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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, 2002                                           
|  |                                                                                         
|  | OR                                                                                      
|  |                                                                                         
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from______to_____
Commission file number 001-14879

BAY VIEW CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)


|                                                                                  |  |                                              
|--------------------------------------------------------------------------------- |  | ---------------------------------------------
|Delaware(State or other jurisdiction ofincorporation or organization)             |  | 94-3078031(I.R.S. EmployerIdentification No.)
|                                                                                  |  |                                              
|1840 Gateway Drive, San Mateo, California(Address of principal executive offices) |  | 94404(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
(Title of Class) |  | Outstanding at April 30, 2002
62,674,830 shares

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TABLE OF CONTENTS



|                              |                                                                                               |                                                                       |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              |                                                                                               | Consolidated Statements of Financial Condition                       
|                              |                                                                                               | Consolidated Statements of Operations and Comprehensive Income (Loss)
|                              |                                                                                               | Consolidated Statements of Stockholders Equity                      
|                              |                                                                                               | Consolidated Statements of Cash Flows                                
|                              |                                                                                               | Notes to Consolidated Financial Statements                           
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 2. Changes in Securities                                                                
|                              | Item 3. Defaults Upon Senior Securities                                                      
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                              | Item 5. Other Information                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                   
|Exhibit 12.1                 



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##### Table of Contents



FORM 10-Q
INDEX

BAY VIEW CAPITAL CORPORATION

|         |  |                                                                                       |  |                                                                       |       |         |      | 
|-------- |  | ------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------- | ----- | ------- | ---- | 
|         |  |                                                                                       |  |                                                                       |       | Page(s)
|         |  |                                                                                       |  |                                                                       |       |        
|PART I.  |  | FINANCIAL INFORMATION                                                                 |  |                                                                       |       |        
|Item 1.  |  | Financial Statements (Unaudited):                                                     |  |                                                                       |       |        
|         |  |                                                                                       |  | Consolidated Statements of Financial Condition                        |       |         | 4    | 
|         |  |                                                                                       |  | Consolidated Statements of Operations and Comprehensive Income (Loss) |       |         | 5    | 
|         |  |                                                                                       |  | Consolidated Statements of Stockholders Equity                       |       |         | 6    | 
|         |  |                                                                                       |  | Consolidated Statements of Cash Flows                                 |       |         | 7-8  | 
|         |  |                                                                                       |  | Notes to Consolidated Financial Statements                            |       |         | 9-18 | 
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  |                                                                       | 19-43 |        
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  |                                                                       | 44-47 |        
|PART II. |  | OTHER INFORMATION                                                                     |  |                                                                       |       |        
|         |  |                                                                                       |  | Other Information                                                     |       |         | 48   | 
|         |  |                                                                                       |  | Signatures                                                            |       |         | 49   | 

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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 may cause our actual results, performance or
achievements to differ materially from those that we anticipate. Factors that
might affect forward-looking statements include, among other things:



| |  | our ability to remain in compliance with written regulatory agreements with government agencies;                                                                            
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | 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;                                                                                                       
| 
| |  | the timing, impact and other uncertainties of our asset sales or securitizations;                                                                                           
| 
| |  | 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 asset sales or 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.

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PART I. FINANCIAL INFORMATION




Item 1. Financial Statements

Bay View Capital Corporation and Subsidiaries




Consolidated Statements of Financial Condition


(Unaudited)


|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |           |      |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | --------- | ---------------------- | ---- | ------------ | --------- | --------- | ---- | -
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           | March 31,              |      | December 31,
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           | 2002                   |      | 2001        
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           |                        |      |             
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           | (Dollars in thousands)
|ASSETS                                                                                                                                                     |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|Cash and cash equivalents:                                                                                                                                 |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|                                                                                                                                                           | Cash and due from depository institutions                                                                                                                                                 |                                                              | $         | 42,502                 |      |              | $         | 357,008   |     
|                                                                                                                                                           | Short-term investments                                                                                                                                                                    |                                                              |           | 301,423                |      |              |           | 164,380   |     
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              | 343,925   |                        |      |              | 521,388   |          
|Securities available-for-sale:                                                                                                                             |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|                                                                                                                                                           | Investment securities                                                                                                                                                                     |                                                              |           | 120,679                |      |              |           | 98,980    |     
|                                                                                                                                                           | Mortgage-backed securities                                                                                                                                                                |                                                              |           | 256,951                |      |              |           | 278,891   |     
|Loans and leases held-for-sale                                                                                                                             |                                                                                                                                                                                           |                                                              | 39,954    |                        |      |              | 40,608    |          
|Loans and leases held-for-investment, net of allowance for loan and lease losses of
$46.2 million at March 31, 2002 and $49.8 million at December 31, 2001 |                                                                                                                                                                                           |                                                              | 2,353,491 |                        |      |              | 2,326,787 |          
|Investment in operating lease assets, net                                                                                                                  |                                                                                                                                                                                           |                                                              | 306,899   |                        |      |              | 339,349   |          
|Investment in stock of the Federal Home Loan Bank of San Francisco                                                                                         |                                                                                                                                                                                           |                                                              | 24,520    |                        |      |              | 24,157    |          
|Investment in stock of the Federal Reserve Bank                                                                                                            |                                                                                                                                                                                           |                                                              | 11,866    |                        |      |              | 11,866    |          
|Real estate owned, net                                                                                                                                     |                                                                                                                                                                                           |                                                              | 6,420     |                        |      |              | 9,462     |          
|Premises and equipment, net                                                                                                                                |                                                                                                                                                                                           |                                                              | 12,257    |                        |      |              | 13,145    |          
|Intangible assets                                                                                                                                          |                                                                                                                                                                                           |                                                              | 123,242   |                        |      |              | 123,573   |          
|Income taxes, net                                                                                                                                          |                                                                                                                                                                                           |                                                              | 176,450   |                        |      |              | 174,360   |          
|Other assets                                                                                                                                               |                                                                                                                                                                                           |                                                              | 52,781    |                        |      |              | 51,539    |          
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|Total assets                                                                                                                                               |                                                                                                                                                                                           | $                                                            | 3,829,435 |                        |      | $            | 4,014,105 |          
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                       |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|Deposits:                                                                                                                                                  |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|                                                                                                                                                           | Transaction accounts                                                                                                                                                                      |                                                              | $         | 1,961,287              |      |              | $         | 1,950,699 |     
|                                                                                                                                                           | Retail certificates of deposit                                                                                                                                                            |                                                              |           | 1,105,413              |      |              |           | 1,284,228 |     
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              | 3,066,700 |                        |      |              | 3,234,927 |          
|Subordinated Notes, net                                                                                                                                    |                                                                                                                                                                                           |                                                              | 149,648   |                        |      |              | 149,632   |          
|Other borrowings                                                                                                                                           |                                                                                                                                                                                           |                                                              | 115,725   |                        |      |              | 137,536   |          
|Other liabilities                                                                                                                                          |                                                                                                                                                                                           |                                                              | 62,515    |                        |      |              | 65,823    |          
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|Total liabilities                                                                                                                                          |                                                                                                                                                                                           |                                                              | 3,394,588 |                        |      |              | 3,587,918 |          
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|Guaranteed Preferred Beneficial Interest in our Junior
Subordinated Debentures (Capital Securities)                                                      |                                                                                                                                                                                           |                                                              | 90,000    |                        |      |              | 90,000    |          
|Stockholders equity:                                                                                                                                      |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|                                                                                                                                                           | Serial preferred stock; authorized, 7,000,000 shares;
outstanding, none                                                                                                                   |                                                              |           |                       |      |              |           |          |     
|                                                                                                                                                           | Common stock ($.01 par value); authorized, 80,000,000 shares;
issued, 2002 - 62,691,910 shares; 2001 - 62,627,980 shares;
outstanding, 2002 - 62,643,059 shares; 2001 - 62,579,129 shares |                                                              |           | 627                    |      |              |           | 626       |     
|                                                                                                                                                           | Additional paid-in capital                                                                                                                                                                |                                                              |           | 596,229                |      |              |           | 595,258   |     
|                                                                                                                                                           | Accumulated deficit                                                                                                                                                                       |                                                              |           | (251,133               | )    |              |           | (258,047  | )   
|                                                                                                                                                           | Treasury stock, at cost; 48,851 shares                                                                                                                                                    |                                                              |           | (808                   | )    |              |           | (808      | )   
|                                                                                                                                                           | Accumulated other comprehensive income (loss):                                                                                                                                            |                                                              |           |                        |      |              |           |           |     
|                                                                                                                                                           |                                                                                                                                                                                           | Unrealized gain on securities available-for-sale, net of tax |           |                        | 226  |              |           |           | 523  |  
|                                                                                                                                                           |                                                                                                                                                                                           | Minimum pension liability adjustment, net of tax             |           |                        | (294 | )            |           |           | (294 | )
|                                                                                                                                                           | Debt of Employee Stock Ownership Plan                                                                                                                                                     |                                                              |           |                       |      |              |           | (1,071    | )   
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|Total stockholders equity                                                                                                                                 |                                                                                                                                                                                           |                                                              | 344,847   |                        |      |              | 336,187   |          
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          
|Total liabilities and stockholders equity                                                                                                                 |                                                                                                                                                                                           | $                                                            | 3,829,435 |                        |      | $            | 4,014,105 |          
|                                                                                                                                                           |                                                                                                                                                                                           |                                                              |           |                        |      |              |           |          

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

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Bay View Capital Corporation and Subsidiaries




Consolidated Statements of Operations and Comprehensive Income (Loss)


(Unaudited)


|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |        |     |  
|------------------------------------------------------------------ | ----------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ | -------------------------- | ---- | -------------- | ------ | ------ | --- | -
|                                                                   |                                                 |                                                                                                                                                                                       |        | For the Three Months Ended
|                                                                   |                                                 |                                                                                                                                                                                       |        |                           
|                                                                   |                                                 |                                                                                                                                                                                       |        | March 31, 2002             |      | March 31, 2001
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |               
|                                                                   |                                                 |                                                                                                                                                                                       |        | (Amounts in thousands,    
|                                                                   |                                                 |                                                                                                                                                                                       |        | except per share amounts) 
|Interest income:                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|                                                                   | Interest on loans and leases                    |                                                                                                                                                                                       | $      | 46,471                     |      |                | $      | 72,350 |    
|                                                                   | Interest on mortgage-backed securities          |                                                                                                                                                                                       |        | 3,551                      |      |                |        | 12,215 |    
|                                                                   | Interest and dividends on investment securities |                                                                                                                                                                                       |        | 3,671                      |      |                |        | 9,894  |    
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|                                                                   |                                                 |                                                                                                                                                                                       | 53,693 |                            |      |                | 94,459 |       
|Interest expense:                                                  |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|                                                                   | Interest on deposits                            |                                                                                                                                                                                       |        | 15,002                     |      |                |        | 43,921 |    
|                                                                   | Interest on borrowings                          |                                                                                                                                                                                       |        | 1,832                      |      |                |        | 14,339 |    
|                                                                   | Interest on Subordinated Notes                  |                                                                                                                                                                                       |        | 3,715                      |      |                |        | 3,715  |    
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|                                                                   |                                                 |                                                                                                                                                                                       | 20,549 |                            |      |                | 61,975 |       
|Net interest income                                                |                                                 |                                                                                                                                                                                       | 33,144 |                            |      |                | 32,484 |       
|Provision for losses on loans and leases                           |                                                 |                                                                                                                                                                                       | 4,900  |                            |      |                | 7,300  |       
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|Net interest income after provision for losses on loans and leases |                                                 |                                                                                                                                                                                       | 28,244 |                            |      |                | 25,184 |       
|Noninterest income:                                                |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|                                                                   | Leasing income                                  |                                                                                                                                                                                       |        | 20,349                     |      |                |        | 24,383 |    
|                                                                   | Loan fees and charges                           |                                                                                                                                                                                       |        | 1,293                      |      |                |        | 1,406  |    
|                                                                   | Loan servicing income                           |                                                                                                                                                                                       |        | 205                        |      |                |        | 1,815  |    
|                                                                   | Account fees                                    |                                                                                                                                                                                       |        | 1,936                      |      |                |        | 2,030  |    
|                                                                   | Sales commissions                               |                                                                                                                                                                                       |        | 1,840                      |      |                |        | 1,297  |    
|                                                                   | Gain on sale of assets and liabilities, net     |                                                                                                                                                                                       |        | 332                        |      |                |        | 10,626 |    
|                                                                   | Other, net                                      |                                                                                                                                                                                       |        | 227                        |      |                |        | 550    |    
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|                                                                   |                                                 |                                                                                                                                                                                       | 26,182 |                            |      |                | 42,107 |       
|Noninterest expense:                                               |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|                                                                   | General and administrative                      |                                                                                                                                                                                       |        | 30,792                     |      |                |        | 35,417 |    
|                                                                   | Revaluation of franchise-related assets         |                                                                                                                                                                                       |        |                           |      |                |        | 16,945 |    
|                                                                   | Leasing expenses                                |                                                                                                                                                                                       |        | 15,007                     |      |                |        | 17,757 |    
|                                                                   | Dividend expense on Capital Securities          |                                                                                                                                                                                       |        | 2,573                      |      |                |        | 2,288  |    
|                                                                   | Real estate owned operations, net               |                                                                                                                                                                                       |        | 540                        |      |                |        | (18    | )  
|                                                                   | Provision for losses on real estate owned       |                                                                                                                                                                                       |        | 204                        |      |                |        |       |    
|                                                                   | Amortization of intangible assets               |                                                                                                                                                                                       |        | 331                        |      |                |        | 2,868  |    
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|                                                                   |                                                 |                                                                                                                                                                                       | 49,447 |                            |      |                | 75,257 |       
|Income (loss) before income tax benefit                            |                                                 |                                                                                                                                                                                       | 4,979  |                            |      |                | (7,966 | )     
|Income tax benefit                                                 |                                                 |                                                                                                                                                                                       | (1,935 | )                          |      |                |       |       
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|Net income (loss)                                                  |                                                 | $                                                                                                                                                                                     | 6,914  |                            |      | $              | (7,966 | )     
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|Basic earnings (loss) per share                                    |                                                 | $                                                                                                                                                                                     | 0.11   |                            |      | $              | (0.24  | )     
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|Diluted earnings (loss) per share                                  |                                                 | $                                                                                                                                                                                     | 0.11   |                            |      | $              | (0.24  | )     
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|Weighted-average basic shares outstanding                          |                                                 |                                                                                                                                                                                       | 62,668 |                            |      |                | 32,647 |       
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|Weighted-average diluted shares outstanding                        |                                                 |                                                                                                                                                                                       | 63,124 |                            |      |                | 32,647 |       
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|Net income (loss)                                                  |                                                 | $                                                                                                                                                                                     | 6,914  |                            |      | $              | (7,966 | )     
|Other comprehensive income (loss), net of tax:                     |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|                                                                   |                                                 | Change in unrealized gain or loss on securities
available-for-sale, net of tax benefit of ($209) and ($26) for
the three months ended March 31, 2002 and March 31, 2001,
respectively |        |                            | (297 | )              |        |        | (37 | )
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|Other comprehensive income (loss)                                  |                                                 |                                                                                                                                                                                       | (297   | )                          |      |                | (37    | )     
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       
|Comprehensive income (loss)                                        |                                                 | $                                                                                                                                                                                     | 6,617  |                            |      | $              | (8,003 | )     
|                                                                   |                                                 |                                                                                                                                                                                       |        |                            |      |                |        |       

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

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Bay View Capital Corporation and Subsidiaries




Consolidated Statements of Stockholders Equity


(Unaudited)




|                                                                                               |  |                        |        |        |  |           |     |         |  |              |     |            |  |          |         |   |  |          |          |  
|---------------------------------------------------------------------------------------------- |  | ---------------------- | ------ | ------ |  | --------- | --- | ------- |  | ------------ | --- | ---------- |  | -------- | ------- | - |  | -------- | -------- | -
|                                                                                               |  |                        |        |        |  |           |     |         |  |              |     |            |  |          |         |   |  | Retained
|                                                                                               |  | Number                 |        |        |  |           |     |         |  |              |     | Additional |  | Earnings
|                                                                                               |  | of Shares              |        | Common |  | Preferred |     | Paid-in |  | (Accumulated
|                                                                                               |  | Issued                 |        | Stock  |  | Stock     |     | Capital |  | Deficit)    
|                                                                                               |  |                        |        |        |  |           |     |         |  |             
|                                                                                               |  | (Amounts in thousands)
|Balance at December 31, 2000                                                                   |  |                        | 32,640 |        |  | $         | 326 |         |  | $            |    |            |  | $        | 456,045 |   |  | $        | (156,877 | )
|Exercise of stock options, including tax benefits                                              |  |                        | 20     |        |  |           |    |         |  |              |    |            |  |          | 94      |   |  |          |         |  
|Distribution of directors retirement plan shares                                              |  |                        | 10     |        |  |           |    |         |  |              |    |            |  |          | 73      |   |  |          |         |  
|Distribution of restricted shares                                                              |  |                        |       |        |  |           |    |         |  |              |    |            |  |          | (273    | ) |  |          |         |  
|Proceeds from issuance of common stock, net of
expenses of $2.0 million                        |  |                        | 23,967 |        |  |           | 240 |         |  |              |    |            |  |          | 107,760 |   |  |          |         |  
|Proceeds from issuance of 5,991,369 shares of
preferred stock, net of expenses of $1.1 million |  |                        |       |        |  |           |    |         |  |              | 60  |            |  |          | 26,340  |   |  |          |         |  
|Conversion of preferred stock to common stock                                                  |  |                        | 5,991  |        |  |           | 60  |         |  |              | (60 | )          |  |          |        |   |  |          |         |  
|Expense recognized on stock options with below
market strike price                             |  |                        |       |        |  |           |    |         |  |              |    |            |  |          | 5,219   |   |  |          |         |  
|Unrealized gain on securities available-for-sale,
net of tax                                   |  |                        |       |        |  |           |    |         |  |              |    |            |  |          |        |   |  |          |         |  
|Minimum pension liability adjustment, net of tax                                               |  |                        |       |        |  |           |    |         |  |              |    |            |  |          |        |   |  |          |         |  
|Change in debt of ESOP                                                                         |  |                        |       |        |  |           |    |         |  |              |    |            |  |          |        |   |  |          |         |  
|Net loss                                                                                       |  |                        |       |        |  |           |    |         |  |              |    |            |  |          |        |   |  |          | (101,170 | )
|                                                                                               |  |                        |        |        |  |           |     |         |  |              |     |            |  |          |         |   |  |          |          |  
|Balance at December 31, 2001                                                                   |  |                        | 62,628 |        |  |           | 626 |         |  |              |    |            |  |          | 595,258 |   |  |          | (258,047 | )
|Exercise of stock options, including tax benefits                                              |  |                        | 62     |        |  |           | 1   |         |  |              |    |            |  |          | 291     |   |  |          |         |  
|Distribution of directors retirement plan shares                                              |  |                        | 1      |        |  |           |    |         |  |              |    |            |  |          | 5       |   |  |          |         |  
|Conversion of stock warrants to common stock                                                   |  |                        | 1      |        |  |           |    |         |  |              |    |            |  |          | 4       |   |  |          |         |  
|Expense recognized on stock options with below
market strike price                             |  |                        |       |        |  |           |    |         |  |              |    |            |  |          | 671     |   |  |          |         |  
|Unrealized loss on securities available-for-sale,
net of tax                                   |  |                        |       |        |  |           |    |         |  |              |    |            |  |          |        |   |  |          |         |  
|Change in debt of ESOP                                                                         |  |                        |       |        |  |           |    |         |  |              |    |            |  |          |        |   |  |          |         |  
|Net income                                                                                     |  |                        |       |        |  |           |    |         |  |              |    |            |  |          |        |   |  |          | 6,914    |  
|                                                                                               |  |                        |        |        |  |           |     |         |  |              |     |            |  |          |         |   |  |          |          |  
|Balance at March 31, 2002                                                                      |  |                        | 62,692 |        |  | $         | 627 |         |  | $            |    |            |  | $        | 596,229 |   |  | $        | (251,133 | )
|                                                                                               |  |                        |        |        |  |           |     |         |  |              |     |            |  |          |         |   |  |          |          |  

[Additional columns below]

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

|                                                                                               |  |                        |        |            |  |                |      |           |  |               |      |       |  |   |        |   |  |   |          |  
|---------------------------------------------------------------------------------------------- |  | ---------------------- | ------ | ---------- |  | -------------- | ---- | --------- |  | ------------- | ---- | ----- |  | - | ------ | - |  | - | -------- | -
|                                                                                               |  |                        |        |            |  | Unrealized     |      |           |  |               |      |       |  |   |        |   |  |  
|                                                                                               |  |                        |        |            |  | Gain (Loss) on |      | Minimum   |  | Debt of       |      |       |  |  
|                                                                                               |  |                        |        |            |  | Securities     |      | Pension   |  | Employee      |      |       |  |  
|                                                                                               |  |                        |        |            |  | Available-for- |      | Liability |  | Stock         |      | Total
|                                                                                               |  | Treasury               |        | Sale,      |  | Adjustment,    |      | Ownership |  | Stockholders'
|                                                                                               |  | Stock                  |        | Net of Tax |  | Net of Tax     |      | Plan      |  | Equity       
|                                                                                               |  |                        |        |            |  |                |      |           |  |              
|                                                                                               |  | (Amounts in thousands)
|Balance at December 31, 2000                                                                   |  | $                      | (1,081 | )          |  | $              | 10   |           |  | $             |     |       |  | $ | (574   | ) |  | $ | 297,849  |  
|Exercise of stock options, including tax benefits                                              |  |                        |       |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   | 94       |  
|Distribution of directors retirement plan shares                                              |  |                        |       |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   | 73       |  
|Distribution of restricted shares                                                              |  |                        | 273    |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   |         |  
|Proceeds from issuance of common stock, net of
expenses of $2.0 million                        |  |                        |       |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   | 108,000  |  
|Proceeds from issuance of 5,991,369 shares of
preferred stock, net of expenses of $1.1 million |  |                        |       |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   | 26,400   |  
|Conversion of preferred stock to common stock                                                  |  |                        |       |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   |         |  
|Expense recognized on stock options with below
market strike price                             |  |                        |       |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   | 5,219    |  
|Unrealized gain on securities available-for-sale,
net of tax                                   |  |                        |       |            |  |                | 513  |           |  |               |     |       |  |   |       |   |  |   | 513      |  
|Minimum pension liability adjustment, net of tax                                               |  |                        |       |            |  |                |     |           |  |               | (294 | )     |  |   |       |   |  |   | (294     | )
|Change in debt of ESOP                                                                         |  |                        |       |            |  |                |     |           |  |               |     |       |  |   | (497   | ) |  |   | (497     | )
|Net loss                                                                                       |  |                        |       |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   | (101,170 | )
|                                                                                               |  |                        |        |            |  |                |      |           |  |               |      |       |  |   |        |   |  |   |          |  
|Balance at December 31, 2001                                                                   |  |                        | (808   | )          |  |                | 523  |           |  |               | (294 | )     |  |   | (1,071 | ) |  |   | 336,187  |  
|Exercise of stock options, including tax benefits                                              |  |                        |       |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   | 292      |  
|Distribution of directors retirement plan shares                                              |  |                        |       |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   | 5        |  
|Conversion of stock warrants to common stock                                                   |  |                        |       |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   | 4        |  
|Expense recognized on stock options with below
market strike price                             |  |                        |       |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   | 671      |  
|Unrealized loss on securities available-for-sale,
net of tax                                   |  |                        |       |            |  |                | (297 | )         |  |               |     |       |  |   |       |   |  |   | (297     | )
|Change in debt of ESOP                                                                         |  |                        |       |            |  |                |     |           |  |               |     |       |  |   | 1,071  |   |  |   | 1,071    |  
|Net income                                                                                     |  |                        |       |            |  |                |     |           |  |               |     |       |  |   |       |   |  |   | 6,914    |  
|                                                                                               |  |                        |        |            |  |                |      |           |  |               |      |       |  |   |        |   |  |   |          |  
|Balance at March 31, 2002                                                                      |  | $                      | (808   | )          |  | $              | 226  |           |  | $             | (294 | )     |  | $ |       |   |  | $ | 344,847  |  
|                                                                                               |  |                        |        |            |  |                |      |           |  |               |      |       |  |   |        |   |  |   |          |  

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

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##### Table of Contents



Bay View Capital Corporation and Subsidiaries




Consolidated Statements of Cash Flows


(Unaudited)


|                                                                                                   |                                                                       |   |                            |        |           |   |         |         |  
|-------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | - | -------------------------- | ------ | --------- | - | ------- | ------- | -
|                                                                                                   |                                                                       |   | For the Three Months Ended
|                                                                                                   |                                                                       |   |                           
|                                                                                                   |                                                                       |   | March 31,                  |        | March 31,
|                                                                                                   |                                                                       |   | 2002                       |        | 2001     
|                                                                                                   |                                                                       |   |                            |        |          
|                                                                                                   |                                                                       |   | (Dollars in thousands)    
|CASH FLOWS FROM OPERATING ACTIVITIES                                                               |                                                                       |   |                            |        |           |   |         |        
|Net income (loss)                                                                                  |                                                                       | $ | 6,914                      |        |           | $ | (7,966  | )      
|Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities: |                                                                       |   |                            |        |           |   |         |        
|                                                                                                   | Amortization of intangible assets                                     |   |                            | 331    |           |   |         | 2,868   |  
|                                                                                                   | Provision for losses on loans and leases and real estate owned        |   |                            | 5,104  |           |   |         | 7,300   |  
|                                                                                                   | Depreciation and amortization of premises and equipment               |   |                            | 945    |           |   |         | 1,339   |  
|                                                                                                   | Depreciation and amortization of investment in operating lease assets |   |                            | 12,716 |           |   |         | 14,993  |  
|                                                                                                   | Amortization of premiums, net of discount accretion                   |   |                            | 2,793  |           |   |         | (3,880  | )
|                                                                                                   | Revaluation of franchise-related assets                               |   |                            |       |           |   |         | 16,945  |  
|                                                                                                   | Gain on sale of assets and liabilities, net                           |   |                            | (332   | )         |   |         | (10,626 | )
|                                                                                                   | Increase in other assets                                              |   |                            | (3,438 | )         |   |         | (1,110  | )
|                                                                                                   | Decrease in other liabilities                                         |   |                            | (3,308 | )         |   |         | (26,142 | )
|                                                                                                   | Other, net                                                            |   |                            | 2,692  |           |   |         | (699    | )
|                                                                                                   |                                                                       |   |                            |        |           |   |         |        
|Net cash provided by (used in) operating activities                                                |                                                                       |   | 24,417                     |        |           |   | (6,978  | )      
|                                                                                                   |                                                                       |   |                            |        |           |   |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES                                                               |                                                                       |   |                            |        |           |   |         |        
|Net (increase) decrease in loans and leases resulting from
originations, net of repayments         |                                                                       |   | (13,660                    | )      |           |   | 61,291  |        
|Purchases of loans and leases, net                                                                 |                                                                       |   |                           |        |           |   | (12,933 | )      
|Purchases of mortgage-backed securities                                                            |                                                                       |   | (39,201                    | )      |           |   | (63,764 | )      
|Purchases of investment securities                                                                 |                                                                       |   | (40,531                    | )      |           |   | (30,742 | )      
|Principal payments on mortgage-backed securities                                                   |                                                                       |   | 44,047                     |        |           |   | 44,461  |        
|Principal payments on investment securities                                                        |                                                                       |   | 5,642                      |        |           |   |        |        
|Proceeds from securitizations and/or sales of loans and leases held-for-sale                       |                                                                       |   |                           |        |           |   | 101,997 |        
|Proceeds from sale of mortgage-backed securities available-for-sale                                |                                                                       |   | 29,404                     |        |           |   |        |        
|Proceeds from sale of investment securities available-for-sale                                     |                                                                       |   |                           |        |           |   | 6,456   |        
|Proceeds from sale of real estate owned                                                            |                                                                       |   | 2,493                      |        |           |   | 1,037   |        
|Additions to premises and equipment                                                                |                                                                       |   | (57                        | )      |           |   | (101    | )      
|Increase in investment in stock of the Federal Home Loan Bank
of San Francisco                     |                                                                       |   | (363                       | )      |           |   | (930    | )      
|Other,
net                                                                                         |                                                                       |   | 83                         |        |           |   |        |        
|                                                                                                   |                                                                       |   |                            |        |           |   |         |        
|Net cash (used in) provided by investing activities                                                |                                                                       |   | (12,143                    | )      |           |   | 106,772 |        
|                                                                                                   |                                                                       |   |                            |        |           |   |         |        

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##### Table of Contents



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

|                                                                        |                                                             |                                       |          |                            |          |           |          |        |          |  
|----------------------------------------------------------------------- | ----------------------------------------------------------- | ------------------------------------- | -------- | -------------------------- | -------- | --------- | -------- | ------ | -------- | -
|                                                                        |                                                             |                                       |          | For the Three Months Ended
|                                                                        |                                                             |                                       |          |                           
|                                                                        |                                                             |                                       |          | March 31,                  |          | March 31,
|                                                                        |                                                             |                                       |          | 2002                       |          | 2001     
|                                                                        |                                                             |                                       |          |                            |          |          
|                                                                        |                                                             |                                       |          | (Dollars in thousands)    
|CASH FLOWS FROM FINANCING ACTIVITIES                                    |                                                             |                                       |          |                            |          |           |          |       
|Net decrease in deposits                                                |                                                             | $                                     | (168,227 | )                          |          | $         | (116,164 | )     
|Proceeds from advances from the Federal Home Loan Bank of San Francisco |                                                             |                                       |         |                            |          |           | 180,000  |       
|Repayment of advances from the Federal Home Loan Bank of San Francisco  |                                                             |                                       |         |                            |          |           | (254,200 | )     
|Repayment of reverse repurchase agreements                              |                                                             |                                       |         |                            |          |           | (103,241 | )     
|Net decrease in warehouse lines outstanding                             |                                                             |                                       |         |                            |          |           | (34,256  | )     
|Net decrease in other borrowings                                        |                                                             |                                       | (21,811  | )                          |          |           | (593     | )     
|Proceeds from issuance of common stock                                  |                                                             |                                       | 301      |                            |          |           | 73       |       
|                                                                        |                                                             |                                       |          |                            |          |           |          |       
|                                                                        |                                                             | Net cash used in financing activities |          |                            | (189,737 | )         |          |        | (328,381 | )
|                                                                        |                                                             |                                       |          |                            |          |           |          |       
|Net decrease in cash and cash equivalents                               |                                                             |                                       | (177,463 | )                          |          |           | (228,587 | )     
|Cash and cash equivalents at beginning of year                          |                                                             |                                       | 521,388  |                            |          |           | 694,934  |       
|                                                                        |                                                             |                                       |          |                            |          |           |          |       
|Cash and cash equivalents at end of year                                |                                                             | $                                     | 343,925  |                            |          | $         | 466,347  |       
|                                                                        |                                                             |                                       |          |                            |          |           |          |       
|Cash paid during the year for:                                          |                                                             |                                       |          |                            |          |           |          |       
|                                                                        | Interest                                                    |                                       | $        | 23,092                     |          |           | $        | 58,026 |         
|                                                                        | Income taxes                                                |                                       | $        | 21                         |          |           | $        |       |         
|Supplemental non-cash investing and financing activities:               |                                                             |                                       |          |                            |          |           |          |       
|                                                                        | Loans transferred to real estate owned                      |                                       | $        |                           |          |           | $        | 122    |         
|                                                                        | Loans transferred from held-for-investment to held-for-sale |                                       | $        |                           |          |           | $        | 35,225 |         

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

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##### Table of Contents



Bay View Capital Corporation and Subsidiaries




Notes to Consolidated Financial Statements


March 31, 2002
(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; FMAC
Insurance Services, a Delaware corporation; FMAC 2000-A Holding Company, a
California corporation; and FMAC Franchise Receivables Corporation, a
California Corporation. Bay View Bank includes its wholly owned subsidiaries:
Bay View Acceptance Corporation, a Nevada corporation; Bay View Commercial
Finance Group, a California corporation; XBVBKRS, Inc., formerly Bankers
Mutual, a California corporation; MoneyCare, Inc., a California corporation;
and Bay View Auxiliary Corporation, a California corporation. All significant
intercompany accounts and transactions have been eliminated.

On November 1, 1999, we acquired Franchise Mortgage Acceptance Company,
sometimes referred to as FMAC, which included the operations of Bankers Mutual
and FMAC Insurance Services. On June 30, 2000, substantially all of the assets
and certain liabilities of Bankers Mutual were sold to Berkshire Mortgage
Finance Limited Partnership. On September 11, 2000, we announced the
restructuring of FMACs franchise lending operations. The shutdown of this
division was effective as of September 30, 2000 and involved the termination of
all related production and marketing personnel. Effective February 28, 2001,
substantially all of the assets and liabilities of FMAC Insurance Services were
sold. On June 22, 2001, we completed the stock sale by Bay View Bank of the
legal entity Bay View Franchise Mortgage Acceptance Company (BVFMAC) and its
related servicing platform. On December 31, 2001, in connection with the
financing secured by our auto lease cash flows, LFS-BV, formerly a subsidiary
of Bay View Acceptance Corporation, was merged into Bay View Bank.

In May 2001, we completed a rights offering and a concurrent offering to
standby purchasers that generated aggregate gross proceeds of $137.5 million.
With this additional capital, we implemented a new strategic plan that included
exiting businesses inconsistent with a California-focused bank and included
assumptions related to the liquidation of our remaining franchise-related
assets and operations and our remaining high loan-to-value home equity loans.
Our results for 2001 included specific charges consistent with our new
strategic plan. The specific charges were primarily related to the stock sale
of the legal entity BVFMAC and its related servicing platform, the disposition
of franchise-related assets, restructuring charges primarily related to the
reduction in our workforce announced in May 2001 and prepayment penalties
related to a reduction in higher-cost borrowings.

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, 2002 and December 31,
2001, the results of our operations for the three-month periods ended March 31,
2002 and 2001, and our cash flows for the three-month periods ended March 31,
2002 and 2001. 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 2001 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,
2001 and 2000 and Results of Operations for the years ended December 31, 2001,
2000 and 1999. Accordingly, only certain changes in financial condition and
results of

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2002
(Unaudited)

operations are discussed in this Form 10-Q. Furthermore, the interim financial
results for the three-month period ended March 31, 2002 are not necessarily
indicative of the results that may be expected for the entire fiscal year or
any other interim period.

Note 2. Earnings Per Share

Basic earnings per share are calculated by dividing net earnings or loss
for the period by the weighted-average common shares outstanding for that
period. There is no adjustment to the number of outstanding shares for
potential dilutive instruments, such as stock options or warrants. Diluted
earnings or loss 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. For the three-month period ended March 31, 2001, average
dilutive potential common shares of 31,211 shares related to shares issuable
upon the exercise of options were not included in the computation because they
were anti-dilutive.

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

|                                                     |  |                             |        |           |  |   |        |  
|---------------------------------------------------- |  | --------------------------- | ------ | --------- |  | - | ------ | -
|                                                     |  | For the Three Months Ended,
|                                                     |  |                            
|                                                     |  | March 31,                   |        | March 31,
|                                                     |  | 2002                        |        | 2001     
|                                                     |  |                             |        |          
|                                                     |  | (Amounts in thousands,     
|                                                     |  | except per share amounts)  
|Net earnings (loss) available to common stockholders |  | $                           | 6,914  |           |  | $ | (7,966 | )
|Weighted-average basic shares outstanding            |  |                             | 62,668 |           |  |   | 32,647 |  
|Add: Dilutive potential common shares                |  |                             | 456    |           |  |   |       |  
|                                                     |  |                             |        |           |  |   |        |  
|Weighted-average diluted shares outstanding          |  |                             | 63,124 |           |  |   | 32,647 |  
|                                                     |  |                             |        |           |  |   |        |  
|Basic earnings (loss) per share                      |  | $                           | 0.11   |           |  | $ | (0.24  | )
|                                                     |  |                             |        |           |  |   |        |  
|Diluted earnings (loss) per share                    |  | $                           | 0.11   |           |  | $ | (0.24  | )
|                                                     |  |                             |        |           |  |   |        |  

Note 3. Stock Options

As of March 31, 2002, we had five employee stock option plans and three
non-employee director stock option plans. The employee stock option plans were
as follows: the Amended and Restated 1986 Stock Option and Incentive Plan,
the Amended and Restated 1995 Stock Option and Incentive Plan, the 1998-2000
Performance Stock Plan, the 1999 FMAC Stock Option, Deferred Stock and
Restricted Stock Plan, and the 2001 Stock Option and Incentive Plan which
authorize the issuance of 1,759,430, 2,500,000, 400,000, 270,576, and 3,200,000
shares of common stock, respectively. The non-employee director stock option
plans were as follows: the Amended and Restated 1989 Non-Employee Director
Stock Option and Incentive Plan, the 1998 Non-Employee Director Stock Option
and Incentive Plan, and the 2001 Non-Employee Director Stock Option Plan
which authorize the issuance of up to 550,000, 200,000, and 500,000 shares of
common stock, respectively.

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2002
(Unaudited)

The following table illustrates the stock options available for grant as
of March 31, 2002:

|                             |  |                 |            |                 |  |              |            |   |  |  |             |  
|---------------------------- |  | --------------- | ---------- | --------------- |  | ------------ | ---------- | - |  |  | ----------- | -
|                             |  |                 |            |                 |  | Non-Employee |            |   |  | 
|                             |  | Employee Stock  |            | Director Stock  |  |              |            |  
|                             |  | Option and      |            | Option and      |  |              |            |  
|                             |  | Incentive Plans |            | Incentive Plans |  | Total       
|                             |  |                 |            |                 |  |             
|Shares reserved for issuance |  |                 | 8,130,006  |                 |  |              | 1,250,000  |   |  |  | 9,380,006   |  
|Granted                      |  |                 | (9,243,642 | )               |  |              | (1,137,000 | ) |  |  | (10,380,642 | )
|Forfeited                    |  |                 | 2,398,312  |                 |  |              | 152,000    |   |  |  | 2,550,312   |  
|Expired                      |  |                 | (408,688   | )               |  |              | (102,000   | ) |  |  | (510,688    | )
|                             |  |                 |            |                 |  |              |            |   |  |  |             |  
|Total available for grant    |  |                 | 875,988    |                 |  |              | 163,000    |   |  |  | 1,038,988   |  
|                             |  |                 |            |                 |  |              |            |   |  |  |             |  

At March 31, 2002, we had outstanding options under the plans with
expiration dates ranging from the year 2003 through 2014, as illustrated in the
following table:

|                                 |  |               |           |                |  |                  |            |  |  |   |       | 
|-------------------------------- |  | ------------- | --------- | -------------- |  | ---------------- | ---------- |  |  | - | ----- | 
|                                 |  | Number of     |           | Exercise Price |  | Weighted-Average
|                                 |  | Option Shares |           | Range          |  | Exercise Price  
|                                 |  |               |           |                |  |                 
|Outstanding at December 31, 2001 |  |               | 6,277,797 |                |  | $                | 4.59-34.41 |  |  | $ | 9.21  | 
|Granted                          |  |               | 41,750    |                |  |                  | 6.62-6.84  |  |  |   | 6.81  | 
|Exercised                        |  |               | (62,251   | )              |  |                  | 4.59-5.41  |  |  |   | 4.68  | 
|Forfeited                        |  |               | (456,994  | )              |  |                  | 4.59-31.56 |  |  |   | 16.68 | 
|                                 |  |               |           |                |  |                  |            |  |  |   |       | 
|Outstanding at March 31, 2002    |  |               | 5,800,302 |                |  | $                | 4.59-34.41 |  |  | $ | 8.65  | 
|                                 |  |               |           |                |  |                  |            |  |  |   |       | 
|Exercisable at March 31, 2002    |  |               | 3,140,868 |                |  | $                | 4.59-34.41 |  |  | $ | 11.41 | 
|                                 |  |               |           |                |  |                  |            |  |  |   |       | 

During the first quarter of 2002, we recognized a total of $0.7 million in
expenses related to the issuance of stock options with below market strike
prices. We will amortize an additional $3.4 million of compensation expense
over the next sixteen months.

Note 4. 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.
The amount of goodwill recorded as of the merger date, which represented the
excess of the total purchase price over the estimated fair value of net assets
acquired, was approximately $199 million. This amount was associated entirely
with BVFMACs lending operations, which was the core business acquired, and was
initially amortized on a straight-line basis over 15 years.

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2002
(Unaudited)

On June 30, 2000, substantially all of the assets and certain liabilities
of Bankers Mutual were sold to or assumed by Berkshire Mortgage Finance Limited
Partnership for approximately $40 million in cash. In September 2000, we
announced the restructuring of BVFMACs franchise lending operations. The
shutdown of this division was effective as of September 30, 2000 and involved
the termination of all related production and marketing personnel. In
connection with this restructuring, goodwill of $192.6 million was written off,
representing the entire unamortized balance associated with BVFMAC. Effective
February 28, 2001, substantially all of the assets and liabilities of FMAC
Insurance Services were sold. On June 22, 2001, we completed the stock sale by
Bay View Bank of the legal entity BVFMAC and its related servicing platform to
a group of investors who were formerly part of the Companys and BVFMACs
management. We realized a loss of $23 million as a result of the sale.

Note 5. Agreements with Regulatory Agencies

During the third quarter of 2000, we entered into formal agreements with
the Office of the Comptroller of the Currency, sometimes referred to as the
OCC, and the Federal Reserve Bank of San Francisco.

The agreement between Bay View Bank and the OCC was dated September 6,
2000. The provisions of this agreement, among other things, require that Bay
View Banks Board of Directors adopt a new budget as well as new strategic,
earnings and capital plans. The new strategic plan establishes objectives for
Bay View Banks overall risk profile, earnings performance, growth, and capital
adequacy. In addition, a provision of the agreement states that Bay View Bank
may not declare or distribute any dividends without the prior written approval
of the OCC.

The agreement between Bay View Capital Corporation and the Federal Reserve
Bank was dated September 28, 2000. The provisions of this agreement, among
other things, also require that we adopt a new budget and new strategic,
earnings and capital plans. The agreement also states that we may not declare
or pay any cash or stock dividends or make any interest payments on our Capital
Securities without the prior written approval of the Federal Reserve Bank. The
agreement further requires the prior written approval of the Federal Reserve
Bank to increase the principal balance of any category of debt above the levels
outstanding as of June 30, 2000. Finally, we may not repurchase any stock
without the prior written approval of the Federal Reserve Bank.

At March 31, 2002, Bay View Capital Corporations regulatory capital
ratios exceeded the requirements necessary to be considered adequately
capitalized. At December 31, 2001, Bay View Capital Corporation exceeded the
minimum requirements for Tier 1 risk-based capital while its Total risk-based
capital ratio of 7.62% and Tier 1 leverage ratio of 3.73% fell below the
minimum required amounts. Bay View Banks regulatory capital ratios exceeded
the requirements necessary to be considered well-capitalized at March 31, 2002
and December 31, 2001.

Note 6. Restructuring Charges

In September 2000, we announced the restructuring of our franchise lending
division, BVFMAC, which was acquired in November of 1999. The restructuring of
the franchise lending division was effective as of September 30, 2000. The
restructuring involved the termination of approximately 146 related production
and marketing personnel, of which 116 were terminated as of September 30, 2000.
Restructuring charges for the division totaled $9.2 million as of December 31,
2000, and consisted primarily of $4.1 million of severance and other
involuntary termination benefits, $1.3 million of occupancy-related charges and
$3.8 million of other facility and ancillary costs. Accrued restructuring
liabilities at December 31, 2000 were $4.3 million, consisting of $2.7 million
related to accrued severance and $1.6 million related to accrued facilities
charges.

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2002
(Unaudited)

As part of the Companys ongoing efforts to focus on its core banking
operations, a total of $6.9 million in restructuring charges were recorded
during 2001 primarily related to the reduction in our workforce. The
restructuring charges originally consisted of $6.7 million of severance and
$3.3 million of facilities charges that were recorded in the second quarter.
During the third and fourth quarters, we recorded a $2.1 million net reversal
of an accrual related to severance payments which were disallowed by our
primary regulator and a $1.0 million reversal of accruals related to closed
facilities which were subleased earlier than projected. As previously
announced, the reduction in our workforce will affect about 100 employees
primarily from business lines that we are exiting, such as franchise
operations, and other non-core and redundant operations.

During 2000, 2001 and
through March 31, 2002, $5.5 million in severance payments have been made to
112 employees impacted by the restructurings. Additionally, $2.5 million in
facilities payments have been made as of March 31, 2002. Accrued restructuring
liabilities at March 31, 2002 were $3.2 million, consisting of $1.8 million
related to accrued severance and $1.4 million related to accrued facilities
charges.

Note 7. Leasing Expenses

Leasing expense represents expenses related to our auto leasing
activities. Because the leases are accounted for as operating leases, the
corresponding assets are capitalized and depreciated to their estimated
residual values over their lease terms. This depreciation expense is included
in leasing expenses, along with the amortization of capitalized initial direct
lease costs and impairment charges. Leasing expenses for the first quarter of
2002 were $15.0 million as compared to $17.8 million for the first quarter of
2001. The decrease in leasing expenses was primarily due to lower depreciation
expense associated with the declining balance of our auto-related operating
lease portfolio. We ceased purchasing auto leases in June 2000.

The Company performs a quarterly impairment analysis of its automobile
operating lease portfolio in accordance with Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, which we adopted effective January 1, 2002. Statement No. 144, which
supersedes Statement No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, retains the fundamental
provisions of Statement No. 121 related to the recognition and measurement of
the impairment of long-lived assets to be held and used and the measurement of
long-lived assets to be disposed of by sale. There was no financial
statement impact upon adoption of Statement No. 144. A lease is considered impaired if
its gross future undiscounted cash flows are less than the net book value of
the lease. The net book value of the lease is defined as the original
capitalized cost of the automobile, including initial direct capitalized costs,
less the cumulative amount of depreciation recorded against the automobile and
the cumulative amount of amortization of the initial direct capitalized costs
recorded since the inception of the lease and less any impairment charges
recorded-to-date on that lease.

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

Using the projected ALG residual values, the Companys experience-to-date
relative to the projected ALG residual values (for example, for vehicle classes
where actual amounts realized were less than what ALG had

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2002
(Unaudited)

projected, the Company reduced the projected ALG residual values to equal the
Companys experience-to-date), and the probabilities of each of the three
disposition scenarios discussed above occurring, the Company determined a
probability-weighted gross future undiscounted cash flow for each automobile
lease. For those leases where the gross future undiscounted cash flows were
less than net book value, the lease was considered impaired.

For those leases considered impaired, the Company then estimated the fair
value of the lease. The fair value was determined by calculating the present
value of the future estimated cash flows again assuming the probabilities of
each of the three disposition scenarios. The present value was calculated
using current market rates, which the Company estimated as the original
contract lease rate. For those impaired leases where the estimated fair value
was less than the net book value, an impairment charge was recorded for the
difference. Since the inception of the lease portfolio in June 1998, the
Company has recorded additional monthly depreciation charges, also included in
leasing expense, to provide for losses that may be incurred at the end of the
lease terms. At March 31, 2002 and December 31, 2001, the
Company had net
impairment and additional monthly charges against its automobile operating
leases outstanding on those dates of $32.2 million and
$32.7 million, respectively.

Note 8. Income Taxes

The Company recorded a tax benefit of $1.9 million for the first quarter
of 2002. This tax benefit included a tax expense of $2.1 million on pre-tax
earnings of $5.0 million offset by a tax benefit of $4.0 million related to the
loss incurred on the 2001 stock sale by Bay View Bank of the legal entity Bay
View Franchise Mortgage Acceptance Company. The Company recorded no tax
benefit for this loss in its 2001 financial statements. The $4.0 million tax
benefit was a result of a change in federal tax law that occurred in the first
quarter of 2002 allowing the Company to deduct a portion of the loss associated
with the sale of BVFMAC. The effective tax rate used in computing the $2.1
million tax expense for the first quarter of 2002 was 41.5%. This effective
tax rate differs from the statutory rate primarily due to the impact of state
taxes. For the first quarter of 2001, the Company recorded no tax benefit on
the pre-tax loss of $8.0 million because, at that time, management could not
determine that it was more likely than not that the Company would realize
benefits in the amount of these additional deferred tax assets.

During 2000, the Company recorded a $26.0 million valuation allowance
against its gross deferred tax assets primarily relating to approximately $48.6
million in federal net operating loss carryforwards that were expiring in 2001
as the Company did not expect to be able to fully utilize these amounts prior
to their expiration date. In May 2001, the Company raised $137.5 million of
additional capital which enabled the Company to implement a new strategic plan,
including the disposition of non-core and higher-risk assets. As a result of
these actions, the Companys ability to generate future taxable income is more
predictable. During 2001, the Company also executed certain transactions that
resulted in significant amounts of taxable income. These transactions included
the sale of the BVFMAC legal entity which generated significant taxable income
related to previously deferred gains in the franchise securitization trusts.
The Company also executed a financing secured by the contractual cash flows of
our auto operating lease portfolio that was treated as a sale for income tax
purposes and generated $136.5 million in taxable income. Primarily as a result
of these transactions, the Company generated sufficient taxable income during
the year to be able to utilize the majority of its net operating loss
carryforwards expiring in 2001. As a result, the Company eliminated
the $26.0 million valuation allowance against its gross deferred
tax assets during 2001.

The Company believes it will be able to fully utilize its $174.0 million
of net deferred tax assets at March 31, 2002. In order to fully utilize its
net operating loss carryforwards prior to their expiration dates, however, the
Company will be required to execute certain tax planning strategies during 2002
including selling certain assets obtained in connection with a previous
purchase business combination with significant built-in gains for tax purposes
which would be triggered in the event of a sale. Such a transaction would not
only generate significant

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2002
(Unaudited)

levels of taxable income, but would also increase the limitation on the
utilization of the net operating loss carryforward acquired in connection with
a previous purchase business combination.

Note 9. Investment Securities

During 2001, we transferred $631.7 million in held-to-maturity securities
to our available-for-sale portfolio. In accordance with Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities, we recorded $1.5 million of unrealized losses related to
the transfer. As a result of the transfer and subsequent sales of securities
from our held-to-maturity portfolio, we do not intend to hold any securities as
held-to-maturity in the foreseeable future. We sold $29.0 million of
mortgage-backed securities during the first quarter of 2002. A gross gain of
$0.4 million was realized on the sale.

Note 10. Allowance for Loan and Lease Losses

The allowance for loan and lease losses is established through a provision
charged to expense and is maintained at a level that we believe is sufficient
to cover estimated probable losses in the portfolio. In determining the level
of the allowance for loan and lease losses, we evaluate specific credits and
the portfolio in general using several methods that include historical
performance, collateral values, cash flows and analysis of current economic
conditions. This evaluation culminates with a judgment on the probability of
collection based on existing and probable near term events. The underwriting
of new credits may be changed or modified depending on the results of these
ongoing evaluations. Discontinued lending operations receive the same scrutiny
as ongoing operations but do not have the additional risk inherent in accepting
new business. Our methodology provides for three allowance components. The
first component represents allowance for loans and leases that are individually
evaluated. The second component represents allowance for groups of homogeneous
loans and leases that currently exhibit no identifiable weaknesses and are
collectively evaluated. We determine allowance for these groups of loans and
leases based on factors such as prevailing economic conditions, historical loss
experience, asset concentrations, levels and trends of classified assets, and
loan and lease delinquencies. The last component is an unallocated allowance
which is 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 an evaluation of economic conditions in areas where we lend money, loan
and lease concentrations, lending policies or underwriting procedures, and
trends in delinquencies and nonperforming assets. The unallocated allowance
reflects our 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 was $46.2 million at March
31, 2002, $49.8 million at December 31, 2001 and $71.4 million at March 31,
2001. The decrease in the allowance for loan and lease losses at March 31,
2002, as compared to December 31, 2001, was primarily related to net
charge-offs in excess of loan loss provision expense during the first quarter
of 2002. During 2001, the allowance for loan and lease losses decreased as we
transferred and subsequently sold loans from our held-for-investment portfolio
to our held-for-sale portfolio. The transfer of loans from held-for-investment
to held-for-sale resulted in a $53.6 million reduction to the allowance for
loan and lease losses related to mark-to-market adjustments on these loans,
consisting of $48.8 million in net reductions related to the
sale of franchise
loans and $4.8 million related to home equity loans.

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2002
(Unaudited)

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

|                                                         |                                                                                 |   |                        |        |              |   |              |         |   |   |         |        |  
|-------------------------------------------------------- | ------------------------------------------------------------------------------- | - | ---------------------- | ------ | ------------ | - | ------------ | ------- | - | - | ------- | ------ | -
|                                                         |                                                                                 |   | Three Months           |        | Year         |   | Three Months
|                                                         |                                                                                 |   | Ended                  |        | Ended        |   | Ended       
|                                                         |                                                                                 |   | March 31,              |        | December 31, |   | March 31,   
|                                                         |                                                                                 |   | 2002                   |        | 2001         |   | 2001        
|                                                         |                                                                                 |   |                        |        |              |   |             
|                                                         |                                                                                 |   | (Dollars in thousands)
|Beginning balance                                        |                                                                                 | $ | 49,791                 |        |              | $ | 73,738       |         |   | $ | 73,738  |       
|Transfers of loans to held-for-sale                      |                                                                                 |   |                       |        |              |   | (53,606      | )       |   |   |        |       
|Charge-offs:                                             |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       
|                                                         | Mortgage                                                                        |   |                        |       |              |   |              | (1,488  | ) |   |         | (41    | )
|                                                         | Home equity loans and lines of credit                                           |   |                        | (571   | )            |   |              | (10,296 | ) |   |         | (4,946 | )
|                                                         | Auto                                                                            |   |                        | (1,072 | )            |   |              | (3,809  | ) |   |         | (637   | )
|                                                         | Asset-based loans, syndicated loans, factored
receivables and
commercial leases |   |                        | (1,583 | )            |   |              | (9,397  | ) |   |         | (2,260 | )
|                                                         | Franchise                                                                       |   |                        | (6,239 | )            |   |              | (24,197 | ) |   |         | (2,781 | )
|                                                         | Business                                                                        |   |                        | (13    | )            |   |              | (2,509  | ) |   |         | (74    | )
|                                                         |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       
|                                                         |                                                                                 |   | (9,478                 | )      |              |   | (51,696      | )       |   |   | (10,739 | )     
|Recoveries:                                              |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       
|                                                         | Mortgage                                                                        |   |                        |       |              |   |              | 283     |   |   |         | 27     |  
|                                                         | Home equity loans and lines of credit                                           |   |                        | 182    |              |   |              | 4,602   |   |   |         | 468    |  
|                                                         | Auto                                                                            |   |                        | 299    |              |   |              | 1,526   |   |   |         | 355    |  
|                                                         | Asset-based loans, syndicated loans, factored
receivables and
commercial leases |   |                        | 426    |              |   |              | 2,479   |   |   |         | 273    |  
|                                                         | Franchise                                                                       |   |                        |       |              |   |              | 196     |   |   |         |       |  
|                                                         | Business                                                                        |   |                        | 31     |              |   |              | 379     |   |   |         |       |  
|                                                         |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       
|                                                         |                                                                                 |   | 938                    |        |              |   | 9,465        |         |   |   | 1,123   |       
|Net charge-offs                                          |                                                                                 |   | (8,540                 | )      |              |   | (42,231      | )       |   |   | (9,616  | )     
|Provision for losses on loans and leases                 |                                                                                 |   | 4,900                  |        |              |   | 71,890       |         |   |   | 7,300   |       
|                                                         |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       
|Ending balance                                           |                                                                                 | $ | 46,151                 |        |              | $ | 49,791       |         |   | $ | 71,422  |       
|                                                         |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       
|Net charge-offs to average loans and leases (annualized) |                                                                                 |   | 1.41                   | %      |              |   | 1.51         | %       |   |   | 1.23    | %     
|                                                         |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       

Note 11. Commitments and Contingencies

Litigation

On November 9, 2000,
Morgan Guaranty Trust (Morgan Guaranty) filed a claim
(the Complaint) in the U.S. District Court, Southern
District of New York, against Bay View Franchise Mortgage Acceptance
Company (BVFMAC) alleging breach of certain
representations and warranties in connection with the sale of loans to
Morgan Guaranty Trust by the former Franchise Mortgage Acceptance
Company. On April 23, 2002, the Court signed an order granting
summary judgment in favor of Morgan Guaranty as to BVFMACs
liability for breach of a certain warranty contained in the purchase
agreement, and denied Morgan Guarantys motion for summary
judgment as to BVFMACs liability for breach of certain other
representations. The Court further granted summary judgment in favor
of BVFMAC with respect to allegations that it breached a certain
warranty, and denied BVFMACs motion for summary judgment with
respect to certain other allegations contained in the Complaint. As a
result of the partial grant of summary judgment in favor of Morgan
Guaranty, the Court has ordered BVFMAC to repurchase from Morgan
Guaranty loans with a remaining principal balance of approximately
$57 million, at a price calculated according to the parties
agreement, and to pay Morgan Guaranty interest on the repurchase
price from October 6, 2000 plus the costs to Morgan Guaranty of
holding the loans subsequent to that date. The Court has not yet
entered a final judgment, and the repurchase price has not yet been
determined. Once final judgement is entered, BVFMAC intends to appeal
the Courts decision. The Company previously signed an agreement
to indemnify BVFMAC with respect to this litigation under the terms
of its sale of BVFMAC in 2001. There are substantial legal and
regulatory issues regarding whether and how the indemnity agreement
could be enforced under circumstances where the Court has ordered
BVFMAC to repurchase the loans. Because the borrowers of the loans are
currently in bankruptcy, the Company believes that full value for the
loans that BVFMAC may be required to repurchase may not be realized
and, in the event that BVFMAC does not prevail on appeal or is
otherwise unable to resolve this matter, and the Company is required
to indemnify BVFMAC, the net cost to the Company arising from
BVFMACs obligation to repurchase the loans could be material but
remains inestimable at this time.

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2002
(Unaudited)

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

Note 12. 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 primary 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, franchise asset-backed securities,
asset-based loans, syndicated loans, factored receivables and 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 operations. 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 were used primarily to fund
franchise loans held-for-sale during 2001, was 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 expenses
associated with our administrative and support functions.

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Bay View Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2002
(Unaudited)

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 loss for the periods
indicated. Reconciling items generally include indirect corporate overhead and
income tax expense.

|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|---------------------------------------------------------------- |  | ----------------------------------------- | --------- | ---------- |  | ----- | --------- | - |  | - | --------- | -
|                                                                 |  | For the Three Months Ended March 31, 2002
|                                                                 |  |                                          
|                                                                 |  | Retail                                    |           | Commercial |  | Total
|                                                                 |  |                                           |           |            |  |      
|                                                                 |  | (Dollars in thousands)                   
|Interest income                                                  |  | $                                         | 23,948    |            |  | $     | 29,745    |   |  | $ | 53,693    |  
|Interest expense                                                 |  |                                           | (12,573   | )          |  |       | (7,976    | ) |  |   | (20,549   | )
|Provision for losses on loans and leases                         |  |                                           | 547       |            |  |       | (5,447    | ) |  |   | (4,900    | )
|Noninterest income                                               |  |                                           | 24,800    |            |  |       | 1,382     |   |  |   | 26,182    |  
|Direct general and administrative expenses                       |  |                                           | (22,634   | )          |  |       | (3,034    | ) |  |   | (25,668   | )
|Allocation of branch network general and administrative expenses |  |                                           | 7,134     |            |  |       | (7,134    | ) |  |   |          |  
|Leasing expenses                                                 |  |                                           | (15,007   | )          |  |       |          |   |  |   | (15,007   | )
|Dividend expense on Capital Securities                           |  |                                           | (1,408    | )          |  |       | (1,165    | ) |  |   | (2,573    | )
|Real estate owned operations including provision for losses, net |  |                                           |          |            |  |       | (744      | ) |  |   | (744      | )
|Amortization of intangible assets                                |  |                                           | (331      | )          |  |       |          |   |  |   | (331      | )
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|Contribution by platform                                         |  | $                                         | 4,476     |            |  | $     | 5,627     |   |  | $ | 10,103    |  
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|Indirect corporate overhead                                      |  |                                           |           |            |  |       |           |   |  |   | (5,124    | )
|Income tax benefit                                               |  |                                           |           |            |  |       |           |   |  |   | 1,935     |  
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|Net income                                                       |  |                                           |           |            |  |       |           |   |  | $ | 6,914     |  
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|At March 31, 2002:                                               |  |                                           |           |            |  |       |           |   |  |   |           |  
|Interest-earning assets plus operating lease assets              |  | $                                         | 1,877,488 |            |  | $     | 1,584,446 |   |  | $ | 3,461,934 |  
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|Noninterest-earning assets                                       |  |                                           |           |            |  |       |           |   |  |   | 367,501   |  
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|Total assets                                                     |  |                                           |           |            |  |       |           |   |  | $ | 3,829,435 |  
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  

|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|---------------------------------------------------------------- |  | ----------------------------------------- | --------- | ---------- |  | ----- | --------- | - |  | - | --------- | -
|                                                                 |  | For the Three Months Ended March 31, 2001
|                                                                 |  |                                          
|                                                                 |  | Retail                                    |           | Commercial |  | Total
|                                                                 |  |                                           |           |            |  |      
|                                                                 |  | (Dollars in thousands)                   
|Interest income                                                  |  | $                                         | 43,517    |            |  | $     | 50,942    |   |  | $ | 94,459    |  
|Interest expense                                                 |  |                                           | (34,820   | )          |  |       | (27,155   | ) |  |   | (61,975   | )
|Provision for losses on loans and leases                         |  |                                           | (4,009    | )          |  |       | (3,291    | ) |  |   | (7,300    | )
|Noninterest income                                               |  |                                           | 31,953    |            |  |       | 10,154    |   |  |   | 42,107    |  
|Direct general and administrative expenses                       |  |                                           | (22,796   | )          |  |       | (7,644    | ) |  |   | (30,440   | )
|Allocation of branch network general and administrative expenses |  |                                           | 7,148     |            |  |       | (7,148    | ) |  |   |          |  
|Revaluation of franchise-related assets                          |  |                                           |          |            |  |       | (16,945   | ) |  |   | (16,945   | )
|Leasing expenses                                                 |  |                                           | (17,757   | )          |  |       |          |   |  |   | (17,757   | )
|Dividend expense on Capital Securities                           |  |                                           | (1,284    | )          |  |       | (1,004    | ) |  |   | (2,288    | )
|Real estate owned operations including provision for losses, net |  |                                           | 18        |            |  |       |          |   |  |   | 18        |  
|Amortization of intangible assets                                |  |                                           | (2,138    | )          |  |       | (730      | ) |  |   | (2,868    | )
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|Contribution by platform                                         |  | $                                         | (168      | )          |  | $     | (2,821    | ) |  |   | (2,989    | )
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|Indirect corporate overhead                                      |  |                                           |           |            |  |       |           |   |  |   | (4,977    | )
|Income tax benefit                                               |  |                                           |           |            |  |       |           |   |  |   |          |  
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|Net loss                                                         |  |                                           |           |            |  |       |           |   |  | $ | (7,966    | )
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|At March 31, 2001:                                               |  |                                           |           |            |  |       |           |   |  |   |           |  
|Interest-earning assets plus operating lease assets              |  | $                                         | 2,657,569 |            |  | $     | 2,027,722 |   |  | $ | 4,685,291 |  
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|Noninterest-earning assets                                       |  |                                           |           |            |  |       |           |   |  |   | 314,678   |  
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  
|Total assets                                                     |  |                                           |           |            |  |       |           |   |  | $ | 4,999,969 |  
|                                                                 |  |                                           |           |            |  |       |           |   |  |   |           |  

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

Strategic Overview

Bay View Capital Corporation is a commercial bank holding 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 other 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, syndicated loans, factored
receivables, commercial leases, and other business banking products and
services. The platforms results include the income and expenses related to
these business activities.

Our Mission and Strategy

From 1996 to 1999, our strategy was to transform Bay View Bank from a
traditional thrift to a commercial bank. During this period, we nearly doubled
in size, replaced a majority of our mortgage-based loans with higher-yielding
consumer and commercial loans and leases and transformed a significant portion
of our deposits into lower-cost transaction accounts.

In May 2001, we completed a rights offering and a concurrent offering to
standby purchasers that generated aggregate gross proceeds of $137.5 million.
With this additional capital, we implemented a new strategic plan that included
exiting businesses inconsistent with a California-focused bank and included
assumptions related to the liquidation of our remaining franchise-related
assets and operations and our remaining high loan-to-value home equity loans.
Our results for 2001 included specific charges consistent with our new
strategic plan. The specific charges were primarily related to the stock sale
of the legal entity BVFMAC and its related servicing platform, the disposition
of franchise-related assets, restructuring charges primarily related to the
reduction in our workforce announced in May 2001 and prepayment penalties
related to a reduction in higher-cost borrowings.

With the majority of the initiatives from our initial strategic plan
completed, our goals for 2002 include growing our core retail and commercial
banking businesses while continuing to reduce our exposure to high-risk assets
and to reduce our costs.

Retail Platform Strategy

One of the principal businesses of the Retail Platform is Bay View Banks
57 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 and expanding and enhancing products and services. A primary
component of the Retail Platforms deposit growth strategy has been 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. We continue to make progress on our goal of
expanding our deposit base by growing transaction accounts and business
deposits. During the first quarter of 2002, our average cost of deposits
decreased to 1.95% from 2.59% for the prior quarter. The decrease in the cost
of deposits was primarily a result of the continued change in our deposit mix
combined with the repricing of approximately $556.8 million of higher-cost
retail certificates of deposit during the quarter. The change in our deposit
mix consisted of a decrease in time deposits and an increase in transaction
accounts. Our transaction accounts increased to 64.0% of total deposits at
March 31, 2002 from 60.3% at December 31, 2001, reflecting the continued
strength of our deposit franchise. At March 31, 2002, the overall cost of
deposits decreased to 1.76% from 2.29% at December 31, 2001.

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

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assets to higher-yielding commercial banking assets. As a result, the
portfolio of single-family loans is decreasing over time as these loans are
repaid or sold.

The Retail Platforms home equity loan portfolio includes conventional
home equity loans and lines of credit and certain 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% at
origination. We define high loan-to-value home equity loans as having combined
loan-to-value ratios of greater than 100% at origination. 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, a significant
portion of which was sold during 2000. Substantially all of the remaining high
loan-to-value home equity loan portfolio was sold in June 2001.

The Retail Platform also originates and purchases fixed-rate loans 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 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 potential loan losses. We ceased purchasing auto leases
in June 2000.

Commercial Platform Strategy

The Commercial Platforms objective is to increase our earnings potential
and enhance our deposit franchise by providing commercial banking products and
services to small and middle-market businesses within California. The
Commercial Platforms strategy centers on originating commercial loans with
higher risk-adjusted returns.

The Commercial Platform originates multi-family and commercial real estate
loans, asset-based loans, factored receivables and business loans. We also
purchased and originated franchise loans until the restructuring of our
franchise lending division, which was shut down in September 2000. Since this
restructuring, we have significantly reduced our concentration of franchise
assets and intend to sell our remaining franchise loans classified as
held-for-sale. As of March 31, 2002, our franchise loans held-for-sale totaled
$40.0 million.

Critical Accounting Policies

We have identified the most critical accounting policies upon which our
financial status depends. We determined the critical policies by considering
accounting principles that involve the most complex or subjective decisions or
assessments. We have identified our most critical accounting policies to be
those related to the allowance for losses on loans and leases, investment in
operating lease assets and income taxes. Descriptions of these accounting
policies are found in both the notes to the consolidated financial statements
and at relevant sections in this managements discussion and analysis.

Results of Operations

Our net income for the first quarter of 2002 was $6.9 million, or $0.11
per diluted share, as compared to a net loss of $7.97 million, or $0.24 per
diluted share, for the first quarter of 2001. First quarter results reflected
pre-tax operating earnings of approximately $5.0 million, or $0.08 per diluted
share.

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Net Interest Income and Net Interest Margin

Net interest income was $33.1 million for the first quarter of 2002 as
compared to $32.5 million for the first quarter of 2001. Net interest margin
was 4.16% for the first quarter of 2002 as compared to 2.93% for the first
quarter of 2001.

The following table illustrates net interest income and net interest
margin, by platform, for the periods indicated:

|                    |  |                            |        |                |  |          |      |          |  |   |        |  |  |  |      |  
|------------------- |  | -------------------------- | ------ | -------------- |  | -------- | ---- | -------- |  | - | ------ |  |  |  | ---- | -
|                    |  | For the Three Months Ended
|                    |  |                           
|                    |  | March 31, 2002             |        | March 31, 2001
|                    |  |                            |        |               
|                    |  | Net                        |        | Net            |  | Net      |      | Net     
|                    |  | Interest                   |        | Interest       |  | Interest |      | Interest
|                    |  | Income                     |        | Margin         |  | Income   |      | Margin  
|                    |  |                            |        |                |  |          |      |         
|                    |  | (Dollars in thousands)    
|Retail Platform (1) |  | $                          | 11,375 |                |  |          | 2.88 | %        |  | $ | 8,697  |  |  |  | 1.50 | %
|Commercial
Platform |  |                            | 21,769 |                |  |          | 5.42 |          |  |   | 23,787 |  |  |  | 4.43 |  
|                    |  |                            |        |                |  |          |      |          |  |   |        |  |  |  |      |  
|Total               |  | $                          | 33,144 |                |  |          | 4.16 | %        |  | $ | 32,484 |  |  |  | 2.93 | %
|                    |  |                            |        |                |  |          |      |          |  |   |        |  |  |  |      |  



|(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 2002, as
compared to the first quarter of 2001, was primarily due to higher net interest
margin partially offset by a decrease in average interest-earning assets. The
increase in our net interest margin and net interest spread was due to lower
overall cost of funds resulting from the lower cost of deposits, the lower
borrowing levels and the prevailing lower interest rate environment. This was
partially offset by lower yields on assets, which were also impacted by the
lower interest rate environment, and sales of higher-yielding loans during
2001. The decrease in average interest-earning assets was primarily due to
sales of franchise and home equity loans during 2001 as well as sales of
mortgage-backed and other investment securities throughout the one-year period
ending March 31, 2002. Our net interest margin, calculated in accordance with
generally accepted accounting principles (GAAP), excludes the revenue impact
of our auto leasing activities, but includes the associated funding costs.
Because our auto leases are accounted for as operating leases, the rental
income and related expenses, including depreciation expense, are reflected in
noninterest income and noninterest expense in accordance with GAAP. For a
discussion of normalized net interest income and net interest margin, including
the revenue impact of our auto leasing activities, see Non-GAAP Performance
Measures  Normalized Net Interest Income and Net Interest Margin.

Net interest income and net interest margin by platform for the first
quarter of 2002, as compared to the first quarter of 2001, reflect our strategy
to sell off our higher-risk assets, specifically high loan-to-value home equity
loans and franchise loans, and focus on our core banking operations. The
increase in the Retail Platforms net interest margin reflects the impact of
lower overall cost of funds, as previously disclosed or as discussed elsewhere
herein. The increase in the Commercial Platforms net interest margin was
primarily due to the lower cost of funds and the sale of franchise loans during
2001, as franchise loans have lower yields relative to the yields on our
asset-based loans, factored receivables, and other commercial loans. For more
detail, see discussion of Interest Income and Interest Expense.

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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      
|                    |  |                         
|                    |  | March 31,                |           | March 31,
|                    |  | 2002                     |           | 2001     
|                    |  |                          |           |          
|                    |  | (Dollars in thousands)  
|Retail Platform     |  | $                        | 1,585,744 |           |  | $ | 2,252,327 | 
|Commercial Platform |  |                          | 1,609,958 |           |  |   | 2,135,044 | 
|                    |  |                          |           |           |  |   |           | 
|Total               |  | $                        | 3,195,702 |           |  | $ | 4,387,371 | 
|                    |  |                          |           |           |  |   |           | 

The decrease in the Retail Platforms average interest-earning assets,
which exclude our auto-related operating lease assets, reflects the impact of
the sales of home equity loans during 2001 and the sale of mortgage-backed and
other investment securities during the one-year period ending March 31, 2002 as
previously disclosed or as discussed elsewhere herein. The decrease in the
Commercial Platforms average interest-earning assets reflects franchise loan
sales as well as the impact of the writedowns related to the revaluation of our
franchise-related assets during 2001.

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

|                    |  |                        |           |              |  |           |           |  |  |   |           | 
|------------------- |  | ---------------------- | --------- | ------------ |  | --------- | --------- |  |  | - | --------- | 
|                    |  | At                     |           | At           |  | At       
|                    |  | March 31,              |           | December 31, |  | March 31,
|                    |  | 2002                   |           | 2001         |  | 2001     
|                    |  |                        |           |              |  |          
|                    |  | (Dollars in thousands)
|Retail Platform     |  | $                      | 1,570,589 |              |  | $         | 1,454,150 |  |  | $ | 2,205,168 | 
|Commercial Platform |  |                        | 1,584,446 |              |  |           | 1,541,310 |  |  |   | 2,027,722 | 
|                    |  |                        |           |              |  |           |           |  |  |   |           | 
|Total               |  | $                      | 3,155,035 |              |  | $         | 2,995,460 |  |  | $ | 4,232,890 | 
|                    |  |                        |           |              |  |           |           |  |  |   |           | 

The increase in the Retail Platforms interest-earning assets, excluding
our auto-related operating lease assets, at March 31, 2002, as compared to
December 31, 2001, was primarily due to the redeployment of non
interest-earning cash at December 31, 2001 into interest-earning short-term
investments during the first quarter of 2002. This was partially offset by the
sale of $29.0 million of mortgage-backed securities during the quarter. The
increase in the Commercial Platforms interest-earning assets was primarily due
to the strong multi-family mortgage loan originations during the first quarter
of 2002.

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.

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|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |      |  
|------------------------------------------ | ------------------------------ | - | ---------------------------------- | --------- | -------------------------- | - | ---------- | ------ | ------- |  | -------- | ---- | ---------- | - | --------- | --------- | ------- | - | ------ | ------ |  |  | ---- | ---- | -
|                                           |                                |   | AVERAGE BALANCES, YIELDS AND RATES
|                                           |                                |   |                                   
|                                           |                                |   | For the Three Months Ended         |           | For the Three Months Ended
|                                           |                                |   | March 31, 2002                     |           | March 31, 2001            
|                                           |                                |   |                                    |           |                           
|                                           |                                |   | Average                            |           |                            |   |            |        | Average |  | Average  |      |            |   |           |           | Average
|                                           |                                |   | Balance                            |           | Interest                   |   | Yield/Rate |        | Balance |  | Interest |      | Yield/Rate
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |           
|                                           |                                |   | (Dollars in thousands)            
|Assets                                     |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Interest-earning assets:                   |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|                                           | Loans and leases               |   | $                                  | 2,424,823 |                            |   | $          | 46,471 |         |  |          | 7.72 | %          |   | $         | 3,134,083 |         |   | $      | 72,350 |  |  |      | 9.28 | %
|                                           | Mortgage-backed securities (1) |   |                                    | 283,853   |                            |   |            | 3,551  |         |  |          | 5.00 |            |   |           | 653,534   |         |   |        | 12,215 |  |  |      | 7.48 |  
|                                           | Investments (1)                |   |                                    | 487,026   |                            |   |            | 3,671  |         |  |          | 3.03 |            |   |           | 599,754   |         |   |        | 9,894  |  |  |      | 6.62 |  
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Total interest-earning assets              |                                |   | 3,195,702                          |           |                            |   | 53,693     |        |         |  | 6.76     | %    |            |   | 4,387,371 |           |         |   | 94,459 |        |  |  | 8.65 | %   
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Other assets                               |                                |   | 678,503                            |           |                            |   |            |        |         |  |          |      |            |   | 783,294   |           |         |   |        |        |  |  |      |     
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Total assets                               |                                | $ | 3,874,205                          |           |                            |   |            |        |         |  |          |      |            | $ | 5,170,665 |           |         |   |        |        |  |  |      |     
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Liabilities and Stockholders Equity       |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Interest-bearing liabilities:              |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|                                           | Deposits                       |   | $                                  | 3,127,324 |                            |   | $          | 15,002 |         |  |          | 1.95 | %          |   | $         | 3,683,916 |         |   | $      | 43,921 |  |  |      | 4.84 | %
|                                           | Borrowings(2)                  |   |                                    | 279,422   |                            |   |            | 5,547  |         |  |          | 7.98 |            |   |           | 1,041,014 |         |   |        | 18,054 |  |  |      | 7.00 |  
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Total interest-bearing liabilities         |                                |   | 3,406,746                          |           |                            |   | 20,549     |        |         |  | 2.44     | %    |            |   | 4,724,930 |           |         |   | 61,975 |        |  |  | 5.31 | %   
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Other liabilities                          |                                |   | 128,014                            |           |                            |   |            |        |         |  |          |      |            |   | 142,793   |           |         |   |        |        |  |  |      |     
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Total liabilities                          |                                |   | 3,534,760                          |           |                            |   |            |        |         |  |          |      |            |   | 4,867,823 |           |         |   |        |        |  |  |      |     
|Stockholders equity                       |                                |   | 339,445                            |           |                            |   |            |        |         |  |          |      |            |   | 302,942   |           |         |   |        |        |  |  |      |     
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Total liabilities and stockholders equity |                                | $ | 3,874,205                          |           |                            |   |            |        |         |  |          |      |            | $ | 5,170,665 |           |         |   |        |        |  |  |      |     
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Net interest income/net interest spread    |                                |   |                                    |           |                            | $ | 33,144     |        |         |  | 4.32     | %    |            |   |           |           |         | $ | 32,484 |        |  |  | 3.34 | %   
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Net interest-bearing liabilities           |                                | $ | (211,044                           | )         |                            |   |            |        |         |  |          |      |            | $ | (337,559  | )         |         |   |        |        |  |  |      |     
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     
|Net interest margin (3)                    |                                |   |                                    |           |                            |   |            |        |         |  | 4.16     | %    |            |   |           |           |         |   |        |        |  |  | 2.93 | %   
|                                           |                                |   |                                    |           |                            |   |            |        |         |  |          |      |            |   |           |           |         |   |        |        |  |  |      |     



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

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Interest Income

Interest income was $53.7 million for the first quarter of 2002 as
compared to $94.5 million for the first quarter of 2001. The average yield on
interest-earning assets was 6.76% for the first quarter of 2002 as compared to
8.65% for the first quarter of 2001. The following table illustrates interest
income, by platform, for the periods indicated:

|                          |                            |   |                            |           |                |   |         |        |         |  |          |       |         |   |           |           |  |   |        |        |  |  |      |       |  
|------------------------- | -------------------------- | - | -------------------------- | --------- | -------------- | - | ------- | ------ | ------- |  | -------- | ----- | ------- | - | --------- | --------- |  | - | ------ | ------ |  |  | ---- | ----- | -
|                          |                            |   | For the Three Months Ended
|                          |                            |   |                           
|                          |                            |   | March 31, 2002             |           | March 31, 2001
|                          |                            |   |                            |           |               
|                          |                            |   | Average                    |           | Interest       |   | Average |        | Average |  | Interest |       | Average
|                          |                            |   | Balance                    |           | Income         |   | Yield   |        | Balance |  | Income   |       | Yield  
|                          |                            |   |                            |           |                |   |         |        |         |  |          |       |        
|                          |                            |   | (Dollars in thousands)    
|Retail Platform:          |                            |   |                            |           |                |   |         |        |         |  |          |       |         |   |           |           |  |   |        |        |  |  |      |      
|                          | Loans                      |   | $                          | 820,728   |                |   | $       | 16,972 |         |  |          | 8.35  | %       |   | $         | 1,017,575 |  |   | $      | 22,328 |  |  |      | 8.83  | %
|                          | Mortgage-backed securities |   |                            | 283,853   |                |   |         | 3,551  |         |  |          | 5.00  |         |   |           | 653,534   |  |   |        | 12,215 |  |  |      | 7.48  |  
|                          | Investments                |   |                            | 481,163   |                |   |         | 3,425  |         |  |          | 2.86  |         |   |           | 581,218   |  |   |        | 8,974  |  |  |      | 6.19  |  
|                          |                            |   |                            |           |                |   |         |        |         |  |          |       |         |   |           |           |  |   |        |        |  |  |      |      
|Total Retail Platform     |                            |   | 1,585,744                  |           |                |   | 23,948  |        |         |  | 6.09     |       |         |   | 2,252,327 |           |  |   | 43,517 |        |  |  | 7.76 |      
|                          |                            |   |                            |           |                |   |         |        |         |  |          |       |         |   |           |           |  |   |        |        |  |  |      |      
|Commercial Platform:      |                            |   |                            |           |                |   |         |        |         |  |          |       |         |   |           |           |  |   |        |        |  |  |      |      
|                          | Loans and leases           |   |                            | 1,604,095 |                |   |         | 29,499 |         |  |          | 7.39  |         |   |           | 2,116,508 |  |   |        | 50,022 |  |  |      | 9.49  |  
|                          | Investments                |   |                            | 5,863     |                |   |         | 246    |         |  |          | 16.98 |         |   |           | 18,536    |  |   |        | 920    |  |  |      | 20.12 |  
|                          |                            |   |                            |           |                |   |         |        |         |  |          |       |         |   |           |           |  |   |        |        |  |  |      |      
|Total Commercial Platform |                            |   | 1,609,958                  |           |                |   | 29,745  |        |         |  | 7.43     |       |         |   | 2,135,044 |           |  |   | 50,942 |        |  |  | 9.58 |      
|                          |                            |   |                            |           |                |   |         |        |         |  |          |       |         |   |           |           |  |   |        |        |  |  |      |      
|Total                     |                            | $ | 3,195,702                  |           |                | $ | 53,693  |        |         |  | 6.76     | %     |         | $ | 4,387,371 |           |  | $ | 94,459 |        |  |  | 8.65 | %    
|                          |                            |   |                            |           |                |   |         |        |         |  |          |       |         |   |           |           |  |   |        |        |  |  |      |      

Retail Platform

Interest income for the Retail Platform was $23.9 million for the first
quarter of 2002 as compared to $43.5 million for the first quarter of 2001.
The average yield on interest-earning assets for the Retail Platform was 6.09%
for the first quarter of 2002 as compared to 7.76% for the first quarter of
2001.

The Retail Platforms interest income on loans was $17.0 million for the
first quarter of 2002 as compared to $22.3 million for the first quarter of
2001. The Retail Platforms average loan yield was 8.35% for the first quarter
of 2002 as compared to 8.83% for the first quarter of 2001. The decrease in
interest income on loans for the first quarter of 2002, as compared to the
first quarter of 2001, was due to lower average loan balances, as previously
discussed, combined with a decrease in the platforms average loan yield due to
the lower interest rate environment and sales of higher-yielding loans during
2001.

The Retail Platforms interest income on mortgage-backed securities was
$3.6 million for the first quarter of 2002 and $12.2 million for the first
quarter of 2001. The Retail Platforms average yield on mortgage-backed
securities was 5.00% for the first quarter of 2002 as compared to 7.48% for the
first quarter of 2001. The decrease in interest income on mortgage-backed
securities for the first quarter of 2002, as compared to the first quarter of
2001, was primarily due to decreases in both the average balance and yield.
The average balance of our mortgage-backed securities decreased as purchases of
mortgage-backed securities were more than offset by sales throughout the
one-year period ending March 31, 2002, including the sale of $29 million of
mortgage-backed securities during the first quarter of 2002. The average yield
of our mortgage-backed securities decreased due to the impact of the prevailing
low interest rate environment and the sales of relatively higher-yielding GNMA
securities during 2001.

The Retail Platforms interest income on investment securities, which
consist primarily of short-term investments, trust preferred and asset-backed
securities and our retained interests in auto loan securitizations, was $3.4
million for the first quarter of 2002 as compared to $9.0 million for the first
quarter of 2001. The Retail Platforms average yield on investment securities
was 2.86% for the first quarter of 2002 as compared to 6.19% for the first
quarter of 2001. The decrease in interest income on investments for the first
quarter of 2002, as compared to the first quarter of 2001, was due to lower
average yields resulting from the prevailing lower interest rate environment
combined with lower average balances, primarily short-term investments.

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Commercial Platform

Interest income for the Commercial Platform was $29.7 million for the
first quarter of 2002 as compared to $50.9 million for the first quarter of
2001. The average yield on interest-earning assets for the Commercial Platform
was 7.43% for the first quarter of 2002 as compared to 9.58% for the first
quarter of 2001.

The Commercial Platforms interest income on loans was $29.5 million for
the first quarter of 2002 as compared to $50.0 million for the first quarter of
2001. The Commercial Platforms average loan and lease yield was 7.39% for the
first quarter of 2002 as compared to 9.49% for the first quarter of 2001. The
decrease in interest income on loans and leases for the first quarter of 2002,
as compared to the first quarter of 2001, was due to lower average loan and
lease balances, resulting from franchise loan sales and the writedowns related
to the revaluation of franchise loans during the one-year period ending March
31, 2002, combined with a decline in average yields.

The Commercial Platforms interest income on investment securities, which
consist of franchise asset-backed securities and residual interests in
franchise loan securitizations, was $246 thousand for the first quarter of 2002
as compared to $920 thousand for the first quarter of 2001. The Commercial
Platforms average yield on investment securities was 16.98% for the first
quarter of 2002 as compared to 20.12% for the first quarter of 2001. The
decrease in interest income on investment securities for the first quarter of
2002, as compared to the first quarter of 2001, was due primarily to a lower
average balance related to the revaluation of residual interests in franchise
loan securitizations during 2001.

Interest Expense

Deposits

Interest expense on our deposits was $15.0 million for the first quarter
of 2002 as compared to $43.9 million for the first quarter of 2001. The
average cost of deposits was 1.95% for the first quarter of 2002 as compared to
4.84% for the first quarter of 2001.

The decrease in interest expense on deposits for the first quarter of
2002, as compared to the first quarter of 2001, was due to lower cost of
deposits and average deposit balances. The decrease in the cost of deposits
was primarily a result of the lower interest rate environment, the continued
change in our deposit mix and the repricing of approximately $556.8 million of
higher-cost retail certificates of deposit during the first quarter of 2002.
The change in our deposit mix consisted of a decrease in time deposits and an
increase in transaction accounts. Our transaction accounts, which are
lower-cost deposits as opposed to retail certificates of deposits, increased to
64.0% of total retail deposits at March 31, 2002 from 60.3% at December 31,
2001. The decrease in average deposit balances was a result of the maturities
of certificates of deposit, including brokered certificates of deposit which
matured during 2001 and were not renewed, partially offset by the growth in our
transaction accounts.

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The following table summarizes our deposit costs by type for the periods
indicated:

|                                 |  |                            |           |           |  |         |      |         |  |   |           |  |  |  |      |  
|-------------------------------- |  | -------------------------- | --------- | --------- |  | ------- | ---- | ------- |  | - | --------- |  |  |  | ---- | -
|                                 |  | For the Three Months Ended
|                                 |  |                           
|                                 |  | March 31,                  |           | March 31,
|                                 |  | 2002                       |           | 2001     
|                                 |  |                            |           |          
|                                 |  | Average                    |           | Average   |  | Average |      | Average
|                                 |  | Balance                    |           | Rate      |  | Balance |      | Rate   
|                                 |  |                            |           |           |  |         |      |        
|                                 |  | (Dollars in thousands)    
|Savings                          |  | $                          | 161,722   |           |  |         | 0.40 | %       |  | $ | 132,900   |  |  |  | 1.68 | %
|Money Market                     |  |                            | 1,106,950 |           |  |         | 1.77 |         |  |   | 1,095,349 |  |  |  | 4.43 |  
|Checking accounts                |  |                            | 690,949   |           |  |         | 0.79 |         |  |   | 433,179   |  |  |  | 1.10 |  
|                                 |  |                            |           |           |  |         |      |         |  |   |           |  |  |  |      |  
|Total transaction accounts       |  |                            | 1,959,621 |           |  |         | 1.31 |         |  |   | 1,661,428 |  |  |  | 3.34 |  
|Retail certificates of deposit   |  |                            | 1,167,703 |           |  |         | 3.01 |         |  |   | 1,826,998 |  |  |  | 5.94 |  
|Brokered certificates of deposit |  |                            |          |           |  |         |     |         |  |   | 195,490   |  |  |  | 7.20 |  
|                                 |  |                            |           |           |  |         |      |         |  |   |           |  |  |  |      |  
|Total deposits                   |  | $                          | 3,127,324 |           |  |         | 1.95 | %       |  | $ | 3,683,916 |  |  |  | 4.84 | %
|                                 |  |                            |           |           |  |         |      |         |  |   |           |  |  |  |      |  

Borrowings

Interest expense on our borrowings was $5.5 million for the first quarter
of 2002 as compared to $18.1 million for the first quarter of 2001. The
average cost of borrowings was 7.98% for the first quarter of 2002 as compared
to 7.00% for the first quarter of 2001. In accordance with GAAP, these amounts
exclude the expense associated with our Capital Securities. The decrease in
interest expense on borrowings for the first quarter of 2002, as compared to
the first quarter of 2001, was due primarily to lower average balances,
partially offset by higher funding costs. The decrease in average balances was
due to the paydown of borrowings, including warehouse lines, Federal Home Loan
Bank advances and securities sold under agreements to repurchase, as we sold
interest-bearing assets during 2001. The increase in borrowing costs was
primarily attributable to a change in our borrowings mix.

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 2002 as compared to the
first quarter of 2001. 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, 2002 vs. 2001
|                    |                            |   |                                                   
|                    |                            |   | Rate                                               |         | Volume   |   | Total   
|                    |                            |   | Variance                                           |         | Variance |   | Variance
|                    |                            |   |                                                    |         |          |   |         
|                    |                            |   | (Dollars in thousands)                            
|Interest income:    |                            |   |                                                    |         |          |   |          |         |   |   |         |        
|                    | Loans and leases           |   | $                                                  | (11,030 | )        |   | $        | (14,849 | ) |   | $       | (25,879 | )
|                    | Mortgage-backed securities |   |                                                    | (3,202  | )        |   |          | (5,462  | ) |   |         | (8,664  | )
|                    | Investment securities      |   |                                                    | (4,621  | )        |   |          | (1,602  | ) |   |         | (6,223  | )
|                    |                            |   |                                                    |         |          |   |          |         |   |   |         |        
|                    |                            |   | (18,853                                            | )       |          |   | (21,913  | )       |   |   | (40,766 | )      
|                    |                            |   |                                                    |         |          |   |          |         |   |   |         |        
|Interest expense:   |                            |   |                                                    |         |          |   |          |         |   |   |         |        
|                    | Deposits                   |   |                                                    | (23,079 | )        |   |          | (5,840  | ) |   |         | (28,919 | )
|                    | Borrowings                 |   |                                                    | 2,960   |          |   |          | (15,467 | ) |   |         | (12,507 | )
|                    |                            |   |                                                    |         |          |   |          |         |   |   |         |        
|                    |                            |   | (20,119                                            | )       |          |   | (21,307  | )       |   |   | (41,426 | )      
|                    |                            |   |                                                    |         |          |   |          |         |   |   |         |        
|Net interest income |                            | $ | 1,266                                              |         |          | $ | (606     | )       |   | $ | 660     |        
|                    |                            |   |                                                    |         |          |   |          |         |   |   |         |        

Provision for Losses on Loans and Leases

The provision for losses on loans and leases for the first quarter of 2002
was $4.9 million as compared to $7.3 million for the first quarter of 2001.
The decrease in the provision for losses on loans and leases for the first
quarter of 2002, as compared to the first quarter of 2001, was primarily due to
a decline in the Retail Platforms provision levels related to the declining
balance of our high loan-to-value home equity portfolio which were mostly sold
during 2001. Additionally,

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the 2002 provision for the Retail Platform reflects a true-up of the
indicated reserves within each platform which was impacted by the $2.6 million
recovery on the sale of charged-off high loan-to-value home equity loans during
the fourth quarter of 2001. The lower provision within the Retail Platform was
partially offset by higher provision levels within the Commercial Platform
related to franchise loans. The following table illustrates the provision for
losses on loans and leases, by platform, for the periods indicated:

|                    |  |                            |       |           |  |   |       | 
|------------------- |  | -------------------------- | ----- | --------- |  | - | ----- | 
|                    |  | For the Three Months Ended
|                    |  |                           
|                    |  | March 31,                  |       | March 31,
|                    |  | 2002                       |       | 2001     
|                    |  |                            |       |          
|                    |  | (Dollars in thousands)    
|Retail Platform     |  | $                          | (547  | )         |  | $ | 4,009 | 
|Commercial Platform |  |                            | 5,447 |           |  |   | 3,291 | 
|                    |  |                            |       |           |  |   |       | 
|Total               |  | $                          | 4,900 |           |  | $ | 7,300 | 
|                    |  |                            |       |           |  |   |       | 

Noninterest Income

Noninterest income for the first quarter of 2002 was $26.2 million as
compared to $42.1 million for the first quarter of 2001. The decrease in
noninterest income for the first quarter of 2002, as compared to the first
quarter of 2001, was largely attributable to lower net gains on sales of assets
and liabilities in both the Retail and Commercial Platforms, lower auto leasing
income in the Retail Platform and lower loan servicing income in the Commercial
Platform. The Commercial Platforms loan servicing income was primarily
impacted by the sale of BVFMAC during 2001. The following table illustrates
noninterest income, by platform, for the periods indicated:

|                    |  |                            |        |           |  |   |        | 
|------------------- |  | -------------------------- | ------ | --------- |  | - | ------ | 
|                    |  | For the Three Months Ended
|                    |  |                           
|                    |  | March 31,                  |        | March 31,
|                    |  | 2002                       |        | 2001     
|                    |  |                            |        |          
|                    |  | (Dollars in thousands)    
|Retail Platform     |  | $                          | 24,800 |           |  | $ | 31,953 | 
|Commercial Platform |  |                            | 1,382  |           |  |   | 10,154 | 
|                    |  |                            |        |           |  |   |        | 
|Total               |  | $                          | 26,182 |           |  | $ | 42,107 | 
|                    |  |                            |        |           |  |   |        | 

Noninterest income for the first quarter of 2002 included net gains on
sales of assets totaling $0.3 million consisting primarily of a $0.4 million
gain on the sale of mortgage-backed securities within the Retail Platform
offset by a $0.1 million loss on the sale of a franchise-related asset within
the Commercial Platform. Noninterest income for the first quarter of 2001
included $10.1 million of contingent gains received during the first quarter of
2001 related to December asset sales, consisting of $6.5 million within the
Commercial Platform and $3.6 million within the Retail Platform.

Noninterest Expense

General and Administrative Expenses

General and administrative expenses for the first quarter of 2002 were
$30.8 million as compared to $35.4 million for the first quarter of 2001. The
decrease in general and administrative expenses for the first quarter of 2002,
as compared to the first quarter of 2001, was primarily due to the elimination
of BVFMAC servicing platform expenses with the sale of the legal entity BVFMAC
during 2001 combined with certain cost-savings we continue to realize from our
ongoing restructuring initiated in 2001.

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. There were no special mention items included in
general and administrative expenses for the first quarter of 2002 and 2001.

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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:

|                                |  |                            |        |           |  |   |        | 
|------------------------------- |  | -------------------------- | ------ | --------- |  | - | ------ | 
|                                |  | For the Three Months Ended
|                                |  |                           
|                                |  | March 31,                  |        | March 31,
|                                |  | 2002                       |        | 2001     
|                                |  |                            |        |          
|                                |  | (Dollars in thousands)    
|Retail Platform                 |  | $                          | 22,634 |           |  | $ | 22,796 | 
|Commercial Platform             |  |                            | 3,034  |           |  |   | 7,644  | 
|                                |  |                            |        |           |  |   |        | 
|Subtotal                        |  |                            | 25,668 |           |  |   | 30,440 | 
|Indirect corporate overhead (1) |  |                            | 5,124  |           |  |   | 4,977  | 
|                                |  |                            |        |           |  |   |        | 
|Total                           |  | $                          | 30,792 |           |  | $ | 35,417 | 
|                                |  |                            |        |           |  |   |        | 



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

The following table illustrates the ratio of general and administrative
expenses to average total assets, including auto-related securitized assets, on
an annualized basis for the periods indicated:

|                                                                                                                  |  |                            |           |           |  |   |           |  
|----------------------------------------------------------------------------------------------------------------- |  | -------------------------- | --------- | --------- |  | - | --------- | -
|                                                                                                                  |  | For the Three Months Ended
|                                                                                                                  |  |                           
|                                                                                                                  |  | March 31,                  |           | March 31,
|                                                                                                                  |  | 2002                       |           | 2001     
|                                                                                                                  |  |                            |           |          
|                                                                                                                  |  | (Dollars in thousands)    
|General and administrative expenses                                                                               |  | $                          | 30,792    |           |  | $ | 35,417    |  
|Average total assets, including auto-related
securitized assets                                                   |  | $                          | 4,064,974 |           |  | $ | 5,351,113 |  
|                                                                                                                  |  |                            |           |           |  |   |           |  
|Annualized general and administrative expenses
to average total assets, including auto-related
securitized assets |  |                            | 3.03      | %         |  |   | 2.65      | %
|                                                                                                                  |  |                            |           |           |  |   |           |  

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

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

|                                    |  |                            |        |           |  |   |        |  
|----------------------------------- |  | -------------------------- | ------ | --------- |  | - | ------ | -
|                                    |  | For the Three Months Ended
|                                    |  |                           
|                                    |  | March 31,                  |        | March 31,
|                                    |  | 2002                       |        | 2001     
|                                    |  |                            |        |          
|                                    |  | (Dollars in thousands)    
|General and administrative expenses |  | $                          | 30,792 |           |  | $ | 35,417 |  
|Operating revenues, as defined      |  | $                          | 44,038 |           |  | $ | 57,310 |  
|                                    |  |                            |        |           |  |   |        |  
|Efficiency ratio                    |  |                            | 69.9   | %         |  |   | 61.8   | %
|                                    |  |                            |        |           |  |   |        |  

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The increase in the efficiency ratio for the first quarter of 2002, as
compared to the first quarter of 2001, was due to lower net leasing-related
rental income, net interest income and noninterest income partially offset by
lower general and administrative expenses.

Revaluation of Franchise-Related Assets

There was no revaluation of franchise-related assets during the first
quarter of 2002. The revaluation of certain franchise-related assets resulted
in a $16.9 million pre-tax adjustment for the first quarter of 2001. The
revaluation included a $13.6 million adjustment to servicing assets and a $3.3
million adjustment to residual assets related to the franchise loan
securitizations, reflecting increasing delinquencies and loss assumptions.

Leasing Expenses

Leasing expense represents expenses related to our auto leasing
activities. Because the leases are accounted for as operating leases, the
corresponding assets are capitalized and depreciated to their estimated
residual values over their lease terms. This depreciation expense is included
in leasing expenses, along with the amortization of capitalized initial direct
lease costs and impairment charges. Leasing expenses for the first quarter of
2002 were $15.0 million as compared to $17.8 million for the first quarter of
2001. The decrease in leasing expenses was primarily due to lower depreciation
expense associated with the declining balance of our auto-related operating
lease portfolio. We ceased purchasing auto leases in June 2000.

The Company performs a quarterly impairment analysis of its automobile
operating lease portfolio in accordance with Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, which we adopted effective January 1, 2002. Statement No. 144, which
supersedes Statement No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, retains the fundamental
provisions of Statement No. 121 related to the recognition and measurement of
the impairment of long-lived assets to be held and used and the measurement of
long-lived assets to be disposed of by sale. There was no financial
statement impact upon adoption of statement No. 144. A lease is considered impaired if
its gross future undiscounted cash flows are less than the net book value of
the lease. The net book value of the lease is defined as the original
capitalized cost of the automobile, including initial direct capitalized costs,
less the cumulative amount of depreciation recorded against the automobile and
the cumulative amount of amortization of the initial direct capitalized costs
recorded since the inception of the lease and less any impairment charges
recorded-to-date on that lease.

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

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

For those leases considered impaired, the Company then estimated the fair
value of the lease. The fair value was determined by calculating the present
value of the future estimated cash flows again assuming the probabilities of
each of the three disposition scenarios. The present value was calculated
using current market rates, which the Company estimated as the original
contract lease rate. For those impaired leases where the estimated fair value
was less than the net book value, an impairment charge was recorded for the
difference. Since the inception of the lease portfolio in June

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1998, the Company has recorded additional monthly depreciation charges, also
included in leasing expense, to provide for losses that may be incurred at the
end of the lease terms. At March 31, 2002 and December 31, 2001, the Company
had net impairment and additional monthly charges against its automobile operating
leases outstanding on those dates of $32.2 million and $32.7 million, respectively.

Significant assumptions underlying the automobile lease impairment
analysis that are susceptible to possible change in the near term include the
projected ALG residual values and the estimated probabilities of each of the
three disposition scenarios. For example, if ALG projected residual values
decline by $250 for each vehicle, approximately 1,600 additional vehicles of
its 16,573 vehicles would be considered impaired at March 31, 2002 and
therefore subject to a possible impairment charge. At March 31,
2002, a total of 7,868 vehicles were considered impaired. Further, if the aggregate
number of lessees that return their vehicle to the Company at the end of the
lease term is higher than currently projected, the number of impaired vehicles
could be higher as the amount realized under this scenario is generally less
than if the lessee purchases their automobile prior to the end of the lease
term or purchases the vehicle at the end of the lease term, either at a
discount or at the full contractual residual amount.

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, which were sold in an underwritten public offering, accrue
quarterly cumulative dividends at an annual rate of 9.76% of the liquidation
value of $25 per share. Dividend expense on the Capital Securities was $2.6
million for the first quarter of 2002 as compared to $2.3 million for the first
quarter of 2001.

In September of 2000, we entered into an agreement with the Federal
Reserve Bank which requires that we obtain their approval prior to disbursing
any dividends associated with our Capital Securities. Beginning the third
quarter of 2000, we have not received approval to disburse the quarterly
dividends. As a result, pursuant to the terms of the Capital Securities, we
have deferred distributions until such time as approval can be obtained. We
fully intend to continue to seek such approval; however, we cannot predict when
approval may be obtained. During this deferral period, distributions to which
holders are entitled will continue to accrue at an annual rate of 9.76% of the
liquidation amount of $25 per Capital Security, plus accumulated additional
distributions at the same rate, compounded quarterly, on any unpaid
distributions (to the extent permitted by law). Holders of the Capital
Securities at the time the distribution of dividends is resumed will receive
the cumulative deferred distributions plus the cumulative interest thereon.
Deferred dividends and interest, which were fully accrued, were $16.6 million
at March 31, 2002 as compared to $14.1 million at December 31, 2001.

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Real Estate Owned

The net expense related to our real estate owned was $0.5 million for the
first quarter of 2002 as compared to net income of $18,000 for the first
quarter of 2001. Additionally, we recorded $204,000 of provision for losses on
real estate owned during the quarter. The increase in expenses and provision
related to real estate owned was primarily due to an increase in real estate
owned activity, primarily representing foreclosed franchise properties.

Amortization of Intangible Assets

As of January 1, 2002, we adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets, which requires that
certain goodwill and intangible assets with indefinite useful lives no longer
be amortized but instead be tested for impairment at least annually. As an
additional component of this adoption, we will be completing a
transitional goodwill impairment test by June 30, 2002. There
will be extensive effort in performing the transitional goodwill
impairment test, including whether any transitional impairment losses
will be required to be recognized as the cumulative effect of a
change in accounting principle. While only preliminary analysis has
been performed, the results of the transitional goodwill impairment
test are not expected to have a material effect on the Companys
financial statements.

Amortization expense related to intangible assets was $0.3 million for the
first quarter of 2002 as compared to $2.9 million for the first quarter of
2001. The decrease in amortization expense was due to a change in the
accounting treatment for amortization of intangible assets. We would have
recorded $2.8 million of amortization expense for the first quarter of 2002
under the prior accounting rule.

Income Taxes

The Company recorded a tax benefit of $1.9 million for the first quarter
of 2002. This tax benefit included a tax expense of $2.1 million on pre-tax
earnings of $5.0 million offset by a tax benefit of $4.0 million related to the
loss incurred on the 2001 stock sale by Bay View Bank of the legal entity Bay
View Franchise Mortgage Acceptance Company. The Company recorded no tax
benefit for this loss in its 2001 financial statements. The $4.0 million tax
benefit was a result of a change in federal tax law that occurred in the first
quarter of 2002 allowing the Company to deduct a portion of the loss associated
with the sale of BVFMAC. The effective tax rate used in computing the $2.1
million tax expense for the first quarter of 2002 was 41.5%. This effective
tax rate differs from the statutory rate primarily due to the impact of state
taxes. For the first quarter of 2001, the Company recorded no tax benefit on
the pre-tax loss of $8.0 million because, at that time, management could not
determine that it was more likely than not that the Company would realize
benefits in the amount of these additional deferred tax assets.

During 2000, the Company recorded a $26.0 million valuation allowance
against its gross deferred tax assets primarily relating to approximately $48.6
million in federal net operating loss carryforwards that were expiring in 2001
as the Company did not expect to be able to fully utilize these amounts prior
to their expiration date. In May 2001, the Company raised $137.5 million of
additional capital which enabled the Company to implement a new strategic plan,
including the disposition of non-core and higher-risk assets. As a result of
these actions, the Companys ability to generate future taxable income is more
predictable. During 2001, the Company also executed certain transactions that
resulted in significant amounts of taxable income. These transactions included
the sale of the BVFMAC legal entity which generated significant taxable income
related to previously deferred gains in the franchise securitization trusts.
The Company also executed a financing secured by the contractual cash flows of
our auto operating lease portfolio that was treated as a sale for income tax
purposes and generated $136.5 million in taxable income. Primarily as a result
of these transactions, the Company generated sufficient taxable income during
the year to be able to utilize the majority of its net operating loss
carryforwards expiring in 2001. As a
result, the Company eliminated the $26.0 million valuation
allowance against its gross deferred tax assets during 2001.

The Company believes it will be able to fully utilize its $174.0 million
of net deferred tax assets at March 31, 2002. In order to fully utilize its
net operating loss carryforwards prior to their expiration dates, however, the
Company will be required to execute certain tax planning strategies during 2002
including selling certain assets obtained in connection with a previous
purchase business combination with significant built-in gains for tax purposes
which would be triggered in the event of a sale. Such a transaction would not
only generate significant levels of taxable income, but would also increase the
limitation on the utilization of the net operating loss carryforward acquired
in connection with a previous purchase business combination.

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There are significant assumptions underlying the valuation of the
Companys net deferred tax assets that are susceptible to possible change in
the near term. In the event the Company cannot implement the tax planning
strategies contemplated above, the Company may not be able to utilize its net
operating loss carryforwards prior to their expiration date. In addition, in
the event the Company does not generate sufficient levels of future taxable
income, the Company may not be able to utilize its net operating loss
carryforwards prior to their expiration date or may not be able to realize
other net deferred tax assets related to timing difference between reported
financial statement income (loss) and taxable income (loss). If the Company
determines in the future that it cannot fully utilize its net deferred tax
assets, it would be required to establish a valuation allowance against that
portion of its net deferred tax assets estimated not to be realizable.

Non-GAAP Performance Measures

The following measures of normalized net interest income and normalized
net interest margin are not measures of performance in accordance with GAAP.
These measures should not be considered alternatives to 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.

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 expense and impairment charges 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 2002 was $38.2 million
as compared to $39.5 million for the first quarter of 2001. Normalized net
interest margin for the first quarter of 2002 was 4.31% as compared to 3.22%
for the first quarter of 2001. The following table illustrates normalized net
interest income and net interest margin, by platform, for the periods
indicated:

|                    |  |                            |        |                |  |            |      |            |  |   |        |  |  |  |      |  
|------------------- |  | -------------------------- | ------ | -------------- |  | ---------- | ---- | ---------- |  | - | ------ |  |  |  | ---- | -
|                    |  | For the Three Months Ended
|                    |  |                           
|                    |  | March 31, 2002             |        | March 31, 2001
|                    |  |                            |        |               
|                    |  | Normalized                 |        | Normalized     |  | Normalized |      | Normalized
|                    |  | Net                        |        | Net            |  | Net        |      | Net       
|                    |  | Interest                   |        | Interest       |  | Interest   |      | Interest  
|                    |  | Income                     |        | Margin         |  | Income     |      | Margin    
|                    |  |                            |        |                |  |            |      |           
|                    |  | (Dollars in thousands)    
|Retail Platform     |  | $                          | 17,600 |                |  |            | 3.63 | %          |  | $ | 16,766 |  |  |  | 2.42 | %
|Commercial
Platform |  |                            | 20,604 |                |  |            | 5.13 |            |  |   | 22,783 |  |  |  | 4.24 |  
|                    |  |                            |        |                |  |            |      |            |  |   |        |  |  |  |      |  
|Total               |  | $                          | 38,204 |                |  |            | 4.31 | %          |  | $ | 39,549 |  |  |  | 3.22 | %
|                    |  |                            |        |                |  |            |      |            |  |   |        |  |  |  |      |  

The decrease in normalized net interest income for the first quarter of
2002, as compared to the first quarter of 2001, was largely attributable to
lower average interest-earning asset balances partially offset by an increase
in normalized net interest margin. The decrease in average interest-earning
assets was primarily due to asset sales throughout the one-year period ending
March 31, 2002, as previously discussed. The increase in normalized net
interest margin was due to lower funding costs, including lower deposit costs
and funding costs associated with the declining balance of our auto-related
operating lease assets, partially offset by lower asset yields. The decreases
in both asset yields and funding costs were primarily due to the lower interest
rate environment.

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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            
|                    |  |                         
|                    |  | March 31,                |           | March 31,
|                    |  | 2002                     |           | 2001     
|                    |  |                          |           |          
|                    |  | (Dollars in thousands)  
|Retail Platform     |  | $                        | 1,944,292 |           |  | $ | 2,731,707 | 
|Commercial Platform |  |                          | 1,609,958 |           |  |   | 2,135,044 | 
|                    |  |                          |           |           |  |   |           | 
|Total               |  | $                        | 3,554,250 |           |  | $ | 4,866,751 | 
|                    |  |                          |           |           |  |   |           | 

The decrease in the Retail Platforms average interest-earning assets,
including our auto-related operating lease assets, reflects the impact of the
sales of loans, mortgage-backed and other investment securities during the
one-year period ending March 31, 2002 as well as the declining balance of our
auto-related operating lease assets, as previously disclosed or discussed
elsewhere herein. The decrease in the Commercial Platforms average
interest-earning assets reflects franchise loan sales as well as the impact of
the writedowns related to the revaluation of our franchise-related assets
during 2001.

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

|                    |  |                        |           |              |  |           |           |  |  |   |           | 
|------------------- |  | ---------------------- | --------- | ------------ |  | --------- | --------- |  |  | - | --------- | 
|                    |  | At                     |           | At           |  | At       
|                    |  | March 31,              |           | December 31, |  | March 31,
|                    |  | 2002                   |           | 2001         |  | 2001     
|                    |  |                        |           |              |  |          
|                    |  | (Dollars in thousands)
|Retail Platform     |  | $                      | 1,877,488 |              |  | $         | 1,793,499 |  |  | $ | 2,657,569 | 
|Commercial Platform |  |                        | 1,584,446 |              |  |           | 1,541,310 |  |  |   | 2,027,722 | 
|                    |  |                        |           |              |  |           |           |  |  |   |           | 
|Total               |  | $                      | 3,461,934 |              |  | $         | 3,334,809 |  |  | $ | 4,685,291 | 
|                    |  |                        |           |              |  |           |           |  |  |   |           | 

The increase in the Retail Platforms interest-earning assets, including
our auto-related operating lease assets, at March 31, 2002, as compared to
December 31, 2001, was primarily due to the redeployment of non
interest-earning cash at December 31, 2001 into interest-earning short-term
investments during the first quarter of 2002 partially offset by the sale of
our mortgage-backed securities and the declining balance of our auto-related
operating lease assets, as previously discussed. The increase in the
Commercial Platforms interest-earning assets was primarily due to the strong
multi-family mortgage loan originations during the first quarter of 2002.

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Balance Sheet Analysis

Our total assets were $3.8 billion at March 31, 2002, as compared to $4.0
billion at December 31, 2001. The slight decrease in total assets was
primarily due to a decline in cash and short-term investments, resulting from
our strategy to reduce higher-cost certificates of deposit, partially offset by
loan and lease originations and purchases of investment securities.

Securities

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

|                                            |                                          |   |                        |         |                   |   |           |         |       |   |         |         |  |   |         |         | 
|------------------------------------------- | ---------------------------------------- | - | ---------------------- | ------- | ----------------- | - | --------- | ------- | ----- | - | ------- | ------- |  | - | ------- | ------- | 
|                                            |                                          |   | March 31, 2002         |         | December 31, 2001
|                                            |                                          |   |                        |         |                  
|                                            |                                          |   | Amortized              |         | Fair              |   | Amortized |         | Fair 
|                                            |                                          |   | Cost                   |         | Value             |   | Cost      |         | Value
|                                            |                                          |   |                        |         |                   |   |           |         |      
|                                            |                                          |   | (Dollars in thousands)
|Available-for-sale                          |                                          |   |                        |         |                   |   |           |         |       |   |         |         |  |   |         |        
|Federal National Mortgage Association stock |                                          | $ | 580                    |         |                   | $ | 764       |         |       | $ | 580     |         |  | $ | 761     |        
|Federal Home Loan Bank callable notes       |                                          |   | 5,457                  |         |                   |   | 5,454     |         |       |   | 10,000  |         |  |   | 9,988   |        
|Asset-backed securities                     |                                          |   | 39,526                 |         |                   |   | 39,551    |         |       |   | 14,129  |         |  |   | 14,096  |        
|Trust preferred securities                  |                                          |   | 49,785                 |         |                   |   | 49,544    |         |       |   | 48,082  |         |  |   | 47,907  |        
|Other investment securities                 |                                          |   | 11,680                 |         |                   |   | 11,732    |         |       |   | 12,287  |         |  |   | 12,354  |        
|Retained interests in securitizations       |                                          |   | 13,634                 |         |                   |   | 13,634    |         |       |   | 13,874  |         |  |   | 13,874  |        
|                                            |                                          |   |                        |         |                   |   |           |         |       |   |         |         |  |   |         |        
|Total investment securities                 |                                          |   | 120,662                |         |                   |   | 120,679   |         |       |   | 98,952  |         |  |   | 98,980  |        
|                                            |                                          |   |                        |         |                   |   |           |         |       |   |         |         |  |   |         |        
|Mortgage-backed securities:                 |                                          |   |                        |         |                   |   |           |         |       |   |         |         |  |   |         |        
|                                            | Fannie Mae                               |   |                        | 50,417  |                   |   |           | 51,332  |       |   |         | 89,083  |  |   |         | 90,256  | 
|                                            | Freddie Mac                              |   |                        | 64,522  |                   |   |           | 64,800  |       |   |         | 73,850  |  |   |         | 73,670  | 
|                                            | Government National Mortgage Association |   |                        | 2,650   |                   |   |           | 2,639   |       |   |         | 2,837   |  |   |         | 2,835   | 
|                                            | Collateralized mortgage obligations      |   |                        | 138,986 |                   |   |           | 138,180 |       |   |         | 112,247 |  |   |         | 112,130 | 
|                                            |                                          |   |                        |         |                   |   |           |         |       |   |         |         |  |   |         |        
|Total mortgage-backed securities            |                                          |   | 256,575                |         |                   |   | 256,951   |         |       |   | 278,017 |         |  |   | 278,891 |        
|                                            |                                          |   |                        |         |                   |   |           |         |       |   |         |         |  |   |         |        
|Total securities available-for-sale         |                                          | $ | 377,237                |         |                   | $ | 377,630   |         |       | $ | 376,969 |         |  | $ | 377,871 |        
|                                            |                                          |   |                        |         |                   |   |           |         |       |   |         |         |  |   |         |        

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, trust preferred and asset-backed securities.

During 2001, we transferred our remaining held-to-maturity securities
totaling $631.7 million to available-for-sale. In accordance with Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments in
Debt and Equity Securities, we recorded $1.5 million of unrealized losses
related to the transfer. As a result of the transfer and subsequent sales of
securities from our held-to-maturity portfolio, we do not intend to hold any
securities as held-to-maturity in the foreseeable future.

We sold $29.0 million of mortgage-backed securities during the first
quarter of 2002. A gross gain of $0.4 million was realized on the sale. The
sale was offset by purchases of $39.2 million of mortgage-backed securities and
$40.5 of asset-backed securities during the quarter.

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.

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Loans and Leases

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

|                                                        |                                   |                                                                                 |           |                        |         |              |           |           |         | 
|------------------------------------------------------- | --------------------------------- | ------------------------------------------------------------------------------- | --------- | ---------------------- | ------- | ------------ | --------- | --------- | ------- | 
|                                                        |                                   |                                                                                 |           | March 31,              |         | December 31,
|                                                        |                                   |                                                                                 |           | 2002                   |         | 2001        
|                                                        |                                   |                                                                                 |           |                        |         |             
|                                                        |                                   |                                                                                 |           | (Dollars in thousands)
|Loans and leases receivable:                            |                                   |                                                                                 |           |                        |         |              |           |          
|                                                        | Retail Platform:                  |                                                                                 |           |                        |         |              |           |           |        
|                                                        |                                   | Single-family mortgage loans                                                    |           | $                      | 216,985 |              |           | $         | 277,288 | 
|                                                        |                                   | High loan-to-value home equity loans and lines of credit                        |           |                        | 13,335  |              |           |           | 13,835  | 
|                                                        |                                   | Other home equity loans and lines of credit                                     |           |                        | 141,554 |              |           |           | 130,784 | 
|                                                        |                                   | Auto loans (1)                                                                  |           |                        | 472,786 |              |           |           | 444,607 | 
|                                                        |                                   |                                                                                 |           |                        |         |              |           |          
|                                                        | Total retail loans                |                                                                                 |           | 844,660                |         |              |           | 866,514   |        
|                                                        | Commercial Platform:              |                                                                                 |           |                        |         |              |           |           |        
|                                                        |                                   | Multi-family mortgage loans                                                     |           |                        | 797,301 |              |           |           | 697,339 | 
|                                                        |                                   | Commercial mortgage loans                                                       |           |                        | 262,883 |              |           |           | 289,093 | 
|                                                        |                                   | Franchise loans                                                                 |           |                        | 108,526 |              |           |           | 119,464 | 
|                                                        |                                   | Asset-based loans, syndicated loans, factored receivables
and commercial leases |           |                        | 294,874 |              |           |           | 310,070 | 
|                                                        |                                   | Business loans                                                                  |           |                        | 75,887  |              |           |           | 79,883  | 
|                                                        |                                   |                                                                                 |           |                        |         |              |           |          
|                                                        | Total commercial loans and leases |                                                                                 |           | 1,539,471              |         |              |           | 1,495,849 |        
|Premiums and discounts and deferred fees and costs, net |                                   |                                                                                 | 15,511    |                        |         |              | 14,215    |          
|                                                        |                                   |                                                                                 |           |                        |         |              |           |          
|Gross loans and leases held for investment              |                                   |                                                                                 | 2,399,642 |                        |         |              | 2,376,578 |          
|Allowance for loan and lease losses                     |                                   |                                                                                 | (46,151   | )                      |         |              | (49,791   | )        
|                                                        |                                   |                                                                                 |           |                        |         |              |           |          
|Loans and leases held-for-investment, net               |                                   |                                                                                 | 2,353,491 |                        |         |              | 2,326,787 |          
|Loans and leases held-for-sale (2)                      |                                   |                                                                                 | 39,954    |                        |         |              | 40,608    |          
|                                                        |                                   |                                                                                 |           |                        |         |              |           |          
|Loans and leases receivable                             |                                   | $                                                                               | 2,393,445 |                        |         | $            | 2,367,395 |          
|                                                        |                                   |                                                                                 |           |                        |         |              |           |          



|(1) |  | Amounts exclude auto-related operating lease assets reported separately
from loans and leases totaling $306.9 million at
March 31, 2002 and $339.3 million at December 31, 2001.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Includes loans with an unpaid principal balance of $47.9 million at March
31, 2002 and $48.5 million at December 31, 2001.                                                      

The increase in loans and leases receivable at March 31, 2002, as compared
to December 31, 2001, was primarily due to strong multi-family mortgage and
consumer loan originations during the quarter partially offset by loan payoffs
and amortization.

Our exposure to higher-risk franchise assets was further reduced during
the quarter as the unpaid principal balance of our franchise loan portfolio
decreased to $163 million at March 31, 2002 from $174 million at December 31,
2001. Net of mark-to-market valuation adjustments, the net book value of our
franchise loan portfolio was $148.5 million at March 31, 2002 as compared to
$160.1 million at December 31, 2001. Loans held-for-sale totaled $40.0 million
as of March 31, 2002, all of which represented franchise loans held-for-sale.

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We currently focus our loan and lease origination efforts on high-quality
consumer and commercial loans and leases including multi-family and commercial
mortgage loans. The following tables illustrate our loan and lease
originations for the periods indicated:

|                             |                    |                                                                                 |   |                            |         |           |   |         |        | 
|---------------------------- | ------------------ | ------------------------------------------------------------------------------- | - | -------------------------- | ------- | --------- | - | ------- | ------ | 
|                             |                    |                                                                                 |   | For the Three Months Ended
|                             |                    |                                                                                 |   |                           
|                             |                    |                                                                                 |   | March 31,                  |         | March 31,
|                             |                    |                                                                                 |   | 2002                       |         | 2001     
|                             |                    |                                                                                 |   |                            |         |          
|                             |                    |                                                                                 |   | (Dollars in thousands)    
|Loan and lease originations: |                    |                                                                                 |   |                            |         |           |   |        
|                             |                    | Home equity loans and lines of credit                                           |   | $                          | 23,878  |           |   | $       | 16,438 | 
|                             |                    | Auto loans                                                                      |   |                            | 82,402  |           |   |         | 73,123 | 
|                             |                    | Multi-family and commercial mortgage loans                                      |   |                            | 113,179 |           |   |         | 21,190 | 
|                             |                    | Asset-based loans, syndicated loans, factored receivables and
commercial leases |   |                            | 8,252   |           |   |         | 14,288 | 
|                             |                    | Business loans                                                                  |   |                            | 6,831   |           |   |         | 10,807 | 
|                             |                    |                                                                                 |   |                            |         |           |   |        
|                             | Total originations |                                                                                 | $ | 234,542                    |         |           | $ | 135,846 |       
|                             |                    |                                                                                 |   |                            |         |           |   |        

Credit Quality

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

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

|                            |  |                        |        |              |  |   |        | 
|--------------------------- |  | ---------------------- | ------ | ------------ |  | - | ------ | 
|                            |  | March 31,              |        | December 31,
|                            |  | 2002                   |        | 2001        
|                            |  |                        |        |             
|                            |  | (Dollars in thousands)
|Nonaccrual loans and leases |  | $                      | 75,729 |              |  | $ | 79,722 | 
|Real estate owned           |  |                        | 6,420  |              |  |   | 9,462  | 
|Other repossessed assets    |  |                        | 655    |              |  |   | 633    | 
|                            |  |                        |        |              |  |   |        | 
|Nonperforming assets        |  | $                      | 82,804 |              |  | $ | 89,817 | 
|                            |  |                        |        |              |  |   |        | 

The decrease in total nonperforming assets at March 31, 2002, as compared
to December 31, 2001, was primarily related to a decrease in nonaccruing
franchise loans. Nonperforming assets excluding franchise-related assets were
$26.7 million at March 31, 2002, as compared to $20.2 million at December 31,
2001, while non-franchise nonaccrual loans and leases were $25.8 million at
March 31, 2002 as compared to $17.5 million at December 31, 2001.

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The following table illustrates, by platform, nonperforming assets and
nonperforming assets as a percentage of consolidated total assets:

|                          |                                                                                 |   |                                              |        |                   |  |      |      |   |   |        |        |  |  |      |      |  
|------------------------- | ------------------------------------------------------------------------------- | - | -------------------------------------------- | ------ | ----------------- |  | ---- | ---- | - | - | ------ | ------ |  |  | ---- | ---- | -
|                          |                                                                                 |   | Nonperforming Assets                        
|                          |                                                                                 |   | as a Percentage of Consolidated Total Assets
|                          |                                                                                 |   |                                             
|                          |                                                                                 |   | March 31, 2002                               |        | December 31, 2001
|                          |                                                                                 |   |                                              |        |                  
|                          |                                                                                 |   | (Dollars in thousands)                      
|Retail Platform:          |                                                                                 |   |                                              |        |                   |  |      |      |   |   |        |        |  |  |      |     
|                          | Single-family mortgage loans                                                    |   | $                                            | 3,671  |                   |  |      | 0.09 | % |   | $      | 2,455  |  |  |      | 0.06 | %
|                          | Home equity loans and lines of credit                                           |   |                                              | 294    |                   |  |      | 0.01 |   |   |        | 470    |  |  |      | 0.01 |  
|                          | Auto loans                                                                      |   |                                              | 772    |                   |  |      | 0.02 |   |   |        | 1,034  |  |  |      | 0.03 |  
|                          |                                                                                 |   |                                              |        |                   |  |      |      |   |   |        |        |  |  |      |     
|Total retail platform     |                                                                                 |   | 4,737                                        |        |                   |  | 0.12 |      |   |   | 3,959  |        |  |  | 0.10 |     
|Commercial Platform:      |                                                                                 |   |                                              |        |                   |  |      |      |   |   |        |        |  |  |      |     
|                          | Multi-family mortgage loans                                                     |   |                                              | 313    |                   |  |      | 0.01 |   |   |        | 67     |  |  |      |     |  
|                          | Commercial real estate loans                                                    |   |                                              | 5,833  |                   |  |      | 0.15 |   |   |        | 7,822  |  |  |      | 0.19 |  
|                          | Franchise loans                                                                 |   |                                              | 56,131 |                   |  |      | 1.47 |   |   |        | 69,583 |  |  |      | 1.74 |  
|                          | Asset-based loans, syndicated loans,
factored receivables
and commercial leases |   |                                              | 15,373 |                   |  |      | 0.40 |   |   |        | 8,003  |  |  |      | 0.20 |  
|                          | Business loans                                                                  |   |                                              | 417    |                   |  |      | 0.01 |   |   |        | 383    |  |  |      | 0.01 |  
|                          |                                                                                 |   |                                              |        |                   |  |      |      |   |   |        |        |  |  |      |     
|Total commercial platform |                                                                                 |   | 78,067                                       |        |                   |  | 2.04 |      |   |   | 85,858 |        |  |  | 2.14 |     
|                          |                                                                                 |   |                                              |        |                   |  |      |      |   |   |        |        |  |  |      |     
|Total                     |                                                                                 | $ | 82,804                                       |        |                   |  | 2.16 | %    |   | $ | 89,817 |        |  |  | 2.24 | %   
|                          |                                                                                 |   |                                              |        |                   |  |      |      |   |   |        |        |  |  |      |     

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

|                    |  |                                             |        |                   |  |  |      |   |  |   |        |  |  |  |      |  
|------------------- |  | ------------------------------------------- | ------ | ----------------- |  |  | ---- | - |  | - | ------ |  |  |  | ---- | -
|                    |  | Loans and Leases Delinquent 60 Days or More
|                    |  | as a Percentage of Gross Loans and Leases  
|                    |  |                                            
|                    |  | March 31, 2002                              |        | December 31, 2001
|                    |  |                                             |        |                  
|                    |  | (Dollars in thousands)                     
|Retail Platform     |  | $                                           | 6,495  |                   |  |  | 0.27 | % |  | $ | 7,802  |  |  |  | 0.32 | %
|Commercial Platform |  |                                             | 70,617 |                   |  |  | 2.89 |   |  |   | 62,221 |  |  |  | 2.58 |  
|                    |  |                                             |        |                   |  |  |      |   |  |   |        |  |  |  |      |  
|Total               |  | $                                           | 77,112 |                   |  |  | 3.16 | % |  | $ | 70,023 |  |  |  | 2.90 | %
|                    |  |                                             |        |                   |  |  |      |   |  |   |        |  |  |  |      |  

The increase in loans and leases delinquent 60 days or more at March 31,
2002, as compared to December 31, 2001, was primarily due to a mortgage loan
participation of $5.0 million that has subsequently been paid current.

Allowance for Loan and Lease Losses (ALLL)

Credit risk and potential loss are inherent in the lending process. The
purpose of the ALLL is to absorb losses that are probable and estimable in our
loan and lease portfolio. The ALLL is augmented through charges to earnings
called provisions. Known losses are charged to the ALLL. Management seeks to
reduce credit risk and therefore potential loss by administering established
lending policies and underwriting procedures combined with continuous
monitoring of the portfolio.

The adequacy of the ALLL is formally evaluated on a quarterly basis. As
discussed in more detail below, specific credits and the portfolio in general
are evaluated by several methods incorporating historical performance,
collateral protection, cash flow and analysis of current economic conditions.
This evaluation culminates with a judgment on the probability of collection
based on existing and probable near-term events. The underwriting of new
credits may be changed or modified depending on the results of these on-going
evaluations. Discontinued lending operations receive the same scrutiny as
on-going operations but do not have the additional risk inherent in accepting
new business.

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After the quarterly evaluations are completed and the various requirements
are tabulated, any deficiency is covered through provisions to the ALLL.
Through the budget process, these provisions are estimated for the entire year
and adjusted after the quarterly evaluations if necessary. This entire process
of evaluating the adequacy of the ALLL is subjective and judgmental. In
accordance with our methodology, this process consists of three major
components as described below:



|1. |  | Allowance for loans and leases that are individually evaluated.These
loans and leases are generally larger commercial or income-producing real
estate loans or leases that are evaluated on an individual basis at least
quarterly in accordance with our internal grading processes and smaller
homogeneous loans that have been adversely graded. Loans adversely graded
receive a specific allowance allocation predicated on the individual
analysis using the various techniques mentioned above. Pass credits
within each loan category receive a general allowance component consistent
with the evaluation of the factors within that portfolio. Loans
considered impaired receive further testing as required under Statement of
Financial Accounting Standards No. 114, Accounting by Creditors for
Impairment of a Loan, and any resulting permanent impairment is charged
off to the ALLL. These grades and the specific allowance allocations are
routinely reviewed for accuracy through an independent review process and
by the banks regulatory agencies.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Allowance for groups of homogenous loans and leases that currently
exhibit no identifiable weaknesses and are collectively evaluated. 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 loans and leases generally consist of commercial or
income-producing real estate loans and leases that are grouped into pools
with common characteristics. An allowance factor is derived that is an
estimate of the probable losses that are inherent in these pools. These
factors are based primarily on the historical loss experience tracked over
various time periods up to three years with specific attention given to
recent trend analysis. Other factors including delinquency, adverse
classification trends, and industry experience are also evaluated. The
resulting allowance is the sum of the allocations in each category.                                                              
|  
|3. |  | Unallocated Allowance.The third component is to absorb losses not
provided for by the other two components. Other factors come into play
that may have an impact on loan losses. These include, but are not
limited to, changes in economic conditions in areas where we loan money,
increased risk in lending into new areas with new products, and timing
difference between the receipt and evaluation of loan data. Another
important risk that this component takes into consideration is the general
level of imprecision involved with any ALLL analysis process. The first
two components are driven primarily by historical factors and evaluation
of existing and near-term events. While these components are believed to
be adequate under existing conditions, they remain subjective and
judgmental. The unallocated portion of the ALLL is managements best
efforts to ensure that the overall allowance appropriately reflects the
probable losses inherent in the loan and lease portfolio.                                                                

The allowance for loan and lease losses at March 31, 2002 was $46.2
million as compared to $49.8 million at December 31, 2001. The decrease in the
allowance for losses on loans and leases was primarily related to net
charge-offs in excess of loan loss provision expense during the first quarter
of 2002.

The allowance for loan and lease losses at March 31, 2002 represents 1.92%
of gross loans and leases held-for-investment. Within this allowance, $14.8
million is specifically allocated to the total franchise portfolio and
represents 13.66% of that portfolio. As such, this particular segment of our
total loan portfolio, while relatively small, contains the most exposure to
potential credit loss. This is a discontinued lending operation and the size
of this portfolio declined significantly since December 31, 2000. The balance
of the allowance of $31.4 million, including $4.3 million of unallocated
reserves, represents 1.37% of the remaining loan portfolio. In addition,
within the held-for-investment portfolio of franchise loans is another $6.3
million of mark-to-market valuation adjustments on loans transferred from
held-for-sale to held-for-investment which is available to absorb losses on
these loans.

The allowance for loan and lease losses is maintained at a level that we
believe is appropriate based on our estimate of probable losses in the
portfolio of loans and leases held-for-investment. This assessment is based on
many factors

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including prevailing economic conditions, identified losses within the
portfolio, historical loss experience, asset concentrations, levels and trends
in classified assets, loan and lease delinquencies and industry data.

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

|                                           |  |                                          |           |                   |  |        |      |         |  |   |           |  |  |  |      |  
|------------------------------------------ |  | ---------------------------------------- | --------- | ----------------- |  | ------ | ---- | ------- |  | - | --------- |  |  |  | ---- | -
|                                           |  | Allowance for Loan and Lease Losses as a
|                                           |  | Percentage of Specified Assets          
|                                           |  |                                         
|                                           |  | March 31, 2002                           |           | December 31, 2001
|                                           |  |                                          |           |                  
|                                           |  | (Dollars in thousands)                  
|                                           |  |                                         
|                                           |  | Assets                                   |           | Percent           |  | Assets |      | Percent
|                                           |  |                                          |           |                   |  |        |      |        
|Nonperforming assets                       |  | $                                        | 82,804    |                   |  |        | 56   | %       |  | $ | 89,817    |  |  |  | 55   | %
|Gross loans and leases held-for-investment |  | $                                        | 2,399,642 |                   |  |        | 1.92 | %       |  | $ | 2,376,578 |  |  |  | 2.10 | %

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

|                                                         |                                                                                 |   |                        |        |              |   |              |         |   |   |         |        |  
|-------------------------------------------------------- | ------------------------------------------------------------------------------- | - | ---------------------- | ------ | ------------ | - | ------------ | ------- | - | - | ------- | ------ | -
|                                                         |                                                                                 |   | Three Months           |        | Year         |   | Three Months
|                                                         |                                                                                 |   | Ended                  |        | Ended        |   | Ended       
|                                                         |                                                                                 |   | March 31,              |        | December 31, |   | March 31,   
|                                                         |                                                                                 |   | 2002                   |        | 2001         |   | 2001        
|                                                         |                                                                                 |   |                        |        |              |   |             
|                                                         |                                                                                 |   | (Dollars in thousands)
|Beginning balance                                        |                                                                                 | $ | 49,791                 |        |              | $ | 73,738       |         |   | $ | 73,738  |       
|Transfers of loans to held-for-sale                      |                                                                                 |   |                       |        |              |   | (53,606      | )       |   |   |        |       
|Charge-offs:                                             |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       
|                                                         | Mortgage                                                                        |   |                        |       |              |   |              | (1,488  | ) |   |         | (41    | )
|                                                         | Home equity loans and lines of credit                                           |   |                        | (571   | )            |   |              | (10,296 | ) |   |         | (4,946 | )
|                                                         | Auto                                                                            |   |                        | (1,072 | )            |   |              | (3,809  | ) |   |         | (637   | )
|                                                         | Asset-based loans, syndicated loans, factored
receivables and
commercial leases |   |                        | (1,583 | )            |   |              | (9,397  | ) |   |         | (2,260 | )
|                                                         | Franchise                                                                       |   |                        | (6,239 | )            |   |              | (24,197 | ) |   |         | (2,781 | )
|                                                         | Business                                                                        |   |                        | (13    | )            |   |              | (2,509  | ) |   |         | (74    | )
|                                                         |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       
|                                                         |                                                                                 |   | (9,478                 | )      |              |   | (51,696      | )       |   |   | (10,739 | )     
|Recoveries:                                              |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       
|                                                         | Mortgage                                                                        |   |                        |       |              |   |              | 283     |   |   |         | 27     |  
|                                                         | Home equity loans and lines of credit                                           |   |                        | 182    |              |   |              | 4,602   |   |   |         | 468    |  
|                                                         | Auto                                                                            |   |                        | 299    |              |   |              | 1,526   |   |   |         | 355    |  
|                                                         | Asset-based loans, syndicated loans, factored
receivables and
commercial leases |   |                        | 426    |              |   |              | 2,479   |   |   |         | 273    |  
|                                                         | Franchise                                                                       |   |                        |       |              |   |              | 196     |   |   |         |       |  
|                                                         | Business                                                                        |   |                        | 31     |              |   |              | 379     |   |   |         |       |  
|                                                         |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       
|                                                         |                                                                                 |   | 938                    |        |              |   | 9,465        |         |   |   | 1,123   |       
|Net charge-offs                                          |                                                                                 |   | (8,540                 | )      |              |   | (42,231      | )       |   |   | (9,616  | )     
|Provision for losses on loans and leases                 |                                                                                 |   | 4,900                  |        |              |   | 71,890       |         |   |   | 7,300   |       
|                                                         |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       
|Ending balance                                           |                                                                                 | $ | 46,151                 |        |              | $ | 49,791       |         |   | $ | 71,422  |       
|                                                         |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       
|Net charge-offs to average loans and leases (annualized) |                                                                                 |   | 1.41                   | %      |              |   | 1.51         | %       |   |   | 1.23    | %     
|                                                         |                                                                                 |   |                        |        |              |   |              |         |   |   |         |       

During 2001, the allowance for loan and lease losses decreased as we
transferred and subsequently sold loans from our held-for-investment portfolio
to our held-for-sale portfolio. The transfer of loans from held-for-investment
to held-for-sale resulted in a $53.6 million reduction to the allowance for
loan and lease losses related to mark-to-market adjustments on these loans,
consisting of $48.8 million in net reductions related to the
sale of franchise
loans and $4.8 million related to home equity loans.

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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:

|                                                       |  |                        |           |                   |  |        |      |       |  |   |           |  |  |  |      |  
|------------------------------------------------------ |  | ---------------------- | --------- | ----------------- |  | ------ | ---- | ----- |  | - | --------- |  |  |  | ---- | -
|                                                       |  | March 31, 2002         |           | December 31, 2001
|                                                       |  |                        |           |                  
|                                                       |  | Amount                 |           | Rates             |  | Amount |      | Rates
|                                                       |  |                        |           |                   |  |        |      |      
|                                                       |  | (Dollars in thousands)
|Transaction accounts                                   |  | $                      | 1,961,287 |                   |  |        | 1.23 | %     |  | $ | 1,950,699 |  |  |  | 1.48 | %
|Retail certificates of deposit                         |  |                        | 1,105,413 |                   |  |        | 2.71 |       |  |   | 1,284,228 |  |  |  | 3.53 |  
|                                                       |  |                        |           |                   |  |        |      |       |  |   |           |  |  |  |      |  
|Total                                                  |  | $                      | 3,066,700 |                   |  |        | 1.76 | %     |  | $ | 3,234,927 |  |  |  | 2.29 | %
|                                                       |  |                        |           |                   |  |        |      |       |  |   |           |  |  |  |      |  
|Transaction accounts as a
percentage of total deposits |  |                        |           |                   |  |        | 64.0 | %     |  |   |           |  |  |  | 60.3 | %
|                                                       |  |                        |           |                   |  |        |      |       |  |   |           |  |  |  |      |  

The decrease in the cost of deposits at March 31, 2002, as compared to
December 31, 2001, was primarily a result of the continued change in our
deposit mix combined with the repricing of approximately $556.8 million of
higher-cost retail certificates of deposit during the first quarter of 2002.
The change in our deposit mix consisted of a decrease in time deposits and an
increase in transaction accounts.

Borrowings

In addition to deposits, we have historically utilized 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, 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.

During 2001, we significantly reduced our borrowings as part of our
strategic plan, completely eliminating short-term borrowings including
collateralized advances from the Federal Home Loan Bank of San Francisco,
warehouse lines and securities sold under agreements to repurchase. At March
31, 2002, our remaining borrowings include subordinated debt, capital
securities and other borrowings related to the financing secured by our auto
lease contractual cash flows during the fourth quarter of 2001.

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

|                        |  |                        |         |                   |  |   |         | 
|----------------------- |  | ---------------------- | ------- | ----------------- |  | - | ------- | 
|                        |  | March 31, 2002         |         | December 31, 2001
|                        |  |                        |         |                  
|                        |  | (Dollars in thousands)
|Subordinated Notes, net |  | $                      | 149,648 |                   |  | $ | 149,632 | 
|Other borrowings        |  |                        | 115,725 |                   |  |   | 137,536 | 
|Capital Securities      |  |                        | 90,000  |                   |  |   | 90,000  | 
|                        |  |                        |         |                   |  |   |         | 
|Total                   |  | $                      | 355,373 |                   |  | $ | 377,168 | 
|                        |  |                        |         |                   |  |   |         | 

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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 Risk Management 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, repurchase agreements 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.

On September 6, 2000, Bay View Bank entered into an agreement with the
Office of the Comptroller of the Currency. This agreement states that Bay View
Bank may not declare or distribute any dividends without prior approval of the
Office of the Comptroller of the Currency.

On September 29, 2000, Bay View Capital Corporation entered into an
agreement with the Federal Reserve Bank of San Francisco. In addition to
requiring prior approval to pay common stock dividends, the agreement requires
us to obtain prior approval to disburse dividends associated with our 9.76%
Capital Securities. We have not received approval to disburse the quarterly
dividend since the third quarter of 2000. Pursuant to the terms of the Capital
Securities, we have deferred distributions on the debentures. During this
deferral period, distributions to which holders are entitled will continue to
accrue at an annual rate of 9.76% of the liquidation amount of $25 per Capital
Security, plus accumulated additional distributions at the same rate,
compounded quarterly, on any unpaid distributions (to the extent permitted by
law). We fully intend to continue to seek approval to distribute the dividend
at the earliest available opportunity as the interest on these unpaid dividends
is one of our highest borrowing costs.

At March 31,
2002, we had liquidity levels with cash and cash equivalents of nearly $344 million, representing approximately 11% of total deposits.

To assist you in analyzing our liquidity, you should review our
Consolidated Statements of Cash Flows at Item 8. Financial Statements and
Supplementary Data.

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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 $344.8 million at March 31, 2002 as compared to
$336.2 million at December 31, 2001. Tangible stockholders equity, which
excludes intangible assets, was $221.6 million at March 31, 2002 as compared to
$212.6 million at December 31, 2001. Both increases were largely due to
earnings for the first quarter of 2002.

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

|                              |  |                           |          |              |  |   |          |  
|----------------------------- |  | ------------------------- | -------- | ------------ |  | - | -------- | -
|                              |  | At                        |          | At          
|                              |  | March 31,                 |          | December 31,
|                              |  | 2002                      |          | 2001        
|                              |  |                           |          |             
|                              |  | (Dollars in thousands,   
|                              |  | except per share amounts)
|Stockholders equity          |  | $                         | 344,847  |              |  | $ | 336,187  |  
|Intangible assets             |  |                           | (123,242 | )            |  |   | (123,573 | )
|                              |  |                           |          |              |  |   |          |  
|Tangible stockholders equity |  | $                         | 221,605  |              |  | $ | 212,614  |  
|                              |  |                           |          |              |  |   |          |  
|Book value per share          |  | $                         | 5.50     |              |  | $ | 5.37     |  
|                              |  |                           |          |              |  |   |          |  
|Tangible book value per share |  | $                         | 3.54     |              |  | $ | 3.40     |  
|                              |  |                           |          |              |  |   |          |  

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

|                                                                                                              |  |                        |         |              |  |   |          |  
|------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | ------------ |  | - | -------- | -
|                                                                                                              |  | Three Months           |         | Year        
|                                                                                                              |  | Ended                  |         | Ended       
|                                                                                                              |  | March 31,              |         | December 31,
|                                                                                                              |  | 2002                   |         | 2001        
|                                                                                                              |  |                        |         |             
|                                                                                                              |  | (Dollars in thousands)
|Beginning tangible stockholders equity                                                                       |  | $                      | 212,614 |              |  | $ | 162,913  |  
|Net income (loss)                                                                                             |  |                        | 6,914   |              |  |   | (101,170 | )
|Net proceeds from issuance of common stock                                                                    |  |                        |        |              |  |   | 108,000  |  
|Net proceeds from issuance of preferred stock                                                                 |  |                        |        |              |  |   | 26,400   |  
|Expense realized on stock options with below market
exercise price                                            |  |                        | 671     |              |  |   | 5,219    |  
|Amortization of intangible assets                                                                             |  |                        | 331     |              |  |   | 11,280   |  
|Exercise of stock options, conversion of stock
warrants and distribution of directors retirement plan shares |  |                        | 301     |              |  |   | 166      |  
|Other                                                                                                         |  |                        | 774     |              |  |   | (194     | )
|                                                                                                              |  |                        |         |              |  |   |          |  
|Ending tangible stockholders equity                                                                          |  | $                      | 221,605 |              |  | $ | 212,614  |  
|                                                                                                              |  |                        |         |              |  |   |          |  

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.

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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, 2002 exceeded both
the minimum requirements as well as the requirements necessary to be considered
well-capitalized as illustrated in the following table:

|                  |  |                        |         |             |  |             |       |       |  |         |         |                  |  |  |      |   |  |   |         |  |  |  |       |  
|----------------- |  | ---------------------- | ------- | ----------- |  | ----------- | ----- | ----- |  | ------- | ------- | ---------------- |  |  | ---- | - |  | - | ------- |  |  |  | ----- | -
|                  |  |                        |         |             |  |             |       |       |  | Minimum |         | Well-Capitalized
|                  |  | Actual                 |         | Requirement |  | Requirement
|                  |  |                        |         |             |  |            
|                  |  | Amount                 |         | Ratio       |  | Amount      |       | Ratio |  | Amount  |         | Ratio           
|                  |  |                        |         |             |  |             |       |       |  |         |         |                 
|                  |  | (Dollars in thousands)
|Tier 1 Leverage   |  | $                      | 229,664 |             |  |             | 6.37  | %     |  | $       | 144,241 |                  |  |  | 4.00 | % |  | $ | 180,302 |  |  |  | 5.00  | %
|Tier 1 Risk-based |  | $                      | 229,664 |             |  |             | 7.74  | %     |  | $       | 118,766 |                  |  |  | 4.00 | % |  | $ | 178,148 |  |  |  | 6.00  | %
|Total Risk-based  |  | $                      | 316,960 |             |  |             | 10.68 | %     |  | $       | 237,531 |                  |  |  | 8.00 | % |  | $ | 296,914 |  |  |  | 10.00 | %

Similarly, Bay View Capital Corporation is subject to various regulatory
capital guidelines administered by the Board of Governors of the Federal
Reserve. The capital guidelines provide definitions of regulatory capital
ratios and the methods of calculating capital and each ratio for bank holding
companies. The federal banking agencies require a minimum ratio of qualifying
total risk-based capital to risk-adjusted assets of 8% and a minimum ratio of
Tier 1 capital to risk-adjusted assets of 4%. In addition to the risk-based
guidelines, federal banking regulators require banking organizations to
maintain a minimum amount of Tier 1 capital to total average assets, referred
to as the leverage ratio. For a banking organization rated in the highest of
the five categories used by regulators to rate banking organizations, the
minimum leverage ratio of Tier 1 capital to total average assets is 3%. For
organizations not rated in the highest of the five categories, the regulations
advise an additional cushion of at least 100 basis points. In addition to
these uniform risk-based capital guidelines and leverage ratios that apply
across the industry, the regulators have the discretion to set individual
minimum capital requirements for specific institutions at rates significantly
above the minimum guidelines and ratios.

At March 31, 2002, Bay View Capital Corporation exceeded the minimum
regulatory capital requirements as illustrated in the following table:

|                  |  |                        |         |             |  |        |      |       |  |         |         |  |  |  |      |  
|----------------- |  | ---------------------- | ------- | ----------- |  | ------ | ---- | ----- |  | ------- | ------- |  |  |  | ---- | -
|                  |  |                        |         |             |  |        |      |       |  | Minimum
|                  |  | Actual                 |         | Requirement
|                  |  |                        |         |            
|                  |  | Amount                 |         | Ratio       |  | Amount |      | Ratio
|                  |  |                        |         |             |  |        |      |      
|                  |  | (Dollars in thousands)
|Tier 1 leverage   |  | $                      | 153,471 |             |  |        | 4.22 | %     |  | $       | 145,625 |  |  |  | 4.00 | %
|Tier 1 risk-based |  | $                      | 153,471 |             |  |        | 4.77 | %     |  | $       | 128,787 |  |  |  | 4.00 | %
|Total risk-based  |  | $                      | 270,609 |             |  |        | 8.40 | %     |  | $       | 257,573 |  |  |  | 8.00 | %

Share Repurchase Program

Our outstanding shares of common stock were 62,643,059 at March 31, 2002
and 62,579,129 at December 31, 2001. In August 1998, our Board of Directors
authorized the repurchase of up to $50 million in shares of our common stock.
We did not repurchase any shares of our common stock during 2000, 2001 and the
first quarter of 2002. In November 1999, all of our treasury shares were
reissued in conjunction with the acquisition of FMAC. At March 31, 2002, we
had approximately $17.6 million in remaining authorization available for future
share repurchases. Pursuant to our agreement with the Federal Reserve Bank of
San Francisco, we must obtain prior written approval before repurchasing
shares.

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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 interest rate risk. We also seek to improve earnings by
controlling noninterest expense, enhancing noninterest income and utilizing
improved information systems to facilitate our analysis of the profitability of
our business platforms. We also use risk management instruments to modify
interest rate characteristics of certain assets or liabilities to hedge against
our exposure to interest rate fluctuations, reducing the effects these
fluctuations might have on associated cash flows or values. These risk
management instruments, also referred to as derivative instruments, have
historically included interest rate exchange agreements, or swaps, Treasury
futures contracts, forward sales contracts and interest rate option contracts,
commonly referred to as caps. Derivative financial instruments involve, to
varying degrees, elements of credit risk. 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.
Finally, we perform internal analyses to measure, evaluate and monitor risk.

Interest Rate Risk

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

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

Caps

Interest rate caps are option contracts that limit the cap holders risk
associated with an increase in interest rates. If rates go above a specified
interest rate (strike price or cap rate), the cap holder is entitled to receive
cash payments equal to the excess of the market rate over the strike price
multiplied by the notional amount. As of March 31, 2002 and December 31, 2001,
we had interest rate caps with notional amounts totaling $180.0 million and cap
rates at 7.00% and a cap index based on either the one- or three-month LIBOR
rate. These caps are reported at their fair value with realized and
unrealized gains and losses charged to earnings when incurred. The fair value
of our interest rate caps was $4,000 and $5,000 at March 31, 2002 and December
31, 2001, respectively.

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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.

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The following table illustrates our combined asset and liability repricing as
of March 31, 2002:

|                                                    |                                |   |                        |           |             |   |            |         |       |   |         |       |  |   |         |       |  |   |           |           | 
|--------------------------------------------------- | ------------------------------ | - | ---------------------- | --------- | ----------- | - | ---------- | ------- | ----- | - | ------- | ----- |  | - | ------- | ----- |  | - | --------- | --------- | 
|                                                    |                                |   | Repricing Period      
|                                                    |                                |   |                       
|                                                    |                                |   | Under                  |           | Between     |   | Between    |         | Over  |   |         |       | 
|                                                    |                                |   | One                    |           | One and     |   | Three and  |         | Five  |   |         |       | 
|                                                    |                                |   | Year                   |           | Three Years |   | Five Years |         | Years |   | Total  
|                                                    |                                |   |                        |           |             |   |            |         |       |   |        
|                                                    |                                |   | (Dollars in thousands)
|Assets:                                             |                                |   |                        |           |             |   |            |         |       |   |         |       |  |   |         |       |  |   |           |          
|Cash and investments                                |                                | $ | 403,397                |           |             | $ | 17,476     |         |       | $ | 14,771  |       |  | $ | 34,356  |       |  | $ | 470,000   |          
|Mortgage-backed securities and loans and leases (1) |                                |   | 2,068,041              |           |             |   | 594,201    |         |       |   | 168,166 |       |  |   | 173,038 |       |  |   | 3,003,446 |          
|                                                    |                                |   |                        |           |             |   |            |         |       |   |         |       |  |   |         |       |  |   |           |          
|Total interest rate sensitive assets                |                                | $ | 2,471,438              |           |             | $ | 611,677    |         |       | $ | 182,937 |       |  | $ | 207,394 |       |  | $ | 3,473,446 |          
|                                                    |                                |   |                        |           |             |   |            |         |       |   |         |       |  |   |         |       |  |   |           |          
|Liabilities:                                        |                                |   |                        |           |             |   |            |         |       |   |         |       |  |   |         |       |  |   |           |          
|Deposits:                                           |                                |   |                        |           |             |   |            |         |       |   |         |       |  |   |         |       |  |   |           |          
|                                                    | Transaction accounts (2)       |   | $                      | 1,243,632 |             |   | $          | 703,509 |       |   | $       | 5,658 |  |   | $       | 8,488 |  |   | $         | 1,961,287 | 
|                                                    | Retail certificates of deposit |   |                        | 1,029,213 |             |   |            | 71,883  |       |   |         | 3,784 |  |   |         | 533   |  |   |           | 1,105,413 | 
|Borrowings (3)                                      |                                |   | 28,439                 |           |             |   | 62,081     |         |       |   | 25,205  |       |  |   | 239,648 |       |  |   | 355,373   |          
|                                                    |                                |   |                        |           |             |   |            |         |       |   |         |       |  |   |         |       |  |   |           |          
|Total interest rate sensitive liabilities           |                                | $ | 2,301,284              |           |             | $ | 837,473    |         |       | $ | 34,647  |       |  | $ | 248,669 |       |  | $ | 3,422,073 |          
|                                                    |                                |   |                        |           |             |   |            |         |       |   |         |       |  |   |         |       |  |   |           |          
|Repricing gap-positive (negative)                   |                                | $ | 170,154                |           |             | $ | (225,796   | )       |       | $ | 148,290 |       |  | $ | (41,275 | )     |  | $ | 51,373    |          
|                                                    |                                |   |                        |           |             |   |            |         |       |   |         |       |  |   |         |       |  |   |           |          
|Cumulative repricing gap-positive (negative)        |                                | $ | 170,154                |           |             | $ | (55,642    | )       |       | $ | 92,648  |       |  | $ | 51,373  |       |  |   |           |          
|                                                    |                                |   |                        |           |             |   |            |         |       |   |         |       |  |   |         |       |  |   |           |          





|(1) |  | Based on assumed annual prepayment and amortization rates, which approximate our historical experience.                    
|--- |  | ---------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | We estimate transaction accounts repricing based on historical trends and the nature and types of our transaction accounts.
|   
|   
|   
|   
|(3) |  | Includes Capital Securities.                                                                                               

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The simulation model discussed above also provides our Risk Management
Committee with the ability to simulate our net interest income. In order to
measure, at March 31, 2002, 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,
on an instantaneous and sustained basis, by 100 to 300 basis points and
decreased by 100 and 200 basis points. At March 31, 2002, our net interest
income related to these hypothetical changes in market interest rates was
within our policy guidelines as illustrated in the following table:

|                                                    |  |                     |         |         |  |         |         |         |  |         |         |    |  |   |         |    |  |   |         |   
|--------------------------------------------------- |  | ------------------- | ------- | ------- |  | ------- | ------- | ------- |  | ------- | ------- | -- |  | - | ------- | -- |  | - | ------- | --
|                                                    |  | Net Interest Income
|                                                    |  |                    
|Projected effect:                                   |  | -200 bp             |         | -100 bp |  | +100 bp |         | +200 bp |  | +300 bp
|                                                    |  |                     |         |         |  |         |         |         |  |        
|Net interest income                                 |  | $                   | 149,761 |         |  | $       | 148,818 |         |  | $       | 147,602 |    |  | $ | 146,572 |    |  | $ | 146,302 |   
|% Increase (decrease) from
base net interest income |  |                     | 1.12    | %       |  |         | 0.48    | %       |  |         | (0.34   | )% |  |   | (1.04   | )% |  |   | (1.22   | )%
|Policy guideline                                    |  |                     | (8.00   | )%      |  |         | (5.00   | )%      |  |         | (5.00   | )% |  |   | (8.00   | )% |  |   | (15.00  | )%

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

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PART II. OTHER INFORMATION




Item 1. Legal Proceedings

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On November 9, 2000, Morgan Guaranty
Trust (Morgan Guaranty) filed a claim (the
Complaint) in the U.S. District Court, Southern
District of New York, against Bay View Franchise Mortgage Acceptance
Company (BVFMAC) alleging breach of certain
representations and warranties in connection with the sale of loans
to Morgan Guaranty Trust by the former Franchise Mortgage Acceptance
Company. On April 23, 2002, the Court signed an order granting
summary judgment in favor of Morgan Guaranty as to BVFMACs liability
for breach of a certain warranty contained in the purchase agreement,
and denied Morgan Guarantys motion for summary judgment as to
BVFMACs liability for breach of certain other representations.
The Court further granted summary judgment in favor of BVFMAC with
respect to allegations that it breached a certain warranty, and
denied BVFMACs motion for summary judgment with respect to
certain other allegations contained in the Complaint. As a result of
the partial grant of summary judgment in favor of Morgan Guaranty,
the Court has ordered BVFMAC to repurchase from Morgan Guaranty loans
with a remaining principal balance of approximately $57 million,
at a price calculated according to the parties agreement, and
to pay Morgan Guaranty interest on the repurchase price from
October 6, 2000 plus the costs to Morgan Guaranty of holding the
loans subsequent to that date. The Court has not yet entered a final
judgment, and the repurchase price has not yet been determined. Once
final judgment is entered, BVFMAC intends to appeal the Courts
decision. The Company previously signed an agreement to indemnify
BVFMAC with respect to this litigation under the terms of its sale of
BVFMAC in 2001. There are substantial legal and regulatory issues
regarding whether and how the indemnity agreement could be enforced
under circumstances where the Court has ordered BVFMAC to repurchase the loans. Because the borrowers of the loans
are currently in bankruptcy, the Company believes that full value for
the loans that BVFMAC may be required to repurchase may not be
realized and, in the event that BVFMAC does not prevail on appeal or
is otherwise unable to resolve this matter, and the Company is
required to indemnify BVFMAC, the net cost to the Company arising
from BVFMACs obligation to repurchase the loans could be
material but remains inestimable at this time.
|
| | We are involved as plaintiff or defendant in various other legal
actions and are occasionally exposed to unasserted claims arising in
the normal course of business. In the opinion of management, after
consultation with counsel, the resolution of these other legal
actions will not have a material adverse effect on our consolidated
financial condition or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          




Item 2. Changes in Securities

| |     
| | ----
| | None




Item 3. Defaults Upon Senior Securities

| |     
| | ----
| | None




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

| |     
| | ----
| | 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)                                                            
|---- |  |  | ---------------------------------------------------------------------------------------------------------------------------
|    
|b(i) |  |  | The Registrant filed the following report on Form 8-K dated
February 12, 2002 during the three months ended March 31, 2002:
|    
|     |  |  | The Board of Directors established April 25, 2002 as the date of
the Annual Meeting of Stockholders.                       

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                   |                                                                                                 |                 
|------------------ | ----------------------------------------------------------------------------------------------- | ----------------
|                   | BAY VIEW CAPITAL CORPORATION Registrant                                                        
|                  
|DATE: May 15, 2002 | BY:                                                                                             | /s/ John W. Rose
|                   |                                                                                                
|                   | John W. Rose
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

| |                                                                                        |                       
| | -------------------------------------------------------------------------------------- | ----------------------
| | BY:                                                                                    | /s/ Jeffrey O. Butcher
| |                                                                                       
| | Jeffrey O. Butcher
Senior Vice President and Controller
(Principal Accounting Officer)

49