
    
    
    Rate
    
    
    Receivable
    
    
    2006(2)(Dollars in thousands)2005-LJ-1
    
    February 17, 2005
    
    May 25, 2012
    
    $
    232,100
    
    
    
    3.70
    %
    
    $
    147,534
    
    
    $
    147,9512005-LJ-2
    
    July 28, 2005
    
    February 25, 2014
    
    
    180,950
    
    
    
    4.63
    
    
    
    135,832
    
    
    
    136,0422005-3
    
    December 6, 2005
    
    June 25, 2014
    
    
    214,600
    
    
    
    5.09
    
    
    
    188,542
    
    
    
    188,756$
    627,650
    
    
    
    4.44
    %
    
    $
    471,908
    
    
    $
    472,749
 
 (1)
    
    The final scheduled payment date represents final legal maturity of the
securitization trust debt. Securitization trust debt is expected to become due and to be paid
prior to those dates, based on anticipated repayments of the auto contracts receivable pledged
to the trusts.(2)
    
    The 2005-LJ-2 and 2005-3 note balances include certificates which are subordinate
in payment to the notes. The outstanding balance of these certificates, which were sold
initially to the underwriter of the transactions, were $4.6 million and $5.5 million,
respectively, as of March 31, 2006.  Note 6. Income Taxes
    15




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Bay View Capital Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
 Note 7. Liquidation Reserve
   Litigation /Severance
    
    
    Facilities(1)
    
    
    Other
    
    
    Total(Dollars in thousands)Balance at December 31, 2005
    
    $
    605
    
    
    $
    4,945
    
    
    $
    2,220
    
    
    $
    7,770Accruals (reversals)
    
    
    44
    
    
    
    (211
    )
    
    
    22
    
    
    
    (145
    )Payments
    
    
    (23
    )
    
    
    (206
    )
    
    
    (4
    )
    
    
    (233
    )Balance at March 31, 2006
    
    $
    626
    
    
    $
    4,528
    
    
    $
    2,238
    
    
    $
    7,392
 
 (1)
    
    The reversal of the facilities accrual during the three months ended March 31,
2006 was attributable to changes in sublease arrangements and projected operating expenses. Note 8. Commitments and Contingencies
    16




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Bay View Capital Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
 Note 9. Subsequent Events
    17




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Strategic Overview
  Liquidation of Bay View Bank
    
    
    Adverse market conditions in the auto finance sector, which caused our Board to conclude
that the near-term sale of BVAC to a third party, or distribution of the stock of BVAC to
our stockholders, as contemplated by the Original Plan, would not be the best method of
maximizing stockholder value;
    
    The opportunity to obtain greater corporate and financial flexibility than we would have
if we were operating as a dissolving corporation; and
    
    A determination that our remaining tax net operating loss carryforwards could be more
fully utilized by continuing to operate BVAC beyond the third quarter of 2005.
  18




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Auto Finance
      19




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Critical Accounting Policies
  Securitization Transactions and Retained Interests in Securitizations
       20




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Weighted-average discount rate
    
    10.0%Range of projected annual credit losses, net
    
    1.45% - 1.55%Range of projected cumulative credit losses
    
    2.23% - 2.43%Prepayment speed
    
    1.35 - 1.50 ABS
  Allowance for Credit Losses
    Income Taxes
   21




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Derivative Instruments
   Results of Operations
   Net Interest Income and Net Interest Margin
   22




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23




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Average Balances, Yields and RatesFor the Three Months Ended
    
    
    For the Three Months EndedMarch 31, 2006
    
    
    March 31, 2005Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Yield/Rate
    
    
    Balance
    
    
    Interest
    
    
    Yield/Rate(Dollars in thousands)AssetsInterest-earning assets:Restricted cash
    
    $
    40,081
    
    
    $
    726
    
    
    
    7.25
    %
    
    $
    28,631
    
    
    $
    221
    
    
    
    3.08
    %Retained interests in securitizations
    
    
    19,947
    
    
    
    613
    
    
    
    12.30
    
    
    
    22,305
    
    
    
    500
    
    
    
    8.98Auto installment contracts and other loans receivable
    
    
    159,982
    
    
    
    3,337
    
    
    
    8.48
    
    
    
    212,562
    
    
    
    3,785
    
    
    
    7.23Securitized auto installment contracts receivable
    
    
    502,711
    
    
    
    8,787
    
    
    
    7.11
    
    
    
    151,246
    
    
    
    2,565
    
    
    
    6.90Total interest-earning assets
    
    
    722,721
    
    
    
    13,463
    
    
    
    7.56
    
    
    
    414,744
    
    
    
    7,071
    
    
    
    6.92
    %Other assets
    
    
    22,228
    
    
    
    
    
    
    
    
    
    
    
    48,371Total assets
    
    $
    744,949
    
    
    
    
    
    
    
    
    
    
    $
    463,115Liabilities and Stockholders EquityInterest-bearing liabilities:Warehouse credit facility and other borrowings
    
    $
    154,797
    
    
    
    2,284
    
    
    
    5.90
    %
    
    $
    232,994
    
    
    
    2,202
    
    
    
    3.78
    %Interest rate swap (income) expense
    
    
    
    
    
    
    (111
    )
    
    
    
    
    
    
    
    
    
    
    216
    
    
    
    Warehouse credit facility, other borrowings and swaps
    
    
    154,797
    
    
    
    2,173
    
    
    
    5.62
    
    
    
    232,994
    
    
    
    2,418
    
    
    
    4.14Securitization notes payable
    
    
    505,144
    
    
    
    6,621
    
    
    
    5.24
    
    
    
    109,337
    
    
    
    1,260
    
    
    
    4.61Total interest-bearing liabilities
    
    
    659,941
    
    
    
    8,794
    
    
    
    5.33
    %
    
    
    342,331
    
    
    
    3,678
    
    
    
    4.29
    %Other liabilities
    
    
    13,859
    
    
    
    
    
    
    
    
    
    
    
    16,699Total liabilities
    
    
    673,800
    
    
    
    
    
    
    
    
    
    
    
    359,030Stockholders equity
    
    
    71,149
    
    
    
    
    
    
    
    
    
    
    
    104,085Total liabilities and stockholders equity
    
    $
    744,949
    
    
    
    
    
    
    
    
    
    
    $
    463,115Net interest income/net interest rate spread
    
    
    
    
    
    $
    4,669
    
    
    
    2.23
    %
    
    
    
    
    
    $
    3,393
    
    
    
    2.63
    %Net interest-earning assets
    
    $
    62,780
    
    
    
    
    
    
    
    
    
    
    $
    72,413Net interest margin
    
    
    
    
    
    
    
    
    
    
    2.69
    %
    
    
    
    
    
    
    
    
    
    
    3.37
    %
 24




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##### Table of Contents



Provision for Credit Losses
  Noninterest Income
      Noninterest Expense
  25




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##### Table of Contents



For the Three Months EndedMarch 31, 2006
    
    
    March 31, 2005(Dollars in thousands)Employee compensation and benefits
    
    $
    3,545
    
    
    $
    3,116Professional and legal services
    
    
    2,252
    
    
    
    2,588Occupancy and equipment
    
    
    259
    
    
    
    470Information technology
    
    
    286
    
    
    
    203Postage, telephone and travel
    
    
    276
    
    
    
    449Capitalized fees and costs
    
    
    (499
    )
    
    
    (566
    )Other
    
    
    175
    
    
    
    346Total general and administrative expense
    
    $
    6,294
    
    
    $
    6,606
    Income Taxes
   26




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##### Table of Contents



Balance Sheet Analysis
  Restricted Cash
  Retained Interests in Securitizations
  March 31,
    
    
    December 31,2006
    
    
    2005(Dollars in thousands)Bay View 2002-LJ-1 Owner Trust
    
    $
    13,912
    
    
    $
    14,028Bay View 2003-LJ-1 Owner Trust
    
    
    6,023
    
    
    
    6,079Total retained interests in securitizations
    
    $
    19,935
    
    
    $
    20,107
  27




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##### Table of Contents



Auto Installment Contracts Receivable
  As of
    
    
    As ofMarch 31, 2006
    
    
    December 31, 2005(Dollars in thousands)Auto installment contracts held-for-investment
    
    $
    205,580
    
    
    $
    105,120Securitized auto installment contracts held-for-investment
    
    
    471,908
    
    
    
    520,387Premiums, discounts and deferred fees and costs, net
    
    
    15,162
    
    
    
    14,393Allowance for credit losses
    
    
    (6,798
    )
    
    
    (6,279
    )Auto installment contracts held-for-investment, net
    
    $
    685,852
    
    
    $
    633,621
   Credit Quality
      28




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##### Table of Contents



Allowance for Credit Losses
  At and Forthe YearAt and For the Three Months
    
    
    EndedEnded March 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2005(Dollars in thousands)Balance at beginning of period
    
    $
    6,279
    
    
    $
    1,508
    
    
    $
    1,508Charge-offs
    
    
    (1,988
    )
    
    
    (418
    )
    
    
    (3,875
    )Recoveries
    
    
    627
    
    
    
    86
    
    
    
    699Net charge-offs
    
    
    (1,361
    )
    
    
    (332
    )
    
    
    (3,176
    )Provision for credit losses
    
    
    1,880
    
    
    
    837
    
    
    
    7,947Balance at end of period
    
    $
    6,798
    
    
    $
    2,013
    
    
    $
    6,279
  Borrowings
  At March 31, 2006
    
    
    At December 31, 2005(Dollars in thousands)Warehouse credit facility
    
    $
    196,798
    
    
    $
    99,727Securitization notes payable
    
    
    472,749
    
    
    
    521,568Total
    
    $
    669,547
    
    
    $
    621,295
  29




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##### Table of Contents



Liquidity and Capital Resources
  .
      30




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Asset/Liability Management
  Fixed-rate Auto Contracts
  Net Interest Income
    Warehouse Credit Facility
   31




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##### Table of Contents



32




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##### Table of Contents



Item 4. Controls and Procedures
   Limitations on the Effectiveness of Controls
    33




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Legal Proceedings
    
 Risk Factors
  
 Unregistered Sales of Equity Securities and Use of Proceeds
  
 Defaults Upon Senior Securities
  
 Submission of Matters to a Vote of Security Holders
  
 Other Information
  
 Exhibits
 31.1
    
    Certification of Chief Executive Officer pursuant to Rules 13a-14 and
15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Rules 13a-14 and
15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of
200232.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002
 34




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##### Table of Contents



SIGNATURES
  BAY VIEW CAPITAL CORPORATIONDATE: April 28, 2006
    
    BY:
    
    /s/ John Okubo

John OkuboExecutive Vice President and Chief Financial Officer(Principal Financial and Accounting Officer)
 35