Table UNITEDof STATESContents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

~~FORM~~ Form 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1933

		For the fiscal year ended December 31, 2005

OR

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

		For the transition period from to

~~For~~ Commission ~~the~~file ~~fiscal~~number ~~year ended December 31, 2000~~0-14879

OR BAY VIEW CAPITAL CORPORATION

¨ (Exact ~~TRANSITION~~name ~~REPORT~~of ~~PURSUANT~~registrant TOas ~~SECTION~~specified 13in ORits ~~15(d~~charter) ~~OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~Delaware ~~the~~(State ~~transition~~or ~~period~~other ~~from to~~ jurisdiction of incorporation or organization) 94-3078031 (I.R.S. Employer Identification No.)

~~Commission~~1840 ~~file~~Gateway ~~number~~Drive ~~0-14879~~San Mateo, California (Address of principal executive offices) 94404 (Zip Code)

~~BAY~~ Registrant’s ~~VIEW~~telephone ~~CAPITAL~~number, ~~CORPORATION~~including area code: (650) 312-7300

~~(Exact~~ Securities ~~name~~registered ofpursuant ~~registrant~~to asSection 12(b) ~~specified~~of ~~in its charter)~~the Act:

Delaware		94-3078031
Title of Each Class		Name of Each Exchange on Which Registered
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Common Stock, par value $0.01 per share		New York Stock Exchange
1840 Gateway Drive
San Mateo, California		94404
(Address of principal executive offices)		(Zip Code)

~~Registrant’s~~ Securities ~~telephone~~registered ~~number,~~pursuant ~~including~~to ~~area code:~~ Section 12(~~650~~g) ~~312-7200~~of the Act:

~~Securities registered pursuant to Section 12(b) of the Act:~~ None

Title of each class		Name of each exchange on which registered
Common Stock, par value $0.01 per share		New York Stock Exchange
9.125% Subordinated Notes due 2007		New York Stock Exchange
9.76% Capital Securities due 2018		New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES o NO þ

~~Securities~~ Indicate ~~registered~~by check mark if the registrant is not required to file reports pursuant to Section 13 12or Section 15(gd) of the Act:. YES o NO þ

~~None~~ 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 requirements for the past 90 days. YES þ NO o

Indicate by check mark ~~whether~~if ~~the~~disclosure ~~registrant~~of ~~(1)~~delinquent ~~has~~filers pursuant ~~filed~~to ~~all~~Item 405 ~~reports~~of Regulation S-K ~~required~~is not tocontained beherein, ~~filed~~and bywill ~~Section~~not 13be orcontained, ~~15(d)~~to of the ~~Securities~~best ~~Exchange Act~~ of registrant’s ~~1934~~knowledge, ~~during~~in ~~the~~a ~~preceding~~definitive 12proxy ~~months (~~or information ~~for~~statement ~~such~~incorporated ~~shorter~~by ~~period~~reference ~~that~~in ~~the~~Part III of ~~registrant~~this ~~was~~Form 10-K or ~~required~~any toamendment ~~file such reports), and (2) has been subject~~ to ~~such requirements for the past 90 days~~this Form 10-K. ~~YES x NO ¨~~ þ

Indicate by check mark ifwhether ~~disclosure~~the ofregistrant ~~delinquent filers pursuant to Item 405 of Regulation S-K~~ is ~~not~~a ~~contained~~large ~~herein,~~accelerated ~~and will not be contained~~filer, toan ~~the~~accelerated ~~best of registrant’s knowledge~~filer, inor a ~~definitive~~non-accelerated filer. ~~proxy~~See ordefinition ~~information~~of ~~statement~~“accelerated ~~incorporated~~filer” byand “large ~~reference~~accelerated filer” in Rule 12b-2 ~~Part III~~ of ~~this~~the Exchange ~~Form~~Act. ~~10-K~~(Check ~~or any amendment to this Form 10-K ¨~~one):

~~As of February 28, 2001, there were outstanding 32,574,987 shares of the registrant’s Common Stock. The aggregate~~ ~~market~~Large ~~value of the voting stock held by non~~accelerated filer o Accelerated filer þ Non-affiliates of the registrant, computed by reference to the closing price of such stock as of February 28, 2001, was $204,193,319. (The exclusion from such amount of the market value of the shares owned byaccelerated ~~any person shall not be deemed an admission by the registrant that such person is an affiliate of the registrant).~~filer o

Indicate ~~FORM~~by 10check mark whether the registrant is a shell company (as defined by Rule 12b-K2 of the Act). YES o NO þ

Part I
Item 1.	Business
	General	4
	Recent Developments	5
	Business Overview	6
	Lending Activities	6
	Investing Activities	8
	Retail Deposit Activities	9
	Borrowing Activities	9
	Debt	9
	Competition	10
	Economic Conditions, Government Policies and Legislation	10
	Supervision and Regulation	10
	Employees	15
	Executive Officers of the Registrant	16
Item 2.	Properties	17
Item 3.	Legal Proceedings	17
Item 4.	Submission of Matters to a Vote of Security Holders	17
Part II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	18
Item 6.	Selected Financial Data—Five-Year Financial Information	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	55
Item 8.	Financial Statements and Supplementary Data	59
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	112
Part III
Item 10.	Directors and Executive Officers of the Registrant	112
Item 11.	Executive Compensation	114
Item 12.	Security Ownership of Certain Beneficial Owners and Management	122
Item 13.	Certain Relationships and Related Transactions	123
Part IV
Item 14.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	124
Signatures		127

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2005 was $102,940,439, based upon the price at which the common equity was last sold on the New York Stock Exchange on such date. Registrant has submitted a 2005 CEO certification with no qualifications to the New York Stock Exchange pursuant to Rule 303A.12(a).

There ~~FORWARD-LOOKING~~were ~~STATEMENTS~~6,613,099 shares of Common Stock, $0.01 par value, outstanding as of February 28, 2006.

~~This Form 10-K contains forward-looking statements which describe our future plans, strategies and expectations. All~~ ~~forward-looking~~DOCUMENTS ~~statements~~INCORPORATED ~~are~~BY 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. FactorsREFERENCE ~~that might affect forward-looking statements include, among other things:~~

· Part III ~~our~~of Form 10-K — The ~~ability~~responses to ~~remain~~Items 10, 11, 12, 13 and 14 are incorporated by reference to Registrant’s proxy statement for its 2006 annual meeting of stockholders, or will be included in ~~compliance~~an ~~with~~amendment ~~written~~to ~~regulatory~~this ~~agreements~~Annual ~~with~~Report ~~the~~on Form 10-K, ~~government~~to ~~agencies~~be filed ~~that~~not ~~regulate~~later ~~us;~~than April 30, 2006 with the Securities and Exchange Commission.

~~· our ability to maintain adequate capital or raise additional capital, if needed;~~ FORM 10-K

· the demand for our products;


PART I
Item 1.	Business	4
	General and Business Overview	4
	Liquidating Portfolio	6
	Competition	6
	Economic Conditions, Government Policies and Legislation	6
	Supervision and Regulation	6
	Employees	8
	Executive Officers of the Registrant	8
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	17
Item 2.	Properties	17
Item 3.	Legal Proceedings	17
Item 4.	Submission of Matters to a Vote of Security Holders	17
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
Item 6.	Selected Financial Data	18
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 8.	Financial Statements and Supplementary Data	44
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	84
Item 9A.	Controls and Procedures	84
Item 9B.	Other Information	88
PART III
Item 10.	Directors and Executive Officers of the Registrant	88
Item 11.	Executive Compensation	88
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	88
Item 13.	Certain Relationships and Related Transactions	88
Item 14.	Principal Accounting Fees and Services	88
PART IV
Item 15.	Exhibits and Financial Statement Schedules	88
Signatures		93
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 11
EXHIBIT 12
EXHIBIT 14
EXHIBIT 21
EXHIBIT 23.1
EXHIBIT 23.2
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

~~· actions taken by our competitors;~~2

·Table taxof rate changes, new tax laws and revised tax law interpretations;Contents

· Forward-Looking ~~adverse changes occurring in the securities markets;~~Statements

· This ~~inflation~~Annual ~~and~~Report ~~changes~~on Form 10-K inof ~~prevailing~~Bay View ~~interest~~Capital ~~rates~~Corporation ~~that~~(the ~~reduce~~“Company,” “we,” “us,” or “our”) ~~margins~~contains forward-looking orstatements within the ~~fair~~meaning ~~value~~of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” and similar terms and phrases, including references to assumptions. These forward-looking statements are necessarily based on assumptions as of the ~~financial~~date ~~instruments~~of this Annual Report on Form 10-K and involve risks and uncertainties. Accordingly, our actual results may differ materially from those that we ~~hold;~~currently anticipate.

· Throughout ~~economic~~this orAnnual ~~business~~Report ~~conditions~~on Form 10-K, “BVCC” ~~either~~refers ~~nationally~~to orBay inView ~~our~~Capital ~~market~~Corporation, “BVAC” ~~areas~~refers to Bay View Acceptance Corporation, BVCC’s ~~that~~auto ~~are~~finance ~~worse~~subsidiary, ~~than~~“GLB” werefers ~~expect;~~to Great Lakes Bancorp, Inc., “GBSB” refers to Greater Buffalo Savings Bank, GLB’s savings bank subsidiary and “AFS” refers to AmeriCredit Financial Services, Inc., a subsidiary of AmeriCredit Corp.

· Some ~~legislative~~of the factors that may cause actual results or ~~regulatory~~earnings ~~changes~~to differ ~~that~~materially ~~adversely~~from ~~affect~~those ~~our~~contemplated ~~business;~~by the forward-looking statements include, but are not limited to, those discussed under “Risks Specifically Related to the Merger” beginning on page 9, as well as the following:

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

· Because ~~technological~~these ~~changes~~forward-looking ~~that~~statements are ~~more~~subject ~~difficult~~to assumptions and uncertainties, actual results may differ materially from those expressed or ~~expensive~~implied ~~than~~by wethese forward-looking ~~expect;~~statements. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this Annual Report on Form 10-K or the date of any document incorporated by reference in this Annual Report on Form 10-K.

· Except ~~increases~~to inthe ~~delinquencies~~extent ~~and~~required ~~defaults~~ by ~~our~~applicable ~~borrowers~~law ~~and~~or ~~other~~regulation, BVCC ~~loan~~undertakes ~~delinquencies;~~no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Annual Report on Form 10-K or to reflect the occurrence of unanticipated events.

~~· increases in our provision for losses on loans and leases;~~3

·Table our inability to sustain or improve the performance of our subsidiaries;Contents

~~· 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;~~ Part I

·Item ~~the~~1. ~~outcome of lawsuits or regulatory disputes;~~Business

· General ~~credit~~ and ~~other~~Business ~~risks of lending, leasing and investment activities; and~~Overview

· BVCC ~~our~~is ~~inability~~a tofinancial ~~use~~services ~~the~~company ~~net~~headquartered ~~operating~~in San Mateo, ~~loss carryforwards we currently have~~California.

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.Background

From ~~PART~~1996 Ito 1999, BVCC’s strategy was to transfer its wholly owned subsidiary, Bay View Bank (“BVB”) from a traditional thrift to a commercial bank. During this period, BVB nearly doubled in size, replaced a majority of its mortgage-based loans with higher-yielding consumer and commercial loans and leases, of which franchise loans represented $952.2 million at December 31, 1999, and transformed a significant portion of its deposits into lower-cost transaction accounts. This strategy proved unsuccessful, and, in 2000, BVCC reported a net loss of $326.2 million. This loss adversely affected BVCC and BVB’s regulatory capital levels and resulted in the imposition of regulatory agreements by the Federal Reserve Board on BVCC and by the Office of the Comptroller of the Currency (“OCC”) on BVB.

~~Item~~ In 1March 2001, in light of the critical financial condition and uncertain future of BVCC and BVB, BVCC retained new management, led by Robert B. ~~Business~~ Goldstein, Charles G. Cooper and John W. Rose, to develop and implement a strategic plan to restore BVCC and BVB’s financial stability. The principal elements of the strategic plan developed by BVCC’s new management were the sale of BVB’s higher risk assets, including the sale of its franchise loan servicing operations and franchise loans, and a renewed focus on BVB’s commercial and retail banking operations.

Following the significant and successful turnaround actions ~~General~~undertaken and completed in 2001 under the strategic plan, BVCC began active consideration of various alternatives to maximize its value to its stockholders. Through this evaluation process, BVCC determined that greater stockholder value could be obtained by adopting a plan of dissolution and stockholder liquidity (the “Original Plan”) providing for the sale of selected assets of BVCC and BVB to various purchasers rather than an alternative approach such as selling BVB as a whole to a single purchaser, the payment of the liabilities of BVCC and BVB, the distribution of any remaining net proceeds to BVCC’s stockholders and the dissolution of BVCC and BVB. This conclusion was reached because the strategies of the prior management of BVB had resulted in a mismatch between the character of BVB’s assets and liabilities. As a result of the adoption of the Original Plan, BVCC adopted the liquidation basis of accounting effective September 30, 2002.

~~Bay~~ BVCC ~~View~~thus ~~Capital~~pursued ~~Corporation, incorporated under~~ the ~~laws~~separate sales of ~~the~~BVB’s ~~state~~significant operations. ofIn ~~Delaware~~August ~~in 1989~~2002, isBVB asold ~~bank holding company~~approximately ~~headquartered~~$1.0 billion inof ~~San~~multi-family ~~Mateo,~~and ~~California.~~commercial ~~Our~~real ~~primary~~estate loans ~~subsidiary~~to isWashington ~~Bay~~Mutual ~~View~~ Bank, NF.A., aIn ~~commercial~~November ~~bank~~2002, ~~that~~BVB ~~operates~~sold its 57retail ~~full~~banking ~~service~~assets ~~branches~~of ~~throughout~~approximately ~~the~~$3.0 billion ~~greater~~and approximately ~~San~~$373.0 million ~~Francisco~~of ~~Bay~~single ~~Area.~~family ~~(See~~residential mortgages, ~~Note~~home 1equity toloans ~~the~~and ~~Consolidated~~commercial ~~Financial~~loans ~~Statements~~to ~~“Summary~~U.S. Bank ofNational ~~Significant~~Association. ~~Accounting~~Following ~~Policies”~~these dispositions, atBVCC’s ~~Item~~remaining 8assets totaled approximately $1.0 billion ~~“Financial~~and ~~Statements~~included BVAC, commercial loans and ~~Supplementary~~leases and ~~Data”~~other ~~for~~miscellaneous ~~further~~assets ~~information~~of onBVB ~~our~~and ~~subsidiaries)~~deferred tax assets.

~~Bay~~ On ~~View~~September 30, ~~Bank~~2003, ~~was~~with ~~organized~~the inapproval ~~1911~~of ~~and~~the ~~became~~OCC, ~~our~~BVB transferred ~~wholly~~its ~~owned~~remaining ~~subsidiary~~assets ~~when~~and weliabilities ~~became~~to aBVCC ~~holding~~and dissolved. ~~company~~Following inthe ~~1989. Prior~~dissolution toof ~~1996~~BVB, ~~Bay~~BVCC’s ~~View~~board of ~~Bank~~directors ~~generated~~reconsidered athe ~~majority~~Original ofPlan ~~its~~and ~~earnings~~determined, ~~from~~in light ~~relatively~~of ~~low-yielding~~the ~~mortgage-based~~lack ~~assets~~of ~~funded~~controlling ~~primarily~~precedent byunder ~~retail~~Delaware General ~~certificates~~Corporation ofLaw ~~deposit.~~(“DGCL”) ~~From~~with ~~1996~~respect to ~~1999,~~what constituted ~~our~~a ~~strategy~~“safe ~~was~~harbor” dissolution and because of BVCC’s inability to ~~transform~~obtain ~~Bay~~value ~~View~~for ~~Bank~~its ~~from~~net operating loss carryforwards in a ~~thrift~~dissolution, to a ~~commercial~~adopt ~~bank.~~an ~~During~~amended ~~this~~plan ~~period~~(the “Amended wePlan”). ~~nearly~~Under ~~doubled~~the inAmended ~~size~~Plan, ~~replaced~~BVCC continued ato ~~majority~~liquidate ofthe ~~our~~assets ~~mortgage-based~~and ~~loans~~liabilities ~~with~~assumed ~~higher-yielding~~from BVB, ~~consumer~~but ~~and~~the ~~commercial~~Amended ~~loans~~Plan ~~and~~provided ~~leases~~that ~~and~~BVCC, ~~transformed~~rather athan dissolve, ~~large~~would ~~portion~~seek ofto ~~our~~engage ~~deposits~~in ~~into~~business ~~low-cost transaction~~combination ~~accounts~~transactions that would maximize stockholder value. InWhen ~~1999~~BVCC adopted the Amended Plan, weit ~~officially~~discontinued ~~converted~~the toliquidation abasis of ~~national~~accounting ~~charter~~and, aseffective aOctober 1, ~~commercial~~2003, ~~bank~~readopted the going concern basis of accounting.

~~Our commercial and consumer businesses and our deposit franchise expansion came primarily as a result of acquisitions.~~4 In June 1996, we formed our auto lending division to provide financing options through auto dealers nationwide. In April 1997, we formed our commercial lending division to provide customized financing to emerging, small and middle-market businesses ~~throughout the country. And in January 1998, we acquired an additional 36 banking branches to become the largest deposit franchise operating exclusively in the San Francisco Bay Area.~~

InTable November 1999, we acquired Franchise Mortgage Acceptance Company, or FMAC, an established franchise lender, and its wholly owned multi-family lending division, Bankers Mutual. In June 2000, we sold substantially all of the assets of Bankers Mutual to Berkshire Mortgage Finance Limited Partnership. In September 2000, we announced a restructuring of FMAC. The performance of this division was considerably dependent upon gains from franchise loan securitizations and sales to offset overhead and other associated expenses. The opportunities for these transactions during 2000 were severely limited by prevailing market conditions, which significantly reduced our earnings. As a result, we were forced to consider other viable options relative to FMAC, including the potential sale of the unit. After an unsuccessful attempt to sell FMAC, we decided that an immediate and permanent shutdown of all franchise loan production was in the best interests of our shareholders. (See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 3 to the Consolidated Financial Statements “Restructuring Charges” at Item 8. “Financial Statements and Supplementary Data” for further details of our FMAC acquisition and subsequent restructuring).Contents

~~During~~ Between ~~the~~December 30, ~~second~~2003 ~~quarter~~and ofDecember 31, ~~2000~~2004, weBVCC distributed ~~retained~~$311.0 million ~~the~~of ~~services~~proceeds of ~~Merrill~~its ~~Lynch~~partial liquidation &to Coits stockholders. asBy ~~our~~December 31, ~~financial~~2005, BVCC ~~advisor~~had substantially completed the liquidation of its assets other than BVAC and investments and restricted cash.

On March 10, 2005, BVCC announced that it would not make a first quarter cash distribution to stockholders while its board ~~Recent~~of ~~Developments~~directors evaluated the strategic value of an acquisition and that BVCC would retain surplus cash for possible use in connection with a potential acquisition rather than distributing such surplus to stockholders. No cash distributions were made to stockholders during 2005. On October 28, 2005, BVCC filed a Current Report on Form 8-K reporting the execution of a definitive agreement to merge (the “Merger”) with Great Lakes Bancorp, Inc. of Buffalo, New York, with BVCC as the surviving corporation. On November 7, 2005, BVCC filed a Current Report on Form 8-K reporting the execution of a definitive agreement to sell BVAC (the “Sale”) to AmeriCredit Financial Services, Inc. in an all-cash transaction at a price approximating BVAC’s book value at the time of closing of the transaction. As a result of these developments, BVCC’s board of directors does not anticipate future distributions of the proceeds from its plan of partial liquidation to its stockholders. See Note 2 to the Consolidated Financial Statements, “Proposed Merger and Sale” at Part II, Item 8. “Financial Statements and Supplementary Data” for additional information regarding the Merger and Sale.

~~We incurred a consolidated net loss of $326.2 million for the year ended December 31, 2000, primarily as a result of our~~ ~~decision to shut down our franchise lending division and the resultant revaluation of our franchise-related assets. The loss for 2000 also adversely impacted our regulatory capital levels as follows:~~BVAC

~~Bay~~ BVAC ~~View~~is ~~Bank~~a Southern California-based auto finance company engaged in the indirect financing of automobile purchases by individuals. Of the auto contracts BVAC purchased in 2005, 91% were originated by manufacturer-franchised dealerships and the remaining 9% were originated by independent dealerships; 40% were contracts on new vehicles and 60% were contracts on used vehicles. BVAC purchases auto contracts from approximately 7,000 automobile dealers in 32 states with limited recourse to the dealer.

	At December 31, 2000						At December 31, 1999
	Actual			Minimum Requirement			Actual			Minimum Requirement
	Amount	Ratio		Amount	Ratio		Amount	Ratio		Amount	Ratio
	(Dollars in thousands)
Tier 1 leverage	$218,736	4.23	%	$206,835	4.00	%	$406,001	6.87	%	$236,337	4.00	%
Tier 1 risk-based	$218,736	6.30	%	$138,875	4.00	%	$406,001	8.41	%	$193,024	4.00	%
Total risk-based	$312,582	9.00	%	$277,751	8.00	%	$507,516	10.52	%	$386,048	8.00	%

BVAC has historically positioned itself in the market as a premium priced lender for well-qualified borrowers seeking extended-term financing and/or higher advance rates than those generally offered by traditional lenders. This strategy has enabled BVAC to establish a loyal dealership network by satisfying a unique niche within the indirect auto finance market that large commercial banks and captive finance companies have not served well. Recently, BVAC has leveraged this established reputation with its dealers to broaden its array of auto financing programs available to prime credit quality borrowers.

~~Bay~~ BVAC ~~View~~places ~~Capital~~a ~~Corporation~~strong emphasis on borrower stability, credit quality and debt serviceability. With Fair, Isaac & Co., or “FICO,” credit scores that averaged 736 in 2005, BVAC’s borrower base is largely comprised of prime credit quality borrowers. BVAC currently offers financing terms to 96 months and typically finances an amount in excess of a dealer’s wholesale value of a vehicle. During 2005, the term to maturity on auto contracts purchased by BVAC averaged 79 months and the loan-to-value ratio averaged 120%. The average loan amount financed by BVAC was $23,800.

	At December 31, 2000						At December 31, 1999
	Actual			Minimum Requirement			Actual			Minimum Requirement
	Amount	Ratio		Amount	Ratio		Amount	Ratio		Amount	Ratio
	(Dollars in thousands)
Tier 1 leverage	$190,686	3.47	%	$219,886	4.00	%	$386,110	6.51	%	$237,247	4.00	%
Tier 1 risk-based	$190,686	4.59	%	$166,284	4.00	%	$386,110	7.17	%	$215,475	4.00	%
Total risk-based	$338,374	8.14	%	$332,568	8.00	%	$587,773	10.91	%	$430,950	8.00	%

Since the dissolution of BVB, BVAC has operated as an independent finance company, rather than a portfolio-lending unit of BVB. BVAC purchases auto contracts primarily for sale or securitization and services these auto contracts. BVAC has a $450.0 million revolving warehouse credit facility to fund its purchases of contracts, and periodically sells or securitizes a portion of its auto contracts in order to pay down the facility and maintain available borrowing capacity. BVAC retains the servicing obligation on the contracts that it sells or securitizes which provides BVAC with a source of fee income over the life of the contracts. At December 31, 2005, BVAC had $99.7 million outstanding under this credit facility and securitization notes payable of $521.6 million.

~~Because~~ BVAC’s ofheadquarters ~~losses~~and weoperations ~~began~~center toare ~~incur~~located in Covina, ~~the~~California. ~~second~~The ~~quarter~~operations center manages the underwriting of ~~2000~~contracts and ~~the~~supports ~~decline~~its indealer ~~our~~relationships. It ~~capital~~also ~~ratios,~~houses ~~Bay~~BVAC’s ~~View~~servicing ~~Bank entered~~and ~~into~~collections aactivities involving ~~written~~approximately ~~agreement~~38,000 ~~with~~accounts ~~the~~representing $766 million ~~Office~~ of ~~the~~managed ~~Comptroller~~contracts as of ~~the~~December 31, 2005. ~~Currency~~In 2004, ~~sometimes~~BVAC ~~referred~~completed toa asgeographical ~~the~~expansion ~~OCC~~that was initiated in late 2002, ~~pursuant~~expanding tointo 12a ~~U.S.C.~~total ~~Section~~of ~~1818(b)~~32 states from onits ~~September~~established 6presence in 17 states, ~~2000~~primarily in the West, Midwest and weFlorida. ~~entered~~In ~~into~~2003, aBVAC ~~written~~entered ~~agreement~~seven Mid-Atlantic ~~with~~states ~~the~~including ~~Federal~~Maryland, ~~Reserve~~New ~~Bank~~Jersey, North ofCarolina, ~~San~~Pennsylvania, ~~Francisco~~South ~~pursuant~~Carolina, toTennessee 12and UVirginia.~~S.C.~~ In ~~Section~~2004, ~~1818(b)~~BVAC onentered ~~September 29, 2000.~~eight

~~The OCC agreement requires, among other matters, that Bay View Bank:~~5

·Table Adopt a new strategic plan establishing objectives for Bay View Bank’s overall risk profile, earnings performance, growth, balance sheet mix, liability structure, capital adequacy and reduction of nonperforming assets;Contents

· additional ~~Consider~~states ~~whether~~including ~~management~~Alabama, ~~changes~~Connecticut, ~~should~~Delaware, Kansas, beKentucky, ~~made;~~Massachusetts, New Hampshire and Oklahoma.

· Liquidating ~~Develop a plan for the maintenance of adequate capital and the raising of additional capital, including a prohibition on the payment of any dividends without the prior approval of the OCC; and~~Portfolio

· As ~~Review~~of ~~its~~December 31, ~~risk~~2005, ~~management~~BVCC’s ~~program~~other ~~with~~principal activity awas ~~view~~completing tothe ~~reduction~~liquidation of the ~~high~~assets ~~level~~BVCC assumed from BVB. During 2005, $16.7 million of ~~credit~~these assets, ~~risk~~primarily inauto ~~Bay~~leases, ~~View~~other ~~Bank~~loans and real estate owned, were liquidated and $6.0 million of liabilities were discharged. At December 31, 2005, we had completed the disposition of our liquidating auto lease and other loan portfolios, which were $10.0 million and $902 thousand, respectively, at December 31, 2004.

~~The Federal Reserve Bank agreement, among other matters:~~ Competition

· Automobile ~~Prohibits~~financing is provided by a number of competing entities, including captive finance affiliates of automobile manufacturers, commercial banks, independent finance companies, thrifts and credit unions. Many of BVAC’s competitors have greater financial resources and capitalization, greater access to existing and newly emerging capital markets, better economies of scale and more favorable cost of funds than BVAC does. The captive finance affiliates of the ~~payment~~automobile manufacturers have historically offered varying amounts of ~~any~~below-market ~~dividends~~financing to ~~without~~automobile ~~prior~~purchasers ~~approval~~to increase automobile sales volume. A number of BVAC’s competitors also offer automobile purchasers and dealerships additional forms of financing, including auto leasing and dealer inventory floor plan financing, which BVAC does not provide. BVCC believes that BVAC competes primarily on the ~~Federal~~basis ~~Reserve~~of ~~Bank;~~the relative uniqueness of the extended term and over-advance features of its products. Accordingly, BVAC may not be able to compete successfully against these competitors.

· Economic ~~Requires~~Conditions, ~~the~~Government ~~development~~Policies ~~of a plan to maintain capital adequacy~~ and ~~raise additional capital.~~Legislation

~~Our~~ During ~~capital~~periods ~~plan~~of ~~has~~economic ~~yet~~slowdown, todelinquencies beand ~~approved~~losses from bydefaults ~~the~~and ~~Federal~~repossessions ~~Reserve~~may ~~Board~~increase. AtDecreased ~~this~~demand for ~~time~~automobiles and, ~~the~~therefore, ~~financial~~BVAC’s ~~impact~~automobile financing volumes, ifmay ~~any,~~also occur during periods of economic slowdown. Decreased demand for automobiles may also depress values of used automobiles, which weakens the collateral values of BVAC’s ~~regulatory~~auto ~~actions~~contracts. ~~that~~Depressed values of used automobiles during periods of economic slowdown may reduce the value of repossessed vehicles and may require greater reserves and could result in greater losses for BVAC. Sustained periods of increased delinquencies and losses from ~~our~~defaults ~~failure~~and repossessions could adversely affect BVAC’s financial position, results of operations and liquidity by limiting its ability to ~~meet~~enter ~~the~~into future ~~minimum~~securitizations ~~capital~~or ~~requirements~~sales ~~cannot~~of beits ~~determined~~auto contracts.

BVAC’s profitability is also dependent on the interest rate spread it earns on auto contracts, the difference between the ~~Business~~interest ~~Overview~~earned on its fixed-rate auto contracts and the rate it pays on its floating-rate borrowings and the price it receives for the fixed-rate contracts that are securitized or sold. BVAC monitors interest rates and utilizes derivative instruments to economically hedge interest rate volatility, however, market interest rates are highly sensitive to many factors that are beyond BVAC’s control, such as inflation, recession and unemployment and the impact of future changes in domestic and foreign economic conditions that BVAC cannot predict.

~~Our principal business activity as a commercial bank is to earn interest on loans, leases and investment securities that~~ ~~are~~Supervision ~~funded by customer deposits~~ and other borrowings. The difference between interest received and interest paid comprises the majority of our operating earnings. Our primary lending activities consist of multi-family and commercial real estateRegulation lending, consumer auto and home equity lending, and commercial business financing. Our 57-branch deposit franchise provides personalized banking services to individuals and businesses and is the significant source of funding for our lending operations. The operating results of our major business segments are accounted for and presented by platform. (See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further details and financial information related to our Retail Platform and our Commercial Platform).

General ~~Lending Activities~~

~~Real~~ BVCC, ~~Estate~~primarily ~~Lending~~because of its ownership of BVAC, is subject to regulation, supervision and licensing under various federal, state and local statutes, ordinances and regulations, including the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), the Office of Foreign Assets Control and the USA Patriot Act. BVCC is

~~At December 31, 2000, real estate loans totaled $1.3 billion, representing 42.7% of our gross loan and lease portfolio.~~6 ~~The real estate loan portfolio is comprised of single-family residential mortgage loans, multi-family residential mortgage loans and nonresidential commercial real estate loans.~~

Single-FamilyTable Residential Mortgage Loans (one to four units)—At December 31, 2000, loans secured by single-family residential real estate totaled $392.0 million, representing 12.5% of our gross loan and lease portfolio. Approximately 72% of these loans are adjustable-rate mortgages, sometimes referred to as ARMs, and generally have original terms of 30 years. We discontinued originating single-family loans in 1996 and, as a result, the portfolio of single-family loans has decreased as these loans have paid off and/or been sold. We anticipate that this portfolio will continue to decline as a percentage of our assets. During 2000, we sold $423.2 million of single-family mortgage loans secured by properties in Northern California. Those sales reduced our concentration of lower-yielding mortgage loans and our geographic concentration risk.Contents

~~Multi-Family Residential Mortgage Loans (five or more units)—At December 31, 2000, loans secured by~~ ~~multi-family~~required ~~residential~~to ~~real~~comply ~~estate~~with ~~totaled~~the ~~$611.5~~laws ~~million, representing 19.4%~~ of ~~our~~those ~~gross~~states ~~loan and lease portfolio. The loans that we hold~~ in ~~our~~which ~~portfolio are primarily fully-amortizing ARMs with original terms of 30 years or 15-year ARMs with~~BVCC ~~monthly~~conducts ~~payments calculated on a 30-year amortization period with a balloon payment due at maturity~~operations. ~~Prior~~BVCC tobelieves ~~1996, we originated ARMs~~ that ~~were~~it ~~indexed to the Federal Home Loan Bank’s Eleventh District Cost of Funds Index, sometimes referred to as COFI. COFI~~ is ~~considered a lagging index because its interest rate movements generally lag behind changes~~ in ~~market~~compliance ~~interest rates. Since that time, our originations have been based on indexes other than COFI, such as the London Interbank~~in ~~Offered~~all ~~Rate,~~material orrespects ~~LIBOR.~~with ~~During~~these ~~2000,~~laws weand ~~sold approximately $58~~regulations.~~5 million of our multi-family mortgage loans. At December 31, 2000, only 15.4% of our multi-family loans were COFI-indexed loans.~~

We Until ~~generally~~BVB’s dodissolution, ~~not~~the ~~lend~~Company ~~more~~and ~~than~~BVB ~~75%~~were subject to extensive regulation intended primarily for the protection of depositors and the ~~appraised~~federal ~~value~~deposit ofinsurance ~~multi-family~~fund ~~residences~~and onnot afor the ~~first~~benefit ~~mortgage~~of ~~loan~~our stockholders. ~~The property~~Upon BVB’s ~~cash~~dissolution, BVCC ~~flow~~ceased ~~available~~to ~~for~~be ~~loan~~a ~~payments~~registered isbank ~~also~~holding acompany ~~limiting~~and ~~factor~~is onno longer ~~the~~subject ~~approved~~to ~~loan~~such ~~amount~~regulation. ~~Properties~~BVCC ~~securing~~has ~~multi-family~~filed ~~loans~~an ~~are~~application to ~~required~~register toas ~~generate~~a ~~cash~~bank ~~flow~~holding ~~sufficient~~company toand, ~~cover~~when ~~loan~~the ~~payments~~merger ~~and~~is effective, ~~other~~will ~~expected~~resume ~~property~~its status as a regulated bank holding ~~expenditures~~company. InAs ~~addition~~a result, ~~most~~BVCC ~~loans~~will ~~provide~~become ~~for~~subject ~~full~~to ~~recourse~~a tovariety ~~the~~of laws ~~borrowers~~and regulatory policies with which it is not currently obligated to comply.

~~Nonresidential Commercial Real Estate Loans—At December 31, 2000, loans secured by nonresidential commercial~~ ~~real~~Future estate totaled $339.8 million, representing 10.8% of our gross loan and lease portfolio. The majority of our commercial real estate loans are ARMs. ARMs secured by commercial real estate are generally made upon the same terms and conditions asLegislation ~~ARMs secured by multi-family residences.~~

~~Most~~ Various oflegislation, ~~our~~including ~~commercial~~proposals ~~real~~to ~~estate~~substantially ~~loans~~change the ~~consist~~financial ofinstitution ~~loans~~regulatory ~~secured~~system byand ~~improved~~to ~~property~~expand ~~such~~or contract asthe ~~office~~powers ~~buildings,~~of banking institutions and bank holding ~~warehouses~~companies, ~~golf~~is ~~courses~~from ~~and~~time ~~retail~~to ~~sales~~time ~~facilities~~introduced in the Congress. AThis legislation ~~majority~~may change banking statutes and the operating environment of ~~these~~the ~~loans~~combined ~~are~~bank and its affiliates in substantial ~~amounts~~and ~~ranging~~unpredictable ~~from~~ways. ~~$250~~If enacted,~~000~~ tosuch $1legislation could ~~million.~~increase Weor ~~generally~~decrease dothe ~~not~~cost ~~originate~~of ~~commercial~~doing ~~real~~business, ~~estate~~limit ~~loans~~or expand ~~that~~permissible ~~have~~activities aor ~~loan-to-value~~affect ~~ratio~~the ~~exceeding~~competitive ~~70%.~~balance among ~~The~~banks, savings associations, credit unions, and other ~~property’s~~financial ~~cash~~institutions. ~~flow~~BVCC ~~available~~cannot ~~for~~accurately ~~loan~~predict ~~payments~~whether any isof ~~also~~this apotential ~~limiting~~legislation ~~factor~~will onultimately be enacted, and, if enacted, the ~~approved~~ultimate ~~loan~~effect ~~amount.~~that ~~Properties~~it, ~~securing~~or ~~commercial~~implementing regulations, ~~real~~would ~~estate~~have ~~loans~~upon ~~are~~the ~~required~~financial tocondition ~~generate~~or ~~cash~~results of ~~flow~~operations ~~sufficient~~of tothe ~~cover~~combined ~~loan~~bank ~~payments~~or ~~and~~any ~~other~~of ~~expected property~~its ~~expenditures~~affiliates.

~~Underwriting Policies and Procedures for Real Estate Loans—Multi-family and commercial real estate lending~~ ~~entails~~Fiscal significant additional risks compared to single-family residential mortgage lending. Income producing property loans may involve large loan balances to single borrowers or groups of related borrowers. In addition, repayment of loans secured by multi-family and ~~commercial~~Monetary ~~real estate properties is typically dependent upon the successful operation of the properties, as well as favorable conditions in the real estate market and/or the economy in general.~~Policies

We BVCC ~~originate~~is ~~multi-family~~affected ~~and~~by ~~commercial~~various ~~real~~other ~~estate~~governmental ~~loans~~requirements ~~through~~and regulations, ~~internal~~general ~~loan~~economic ~~production~~conditions ~~personnel.~~and Asthe ~~part~~monetary policies of the ~~loan~~ ~~underwriting~~federal ~~process,~~government ~~staff appraisers or qualified independent appraisers inspect~~ and ~~appraise~~ the ~~property~~Federal ~~that will secure the loan~~Reserve Board. AThe ~~loan~~monetary ~~underwriter~~policies ~~analyzes the merits~~ of the ~~loan~~Federal ~~based~~Reserve ~~upon~~Board influence ~~information~~to ~~obtained~~a ~~relative~~significant toextent the ~~borrower and~~overall ~~property~~growth ~~(e.g.,~~of ~~income~~loans, ~~credit history~~ investments, ~~assets~~deposits, ~~liabilities,~~interest ~~cash~~rates ~~flows,~~charged ~~and~~on ~~the~~loans ~~value~~and interest ofrates ~~the~~paid ~~real property as stated~~ on ~~the appraisal report)~~deposits. ~~Loans~~The ~~are~~nature ~~then~~and ~~approved~~impact ~~at various levels~~ of ~~authority~~future changes ~~depending~~in ~~upon~~monetary ~~the~~policies ~~amount~~are ~~and~~often ~~type~~not ~~of loan~~predictable.

~~The majority of real estate loans held in our portfolio are secured by properties located in northern California. We~~ ~~require~~Consumer ~~the~~Protection ~~American~~Laws ~~Land~~Affecting Title Association form of title insurance on all loans secured by real property and require that fire and extended coverage casualty insurance in amounts sufficient to rebuild or replace the improvements at currentBVAC replacement costs be maintained on all properties securing the loans. In addition, we require flood insurance for properties in flood hazard zones to protect the property securing our interest. Consistent with regional industry practices, we do not necessarily require earthquake insurance as part of our general underwriting practices. In certain circumstances, however, we may require mudslide, earthquake and/or other hazard insurance depending upon the location of the property.

Numerous federal and state consumer protection laws and related regulations impose substantial requirements upon lenders and servicers involved in consumer finance, such as BVAC. These laws include the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board’s Regulations B and Z, states’ adaptations of the Uniform Consumer Credit Code and of the Uniform Commercial Code, state and federal privacy laws and state motor vehicle retail installment sales acts and other similar laws. These laws, among other things, require BVAC to provide certain disclosures to applicants, prohibit misleading advertising and protect against discriminatory financing or unfair credit and collection practices. The Truth-in-Lending Act and Regulation Z promulgated thereunder require disclosure of, among other things, the payment schedule, the finance charge, the amount financed, the total of payments and the annual percentage rate charged on each retail installment contract. The Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants (including retail installment contract obligors) on the basis of specific enumerated criteria. Creditors are also required to make certain disclosures regarding consumer rights and advise consumers whose credit applications are not approved. The holder in due course rules of the Federal Trade Commission provide for the preservation of the consumer’s claims and defenses when a consumer obligation is assigned to a holder. Some state laws impose finance charge ceilings and other restrictions on consumer transactions and require contract disclosures in addition to those required under federal law. These requirements impose specific statutory liabilities upon creditors who fail to comply with their provisions. In some cases these provisions, if violated, could affect BVAC’s ability to enforce the contracts it purchases.

~~At December 31, 2000, consumer loans totaled $589.9 million, representing 18.~~7~~% of our gross loan and lease portfolio.~~ ~~The consumer loans are comprised primarily of auto loans and home equity loans and lines of credit.~~

AutomobileTable Financing—At December 31, 2000, auto loans totaled $287.0 million, representing 9.1% of our gross loan and lease portfolio. Additionally, auto operating leases, excluded from our loan and lease portfolio, totaled $479.8 million at December 31, 2000, representing 9.0% of our consolidated assets. We underwrite and purchase new and used fixed-rate prime auto loans on an indirect basis. During 1998, we entered into an agreement with Lendco Financial Services for the purchase of auto loans and leases which expired on June 30, 2000. Accordingly, we ceased purchasing auto loans and leases from Lendco during June 2000. The auto leases are accounted for as operating leases and the leased asset is capitalized and depreciated to its estimated residual value over the term of the lease.Contents

~~We underwrite all loans and leases that we purchase. Our underwriting standards focus on the borrower’s ability to~~ ~~repay, as demonstrated by debt-to-income ratios, as well as the borrower’s willingness to repay, as demonstrated by Fair, Isaac & Company Credit Bureau scores, sometimes referred to as FICO scores.~~Employees

We At ~~periodically~~December 31, ~~securitize~~2005, ~~and/or~~BVCC ~~sell~~had ~~our~~a ~~auto~~total ~~loans.~~of ~~During~~101 ~~2000,~~employees weon a ~~securitized~~full-time ~~and~~equivalent ~~sold~~basis, ~~$356.6~~consisting ~~million~~ of ~~auto~~both ~~loans~~ full-time and permanent ~~completed~~part-time ~~$49.1~~employees, ~~million~~as ~~of auto whole loan sales.~~follows:

Home Equity Lending—At December 31, 2000, home equity loans and lines of credit totaled $302.9 million, representing 9.6% of our gross loan and lease portfolio. Bay View Bank originates conventional home equity loans and lines of credit through its branch network. We have also purchased home equity loans. Through 1998 and the first quarter of 1999, we purchased uninsured high loan-to-value home equity loans. We define high loan-to-value home equity loans as loans with a combined loan-to-value ratio of 100% or more. During 1999, we ceased purchasing these uninsured high loan-to-value home equity loans and focused our production efforts on originating higher-quality conventional home equity loans and lines of credit (where combined loan-to-value ratios are less than 100%, typically 80% to 90%) or insured high loan-to-value home equity loans where 100% of the loan is insured against credit losses. During 2000, we sold $244.0 million of our uninsured high loan-to- value home equity loans. At December 31, 2000, our portfolio included $174.2 million in conventional home equity loans, $100.6 million in high loan-to-value home equity loans, and $28.1 million in 100% insured high loan-to-value home equity loans.


Bay View Acceptance Corporation			85
Bay View Capital Corporation			16

Total			101

We BVCC’s ~~underwrite~~employees ~~all~~are ~~home~~not ~~equity~~represented ~~loans~~by ~~that~~any weunions ~~originate~~or covered ~~and~~by ~~purchase.~~any ~~Our~~collective ~~underwriting~~bargaining ~~standards~~agreements. ~~for~~We ~~home~~consider ~~equity loans~~our ~~focus~~relations onwith ~~debt-to-income~~our ~~ratios~~employees ~~and~~to ~~FICO~~be ~~scores~~satisfactory.

~~Business~~ Executive ~~Loans~~Officers ~~and Lines~~ of ~~Credit~~the Registrant

~~At December 31, 2000, our business loans totaled $81.4 million, representing 2.6% of our gross loan and lease portfolio.~~ The ~~business~~following ~~loans~~table ~~are~~sets ~~comprised~~forth ~~primarily~~certain ofinformation ~~business~~regarding ~~lending products (e.g., business term loans and lines of credit), which are offered in conjunction with other services in order to expand Bay View Bank’s customer base and make us more~~our ~~competitive~~executive ~~in the commercial business banking environment.~~officers:

Commercial Lending


				Year
Name	Age		Position	Appointed

Charles G. Cooper		58	Director, President and Chief Executive Officer		2002
Prodyodth K. “PK” Chatterjee		57	Director, Executive Vice President and Director of Retail Operations, Bay View Capital Corporation and President and Chief Executive Officer, Bay View Acceptance Corporation		2004
John Okubo		52	Executive Vice President and Chief Financial Officer		2002
Sossy Soukiassian		42	Senior Vice President and General Auditor		2002

~~Asset-Based Lending, Factoring and Equipment Leasing—At December 31, 2000, our commercial loans and leases,~~ ~~excluding~~The ~~franchise~~business ~~loans,~~experience ~~totaled~~of ~~$353.4~~each ~~million, representing 11.2%~~ of our ~~gross~~executive ~~loan~~officers ~~and~~is ~~lease portfolio. Approximately $248.0 million of the loans and leases outstanding at December 31, 2000 were asset-based loans, including asset-based~~as participation loans, another $54.6 million of the balance was related to receivable factoring and $50.8 million were equipment leases. Asset-based and factoring loans are primarily adjustable-rate loans based on the prime rate index. Our equipmentfollows: leases are fixed-rate direct financing leases. We employ underwriting procedures which include, among other things, continuous reviews of the borrower’s financial condition and periodic audits of the receivables, equipment or other assets securing the loans and leases. During 2000, we sold $26.5 million of equipment leases.

~~Franchise~~ Mr. Cooper ~~Lending—At~~has ~~December~~served ~~31,~~as ~~2000~~a Director, ~~our~~President ~~commercial~~and Chief ~~franchise~~Executive ~~loans~~Officer ~~totaled $779.9 million, representing 24.8%~~ of ~~our~~Bay ~~gross~~View ~~loan~~Capital ~~and~~Corporation ~~lease~~since October ~~portfolio~~2002. ~~This~~He ~~total~~joined ~~included~~us ~~$336.3~~in ~~million~~May of2001, ~~franchise~~initially ~~loans~~serving ~~held-for-sale.~~as Executive WeVice ~~purchased~~President and ~~originated~~Chief ~~franchise~~Credit ~~loans~~Officer. ~~until~~Previously, he ~~the~~served ~~restructuring~~as ofExecutive ~~FMAC~~Vice inPresident ~~September~~and ~~2000,~~Chief asCredit ~~previously discussed. In connection~~Officer ~~with~~at ~~this~~Lone ~~restructuring,~~Star weBank ~~intend to reduce our concentration~~ of ~~franchise~~Dallas. ~~assets~~Prior ~~through~~to ~~loan~~joining ~~sales.~~Lone ~~During~~Star ~~2000~~Bank, wehe was ~~sold~~Senior ~~$120.0~~Vice ~~million~~President of ~~franchise~~Loan Administration ~~loans.~~at InCompass Bank ~~addition,~~in weDallas ~~completed~~from a1996 ~~$268~~to 2000.2 ~~million~~Mr. Cooper ~~on-balance~~has ~~sheet~~more ~~franchise loan securitization~~than in30 years ~~April~~of ~~2000,~~experience ~~effectively~~in ~~transferring~~the ~~these~~banking ~~loans~~industry, toincluding 13 years ~~investment~~experience ~~securities.~~as ~~The~~a ~~investment~~bank ~~securities~~examiner ~~resulting~~with ~~from~~the ~~this transaction were subsequently sold during December 2000~~FDIC.

~~Our~~ Mr. Chatterjee ~~franchise~~has ~~loans~~served ~~are~~as ~~primarily~~Executive ~~fully-amortizing,~~Vice President ~~long-term,~~and ~~fixed-~~Director orof ~~adjustable-rate~~Retail ~~loans~~Operations ~~provided~~of ~~for~~Bay ~~purposes~~View Capital ~~other~~Corporation ~~than~~and ~~development~~President and ~~construction~~Chief ofExecutive ~~business~~Officer ~~units.~~of ~~These~~Bay View ~~loans~~Acceptance ~~generally~~Corporation ~~have~~since aSeptember ~~maximum~~2004, ~~term~~ and ~~amortization~~as ~~period~~a Director of upBay toView 20Capital ~~years.~~Corporation ~~Fixed-rate~~since ~~loans~~May ~~are based upon U~~2005.S. ~~Treasury~~Prior to ~~rates~~joining ~~plus~~us, ahe ~~spread~~served ~~while~~as ~~adjustable-rate~~Executive ~~loans~~Vice ~~are~~President, ~~tied~~Head toof ~~LIBOR~~Consumer ~~plus~~Lending, aat ~~spread~~AmSouth ~~and~~Bancorp ~~generally~~from ~~reprice~~1997 onto a2002 ~~monthly~~and ~~basis~~U.S. Bancorp Atfrom ~~December~~1995 ~~31,~~to ~~2000,~~1997. ~~total~~Mr. ~~franchise~~Chatterjee ~~loans~~has ~~included~~over ~~$397.3~~17 years of ~~million~~consumer oflending ~~loans~~experience toand ~~restaurant~~has ~~franchisees~~served ~~and~~as ~~$381.9~~a ~~million~~member of ~~loans~~the Automobile toFinance ~~gas~~Committee ~~stations~~of ~~and~~the ~~convenience~~Consumer ~~store~~Bankers Association ~~operators~~for more than 10 years.

~~We employ underwriting and monitoring procedures which include~~ Mr. Okubo, ~~among~~Executive ~~other~~Vice ~~things~~President, ~~continuous~~has ~~reviews~~served ~~of the~~as ~~borrower’s~~our ~~financial~~Chief ~~condition~~Financial ~~and~~Officer ~~periodic~~since ~~audits~~November of2002. ~~the borrower’s business results~~Mr. Okubo joined Weus ~~focus~~in on1996 ~~the~~and ~~cash~~has ~~flow~~held ofvarious ~~the~~financial ~~business~~management positions, ~~the~~including ~~continuing~~Treasurer ~~ability~~from ofJune ~~the~~2001 ~~borrower~~and toas ~~operate~~Controller of the ~~business~~Bank ~~unit~~from in1998 ato ~~cash~~2001. ~~positive~~Previously, ~~manner~~he ~~and~~served ~~the~~as ~~borrower’s~~Executive ~~ability~~Vice toPresident ~~repay~~and ~~the~~Chief ~~loan~~Financial ~~since~~Officer ~~neither~~of ~~the~~Home Federal ~~real~~Savings ~~property~~of ~~mortgage~~San Francisco ~~nor~~from ~~the~~1993 ~~franchise or license agreement is generally assignable~~ to ~~secure the loan~~1996.

Ms. Soukiassian, Senior Vice President, was promoted ~~Investing~~to ~~Activities~~General Auditor in November 2002. Previously, she served as our Director of Corporate Projects from 1998 to 2002. Prior to joining us, she held management positions with KPMG Peat Marwick, LLP in Los Angeles from 1996 to 1998.

~~Our investing activities primarily involve the purchase and sale of mortgage-backed securities. We purchase securities~~8 to supplement our loan and lease production. Our portfolio includes mortgage-backed securities issued by the Government National Mortgage Association, or GNMA, Fannie Mae, and Freddie Mac and senior tranches of private issue collateralized mortgage ~~obligations, or CMO’s which carry less prepayment and credit~~ risk as compared to other collateralized mortgage obligation tranches. In addition to these securities, we also hold asset-backed securities, retained interests in loan and lease securitizations, U.S. government agency notes and other short-term securities.

SecuritiesTable are classified as held-to-maturity or available-for-sale. We do not maintain a trading portfolio. Securities in the held-to-maturity category consist of securities purchased for long-term investment in order to enhance our ongoing stream of net interest income. Securities deemed held-to-maturity are classified as such because we have both the intent and ability to hold these securities to maturity. Securities purchased to meet investment-related objectives such as interest rate risk and liquidity management, but which may be sold as necessary to implement management strategies, are designated as available-for-sale at the time of purchase. We also hold retained interests in our franchise and auto loan securitizations which are designated as securities available-for-sale. At December 31, 2000, we had $642.1 million in securities held-to-maturity and $33.6 million in securities available-for-sale, including $32.2 million in retained interests. During 2000, we sold $239.9 million of lower-yielding, fixed-rate mortgage-backed securities.Contents

There is no family relationship among the above officers. All ~~Retail~~executive ~~Deposit~~officers ~~Activities~~serve at the discretion of the board of directors.

~~Bay~~Item ~~View Bank attracts both short-term and long-term deposits from the general public by offering a wide range of deposit products and services~~1A. ~~Bay~~Risk View Bank, through its branch network, provides its banking customers with money market accounts, savings and checking accounts, certificates of deposit, individual retirement accounts, investment services, business checking accounts, cash management services, 24-hour automated teller machines, and internet banking and bill-pay services.Factors

~~Enhancing~~ In ~~the~~addition ~~value of Bay View Bank’s retail branch franchise remains one of our primary objectives. We plan~~ to ~~continue~~ tothe ~~expand~~other ~~our~~information ~~retail~~contained ~~banking presence~~ in ~~northern~~this ~~California~~Annual Report ~~through~~on Form 10-K, ~~internal~~you should ~~growth~~carefully ~~and~~consider ~~new product marketing and development. Our retail deposit franchise is currently~~ the ~~largest~~following ofrisk ~~any financial institution operating exclusively in the~~factors: ~~San Francisco Bay Area.~~

~~Borrowing~~Risks ~~Activities~~Specifically Related to the Merger

~~Our~~GLB ~~borrowing~~stockholders ~~activities~~cannot ~~are~~be ~~primarily~~certain ~~conducted~~of bythe ~~Bay~~market ~~View~~value ~~Bank.~~of ~~The~~the ~~Federal~~BVCC ~~Home~~common ~~Loan~~stock ~~Bank~~that ~~System~~they ~~functions~~will inreceive ~~a reserve credit capacity for qualifying financial institutions. As a member, Bay View Bank is required to own capital stock~~ in the ~~Federal~~merger ~~Home~~because ~~Loan Bank of San Francisco and may apply for advances from~~ the ~~Federal~~market ~~Home~~price ~~Loan Bank~~ of ~~San~~BVCC ~~Francisco utilizing~~common ~~Federal Home Loan Bank~~ stock, ~~qualifying mortgage loans and mortgage-backed securities as collateral~~fluctuates.

~~The~~ Upon ~~Federal~~completion ~~Home~~of ~~Loan~~the ~~Bank~~merger, each share of ~~San~~GLB ~~Francisco~~common ~~offers~~stock will abe ~~full~~converted ~~range~~into the right to receive 1.0873 shares of ~~borrowing~~BVCC ~~programs~~common onstock. ~~its~~Any ~~advances~~change ~~with~~in ~~terms~~the price of upBVCC common stock prior to ~~ten~~the ~~years~~merger atwill ~~competitive~~affect the market ~~rates.~~value Aof ~~prepayment~~the stock ~~penalty~~that isa ~~usually~~GLB ~~imposed~~stockholder ~~for~~will ~~early~~receive ~~repayment~~in ofthe ~~these advances~~merger. AsStock price achanges ~~Federal~~may ~~Reserve~~result ~~Bank~~from ~~member,~~a ~~Bay~~variety ~~View~~of ~~Bank~~factors, ~~may~~including general ~~also~~market ~~borrow~~and ~~from~~economic ~~the~~conditions, ~~Federal~~changes ~~Reserve~~in ~~Bank~~BVCC’s businesses, ofoperations ~~San~~and ~~Francisco~~prospects and regulatory considerations.

We The ~~also~~prices ~~utilize~~of ~~other~~BVCC ~~short-term~~common ~~borrowing~~stock ~~including~~and ~~warehouse~~GLB ~~lines~~common ~~and~~stock ~~Repurchase~~at ~~agreements.~~the closing ~~Repurchase~~of ~~agreements are~~the ~~sales~~merger ofmay ~~securities~~vary wefrom ~~own~~their torespective ~~securities~~prices ~~dealers~~on the ordate the ~~Federal~~merger ~~Home~~agreement ~~Loan~~was ~~Bank~~executed, on the date of ~~San~~this Annual ~~Francisco~~Report ~~with~~on Form 10-K ~~our~~and ~~commitment~~on the todate ~~repurchase~~of ~~such~~GLB’s ~~securities~~special ~~for~~meeting. As a ~~predetermined~~result, ~~price~~the atvalue represented aby ~~future~~the ~~date~~exchange ratio will also vary. AtBecause ~~December~~the date 31the merger will be completed will be later than the date of GLB’s special meeting, ~~2000~~at ~~our~~the ~~Federal~~time ~~Home~~of ~~Loan~~GLB’s ~~Bank~~special ~~advances~~meeting ~~totaled~~GLB ~~$804.8~~stockholders ~~million~~will ~~and~~not ~~our~~know ~~short-term~~what ~~borrowings~~the ~~totaled~~market ~~$197.4~~value ~~million~~of BVCC’s common stock will be upon completion of the merger.

~~Debt~~The ability of each of GLB and BVCC to pursue alternatives to the merger is restricted by the merger agreement.

At The ~~December~~merger 31agreement contains provisions that, ~~2000~~subject to limited exceptions, welimit ~~had~~GLB’s ~~approximately~~and ~~$239.6~~BVCC’s ~~million~~ability ofto discuss, ~~debt~~facilitate ~~outstanding~~or enter into agreements with third parties to acquire either BVCC or GLB. ~~This~~In ~~debt~~general, isif ~~comprised~~either of ~~(i)~~BVCC ~~$99.6~~or ~~million~~GLB avails itself of 9those limited exceptions, it will be obligated to pay the other party a break-up fee of $3.~~125%~~4 million ~~Subordinated~~plus ~~Notes~~expenses. ~~due~~From ~~August~~GLB’s 15perspective, these ~~2007~~provisions ~~issued~~could indiscourage ~~August~~a ~~1997~~potential bycompeting ~~Bay~~acquiror that ~~View~~might ~~Capital~~have ~~Corporation,~~an ~~(ii)~~interest ~~$50~~in ~~million~~acquiring GLB from proposing or considering an acquisition of ~~10.00%~~GLB ~~Subordinated~~even ~~Notes~~if ~~due~~that ~~August~~potential acquiror ~~31,~~were ~~2009~~prepared ~~issued~~to inpay ~~August~~a ~~1999~~higher byprice ~~Bay~~to ~~View~~GLB ~~Bank~~stockholders than ~~and~~the ~~(iii)~~price ~~$90~~BVCC ~~million~~proposes ofto 9pay under the merger agreement.~~76%~~ ~~Capital~~From ~~Securities~~BVCC’s ~~due~~perspective, ~~December~~these ~~31,~~provisions ~~2028~~could ~~issued~~preclude BVCC infrom ~~December~~entering ~~1998~~into bya ~~Bay~~business ~~View~~combination ~~Capital~~transaction I,that could aoffer ~~Delaware~~greater ~~business~~benefits ~~trust~~to ~~sponsored~~BVCC byand ~~Bay~~its ~~View~~stockholders ~~Capital~~than the ~~Corporation~~merger with GLB.

GLB’s ~~Competition~~stockholders do not have the right to vote on important BVCC matters even though they will become stockholders of BVCC if the merger is consummated.

~~The~~ Because ~~banking~~GLB’s ~~and~~stockholders ~~financial~~will ~~services~~not ~~industry~~be instockholders ~~general,~~of ~~and specifically in California and the San Francisco Bay Area,~~BVCC isfor ~~highly~~purposes ~~competitive. The increasingly competitive environment is a result primarily~~ of ~~changes in regulation, including~~ the ~~1999~~BVCC ~~Financial~~special ~~Services Modernization Act~~meeting, ~~changes~~GLB’s stockholders indo ~~technology~~not ~~and~~have ~~product~~the ~~delivery~~right ~~systems,~~to ~~and~~vote ~~the~~on ~~accelerating pace of~~BVCC’s ~~consolidation~~proposal ~~among~~to ~~financial~~sell ~~services providers. We compete for loans and leases~~BVAC, ~~deposits,~~BVCC’s ~~and~~proposal ~~customers~~to ~~with~~amend ~~other commercial banks, savings and loan associations, securities and brokerage companies, mortgage companies, insurance companies,~~its ~~finance~~certificate ~~companies, money market funds, credit unions, and other nonbank financial services providers. Many~~ of ~~these~~incorporation ~~competitors~~to ~~are~~establish ~~much~~transfer ~~larger~~restrictions or inBVCC’s ~~total~~proposal ~~assets~~to ~~and~~ratify ~~capitalization,~~an ~~have~~amendment ~~greater access~~ to ~~existing and newly emerging capital markets~~BVCC’s ~~and~~by-laws. ~~offer~~GLB astockholders ~~broader~~should ~~range~~carefully ofreview ~~financial~~these proposals ~~services~~before ~~than~~they ~~Bay~~decide ~~View~~how ~~Bank.~~to Invote ~~addition,~~on ~~recent federal legislation may have~~ the ~~effect~~proposal ofto approve ~~further increasing~~ the ~~pace~~merger of ~~consolidation~~GLB ~~within~~and ~~the financial services industry~~BVCC.

InThe ~~order~~amount toof ~~compete~~capital ~~with~~BVCC ~~other~~brings ~~financial~~to ~~services~~the ~~providers,~~merged wecompany ~~principally~~could ~~rely~~be ~~upon~~substantially ~~local~~reduced ~~promotional~~from ~~activities, personal relationships with our customers, and specialized services tailored to meet~~ the ~~needs~~amount of ~~the communities served. In those instances when we are unable to accommodate a customer~~BVCC’s ~~needs,~~capital weat ~~may~~December ~~arrange for those services to be provided by our correspondents. Bay View Bank has branch offices located in the following San Francisco Bay Area counties: San Francisco~~31, ~~San Mateo, Santa Clara, Marin, Contra Costa, Alameda, Sonoma, Solano, and Santa Cruz~~2005. ~~In addition, we operate various lending facilities through a nationwide network of loan production offices.~~

~~Economic~~As ~~Conditions~~of December 31, ~~Government~~2005, ~~Policies~~BVCC had stockholders’ equity of $70.5 million. This amount will be reduced by BVCC’s remaining expenses of merging with GLB and ~~Legislation~~selling BVAC, which BVCC currently estimates will be approximately $1.6 million. BVCC’s stockholders’ equity will also be adversely affected by the operating losses BVCC is incurring in connection with the completion of its plan of partial liquidation.

~~Our profitability, like most financial institutions, is dependent on interest rate differentials. In general, the~~9 difference between the interest rates we pay on our interest-bearing liabilities, such as deposits and other borrowings, and the interest rates we receive on our interest-earning assets, such as loans, leases and securities, comprises a significant portion of our earnings. These rates are highly sensitive to many factors that are beyond our control, such as inflation, recession and unemployment and the impact of future changes in domestic and foreign economic conditions that we cannot predict.

OurTable business is also influenced by the monetary and fiscal policies of the federal government and the policies of regulatory agencies, particularly the Board of Governors of the Federal Reserve System, sometimes referred to as the Federal Reserve Board. The Federal Reserve Board implements national monetary policies, with objectives such as curbing inflation and combating recession, through its open-market operations in U.S. Government securities by adjusting the required level of reserves for depository institutions subject to its reserve requirements, and by varying the target federal funds and discount rates applicable to borrowings by depository institutions. The actions of the Federal Reserve Board in these areas influence the growth of bank loans, leases, investments, and deposits, and also affect interest rates earned on interest-earning assets and paid on interest-bearing liabilities. We cannot predict the nature or impact on us of any future changes in monetary and fiscal policies.Contents

~~From time to time, legislation is enacted, and regulations are adopted which have the effect of increasing the cost of~~ ~~doing~~Risks ~~business,~~Related ~~limiting or expanding permissible activities, or affecting the competitive balance between financial services providers. Proposals~~ to ~~change~~Owning ~~the~~BVCC ~~laws~~Common ~~and regulations governing the operations and taxation of national banks, bank~~Stock holding companies and other financial institutions are frequently made in the U.S. Congress, in the state legislatures and by various regulatory agencies. We cannot predict the likelihood of any legislative or regulatory changes or the impact that these changes might have on us.

~~Supervision~~The ~~and~~combined ~~Regulation~~company will be dependent on the ability of its subsidiaries to pay dividends in order to meet its obligations.

~~General~~ The combined company will be a holding company and conduct almost all of its operations through its subsidiaries. The combined company will not have any significant assets other than the stock of its subsidiaries, deferred tax assets and the net proceeds from the sale of BVAC if the BVAC sale is consummated. Accordingly, the combined company will depend on the payment of dividends by its subsidiaries to meet its obligations. The combined company’s right to participate in any distribution of earnings or assets of its subsidiaries is subject to the prior claims of creditors of such subsidiaries. Under federal and state law, GBSB is limited in the amount of dividends it may pay to its parent without prior regulatory approval. Also, bank regulators have the authority to prohibit GBSB from paying dividends if the bank regulators determine that GBSB is in an unsafe or unsound condition or that the payment would be an unsafe and unsound banking practice.

~~Bay~~Interest ~~View~~rate ~~Capital~~volatility ~~Corporation~~could ~~and~~significantly ~~Bay~~harm ~~View Bank are extensively regulated under federal law. This regulation is intended primarily for~~ the ~~protection~~combined ofcompany’s ~~depositors and the deposit insurance fund and not for the benefit of our stockholders~~business. Set forth below is a summary description of the material laws and regulations which relate to our operations. The description is qualified in its entirety by reference to the applicable laws and regulations.

~~Bay~~ The ~~View~~combined ~~Capital~~company’s ~~Corporation~~results of operations will be affected by the monetary and fiscal policies of the federal government and the regulatory policies of governmental authorities. A significant component of the combined company’s earnings will consist of GBSB’s net interest income, which is the difference between its income from interest-earning assets, such as loans, and its expense of interest-bearing liabilities, such as deposits. A change in market interest rates could adversely affect GBSB’s earnings if market interest rates change such that the interest GBSB pays on deposits and borrowings increases faster than the interest it collects on loans and investments. Consequently, GBSB, along with other financial institutions generally, is sensitive to interest rate fluctuations.

AsThe acombined ~~registered bank holding~~ company,’s weresults ~~are subject to regulation under the Bank Holding Company Act~~ of ~~1956,~~operations ~~as amended,~~will ~~sometimes~~be ~~referred~~significantly toaffected asif ~~the~~its ~~BHCA.~~borrowers We are ~~required~~unable to ~~file~~pay ~~with~~their ~~the Federal Reserve Board quarterly, semi-annual and annual reports, and such additional information as the Federal Reserve Board may require pursuant to the BHCA~~loans. ~~The Federal Reserve Board may conduct examinations of Bay View Capital Corporation and our subsidiaries.~~

~~The~~ Lending ~~Federal~~money ~~Reserve~~is ~~Board may require that we terminate~~ an ~~activity~~essential orpart ~~terminate control~~ of, ~~or liquidate or divest certain subsidiaries or affiliates when~~ the ~~Federal Reserve Board believes the activity, or the control of the subsidiary or affiliate constitutes a significant risk to the financial safety, soundness or stability of any of our~~ banking ~~subsidiaries~~business. ~~The Federal Reserve Board also has the authority to regulate provisions of certain bank holding company debt~~However, ~~including~~borrowers ~~authority~~do tonot ~~impose~~always ~~interest~~repay ~~ceilings~~their ~~and reserve requirements on such debt~~loans. ~~Under~~The ~~certain~~risk ~~circumstances, we must file written~~of ~~notice~~non-payment ~~and~~is ~~obtain~~affected ~~approval from the Federal Reserve Board prior to purchasing or redeeming our equity securities.~~by:

~~Under~~• ~~the~~credit ~~BHCA~~risks ~~and~~of ~~regulations~~a ~~adopted~~particular byborrower; ~~the~~• ~~Federal~~changes ~~Reserve~~in ~~Board,~~economic we and ~~our~~industry ~~nonbanking~~conditions; ~~subsidiaries~~• ~~are~~the ~~prohibited from~~duration ~~requiring certain tie-in arrangements in connection with any extension~~ of ~~credit,~~the ~~lease~~loan; orand ~~sale~~• ofin ~~property~~the orcase ~~furnishing~~ of ~~services~~a bycollateralized ~~Bay View Bank~~loan, ~~N.A.~~uncertainties ~~Further,~~as weto ~~are required by~~ the ~~Federal~~future ~~Reserve~~value ~~Board to maintain certain levels~~ of ~~regulatory~~ ~~capital~~the collateral.

We Generally, ~~are~~commercial/industrial, ~~required~~construction toand ~~obtain~~commercial real ~~the~~estate ~~prior~~loans ~~approval~~present ofa ~~the~~greater ~~Federal~~risk ~~Reserve~~of ~~Board~~non-payment ~~for~~by ~~the~~a borrower ~~acquisition~~than other types of ~~more~~loans. ~~than~~In 5%addition, ofconsumer ~~the~~loans ~~outstanding~~typically ~~shares~~have ofshorter ~~any~~terms ~~class~~and oflower ~~voting~~balances ~~securities~~with orhigher yields ~~substantially~~compared ~~all~~to ofreal ~~the~~estate ~~assets~~mortgage ofloans, ~~any~~but ~~bank~~generally carry orhigher ~~bank~~risks ~~holding~~of ~~company~~default. ~~Prior~~Consumer ~~approval~~loan ofcollections are dependent on the ~~Federal~~borrower’s ~~Reserve~~continuing ~~Board~~financial isstability, and ~~also~~thus ~~required~~are ~~for~~more ~~the~~likely ~~merger~~to orbe ~~consolidation~~affected by adverse personal circumstances. Furthermore, the application of ~~Bay~~various ~~View~~federal and ~~Capital~~state ~~Corporation~~laws, including bankruptcy and insolvency laws, may ~~with~~limit ~~another~~the ~~bank~~amount ~~holding~~that ~~company~~can be recovered on these loans.

WeThe ~~are~~combined ~~prohibited by the BHCA, except in certain statutorily prescribed instances, from acquiring direct or indirect ownership or control of more than 5% of any class of the outstanding voting shares of any~~ company’s ~~that~~financial iscondition ~~not a bank or bank holding company~~ and ~~from~~results ~~engaging directly or indirectly in activities other than those~~ of ~~banking,~~operations ~~managing~~would or controlling banks or furnishing services to our subsidiaries. However, we may, subject to the prior approval of the Federal Reserve Board, engage in any, or acquire shares of companies engaged in, activities that were deemed by the Federal Reserve Board to be so ~~closely~~adversely ~~related~~affected toif ~~banking~~GBSB’s orallowance ~~managing~~for orloan ~~controlling~~losses ~~banks~~is asnot tosufficient ~~be a proper incident thereto prior~~ to ~~November~~absorb ~~12,~~actual ~~1999~~losses.

~~Under~~ There ~~Federal Reserve Board regulations, a bank holding company~~ is ~~required~~no toprecise ~~serve~~method ~~as a source~~ of ~~financial~~predicting ~~and managerial~~loan ~~strength to its subsidiary banks and may not conduct its operations in an unsafe or unsound manner~~losses. InExcess loan ~~addition,~~losses itcould ishave ~~the Federal Reserve Board’s policy that in serving as~~ a ~~source~~material ofadverse ~~strength~~effect toon ~~its subsidiary banks, a bank holding~~GBSB’s ~~company should stand ready to use available resources to provide adequate capital funds to its subsidiary banks during periods of~~ financial ~~stress~~condition ~~or adversity~~ and ~~should~~results ~~maintain~~of ~~the~~operations. ~~financial~~GBSB ~~flexibility~~attempts ~~and capital-raising capacity~~ to ~~obtain~~ ~~additional~~maintain resources for assisting its subsidiary banks. A bank holding company’s failure to meet its obligations to serve as a source of strength to its subsidiary banks will generally be considered by the Federal Reserve Board to be an ~~unsafe~~appropriate ~~and unsound banking practice or a violation of the Federal Reserve Board’s regulations or both.~~

~~Our securities are registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as~~10 ~~amended. As such, we are subject to the information, proxy solicitation, insider trading, and other requirements and restrictions of the Securities Exchange Act.~~

EffectiveTable April 1, 1999, we changed the listing of our common stock and Capital Securities from Nasdaq to the New York Stock Exchange and commenced trading of our Subordinated Notes on the New York Stock Exchange. Our common stock trades under the ticker symbol “BVC”, our capital securities trade under the ticker symbol “BVS”, and our Subordinated Notes trade under the ticker symbol “BVC 07”.Contents

~~Bay~~ allowance ~~View~~for ~~Bank,~~loan Nlosses to provide for estimated losses in its loan portfolio.A. GBSB periodically determines the amount of its allowance for loan losses based upon consideration of several factors, including:

~~Bay~~• ~~View Bank, N.A., as~~ a ~~national~~regular ~~banking~~review ~~association, is subject to primary supervision, examination and regulation by the OCC. To a lesser extent, Bay View Bank is also subject to regulations~~ of the ~~Federal Deposit Insurance Corporation~~quality, ~~sometimes~~mix ~~referred to as the FDIC, which insures our deposit accounts,~~ and ~~the~~size ~~Federal Reserve Board. If, as a result~~ of ~~an examination,~~ the ~~OCC~~overall ~~determines~~loan ~~that~~portfolio; ~~the~~• ~~financial~~historical ~~condition,~~loan ~~capital~~loss ~~resources,~~experience; ~~asset~~• ~~quality,~~evaluation ~~earnings~~of ~~prospects,~~non-performing ~~management,~~loans; ~~liquidity~~• orassessment ~~other aspects~~ of ~~Bay~~economic View Bank’s operations are unsatisfactory, or that Bay View Bank or its management is violating or has violated any law or regulation, various remedies are available to the OCC. Such remedies include the power to enjoin “unsafe or unsound practices”, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in capital, to restrict the growth of Bay View Bank, to assess civil monetary penalties, and totheir ~~remove~~effects ~~officers~~on ~~and directors. The FDIC has similar enforcement authority, in addition to its authority to terminate Bay View Bank~~GBSB’s ~~deposit~~existing ~~insurance~~portfolio; inand ~~the~~• ~~absence of action by~~ the ~~OCC~~amount and ~~upon~~quality aof ~~finding that we are in an unsafe or unsound condition~~collateral, ~~are~~including ~~engaging in unsafe or unsound activities~~guarantees, orsecuring ~~that our conduct poses a risk to the deposit insurance fund or may prejudice the interest of our depositors~~loans.

~~Various~~The ~~requirements~~merged ~~and restrictions under the laws of the United States affect the operations of Bay View Bank. Federal statutes and regulations relate to many aspects of Bay View Bank~~company’s ~~operations,~~financial ~~including~~condition ~~reserves~~may ~~against~~be ~~deposits,~~adversely ~~ownership~~affected ofif ~~deposit~~GBSB ~~accounts,~~is ~~interest~~unable ~~rates~~to ~~payable~~attract onsufficient deposits, ~~loans~~to ~~and~~fund ~~investments,~~its ~~mergers~~anticipated ~~and~~loan ~~acquisitions, borrowings, dividends, locations of branch offices, capital requirements, and disclosure obligations to depositors and borrowers~~growth.

~~Agreements~~ GBSB ~~with~~funds ~~Regulatory~~its ~~Agencies~~loan growth primarily through deposits. To the extent that GBSB is unable to attract and maintain sufficient levels of deposits to fund its loan growth, GBSB would be required to raise additional funds through public or private financings.

~~During~~The ~~the~~combined ~~third~~company ~~quarter~~could ofexperience ~~2000,~~significant wedifficulties ~~entered~~and ~~into~~complications ~~formal~~in ~~agreements~~connection with ~~the~~its ~~OCC~~growth and ~~the~~acquisition ~~Federal Reserve Bank of San Francisco (see “Recent Developments” and Note 4 to the Consolidated Financial Statements, “Regulatory Matters”, at Item 8~~strategy. ~~“Financial Statements and Supplementary Data”).~~

~~Dividends~~ GLB has grown significantly over the last few years and, following ~~Other~~the ~~Transfers~~merger, ofmay ~~Funds~~seek to continue to grow by acquiring financial institutions and branches as well as non-depository entities engaged in permissible activities for its financial institution subsidiaries. However, the market for acquisitions is highly competitive. The combined company may not be successful in identifying financial institution and branch acquisition candidates, integrating acquired institutions or preventing deposit erosion at acquired institutions or branches.

~~Our~~ As ~~principal~~part ~~source~~ of ~~income~~this ~~has~~acquisition ~~historically~~strategy, ~~been~~the ~~dividends~~merged ~~from~~company ~~Bay~~may acquire ~~View~~additional ~~Bank.~~banks ~~Bay~~and ~~View~~non-bank ~~Bank~~entities isthat ait ~~legal entity~~believes ~~separate~~provide ~~and~~a ~~distinct~~strategic ~~from~~fit ~~Bay~~with ~~View Capital Corporation. Bay View Bank is subject to various statutory and regulatory restrictions on~~ its ~~ability to pay dividends to us~~business. InThe ~~addition,~~merged ~~the OCC has the authority to prohibit Bay View Bank from paying~~company ~~dividends,~~may ~~depending~~not ~~upon~~be ~~its~~successful ~~financial~~with ~~condition,~~this ~~if such payment is deemed to constitute an unsafe or unsound practice. As a national bank~~strategy, ~~Bay~~and ~~View Bank~~ may ~~pay~~not ~~dividends~~be inable ~~any one calendar year equal~~ to ~~its net earnings in that calendar year~~ ~~plus~~manage ~~net~~this ~~earnings~~growth ~~for~~adequately ~~the~~and ~~previous~~profitably. ~~two~~For ~~calendar years~~example, acquiring ~~less~~ any ~~dividends~~bank ~~paid~~or ~~during this three~~non-~~year~~bank ~~period.~~entity ~~Under~~will ~~Bay~~involve ~~View~~risks commonly ~~Bank’s~~associated ~~current agreement~~ with ~~the OCC~~acquisitions, ~~as previously discussed, dividends may not be declared or distributed to us~~including: ~~without the prior written approval of the OCC.~~

~~The~~• ~~OCC~~potential ~~also~~exposure ~~has the authority~~ to ~~prohibit~~unknown ~~Bay View Bank from engaging in activities that, in the OCC’s opinion, constitute unsafe~~ or ~~unsound~~contingent ~~practices~~liabilities ~~in conducting its business. It is possible, depending upon the financial condition~~ of ~~the~~banks ~~bank in question~~ and ~~other~~non-bank ~~factors,~~entities ~~that~~ the ~~OCC~~merged ~~could~~company ~~assert~~acquires; ~~that~~• ~~the~~exposure ~~payment of dividends or other payments might, under some circumstances, be such an unsafe or unsound practice. Further, the OCC and the Federal Reserve Board have established guidelines with respect~~ to ~~the~~potential ~~maintenance~~asset ofquality ~~appropriate~~issues ~~levels~~ of ~~capital~~acquired ~~by national~~ banks and non-bank ~~holding~~entities; ~~companies~~• ~~under~~potential ~~their~~disruption ~~jurisdiction.~~to ~~Compliance with~~ the ~~standards~~merged ~~set~~company’s ~~forth~~business; in• ~~such~~potential ~~guidelines~~diversion ~~and~~of the ~~restrictions~~time ~~that~~and ~~are~~attention ~~or may be imposed under the prompt corrective action provisions~~ of ~~federal law could limit~~ the ~~amount~~merged ~~of dividends~~company’s ~~that Bay View Bank or Bay View Capital Corporation may pay. An insured depository institution is prohibited from paying~~ management; ~~fees~~and to• ~~any controlling persons or, with certain limited exceptions, making capital distributions, if after such transaction~~ the ~~institution~~possible ~~would~~loss beof ~~undercapitalized.~~key ~~See~~employees ~~“Capital Standards”~~ and ~~“Prompt~~customers ~~Corrective~~of ~~Regulatory~~the ~~Action~~banks and ~~Other~~other ~~Enforcement~~businesses ~~Mechanisms”~~the ~~for~~merged acompany ~~discussion of these additional restrictions on capital distributions~~acquires.

~~Bay~~ In ~~View~~addition ~~Bank is subject~~ to ~~certain~~acquisitions, ~~restrictions~~GBSB ~~imposed~~intends byto ~~federal~~strengthen ~~law~~its position onin ~~any~~its ~~extensions~~current ofmarkets ~~credit~~by ~~to,~~undertaking oradditional ~~the issuance~~de ofnovo abranch ~~guarantee~~openings. orBased ~~letter of credit~~ on ~~behalf~~its ofexperience, ~~Bay~~GBSB ~~View~~believes that ~~Capital~~it ~~Corporation~~generally ortakes ~~other~~up ~~affiliates,~~to ~~the~~three ~~purchase~~years ~~of,~~for ornew ~~investments~~banking facilities ~~in,~~to ~~stock~~achieve oroperational ~~other~~profitability ~~securities~~due ~~thereof,~~to the impact ~~taking~~ of ~~such~~organizational ~~securities~~and asoverhead ~~collateral~~expenses ~~for loans,~~ and the start-up ~~purchase~~phase of ~~our~~ ~~assets.~~generating ~~Such~~loans ~~restrictions~~and ~~prevent~~deposits. usTo ~~from borrowing from Bay View Bank unless~~ the ~~loans~~extent ~~are~~that ~~secured~~GBSB undertakes byadditional ~~designated~~de ~~amounts~~novo ofbranch ~~specified collateral. Further~~openings, ~~unless~~GBSB anis ~~exception~~likely ~~applies,~~to continue ~~such~~to ~~secured~~experience ~~loans~~the ~~and~~effects ~~investments~~of ~~are~~higher ~~limited~~operating ~~for any one~~expenses ~~affiliate~~relative to ~~10%~~operating ofincome ~~Bay~~from ~~View~~the ~~Bank’s~~new ~~capital~~banking ~~and surplus (as defined by federal regulations)~~facilities, which ~~and~~may ~~such~~have ~~secured~~an ~~loans~~adverse ~~and~~effect ~~investments~~on ~~are limited for all affiliates in total, to 20% of Bay View Bank~~GBSB’s ~~capital~~net ~~and surplus (as defined by~~income, ~~federal~~earnings ~~regulations).~~per ~~California~~share, ~~law~~return ~~also~~on ~~imposes~~average ~~certain~~stockholders’ ~~restrictions with respect to transactions involving Bay View Capital Corporation~~ equity and ~~other~~return ~~controlling persons of Bay View Bank. Additional restrictions~~ on ~~transactions~~average ~~with affiliates may be imposed on Bay View Bank under the prompt corrective action provisions of federal law~~assets. ~~See “Prompt Corrective Action and Other Enforcement Mechanisms.”~~

The ~~Federal~~combined ~~Deposit~~company ~~Insurance~~may ~~Act~~encounter ~~provides~~unforeseen ~~that~~expenses, inas ~~the~~well as ~~event~~difficulties ofand ~~the~~complications ~~liquidation~~in orintegrating ~~other resolution of an insured~~expanded ~~depository~~operations ~~institution,~~and ~~the~~new ~~claims~~employees ofwithout ~~depositors~~disruption ofto ~~the~~its ~~institution~~overall operations. ~~and~~Following ~~certain~~each ~~claims~~acquisition, ~~for administrative expenses of~~ the ~~FDIC~~combined ~~as receiver~~ company will have ~~priority~~to ~~over~~expend ~~other~~substantial ~~general~~resources ~~unsecured~~to ~~claims~~integrate ~~against~~ the entities. ~~institution~~The asintegration ~~well~~of asnon-banking ~~over~~entities ~~nonsecured,~~often involves ~~nondeposit~~combining ~~creditors,~~different ~~including~~industry ~~any~~cultures ~~depository~~and ~~institution~~business methodologies. ~~holding~~The ~~company~~failure ~~(such~~to asintegrate ~~Bay~~successfully ~~View~~the entities ~~Capital~~the ~~Corporation),~~combined ~~with~~company ~~respect~~may toacquire ~~any~~into ~~extensions~~its ofexisting operations ~~credit~~may ~~they~~adversely ~~have~~affect ~~made~~its toresults ~~such~~of ~~insured~~operations ~~depository~~and financial ~~institutions~~condition.

~~Capital Standards~~11

TheTable Federal Reserve Board and the OCC have adopted risk-based minimum capital guidelines intended to provide a measure of capital that reflects the degree of risk associated with a banking organization’s operations for both transactions reported on the balance sheet as assets and transactions, such as letters of credit and recourse arrangements, which are recorded as off-balance sheet items. Under these guidelines, nominal dollar amounts of assets and credit equivalent amounts of off-balance sheet items are multiplied by one of several risk adjustment percentages, which range from 0% for assets with low credit risk, such as certain U.S. Treasury securities, to 100% for assets with a higher degree of credit risk, such as commercial loans.Contents

The ~~federal~~combined ~~banking~~company ~~agencies~~could ~~require~~be aadversely ~~minimum~~affected ~~ratio~~by ofchanges ~~qualifying~~in ~~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~~law, ~~federal~~especially ~~banking~~changes ~~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~~regulation 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%; otherwise, it is generally considered to be 4%. 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~~. (See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 16 to the Consolidated Financial Statements, “Stockholders’ Equity and Regulatory Capital Requirements”, at Item 8. “Financial Statements and Supplementary Data” for further discussion of our capital ratios).

~~Prompt~~ The ~~Corrective~~combined ~~Action~~company and ~~Other~~its ~~Enforcement~~subsidiaries ~~Mechanisms~~will operate in a highly regulated environment and will be subject to supervision and regulation by several governmental regulatory agencies, including the Federal Reserve Board, the Federal Deposit Insurance Corporation, which we sometimes refer to as the FDIC and the New York State Banking Department, which we sometimes refer to as the Banking Department in this Annual Report on Form 10-K. Regulations are generally intended to provide protection for depositors and customers rather than for investors. The combined company will be subject to changes in federal and state law, regulations, governmental policies, income tax laws and accounting principles. Changes in regulation could adversely affect the banking industry as a whole and could limit the combined company’s growth and the return to investors by restricting such activities as:

~~Federal~~• ~~banking agencies possess broad powers to take corrective and other supervisory action to resolve~~ the ~~problems~~payment of ~~insured~~ ~~depository~~dividends; ~~institutions,~~• ~~including~~mergers ~~but~~with ~~not~~or ~~limited~~acquisitions toof ~~those~~other institutions; ~~that~~• ~~fall~~investments; ~~below~~• ~~one~~loans orand ~~more~~interest ~~prescribed~~rates; ~~minimum~~• ~~capital~~the ~~ratios.~~provision ~~The~~of ~~OCC~~securities, ~~which~~insurance ~~regulates~~or ~~Bay~~trust ~~View~~services; ~~Bank,~~and ~~has~~• ~~promulgated~~the ~~regulations~~types ~~defining~~of ~~the~~non-deposit ~~following~~activities ~~five categories~~ in which an insured depository institution will be placed, based upon its capital ratios: “well-capitalized”, “adequately capitalized”, “undercapitalized”, “significantly undercapitalized”, and “critically undercapitalized”. At December 31, 2000, Bay View Bank exceeded the ~~ratios~~combined ~~required~~company’s ~~for~~financial ~~classification~~institution assubsidiaries ~~“adequately~~may ~~capitalized”~~engage.

An In ~~institution that~~addition, ~~based~~legislation ~~upon its capital levels, is classified as well-capitalized, adequately capitalized~~ or ~~undercapitalized~~ ~~may be treated as though it were in the next lower capital category if the appropriate federal banking~~ agency, ~~after~~rulemaking ~~notice~~may ~~and~~change ~~opportunity for hearing, determines that an unsafe or unsound condition or an unsafe or unsound practice~~present ~~warrants such treatment. At each successive lower~~ capital ~~category~~requirements, anwhich ~~insured~~could ~~depository~~restrict ~~institution~~the iscombined company’s ~~subject~~activities toand ~~more~~require ~~restrictions.~~the Acombined ~~significantly~~company ~~undercapitalized institution can not be treated as critically undercapitalized unless its capital~~to ~~ratio~~maintain ~~actually~~additional ~~warrants such treatment~~capital.

InThe ~~addition~~combined tocompany’s ~~measures~~results ~~taken~~of ~~under~~operations ~~the~~could ~~prompt~~be ~~corrective~~adversely ~~action~~affected ~~provisions,~~due ~~commercial banking organizations may be subject~~ to ~~potential~~significant enforcement actions by federal regulators for unsafe or unsound practices in conducting their businesses or for violations of any law, rule, regulation, or any condition imposed in writing by the agency or any written agreement with the agencycompetition.

~~Safety~~ The combined company may not be able to compete effectively in its markets, which could adversely affect its results of operations. The banking and ~~Soundness~~financial ~~Standards~~service industry in GBSB’s market areas is highly competitive. The competitive environment is a result of:

~~The~~• ~~federal~~changes ~~banking~~in ~~agencies~~regulation; ~~have~~• ~~adopted~~prevailing ~~guidelines~~economic ~~designed~~conditions ~~to assist them~~ in identifying and addressing potential safety and soundness concerns before capital becomes impaired. The guidelines set forth operational and managerial standards relating to: (i) internal controls, information systems and internal audit systems, (ii) loan documentation, (iii) credit underwriting, (iv) asset growth, (v) earnings, and (vi) compensation, fees and benefits. In addition, the ~~federal~~Greater ~~banking~~Buffalo ~~agencies~~area; ~~have~~• ~~also~~changes adopted safety and soundness guidelines with respect to asset quality and earnings standards. These guidelines provide six standards for establishing and maintaining a system to identify problem assets and preventing those assets from deteriorating. Under these standards, an insured depository institution should: (i) conduct periodic asset quality reviews to identify problem assets, (ii) estimate the inherent losses in ~~problem~~technology ~~assets~~ and ~~establish~~product ~~reserves~~delivery ~~that~~systems; ~~are~~• ~~sufficient~~declining topopulation ~~absorb~~trends; ~~estimated losses, (iii) compare problem asset totals to capital, (iv) take appropriate corrective action to resolve problem assets, (v) consider the size~~ and ~~potential~~• ~~risks of material asset concentrations, and (vi) provide periodic asset quality reports with adequate information for management and~~ the ~~Board~~accelerated ofpace ~~Directors to assess the level~~ of ~~asset risk.~~consolidation ~~These~~among ~~guidelines~~financial ~~also~~services ~~set forth standards for evaluating and monitoring earnings and for ensuring that earnings are sufficient to maintain adequate capital and reserves~~providers.

~~Premiums~~ GBSB competes for ~~Deposit~~loans, ~~Insurance~~deposits and customers with various bank and non-bank financial service providers, many of which are larger in terms of total assets and capitalization, have greater access to the capital markets and offer a broader array of financial services than GBSB does. Competition with such institutions may cause GBSB to increase its deposit rates or decrease its interest rate spread on loans it originates.

~~Bay~~The ~~View~~combined ~~Bank~~company’s ~~deposit~~anticipated ~~accounts~~future ~~are~~growth ~~insured~~may byrequire ~~the~~it ~~Savings~~to ~~Association~~raise ~~Insurance~~additional ~~Fund,~~capital orin ~~SAIF, as administered by~~ the ~~FDIC~~future, upbut tothat ~~the~~capital ~~maximum amounts permitted by law. Insurance of deposits~~ may not be ~~terminated~~available bywhen ~~the~~it ~~FDIC upon a finding that an institution has engaged in unsafe or unsound practices,~~ is ~~in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order, or condition imposed by the FDIC or the institution’s primary regulator~~needed.

~~The FDIC charges an annual assessment for the insurance of deposits based on the risk that a particular institution~~ ~~poses~~GLB ~~to its deposit insurance fund. The risk classification is based on an institution’s capital group~~ and ~~supervisory~~GBSB ~~subgroup assignment. Pursuant to federal law~~are, onand ~~January~~the 1,combined ~~1997,~~company ~~Bay~~will ~~View Bank began paying~~be, inrequired ~~addition to its normal~~by ~~deposit~~federal ~~insurance~~and ~~premium~~state asregulatory aauthorities ~~member of the SAIF, an amount equal~~ to ~~approximately~~maintain ~~6.4 basis points per $100 of insured deposits toward the retirement of the Financing Corporation bonds issued in the 1980s to assist in the recovery of the savings~~adequate ~~and~~levels ~~loan industry. Members~~ of ~~the~~capital ~~Bank Insurance Fund, or BIF, by contrast, pay, in addition~~ to ~~their~~support ~~normal~~GBSB’s ~~deposit insurance premium, approximately 1~~operations.3 ~~basis~~GLB ~~points.~~and BVCC ~~Under~~anticipate ~~federal~~that ~~law,~~ the ~~FDIC~~combined iscompany’s ~~not~~current ~~permitted to establish SAIF assessment rates~~capital ~~that~~resources ~~are~~will ~~lower~~satisfy ~~than~~its ~~comparable~~and ~~BIF~~GBSB’s ~~assessment~~capital ~~rates. On January 1, 2000, the rate paid to retire the Financing Corporation bonds became equal~~ requirements for ~~members of~~ the ~~BIF~~foreseeable ~~and the SAIF at 2~~future.12 ~~basis~~The ~~points.~~combined ~~Effective~~company ~~January~~may 1at some point, ~~2001~~however, ~~our~~need ~~total deposit insurance premium increased from 2.12 basis points~~ to ~~18.96~~raise ~~basis~~additional ~~points per $100 of insured deposits due to Bay View Bank’s regulatory~~ capital ~~classification as “adequately capitalized” (See Note 16~~ to ~~the Consolidated Financial~~support ~~Statements,~~continued ~~“Stockholders’ Equity and Regulatory Capital Requirements~~growth,” atboth ~~Item~~internally ~~8. “Financial Statements~~ and ~~Supplementary~~through ~~Data~~acquisitions.~~”).~~

~~Interstate Banking and Branching~~12

TheTable BHCA permits bank holding companies from any state to acquire banks and bank holding companies located in any other state, subject to certain conditions, including certain nationwide- and state-imposed concentration limits. Bay View Bank has the ability, subject to certain restrictions, to acquire by acquisition or merger branches outside its home state. The establishment of new interstate branches is also possible in those states with laws that expressly permit it. Interstate branches are subject to certain laws of the states in which they are located. Competition may increase further as banks branch across state lines and enter new markets.Contents

~~Community~~ The ~~Reinvestment~~combined ~~Act~~company’s ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside its control, and ~~Fair~~on ~~Lending~~its ~~Developments~~financial performance. If the combined company cannot raise additional capital when needed, its ability to expand its operations through internal growth and acquisitions could be materially impaired.

~~Bay~~Adverse ~~View~~economic ~~Bank~~conditions is subject to certain fair lending requirements and reporting obligations involving home mortgage lending operations and Community Reinvestment Act, or CRA, activities. The CRA generally requires the federal banking agencies to evaluate the record of a financial institution in ~~meeting~~GBSB’s ~~the~~market ~~credit~~areas ~~needs of its local communities, including low- and moderate-income neighborhoods. A bank~~ may beadversely ~~subject~~impact toits ~~substantial~~results ~~penalties and corrective measures for a violation~~ of ~~certain~~operations ~~fair lending laws. The federal banking agencies may take compliance with such laws~~ and ~~CRA~~financial ~~obligations into account when regulating and supervising other activities~~condition.

A The ~~bank~~majority of GBSB’s ~~compliance~~business ~~with~~is ~~its~~concentrated ~~CRA~~in ~~obligations~~western New isYork, ~~based~~which ~~upon~~in arecent ~~performance-based~~years ~~evaluation~~has ~~system~~been ~~which~~a ~~bases~~slower ~~CRA~~growth market ~~ratings~~than onmany another ~~institution’s~~areas ~~lending~~of ~~service~~the ~~and~~United ~~investment performance~~States. ~~When~~As a ~~bank~~result, GBSB’s ~~holding~~loan ~~company~~portfolio ~~applies~~and ~~for~~results ~~approval~~of tooperations ~~acquire~~may abe adversely ~~bank~~affected orby ~~other~~factors ~~bank~~that ~~holding~~have ~~company,~~a significant impact on the ~~Federal~~economic ~~Reserve~~conditions ~~Board~~in ~~will~~this ~~review~~market ~~the~~area. ~~assessment~~The local economies of ~~each~~this ~~subsidiary~~market area in recent years have been less robust than ~~bank~~the economy of the ~~applicant~~nation ~~bank~~as ~~holding~~a ~~company,~~whole and ~~such records~~ may not be subject to the ~~basis~~same ~~for~~fluctuations ~~denying~~as the ~~application~~national economy. ~~Based~~Adverse oneconomic conditions anin ~~examination~~GBSB’s ~~conducted~~market ~~April~~area, 3including the loss of certain significant employers, ~~2000~~could reduce its growth rate, affect ~~Bay~~its ~~View~~borrowers’ ~~Bank~~ability ~~was~~to ~~rated~~repay ~~“satisfactory”~~their loans and generally affect GBSB’s financial condition and results of operations. Furthermore, a downturn in ~~complying~~real ~~with~~estate values in GBSB’s market area could cause many of its ~~CRA~~loans to become ~~obligations~~inadequately collateralized.

~~Employees~~Certain provisions of BVCC’s certificate of incorporation and by-laws after the merger may discourage takeovers.

At BVCC’s ~~December~~certificate ~~31,~~of ~~2000,~~incorporation weand ~~had~~by-laws aafter ~~total~~the merger ofcontain 1certain anti-takeover provisions that may discourage or may make more difficult or expensive a tender offer,~~018~~ ~~employees~~change onin control or a ~~full-time~~takeover ~~equivalent~~attempt ~~basis,~~that ~~consisting~~is opposed by BVCC’s board of ~~both~~directors. ~~full-time~~In particular, the ~~and~~certificate ~~permanent~~of ~~part~~incorporation and by-~~time~~laws ~~employees,~~of asBVCC ~~follows~~following the merger:

Bay View Bank, N.A. and Subsidiaries		855
Bay View Capital Corporation		163
Total		1,018


	•	classify its board of directors into three classes, so that stockholders elect only one-third of its board of directors each year;

	•	permit stockholders to remove directors only for cause;

	•	do not permit stockholders to take action except at an annual or special meeting of stockholders;

	•	require stockholders to give advance notice to nominate candidates for election to the board of directors or to make stockholder proposals at a stockholders’ meeting;

	•	permit the board of directors to issue, without stockholder approval unless otherwise required by law, preferred stock with such terms as its board of directors may determine; and

	•	prohibit the acquisition of 5% or more of BVCC’s common stock, without the prior approval of its board of directors.

~~Our~~ Section 203 ~~employees~~of ~~are~~the ~~not~~DGCL ~~represented~~generally byprovides ~~any~~that ~~unions~~a publicly-held Delaware corporation, such as BVCC or ~~covered~~GLB, that has not “opted out” of coverage by this section in the prescribed manner may not engage in any ~~collective~~business ~~bargaining~~combination with ~~agreements~~an interested stockholder for a period of three years following the date that the stockholders became an interested stockholder. WeBVCC ~~consider~~has ~~our~~opted out of Section 203 and ~~relations~~Section 203 ~~with~~is ~~our~~not ~~employees~~applicable to beBVCC. ~~satisfactory~~GLB has not opted out of Section 203 and Section 203 is applicable to GLB.

These provisions of BVCC’s certificate of incorporation and by-laws after the merger and of Delaware law could discourage ~~Executive~~potential ~~Officers~~acquisition proposals and could delay or prevent a change in control, even though a majority of the ~~Registrant~~merged company’s stockholders may consider such proposals desirable. Such provisions could also make it more difficult for third parties to remove and replace the members of the merged company’s board of directors. Moreover, these provisions could diminish the opportunities for stockholders to participate in certain tender offers, including tender offers at prices above then-current market price of the merged company’s common stock, and may also inhibit increases in the trading price of the merged company’s common stock that could result from takeover attempts.

~~The following table sets forth certain information regarding the executive officers of the Registrant.~~13

Name	Age	Position	Year Appointed
Edward H. Sondker	53	Director, President and Chief Executive Officer	1995
Matthew L. Carpenter	41	Executive Vice President and Chief Operating Officer, Bay View Capital Corporation and President and Chief Executive Officer, Bay View Commercial Finance Group	2001
Richard E. Arnold	60	Executive Vice President and Director of Sales and Banking Administration, Bay View Bank	1997
James A. Badame	57	President, Bay View Acceptance Corporation	1998
John N. Buckley	43	Executive Vice President and Chief Credit Officer	1995
Mark E. Lefanowicz	44	Executive Vice President and Chief Financial Officer	2000
Ronald L. Reed	54	Executive Vice President and Director of Management Information Systems and Loan Servicing	1997
Douglas J. Wallis	50	Executive Vice President, General Counsel and Corporate Secretary	2000
Carolyn Williams-Goldman	39	Executive Vice President and Director of Administration	1998

~~The~~Loss ~~business~~of ~~experience~~members of ~~each~~the ofcombined ~~our~~company’s executive ~~officers~~team iscould ashave ~~follows:~~a negative impact on its business.

~~Mr.~~ The ~~Sondker~~combined ~~has~~company’s ~~served~~success asis ~~a Director~~dependent, ~~President~~in ~~and~~part, ~~Chief~~on the ~~Executive~~continued ~~Officer~~service of ~~Bay~~its ~~View~~executive ~~Capital~~officers, ~~Corporation~~including ~~since 1995.~~Barry ~~Previously~~M. Snyder, heChairman ~~served as President and Chief Executive Officer~~ of ~~Independence~~the ~~One~~Board ~~Bank~~ of ~~California,~~GLB ~~FSB,~~and aAndrew ~~subsidiary of Michigan National Corporation~~W. ~~From 1985 to 1990~~ Dorn, Jr., ~~he was the~~ President and Chief Executive Officer of ~~La Jolla Bank &~~GLB. ~~Trust~~The ~~Company.~~loss ~~Prior~~of tothe ~~1985,~~services ~~Mr.~~of ~~Sondker~~any ~~held~~of ~~executive~~these ~~and~~key ~~management~~persons ~~positions~~could ~~with~~ have a ~~community~~negative ~~bank~~impact ~~holding~~on ~~company~~the incombined ~~Kansas~~company’s ~~City,~~business because ~~Missouri.~~of Ontheir ~~February 14~~skills, ~~2001,~~relationships ~~Mr.~~in ~~Sondker announced his retirement from~~ the banking ~~industry~~ community and ~~from~~years ~~his positions~~of asindustry ~~president~~experience, ~~CEO~~ and ~~director.~~the Adifficulty ~~nationwide~~of ~~search~~promptly finding ~~for~~qualified ~~his replacement is underway~~successors. ~~During this transition, Mr. Sondker will continue in his current capacity until a successor is named.~~

~~Mr.~~If ~~Carpenter~~it ~~was~~should ~~appointed~~be ~~Executive~~ultimately ~~Vice~~determined ~~President~~that ~~and~~BVCC’s ~~Chief~~reserves ~~Operating~~for ~~Officer~~the ofcontingent ~~Bay~~liabilities ~~View~~remaining Capital Corporation in 2001 and has served as President and Chief Executive Officer of our subsidiary Bay View Commercial Finance Group since 1999. Prior to being appointed President and Chief Executive Officer, he served as Chief Operating Officer of Bay View Commercial Finance Group from the ~~time~~dissolution of ~~its~~BVB ~~acquisition~~are bynot ~~Bay View Capital Corporation in 1997. Prior to the acquisition~~adequate, ~~Mr.~~it ~~Carpenter~~could ~~served~~have asa ~~Chief~~material ~~Financial~~adverse ~~Officer~~effect ofon ~~Concord Growth Corporation,~~ the ~~predecessor~~combined ~~of Bay View Commercial Finance Group, from 1991 to 1997, and as President of EXXE Data Corporation, the holding~~ company ~~of Concord Growth Corporation, from 1993 to 1997~~.

~~Mr.~~ As ~~Arnold,~~part ~~Executive~~of ~~Vice~~the ~~President,~~solvent ~~has~~dissolution ~~served~~of asBVB ~~Director~~on ofSeptember 30, 2003, ~~Sales~~BVCC ~~and~~assumed ~~Banking~~the ~~Administration~~assets ~~since~~and ~~1997.~~liabilities ~~Previously~~of BVB, including hecertain ~~served~~pending aslitigation ~~Executive~~and ~~Vice~~other ~~President~~contingent ofliabilities. BVCC ~~First~~has ~~Interstate~~established ~~Bank~~reserves ~~and was responsible~~ for ~~all~~those ~~branch~~liabilities ~~banking~~that ~~activities~~have been insufficient ~~northern~~to ~~California~~date. ~~Prior~~However, toif ~~joining~~BVCC’s ~~First~~remaining reserves ~~Interstate~~were ~~Bank~~insufficient into ~~1990,~~discharge heany ~~held~~future ~~executive~~ liabilities and ~~management~~contingent ~~positions~~liabilities atremaining ~~Security~~from the dissolution of ~~Pacific~~BVB, ~~Bank~~it incould have a ~~career~~material ~~that~~adverse ~~spanned~~effect ~~over~~on 30the ~~years~~combined company.

~~Mr.~~ Risks ~~Badame~~Relating ~~has served as President of Bay View Acceptance Corporation since 1998. Prior~~ to ~~joining the Company, he~~BVAC served as Director of Operations for Triad Financial Corporation, a non-prime indirect automobile loan originator. He has over 25 years of experience in the indirect retail and wholesale automobile dealer financing business in a commercial bank environment, including management and executive positions with Bank of America, Marine Midland Banks and Imperial Thrift. Mr. Badame has also held sales, business and general management positions with General Motors, Chrysler and Honda franchisees in the retail automobile industry.

~~Mr.~~The ~~Buckley,~~sale ~~Executive~~of ~~Vice~~BVAC ~~President,~~may ~~has~~not ~~served~~occur asnotwithstanding ~~Chief~~the ~~Credit~~decision ~~Officer~~of ~~since~~BVCC’s ~~1995~~board ~~and Manager~~ of ~~Credit Administration~~directors ~~and~~that ~~Asset~~the ~~Management~~sale ~~since~~of ~~1994.~~BVAC Heis ~~joined Bay View Capital Corporation~~ in ~~September~~the ~~1993.~~best ~~Previously,~~interests ~~he served at Bank~~ of ~~America~~BVCC ~~in various capacities from 1985 to 1993. His last position was Vice President~~ and ~~Regional~~its ~~Credit Administrator for the Real Estate Industries Division at Bank of America~~stockholders.

~~Mr. Lefanowicz, Executive Vice President, has served as Chief Financial Officer of Bay View Capital Corporation since~~ ~~July~~There ~~2000.~~are ~~Previously~~numerous heconditions ~~served~~to as the ~~Chief~~sale ~~Financial~~of ~~Officer for Provident~~BVAC, ~~the~~and ~~nation’s~~BVCC ~~largest~~and BVAC ~~privately~~may ~~held~~not ~~mortgage~~be ~~bank.~~able ~~Prior~~ to ~~joining~~satisfy ~~Provident,~~these Mrconditions. ~~Lefanowicz~~If ~~held~~this ~~various~~sale of ~~positions~~BVAC asdoes anot ~~partner~~occur, atthe ~~Coopers~~merged &company ~~Lybrand,~~will ~~LLP.~~continue Mrto ~~Lefanowicz~~operate ~~has~~BVAC ~~over~~for 22at ~~years~~least ofthe ~~experience~~short-term infuture ~~financial~~and ~~service~~will continue ~~management~~to ~~and~~be ~~consulting~~subject ~~and~~to hethe isrisks aof ~~Certified~~BVAC’s ~~Public~~business described ~~Accountant~~in this section.

~~Mr.~~The ~~Reed,~~purchase ~~Executive~~agreement ~~Vice~~limits ~~President,~~BVCC’s ~~has served as Director of Management Information Systems~~ and ~~Loan~~BVAC’s ~~Servicing~~ability ~~since 1997.~~to ~~Previously,~~pursue healternatives ~~served~~to asthe ~~Chief~~sale ~~Information Officer for Weyerhaeuser and WMC Mortgage Corporation. He has over 30 years~~ of corporate management, information technology and servicing experience and has also held senior management positions with Technology Management Corporation, American Savings Bank and Home Savings of America/HF AhmansonBVAC.

~~Mr.~~ The ~~Wallis~~purchase agreement contains provisions that, ~~Executive~~subject ~~Vice~~to limited ~~President~~exceptions, ~~was~~limit ~~appointed~~BVCC’s ~~General~~and ~~Counsel~~BVAC’s ofability ~~Bay~~to discuss, ~~View~~facilitate ~~Capital~~or ~~Corporation~~enter ininto ~~January~~agreements ~~2000.~~with Mrthird parties to acquire BVAC. In general, if BVCC or BVAC avail themselves of ~~Wallis~~these ~~joined~~limited ~~Bay~~exceptions, ~~View~~BVCC ~~Capital~~will ~~Corporation~~be inobligated ~~1999~~to aspay ~~General~~AFS ~~Counsel~~a break-up ~~for~~fee ~~Bay~~of $2.5 million, ~~View~~plus ~~Bank~~certain expenses. ~~Previously,~~These heprovisions ~~served~~could discourage asa ~~Executive~~potential ~~Vice~~competing ~~President~~acquirer ~~and~~that ~~General~~might ~~Counsel~~have ~~for~~an interest ~~California~~in ~~Federal~~acquiring ~~Bank.~~BVAC ~~Mr.~~from ~~Wallis~~proposing isor aconsidering ~~member~~the acquisition of ~~the~~BVAC ~~State~~even ~~Bars~~if ofthat ~~California~~potential ~~and~~acquirer were ~~Missouri.~~prepared Heto ~~has~~pay ~~over~~a 25higher ~~years~~price ofto ~~experience~~BVCC ~~within~~than the ~~banking~~price ~~industry~~AFS proposes to pay under the purchase agreement.

~~Ms.~~The ~~Williams-Goldman,~~purchase ~~Executive~~agreement ~~Vice~~restricts ~~President,~~the ~~has~~activities ~~served as Director of Administration since 1998 and Director of Human Resources since 1995. She joined Bay View Capital Corporation as Associate Counsel~~ in ~~1994.~~which ~~Previously,~~BVAC ~~she~~may ~~served~~engage aspending ~~Vice President and Counsel at First Nationwide Bank in San Francisco. Prior to her service with First Nationwide Bank, she was an Associate in~~ the ~~Business Law and Banking Practice Groups of Winthrop, Stimson, Putnam & Roberts~~merger. ~~She is a member of the State Bars of California and New York.~~

~~There~~ The ispurchase noagreement ~~family~~contains ~~relationship~~provisions ~~among~~that, ~~the~~subject ~~above~~to limited ~~officers.~~exceptions, ~~All~~restrict ~~executive~~the ~~officers~~business ~~serve~~activities atBVAC may conduct until the ~~discretion~~sale of BVAC is completed or the ~~Board~~purchase agreement is terminated. If BVAC were to breach any of these ~~Directors~~restrictions, it would provide AFS with the right to terminate the purchase agreement. In addition, these restrictions could prevent BVAC from engaging in business activities it might wish to pursue.

~~Item~~Certain 2indemnification obligations of BVCC under the purchase agreement survive indefinitely and are not limited in amount which could adversely affect the financial condition of the merged company. ~~Properties~~

At Although ~~December~~the ~~31,~~purchase ~~2000~~agreement, wein ~~occupied~~general, alimits ~~total~~the indemnification obligations of ~~100~~BVCC ~~offices~~to ~~plus~~$3.2 million ~~our administrative corporate office under operating lease~~and ~~agreements~~provides ~~expiring~~that atBVCC ~~various~~would ~~dates~~not ~~through~~be ~~the~~liable ~~year~~for ~~2016.~~breaches Inof ~~most~~its representations ~~instances,~~and ~~these~~warranties ~~lease~~in ~~arrangements~~the ~~include~~purchase ~~options~~agreement toafter 18 months ~~renew~~have orelapsed ~~extend~~from the ~~lease~~date atof ~~market rates. Bay View Bank owns~~ the ~~property~~BVAC onsale, certain ~~which four~~ of ~~its~~BVCC’s ~~branches~~indemnification ~~are~~obligations ~~located.~~under ~~We also~~the ~~own~~purchase ~~leasehold~~agreement ~~improvements,~~are ~~furniture~~not ~~and~~limited ~~equipment~~as atto ~~our~~amount ~~offices~~or ~~and branches, all of which are used in our business activities~~time.

14 ~~Item 3. Legal Proceedings~~

ThereTable were no legal proceedings requiring disclosure pursuant to this item at December 31, 2000, or at the date of this report.Contents

~~Item~~BVAC’s ~~4. Submission~~business ofis ~~Matters~~dependent toupon ageneral ~~Vote~~economic ~~of Security Holders~~conditions.

~~There~~ BVAC’s ~~were~~business nocan ~~matters~~be ~~submitted~~adversely toaffected aduring ~~vote~~periods of economic ~~security~~slowdown, ~~holders~~when delinquencies, ~~through~~defaults, ~~the~~repossessions and ~~solicitation~~losses generally increase. These periods may also be accompanied by decreased consumer demand for automobiles, and declining values of ~~proxies~~loans orsecuring ~~otherwise~~outstanding loans. In addition, during ~~the~~ ~~three~~an ~~months~~economic ~~ended~~slowdown ~~December~~or 31a recession, BVAC’s ~~2000~~servicing and collection cost could increase without a corresponding increase in income.

BVAC ~~PART~~is IIalso subject to litigation risks.

BVAC is a consumer finance company and, as such, is subject to ~~Item~~various ~~5. Market~~consumer ~~for~~claims ~~Registrant’s~~and ~~Common~~litigation ~~Equity~~seeking damages and statutory ~~Related~~penalties ~~Stockholder~~based ~~Matters~~upon the following:

At• ~~December~~usury ~~31,~~laws; ~~2000,~~• ~~our~~inaccurate ~~common~~disclosures; ~~stock~~• ~~was~~wrongful ~~traded~~repossession; on• ~~the~~violations ~~New~~of ~~York~~bankruptcy ~~Stock~~stay ~~Exchange~~provisions; ~~under~~• ~~the~~certificate ~~stock~~of ~~symbol~~title ~~“BVC.” At~~disputes; ~~December~~• ~~31,~~fraud; ~~2000,~~• ~~32,574,987~~breach ~~shares~~ of ~~our~~contract; ~~common~~and ~~stock~~• ~~were~~discriminatory ~~outstanding,~~treatment ~~which were owned by 1,515 stockholders~~ of ~~record~~credit applicants.

Some litigation against BVAC could take the form of class action complaints by consumers. BVAC may also be named as a co-defendant in lawsuits brought primarily against automobile dealers. The ~~following~~damages ~~table~~and ~~illustrates~~penalties ~~quarterly~~claimed ~~closing~~by ~~stock~~consumers ~~price~~could ~~activity~~be substantial, and ~~dividends~~could ~~declared~~have ~~for~~a ~~2000~~material and adverse financial ~~1999:~~effect on BVAC.

	2000
	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Stock price—high	$13.44	$11.25	$10.75	$10.00
Stock price—low	$ 7.19	$ 6.56	$ 8.50	$ 4.94
Dividends	$ 0.10	$ 0.10	$ 0.10	$ —
	1999
	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Stock price—high	$21.06	$20.50	$20.56	$16.81
Stock price—low	$17.44	$16.25	$12.50	$11.69
Dividends	$ 0.10	$ 0.10	$ 0.10	$ —


	*BVAC is subject to significant government regulation, violations of which could have a material adverse effect on BVAC.*

~~Our~~ BVAC’s ~~ability~~business ~~to pay dividends~~ is subject to ~~certain~~significant ~~restrictions and limitations pursuant to applicable laws and~~government ~~regulations. During the third quarter of 2000 we entered into an agreement with the Federal Reserve Bank that~~regulation, ~~among~~supervision ~~other~~and ~~matters,~~licensing requires prior approval of any dividend payments on our common stock. Our primary source of income is dividends from Bay View Bank. Bay View Bank is prohibited from paying dividends to us without prior approval of the OCC under ~~its~~various ~~agreement with the OCC (see “Recent Developments” at Item 1. “Business” and Note 16 to the Consolidated Financial Statements~~federal, state ~~“Stockholders’ Equity~~ and ~~Regulatory~~local ~~Capital~~laws ~~Requirements~~governing,” atamong ~~Item~~other ~~8. “Financial Statements and Supplementary Data”).~~things:

• ~~Item~~licensing ~~6. Selected~~requirements; ~~Financial~~• ~~Data—Five~~record-~~Year~~keeping ~~Financial~~requirements; ~~Information~~• payment of fees to certain states; • maximum interest rates that may be charged; • interest rates on loans to customers serving in the military; • debt collection practices; • disclosure to customers regarding financing terms; • the privacy of certain consumer information; and • collection of debt from loan customers who have filed bankruptcy.

	At December 31,
	2000		1999		1998		1997		1996
	(Dollars in thousands)
Selected Balance Sheet Information(1)
Total assets	$5,360,931		$6,498,700		$5,596,232		$3,246,476		$3,300,262
Mortgage-backed securities	642,628		654,713		635,389		470,261		577,613
Loans and leases held-for-investment, net	2,751,794		4,295,246		4,191,269		2,373,113		2,179,768
Loans and leases held-for-sale	345,207		66,247		—		—		294,949
Investment in operating leased assets, net	479,829		463,088		183,453		—		—
Deposits	3,746,312		3,729,780		3,269,637		1,677,135		1,763,967
Borrowings	1,153,443		1,935,517		1,833,116		1,355,976		1,245,537
Intangible assets	134,936		329,005		134,088		29,507		10,197
Capital Securities	90,000		90,000		90,000		—		—
Stockholders’ equity	297,849		631,194		377,811		173,627		200,062
	For the Year Ended December 31,
	2000		1999		1998		1997		1996
	(Dollars in thousands, except per share amounts)
Selected Results of Operations Information(1)
Interest income	$ 460,192		$ 421,656		$ 406,363		$ 242,244		$ 241,755
Interest expense	(294,752	)	(251,172	)	(251,762	)	(154,908	)	(160,773	)
Net interest income	165,440		170,484		154,601		87,336		80,982
Provision for losses on loans and leases	(62,600	)	(28,311	)	(9,114	)	(1,952	)	(1,898	)
Leasing income	97,207		58,558		11,341		—		—
Gain (loss) on sales of assets and liabilities	(52,606	)	10,058		1,060		925		(1,453	)
Other income, net	32,041		22,916		18,671		11,830		10,017
General and administrative expenses	(136,718	)	(112,598	)	(113,567	)	(71,913	)	(58,955	)
General and administrative expenses— FMAC loan production	(15,561	)	(2,395	)	—		—		—
General and administrative expenses— Bankers Mutual	(6,311	)	(2,123	)	—		—		—
Restructuring charges—FMAC	(9,213	)	—		—		—		—
Revaluation of FMAC-related assets	(101,894	)	—		—		—		—
Leasing expense	(69,350	)	(40,188	)	(7,682	)	—		—
Dividend expense on Capital Securities	(8,989	)	(8,935	)	(244	)	—		—
SAIF recapitalization assessment	—		—		—		—		(11,750	)
Real estate operations, net	(65	)	238		240		1,128		4,909
Amortization of intangible assets	(11,158	)	(11,993	)	(11,372	)	(4,088	)	(2,606	)
Amortization of intangible assets— FMAC	(9,608	)	(1,694	)	—		—		—
Write-off of intangible assets—FMAC	(192,622	)	—		—		—		—
Income (loss) before income tax (expense) benefit	(382,007	)	54,017		43,934		23,266		19,246
Income tax (expense) benefit	55,810		(25,053	)	(21,215	)	(9,245	)	(8,277	)
Net income (loss)	$ (326,197	)	$ 28,964		$ 22,719		$ 14,021		$ 10,969
Earnings (loss) per diluted share	$ (10.00	)	$ 1.36		$ 1.12		$ 1.06		$ 0.79
Dividends declared per share	$ 0.30		$ 0.30		$ 0.40		$ 0.34		$ 0.31

BVAC believes it maintains all material licenses and permits required for its current operations and that it is in substantial compliance with all material local, state and federal regulations. The failure of BVAC or of the automobile dealers who sell contracts to BVAC to maintain all requisite licenses, and to comply with applicable regulatory requirements, could allow consumers to assert rights of rescission and other remedies that could have a material adverse effect on BVAC.

	At and For the Year Ended December 31,
	2000		1999		1998		1997		1996
	(Dollars in thousands, except per share amounts)
Selected Other Information(1)
Net interest margin	3.13	%	3.23	%	3.03	%	2.86	%	2.57	%
Return on average assets	(5.20	)%	0.49	%	0.41	%	0.45	%	0.34	%
Return on average equity	(58.80	)%	7.00	%	5.87	%	7.32	%	5.39	%
Ratio of total equity to total assets	5.56	%	9.71	%	6.75	%	5.35	%	6.06	%
Book value per share	$ 9.14		$ 19.38		$ 19.77		$ 14.38		$ 14.98
Dividend payout ratio	N/A		19.26	%	35.57	%	30.53	%	38.61	%
Nonperforming assets	$101,713		$25,939		$18,020		$15,766		$24,310
Ratio of nonperforming assets to total assets	1.90	%	0.40	%	0.32	%	0.49	%	0.74	%

(1)Table Includes the acquisitions of Bay View Credit effective June 1, 1996, Bay View Commercial Finance Group effective April 1, 1997, Ultra Funding effective October 1, 1997, America First Eureka Holdings effective January 2, 1998, and Franchise Mortgage Acceptance Company effective November 1, 1999.Contents

Changes ~~Item~~in ~~7. Management’s~~law ~~Discussion~~could ~~and~~adversely ~~Analysis~~affect ~~of Financial Condition and Results of Operations~~BVAC.

~~INDEX~~ Any changes in the laws, rules and regulations that govern the operation of BVAC’s business could result in higher costs of compliance and otherwise adversely affect BVAC’s financial condition.

Strategic Overview		22
Our Mission and Strategy		22
Retail Platform Strategy		22
Commercial Platform Strategy		23
Results of Operations		23
Net Interest Income and Net Interest Margin		24
Interest Income		28
Interest Expense		30
Provision for Losses on Loans and Leases		32
Noninterest Income (Loss)		32
Noninterest Expense		33
Income Taxes		37
Non-GAAP Performance Measures		37
Normalized Net Interest Margin		37
Balance Sheet Analysis		39
Securities		39
Loans and Leases		42
Deposits		48
Borrowings		49
Liquidity		51
Capital Resources		52
Stock Repurchase Program		54
Impact of Inflation and Changing Prices		54


	*BVAC is dependent upon its ability to effect securitizations periodically.*

BVAC ~~Strategic~~typically ~~Overview~~finances the purchase of contracts from automobile dealers by draws against its warehouse line of credit. BVAC then periodically pools the contracts and sells interests in the pooled portfolio to a trust that sells asset-backed securities to investors. BVAC then uses the net proceeds of the sale to the securitization trust to repay amounts outstanding under the warehouse line of credit. BVAC’s financial condition would be materially and adversely affected if its warehouse lines of credit became unavailable or it was unable to continue similar transactions in the future. In addition, the purchase agreement limits the types of securitizations in which BVAC may engage prior to closing of its sale to AFS or the termination of the merger agreement.

~~Bay~~BVAC ~~View~~operates ~~Capital~~in ~~Corporation is~~ a ~~diversified~~competitive ~~financial~~market ~~services company headquartered in San Mateo, California~~place. ~~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~~ The ~~Retail~~indirect ~~Platform~~automobile ~~includes~~finance ~~single-family~~industry ~~real~~is ~~estate~~extremely competitive. ~~loans,~~Consumer ~~home~~credit ~~equity~~for ~~loans~~automobile ~~and~~purchases ~~lines~~is available ofthrough banks, credit unions, ~~auto~~other ~~loans~~consumer ~~and~~finance ~~leases,~~companies ~~mortgage-backed~~and ~~securities~~captive ~~and~~finance ~~other~~companies ~~investments,~~owned by automobile manufacturers and ~~other~~retailers. ~~consumer~~Many ~~banking~~of ~~products~~these competitors are larger than BVAC and ~~services~~have substantially greater financial resources than BVAC. ~~The~~Many ~~platform~~of BVAC’s ~~results~~competitors ~~include~~provide financing ~~the~~on ~~income~~more ~~and~~favorable ~~expenses~~terms ~~related~~to automobile purchasers or dealers than BVAC does. Certain of BVAC’s competitors also offer financing to ~~these~~automobile ~~business~~dealers ~~activities~~which BVAC does not provide. Providers of consumer credit for automobile purchases have traditionally competed on the basis of:

~~Our~~• ~~Commercial~~the ~~Platform~~maintenance ~~includes~~of ~~multi-family~~favorable ~~and~~relationships ~~commercial~~with ~~real~~automobile ~~estate~~dealers; ~~loans,~~• ~~franchise~~interest ~~loans,~~rates ~~asset-based~~charged; ~~loans, factoring~~• ~~loans,~~the ~~commercial~~quality ~~leases,~~of ~~and~~credit ~~other~~accepted; ~~business~~• ~~banking~~the ~~products~~flexibility ~~and~~of ~~services.~~loan ~~The~~terms ~~platform’s~~offered; ~~results~~and ~~include~~• the ~~income~~quality ~~and~~of ~~expenses~~service ~~related to these business activities~~provided.

~~Our~~ BVAC ~~Mission~~may ~~and~~not ~~Strategy~~be able to continue to compete effectively in this marketplace.

~~Our mission has been to create a diversified financial services company by investing in and developing niche businesses~~ ~~with~~Risks ~~risk-adjusted~~Relating ~~returns that enhance shareholder value. From 1996~~ to ~~1999,~~Tax ~~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~~Matters 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. Our strategy has now refocused around the development of our core commercial banking activities and the growth of our deposit franchise. In order to realize these objectives, our focus remains on the following:

·If ~~Enhancing~~the ~~and~~transfer ~~expanding~~restrictions ~~Bay~~are ~~View~~not ~~Bank’s~~effective ~~deposit~~in ~~base~~preventing byan ~~attracting~~ownership ~~and~~change ~~retaining~~from ~~lower-cost transaction accounts~~occurring, ~~including~~the ~~commercial~~merged ~~and~~company’s ~~business~~ability ~~checking~~to ~~accounts,~~use ~~through~~BVCC’s ~~increased~~net ~~marketing~~operating ~~and~~loss ~~promotional~~carryforwards ~~efforts~~could ~~and~~be ~~offering~~severely ~~competitively priced certificates of deposit~~limited.

· Although ~~Originating~~the ~~and~~transfer ~~purchasing~~restrictions ~~consumer~~are ~~and~~valid ~~commercial~~under ~~loans~~the ~~and~~DGCL, there ~~leases~~is ~~with~~little ~~higher~~judicial ~~yields,~~precedent ~~shorter~~regarding ~~maturities~~the enforcement of similar transfer restrictions. Thus, ~~less~~a ~~geographic~~transfer ~~concentration~~could ~~risk~~occur that would violate the transfer restrictions, and ~~less~~the ~~interest~~merged ~~rate~~company may ~~sensitivity~~be unable to enforce the transfer restrictions. Even if a court were to enforce the transfer restrictions, the Internal Revenue Service, or IRS, could nevertheless disagree that the transfer restrictions provided a sufficient remedy with respect to an ownership change resulting from a prohibited transfer.

·The ~~Reducing~~transfer ~~our~~restrictions ~~franchise~~may ~~loan~~delay ~~risk~~or ~~concentration~~prevent takeover bids by ~~selling~~third ~~our~~parties ~~franchise~~and ~~loans~~may ~~classified~~delay asor ~~held-for-sale~~frustrate atattempts ~~December~~by ~~31,~~stockholders ~~2000~~to replace management.

· The ~~Managing~~transfer restrictions on the ~~capital~~common ~~levels~~stock of ~~both~~the ~~Bay~~merged company ~~View~~are ~~Bank~~complex and ~~Bay~~are ~~View~~designed ~~Capital~~to ~~Corporation~~preserve ~~with~~the value of its net operating loss carryforwards for the ~~goal~~benefit of ~~attaining~~its stockholders. ~~and~~Any ~~maintaining~~person ~~capital~~who ~~levels~~seeks atto oracquire ~~above~~a significant interest in the ~~well-capitalized~~merged ~~level,~~company aswill ~~defined~~be ~~for~~required ~~regulatory~~to ~~purposes~~negotiate with its board of directors. The transfer restrictions may also make it more difficult to effect a business combination transaction that stockholders may perceive to be favorable because of the need to negotiate with the merged company’s board of directors. The transfer restrictions could also make it more difficult for stockholders to replace

~~During 2000, we retained the services of Merrill Lynch & Co. as our financial advisor.~~16

RetailTable Platformof StrategyContents

~~One~~ current ofmanagement ~~the~~because ~~principal~~no ~~businesses~~single ofstockholder ~~the~~may ~~Retail~~cast ~~Platform is Bay View Bank’s 57 full service branch banking network. A~~votes ~~primary~~for ~~objective~~more ofthan ~~the~~5% ~~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~~merged ~~Platform~~company’s ~~deposit~~outstanding ~~growth strategy has~~common ~~been to focus on lower-cost transaction accounts (e~~stock.~~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 continued to make progress on our goal of~~ expanding our deposit base by growing business deposits and introducing internet banking to our customers. Consumer internet banking was launched at the end of the first quarter of 2000 while business online banking was launched in June 2000. Our retail deposits grew $140.8 million during 2000, reflecting the continued strength of our deposit franchise.

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

~~The~~ Based ~~Retail~~on ~~Platform’s~~the ~~home~~current ~~equity~~federal ~~loan~~corporate ~~portfolio~~income ~~includes~~tax ~~conventional~~rate ~~home equity loans and lines~~ of ~~credit and~~34%, ~~certain~~the ~~high~~net ~~loan-to-value~~operating ~~home~~loss ~~equity~~carryforwards ~~loans.~~could Weprovide ~~define~~significant future ~~conventional~~tax ~~home~~savings ~~equity loans and lines of credit as having combined loan-~~to~~-value~~ ~~ratios~~the ofmerged ~~less than or equal to 100%~~company. WeHowever, ~~define~~the ~~high loan-to-value home equity loans as having combined~~ability ~~loan-to-value ratios~~ of ~~greater~~the ~~than~~merged ~~100%.~~company ~~Our~~to ~~home~~use ~~equity~~these ~~loan~~tax ~~production~~benefits ~~efforts~~will ~~are~~depend ~~focused~~ on ~~conventional home equity loans and lines of credit originated through our branch banking network. Our high loan-to value home equity loans were~~a ~~purchased~~number ~~primarily in 1997 and 1998, a significant portion~~ of ~~which~~factors ~~were sold during 2000.~~including:

~~The~~• ~~Retail~~the ~~Platform~~ability ~~also~~of ~~originates~~the ~~and~~merged ~~purchases~~company ~~fixed-rate~~to ~~loans~~generate ~~and~~sufficient ~~leases~~net ~~secured~~income byto ~~new~~utilize ~~and~~the ~~used~~net ~~autos.~~operating ~~In executing~~loss ~~our~~carryforwards; ~~strategy,~~• wethe ~~identify~~absence ~~product~~of ~~niches~~a ~~which~~future ~~are~~ownership ~~not~~change ~~the primary focus~~ of ~~traditional~~BVCC ~~competitors~~within in the ~~auto~~meaning ~~lending~~of ~~area,~~Section ~~such~~382 asof ~~banks~~the ~~and~~Code; ~~captive~~• ~~finance~~the ~~companies.~~acceptance ~~One~~by ~~such~~the ~~niche~~IRS ~~includes~~of ~~auto~~the ~~loans~~positions ~~where~~taken aon ~~highly~~BVCC’s ~~qualified~~prior ~~borrower desires~~tax areturns ~~higher~~as ~~relative~~to ~~loan~~the amount and~~/or~~ atiming ~~longer~~of ~~term~~its ~~than~~income isand ~~offered~~expenses; byand ~~many~~• ~~other~~future ~~more~~changes ~~traditional~~in ~~auto~~laws ~~financing~~or ~~sources.~~regulations Inrelating ~~return~~to ~~for~~ the ~~flexibility~~use of ~~the~~net ~~products~~operating ~~offered,~~loss ~~we charge higher interest rates while still applying traditional underwriting criteria to mitigate any potential loan losses~~carryforwards.

~~During~~Item ~~1998, we entered into an agreement with Lendco Financial Services for the purchase of auto loans and leases which expired on June 30, 2000~~1B. ~~Accordingly,~~Unresolved weStaff ~~ceased purchasing auto loans and leases from Lendco in June 2000.~~Comments

~~Commercial~~ No ~~Platform~~written ~~Strategy~~comments made by the Securities and Exchange Commission staff regarding BVCC’s filings under the Exchange Act since July 1, 2005 remain unresolved.

~~The~~Item Commercial Platform’s objective is to increase our earnings potential and enhance our deposit franchise by providing commercial bank-like products and services to small and middle-market businesses on a nationwide basis2. ~~The Commercial Platform’s strategy centers on originating and purchasing commercial loans and leases with higher risk-adjusted returns.~~Properties

~~The~~ At ~~Commercial~~December 31, ~~Platform~~2005, ~~originates~~BVCC ~~loans~~occupied ~~and~~two ~~leases~~offices including its ~~multi-family~~corporate ~~and~~headquarters ~~commercial~~office ~~real~~and ~~estate~~had ~~loans,~~an ~~asset-based~~additional two ~~loans,~~offices ~~factoring~~that ~~loans~~it has vacated, and ~~equipment~~is ~~leases.~~subleasing, ~~The~~under ~~Platform~~operating lease ~~also~~agreements ~~includes~~expiring ~~franchise~~at ~~loans~~various ~~that~~dates ~~were~~through ~~purchased or originated by~~ the ~~FMAC lending division~~year 2012. ~~FMAC’s~~In ~~lending~~most ~~operations~~instances, ~~were~~these ~~shut~~lease ~~down~~arrangements ininclude options ~~September~~to ~~2000~~renew ~~(See~~or ~~Note~~extend ~~3 to~~ the ~~Consolidated Financial~~lease ~~Statements,~~at ~~“Restructuring~~market ~~Charges”~~rates. atBVCC ~~Item~~also owns 8leasehold ~~“Financial~~improvements, ~~Statements~~furniture and ~~Supplementary~~equipment ~~Data”~~at ~~for further details of~~ our offices, ~~FMAC~~all ~~restructuring). We intend to decrease our current concentration~~ of ~~franchise~~which ~~loans~~are byused ~~selling our~~in ~~franchise~~its ~~loans~~business ~~classified as held-for-sale that totaled $336~~activities.~~3 million as of December 31, 2000.~~

~~Results~~Item of3. ~~Operations~~Legal Proceedings

~~Our~~ On ~~consolidated~~August 29, ~~net~~2003, ~~loss~~Financial ~~was~~Security ~~$326~~Assurance Inc.2 (“FSA”) ~~million,~~filed ora ~~$10.00~~complaint ~~per~~against ~~diluted~~BVCC ~~share,~~and BVB in the United States District Court for the ~~year~~Southern ~~ended~~District ~~December~~of ~~31,~~New York. ~~2000~~The complaint, as amended, alleges breaches of ~~compared~~representations and warranties or indemnity obligations with regard ~~net~~to ~~income~~a number of ~~$29.0~~loans ~~million,~~that served as collateral for two securitizations involving BVCC and/or ~~$1.36~~a ~~per~~former ~~diluted~~subsidiary ~~share~~of BVB, ~~for~~Bay ~~1999~~View Franchise Mortgage Acceptance Company, that were effected in 1998 and ~~$22~~2000.7 ~~million,~~FSA orguaranteed $1certain payments in connection with these securitizations.12 ~~per~~BVCC ~~diluted~~vigorously ~~share,~~denies any ~~for~~liability ~~1998~~to FSA and has asserted numerous defenses to each of FSA’s claims. BVCC has also filed counterclaims against FSA.

~~The net loss in 2000 was primarily the result of the restructuring of our franchise lending division, and the~~ ~~revaluation~~BVCC ofis ~~franchise-related~~also assets. Restructuring charges totaled $9.2 million before taxes and consisted primarily of severance, occupancy and related facility costs. Goodwill of $192.6 million was written off, representing the unamortized balance associated with the purchase of FMAC. The revaluation of certain FMAC-related assets resulted in a ~~$101.9~~party ~~million pre-tax adjustment. The revaluation included a $35.4 million adjustment~~ to ~~residual~~various ~~and servicing assets related to the franchise loan securitizations and~~ other ~~FMAC-related~~legal ~~assets.~~actions ~~The~~arising ~~revaluation also included a $66.5 million mark-to-market charge on our $336.3 million portfolio of franchise loans held-for-sale, reflecting estimated bulk-sale pricing. Additionally,~~in wethe ~~recorded~~normal ~~$52.6~~course ~~million in pre-tax net losses associated with asset sales and $43.5 million~~ of ~~loan~~our ~~loss provision related to franchise loans during 2000~~business.

~~The~~ After ~~increases~~consultation ~~in net income and earnings per diluted share in 1999 as compared~~ with ~~1998~~counsel, ~~were~~BVCC ~~primarily~~does ~~driven~~not bycurrently ~~the~~expect ~~expansion~~that the resolution of ~~our~~these ~~net~~legal ~~interest~~actions ~~margin~~will ~~and~~have ~~higher~~a ~~net~~material adverse ~~interest~~effect ~~income~~on ~~associated~~its ~~with~~consolidated ~~the~~financial ~~change-out~~condition, results of ~~our~~operations ~~balance~~or ~~sheet~~cash ~~to higher-yielding commercial assets and lower-cost funding~~flows.

~~Net~~ During ~~Interest~~our ~~Income~~fiscal ~~and~~year ~~Net~~ended ~~Interest~~December 31, ~~Margin~~2005, no tax shelter penalties were assessed against us by the Internal Revenue Service.

~~Net~~Item interest income represents the difference between interest earned on loans, leases and investments and interest paid on funding sources, including deposits and borrowings, and has historically been our principal source of revenue4. ~~Net~~Submission ~~interest margin is the amount~~ of ~~net~~Matters ~~interest~~to ~~income expressed as~~ a ~~percentage~~Vote of ~~average~~Security ~~interest-earning assets.~~Holders

~~Average~~ There ~~Balance~~were ~~Sheet~~no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the three months ended December 31, 2005.

~~The following table illustrates average yields on our interest-earning assets and average rates on our interest-bearing~~17 liabilities for the years indicated. These average yields and rates are derived by dividing interest income by the average balances of interest-earning assets and by dividing interest expense by the average balances of interest-bearing liabilities ~~for the years indicated. Average balances of interest-earning assets and interest-bearing liabilities were calculated by averaging the relevant month-end amounts for the respective years.~~

Table AVERAGEof BALANCES, YIELDS AND RATESContents

	For the Year Ended December 31,
	2000					1999					1998
	Average Balance		Interest	Average Yield/Rate		Average Balance		Interest	Average Yield/Rate		Average Balance	Interest	Average Yield/Rate
	(Dollars in thousands)
ASSETS
Interest-earning assets:
Loans and leases	$3,949,017		$360,203	9.12	%	$4,444,079		$369,841	8.32	%	$4,174,976	$347,086	8.32	%
Mortgage-backed securities(1)	856,004		60,923	7.12		583,286		37,376	6.41		743,545	48,225	6.50
Investments(1)	481,519		39,066	8.11		244,146		14,439	5.91		179,492	11,052	6.17
Total interest-earning assets	5,286,540		460,192	8.71		5,271,511		421,656	8.00		5,098,013	406,363	7.98
Other assets(2)	981,775					611,301					394,623
Total assets	$6,268,315					$5,882,812					$5,492,636
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Deposits	$3,751,034		176,602	4.71		$3,462,048		142,427	4.11		$3,375,777	149,656	4.44
Borrowings(3)	1,783,514		118,150	6.62		1,882,278		108,745	5.78		1,663,972	102,106	6.15
Total interest-bearing liabilities	5,534,548		294,752	5.33		5,344,326		251,172	4.70		5,039,749	251,762	5.00
Other liabilities	179,015					124,640					66,062
Total liabilities	5,713,563					5,468,966					5,105,811
Stockholders’ equity	554,752					413,846					386,825
Total liabilities and stockholders’ equity	$6,268,315					$5,882,812					$5,492,636
Net interest income/net interest spread			$165,440	3.38	%			$170,484	3.30	%		$154,601	2.98	%
Net interest-earning assets (liabilities)	$ (248,008	)				$ (72,815	)				$ 58,264
Net interest margin(4)				3.13	%				3.23	%			3.03	%

Part II

~~(1)~~Item ~~Average~~5. ~~balances~~Market ~~and yields~~ for ~~securities~~Registrant’s ~~and~~Common ~~other~~Equity, ~~investments~~Related ~~classified~~Stockholder asMatters ~~available-for-sale~~and ~~are~~Issuer ~~based~~Purchases onof ~~historical~~Equity ~~amortized cost.~~Securities

~~(2)~~ BVCC’s ~~Other~~common ~~assets~~stock ~~include~~is ~~average~~traded ~~auto~~on ~~lease~~the ~~balances~~New York Stock Exchange under the stock symbol “BVC.” At December 31, 2005, 6,613,099 shares of BVCC’s common stock were outstanding, and held by 1,335 stockholders of record. During 2004, we distributed $~~513~~7.325 per ~~million~~share in cash to our common stockholders — $2.50 per share on June 30, 2004, $~~332~~2.050 per ~~million~~share on September 30, 2004 and $652.825 per ~~million~~share ~~for~~on December 31, 2004. The effect of these distributions is reflected in the ~~years~~following tables ~~ended~~that ~~December~~set ~~31,~~forth ~~2000,~~quarterly ~~1999~~closing stock price activity for 2005 and ~~1998~~2004 as adjusted to reflect a 1-for-10 stock split effected on June 30, ~~respectively.~~2004:

(3) Interest expense on borrowings includes interest expense (income) and premiums on interest rate swaps and caps of ($0.2) million, $3.1 million and $2.4 million for the years ended December 31, 2000, 1999 and 1998, respectively. Interest expense on borrowings excludes dividend expense on our Capital Securities.


	2005

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter

Stock price — high	$	17.38	$	16.24	$	15.95	$	18.00
Stock price — low	$	15.58	$	15.27	$	15.32	$	15.30

(4) Net interest income divided by average interest-earning assets.


	2004

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter

Stock price — high	$	24.00	$	22.40	$	19.75	$	18.00
Stock price — low	$	21.30	$	20.00	$	16.15	$	15.31

~~Net interest income was $165.4 million for the year ended December 31, 2000 as compared with $170.5 million for 1999 and~~ ~~$154.6~~BVCC ~~million~~did ~~for~~not ~~1998.~~repurchase ~~Net~~any ~~interest~~equity ~~margin~~securities ~~was~~during ~~3.13% for~~ the ~~year~~three months ended December 31, ~~2000 as compared with 3~~2005.~~23% for 1999 and 3.03% for 1998.~~

~~The~~Item ~~following~~6. ~~table~~Selected ~~illustrates net interest income and net interest margin, by platform, for the years indicated: (Also see Note 24 to the Consolidated~~ Financial ~~Statements, “Segment and Related Information,” at Item 8 “Financial Statements and Supplementary~~ Data~~” for further discussion on our business platforms).~~

	For the Year Ended December 31,
	At December 31,
	2000					1999				1998
	2005				2004			2003			2002		2001
	Net Interest Income		Net Interest Margin			Net Interest Income	Net Interest Margin			Net Interest Income	Net Interest Margin
											Liquidation		Going Concern
	(Dollars in thousands)
Selected Balance Sheet Information(1)	Going Concern Basis										Basis		Basis
Retail Platform(1)	$ 62,120		2.27	%		$ 96,478	2.78	%		$101,246	2.78	%
	(Dollars in thousands)
Commercial Platform	103,320		4.04			74,006	4.11			53,355	3.66
Total assets	$	714,761			$	427,519		$	364,118		$	875,545	$	4,014,105
Total	$165,440		3.13	%		$170,484	3.23	%		$154,601	3.03	%
Retained interests in securitizations available-for-sale and other investment securities		20,107				22,636			28,836			38,137		98,980
Mortgage-backed securities		—				—			5,893			32,516		278,891
Loans and leases held-for-investment, net		633,621				252,863			—			—		2,326,787
Loans and leases held-for-sale		—				75,923			177,948			311,014		40,608
Investment in operating lease assets, net		—				10,041			66,657			191,005		339,349
Intangible assets		1,846				1,846			1,846			—		123,573
Deposits		—				—			—			224,189		3,234,927
Borrowings		621,295				300,650			179,060			61,969		287,168
Capital Securities(2)		—				—			—			90,000		90,000
Net assets in liquidation		—				—			—			410,064		—
Stockholders’ equity		70,515				104,193			155,932			—		336,187

(1) The Retail Platform’s net interest margin and net interest income presented above excludes the revenue impact of our auto leasing activities, which is included in noninterest income, but does include the associated funding costs.18

TheTable decrease in net interest income for 2000, as compared with 1999, was due to a decrease in net interest margin offset by a slight increase in average interest-earning assets. Our net interest margin decreased due to the increasing impact of higher funding costs and the increase in net interest-bearing liabilities associated with funding our auto leasing activities, as discussed further below. Average interest-earning assets increased primarily due to higher mortgage-backed securities and other investment securities balances offset by a decline in loan balances resulting from the sales and/or securitizations effected during 2000. Our net interest spreads increased due to higher yields on interest-earning assets, resulting from the change-out of our balance sheet to more commercial bank-like assets and the higher interest rate environment partially offset by higher funding costs. The increases in net interest income and net interest margin in 1999, as compared with 1998, were attributable to our development into a commercial bank and the related shift from traditional mortgage-based assets to consumer and commercial assets with higher risk-adjusted yields, combined with a decline in our funding costs. Our funding costs declined due to an increase in lower-cost transaction accounts, deposit pricing strategies, a decline in the interest rate environment during the first half of 1999 and the managed run-off of our higher-cost certificates of deposit.Contents

Our net interest margin, calculated in accordance with accounting principles generally accepted in the United States of America, sometimes referred to as GAAP, excludes the revenue impact of our auto leasing activities, but includes the associated funding costs. Because 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”).


							For the Three			For the Nine			For the Three			For the Nine
	For the Year			For the Year			Months			Months			Months			Months			For the Year
	Ended			Ended			Ended			Ended			Ended			Ended			Ended
Selected Results of Operations	December 31,			December 31,			December 31,			September 30,			December 31,			September 30,			December 31,
Information(1)	2005			2004			2003			2003			2002			2002			2001

	Going Concern Basis									Liquidation Basis						Going Concern Basis

	(Dollars in thousands, except per share amounts)
Interest income	$	40,253		$	22,609		$	4,936		$	17,951		$	17,247		$	145,239		$	302,745
Interest expense		(22,617	)		(8,845	)		(3,612	)		(8,411	)		(10,001	)		(60,068	)		(180,497	)

Net interest income		17,636			13,764			1,324			9,540			7,246			85,171			122,248
Provision for credit losses		(7,947	)		(1,612	)		—			—			—			(10,700	)		(71,890	)
Leasing income		4,800			12,941			6,907			32,578			14,639			56,188			92,305
Gain (loss) on sales of assets and liabilities, net		(1,247	)		(1,887	)		842			787			81			18,625			(10,547	)
Other income, net		3,449			5,985			2,586			3,722			3,600			16,752			25,411
General and administrative expenses		(27,395	)		(25,211	)		(5,747	)		(26,338	)		(17,697	)		(106,101	)		(155,287	)
Restructuring charges		—			—			—			—			—			—			(6,935	)
Revaluation of franchise-related assets		—			—			—			—			—			—			(70,146	)
Leasing expense		(739	)		(9,163	)		(5,938	)		(24,421	)		(10,854	)		(43,984	)		(86,120	)
Real estate operations, net		(485	)		(1,255	)		(831	)		(463	)		(397	)		(1,222	)		(5,021	)
Amortization of intangible assets		—			—			—			—			—			(993	)		(11,280	)

Income (loss) before income tax expense (benefit)		(11,928	)		(6,438	)		(857	)		(4,595	)		(3,382	)		13,736			(177,262	)
Adjustment for liquidation basis accounting		—			—			—			(5,995	)		(2,761	)		266,510			—
Income tax (expense) benefit		(22,522	)		2,526			184			6,252			4,886			(181,792	)		85,866
Dividends on Capital Securities(3)		—			—			—			—			(2,742	)		(7,873	)		(9,774	)
Cumulative effect of change in accounting principle		—			—			—			—			—			(18,920	)		—

Net income (loss) and changes in net assets in liquidation	$	(34,450	)	$	(3,912	)	$	(673	)	$	(4,338	)	$	(3,999	)	$	71,661		$	(101,170	)

Earnings (loss) per diluted share(4)	$	(5.22	)	$	(0.59	)	$	(0.10	)		N/A			N/A		$	11.35		$	(19.89	)
Cash distributions per share(4)	$	—		$	7.25		$	40.00		$	—		$	—		$	—		$	—

~~Net interest income and net interest margin by platform reflect the shift in our asset mix toward more commercial~~19 bank-like products. This shift in our asset mix to higher-yielding assets helped to mitigate the impact of higher funding costs during 2000 due to the rising interest rate environment and increased reliance on higher-cost wholesale borrowings. (See ~~the following discussions of “Interest Income” and “Interest Expense”).~~

TheTable followingof tables illustrate average interest-earning assets, excluding our auto-related operating lease assets, by platform, for the years ended as indicated:Contents

	Average Balances for the Year Ended December 31,
	At and For the Year Ended December 31,
	2000		1999	1998
	2005			2004			2003			2002			2001
	(Dollars in thousands)
													Going
Retail Platform(1)	$2,732,093		$3,472,291	$3,640,743
										Liquidation			Concern
Commercial Platform	2,554,447		1,799,220	1,457,270
Selected Other Information(1)	Going Concern Basis									Basis			Basis
Total	$5,286,540		$5,271,511	$5,098,013
				(Dollars in thousands, except per share
				amounts)
Net interest margin		3.21	%		4.41	%		2.71	%		N/A			3.18	%
Book value per share(4)	$	10.66		$	15.80		$	23.71			N/A		$	53.72
Nonperforming assets	$	1,667		$	4,742		$	7,133		$	27,268		$	89,817
Ratio of nonperforming assets to total assets		0.23	%		1.12	%		1.96	%		3.11	%		2.24	%

(1) Amounts exclude auto-related operating leased assets. The average balance of these assets was $513.3 million for the year ended December 31, 2000, $332.0 million for the year ended December 31, 1999 and $65.8 million for the year ended December 31, 1998.


(1)	The financial statements for the periods from September 30, 2002 through September 30, 2003 have been prepared using liquidation basis accounting.

(2)	Effective December 31, 2003, BVCC adopted FASB Financial Interpretation No. 46, “Consolidation of Variable Interest Entities, as revised,” and, accordingly, deconsolidated Bay View Capital I. As a result, as of December 31, 2003, the 9.76% Capital Securities of Bay View Capital I are no longer reflected on the Company’s Consolidated Statement of Financial Condition while BVCC’s underlying 9.76% Junior Subordinated Deferrable Interest Debentures, which were acquired by Bay View Capital I, are reflected as borrowings of BVCC.

(3)	Effective July 1, 2003, BVCC adopted Statement of Financial Accounting Standards (“SFAS”) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” Year-to-date dividend expense on the Capital Securities is now reflected in interest on borrowings. SFAS No. 150 does not allow for prior year restatements.

(4)	Adjusted to retroactively reflect a 1-for-10 reverse stock split effective June 30, 2004.

~~The decreases in the Retail Platform’s average interest-earning assets and the corresponding increases in the~~20 Commercial Platform’s average interest-earning assets, as compared with the prior periods, reflect our continued shift in asset mix toward more commercial bank-like products. The Retail Platform’s average interest-earning assets were also ~~impacted from 1998 through 2000 by loan sales and/or securitizations throughout these periods, as discussed elsewhere herein.~~

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

	At December 31,
	2000	1999
	(Dollars in thousands)
Retail Platform(1)	$1,727,537	$3,195,647
Commercial Platform	2,178,619	2,219,536
Total	$3,906,156	$5,415,183


Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~(1) Amounts exclude auto-related operating leased assets. These assets totaled $479.8 million at December 31, 2000 and $463.1 million at December 31, 1999.~~ INDEX

The significant decrease in the Retail Platform’s interest-earning assets, excluding our auto-related operating lease assets, at December 31, 2000, as compared with December 31, 1999, was due primarily to sales of $423.2 million of single-family mortgage loans and $244.0 million of HLTV home equity loans, and the securitization and sales of $405.7 million of auto loans during 2000.


Strategic Overview			22
	Liquidation of Bay View Bank		22
	Auto Finance		22
	Critical Accounting Policies		23
Accounting Changes and Recent Accounting Pronouncements			27
Results of Operations			28
	Going Concern Basis		28
		Results of Operations — Years ended December 31, 2005 and 2004	28
		Results of Operations — Three Months ended December 31, 2003	32
	Liquidation Basis		34
		Changes in Net Assets in Liquidation — Nine Months ended September 30, 2003	34
Balance Sheet Analysis			35
	Restricted Cash		35
	Retained Interests in Securitizations		35
	Auto Contracts and Other Loans Receivable		36
	Borrowings		38
Liquidity and Capital Resources			39
Contractual Obligations			40
Stock Repurchase Program			41
Impact of Inflation and Changing Prices			41

~~Interest Income~~21

InterestTable income was $460.2 million for the year ended December 31, 2000 as compared with $421.7 million for 1999 and $406.4 million for 1998. The average yield on interest-earning assets was 8.71% for the year ended December 31, 2000 as compared with 8.00% for 1999 and 7.98% for 1998. The increase in interest income and average yields in 2000, as compared to 1999, was primarily a result of the change-out of our balance sheet to more commercial bank-like assets and the higher interest rate environment. The increase in interest income and average yields in 1999, as compared to 1998, was attributable to our development into a commercial bank and the related shift from traditional mortgage-based assets to consumer and commercial assets with higher risk-adjusted yields, combined with an increase in average interest-earning assets. The following tables illustrate interest income, by platform, for the periods indicated:Contents

	For the Year Ended December 31, 2000
	Average Balance	Interest Income	Average Yield
	(Dollars in thousands)
Retail Platform:
Loans	$1,587,130	$138,792	8.74	%
Mortgage-backed securities	856,004	60,923	7.12
Investments	288,959	21,736	7.52
Total Retail Platform	2,732,093	221,451	8.11
Commercial Platform:
Loans and leases	2,361,887	221,411	9.37
Investments	192,560	17,330	9.00
Total Commercial Platform	2,554,447	238,741	9.35
Total	$5,286,540	$460,192	8.71	%

Strategic Overview

	For the Year Ended December 31, 1999
	Average Balance	Interest Income	Average Yield
	(Dollars in thousands)
Retail Platform:
Loans	$2,653,496	$216,023	8.14	%
Mortgage-backed securities	583,286	37,376	6.41
Investments	235,509	12,608	5.35
Total Retail Platform	3,472,291	266,007	7.66
Commercial Platform:
Loans and leases	1,790,583	153,819	8.59
Investments	8,637	1,830	21.19
Total Commercial Platform	1,799,220	155,649	8.65
Total	$5,271,511	$421,656	8.00	%

Bay View Capital Corporation (the “Company,” “we,” “us” or “our”) is a financial services company headquartered in San Mateo, California, whose primary subsidiary, Bay View Acceptance Corporation (“BVAC”), is an automobile finance company engaged in indirect purchases of retail automobile installment contracts originated by manufacturer-franchised and independent dealers in connection with the sale of new and used automobiles. BVAC generates revenue through its investment in auto contracts, and the subsequent securitization or sale and servicing of these auto contracts.

	For the Year Ended December 31, 1998
	Average Balance	Interest Income	Average Yield
	(Dollars in thousands)
Retail Platform:
Loans	$2,717,706	$221,694	8.17	%
Mortgage-backed securities	743,545	48,225	6.50
Investments	179,492	11,052	6.17
Total Retail Platform	3,640,743	280,971	7.73
Commercial Platform:
Loans and leases	1,457,270	125,392	8.60
Total Commercial Platform	1,457,270	125,392	8.60
Total	$5,098,013	$406,363	7.98	%

Liquidation of Bay View Bank

~~Retail~~ On ~~Platform~~October 3, 2002, we adopted a Plan of Dissolution and Stockholder Liquidity (the “Original Plan”). The Original Plan contemplated that we, under applicable provisions of the Delaware General Corporation Law, would dispose of all of our assets, including all of the assets of Bay View Bank, N.A. (“BVB”); pay all of our debts and liabilities and make reasonable provision for any contingent liabilities; distribute the remaining proceeds from our asset sales to our stockholders; and dissolve. As a result of the adoption of the Original Plan, we adopted liquidation basis accounting effective September 30, 2002.

~~Interest~~ During ~~income~~the ~~for~~fourth quarter of 2003, our Board amended the Original ~~Retail~~Plan ~~Platform~~to ~~was~~become ~~$221.5~~a ~~million~~plan ~~for~~of partial liquidation (the “Amended ~~year~~Plan”) ~~ended~~under ~~December~~which 31we are completing the liquidation of the assets and the satisfaction of the liabilities of BVB remaining after BVB’s September 30, 2003 ~~2000~~dissolution, asdistributed ~~compared~~a ~~with~~major ~~$266.0~~portion of the proceeds to ~~million~~our ~~for~~stockholders ~~1999~~through a series of cash distributions, and continue ~~$281~~to operate BVAC.0 ~~million~~When ~~for~~we ~~1998~~adopted the Amended Plan, we discontinued our use of liquidation basis accounting and re-adopted going concern basis accounting effective October 1, 2003. ~~The~~With ~~average~~BVB’s ~~yield~~dissolution on September 30, ~~interest-earning~~2003, its remaining assets ~~for~~and ~~the~~liabilities were ~~Retail~~transferred ~~Platform~~to ~~was~~us, ~~8.11%~~as ~~for~~BVB’s sole stockholder, and we ceased to be a bank holding company and, along with our subsidiaries, were no longer subject to supervision, examination and regulation by the ~~year~~Board ~~ended~~of ~~December~~Governors 31of the Federal Reserve System (the “FRB”), ~~2000~~the asOffice ~~compared~~of ~~with~~the ~~7.66%~~Comptroller ~~for~~of the ~~1999~~Currency and ~~7.73%~~the ~~for~~Federal ~~1998~~Deposit Insurance Corporation.

~~The~~ Among ~~decrease in~~ the ~~Retail~~factors ~~Platform’s~~considered ~~interest income in 2000, as compared to 1999, was primarily due to a decrease in average interest-earning assets partially offset~~ by higher average yields. The decrease in average asset balances was due to lower average loan balances resulting from loan sales and/or securitizations effected in 2000 offset by increases in the average balances of our ~~mortgage-backed~~Board ~~securities and investment securities portfolios. The increases~~ in ~~mortgage-backed~~deciding ~~securities and investment securities average balances were due~~ to ~~purchases of relatively higher-yielding GNMA securities~~engage ~~during the fourth quarter of 1999 and throughout 2000, purchases of higher-yielding Federal Home Loan Bank, sometimes referred to as FHLB, securities~~ in ~~the~~a ~~first~~partial ~~half~~liquidation ofrather ~~the~~than ~~year and an increase in the average residual interest balance as~~ a ~~result of~~complete ~~our~~liquidation December 1999 and March 2000 auto securitizations. The increase in average asset yields was primarily due to the higher interest rate environment, the sales of lower-yielding mortgage loans and the purchases of higher-yielding mortgage-backedwere: ~~and investment securities.~~

~~The~~• ~~decrease~~Adverse market conditions in the ~~Retail~~auto ~~Platform’s~~finance ~~interest income in 1999~~sector, aswhich ~~compared~~caused toour ~~1998,~~Board ~~was attributable~~ to ~~lower average~~conclude ~~asset~~that ~~balances~~the ~~and~~near-term ~~lower~~sale ~~asset~~of ~~yields.~~BVAC ~~The lower average asset balances was due~~ to a ~~decrease~~third ~~in average loan and mortgage-backed securities balances~~party, ~~resulting~~or ~~from~~distribution of the ~~sale~~stock of ~~$105~~BVAC ~~million~~to inour ~~single-family~~stockholders, ~~COFI-based~~as ~~loans~~contemplated ~~and~~by the ~~repayments~~ ofOriginal ~~higher-yielding mortgage-backed securities~~Plan, ~~offset~~would bynot abe ~~slight increase in~~ the ~~average~~best ~~balances~~method of ~~our~~maximizing ~~investment~~stockholder ~~securities.~~value; • The ~~decrease~~opportunity into ~~the~~obtain ~~platform’s~~greater ~~average~~corporate ~~yield~~and ~~was~~financial ~~due~~flexibility tothan ~~several~~we ~~factors~~would ~~including~~have ~~the~~if ~~impact~~we ofwere ~~the declining~~operating ~~interest~~as ~~rate~~a ~~environment~~dissolving ~~during~~corporation; ~~the~~and ~~first~~• ~~six~~A ~~months~~determination ofthat ~~1999,~~our ~~the~~remaining ~~yield~~tax ~~compression~~net ~~associated~~operating ~~with~~loss ~~competition,~~carryforwards ~~higher~~could ~~premium~~be ~~amortization~~more ~~attributable~~fully toutilized ~~higher~~by ~~prepayment~~continuing ~~speeds on our high loan-~~to~~-value~~ ~~home~~operate ~~equity~~BVAC ~~loans,~~beyond ~~and~~the ~~our continued~~third ~~emphasis~~quarter onof ~~higher-quality loans and leases~~2005.

~~Commercial~~ In ~~Platform~~accordance with the Amended Plan, we redeemed $63.5 million of our 9.76% Cumulative Capital Securities (the “Capital Securities”) on December 31, 2003, and redeemed the remaining $22.0 million of these Capital Securities on June 30, 2004 and, between December 31, 2003 and December 31, 2004, distributed $311.0 million in cash to our stockholders, or $47.25 per share after the adjustments to reflect the retroactive effect of the 1-for-10 reverse stock split of our common stock effective June 30, 2004.

~~Interest~~ At ~~income~~December 31, ~~for~~2005, ~~the~~we ~~Commercial~~had ~~Platform~~assets ~~was~~of $~~238~~714.7 8 million ~~for the year ended December 31~~, liabilities ~~2000~~of ~~as compared with~~ $~~155~~644.6 3 million ~~for~~and ~~1999~~stockholders’ ~~and~~equity of $~~125~~70.4 5 million ~~for 1998~~. ~~The average yield on interest-earning assets for the Commercial Platform was 9.35% for the year ended December 31, 2000 as compared with 8.65% 1999 and 8.60% for 1998.~~

~~The increases in the Commercial Platform’s interest income, from 1998 to 2000, were primarily due to higher average~~ ~~loan~~Auto and lease balances, higher investment securities balances, and higher average asset yields. The increases in the Commercial Platform’s average loan and lease balances and investment securities balancesFinance reflect the shift in our asset mix toward more commercial bank-like products. The increases in the Commercial Platform’s average asset yields were primarily due to the impact of the shift from lower-yielding multi-family mortgage-based loans to higher-yielding commercial business loans combined with the impact of the higher interest rate environment during 2000.

~~During~~ BVAC ~~April~~is ~~2000,~~a weSouthern ~~completed~~California-based aauto ~~$268.2~~finance ~~million~~company ~~on-balance~~engaged in ~~sheet~~the ~~franchise~~indirect ~~loan~~financing ~~securitization~~of ~~within~~automobile ~~the~~purchases ~~Commercial~~by ~~Platform~~individuals. ~~The~~Of ~~securitization~~the ~~essentially~~auto ~~enabled~~contracts usBVAC topurchased ~~convert~~in ~~franchise~~2005, ~~loans~~91% were ~~into~~originated ~~AAA-rated,~~by ~~credit~~manufacturer-~~enhanced~~franchised ~~securities~~dealerships ~~which~~and ~~helped~~the remaining us9% ~~obtain~~were ~~lower-cost~~originated ~~funding.~~by ~~The~~independent ~~rising~~dealerships; ~~interest~~40% were ~~rate~~contracts ~~environment~~on ~~combined~~new ~~with~~vehicles aand ~~decrease~~60% inwere ~~the~~contracts ~~interest~~on ~~rate~~used ~~paid~~vehicles. onBVAC ~~the~~purchases ~~securities~~auto ~~compressed~~contracts ~~our~~from ~~spread~~approximately ~~on these securities~~7,000 automobile ~~prompting~~dealers usin to32 states ~~sell~~with ~~the~~limited ~~securities~~recourse ~~at a $26.4 million loss during~~ to the ~~fourth quarter of 2000~~dealer.

~~Interest Expense~~22

DepositsTable of Contents

~~Interest~~ BVAC ~~expense~~has onhistorically ~~our~~positioned ~~deposits~~itself ~~was~~in ~~$176.6~~the ~~million~~market ~~for~~as ~~the~~a premium ~~year~~priced ~~ended~~lender ~~December~~for ~~31,~~well-qualified ~~2000~~borrowers asseeking extended-term ~~compared~~financing ~~with~~and/or ~~$142.4~~higher ~~million~~advance rates than those ~~for~~generally ~~1999~~offered ~~and~~by ~~$149~~traditional lenders.7 ~~million~~This ~~for~~strategy ~~1998.~~has enabled ~~The~~BVAC ~~average~~to ~~cost~~establish ofa ~~deposits~~loyal ~~was~~dealership ~~4.71%~~network ~~for~~by satisfying ~~the~~a ~~year~~unique ~~ended~~niche ~~December~~within ~~31,~~the ~~2000~~indirect asauto ~~compared~~finance market ~~with~~that ~~4.11%~~large ~~for~~commercial ~~1999~~banks and 4captive finance companies have not served well.~~44%~~ ~~for~~BVAC ~~1998~~has leveraged this established reputation with its dealers to broaden its array of auto financing programs available to prime credit quality borrowers.

~~The~~ BVAC ~~increase~~places ina ~~interest~~strong ~~expense~~emphasis on ~~deposits~~borrower ~~for 2000~~stability, ascredit quality ~~compared~~and ~~with~~debt ~~1999,~~serviceability. ~~was~~With ~~due~~Fair, ~~to higher average deposit balances~~Isaac & ~~combined~~Co., ~~with~~or an“FICO,” ~~increase~~credit inscores ~~the~~that ~~cost~~averaged of736 ~~deposits. The increase~~ in 2005, ~~average~~BVAC’s ~~balances~~borrower ~~was~~base ~~due~~is tolargely ~~higher~~comprised ~~retail~~of ~~and~~prime credit ~~brokered~~quality ~~certificates~~borrowers. ofBVAC ~~deposit~~currently ~~balances,~~offers ~~utilized~~financing terms to ~~fund~~96 months ~~our~~and ~~expanding~~typically ~~balance~~finances ~~sheet~~an ~~during~~amount ~~2000,~~in ~~partially~~excess ~~offset by lower~~of ~~transaction~~a ~~account~~dealer’s ~~balances.~~wholesale ~~The~~value ~~increase~~of ina ~~the~~vehicle. ~~cost~~During of2005, ~~our~~the term ~~deposits~~to ~~was~~maturity ~~primarily~~on ~~associated~~auto ~~with~~contracts ~~the~~purchased ~~rising~~by ~~interest~~BVAC ~~rate~~averaged 79 months ~~environment~~ and ~~our~~the loan-to-value ~~increased~~ratio averaged ~~usage~~120%. ofThe ~~higher-cost~~average ~~certificates~~loan ofamount ~~deposit,~~financed ~~including~~by ~~brokered~~BVAC ~~certificates~~in of2005 ~~deposit~~was $23,800.

~~The~~ Since ~~decrease~~the inliquidation ~~interest~~of ~~expense~~BVB, onBVAC ~~deposits~~has ~~for~~operated ~~1999,~~ as ~~compared~~an independent ~~with~~finance ~~1998~~company, ~~was~~rather ~~due~~than to a ~~decrease~~portfolio-lending unit ~~in the cost~~ of ~~deposits~~ ~~partially~~BVB, ~~offset~~purchasing byauto ~~higher~~contracts ~~average~~primarily ~~deposit~~for ~~balances.~~sale ~~The~~or securitization ~~decrease~~and inservicing ~~the~~these ~~cost~~auto ofcontracts. ~~deposits~~BVAC ~~resulted from~~ utilizes a ~~combination~~revolving ofwarehouse ~~factors,~~credit ~~including~~facility ~~our~~to ~~emphasis~~fund onits ~~lower-cost~~purchases ~~transaction accounts~~of contracts, ~~our~~and ~~deposit~~periodically ~~pricing~~sells ~~strategies~~or ~~and~~securitizes ~~the~~a ~~declining~~portion of ~~interest~~its ~~rate~~auto ~~environment~~contracts ~~during~~in ~~the~~order ~~first~~to ~~six~~pay ~~months~~down ofthe ~~1999,~~facility ~~partially~~and maintain ~~offset~~available byborrowing ancapacity. ~~increase~~At inDecember 31, 2005, ~~higher-cost~~BVAC ~~brokered~~had ~~certificates~~$99.7 million ofoutstanding ~~deposit.~~under ~~The~~this ~~increase~~credit facility. inBVAC ~~average~~retains ~~deposit~~the ~~balances~~servicing ~~was~~obligation ~~due~~on tothe ~~higher~~contracts that ~~transaction~~it ~~account~~sells ~~balances~~or ~~and~~securitizes ~~brokered certificates~~which ofprovides ~~deposit~~us ~~balances~~with ~~partially~~a ~~offset~~source byof fee ~~lower~~income ~~retail~~over ~~certificates~~the life of ~~deposit~~the contracts.

BVAC’s headquarters and operations center are located in Covina, California. The ~~following~~operations ~~table~~center ~~summarizes~~manages ~~our~~the underwriting ~~deposit~~of ~~costs~~contracts byand ~~type~~supports its dealer relationships. It also houses BVAC’s servicing and ~~our~~collections ~~transaction~~activities involving more than 38,000 accounts representing $765.5 million of managed contracts as of December 31, 2005. In 2004, BVAC completed a ~~percentage~~geographical ofexpansion ~~retail~~that ~~deposits~~was ~~for~~initiated in late 2002, expanding into a total of 32 states from its established presence in 17 states, primarily in the ~~periods~~West, ~~indicated:~~Midwest and Florida. In 2003, BVAC entered seven Mid-Atlantic states including Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee and Virginia. In 2004, BVAC entered eight additional states including Alabama, Connecticut, Delaware, Kansas, Kentucky, Massachusetts, New Hampshire and Oklahoma.

	For the Month Ended December 31,
	2000		1999		1998
Transaction accounts	3.54	%	3.26	%	3.15	%
Retail certificates of deposit	6.04		4.92		5.20
Total retail deposits	4.89		4.07		4.20
Brokered certificates of deposit	7.16		6.18		—
Total deposits	5.05	%	4.30	%	4.20	%
Transaction accounts as a percentage of retail deposits	46.20	%	51.00	%	49.80	%

Critical Accounting Policies

~~Borrowings~~ We have identified the most critical accounting policies upon which our financial status depends. We determined the critical policies by considering accounting principles that involve the most complex or subjective decisions or assessments. We have identified our most critical accounting policies to be those related to our securitization transactions and retained interests in securitizations, allowance for credit losses, income taxes and derivative instruments.

~~Interest~~Going ~~expense~~Concern ~~on our borrowings, excluding the Capital Securities issued in December 1998, was $118~~vs.2 ~~million~~Liquidation ~~for~~Basis the year ended December 31, 2000 as compared with $108.7 million for 1999 and $102.1 million for 1998. The average cost of borrowings was 6.62% for the year ended December 31, 2000 as compared with 5.78% for 1999 and 6.15% for 1998.Accounting

~~The~~ For ~~increase~~the inperiod ~~interest~~September 30, ~~expense~~2002 onthrough September 30, ~~borrowings~~2003, ~~for~~we ~~2000,~~used asliquidation ~~compared~~basis ~~with~~accounting under ~~1999,~~which ~~was~~assets ~~attributable~~were tocarried ~~the~~at ~~effects~~estimated ofnet ~~the~~realizable ~~rising~~values ~~interest~~and ~~rate~~all ~~environment~~estimated onfuture ~~our~~liabilities ~~borrowings~~associated ~~combined~~ with carrying out the ~~utilization~~Original Plan were accrued. Future revenues and expenses of ~~higher-cost~~an ~~warehouse~~operating ~~lines~~nature towere ~~fund~~recognized ~~our~~in ~~franchise~~income ~~loan~~and expense ~~production~~when realized.

~~The increase in interest expense on borrowings for 1999, as compared with 1998, was primarily due to higher average~~ ~~borrowing~~With ~~balances which were required to fund the growth in~~ our ~~balance~~adoption ~~sheet.~~of ~~This volume-related increase in interest expense was partially offset by a decline in~~ the ~~cost~~Amended ~~of borrowings~~Plan, ~~attributable~~we todiscontinued our ~~refinancing and extending of maturities~~use ~~on a significant portion~~ of ~~our~~liquidation ~~Federal~~basis ~~Home~~accounting ~~Loan~~and re-adopted ~~Bank~~going concern ~~advances~~basis inaccounting, ~~October 1998~~ and ~~the~~reestablished ~~maturity~~our stockholders’ ofequity ~~$50~~effective ~~million of 8.42% Senior Debentures on June~~ October 1, ~~1999~~2003. ~~The~~In connection ~~impact~~with ofour ~~these~~re-adoption ~~factors was partially offset by the utilization~~ of ~~new~~going ~~funding~~concern ~~sources~~basis ~~during 1999~~accounting, ~~including~~we arecognized ~~LIBOR-based~~$0.7 million ~~warehouse~~of ~~line with an all~~pre-intax ~~cost of approximately 7.92%~~ expense and $50 1.1 million of ~~10%~~additions ~~Subordinated~~to ~~Notes~~stockholders’ ~~due~~equity, and ~~2009~~recorded ~~issued~~the byfollowing ~~Bay View Bank on August 18, 1999.~~adjustments:

~~The~~• ~~following~~Goodwill: ~~tables~~Reestablished ~~illustrate~~ the ~~changes~~$1.8 inmillion ~~net~~of ~~interest~~goodwill ~~income~~related ~~due~~ to ~~changes in the rate and volume of~~ our ~~interest-earning~~ ~~assets~~acquisition ~~and interest-bearing liabilities. The variances include the effects~~ of ~~our~~BVAC’s ~~acquisitions.~~predecessor ~~Changes~~entity, inCTL, ~~rate and volume which cannot be segregated (i~~Inc.e., ~~changes~~that inexisted ~~weighted-average~~prior ~~interest rate multiplied by average portfolio balance) have been allocated proportionately~~ to ~~the~~our ~~change~~adoption inof ~~rate~~liquidation ~~and~~basis ~~the change in volume.~~accounting;

	For the Year Ended December 31, 2000 vs. 1999
	Rate Variance		Volume Variance		Total Variance
	(Dollars in thousands)
Interest income:
Loans and leases	$ 60,792		$(70,430	)	$ (9,638	)
Mortgage-backed securities	4,510		19,037		23,547
Investments	6,818		17,809		24,627
	72,120		(33,584	)	38,536
Interest expense:
Deposits	21,743		12,432		34,175
Borrowings	14,719		(5,314	)	9,405
	36,462		7,118		43,580
Change in net interest income	$ 35,658		$(40,702	)	$ (5,044	)
	For the Year Ended December 31, 1999 vs. 1998
	Rate Variance		Volume Variance		Total Variance
	(Dollars in thousands)
Interest income:
Loans and leases	$ —		$ 22,755		$ 22,755
Mortgage-backed securities	(655	)	(10,194	)	(10,849	)
Investments	(449	)	3,836		3,387
	(1,104	)	16,397		15,293
Interest expense:
Deposits	(11,017	)	3,788		(7,229	)
Borrowings	(5,623	)	12,262		6,639
	(16,640	)	16,050		(590	)
Change in net interest income	$ 15,536		$ 347		$ 15,883

ProvisionTable Forof Losses on Loans and LeasesContents

~~The~~• ~~provision~~Premium ~~for losses~~ on ~~loans~~investment ~~and~~in ~~leases~~BVAC: ~~was~~Reversed $6210.60 million ~~for~~of ~~the~~premium ~~year~~over ~~ended December 31, 2000 as compared with $28.3 million for 1999 and $9.1 million for 1998. The increase in~~ the ~~provision~~book ~~for~~value ~~losses~~of onBVAC, ~~loans~~which ~~and~~was ~~leases~~recorded ~~for 2000,~~ as ~~compared~~deferred ~~with~~gain ~~1999,~~under ~~was~~liquidation ~~primarily~~basis ~~due~~accounting, toand ~~higher~~restored ~~provision levels within~~ the ~~Commercial~~historical ~~Platform~~cost ~~related~~basis toin ~~franchise~~our ~~loans. Specifically,~~equity ~~the~~investment ~~higher~~in ~~provision~~BVAC; ~~level~~• ~~was~~Auto ~~necessary~~contracts: asReversed aunrealized ~~result~~gains ofthat ~~higher~~were ~~franchise~~recorded ~~loan~~under ~~balances~~liquidation ~~during~~basis ~~2000~~accounting ~~combined~~and ~~with~~restored the ~~deterioration~~lower ~~in the credit quality~~ of ~~franchise~~cost ~~loans.~~or ~~The~~market ~~provision~~valuation; ~~levels~~• ~~decreased for the Retail Platform due to lower net charge~~Mortgage-~~offs~~backed ~~and~~securities: ~~declining~~Restored ~~loan~~fair ~~balances.~~value ~~The~~accounting ~~increase in the provision~~ for ~~losses~~these ~~on loans and leases~~ available-for-sale ~~1999,~~securities; as• ~~compared~~Accrued ~~with~~liabilities: ~~1998,~~Reversed ~~was~~$1.7 amillion ~~result~~ of ~~our~~accruals ~~acquisitions~~related ~~combined~~to ~~with~~certain ~~our~~severance ~~internal loan~~ and ~~lease~~occupancy ~~growth,~~costs ~~principally~~that ~~within our~~were ~~Commercial~~recorded ~~Platform,~~under ~~higher~~liquidation ~~net~~basis ~~charge-offs~~accounting inand ~~the~~adopted ~~Retail~~Statement ~~Platform~~of ~~related~~Financial toAccounting ~~uninsured~~Standards ~~high~~(“SFAS”) ~~loan-to-value~~No. ~~home equity loans~~146, ~~and~~“Accounting ~~higher~~for ~~net~~Costs ~~charge-offs~~Associated inwith ~~the~~Disposal ~~Commercial~~Activities”; ~~Platform~~and ~~related~~• toStockholders’ aequity: ~~seasoning~~Restored ofstockholders’ ~~the~~equity ~~portfolio.~~as ~~See~~of ~~“Balance~~October ~~Sheet Analysis—Allowance~~1, ~~for Loan and Lease Losses” for further discussion~~2003.

~~The~~ See ~~following~~Note 3 ~~table~~to ~~illustrates~~ the ~~provision~~Consolidated ~~for~~Financial ~~losses~~Statements, “Summary onof ~~loans~~Significant Accounting Policies — Liquidation Basis,” at Item 8. “Financial Statements and ~~leases~~Supplementary Data” for further discussion of the significant accounting policies that were applicable, under byliquidation ~~platform~~basis accounting, ~~for~~during the ~~periods~~period ~~indicated:~~September 30, 2002 through September 30, 2003.

	For the Year Ended December 31,
	2000	1999	1998
	(Dollars in thousands)
Retail Platform	$10,354	$25,558	$9,114
Commercial Platform	52,246	2,753	—
Total	$62,600	$28,311	$9,114


	*Securitization Transactions and Retained Interests in Securitizations*

~~Noninterest~~ BVAC ~~Income~~purchases auto contracts with the intention of repackaging them as securitizations. All such securitizations have involved the identification of specific auto contracts, the sale of those contracts (~~Loss~~and the associated rights) to a special purpose subsidiary of BVAC, and issuance of asset-backed securities to fund the transactions. Depending upon the structure of the securitization, the transaction may be accounted for as a sale or as a secured financing.

~~Noninterest~~ Prior ~~income~~to ~~was~~2005, ~~$76.6~~BVCC ~~million~~structured ~~for~~these ~~the~~transactions ~~year~~as ~~ended~~sales ~~December~~in accordance ~~31,~~with ~~2000~~Statement asof ~~compared~~Financial ~~with~~Accounting ~~$91~~Standards (“SFAS”) No.5 140, ~~million~~“Accounting for ~~1999~~Transfers and Servicing of Financial Assets and Extinguishments of ~~$31~~Liabilities.1” ~~million~~For ~~for~~transactions ~~1998.~~structured ~~The~~as ~~decrease~~sales, inthe sold ~~noninterest~~auto ~~income~~contracts ~~for~~were ~~2000,~~removed asfrom ~~compared~~BVCC’s ~~with~~consolidated statements ~~1999,~~of ~~was~~financial ~~largely~~condition, ~~due~~the toasset-backed ~~the~~securities did ~~net~~not ~~loss~~appear onas ~~sales~~debt of ~~assets~~BVCC and ~~liabilities~~BVCC ~~associated~~recognized ~~with~~a ~~restructuring~~gain ~~our~~on ~~balance~~the sale ~~sheet~~of tothe ~~reduce~~auto ~~credit~~contracts ~~and~~to ~~concentration~~the ~~risk associated~~trusts. ~~with~~Gains ~~franchise~~or ~~assets~~losses ~~and~~on ~~HLTV~~the securitizations ~~home~~and/or ~~equity~~sales of loans. ~~Offsetting~~are ~~these~~recorded ~~losses~~in ~~were~~earnings at ~~higher~~the ~~auto~~time ~~leasing~~of ~~income~~the ~~and~~transaction ~~loan-related~~when ~~fees~~control inover the ~~Retail~~loans ~~Platform~~is surrendered and ~~higher~~consideration ~~loan~~other ~~servicing~~than ~~and~~beneficial ~~fee~~interests ~~income~~ in the ~~Commercial~~loans ~~Platform~~is received. The ~~increase~~gain inor loss represents the ~~noninterest~~difference ~~income~~between ~~for~~the ~~1999~~sum of sale proceeds, asnet ~~compared~~of ~~with~~transaction costs ~~1998,~~and ~~was~~cash ~~largely~~deposited ~~attributable~~into a securitization trust account, in order to ~~higher~~enhance ~~auto~~the ~~leasing~~credit ~~income~~rating inof the ~~Retail~~asset-backed securities, ~~Platform~~and ~~combined~~the ~~with~~sum ~~higher~~of BVCC’s net ~~gains~~carrying onvalue of the auto ~~securitization~~contracts and~~/or~~ ~~sale~~the present value of ~~loans~~future ~~and~~excess ~~increases~~cash inflow anticipated ~~account~~to ~~fees,~~be ~~loan~~distributed ~~fees~~to ~~and charges~~BVCC ~~and~~by ~~investment~~the ~~sales~~trust ~~commissions~~over the life of the asset-backed securities. The ~~following~~present ~~table~~value ~~illustrates~~of ~~noninterest~~the anticipated ~~income~~future ~~(loss),~~excess bycash ~~platform,~~flow ~~for~~is ~~the~~an ~~periods~~asset ~~indicated:~~which is referred to as a “retained interest” in the securitization.

	For the Year Ended December 31,
	2000		1999	1998
	(Dollars in thousands)
Retail Platform	$ 90,350		$84,658	$30,339
Commercial Platform	(13,708	)	6,874	733
Total	$ 76,642		$91,532	$31,072

These estimated future cash flows, which are comprised of interest income received on the auto contracts less interest paid to investors in the asset-backed securities, credit losses, servicing fees and trust expenses, are initially retained by the trust to build the trust cash account to pre-designated levels and provide further credit enhancement. Once the pre-designated levels of cash are attained, the trust distributes the excess cash flow to BVAC. In recording the gain on sale and the retained interest, BVCC has made assumptions in calculating the present value of the future excess cash flow anticipated to be distributed to BVAC by the trust over the life of the asset-backed securities.

~~During~~ BVAC ~~2000,~~designates ~~noninterest~~retained ~~income~~interests ~~within~~as ~~our~~available-for-sale ~~Retail Platform included $19.4 million in net losses from the sales of~~and ~~single-family~~carries ~~mortgage~~them ~~loans,~~at ~~high~~fair ~~loan-to-~~value. ~~home~~Unrealized ~~equity~~gains ~~loans~~ and ~~auto loans, $9.1 million in~~ losses ~~related to the revaluation of our~~ on retained interests inthat ~~our~~are ~~auto~~deemed ~~loan~~to ~~securitizations~~be ~~combined~~temporary ~~with~~are ~~charges associated with the exercise of the~~reported ~~cleanup~~in ~~call~~other oncomprehensive ~~our~~income ~~1997~~or ~~auto loan securitization~~loss, ~~and~~net ~~$2.1 million in losses related to our implementation~~ of ~~Statement No~~tax. ~~133,~~For ~~partially~~retained interests ~~offset~~that byhave experienced a ~~$2.1~~decline ~~million~~in ~~gain~~fair ~~associated~~value ~~with~~below their ~~the~~amortized ~~sale~~cost ofbasis ~~servicing~~and ~~rights. Noninterest loss~~ for ~~our Commercial~~which ~~Platform~~the ~~included~~decline ~~$26.4~~in ~~million~~fair value inhas ~~losses~~been ~~related~~determined to ~~the~~be ~~sale of franchise asset~~other-~~backed securities~~than-temporary, ~~a $4.9 million loss on~~ the ~~sale~~cost basis of ~~substantially all of~~ the ~~assets~~retained ~~and~~interest ~~certain~~is ~~liabilities~~written ofdown ~~Bankers~~to ~~Mutual,~~fair ~~$2.6~~value ~~million in net losses~~as ~~from~~ the ~~sales~~new ofcost ~~multi-family~~basis ~~mortgage loans, franchise loans,~~ and ~~commercial~~the ~~leases,~~writedown ~~and~~is acharged $1to earnings.1 BVCC ~~million~~recorded ~~write~~other-~~down~~than-temporary ofimpairment ancharges ~~equity~~related ~~security.~~to retained ~~These~~interests ~~losses~~in ~~were offset by a $10.0 million gain on the auction of $180 million of Federal Home Loan Bank liabilities with below~~securitiza-~~market interest~~ ~~rates.~~

~~Noninterest income for 1999 primarily included a $5.2 million gain on the securitization and sale of $247 million of~~24 auto loans in the Retail Platform and $4.1 million in net gains on loan sales in the Commercial Platform from the sales of multi-family loans. Noninterest income for 1998 included approximately $2.0 million in gains on sales of mortgage-backed ~~securities and a $940,000 loss on the settlement of forward sale contracts relating to mortgage-backed securities.~~

DuringTable 2000, we serviced off-balance sheet portfolios of franchise loans and multi-family loans associated with Bankers Mutual. Servicing income on franchise loans was $3.6 million for 2000 and $341,000 for November and December of 1999. The franchise loan servicing portfolio totaled $2.4 billion and $2.2 billion at December 31, 2000 and 1999, respectively. Servicing income on Bankers Mutual’s multi-family loans through June 30, 2000, the effective date of the sale of substantially all of Bankers Mutual’s assets to Berkshire Mortgage Finance Limited Partnership, was $742,000 on a servicing portfolio totaling approximately $3.4 billion. Servicing income on Bankers Mutual’s multi-family loans for November and December of 1999 was $169,000 on a servicing portfolio totaling $3.2 billion at December 31, 1999.Contents

~~Noninterest~~ tions ~~Expense~~of $222 thousand in 2005. There were no impairment charges related to retained interests in securitizations during 2004 and 2003.

~~General~~ BVCC’s retained interests are subordinate to investor interests in the related asset-backed securities and ~~Administrative~~their value is subject to credit and prepayment risks in the pool of underlying auto contracts. BVCC is not aware of an active secondary market for its retained interests and, accordingly, estimates the fair value of its retained interests by calculating the present value of the future excess cash flow anticipated to be received, using management’s best estimates of key valuation assumptions, including credit losses, prepayment speeds and discount rates commensurate with the underlying risks in the anticipated future cash flow. Changes in these assumptions due to differing actual experience or market conditions could affect the value of our retained interests.

~~General~~ The ~~and~~following ~~administrative~~table ~~expenses~~sets ~~for~~forth the ~~year~~significant ~~ended~~assumptions ~~December 31, 2000 were $158.6 million as compared with $117.1~~used ~~million~~in ~~for 1999 and $113.6 million for 1998. Excluding special mention items, which are discussed below,~~ the ~~increases~~valuation inof ~~general~~BVCC’s ~~and~~retained ~~administrative~~interests ~~expenses,~~ as ~~compared with the respective prior periods~~of December 31, ~~were primarily related to general and~~2005: ~~administrative expenses associated with FMAC which we acquired in November 1999.~~

Our general and administrative expenses for the year ended December 31, 2000 included $5.8 million in special mention items, as compared with $5.3 million in special mention items for 1999 and $10.4 million for 1998. 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.


Weighted-average discount rate		10.0%
Range of projected annual credit losses, net		1.45% - 1.65%
Range of projected cumulative credit losses		2.31% - 2.44%
Prepayment speed		1.35 - 1.50 ABS

~~Special~~ Changes ~~mention items for 2000 included approximately $3.8 million~~ in ~~FMAC-related transition costs and other operational charges including~~ the ~~consolidation~~above ofassumptions ~~certain~~due ~~loan~~to ~~servicing~~differing ~~operations,~~actual experience ~~the~~or ~~closure~~market ofconditions ancould ~~FMAC~~affect ~~satellite loan production office and~~ the ~~outsourcing~~value of our ~~internal audit function. Special mention items for 2000 also included $1.1~~ ~~million~~retained ~~in fees associated with our financial advisor, and $0~~interests.~~9 million in legal settlements expenses.~~

~~Special~~ During ~~mention~~2005, ~~items~~BVAC ~~for~~completed ~~1999~~three ~~included~~auto ~~approximately~~contract $1securitizations.1 Under ~~million~~the interms ~~severance~~of ~~payments~~these transactions, ~~$1.0~~BVAC ~~million~~retained certain rights that resulted in ~~acquisition and~~its ~~integration~~maintaining ~~costs~~control ~~(largely~~over ~~FMAC-related),~~the transferred ~~$779~~receivables and,~~000~~ in ~~auto-related~~accordance ~~restructuring~~with ~~charges,~~provisions ~~$705~~of SFAS No. 140,~~000~~ inBVCC ~~third-party~~has ~~Year~~accounted ~~2000~~for ~~compliance-related~~these transactions ~~costs,~~as ~~and~~secured ~~$598,000~~financings. inFor ~~costs~~securitizations ~~associated~~treated as ~~with~~secured ~~repurchasing~~financings, ~~out-of-~~the~~-money~~ ~~stock~~auto ~~options~~contracts ~~for~~are ~~possible future~~retained ~~reissuance.~~on ~~Special~~the consolidated ~~mention~~statement ~~items~~of ~~for~~financial ~~1999~~condition ~~also~~and ~~included~~the ~~approximately~~securities issued ~~$377,000~~to infinance ~~collection-based~~the ~~fees~~contracts ~~associated~~are ~~with~~recorded aas $1securitization notes payable.1 ~~million~~BVCC ~~state~~records ~~tax~~interest ~~refund,~~income ~~$278,000~~on inthe ~~costs~~securitized contracts ~~associated~~and ~~with~~interest aexpense ~~debt~~on ~~offering~~the ~~which~~notes weissued ~~did~~through ~~not~~the securitized ~~consummate~~transactions, ~~$239,000 in~~and ~~costs~~records ~~associated~~as ~~with~~expense ~~branch~~a ~~relocations~~provision ~~and~~for credit ~~closures,~~losses ~~and~~on ~~$180,000~~the inauto ~~initial~~contracts ~~fees~~receivable. ~~related~~See Note 10 to the ~~listing~~Consolidated ofFinancial ~~our~~Statements, ~~securities~~“Securitization Notes Payable,” at Item 8. “Financial Statements and Supplementary Data” for additional information on the ~~New~~related ~~York~~auto ~~Stock~~receivable-backed ~~Exchange~~notes.

~~Special~~Allowance ~~mention items~~ for ~~1998~~Credit included approximately $6.9 million in acquisition and integration expenses related to our acquisition of AFEH, $1.35 million in expenses related to the cancellation of our proposed acquisition of PSB Lending Corporation, $814,000 in auto-related restructuring charges, $600,000 for a legal settlement related to the termination of a third-party data processing service contract, $253,000 in third-party Year 2000 compliance related costs, $240,000 in branch closure expenses, and $233,000 in other expenses.Losses

The ~~following~~allowance ~~table~~for ~~illustrates~~credit ~~general~~losses on auto contracts held-for-investment is established through a provision charged to expense and ~~administrative~~maintained ~~expenses~~at a level that BVCC believes is sufficient to cover estimated probable losses in this loan portfolio. BVCC considers BVAC’s portfolio of auto contracts receivable to be comprised of relatively small balance, byhomogeneous ~~platform~~receivables and, accordingly, determines its allowance for ~~the~~credit ~~periods~~losses ~~indicated:~~in accordance with SFAS No. 5, “Accounting for Contingencies.” The allowance for credit losses is evaluated and adjusted on a quarterly basis.

	For the Year Ended December 31,
	2000	1999	1998
	(Dollars in thousands)
Retail Platform	$ 79,856	$ 76,309	$ 79,867
Commercial Platform:
Direct general and administrative expenses	31,547	14,923	9,501
Direct general and administrative expenses—FMAC loan production	15,561	2,395	—
Direct general and administrative expenses—Bankers Mutual	6,311	2,123	—
Total Commercial Platform	53,419	19,441	9,501
Subtotal	133,275	95,750	89,368
Indirect corporate overhead(1)	25,315	21,366	24,199
Total	$158,590	$117,116	$113,567

In determining the level of the allowance for credit losses, BVCC evaluates BVAC’s auto contracts held-for-investment using two methodologies. The first methodology is based upon an analysis of BVAC’s historical loss experience using a “vintage” analysis of its past purchases of auto contracts from which BVAC predicts probable losses that are inherent in its portfolio of auto contracts held-for-investment. Under this method, BVAC’s historical credit loss experience is stratified by quarter and correlated with the related auto contracts that have been similarly stratified by the number of quarters that have elapsed since date of purchase. This credit loss data is derived from “static pool” information that has been internally collected on the historical loss experience of BVAC’s portfolio of managed auto contracts. BVAC defines managed auto contracts as the sum of its warehouse inventory of auto contracts receivable plus auto contracts that have been securitized and/or sold with servicing retained by BVAC. BVCC also uses a second method for evaluating the sufficiency of the allowance for credit losses. This second method, a “roll rate” analysis, projects the migration of quarter-end auto contracts held-for-investment from current payment status through 30-, 60- and 90-day delinquent status to charge-off and correlates this projection with loss reserve factors.

~~(1) Amount represents indirect corporate expenses not specifically identifiable with, or allocable to, our business platforms.~~25

TheTable followingof table illustrates general and administrative expenses, excluding the special mention items as previously discussed, by platform, for the periods indicated:Contents

	Excluding Special Mention Items for the Year Ended December 31,
	2000	1999	1998
	(Dollars in thousands)
Retail Platform	$ 78,480	$ 73,232	$ 74,230
Commercial Platform:
Direct general and administrative expenses	30,897	14,783	9,501
Direct general and administrative expenses—FMAC loan production	14,436	2,395	—
Direct general and administrative expenses—Bankers Mutual	6,103	2,123	—
Commercial Platform	51,436	19,301	9,501
Subtotal	129,916	92,533	83,731
Indirect corporate overhead(1)	22,890	19,280	19,470
Total	$152,806	$111,813	$103,201

These methodologies incorporate quantitative as well as qualitative factors, including historical loss experience changes in underwriting practices, changes in the credit quality of contracts and an assessment of economic conditions.

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

~~Retail~~ BVCC ~~Platform~~files consolidated federal income tax returns in which its taxable income or loss is combined with that of its subsidiaries. Consolidated, combined and separate company state tax returns are filed in certain states, as applicable, including California. Each subsidiary’s share of income tax expense (benefit) is based on the amount that would be payable (receivable) if separate returns were filed.

~~The~~ BVCC’s ~~increase~~income intax provisions are based upon income taxes payable for the ~~Retail~~current ~~Platform’s~~period ~~general~~as ~~and~~well ~~administrative~~as ~~expenses,~~current ~~excluding~~period ~~special~~changes in ~~mention~~deferred ~~items,~~income taxes. Deferred income taxes are recognized for the ~~year~~ ~~ended~~tax ~~December~~consequences ~~31,~~of ~~2000,~~temporary asdifferences ~~compared~~by ~~with~~applying enacted ~~1999,~~statutory ~~was~~income ~~due~~tax ~~primarily~~rates applicable to ~~inflationary~~future ~~pressures,~~years ~~including~~to differences ~~annual~~between ~~salary~~the ~~increases~~financial statement carrying amounts and the tax basis of existing assets and liabilities. The ~~decrease~~effect on deferred income taxes for a change in tax rates is recognized through the ~~Retail~~provision ~~Platform’s~~for ~~general~~income ~~and~~taxes ~~administrative~~during ~~expenses,~~the ~~excluding~~period ~~special~~of enactment. ~~mention~~BVCC ~~items,~~measures ~~for~~deferred tax assets using the enacted tax rate expected to apply to carryforwards and temporary differences in the ~~year~~periods ~~ended~~they ~~December~~are 31expected to reverse. Under SFAS No. 109, ~~1999~~a valuation allowance must be recognized on deferred tax assets if, asbased ~~compared~~upon ~~with~~the ~~1998~~weight of available evidence, ~~was~~it ~~primarily~~is ~~due~~more tolikely ~~cost~~than ~~savings~~not ~~initiatives~~that ~~implemented~~some ~~and~~or ~~other~~all ~~efficiencies~~of the assets may not be realized.

~~Commercial~~ At ~~Platform~~December 31, 2005 and 2004, BVCC had recorded estimates of contingent tax liabilities of $4.4 million and $4.2 million, respectively. If and when these current tax liabilities are ultimately paid, there could be a significant impact on the cash flows or liquidity of BVCC.

~~The~~Derivative increases in the Commercial Platform’s general and administrative expenses, excluding special mention items, for the year ended December 31, 2000, as compared with 1999, and for the year ended December 31, 1999, as compared with 1998, were directly attributable to our acquisition of FMAC effective November 1, 1999 and the impact of platform growth. The Commercial Platform’s general and administrative expenses for 2000 included $15.6 million of franchise loan production expenses, $6.3 million of Bankers Mutual expenses, and $13.5 million in remaining FMAC general and administrative expenses. As previously discussed, our franchise loan production and related operations were shut down as of September 30, 2000 and our Bankers Mutual subsidiary was sold effective June 30, 2000. The Commercial Platform’s general and administrative expenses for 1999, excluding special mention items, included $2.4 million of incremental franchise loan production expenses, $2.1 million of Bankers Mutual expenses, and $4.4 million in remaining FMAC general and administrative expenses.Instruments

~~Indirect~~ BVCC ~~Corporate~~uses ~~Overhead~~derivative instruments to reduce its exposure to interest rate risk embedded in BVAC’s fixed-rate auto contracts which are funded by floating-rate financing. Rising interest rates reduce the net interest spread produced by BVAC’s auto contracts, a primary component of BVCC’s profitability, as well as the economic value of BVAC’s inventory of auto contracts. Additionally, under the terms of its warehouse credit facility, the indenture trustee maintains derivative instruments to provide interest rate risk protection to BVAC’s lenders. BVCC accounts for these derivative instruments in accordance with SFAS No. 133, “Accounting for Derivatives and Hedging Activities.”

~~The~~ SFAS No. 133 ~~increase~~establishes accounting and reporting standards for derivative instruments and requires that derivative instruments (including certain derivative instruments embedded in ~~indirect~~other ~~corporate~~contracts) ~~overhead,~~be ~~excluding~~recorded ~~special~~in ~~mention~~the ~~items,~~statement of financial condition as either an asset or liability measured at its fair value. SFAS No. 133 further dictates that the accounting treatment for gains or losses from changes in the derivative ~~year~~instrument’s ~~ended~~fair ~~December~~value ~~31,~~is ~~2000,~~contingent on whether the derivative instrument qualifies as a hedge under the ~~compared~~standard. ~~with~~Derivative ~~1999,~~instruments ~~was~~must ~~due~~qualify toand ~~inflationary~~be ~~pressures,~~designated as ~~including~~hedges ~~annual~~upon ~~salary~~their ~~increases,~~inception and ~~higher~~must ~~expenses~~be ~~necessary~~effective in substantially reducing the risk arising from the asset or liability identified as exposing BVCC to ~~support~~risk ~~our~~throughout ~~expanding~~the hedge ~~business~~period ~~activities~~in ~~(primarily~~order ~~related~~to receive hedge accounting treatment. To qualify as hedges, among other things, derivative instruments must be linked to ~~FMAC)~~specific assets or liabilities or pools of similar assets or liabilities. ~~The~~If ~~decrease~~the inderivative ~~indirect~~instrument ~~corporate~~does not ~~overhead~~qualify as a hedge, ~~excluding~~the gains or losses are reported in the ~~special~~consolidated ~~mention~~statement ~~items~~of operations when they occur. If the derivative instrument qualifies and is designated as a hedge under the standard, ~~for~~depending on the ~~year~~type ~~ended~~of ~~December~~risk 31being hedged, the ~~1999~~gains and losses are either reported in the consolidated statement of operations, offsetting the fair value change in the hedged item, or reported as ~~compared~~accumulated ~~with~~other ~~1998~~comprehensive income in the equity section of the consolidated statement of financial condition. If a hedged asset or liability is sold or paid off before maturity of the hedging derivative, ~~was~~the derivative ~~directly~~is ~~attributable~~closed toout ~~cost~~or ~~savings~~settled, ~~initiatives~~and any net settlement amount upon the close-out or termination of the derivative is recognized in earnings. The standard requires that an entity formally document, designate and ~~efficiencies~~assess the effectiveness of transactions that receive hedge accounting.

~~The~~ BVCC’s ~~following~~derivative ~~table~~instruments ~~illustrates~~outstanding ~~the~~at December 31, ~~ratio~~2005 ~~of general~~ and ~~administrative~~2004 ~~expenses~~were tocomprised ~~average~~of interest~~-earning~~ ~~assets,~~rate ~~including~~swap ~~our~~contracts ~~auto-related operating leased assets~~ and ~~auto-related~~interest ~~securitized~~rate ~~assets, by platform, for the periods indicated~~caps. The ~~fluctuations~~interest inrate ~~the~~swap contracts ~~general and administrative expense ratios~~ are ~~largely~~used ~~driven~~to byreduce ~~the~~our ~~fluctuations~~exposure ~~in general and~~to ~~administrative expenses, as previously discussed.~~

	For the Year Ended December 31,
	2000		1999		1998
	(Dollars in thousands)
General and administrative expenses	$ 158,590		$ 117,116		$ 113,567
Average total assets, including auto-related securitized assets	$6,711,135		$5,955,213		$5,607,221
General and administrative expenses to average total assets, including auto-related securitized assets	2.36	%	1.97	%	2.03	%

AnotherTable 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 the Capital Securities, the excess of our leasing-related rental income over leasing-related depreciation expense, and other noninterest income. Prior to our November 1, 1999 acquisition of FMAC, gains and losses from loan sales and securitizations were excluded in operating revenues as this was a non-recurring operating activity. 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:Contents

	For the Year Ended December 31,
	2000		1999		1998
	(Dollars in thousands)
General and administrative expenses	$158,590		$117,116		$113,567
Operating revenues, as defined	$173,405		$215,112		$177,785
Efficiency ratio	91.5	%	54.4	%	63.9	%

interest rate risk. The interest rate caps are required under the terms of BVAC’s warehouse credit facility and maintained by the indenture trustee, as discussed above. In accordance with SFAS No. 133, these derivative instruments are accounted for as assets or liabilities and recorded at fair value. Because these derivatives were not formally designated as hedges, which is required to use hedge accounting, changes in fair values are charged or credited to earnings.

~~The~~ Prior ~~increase~~to inits ~~the~~re-adoption ~~efficiency~~of ~~ratio~~going ~~for~~concern ~~2000,~~basis ~~as compared with 1999~~accounting, ~~was due to higher general and administrative~~BVCC ~~expenses,~~accounted ~~primarily~~for ~~associated~~changes ~~with FMAC, combined with a decrease~~ in ~~operating~~the ~~revenues,~~market asvalue ~~defined,~~of ~~resulting~~derivative instruments ~~from~~using ~~the~~liquidation ~~impact~~basis ofaccounting. ~~losses~~Changes ~~associated~~in ~~with~~ the market ~~sales~~value of ~~assets~~these ~~during~~derivative ~~the~~instruments ~~third~~were ~~and~~reflected ~~fourth~~in BVCC’s ~~quarters~~consolidated statements of ~~2000,~~changes ~~partially~~in ~~offset~~net byassets ~~higher~~in ~~net~~liquidation ~~leasing-related~~under ~~rental income. Our efficiency ratio excluding the impact of FMAC~~pre-~~related~~tax ~~asset~~loss ~~sales~~from ~~and general and administrative expenses was 64.8% for the year ended December 31~~operations, ~~2000.~~while ~~The~~offsetting changes ~~improvement~~ in the ~~efficiency~~market ~~ratio~~value ~~for~~of ~~1999,~~underlying ~~as compared~~auto ~~with~~contracts ~~1998,~~were included ~~was~~in ~~due~~changes toin ~~higher~~estimated ~~net~~values ~~interest~~of ~~income,~~assets ~~higher net leasing-related rental income,~~ and liabilities. ~~higher~~Refer ~~other~~to ~~noninterest income, including a $1~~Item 7A.1 ~~million~~“Quantitative ~~state~~and Qualitative ~~tax~~Disclosures ~~refund~~About ~~recognized~~Market Risk — Asset/ ~~during~~Liability ~~the~~Management” ~~first quarter of 1999, partially offset by~~for ~~higher~~further ~~general~~comments ~~and~~about ~~administrative~~BVCC’s ~~expenses~~use ~~and~~of ~~the~~derivative ~~expenses associated with our Capital Securities~~instruments.

~~Restructuring~~ Accounting ~~Charges—FMAC~~Changes and Recent Accounting Pronouncements

~~Restructuring~~ In ~~charges~~December ~~consist~~2004, ~~primarily~~the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R, “Share-Based Payments,” which revised SFAS No. 123 and superseded APB No. 25. SFAS No. 123R requires that the cost of ~~severance~~employee services received in exchange for an award of equity instruments, ~~occupancy~~such as stock options or restricted stock, be measured based on the fair value of the award on the grant date and ~~related~~recognized ~~facility~~in ~~costs~~the ~~associated~~statement ~~with~~of income over the ~~shut~~vesting ~~down~~period of ~~our~~the ~~franchise~~award. ~~lending~~Securities ~~division~~and ~~effective~~Exchange ~~September~~Commission (“SEC”) 30registrants were originally required to adopt SFAS No. 123R’s provisions at the beginning of their first interim period after June 15, ~~2000~~2005. ~~Restructuring~~In ~~charges~~March 2005, ~~totaled~~the $9SEC issued Staff Accounting Bulletin (“SAB”) No.2 107 ~~million~~to provide its view on the valuation of share-based payment arrangement for public companies. In April 2005, the SEC announced that registrants could delay adoption of SFAS No. 123R until the first fiscal year ~~ended~~beginning after ~~December~~September 312005. During 2005, ~~2000~~the FASB issued FASB Staff Position (~~See~~“FSP”) ~~Note~~FAS 123R-1, FSP FAS 123R-2 and FSP FAS 123-3 which amend the guidance in SFAS No. 123R for freestanding financial instruments issued in exchange for employee services, practical accommodation to the ~~Consolidated~~application ~~Financial~~of ~~Statements~~grant date and transition election related to the tax effects of share-based payment awards, ~~“Restructuring~~respectively. ~~Charges”~~BVCC atwill ~~Item~~adopt 8the standard as required ~~“Financial~~beginning ~~Statements~~January 1, ~~and~~2006 ~~Supplementary~~using ~~Data”~~the modified prospective method of adoption. Under the modified prospective method, the requirements of SFAS No. 123R are applied to all new share-based awards granted after December 31, 2005, and compensation cost for ~~further~~unvested ~~details~~awards outstanding at December 31, 2005 is recognized over the remaining vesting period based upon the grant-date fair value of the award. BVCC estimates that the adoption of SFAS No. 123R will result in approximately $200 thousand of additional expense for the year ending December 31, 2006, assuming no new option grants. The estimated additional expense is based on unamortized expense relating to current outstanding options granted prior to our ~~FMAC~~implementation ~~restructuring)~~of SFAS No. 123R that are expected to vest subsequent to December 31, 2005.

~~Revaluation~~ In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,” a replacement of ~~FMAC-Related~~APB ~~Assets~~No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements.” APB No. 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. SFAS No. 154 requires retrospective application to prior period’s financial statements of changes in accounting principle. Retrospective application is defined as the application of a different accounting principle to prior accounting periods as if that principle had always been used, or as the adjustment of previously issued financial statements to reflect a change in reporting entity. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. BVCC does not expect the adoption of SFAS No. 154 to have a material impact on our financial condition, results of operations or cash flows.

~~During 2000, certain FMAC-related assets were revalued resulting in a $101.9 million pre-tax expense. The revaluation~~ ~~included~~In ~~$35.4~~November ~~million~~2005, inthe ~~adjustments~~FASB ~~resulting~~issued ~~primarily~~FSP ~~from permanent impairments to our franchise~~FAS 115-~~related~~1 ~~residual~~ and ~~servicing assets~~ FAS 124-1, ~~reflecting~~“The ~~higher~~Meaning ~~loss~~of ~~assumptions~~Other-Than-Temporary Impairment and aIts ~~higher~~Application ~~discount~~to ~~rate~~Certain Investments.” This ~~The~~staff ~~revaluation~~position ~~also~~reflects ~~included~~the alatest ~~$66.5~~changes ~~million mark-~~to~~-market~~ ~~charge~~the onFASB Emerging ~~our~~Issues ~~portfolio~~Task ofForce ~~franchise~~(“EITF”) ~~loans held~~03-~~for-sale~~01, ~~reflecting~~which ~~estimated~~we adopted ~~bulk-sale~~in ~~pricing~~December ~~versus pricing based on smaller loan pool sales to multiple investors~~2003.

~~Leasing Expense~~27

LeasingTable expense represents expenses related to our auto leasing activities which began in April 1998. Because the leases are accounted for as operating leases, the corresponding assets are capitalized and depreciated to their estimated residual values over their lease terms. This depreciation expense is included in leasing expenses, along with the amortization of capitalized initial direct lease costs. Leasing expenses for the year ended December 31, 2000 were $69.4 million as compared with $40.2 million for 1999 and $7.7 million for 1998. The increases in leasing expenses were due to growth in our auto-related operating lease portfolio. We ceased purchasing auto leases on June 30, 2000 when our agreement with Lendco Financial Services expired.Contents

~~Capital~~ EITF 03-01 included certain disclosures regarding quantitative and qualitative disclosures for investment securities accounted for under SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” that are impaired at the balance sheet date, but an other-than-temporary impairment has not been recognized. FSP FAS 115-1 and FAS 124-1 codifies the guidance set forth in EITF Topic D-44 and clarifies that an investor should recognize an impairment no later than when the impairment is considered other-than-temporary, even if a decision to sell has not been made. The guidance in this FSP should be applied to reporting periods beginning after December 15, 2005. BVCC has determined that FSP FAS 115-1 and FAS 124-1 will not have a material impact on our financial condition, results of operations or cash flows.

On In December 212005, ~~1998,~~the weFASB issued ~~$90~~FSP SOP 94-6-1, “Terms ~~million~~of inLoan ~~Capital~~Products ~~Securities~~That ~~through~~May ~~Bay~~Give ~~View~~Rise ~~Capital~~to I, a Concentration ~~business~~of ~~trust~~Credit ~~formed~~Risk.” ~~to issue~~This ~~the~~staff ~~securities.~~position ~~The~~focuses on ~~Capital~~disclosures ~~Securities,~~for ~~which~~loan ~~were~~products ~~sold~~whose interms anmay ~~underwritten~~give ~~public~~rise ~~offering,~~to ~~pay~~a concentration ~~quarterly~~of ~~cumulative~~credit ~~dividends~~risk. atThe anguidance ~~annual~~relative ~~rate~~to concentration of ~~9.76%~~credit ofrisk ~~the~~is ~~liquidation~~effective ~~value~~for ofinterim ~~$25~~and ~~per~~annual periods ~~share~~ending after December 19, 2005. ~~Dividend~~An ~~expense~~entity onshould provide the ~~Capital~~disclosures ~~Securities~~required ~~was $9~~by SFAS No.0 107, “Disclosures ~~million~~about Fair Value of Financial Statements,” for ~~the~~loan ~~year~~products ~~ended~~that ~~December~~are ~~31,~~determined ~~2000~~to represent asa ~~compared~~concentration of credit risk in accordance with $8FSP SOP 94-6-1.9 ~~million~~BVCC has ~~for~~determined ~~1999~~that ~~and~~FSP SOP 94-6-1 ~~$244~~will not have a material impact on our financial condition,~~000~~ ~~for~~results of ~~1998~~operations or cash flows.

~~In September of 2000, we entered into an agreement with the Federal Reserve Bank which requires that we obtain their~~ ~~approval~~Results ~~prior to disbursing any dividends associated with our Capital Securities. For the third and fourth quarters~~ of ~~2000, our requests for approval were denied. As a result, pursuant to the terms of the Capital Securities, the Company has~~Operations deferred distributions until such time as approval can be obtained. The Company fully intends to continue to seek such approval; however, it 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.

~~Real~~ From ~~Estate~~September 30, ~~Owned~~2002 through September 30, 2003, we reported our results under liquidation basis accounting under which we reported the value of, and the changes in, net assets available for distribution to stockholders (“net assets in liquidation”) instead of results from continuing operations. As discussed above, we discontinued the use of liquidation basis accounting and re-adopted going concern basis accounting effective October 1, 2003. Accordingly, our financial statements as of December 31, 2005 and 2004 and for the years ended December 31, 2005 and 2004 and the three months ended December 31, 2003 have been prepared under going concern basis accounting while reporting periods from January 1, 2003 through September 30, 2003 have been prepared under liquidation basis accounting. The following discussion of our results of operations for reporting periods for which our financial statements have been prepared under going concern basis accounting are presented independently from the discussion of our results of operations for which our financial statements have been prepared under liquidation basis accounting.

~~The~~ Under ~~net~~liquidation ~~expense~~basis ~~related to our real estate loan operations~~accounting, ~~including~~the ~~net~~Consolidated ~~losses~~Statement of orOperations ~~recoveries~~and onComprehensive ~~real~~Loss ~~estate owned,~~ was ~~$65,000~~ ~~for~~replaced with the Consolidated ~~year~~Statement ~~ended~~of ~~December~~Changes ~~31,~~in ~~2000~~Net asAssets ~~compared~~in ~~with~~Liquidation. As ~~net~~a ~~income~~result, ofwe ~~$238~~are providing,~~000~~ ~~for~~in ~~1999~~Item 8. “Financial Statements and ~~$240,000~~Supplementary ~~for 1998~~Data.”

~~Amortization~~• Consolidated Statements of ~~Intangible~~Financial Condition as of December 31, 2005 and 2004, • Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2005 and 2004 and the three months ended December 31, 2003, and • Consolidated Statements of Changes in Net Assets in Liquidation for the nine months ended September 30, 2003.

~~Amortization expense related to intangible assets was $20.8 million for the year ended December 31, 2000 as compared~~ ~~with~~Going ~~$13.7~~Concern million for 1999 and $11.4 million for 1998. The increases in amortization of intangible assets were due to the additional amortization of goodwill and core deposit intangibles generated in conjunction with our aforementionedBasis ~~acquisitions, all of which were accounted for under the purchase method of accounting.~~

~~Write-off~~ Results of ~~Intangible Assets~~Operations —~~FMAC~~ Years ended December 31, 2005 and 2004

In Our ~~connection~~consolidated ~~with~~net loss for the ~~shutdown~~year ofended ~~FMAC’s~~December 31, 2005 ~~lending~~was ~~operations~~$34.5 million, asor of$5.22 per ~~September~~diluted 30share, compared ~~2000,~~to ~~goodwill~~a net loss of $~~192~~3.6 9 million ~~was~~, ~~written~~or ~~off~~$0.59 per diluted share, ~~representing~~for the ~~entire~~year ~~unamortized~~ended ~~balance~~December 31, ~~associated with FMAC~~2004.

~~Income~~ As discussed in additional detail under “Income Taxes,” we recorded a charge to earnings of $25.3 million in the fourth quarter of 2005 to establish a full valuation allowance on our net deferred tax assets of $46.8 million at December 31, 2005.

~~Income tax benefit was $55.8 million for the year ended December 31, 2000 as compared with income tax expense of $25.1~~28 million for 1999 and $21.2 million for 1998. Our effective tax rate for 2000 was 14.6% as compared with 46.4% for 1999 and 48.3% for 1998. Our effective tax rate differs from the statutory rate due primarily to nondeductible goodwill write-off and amortization and the establishment of a $26 million valuation allowance against our gross deferred tax assets. (See Note 15 to the Consolidated Financial Statements, “Income Taxes,” at Item 8, “Financial Statements and Supplementary ~~Data” for further discussion).~~

Non-GAAPTable Performanceof MeasuresContents

~~The~~ Results ~~following~~for ~~measures~~the ofyear ~~normalized~~ended ~~net~~December 31, ~~interest~~2005 ~~income~~included record loan production by BVAC and ~~normalized~~increased net interest income. ~~margin~~However, ~~are~~leasing ~~not~~income ~~measures~~declined ofdue to the continued ~~performance~~runoff inof ~~accordance~~our ~~with~~liquidating ~~GAAP.~~auto ~~These~~lease ~~measures~~portfolio ~~should~~and ~~not~~general beand administrative ~~considered~~expense ~~alternatives~~increased todue ~~net~~primarily ~~interest~~to ~~income~~higher legal and ~~net~~professional ~~interest~~fees, ~~margin~~including ascosts ~~indicators~~related ofto ~~our~~merger ~~operating~~and sale ~~performance.~~activities ~~These~~and ~~measures~~increased ~~are~~liquidation ~~included~~expense. ~~because~~Our weprovision for ~~believe~~credit ~~they~~losses ~~are~~increased ~~useful tools~~ to ~~assist~~$7.9 million ~~you~~for inthe ~~assessing~~year ended ~~our~~December 31, ~~performance~~2005 ~~and~~from ~~trends~~$1.6 million ~~These~~for ~~measures~~the ~~may~~year ended ~~not~~December 31, be2004 ~~comparable~~primarily to ~~similarly~~support ~~titled~~our ~~measures~~growing portfolio ~~reported~~of byauto ~~other~~contracts ~~companies~~held-for-investment.

~~Normalized~~Net Interest Income and Net Interest Margin

~~Normalized~~ Net ~~net~~ interest income ~~and~~represents ~~net~~the ~~interest~~difference ~~margin~~between ~~include net rental~~ interest income ~~from~~earned ~~our~~on auto ~~leasing~~contracts ~~activities~~receivable ~~(that~~and other ~~is,~~interest-earning ~~the~~assets ~~excess~~and ofinterest ~~rental income over depreciation~~ expense paid on ~~auto-related~~borrowings and ~~leased~~other ~~assets),~~funding ~~which are principally funded by our deposits~~sources, and ~~also~~is ~~include expenses related to~~ our ~~Capital~~principal ~~Securities~~source of revenue. ~~Because~~Net ~~our~~interest ~~auto~~rate ~~leases~~spread ~~are~~is ~~accounted~~the ~~for~~difference ~~as operating~~between ~~leases,~~ the average ~~rental~~yield ~~income~~on isour ~~reflected~~interest-earning asassets ~~noninterest income~~ and the ~~related~~average rate ~~expenses,~~on ~~including~~our ~~depreciation~~interest-bearing ~~expense,~~liabilities. ~~are~~Net ~~reflected~~interest asmargin represents ~~noninterest expenses, in accordance with GAAP. Normalized~~ net interest income ~~also~~expressed ~~excludes~~as ~~certain nonrecurring~~a ~~interest~~percentage ~~income~~of average ~~and~~ interest-earning ~~expense items~~assets.

~~Normalized~~ Net interest income, net interest ~~income~~margin ~~for~~and ~~the~~average interest-earning ~~year~~assets ~~ended~~at December 31, ~~2000~~2005 ~~was~~ were $~~194~~17.0 6 million, ~~as compared with $184~~3.721% ~~million for 1999~~ and $~~159~~553.1 0 million, ~~for 1998~~respectively. Net ~~Normalized~~interest income, net interest margin and average interest-earning assets for the year ended December 31, 2004 ~~2000~~were ~~was 3~~$13.~~35%~~8 million, ~~as compared with 3~~4.3041% ~~for 1999~~ and 3$312.~~08% for 1998~~4 million, respectively.

The ~~following~~increase ~~table~~in ~~illustrates~~net ~~normalized~~interest income for the year ended December 31, 2005 compared to the same period in 2004 was attributable to an increase in average interest-earning assets due to the record volume of loan purchases. In addition, net interest income for the year ended December 31, 2005 reflected the elimination of interest expense from the $22.0 million of 9.76% Cumulative Capital Securities that were redeemed in mid-2004. Although net interest income expanded, net interest margin decreased as short-term, floating-rate funding costs on BVAC’s warehouse credit facility rose more rapidly than intermediate-term yields on purchased auto contracts. At December 31, 2005, the spread between the yields on one-month and three-year U.S. Treasury securities narrowed to 36 basis points from 136 basis points at December 31, 2004. For the year ended December 31, 2004, our net interest margin, was enhanced by ~~platform~~significant cash flow from monetization of our liquidating auto lease portfolio. This monetization reduced our need to borrow in order to fund purchases of auto contracts, reducing ~~for~~related ~~the~~interest ~~periods~~expense. ~~indicated:~~

	For the Year Ended December 31,
	2000			1999			1998
	Net Interest Income	Net Interest Margin		Net Interest Income	Net Interest Margin		Net Interest Income	Net Interest Margin
	(Dollars in thousands)
Retail Platform	$ 94,530	2.91	%	$114,237	3.00	%	$104,871	2.83	%
Commercial Platform	99,496	3.90		70,461	3.92		54,204	3.72
Total	$194,026	3.35	%	$184,698	3.30	%	$159,075	3.08	%

TheTable increases in normalized net interest income and net interest margin, as compared with the respective prior periods, were largely attributable to increases in average interest-earning assets combined with higher net rental income from our auto leasing activities, partially offset by the impact of our Capital Securities issued on December 21, 1998.Contents

~~Our~~ The ~~cost~~following oftable ~~borrowings,~~sets inforth ~~accordance~~average ~~with~~outstanding ~~GAAP,~~balances ~~does not include the impact~~ of ~~the cost associated with the $90 million~~ ofassets ~~Capital~~and ~~Securities issued on December 21~~liabilities, ~~1998.~~interest ~~Had~~income ~~this~~and expense ~~been included~~, ~~our~~and ~~cost~~average yields ofon ~~borrowings~~our ~~would~~interest-earning ~~have~~assets ~~been~~and ~~6.79% for~~ the ~~year~~average ~~ended~~cost ~~December~~of our ~~31,~~borrowings ~~2000 and 5.97%~~ for the ~~year~~years ended December 31, ~~1999,~~2005 ~~representing increases of 17 basis points~~ and ~~19 basis points, respectively.~~ 2004:

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


		Average Balances, Yields and Rates

		For the Year Ended December 31, 2005								For the Year Ended December 31, 2004

		Average					Average			Average				Average
		Balance		Interest			Yield/Rate			Balance		Interest		Yield/Rate

		(Dollars in thousands)
Assets
Interest-earning assets:
	Restricted cash and other short-term investments	$	36,102	$	1,756			4.80	%	$	33,640	$	516		1.53	%
	Retained interests in securitizations		21,225		1,948			9.18			26,622		2,345		8.81
	Mortgage-backed and other securities		—		—			—			742		48		6.47
	Auto installment contracts and other loans receivable		223,920		17,913			8.01			251,380		19,700		7.83
	Securitized auto installment contracts		271,751		18,636			6.85			—		—		—

Total interest-earning assets			552,998		40,253			7.27	%		312,384		22,609		7.23	%

Other assets			51,271								81,554

Total assets		$	604,269							$	393,938


Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
	Warehouse credit facility and other borrowings	$	223,126		10,242			4.53	%	$	215,775		5,647		2.58	%
	Interest rate swap (income) expense		—		(62	)		—			—		1,995		—

	Warehouse credit facility, other borrowings and swaps		223,126		10,180			4.50			215,775		7,642		3.50
	Junior Subordinated Deferrable Interest Debentures		—		—			—			12,256		1,203		9.77
	Securitization notes payable		260,273		12,437			4.79			—		—		—

Total interest-bearing liabilities			483,399		22,617			4.65	%		228,031		8,845		3.84	%

Other liabilities			17,061								35,629

Total liabilities			500,460								263,660
Stockholders’ equity			103,809								130,278

Total liabilities and stockholders’ equity		$	604,269							$	393,938

Net interest income/net interest rate spread				$	17,636			2.62	%			$	13,764		3.39	%

Net interest-earning assets		$	69,599							$	84,353

Net interest margin								3.21	%						4.41	%

	Average Balances for the Year Ended December 31,
	2000	1999	1998
	(Dollars in thousands)
Retail Platform	$3,245,417	$3,804,308	$3,706,565
Commercial Platform	2,554,447	1,799,220	1,457,270
Total	$5,799,864	$5,603,528	$5,163,835


	*Provision for Credit Losses*

~~The~~ An ~~decrease~~allowance infor ~~the~~credit ~~Retail~~losses ~~Platform’s~~on ~~average interest-earning assets, including~~ our auto~~-related~~ ~~operating lease~~contracts ~~assets,~~held-for-investment ~~and~~is ~~the~~established ~~corresponding~~through ~~increase in~~ the ~~Commercial~~provision ~~Platform’s~~for credit ~~average~~losses. ~~interest-earning~~At ~~assets~~December 31, in2005 ~~2000~~and 2004, asBVAC ~~compared~~had $633.6 million toand ~~1999~~$252.9 million, ~~reflect~~respectively, ~~the~~of auto ~~shift~~contracts indesignated ~~our~~as ~~asset mix toward more commercial bank~~held-~~like products~~for-investment. ~~The~~Our ~~Retail Platform’s average~~provision ~~interest-earning~~for ~~assets~~credit ~~were~~losses ~~also impacted from 1999 through 2000 by loan sales and securitizations throughout this period, as discussed elsewhere herein or previously disclosed.~~totaled

~~The increase in the Retail Platform’s average interest-earning assets, including our auto-related operating lease~~30 assets, in 1999, as compared with 1998, was directly attributable to the growth in our auto-related operating lease assets resulting from the continued growth in our auto leasing activities. The increase in the Commercial Platform’s average interest-earning assets in 1999, as compared with 1998, was primarily due to purchases of franchise loans and the acquisition of FMAC partially offset by the sale of lower-yielding multi-family mortgage-based loans during the period.

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

	At December 31, 2000	At December 31, 1999
	(Dollars in thousands)
Retail Platform	$2,207,366	$3,658,735
Commercial Platform	2,178,619	2,219,536
Total	$4,385,985	$5,878,271

$7.9 million and $1.6 million, respectively, for the years ended December 31, 2005 and 2004. The increases in provision expense and related increases in allowance for credit losses reflected both the continued growth and seasoning of our portfolio of auto contracts. In addition, a change in the federal bankruptcy laws, which made it more difficult for debtors to have debts discharged under Chapter 7 filings, produced an increase in bankruptcy filings prior to the change in law and increased BVAC’s bankruptcy-related loan losses in the fourth quarter of 2005. See “Balance Sheet Analysis — Allowance for Credit Losses” for related information on BVAC’s allowance for credit losses on auto contracts held-for-investment.

~~Balance~~Noninterest ~~Sheet Analysis~~Income

~~Our~~ Noninterest ~~total~~income ~~assets~~was ~~were~~ $57.40 million ~~billion~~for atthe ~~December~~year ended December 31, ~~2000~~2005, as compared ~~with~~to $617.50 million ~~billion~~for ~~at December 31, 1999 and $5.6~~the ~~billion~~year atended December 31, ~~1998~~2004. The decrease in ~~total~~noninterest income ~~assets~~for ~~from~~2005 ~~1999~~was tolargely ~~2000~~due ~~was~~to ~~primarily~~decreased ~~related~~leasing toand loan servicing ~~securitizations~~income. ~~and/or~~The ~~sales~~decrease ~~and~~in leasing income was a direct result of the ~~write-off~~runoff of ~~assets~~our ~~associated~~auto ~~with~~lease portfolio, offset, in part, by favorable experience on the ~~restructuring~~disposition of ~~our~~vehicles coming ~~franchise~~off ~~lending~~lease ~~division~~during 2005. ~~The~~We ~~increase~~ceased inpurchasing auto leases ~~total~~in ~~assets~~June ~~from~~2000, ~~1998~~and tothe ~~1999~~portfolio was ~~largely~~fully ~~related~~liquidated toat December 31, ~~the~~2005. ~~purchase~~For ofthe ~~$814~~years ~~million~~ended inDecember 31, 2005 ~~franchise~~and ~~loans~~2004, ~~during~~we ~~1999~~liquidated $10.0 million and $56.6 million ~~the~~of ~~acquisition~~auto ofleases, ~~FMAC~~respectively.

~~During~~ As ~~the~~discussed ~~year~~in ~~ended~~additional ~~December~~detail ~~31,~~in Item 7A. “Quantitative ~~2000~~and Qualitative Disclosures About Market Risk — Asset/ Liability Management,” we ~~sold~~employ ~~$423.2~~derivative ~~million~~instruments primarily to protect the value of ~~single~~BVAC’s fixed-~~family~~rate ~~mortgage~~auto ~~loans,~~contracts ~~$244~~from rising interest rates.0 ~~million~~Our ofstrategy ~~high loan-~~is to- protect the economic value ~~home~~of ~~equity~~these ~~loans,~~auto ~~$120.0~~contracts ~~million~~rather ofthan ~~franchise~~the ~~loans,~~accounting ~~$58~~values.5 We ~~million~~account offor ~~multi-family~~changes ~~mortgage~~in ~~loans,~~the ~~and~~market ~~$26.5~~value ~~million~~ of ~~commercial~~our ~~equipment~~derivative instruments ~~leases.~~as Inprescribed ~~addition,~~by weSFAS No. 133. ~~securitized~~Our derivative ~~and/or~~instruments ~~sold~~are ~~$405.7~~not ~~million~~treated ofas ~~auto~~designated ~~loans~~hedge instruments under SFAS No. 133 and ~~completed~~are, aaccordingly, ~~$268.2~~carried ~~million~~at ~~on-balance~~fair ~~sheet~~value, ~~franchise~~with ~~loan~~changes ~~securitization~~in ~~during~~such ~~the~~fair ~~second~~value ~~quarter~~charged or ofcredited ~~2000~~to earnings. ~~This~~Our ~~transaction~~use ~~effectively~~of ~~transferred~~fair ~~$268.2~~value ~~million~~accounting infor our ~~franchise~~derivative ~~loans~~instruments tohas ~~investment~~resulted ~~securities,~~in ~~initially~~certain ~~generating~~fluctuations in ~~$264~~noninterest income.2 ~~million~~During in2005 ~~asset-backed securities~~and ~~classified~~2004, aswe ~~held-to-maturity~~recorded $1.2 million ~~with~~and ~~the~~$1.4 million, ~~balance~~respectively, ~~going~~of tonet gains ~~retained~~on ~~interests~~our inderivative ~~securitizations~~instruments, ~~classified~~reflecting asthe ~~available~~increase in intermediate-~~for-sale.~~term ~~During~~rates ~~the~~that ~~fourth~~occurred ~~quarter~~during ofthis ~~2000,~~period. ~~these~~Future changes ~~franchise-related~~in ~~asset-backed~~interest ~~securities~~rates ~~were~~could ~~transferred~~continue to ~~available-for-sale~~ ~~under~~produce fluctuations in the ~~provisions~~fair value of ~~Statement~~our ~~No.~~derivatives ~~133~~ and, ~~subsequently~~therefore, ~~sold~~the level of our noninterest income.

AsNoninterest previously discussed, in conjunction with the restructuring of our franchise lending division in the third quarter of 2000, we wrote-off $192.6 million of goodwill, which represented the remaining balance associated with FMAC during 2000. During 2000, we also revalued certain FMAC-related assets, including retained interests in securitizations, loans held-for-sale and servicing assets, which resulted in a write-down of $101.9 million.Expense

~~Securities~~ Noninterest expense was $28.6 million for the year ended December 31, 2005 compared to $35.6 million for the year ended December 31, 2004. For 2005, our noninterest expense included $27.4 million of general and administrative expense, $0.7 million of leasing expense and $0.5 million of real estate owned expense. For 2004, noninterest expense included $25.2 million of general and administrative expense, $9.2 million of leasing expense and $1.2 million of real estate owned expense.

~~Our securities activities are primarily conducted by Bay View Bank. Bay View Bank has historically purchased securities~~ toThe ~~supplement~~following ~~our~~table ~~loan~~sets ~~production.~~forth ~~The~~the ~~majority~~ratio of ~~the~~our ~~securities~~general ~~purchased~~and administrative ~~are~~expenses ~~high-quality~~to ~~mortgage-backed~~average ~~securities,~~managed ~~including securities issued by GNMA~~assets, ~~Fannie Mae and Freddie Mac and senior tranches of private issue collateralized mortgage~~including ~~obligations,~~auto-related orsecuritized ~~CMOs. In addition to these securities~~assets, wefor ~~also~~the ~~hold~~periods ~~retained interests in loan and lease securitizations and hold investment securities such as U.S. government agency notes and other short-term securities.~~indicated:

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


	For the Year Ended

	December 31,			December 31,
	2005			2004

	(Dollars in thousands)
General and administrative expenses	$	27,395		$	25,211
Average managed assets, including auto-related securitized assets	$	792,560		$	709,735
General and administrative expense to average managed assets, including auto-related securitized assets		3.46	%		3.55	%

	At December 31,
	2000	1999	1998
	(Dollars in thousands)
Available-for-sale
Investment securities(1)	$ 33,009	$ 49,063	$ 5,319
Mortgage-backed securities:
GNMA, Fannie Mae and Freddie Mac	341	10,143	13,143
CMOs	237	336	473
Total	$ 33,587	$ 59,542	$ 18,935
Held-to-maturity
Investment securities(1)	$ —	$ 9,997	$ —
Mortgage-backed securities:
GNMA, Fannie Mae and Freddie Mac	627,300	472,019	403,512
Other financial intermediaries	11,827	20,633	41,759
CMOs	2,923	151,582	176,502
Total	$642,050	$654,231	$621,773

The increase in general and administrative expense for the year ended December 31, 2005, compared to the same period in 2004, was primarily due to additional liquidation expense and higher professional and legal services expense in 2005, including costs attributable to the proposed merger with GLB and sale of BVAC to AFS. These increases in expense were partially offset by higher capitalized fees and costs directly related to higher loan production volume, lower compensation and benefits due to planned attrition and decreased occupancy and equipment expense.

(1) See Note 5 to our Consolidated Financial Statements, “Investment Securities”, at Item 8, “Financial Statements and Supplementary Data” for further detail on our investment securities portfolio.31

DuringTable 2000, we purchased $327.8 million of GNMA securities and $35.3 million of Federal Home Loan Bank callable notes for our held-to-maturity portfolio. These securities receive favorable regulatory capital risk-weighting and help diversify our balance sheet. In addition, we completed an on-balance sheet franchise loan securitization during the second quarter of 2000. This transaction initially generated $264.2 million in asset-backed securities held-to-maturity and $12.1 million in retained interests classified as available-for-sale. Under the provisions of Statement No. 133, we transferred these franchise-related asset-backed securities to available-for-sale and subsequently sold them in December 2000 as a result of declining spreads on these fixed-rate securities. During 2000, we revalued franchise-related retained interests in loan and lease securitizations by $26.3 million, as previously discussed.Contents

~~During~~ Liquidation ~~1999,~~of wethe ~~purchased~~last ~~$172.0~~of ~~million~~our inauto ~~mortgage-backed~~lease ~~securities~~portfolio ~~and~~was completed ~~$10.0 million~~ in ~~Federal~~the ~~Home~~fourth ~~Loan~~quarter ~~Bank callable~~of ~~notes~~2005. ~~which~~Throughout we2005 ~~used~~and 2004, asour ~~collateral~~leasing ~~for~~expense ~~borrowings.~~declined Inin ~~connection~~line with ~~our~~the ~~acquisition~~runoff of the ~~FMAC,~~balance weof ~~acquired~~the ~~$35~~remaining portfolio.0 ~~million~~Because inour ~~retained~~auto ~~interests~~leases were inaccounted ~~franchise~~for ~~loan~~as ~~and~~operating ~~lease~~leases, ~~securitizations~~the ~~and~~corresponding ~~asset-backed~~leased vehicles ~~securities.~~were Incapitalized ~~December~~and ofdepreciated ~~1999,~~to wetheir estimated ~~securitized~~residual ~~and~~values ~~sold~~over ~~$247~~their ~~million~~lease interms. ~~auto~~This ~~loans~~depreciation expense ~~and~~is ~~retained~~included ~~an interest~~ in ~~this~~leasing ~~securitization~~expense, along with anthe amortization of capitalized initial ~~balance~~direct oflease ~~$10.0~~costs ~~million~~and lease impairment charges.

InIncome connection with our adoption of Statement No. 133 on October 1, 2000, we also transferred $231.0 million of mortgage-backed securities to our available-for-sale portfolio. We sold $108.2 million of GNMA securities and $131.7 million of private-label mortgage-backed securities from our available-for-sale portfolio during 2000. There were no sales of mortgage-backed securities from our available-for-sale portfolio in 1999. In 1998, we sold $237.7 million in mortgage-backed securities from our available-for-sale portfolio, including securities acquired in connection with our acquisition of AFEH. A portion of these mortgage-backed securities was replaced by $201.7 million in CMOs purchased during 1998, which were classified as held-to-maturity. Also during 1998, we sold $2 million in investment securities available-for-sale and a $5.0 million Federal Farm Credit Bank callable bank note was called. We do not maintain a trading portfolio. Unrealized gains of $10,000 and unrealized losses of $293,000 and $202,000 on securities classified as available-for-sale were included in stockholders’ equity (net of tax) at December 31, 2000, 1999, and 1998, respectively.Taxes

At We ~~December~~recorded income tax expense of $22.5 million and income tax benefit of $2.5 million for the years ended December 31, ~~2000~~2005 and 2004, ~~1999~~respectively. As a result of our consolidated pre-tax loss of $11.9 million for the year ended December 31, 2005 and ~~1998~~in accordance with the provisions of SFAS No. 109, “Accounting for Income Taxes,” we ~~did~~concluded ~~not~~that ~~hold~~net ~~any~~deferred ~~securities~~tax ~~that~~assets ~~were~~of $46.8 million ~~issued~~should bybe fully reserved at December 31, 2005. With $21.5 million of previously established valuation allowance, we recorded a ~~single~~charge ~~party~~to ~~which~~earnings ~~exceeded~~of ~~10%~~$25.3 million in the fourth quarter of 2005 to establish a full valuation allowance on our ~~stockholders’~~net ~~equity~~deferred ~~balance~~tax assets at December 31, ~~excluding~~2005. ~~securities~~Under ~~issued~~SFAS No. 109, bya valuation allowance must be recognized on deferred tax assets if, based upon the ~~U.S.~~weight ~~government~~of available evidence, it is more likely than not that some or Uall of the assets may not be realized.S. ~~government~~The ~~agencies~~realization of deferred tax assets is dependent on the generation of future taxable income and, ~~corporations~~given our history of recent losses, management made a judgment that a full valuation allowance was prudent at this time.

~~Mortgage-backed~~ In ~~securities~~reaching ~~pose~~this ~~risks not associated with fixed maturity bonds~~conclusion, ~~primarily~~we ~~related~~did tonot ~~the~~take ~~ability~~into ~~of the~~consideration ~~borrower to prepay~~ the ~~underlying~~future ~~loan~~taxable ~~with~~income orthat ~~without penalty. This risk, known as prepayment risk,~~ may ~~cause~~arise ~~the~~from ~~mortgage-backed securities to remain outstanding for a period of time different than that assumed at~~ the ~~time of purchase. When~~previously ~~interest~~announced ~~rates~~pending ~~decline,~~sale ~~prepayments~~of ~~generally~~BVAC ~~tend~~ to ~~increase,~~AFS ~~causing~~and the ~~average~~pending ~~expected~~merger with ~~remaining~~GLB. ~~maturity~~The establishment of the ~~mortgage-backed~~full ~~securities~~valuation toallowance ~~decline.~~does not ~~Conversely,~~affect ifour ~~interest~~net ~~rates~~operating ~~rise,~~loss ~~prepayments tend to decrease~~carryforwards, ~~lengthening~~which ~~the average~~totaled ~~expected remaining maturity of the mortgage-backed securities~~$143.4 million ~~The following table illustrates the remaining contractual principal maturities and weighted-average yields on our mortgage-backed securities held~~ at December 31, ~~2000.~~2005, ~~The~~and remain ~~weighted-average~~available ~~yield~~to isoffset ~~computed~~future ~~using~~taxable ~~the~~income. ~~amortized~~Upon ~~cost~~consummation of the ~~available-for-sale securities~~merger, ~~which~~the ~~are~~carrying ~~reported at fair~~ value. ~~Expected~~of ~~remaining~~the ~~maturities~~deferred oftax ~~mortgage-backed~~assets ~~securities~~ will be ~~generally~~reevaluated ~~differ~~as ~~from~~part ~~their~~of ~~contractual~~purchase ~~maturities because~~accounting ~~borrowers~~based ~~may~~on ~~have~~estimates of the ~~right~~future totaxable ~~prepay~~income ~~obligations~~of ~~with~~the orcombined ~~without penalties~~company.

	Within One Year		After One Year Through Five Years			After Five Years Through Ten Years			After Ten Years			Total
	Amount	Weighted- Average Yield	Amount	Weighted- Average Yield		Amount	Weighted- Average Yield		Amount	Weighted- Average Yield		Amount	Weighted- Average Yield
	(Dollars in thousands)
Available-for-sale:
GNMA, Fannie Mae	$ —	—	$ —	—		$ 340	6.56	%	$ —	—		$ 340	6.56	%
CMOs	—	—	—	—		—	—		262	5.52	%	262	5.52
Total amortized cost	$ —	—	$ —	—		$ 340	6.56	%	$ 262	5.52	%	$ 602	6.11	%
Fair value	$ —		$ —			$ 341			$ 237			$ 578
Held-to-maturity
GNMA, Fannie Mae and Freddie Mac	$ —	—	$ 373	9.51	%	$85,359	6.89	%	$541,568	7.51	%	$627,300	7.43	%
Other financial Intermediaries	—	—	545	7.73		—	—		11,282	8.88		11,827	8.83
CMOs	—	—	—	—		—	—		2,923	6.75		2,923	6.76
Total amortized cost	$ —	—	$ 918	8.46	%	$85,359	6.89	%	$555,773	7.54	%	$642,050	7.45	%
Fair value	$ —		$ 942			$84,262			$563,993			$649,197

The effective tax rate used in computing income taxes for the years ended December 31, 2005 and 2004 was (188.8)% and 39.2%, respectively. Our 2005 tax rate differed from the 34% federal statutory rate due to the establishment of the full valuation allowance on net deferred tax assets, the effect of state income and franchise taxes, and nondeductible merger-related expenses. Our 2004 effective tax rate differed from the 35% federal statutory rate due primarily to the effect of state income and franchise taxes.

~~Loans~~ Results ~~and~~of ~~Leases~~Operations — Three Months ended December 31, 2003

~~Loan~~ Our net loss for the three months ended December 31, 2003, including net adjustments required to readopt going concern basis accounting effective October 1, 2003, totaled $0.7 million, or $0.10 per diluted share, and consisted ~~Lease~~of ~~Portfolio~~income ~~Composition~~from ongoing operations of BVAC totaling $0.8 million offset by a net loss of $1.5 million from our liquidating activities.

~~Our~~ As ~~loan~~discussed ~~and~~under ~~lease~~“Critical ~~portfolio~~Accounting Policies — ~~reflects~~Going ~~the~~Concern ~~activity of our two business segments, or platforms~~vs. ~~The~~Liquidation ~~Retail Platform~~Basis ~~consists of single-family real estate loans~~Accounting,” ~~home equity loans and lines of credit, and auto loans and leases. We ceased our single-family loan origination operations~~ in ~~1996~~connection ~~in conjunction~~ with our ~~strategic plan to change~~re-~~out~~adoption ~~these~~of ~~assets for~~going ~~commercial~~concern ~~bank-like~~basis ~~assets~~accounting, ~~with~~we ~~higher~~recognized ~~risk-adjusted yields~~$0.7 million ~~The Commercial Platform includes multi~~of pre-~~family~~tax ~~and~~expense ~~commercial real estate loans, franchise loans, asset-based loans, factoring loans~~ and ~~commercial leases~~$1.1 million ~~The~~of ~~following~~additions ~~table shows the~~to ~~composition~~stockholders’ ofequity ~~our~~in ~~gross~~the ~~loan~~three ~~and~~months ~~lease~~ended December 31, ~~portfolio as of the dates indicated:~~2003.

	At December 31,
	2000			1999			1998			1997			1996
	Amount	% of Total		Amount	% of Total		Amount	% of Total		Amount	% of Total		Amount	% of Total
	(Dollars in thousands)
Loans and Leases Receivable:
Retail Platform:
Single-family mortgage loans(1)	$ 392,047	12.5	%	$ 940,235	21.6	%	$1,515,413	36.2	%	$ 550,506	22.9	%	$ 692,086	27.6	%
Home equity loans and lines of credit	302,897	9.6	%	648,676	14.9	%	622,797	14.9	%	103,715	4.3	%	57,815	2.3	%
Auto loans(2)	287,020	9.1	%	496,901	11.4	%	546,806	13.0	%	298,627	12.4	%	315,439	12.6	%
Total retail loans	981,964	31.2	%	2,085,812	47.9	%	2,685,016	64.1	%	952,848	39.6	%	1,065,340	42.5	%
Commercial Platform:
Multi-family mortgage loans	611,484	19.4	%	622,835	14.3	%	1,015,980	24.2	%	1,026,148	42.6	%	1,048,291	41.9	%
Commercial mortgage loans	339,764	10.8	%	365,712	8.4	%	338,220	8.1	%	348,754	14.5	%	381,822	15.2	%
Franchise loans(1)	779,922	24.8	%	952,243	21.9	%	—	0.0	%	—	0.0	%	—	0.0	%
Asset-based loans, factoring loans and commercial leases	353,362	11.2	%	254,671	5.8	%	113,210	2.7	%	54,120	2.3	%	—	0.0	%
Business loans	81,365	2.6	%	72,977	1.7	%	39,039	0.9	%	24,855	1.0	%	10,203	0.4	%
Total commercial loans and leases	2,165,897	68.8	%	2,268,438	52.1	%	1,506,449	35.9	%	1,453,877	60.4	%	1,440 ,316	57.5	%
Gross loans and leases(3)	$3,147,861	100.0	%	$4,354,250	100.0	%	$4,191,465	100.0	%	$2,406,725	100.0	%	$2,505,656	100.0	%


	*Net Interest Income*

~~(1)~~ For ~~Balances~~the ~~include~~three months ended December 31, 2003, interest income was $84.9 million and the average yield on interest-earning assets was 4.56% while interest expense on our borrowings was $3.6 million and the average cost of borrowings, ~~single-family~~largely ~~mortgage~~comprised ~~loans~~of ~~held-~~interest on our 9.76% Junior Subordinated Deferrable Interest Debentures (the “Junior Debentures”), was 11.20%. The negative interest rate spread for the quarter, the difference between the yield on interest-~~sale~~earning assets and the cost of our borrowings, was attributable to large balances of cash and cash equivalents which were accumulated in the quarter in order to distribute $~~336~~263.32 million, or $40.00 per share in cash, to common stockholders on December 30, 2003 and redeem $63.5 million of ~~franchise~~the ~~loans~~Capital ~~held~~Securities issued by Bay View Capital I on December 31, 2003. Money market yields earned on the cash and cash equivalent balances caused a significant decline in the overall yield of interest-~~for-sale~~earning assets in the quarter ended December 31, 2003.

~~(2) Auto loan totals exclude auto-related operating lease assets.~~32

(3)Table Grossof loans and leases exclude premiums and discounts, deferred fees and costs, and the allowance for losses on loans and leases.Contents

~~The~~ Implementation ~~decrease~~of inSFAS No. 150, ~~retail~~“Accounting ~~and~~for Certain ~~commercial~~Financial ~~loans~~Instruments ~~and leases in 2000, as compared~~ with ~~1999,~~Characteristics ~~was~~of ~~primarily~~both Liabilities ~~due~~and toEquity” ~~loan~~resulted ~~sales effected~~in ~~throughout~~ the ~~year.~~reclassification ~~During~~of our ~~2000,~~Capital weSecurities ~~sold~~from ~~$423.2~~their ~~million~~prior ofclassification ~~single-family~~as ~~mortgage~~a “mezzanine” ~~loans,~~item ~~$244.0 million of high loan-~~to~~-value~~ ~~home~~liabilities ~~equity~~as ~~loans~~of December 31, ~~$120~~2003.0 ~~million of franchise loans~~Accordingly, ~~$58.5~~dividend ~~million~~expense ofon ~~multi-family mortgage loans, and $26.5~~the ~~million~~Capital ~~of commercial equipment leases. In addition~~Securities, wetotaling ~~securitized and/or sold~~ $~~405~~2.7 1 million ~~of auto loans~~ and ~~completed a~~ $~~268~~8.2 8 million ~~on-balance~~for ~~sheet franchise loan securitization during~~ the ~~second~~three ~~quarter~~and oftwelve ~~2000~~months ~~that effectively transferred~~ended ~~this~~December 31, ~~balance~~2003, ~~to investment securities. Our loan sales during the year were consistent with our efforts to restructure our balance sheet and position ourselves for 2001. The reduction in single-family loans~~respectively, ~~high~~has ~~loan-to-value~~been ~~home~~included ~~equity loans, and~~in ~~franchise~~interest ~~loans~~expense ~~reduced~~on ~~both our geographic concentration risk and overall credit risk profile, and improved regulatory capital~~borrowings.

The ~~decrease~~following intable ~~single-family~~sets ~~loans~~forth inaverage ~~1999,~~yields ason ~~compared with 1998, was primarily due to loan repayments and scheduled~~our ~~amortization. We also sold $105 million in single~~interest-~~family~~earning ~~COFI-based~~assets ~~loans~~and inaverage ~~1999~~rates toon ~~reduce~~ our interest-bearing ~~exposure~~liabilities tofor ~~this~~the ~~lagging~~period ~~index~~indicated. ~~The~~These average ~~decrease~~yields inand ~~multi-family~~rates ~~loans~~are ~~from~~derived ~~1999,~~by asdividing ~~compared~~interest ~~with~~income by ~~1998,~~the ~~was~~average ~~primarily~~balances ~~related to our sale~~ of ~~$450 million in multi~~interest-~~family~~earning ~~COFI-based~~assets ~~loans,~~and ~~again,~~by dividing tointerest ~~reduce~~expense ~~our~~by ~~exposure~~the toaverage ~~COFI,~~balances ~~reduce our geographic concentration risk, and also to realize our strategy~~ of ~~changing~~ interest-~~out~~bearing ~~our~~liabilities ~~assets~~for ~~from~~the ~~real~~period ~~estate-based loans to commercial and consumer assets~~indicated. ~~We also sold~~Average ~~$79.9~~balances ~~million~~ of ~~Bankers Mutual multi~~interest-~~family~~earning ~~production~~assets and ~~$43.2~~interest-bearing liabilities ~~million~~were ofcalculated ~~home~~by ~~equity~~averaging ~~loans~~the inrelevant ~~1999.~~month-end amounts ~~Additionally,~~for wethe ~~securitized and sold $247 million in auto loans in 1999~~period. ~~There were no loan sales in 1998.~~

Loans and leases held-for-sale totaled $345.2 million as of December 31, 2000, of which approximately $336.3 million represented franchise loans held-for-sale and the remainder represented multi-family loans held-for-sale. We are actively pursuing opportunities to sell our remaining held-for-sale franchise loan portfolio as the potential sale of these loans would not only free-up capital to facilitate the paydown of our higher-cost funding, but also effectively reduce our concentration in franchise assets. During 2000, we recognized a mark-to-market adjustment on this portfolio of $66.5 million reflecting estimated bulk-sale pricing.


		Average Balances, Yields and Rates

		For the Three Months Ended
		December 31, 2003

		Average				Average
		Balance		Interest		Yield/Rate

		(Dollars in thousands)
Assets
Interest-earning assets:
	Auto installment contracts and other loans receivable	$	175,621	$	3,757		8.48	%
	Investments(1)		242,863		1,013		1.65
	Mortgage-backed securities(1)		11,105		166		5.95

Total interest-earning assets			429,589		4,936		4.56	%

Other assets			29,740

Total assets		$	459,329


Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
	Borrowings(2)	$	128,781		3,612		11.20	%

Total interest-bearing liabilities			128,781		3,612		11.20	%

Other liabilities			47,550

Total liabilities			176,331
Stockholders’ equity			282,998

Total liabilities and stockholders’ equity		$	459,329

Net interest income/net interest spread				$	1,324		(6.64	)%

Net interest-earning assets		$	300,808

Net interest margin(3)							1.71	%

The following table illustrates the composition of our fixed- and adjustable-rate gross loan and lease portfolio (before premiums and discounts, deferred fees and costs and the allowance for losses on loans and leases) as of the dates indicated:


(1)	Average balances and yields for securities and other investments classified as available-for-sale are based on historical amortized cost.

(2)	Interest expense for borrowings includes expenses related to our Capital Securities.

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

	At December 31,
	2000	1999	1998
	(Dollars in thousands)
Fixed-rate loans and leases:
Mortgage	$ 256,059	$ 316,360	$ 620,603
Home Equity	228,321	564,333	506,338
Auto	287,020	496,901	545,431
Commercial	105,777	96,499	19,192
Franchise	490,634	761,794	—
Business	81,365	72,977	39,039
	1,449,176	2,308,864	1,730,603
Adjustable-rate loans and leases:
Mortgage	1,087,236	1,612,422	2,249,010
Home Equity	74,576	84,343	116,459
Auto	—	—	1,375
Commercial	247,585	158,172	94,018
Franchise	289,288	190,449	—
	1,698,685	2,045,386	2,460,862
Total	$3,147,861	$4,354,250	$4,191,465

TheTable following table illustrates the remaining contractual maturity distribution of our fixed- and adjustable-rate gross loan and lease portfolio (before premiums and discounts, deferred fees and costs and the allowance for losses on loans and leases) at December 31, 2000:Contents

	At December 31, 2000
	One Year or Less	After One Year Through Five Years	After Five Years	Total
	(Dollars in thousands)
Fixed-rate loans and leases:
Mortgage	$ 1,433	$ 11,482	$ 243,144	$ 256,059
Home Equity	1,838	10,369	216,114	228,321
Auto	2,813	73,921	210,286	287,020
Commercial	55,140	50,637	—	105,777
Franchise	735	14,488	475,411	490,634
Business	43,941	34,196	3,228	81,365
	105,900	195,093	1,148,183	1,449,176
Adjustable-rate loans and leases:
Mortgage	16,008	16,648	1,054,580	1,087,236
Home Equity	3,257	6,573	64,746	74,576
Commercial	60,363	168,756	18,466	247,585
Franchise	29,294	24,578	235,416	289,288
	108,922	216,555	1,373,208	1,698,685
Total	$214,822	$411,648	$2,521,391	$3,147,861


	*Noninterest Income and Expense*

~~Loan~~ For the three months ended December 31, 2003, noninterest income was $10.3 million and ~~Lease~~included ~~Originations~~leasing income of $6.9 million, loan servicing and ~~Purchases~~other fee income of $1.3 million, gains related to recoveries of mark-to-market adjustments on franchise loans of $0.9 million and other income of $1.2 million. Noninterest expense was $12.5 million and included leasing expenses of $5.9 million and operating expenses of $6.6 million.

~~The~~Leasing ~~following table illustrates gross loans and leases, including operating lease assets, originated and purchased for the years indicated:~~Expense

	For the Year Ended December 31,
	2000	1999	1998
	(Dollars in thousands)
Loan and Lease Production:
Originations:
Home equity loans and lines of credit	$ 71,883	$ 64,624	$ 39,301
Auto loans and leases(1)	403,336	682,827	565,272
Multi-family and commercial mortgage loans	168,520	250,562	150,677
Franchise loans(2)	299,878	142,241	—
Bankers Mutual multi-family loans(2)(3)	220,146	78,500	—
Asset-based loans, factoring loans and commercial leases	150,545	164,297	75,584
Business loans	67,078	68,690	29,790
Total originations	1,381,386	1,451,741	860,624
Purchases:
Home equity loans	826	178,815	454,901
Auto loans(4)	25,017	135,504	71,773
Mortgage loans	2,006	26,472	421,458
Franchise loans	—	813,988	—
Total purchases	27,849	1,154,779	948,132
Total loan and lease production	$1,409,235	$2,606,520	$1,808,756

Leasing expense was $5.9 million for the three months ended December 31, 2003. At December 31, 2003, approximately 109 of the 5,341 vehicles in our auto lease portfolio, or 2%, were considered impaired under SFAS No. 144. If the market values of the individual vehicles declined by $250, an additional 7% of the leases would have been deemed to be impaired and, therefore, potentially subject to an impairment charge.

~~(1)~~Income Includes auto-related operating lease assets totaling $114.6 million for 2000, $335.2 million for 1999, and $187.9 million for 1998, which are not included in our total loan and lease portfolio in accordance with GAAP.Taxes

~~(2)~~ We ~~Represents~~recorded ~~franchise~~a ~~loans~~tax ~~and~~benefit ~~Bankers~~of ~~Mutual~~$0.2 million ~~multi-family~~for ~~loans originated subsequent to~~ the ~~acquisition~~three months ofended ~~FMAC on November 1~~December 31, ~~1999~~2003. ~~Effective~~Our ~~September~~effective ~~30,~~tax ~~2000,~~rate ~~our~~of 55.7% ~~franchise~~differed ~~lending~~from ~~division~~the ~~was~~federal ~~shut~~statutory ~~down.~~rate ~~Effective~~due ~~June~~primarily ~~30,~~to nondeductible ~~2000,~~compensation ~~substantially~~and ~~all~~reduced levels of ~~the~~state ~~assets~~ income and ~~liabilities~~franchise ~~of Bankers Mutual were sold~~taxes.

~~(3)~~ Liquidation ~~100%~~Basis ~~of Bankers Mutual multi-family mortgage loans were originated and sold through seller-servicer programs administered by Fannie Mae and Freddie Mac.~~

~~(4)~~ Changes ~~Auto~~in ~~loan~~Net ~~and~~Assets ~~lease~~in ~~purchases~~Liquidation — ~~for~~Nine ~~the year~~ Months ended ~~December 31~~September 30, ~~2000, included $22.2 million related to the repurchase of loans as a result of exercising the cleanup call on our 1997 auto loan securitization.~~2003

Our ~~loan~~net ~~and lease origination and purchase activity during 2000 and 1999 were primarily focused on consumer and commercial~~ assets ~~which~~in ~~provide~~liquidation ~~higher~~totaled ~~risk-adjusted yields compared to the traditional mortgage-based assets~~$409.8 million, ~~Our mortgage loan originations and purchases consist primarily of multi-family and commercial real estate loans. Single-family mortgage~~or ~~loan originations ceased during 1996~~$63.60 ~~We supplemented our originations~~ in ~~1999~~net ~~and~~assets ~~1998 with a significant amount of loan and lease purchases. The franchise loans purchased~~ in ~~1999~~liquidation ~~were~~per ~~originated~~outstanding bydiluted share, ~~FMAC.~~at ~~The~~September 30, ~~mortgage~~2003 ~~loan~~compared ~~purchases in 1998~~to ~~included~~ $~~200~~ 410.1 million, ofor ~~loans~~$64.30 ~~acquired~~in ~~primarily~~net toassets ~~assist Bay View Bank~~ in ~~meeting~~liquidation ~~its~~per outstanding ~~Community~~diluted ~~Reinvestment Act~~share, ~~sometimes~~at ~~referred to as CRA~~December 31, ~~regulatory requirements~~2002.

~~Credit~~ The ~~Quality~~change in net assets in liquidation for the first nine months of 2003 included a pre-tax operating loss of $4.6 million and $6.0 million of charges for assets in liquidation partially offset by $6.3 million of income tax benefits and $4.1 million of other changes in net assets in liquidation, primarily proceeds from stock options and warrants exercised during the first nine months of 2003.

We The ~~define~~net ~~nonperforming~~charges ~~assets~~for aschanges ~~nonaccrual~~in ~~loans~~estimated ~~and~~values ~~leases,~~of ~~real~~assets ~~estate~~and liabilities ~~owned,~~during ~~defaulted~~the ~~mortgage-backed~~first ~~securities, and~~nine ~~other~~months ~~repossessed~~of ~~assets.~~2003 Weconsisted primarily ~~define~~of ~~nonaccrual~~$8.5 million ~~loans~~of ~~and~~additional mark-to-market writedowns ~~leases~~on asthe ~~loans~~auto ~~and~~lease ~~leases~~portfolio. 90This ~~days~~writedown orwas partially ~~more~~offset ~~delinquent~~by asa to$1.3 million ~~principal~~gain ~~and~~associated ~~interest~~with ~~payments~~the financing ~~(unless~~secured ~~the~~by ~~principal~~our ~~and~~auto ~~interest~~lease ~~are~~cash ~~well~~flows ~~secured~~resulting ~~and~~from favorable inexperience with the ~~process~~underlying ofcash ~~collection)~~flows, and ~~loans~~a ~~and~~$1.0 million ~~leases~~reduction ~~less~~of ~~than~~an 90accrual ~~days~~related ~~delinquent~~to ~~designated~~the settlement asof ~~nonperforming~~litigation ~~when~~that wewas ~~determine~~negotiated ~~that~~during the ~~full~~first quarter ~~collection~~ of ~~principal and/or interest is doubtful~~2003. ~~We do not record interest on nonaccrual loans and leases.~~

~~The~~ Implementation ~~following~~of ~~table~~SFAS No. 150 ~~illustrates~~resulted in the reclassification of our ~~nonperforming~~Capital ~~assets~~Securities from their prior classification as ofa “mezzanine” item to liabilities. Consequently, the ~~dates~~dividend ~~indicated:~~expense on the Capital Securities, totaling $6.7 million during the nine-month period ended September 30, 2003, has been included in interest expense on borrowings.

	At December 31,
	2000	1999	1998	1997	1996
	(Dollars in thousands)
Nonaccrual loans and leases	$100,148	$22,918	$14,700	$10,991	$16,125
Real estate owned	1,041	2,467	2,666	4,146	7,387
Other repossessed assets	524	554	654	629	798
Nonperforming assets	$101,713	$25,939	$18,020	$15,766	$24,310

Leasing expenses were $24.4 million for the first nine months of 2003. At September 30, 2003, approximately 4,275 of the 6,665 vehicles in our auto lease portfolio, or 64%, were considered impaired under SFAS No. 144. If the market values of the individual vehicles declined by $250, an additional 7% of the leases would have been deemed to be impaired and, therefore, potentially subject to an impairment charge.

~~The increase in total nonperforming assets in 2000, as compared to 1999, was primarily due to an increase in~~ ~~nonperforming~~We ~~assets~~recorded ~~within~~a ~~our~~tax ~~franchise~~benefit ~~loan sector. Nonperforming assets within the franchise loan sector represented approximately 71%~~ of ~~the 2000 total and included~~ $716.3 million infor ~~nonaccrual~~the ~~franchise~~first nine ~~loans~~months ~~and $1.0 million~~ of ~~franchise real estate owned at December 31~~2003, ~~2000.~~which Inwas ~~addition,~~recorded ~~nonperforming~~at ~~assets~~an ~~included~~effective ~~approximately~~tax ~~$23 million~~ rate of ~~franchise~~59.0%. ~~loans~~The ~~that~~2003 ~~are~~effective ~~technically~~tax ~~performing~~rate asdiffered ~~agreed~~from ~~but~~the ~~require~~federal statutory ~~classification~~rate asprimarily ~~nonperforming~~due ~~assets according~~ to ~~regulatory guidelines.~~reduced Welevels ~~have reserves totaling approximately 10%~~ of ~~our~~state income and franchise ~~loan portfolio classified as held-for-investment~~taxes.

~~Our total nonperforming assets in 1999 included $8.7 million of nonaccrual franchise loans and $1.4 million of franchise~~34 ~~real estate owned at December 31, 1999. Our loan and lease portfolio did not include franchise loans prior to 1999.~~

TheTable following table illustrates, by platform, nonperforming assets and nonperforming assets as a percentage of consolidated assets:Contents

	Nonperforming Assets as a Percentage of Consolidated Total Assets
	At December 31, 2000			At December 31, 1999			At December 31, 1998
	(Dollars in thousands)
Retail Platform:
Single-family mortgage	$ 4,599	0.09	%	$ 5,121	0.08	%	$10,813	0.19	%
Home equity	3,919	0.07		2,958	0.04		2,035	0.04
Auto	706	0.01		1,307	0.02		1,090	0.02
Total Retail Platform	9,224	0.17		9,386	0.14		13,938	0.25
Commercial Platform:
Multi-family mortgage	337	0.01		1,172	0.02		2,133	0.04
Commercial real estate	12,950	0.24		6,557	0.10		1,581	0.02
Franchise loans	72,330	1.35		6,185	0.10		—	—
Asset-based loans, factoring loans and commercial leases	6,565	0.12		1,639	0.02		368	0.01
Business loans	307	0.01		1,000	0.02		—	—
Total Commercial Platform	92,489	1.73		16,553	0.26		4,082	0.07
Total	$101,713	1.90	%	$25,939	0.40	%	$18,020	0.32	%

Balance Sheet Analysis

~~The~~ Our ~~following~~total ~~table~~assets ~~illustrates~~were $714.8 million at December 31, 2005 compared to $427.5 million at December 31, 2004. This increase in total assets was attributable to asset growth by ~~platform~~BVAC, ~~loans~~which was offset, in part, by further liquidation of the remaining assets of BVB. During the year, BVAC’s purchases of auto contracts produced $305.7 million of growth in our auto contracts receivable, net of repayments and loan ~~leases~~sales. ~~delinquent~~These 60purchases ~~days~~were orlargely ~~more~~funded by additional borrowings on our warehouse credit facility and securitization notes payable resulting from securitizations treated as asecured financings. ~~percentage~~During 2005, the liquidation of ~~gross~~the ~~loans~~remaining BVB ~~and~~assets included the monetization of $10.0 million of auto leases:, $2.8 million of real estate owned and $902 thousand of other loans receivable.

	Loans and Leases Delinquent 60 Days or More as a Percentage of Gross Loans and Leases
	At December 31, 2000			At December 31, 1999			At December 31, 1998
	(Dollars in thousands)
Retail Platform	$15,139	0.48	%	$16,747	0.38	%	$18,430	0.44	%
Commercial Platform	69,697	2.22		11,668	0.27		3,572	0.08
Total	$84,836	2.70	%	$28,415	0.65	%	$22,002	0.52	%


	*Restricted Cash*

~~Allowance~~ Our ~~for~~restricted ~~Losses~~cash balances were $35.1 million and $26.8 million at December 31, 2005 and 2004, respectively. Restricted cash attributable to BVAC’s auto finance business includes cash collateral provided to counterparties to BVAC’s hedging contracts to meet margin requirements, cash collateral provided to cure potential borrowing base deficiencies on ~~Loans~~BVAC’s warehouse credit facility, cash collateral provided in connection with credit enhancement of securitization notes payable and ~~Leases~~cash payments received from our customers that are in-transit to trust accounts for BVAC’s auto securitization trusts. The remaining assets from BVB’s liquidation also include restricted cash that has been pledged to secure a letter of credit, cash collateral pledged in connection with financing secured by our auto lease portfolio contractual cash flow as well as cash collateral pledged in connection with the Company’s servicing of a multi-family loan pool and other contractual obligations.

~~Credit~~ The ~~risk~~$8.3 million isincrease ~~defined~~in asrestricted ~~the~~cash ~~possibility~~from December 31, of2004 ~~sustaining~~to aDecember 31, ~~loss~~2005 ~~because~~was ~~other~~due primarily ~~parties~~ to ~~the~~a ~~financial~~$14.5 million ~~instrument~~increase ~~fail~~in tocash on deposit ~~perform~~provided inas ~~accordance~~credit ~~with~~enhancement ~~the~~for ~~terms~~BVAC’s ofauto receivable-backed ~~the~~notes ~~contract.~~payable ~~While~~issued wein ~~follow~~2005 ~~underwriting~~partially ~~and~~offset by ~~credit~~a ~~monitoring~~$3.2 million ~~procedures~~decrease ~~which~~in wecash ~~believe~~on ~~are~~deposit ~~appropriate~~for ininterest rate ~~both~~swap ~~growing~~contracts ~~and~~used ~~managing~~to protect the ~~loan~~market ~~and~~value ~~lease~~of BVAC’s ~~portfolio,~~warehouse ininventory of auto contracts and the ~~event~~net interest ofincome ~~nonperformance~~produced by ~~these other~~its ~~parties,~~warehouse ~~our~~inventory ~~potential~~and ~~exposure~~a $2.2 million todecrease ~~credit~~in ~~losses~~cash ~~could~~collateral ~~significantly~~pledged ~~affect~~for our auto ~~consolidated~~lease ~~financial~~portfolio ~~position~~structured ~~and~~financing ~~results~~due to the full liquidation of ~~operations~~the auto lease portfolio in 2005.

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

1. The ~~Reserves~~following ~~for~~table ~~loans~~provides ~~and~~information leases that have been individually evaluated and identified as loans or leases which have probable losses. These loans and leases are generally larger-balance commercial or income producing real estate loans or leases which are evaluated on ~~an individual basis. Reserves for these loans and leases are attributable to specific weaknesses in these loans or leases evidenced by factors such as a deterioration in~~ the ~~borrower~~balances of BVAC’s ~~ability~~retained tointerests ~~meet~~in its ~~obligations,~~outstanding securitizations ~~a deterioration in the quantity or quality~~ of ~~the~~auto ~~collateral~~contracts ~~securing~~as ~~the loan or lease, payment delinquency, or other events~~ of ~~default under~~ the ~~terms~~dates ~~of the loan or lease agreement or promissory note.~~indicated:

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


		At December 31,

		2005		2004

		(Dollars in thousands)
Transaction:
	2002-LJ-1	$	14,028	$	15,622
	2003-LJ-1		6,079		7,014

Total retained interests in securitizations		$	20,107	$	22,636

3. During ~~Unallocated~~2003 ~~Reserves.~~and ~~Management~~2002, ~~determines~~we ~~the~~securitized ~~unallocated~~and ~~portion~~sold ofauto ~~the~~contracts ~~allowance~~of $193.3 million ~~for losses on loans~~ and ~~leases~~$453.2 million, ~~based~~respectively. onWe retained ~~factors~~interests ~~that~~in ~~are~~these ~~not~~securitizations ~~necessarily associated~~ with ainitial balances ~~specific credit, group~~ of ~~loans~~$9.5 million orand ~~leases~~$23.2 million orfor ~~loan~~2003 and or2002, ~~lease category~~respectively. ~~These~~At ~~factors include~~December 31, ~~but~~2005 ~~are~~and ~~not limited to~~2004, ~~management’s~~our retained ~~evaluation~~interests ~~of economic conditions~~ in ~~regions~~securitizations ~~where~~were weclassified ~~lend~~as available-for-sale ~~money, loan~~ and ~~lease~~reported ~~concentrations,~~at ~~lending~~fair ~~policies~~value. orUnrealized ~~underwriting~~gains of ~~procedures,~~$151 ~~and~~thousand ~~trends in delinquencies~~ and ~~nonperforming~~unrealized ~~assets.~~losses ~~The unallocated portion~~ of ~~the~~$279 ~~allowance~~thousand ~~for~~in ~~losses~~these retained oninterests ~~loans~~were ~~and~~included ~~leases~~in ~~reflects~~our ~~management~~stockholders’s equity, ~~efforts~~net toof ~~ensure~~tax ~~that~~at ~~the~~December 31, ~~overall~~2005 ~~allowance appropriately reflects the probable losses inherent in the loan~~ and ~~lease portfolio~~2004, respectively.

~~The allowance for losses on loans and leases at December 31, 2000 was $73.7 million as compared with $52.2 million at~~35 December 31, 1999 and $45.4 million at December 31, 1998. The increase in the allowance for losses on loans and leases at December 31, 2000, as compared with December 31, 1999, was primarily related to higher provision levels associated with the franchise loan sector partially offset by reserve reductions related to transfers of loans to held-for-sale. These higher provision levels resulted in an increase in the allowance for losses on loans and leases to 2.63% of gross loans and leases held-for-investment at December 31, 2000 as compared with 1.22% at December 31, 1999. The increase in the allowance for losses on loans and leases at December 31, 1999, as compared with December 31, 1998, was largely due to reserves acquired in connection with the acquisition of FMAC, partially offset by reserve reductions related to transfers of loans to held-for-sale. The allowance for losses on loans and leases 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 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.

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

	Allowance for Losses on Loans and Leases as a Percentage of Specified Assets
	At December 31, 2000			At December 31, 1999			At December 31, 1998
	Assets	Percent		Assets	Percent		Assets	Percent
	(Dollars in thousands)
Nonperforming assets	$ 101,713	72	%	$ 25,939	201	%	$ 18,020	252	%
Gross loans and leases, excluding loans and leases held-for-sale	$2,802,654	2.63	%	$4,288,003	1.22	%	$4,191,465	1.08	%


	*Auto Contracts and Other Loans Receivable*

The following table ~~illustrates~~sets forth the ~~allowance~~composition ~~for~~of ~~losses~~our onauto contracts and other loans ~~and~~receivable ~~leases~~as ~~for~~of the ~~years~~dates indicated:

		For the Year Ended December 31,
				At December 31,
		2000		1999			1998			1997			1996
				2005								2004
		(Dollars in thousands)
								% of							% of
Beginning balance		$ 52,161		$ 45,405			$ 38,458			$29,013			$30,014
				Amount				Total				Amount			Total
Reserves related to acquisitions(1)		—		8,256			11,374			14,162			2,860
				(Dollars in thousands)
Transfers of loans to held-for-sale		(15,210	)	(2,656	)		—			—			—
Auto installment contracts and other loans receivable(1):
Charge-offs:
	Auto installment contracts held-for-sale			$	—				—	%		$	73,462			22.3	%
Mortgage		(422	)	(827	)		(2,480	)		(2,699	)		(6,401	)
		Premiums, discounts, and deferred fees and costs, net			—				—				1,559			0.5
Home Equity		(18,014	)	(19,568	)		(7,152	)		—			—
	Auto installment contracts held-for-sale, net				—				—				75,021			22.8
Auto		(2,953	)	(7,674	)		(8,604	)		(4,057	)		—
	Other loans held-for-sale:(2)
Asset-based loans, factoring loans and commercial leases		(4,425	)	(3,176	)		(828	)		(1,658	)		—
			Franchise loans		—				—				583			0.2
Franchise		(1,128	)	—			—			—			—
			Asset-based loans		—				—				319			0.1
Business(2)		(7,926	)	—			—			—			—
		Total other loans held-for-sale(2)			—				—				902			0.3
		(34,868	)	(31,245	)		(19,064	)		(8,441	)		(6,401	)
	Auto installment contracts and other loans held-for-sale, net(2)				—				—	%			75,923			23.1	%
Recoveries:
	Auto installment contracts held-for-investment				105,120				16.6	%			247,219			75.2	%
Mortgage		218		607			2,290			706			642
	Securitized auto installment contracts held-for-investment				520,387				82.1				—			—
Home Equity		3,157		1,530			456			—			—
	Premiums, discounts, and deferred fees and costs, net				14,393				2.3				7,152			2.2
Auto		1,488		1,722			2,599			955			—
	Allowance for credit losses				(6,279	)			(1.0	)			(1,508	)		(0.5	)
Asset-based loans, factoring loans and commercial leases		1,366		231			178			111			—
	Auto installment contracts held-for-investment, net				633,621				100.0	%			252,863			76.9	%
Franchise		2,826		—			—			—			—
Auto installment contracts and other loans receivable, net(1)(2)				$	633,621				100.0	%		$	328,786			100.0	%
		9,055		4,090			5,523			1,772			642
Net charge-offs		(25,813	)	(27,155	)		(13,541	)		(6,669	)		(5,579	)
Provision for loan and lease losses		62,600		28,311			9,114			1,952			1,898
Ending balance		$ 73,738		$ 52,161			$ 45,405			$38,458			$29,013
Net charge-offs to average total loans and leases		0.65	%	0.61	%		0.32	%		0.28	%		0.24	%

(1) We acquired Bay View Credit in June 1996, Bay View Commercial Finance Group in March 1997, Ultra Funding in October 1997, America First Eureka Holdings in January 1998 and Franchise Mortgage Acceptance Company in November 1999.


(1)	Auto contracts do not include auto-related operating lease assets.

(2)	Includes allowances for mark-to-market valuation reserves of $1.2 million at December 31, 2004.

~~(2)~~ The ~~Includes~~increase ~~$7.9~~in ~~million~~loans inreceivable ~~FMAC-originated~~from ~~funeral~~December 31, ~~home~~2004 ~~loans~~to December 31, 2005 was attributable to BVAC’s increased purchases of auto contracts partially offset by loan sales and repayments during 2005.

~~Deposits~~ During 2005, we sold $6.5 million of loans, consisting entirely of auto contracts receivable. During 2004, we sold $33.4 million of loans, consisting of $24.8 million of auto loans, $3.8 million of franchise loans and $4.8 million of business loans. Gains of $31 thousand and $344 thousand were realized on these sales in 2005 and 2004, respectively. With the exception of BVAC’s purchases of auto contracts, we ceased all other loan production activities during the fourth quarter of 2002.

AsAuto aContracts ~~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:~~Receivable

	At December 31,
	2000			1999			1998
	Amount	Rates		Amount	Rates		Amount	Rates
	(Dollars in thousands)
Transaction accounts	$1,608,499	3.54	%	$1,703,123	3.26	%	$1,627,275	3.15	%
Retail certificates of deposit	1,872,562	6.04		1,637,127	4.92		1,642,362	5.20
Total retail deposits	3,481,061	4.89		3,340,250	4.07		3,269,637	4.20
Brokered certificates of deposit	265,251	7.16		389,530	6.18		—	—
Total	$3,746,312	5.05	%	$3,729,780	4.30	%	$3,269,637	4.20	%
Transaction accounts as a percentage of retail deposits		46.2	%		51.0	%		49.8	%

At December 31, 2005, BVAC’s entire $633.6 million portfolio of auto contracts receivable was designated as held-for-investment. $106.8 million of BVAC’s auto contracts were designated as held-for-investment in anticipation of securitizing such contracts in early 2006 in an asset-backed transaction that is to be structured as a secured financing. The remaining $526.8 million of auto contracts held-for-investment represented auto contracts securitized during 2005; these transactions were accounted for as secured financings according to SFAS 140. At December 31, 2004, $252.9 million of BVAC’s auto contracts receivable were designated as held-for-investment in anticipation of securitizing such contracts in an asset-

~~The increase in total deposits at December 31, 2000, as compared with December 31, 1999, was due primarily to the~~36 growth of our retail certificates of deposit partially offset by a decrease in transaction accounts and brokered certificates of deposit. Our retail deposits grew $140.8 million during the year primarily related to marketing and promotional efforts, reflecting the continued strength of Bay View Bank’s deposit franchise. These deposits are a significantly lower-cost funding source relative to wholesale borrowings. The increase in total deposits at December 31, 1999, as compared with December 31, 1998, was primarily due to the growth of our brokered certificates of deposit, which we used to help fund our growth.

WeTable continue to focus on enhancing the value of Bay View Bank’s deposit branch franchise. We believe that our focus on Bay View Bank’s retail deposit base, particularly transaction accounts, will enhance our results of operations by lowering our consolidated cost of funds, increasing fee income and expanding opportunities for cross-selling products and services.Contents

~~Retail~~ backed ~~certificates~~bond offering that was structured as a financing transaction. The remaining $75.0 million of ~~deposit~~BVAC’s warehouse inventory of ~~$100~~auto contracts were designated as held-for-sale at December 31,~~000~~ 2004 and carried at the lower of cost or ~~more,~~fair byvalue. ~~time~~Prior ~~remaining~~to ~~until~~the ~~maturity~~second quarter of 2004, ~~were~~our entire warehouse inventory of auto contracts receivable had been designated as ~~follows:~~held-for-sale.

	At December 31,
	2000	1999
	(Dollars in thousands)
Three months or less	$208,916	$ 96,916
Over three through six months	167,487	151,179
Over six through twelve months	155,087	130,930
Over twelve months	18,432	44,961
Total	$549,922	$423,986

During 2005, BVAC purchased $512.5 million of auto contracts compared to $295.3 million during 2004, a 73.6% increase, year-over-year. We attribute this increase to the success of our efforts to broaden BVAC’s market for good credit quality customers and its focus on expanding its purchases of high quality loans.

~~Borrowings~~ BVAC’s unit purchase volume for 2005 totaled 21,515 contracts compared to 10,043 contracts in 2004. The weighted-average contract rate and weighted-average FICO score for the 2005 and 2004 purchases was 8.87% and 736 compared to 7.98% and 739, respectively. At December 31, 2005, BVAC was servicing 38,000 contracts representing $765.5 million of managed loans compared to 28,300 contracts representing $570.9 million of managed loans at December 31, 2004.

~~In addition to deposits, we utilize collateralized advances from the Federal Home Loan Bank of San Francisco and other~~ ~~borrowings,~~During ~~such~~2005 ~~as senior~~ and ~~subordinated debt~~2004, ~~capital~~BVAC ~~securities,~~sold ~~warehouse~~$6.5 million ~~lines,~~ and $24.8 million ~~securities~~of ~~sold~~auto ~~under~~contracts ~~agreements to repurchase~~receivable, respectively, on a ~~collateralized~~“whole ~~and~~loan” ~~noncollateralized~~ basis, ~~for~~with ~~various~~servicing ~~purposes~~retained. Repayments ~~including~~of ~~the~~auto ~~funding~~contracts oftotaled ~~loans,~~$201.8 million ~~leases~~ and $110.5 million ~~securities~~during as2005 ~~well~~and as2004, ~~to support the execution of our business strategies~~respectively.

~~During~~Credit 1999, two warehouse lines with initial committed amounts totaling $600 million were secured. Both lines have maturities of one year or less. One warehouse line of $500 million was established to provide financing for franchise loans. The other warehouse line of $100 million, which was established to fund Bankers Mutual multi-family loan production, was terminated following the sale of substantially all of the assets and certain liabilities of Bankers Mutual during the second quarter of 2000. In October 2000, we replaced the $500 million franchise loan-related warehouse line with a $170 million warehouse line that expires March 31, 2001. This warehouse line is used solely to finance franchise loans held at the parent company.Quality

On We ~~August~~define ~~18,~~nonaccrual ~~1999,~~auto ~~Bay~~contracts ~~View~~receivable ~~Bank~~as ~~issued~~contracts which ~~$50~~are ~~million~~90 days ofor ~~10%~~more ~~Subordinated~~delinquent ~~Notes,~~as ~~which~~to ~~mature~~principal inand interest ~~August~~payments ~~2009,~~unless athe ~~portion of~~principal ~~which~~and ~~was~~interest ~~used~~are well-secured toand ~~partially~~in ~~finance~~ the ~~acquisition~~process of ~~FMAC~~collection. InWe ~~December~~charge ~~1998,~~off auto wecontracts ~~issued~~receivable ~~$90~~and ~~million~~reverse inrelated ~~Capital~~accrued ~~Securities~~interest receivable ~~yielding~~when ~~9.76%,~~the ~~which~~contracts ~~mature~~become on120 days ~~December 31, 2028~~delinquent. We Amay ~~portion~~also ofdesignate ~~the~~contracts ~~proceeds~~which ~~from~~are ~~the~~less ~~Capital~~than ~~Securities~~90 days delinquent ~~were~~as ~~used~~nonaccrual ~~to redeem~~when ~~our~~the ~~$50~~full ~~million~~collection of ~~8.42%~~principal and/or ~~Senior~~interest ~~Debentures~~is ~~which~~doubtful. ~~matured~~We onrecognize ~~June~~interest 1,income ~~1999~~on nonaccrual ~~and~~contracts ~~the~~on ~~remainder~~a ~~for~~cash ~~general corporate purposes~~basis.

~~The~~ Auto ~~following~~contracts ~~table~~receivable ~~illustrates~~delinquent ~~outstanding~~30+ ~~borrowings~~days asor more were $3.3 million, or 0.52% of ~~the~~gross ~~dates~~auto ~~indicated:~~contracts receivable, at December 31, 2005 compared to $1.3 million, or 0.41% of gross auto contracts receivable at December 31, 2004. As a percentage of managed contracts, 30+ day delinquencies were 0.63% of outstanding contracts at both December 31, 2005 and December 31, 2004.

	At December 31,
	2000	1999	1998
	(Dollars in thousands)
Advances from the Federal Home Loan Bank of San Francisco	$ 804,837	$1,367,300	$1,653,300
Securities sold under agreements to repurchase	103,241	17,883	25,302
Warehouse lines	94,134	397,538	—
Subordinated Notes, net	149,567	149,502	99,437
Senior Debentures	—	—	50,000
Other borrowings	1,664	3,294	5,077
Capital Securities	90,000	90,000	90,000
Total	$1,243,443	$2,025,517	$1,923,116

Net charge-offs, defined as gross charge-offs less recoveries, as a percentage of auto contracts receivable increased to a rate of 0.80% for the year ended December 31, 2005 compared to 0.50% for the year ended December 31, 2004. The increase in the net charge-off rate from 2004 reflects the increasing loss rates that we associate with the aging or “seasoning” of our auto contracts through their midlife which is typically followed by a gradual decrease in loss rates through the remaining life of the contracts.

~~The~~ As ~~lower~~a ~~borrowing~~percentage ~~level~~of atmanaged ~~December 31~~contracts, ~~2000,~~which asis ~~compared~~defined ~~with~~as ~~December 31, 1999, was primarily due to~~ the ~~pay-down of~~ ~~the~~total ~~warehouse~~auto ~~lines~~contracts ~~related~~serviced toby ~~franchise~~BVAC, ~~loans~~net ~~and the pay~~charge-~~down~~offs ~~of Federal Home Loan Bank advances associated with the aforementioned sales of single-family mortgage loans and other assets during 2000. These reductions were partially offset by an~~decreased ~~increase~~slightly ~~in securities sold under agreements~~ to ~~repurchase~~a ~~used~~rate ~~primarily to fund mortgage-backed security purchases. Additionally, in June 2000 we auctioned $180 million~~ of ~~Federal Home Loan Bank liabilities with below-market interest rates~~1.06% ~~The higher~~for ~~borrowing~~the ~~level~~year atended December 31, 2005 ~~1999,~~from asa ~~compared~~rate ~~with~~of ~~1998,~~1.15% ~~was~~for ~~primarily due to~~ the ~~utilization~~same ofperiod ~~the~~in ~~warehouse lines offset by a lower Federal Home Loan Bank advances level~~2004. ~~The~~This change ~~lower~~in ~~Federal~~the ~~Home~~rate ~~Loan~~of ~~Bank~~net ~~advances~~charge-offs ~~level~~ was primarily ~~related~~ attributable to ~~the~~our ~~sale~~increased ofproduction ~~$450~~volumes ~~million~~ in ~~multi-family~~2005 ~~COFI-based loans,~~ which ~~effectively~~ reduced the composite ~~amount~~seasoning of ~~mortgage~~our ~~loans~~managed ~~that~~loan ~~can~~portfolio ~~be pledged as underlying collateral for such advances~~and, therefore, ~~and~~decreased ~~the~~overall ~~use~~net ofcharge-off ~~alternative funding sources~~experience.

~~Short-term borrowings are defined as borrowings due within one year or less. The following table illustrates our~~37 ~~short-term borrowings as of the dates indicated:~~

	At December 31,
	2000		1999		1998
	(Dollars in thousands)
Advances from the Federal Home Loan Bank of San Francisco	$530,437		$ 722,500		$729,100
Securities sold under agreements to repurchase	103,241		17,883		25,302
Warehouse lines	94,134		397,538		—
Total	$727,812		$1,137,921		$754,402
Weighted-average interest rate of total short-term borrowings outstanding at period end	6.58	%	6.47	%	5.07	%

~~The~~Allowance ~~following table illustrates the maximum outstanding balance~~ for ~~each~~Credit ~~type of short-term borrowing at any month end during 2000, 1999 and 1998, and the average balances and weighted-average interest rates on short-term borrowings for those years:~~Losses

	Year Ended December 31,
	2000		1999		1998
	(Dollars in thousands)
Advances from the Federal Home Loan Bank of San Francisco	$ 772,700		$1,900,400		$1,575,460
Securities sold under agreements to repurchase	$ 448,660		$ 24,784		$ 153,148
Warehouse lines	$ 355,316		$ 397,538		$ —
Average amount of total short-term borrowings outstanding during the year	$1,137,662		$ 858,226		$1,168,410
Weighted-average interest rate of total short-term borrowings outstanding during the year	6.59	%	5.10	%	5.54	%

The following table sets forth the activity in the allowance for credit losses on auto contracts held-for-investment as of and for the periods indicated:

Liquidity


	At and For the Year
	Ended December 31,

	2005			2004

	(Dollars in thousands)
Balance at beginning of period	$	1,508		$	—
Charge-offs		(3,875	)		(222	)
Recoveries		699			118

Net charge-offs		(3,176	)		(104	)
Provision for losses on loans and leases		7,947			1,612

Balance at end of period	$	6,279		$	1,508

~~The~~ At ~~objective~~December 31, of2005, our ~~liquidity~~allowance ~~management~~for ~~program~~credit islosses represented 1.00% of outstanding auto contracts held-for-investment, compared to ~~ensure~~0.61% ~~that~~at ~~funds~~December 31, 2004. ~~are~~The ~~available~~level inof athe ~~timely~~allowance ~~manner~~at tothe ~~meet~~respective ~~loan~~year ends ~~demand~~reflected ~~and~~the ~~depositors’~~underlying ~~needs,~~level ~~and~~of net charge-offs that we estimated to ~~service~~be ~~other~~embedded ~~liabilities~~in asour ~~they~~auto ~~come~~contracts held-for-investment. ~~due,~~The ~~without~~increase ~~causing~~in anthe ~~undue~~allowance ~~amount~~was reflective of ~~cost~~the orimpact ~~risk,~~of ~~and~~the ~~without~~seasoning ~~causing~~of aour ~~disruption~~auto contracts held-for-investment, as discussed above. Refer to ~~normal~~“Critical Accounting ~~operating~~Policies — ~~conditions~~Allowance for Credit Losses” for additional comments on our related accounting policies.

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

~~The~~ At ~~ability~~December 31, to2005, ~~attract~~we ahad ~~stable,~~completed ~~low-cost~~the ~~base~~disposition of our ~~deposits~~liquidating isloan aportfolio ~~significant~~and ~~source~~no oflonger ~~liquidity.~~had ~~Other~~an ~~sources of~~investment ~~liquidity~~in ~~available~~other toloans. usAt ~~include~~December 31, ~~short-term borrowings~~2004, ~~which~~we ~~consist~~had of$902 ~~advances from the Federal Home Loan Bank~~ thousand of ~~San~~other ~~Francisco~~loans, ~~repurchase~~comprised ~~agreements,~~of ~~warehouse~~franchise ~~lines~~loans and asset-based loans; these other ~~short-term~~loans ~~borrowing~~were ~~arrangements~~nonaccruing. ~~Our~~At ~~liquidity~~December 31, 2005, ~~requirements~~we ~~can~~ also behad ~~met~~$0.6 million ~~through the use~~ of ~~our~~real ~~portfolio~~estate ofowned compared ~~liquid~~to ~~assets~~$3.4 million ~~Liquid~~at ~~assets~~December 31, as2004. ~~defined~~The decrease bywas ~~us,~~due ~~include~~to ~~cash~~$2.2 million ~~and~~in ~~cash~~sales, ~~equivalents~~a $0.5 million inwritedown ~~excess~~ of ~~the~~franchise-related ~~minimum~~property ~~levels~~and ~~necessary~~a $0.2 million toinsurance ~~carry~~recovery ~~out~~for ~~normal~~a ~~business~~property ~~operations, federal funds sold, commercial~~in ~~paper,~~Mississippi ~~and~~damaged ~~other~~during ~~short-term~~Hurricane ~~investments~~Katrina.

~~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.~~Borrowings

On Our ~~September~~borrowings ~~29,~~are ~~2000,~~comprised ~~Bay~~primarily ~~View~~of ~~Capital~~a ~~Corporation~~revolving ~~entered~~warehouse credit ~~into~~facility anand ~~agreement~~auto ~~with~~receivable-backed ~~the~~securitization ~~Federal Reserve Bank of San~~notes ~~Francisco~~payable. InAt ~~addition~~December 31, ~~to requiring prior approval to pay common stock dividends~~2005, ~~the agreement requires us to obtain prior approval to disburse dividends associated with~~ our 9borrowings totaled $621.~~76%~~3 million ~~Capital~~including ~~Securities~~$99.7 million Weon ~~requested but did not receive approval to~~our ~~disburse~~warehouse ~~the~~credit ~~quarterly~~facility ~~dividend in the third~~ and ~~fourth quarters of 2000~~$521.6 million ~~Pursuant to the terms~~ of securitization ~~the~~notes ~~Capital Securities, we have deferred distributions on the debentures~~payable. ~~During~~Balances ~~this~~at ~~deferral period~~December 31, ~~distributions to which holders are entitled~~2004 ~~will~~included ~~continue~~$298.8 million tooutstanding ~~accrue~~on atour anwarehouse ~~annual~~credit facility ~~rate~~and ~~of 9~~$1.~~76%~~9 million of ~~the~~other ~~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)~~borrowings. The Wefollowing ~~fully~~table ~~intend~~sets toforth ~~continue~~our tooutstanding ~~seek~~borrowings ~~permission to distribute the dividend at the earliest available opportunity~~ as ~~the interest on these unpaid dividends is one~~ of ~~our~~the dates ~~highest borrowing costs.~~indicated:

At December 31, 2000, we had liquidity levels with cash and overnight deposits in excess of $695 million, representing approximately 20% of total retail deposits.


	At December 31,

	2005		2004

	(Dollars in thousands)
Warehouse credit facility	$	99,727	$	298,755
Securitization notes payable		521,568		—
Other borrowings		—		1,895

Total	$	621,295	$	300,650

To Warehouse ~~assist~~credit ~~you~~facility — inDuring ~~analyzing~~the ~~our~~second quarter ~~liquidity~~of 2005, ~~you~~BVAC ~~should~~secured ~~review~~a ~~our~~$450.0 million floating-rate, ~~Consolidated~~revolving ~~Statements~~warehouse ofcredit ~~Cash~~facility ~~Flows~~to atreplace ~~Item~~a maturing 8$350.0 million facility originally obtained in 2004. The facility is jointly provided by two lenders (the “~~Financial~~Note Purchasers”). ~~Statements~~The facility is for a term of 364 days and ~~Supplementary~~matures ~~Data~~on June 19, 2006.” The interest rate on the facility is indexed to asset-backed commercial paper rates or LIBOR. BVAC draws on the facility to purchase and finance its existing inventory of auto contracts. Substantially all auto contracts retained by BVAC are pledged as collateral for the credit facility.

~~Capital Resources~~38

ManagementTable seeksof 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.Contents

On Under ~~August~~the ~~18,~~terms ~~1999~~of the facility, ~~Bay~~BVAC ~~View~~draws ~~Bank,~~on ~~our~~the ~~wholly~~facility ~~owned~~by transferring ~~subsidiary,~~auto ~~issued~~contracts ~~$50~~to ~~million~~a inspecial ~~Subordinated~~purpose ~~Notes.~~entity, ~~The~~a ~~Subordinated~~statutory ~~Notes~~trust, which ~~mature~~issues innotes ~~August~~to ~~2009,~~the ~~qualify as Tier 2 capital for regulatory purposes~~Note Purchasers. BVAC ~~The~~periodically ~~proceeds~~securitizes ~~from~~or ~~the~~sells ~~notes~~auto ~~were~~contracts ~~used~~in ~~for,~~order to ~~among~~pay ~~other~~down ~~things,~~ the ~~payment~~line of ~~dividends~~credit ~~to us to partially fund our acquisition of FMAC~~ and ~~for~~maintain ~~our general~~borrowing ~~corporate purposes~~capacity.

On Under ~~December~~the ~~21,~~terms ~~1998~~of the indenture, wethe ~~issued~~trust ~~$90~~enters ~~million~~into out-of-the-money, interest inrate ~~Capital~~cap ~~Securities~~contracts, ~~through~~containing ~~Bay~~terms ~~View~~and ~~Capital~~conditions required I.by ~~The~~the ~~Capital~~Note Purchasers, ~~Securities~~to ~~pay~~provide protection to ~~quarterly~~the ~~cumulative~~Note Purchasers ~~cash~~from ~~distributions~~interest atrate anrisk ~~annual~~embedded in the fixed-rate ofauto ~~9.76%~~contracts ofthat have been transferred to the trust. ~~liquidation~~BVAC ~~value~~incurs ofthe ~~$25~~cost ~~per~~of ~~share.~~these Weinterest ~~used~~rate ~~$50~~caps. ~~million~~The notional balance of the ~~proceeds~~amortizing caps is maintained by the trust to ~~repay~~coincide ~~our~~with ~~8.42%~~the ~~Senior~~outstanding ~~Debentures~~balance ~~upon~~of ~~their~~the ~~maturity~~underlying auto incontracts. ~~June~~The ~~1999~~interest ~~and~~rate ~~the~~caps ~~remainder~~are ~~for~~not ~~general~~designated as ~~corporate~~hedges for accounting purposes. ~~The~~and, ~~Capital~~accordingly, ~~Securities~~changes ~~have~~in the fair ~~added~~value ~~benefit~~ of ~~qualifying~~the asinterest ~~Tier~~rate 1caps ~~capital~~are ~~for~~recognized ~~regulatory~~in ~~purposes~~earnings and recorded as unrealized gains or losses. The ~~Capital~~fair ~~Securities~~value ~~are~~of the ~~presented~~interest asrate acaps ~~separate~~is ~~line~~included ~~item~~ in ~~our~~other ~~consolidated~~assets. ~~balance~~At December 31, ~~sheet~~2005 ~~under~~and 2004, the ~~caption “Guaranteed~~interest ~~Preferred~~rate ~~Beneficial~~caps ~~Interest~~had ina fair ~~the~~value ~~Company’s~~of ~~Junior~~$0.4 million ~~Subordinated~~and ~~Debentures~~$0.”7 million, respectively. For ~~additional~~the ~~related~~years ~~discussion~~ended December 31, ~~see~~2005 ~~Note~~and 2004, 14we torecognized ~~the~~$0.4 million ~~Consolidated~~and ~~Financial Statements~~$0.7 million, respectively, ~~“Capital~~of ~~Securities”~~unrealized atlosses ~~Item~~based 8.on a decline in the ~~“Financial~~value ~~Statements~~of ~~and~~the ~~Supplementary~~interest ~~Data~~rate caps.”

~~Stockholders’~~ At ~~equity totaled $297.8 million at~~ December 31, ~~2000~~2005, ~~as compared with~~ $~~631~~99.2 7 million atwas ~~December 31,~~outstanding ~~1999.~~under ~~Tangible~~this ~~stockholders’~~facility ~~equity,~~with ~~which~~an ~~excludes~~all-in ~~intangible~~cost ~~assets,~~of ~~was $162~~5.910%. ~~million~~These borrowings atwere ~~December~~secured ~~31,~~by ~~2000 as compared with~~ $~~302~~102.2 9 million atof ~~December~~auto ~~31, 1999. The decreases in stockholders’ equity~~ contracts and ~~tangible~~cash ~~stockholders’ equity were due to the loss incurred~~ in ~~2000~~trust ~~combined~~accounts. ~~with~~The ~~dividends~~facility ~~declared~~contains ~~for~~various performance ~~the~~triggers ~~year.~~and ~~Intangible~~default ~~assets~~covenants ~~decreased~~requiring ~~primarily~~that asBVAC maintain acertain ~~result~~cumulative ofcredit ~~the~~loss, ~~aforementioned~~delinquency ~~restructuring of FMAC~~ and ~~the~~other financial ~~resulting~~ratios. ~~write-off~~As of ~~$192.6~~December 31, ~~million~~2005, ofall ~~FMAC-related~~such ~~goodwill.~~financial Weand doperformance ~~not~~ratios ~~have~~were ~~any~~within ~~material~~required ~~commitments for capital expenditures at December 31, 2000~~levels.

~~The~~ Securitization ~~following~~notes ~~table~~payable — ~~illustrates~~In ~~the~~February 2005, ~~reconciliation~~BVAC transferred $232.1 million of ~~our~~auto ~~stockholders’~~contract receivables ~~equity~~to a special purpose entity, Bay View 2005-LJ-1 Owner Trust, and issued a corresponding amount of auto receivable-backed notes. In July 2005, BVAC transferred $185.6 million of auto contract receivables to ~~tangible~~Bay ~~stockholders’~~View ~~equity~~2005-LJ-2 Owner Trust and issued $180.9 million of auto receivable-backed notes. In December 2005, BVAC transferred $220.1 million of auto contract receivables to Bay View 2005-3 Owner Trust and issued $214.6 million of auto receivable-backed notes. Under the terms of these notes, BVAC retained certain rights that resulted in its maintaining control over the transferred receivables and, in accordance with provisions of SFAS No. 140, we have accounted for these transactions as secured financings. For securitizations treated as secured financings, the contracts are retained on the consolidated statement of financial condition and the ~~dates~~securities issued ~~indicated:~~to finance the contracts are recorded as securitization notes payable. We record interest income on the securitized contracts and interest expense on the notes issued through the securitized transactions. See Note 10 to the Consolidated Financial Statements, “Securitization Notes Payable,” at Item 8. “Financial Statements and Supplementary Data” for additional information on the related auto receivable-backed notes.

	At December 31,
	2000		1999
	(Dollars in thousands)
Stockholders’ equity	$ 297,849		$ 631,194
Intangible assets	(134,936	)	(329,005	)
Tangible stockholders’ equity	$ 162,913		$ 302,189
Book value per share	$ 9.14		$ 19.38
Tangible book value per share	$ 5.00		$ 9.28

Other borrowings — On December 31, 2001, we completed a financing secured by the contractual cash flows from our liquidating auto operating lease portfolio. The transaction was recorded as a secured financing and resulted in an increase in other borrowings of $136.5 million at an initial imputed interest rate of 5.25%. With no new purchases of auto leases since June 2000, the outstanding balance of this borrowing has declined sharply since its inception. As of December 31, 2005, the balance of this financing was fully repaid. At December 31, 2004, the balance was $1.9 million.

~~The~~ Liquidity ~~following~~and ~~table~~Capital ~~illustrates the changes in our tangible stockholders’ equity for the periods~~Resources ~~indicated:~~

	For the Year Ended December 31,
	2000		1999		1998
	(Dollars in thousands)
Beginning tangible stockholders’ equity	$ 302,189		$ 243,723		$ 144,120
Net (loss) income	(326,197	)	28,964		22,719
Equity issued in connection with acquisitions	—		237,022		210,000
Intangible assets generated from acquisitions accounted for under the purchase method of accounting	(22,095	)	(199,344	)	(115,734	)
Intangible assets generated from branch acquisitions	—		(6,154	)	—
Write-off of intangible assets related to Bankers Mutual	2,776		—		—
Write-off of intangible assets related to FMAC	192,622		—		—
Amortization of intangible assets	20,766		13,687		11,372
Repurchase of common stock	—		(8,381	)	(24,063	)
Exercise of stock options	94		498		3,269
Cash dividends declared	(9,780	)	(5,579	)	(8,069	)
Other	2,538		(2,247	)	109
Ending tangible stockholders’ equity	$ 162,913		$ 302,189		$ 243,723

BVAC’s $450.0 million revolving warehouse credit facility allows us to purchase and warehouse auto contracts. Our ability to securitize or sell auto contracts on a whole loan basis allows us to periodically pay down the warehouse facility in order to maintain available borrowing capacity to fund future purchases of auto contracts. Repayments from warehoused auto contracts also provide liquidity. During 2005, liquidation of the assets of BVB remaining from its September 30, 2003 dissolution, primarily the auto lease portfolio, also provided liquidity; however, the liquidation of these assets was largely completed in 2005 and they are a limited source of liquidity in 2006 and beyond.

~~Intangible assets generated from our acquisitions accounted for under the purchase method of accounting are deducted~~39 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.~~

BayTable 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.Contents

~~Additionally~~ At December 31, ~~the~~2005, ~~Federal~~we ~~Deposit~~had ~~Insurance~~$8.9 million ~~Corporation~~of ~~Improvement~~cash ~~Act~~and $350.3 million of ~~1991~~available ~~defines~~borrowing ~~five~~capacity ~~capital~~on ~~tiers:~~our ~~well-capitalized,~~revolving ~~adequately~~warehouse ~~capitalized,~~credit ~~undercapitalized~~facility, ~~significantly undercapitalized, and critically undercapitalized, depending upon the capital level~~ of ~~the~~which ~~institution~~$11.6 million was ~~Each~~immediately ~~federal~~available ~~banking~~based ~~agency,~~upon ~~including~~BVAC-owned ~~the~~auto ~~Office of the Comptroller of~~contracts ~~the~~eligible ~~Currency, is required to implement prompt corrective actions~~ for ~~“undercapitalized” institutions that it regulates~~pledging.

On February 17, 2005, we issued $232.1 million of auto receivable-backed notes payable through Bay View ~~Bank’s~~2005-LJ-1 ~~regulatory~~Owner Trust, ~~capital~~on ~~levels~~July 28, at2005, we issued $180.9 million of auto receivable-backed notes payable through Bay View 2005-LJ-2 Owner Trust and on December 6, 312005 we issued $214.6 million of auto receivable-backed notes payable through Bay View 2005-3 Owner Trust. Proceeds from the issuance of each of the notes were used to repay our revolving warehouse credit facility. The notes contain a call provision that grants the Company the option of calling the notes at any time after the aggregate balance of the receivables has been reduced to 15% of the original pool of receivables. These notes, ~~2000~~which ~~and~~are “sequential ~~1999~~pay” ~~exceeded~~notes with repayment provisions linked to repayments of the ~~minimum~~underlying ~~requirements~~pools of auto contracts, have maturities extending to beFebruary 2014. We anticipate that ~~considered~~prepayments ~~adequately~~will ~~capitalized~~reduce asthe ~~illustrated~~effective inlife of the ~~following~~notes. ~~table:~~Refer to Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” for additional information on expected maturities.

	At December 31, 2000				At December 31, 1999
	Actual		Minimum Requirement		Actual		Minimum Requirement
	Amount	Ratio	Amount	Ratio	Amount	Ratio	Amount	Ratio
	(Dollars in thousands)
Tier 1 leverage	$218,736	4.23%	$206,835	4.00%	$406,001	6.87%	$236,337	4.00%
Tier 1 risk-based	$218,736	6.30%	$138,875	4.00%	$406,001	8.41%	$193,024	4.00%
Total risk-based	$312,582	9.00%	$277,751	8.00%	$507,516	10.52%	$386,048	8.00%

Between December 30, 2003 and December 31, 2004, we distributed $311.0 million in cash to our stockholders, or $47.25 per share after the adjustment to reflect the retroactive effect of the 1-for-10 reverse stock split of our common stock effective June 30, 2004. We did not make any cash distributions to stockholders in 2005. Refer to “General and Business Overview — Background” at Part I, Item 1. “Business” for additional comments about cash distributions.

~~Similarly, Bay View Capital Corporation is subject to various regulatory capital guidelines administered by the Board of~~ ~~Governors~~Stockholders’ ofequity ~~the~~totaled ~~Federal Reserve~~$70.5 million ~~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%~~$104.2 million Inat ~~addition to the risk-based guidelines~~December 31, ~~federal~~2005 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~~2004, ~~the regulators~~ ~~have the discretion to set individual minimum capital requirements for specific institutions at rates significantly above the minimum guidelines and ratios~~respectively.

At On ~~December~~October 28, 312005, ~~2000~~we reported the execution of a definitive agreement to merge with GLB, ~~Bay~~with ~~View~~us ~~Capital~~as ~~Corporation~~the ~~exceeded~~surviving corporation. GLB is the ~~minimum~~holding ~~requirements~~company for ~~total~~GBSB, a savings bank that was founded in November 1999 and, ~~Tier~~as 1of ~~risk-based~~September 30, ~~capital~~2005, ~~while~~reported ~~the~~assets ~~Tier~~of 1$771 million. ~~leverage~~GBSB ~~ratio~~operates ~~was~~9 3full service branches and currently has 4 additional branches under construction in Western New York.~~47%.~~ WeUnder ~~exceeded~~the terms of the ~~minimum~~merger agreement, ~~capital~~GLB ~~requirements~~stockholders towill bereceive ~~considered~~a ~~adequately~~fixed ~~capitalized~~ratio atof 1.0873 shares ~~December~~of ~~31,~~our ~~1999~~common asstock ~~illustrated~~for ineach share of GLB common stock. Based on the ~~following~~closing ~~table:~~price of our common stock at the execution date, the transaction was valued at approximately $67.1 million.

	At December 31, 2000				At December 31, 1999
	Actual		Minimum Requirement		Actual		Minimum Requirement
	Amount	Ratio	Amount	Ratio	Amount	Ratio	Amount	Ratio
	(Dollars in thousands)
Tier 1 leverage	$190,686	3.47%	$219,886	4.00%	$386,110	6.51%	$237,247	4.00%
Tier 1 risk-based	$190,686	4.59%	$166,284	4.00%	$386,110	7.17%	$215,475	4.00%
Total risk-based	$338,374	8.14%	$332,568	8.00%	$587,773	10.91%	$430,950	8.00%

After completion of the merger, our stockholders will own approximately 60% of our then outstanding shares. The merger is expected to close in the second quarter of 2006, subject to receipt of government regulatory approvals and stockholder approvals. We do not expect the merger to adversely impact our net operating loss carryforwards.

~~Although~~ On weNovember 7, ~~did~~2005, ~~not~~we ~~meet~~reported the ~~minimum~~execution ~~Tier~~of 1a definitive ~~leverage~~agreement ~~capital~~to ~~requirement~~sell atBVAC ~~December~~to ~~31,~~AFS ~~2000,~~in wean ~~have~~all-cash transaction ~~filed~~for a ~~capital plan~~price ~~pursuant~~approximating to the ~~terms~~book value of ~~our~~BVAC ~~regulatory~~at the ~~agreements~~time ~~with~~of ~~the~~closing. ~~Federal~~The ~~Reserve~~sale ~~Bank~~ of ~~San~~BVAC ~~Francisco~~is ~~indicating~~expected ~~that~~to weclose ~~will meet~~ in the ~~required~~second ~~minimum~~quarter ~~capital~~of ~~ratios by March 31~~2006, ~~2001~~subject ~~and maintain appropriate capital levels thereafter (See Item 1. “Business” and Note 4~~ to the ~~Consolidated~~receipt ~~Financial~~of ~~Statements,~~government regulatory ~~“Regulatory~~approvals ~~Matters” at Item 8 “Financial Statements~~ and ~~Supplementary~~approval ~~Data”~~by ~~for~~our ~~further discussion on regulatory capital requirements)~~stockholders.

~~Stock~~ Contractual ~~Repurchase Program~~Obligations

Our ~~outstanding~~obligations ~~shares~~and ofcommitments ~~common~~to ~~stock~~make ~~were~~future ~~32,574,987~~payments atunder contracts ~~December~~include ~~31,~~$99.7 million ~~2000~~on ~~and~~BVAC’s 32warehouse credit facility,~~562,942~~ at$14.7 million ~~December~~of ~~31,~~payments ~~1999.~~under ~~The~~various ~~weighted-average~~operating ~~shares~~lease ~~outstanding~~agreements ~~(including~~and ~~potential~~BVAC’s ~~dilutive~~issuance ~~common~~of $521.6 million ~~shares)~~of ~~used~~auto ~~for~~receivable-backed ~~computing~~notes ~~earnings~~payable issued ~~per~~through ~~diluted~~affiliates, ~~share~~Bay ~~increased~~View to2005-LJ-1, ~~32.6~~2005-LJ-2 ~~million~~and 2005-3 ~~shares~~Owners ~~for~~Trusts. ~~the~~Refer ~~year~~to ~~ended~~“Balance ~~December~~Sheet Analysis — ~~31,~~Borrowings” ~~2000~~for ascomments ~~compared~~about ~~with~~the warehouse ~~21.3~~credit ~~million~~facility ~~shares~~and ~~for~~ the ~~year ended~~other ~~December 31~~borrowings, ~~1999~~and “Liquidity and ~~20.3~~Capital ~~million~~Resources” for comments on the issuance ~~year~~of ~~ended~~the ~~December~~$521.6 million ~~31,~~of ~~1998~~auto receivable-backed notes payable.

In At ~~August~~December 31, ~~1998~~2005, ~~our~~we ~~Board~~occupied oftwo ~~Directors~~offices, ~~authorized~~including our ~~the~~corporate ~~repurchase~~headquarters ofoffice, upand tohad ~~$50~~an ~~million~~additional ~~in shares of our common stock.~~two ~~During~~offices ~~1999,~~that wehave ~~repurchased~~been ~~460~~vacated,~~000~~ ~~shares~~and ofare ~~our~~subleased ~~common~~under operating ~~stock~~lease ~~for~~agreements ~~$8.3~~expiring ~~million~~ at anvarious ~~average~~dates ~~price~~through ofthe year ~~$18~~2012.22 ~~per share. We did not repurchase any shares of our common stock during 2000.~~ In ~~November~~most ~~1999~~instances, ~~all~~these oflease ~~our~~arrangements ~~treasury shares were reissued in~~include ~~conjunction~~options ~~with the acquisition of FMAC. At December 31, 2000, we had approximately $17.6 million in remaining authorization available for future share repurchases. Pursuant~~ to ~~our~~renew ~~agreement~~or ~~with~~extend the ~~Federal~~lease ~~Reserve~~at ~~Bank~~market ~~of San Francisco, we must obtain prior written approval before repurchasing shares~~rates.

~~Impact of Inflation and Changing Prices~~40

OurTable consolidated financial statements presented herein have been prepared in accordance with generally accepted accounting principles, which generally require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time. Due to the fact that most assets and liabilities of a financial institution are monetary in nature, interest rates have a more significant impact on a financial institution’s performance than do general levels of inflation. Interest rates do not necessarily move in the same direction or magnitude as the prices of goods and services.Contents

~~Item~~Our ~~7A. Quantitative~~contractual ~~and~~obligations ~~Qualitative~~for ~~Disclosures~~future ~~About~~payments ~~Market~~are ~~Risk~~set forth in the following table:

Asset/Liability Management


	Payments Due by Period

			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 Years

	(Dollars in thousands)
Warehouse credit facility	$	99,727	$	99,727	$	—	$	—	$	—
Operating leases(1)		14,721		2,606		5,069		3,925		3,121
Bay View 2005-LJ-1, 2005-LJ-2, and 2005-3 auto receivable-backed notes		521,568		14,719		84,277		239,200		183,372

Total	$	636,016	$	117,052	$	89,346	$	243,125	$	186,493

~~The~~(1) ~~objective~~These ofpayments 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~~reflect ~~our objectives for interest rate risk~~$4.2 Wemillion ~~also~~in ~~seek~~sublease torental ~~improve earnings by controlling noninterest expense, enhancing noninterest~~ income ~~and~~from ~~utilizing~~existing ~~improved~~sublease ~~information~~rental ~~systems~~arrangements tothrough ~~facilitate our analysis of~~ the ~~profitability~~year ~~of our business platforms~~2011. WeIncluded ~~also~~in ~~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~~table ~~these~~above ~~fluctuations~~are ~~might~~lease ~~have~~payments on associated cash flows or values. During 2000, 1999 and 1998, these risk management instruments, also referred to as derivative instruments, 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~~$13.7 ~~Credit~~million ~~risk~~related ~~is defined as the possibility of sustaining a loss because other parties~~ to the ~~financial instrument~~Company’s ~~fail~~liquidating ~~to perform in accordance with the terms of the contract~~activities. ~~Finally, we perform internal analyses to measure, evaluate and monitor risk.~~

~~Interest~~ Stock ~~Rate~~Repurchase ~~Risk~~Program

A In ~~key~~August ~~objective~~1998, ofour ~~asset~~board ~~and~~of ~~liability~~directors ~~management~~authorized isthe ~~to manage interest rate risk associated with changing asset and~~repurchase ~~liability~~of ~~cash~~up ~~flows~~to ~~and values and market interest rate movements~~$50.0 million ~~Interest rate risk occurs when interest rate sensitive assets and liabilities do not reprice simultaneously and~~ in ~~equal~~shares ~~volumes.~~of ~~Our~~our ~~Asset~~common ~~and Liability Committee provides~~stock; ~~oversight~~however towe ~~our~~have ~~interest~~not ~~rate~~repurchased ~~risk~~shares ~~management~~of ~~process and recommends policy guidelines regarding exposure to interest rates for approval by~~ our ~~Board~~common ofstock ~~Directors~~since 1999. ~~Adherence~~At toDecember 31, ~~these policies is monitored on an ongoing basis~~2005, ~~and~~we ~~decisions~~had ~~related~~approximately to$17.6 million ~~the~~in ~~management~~remaining ofauthorization ~~interest~~available ~~rate~~for future ~~exposure~~share ~~are made when appropriate in accordance with our policies~~repurchases.

~~Financial institutions are subject to interest rate risk to the degree that interest-bearing liabilities reprice or~~ ~~mature~~Impact ~~on a different basis and at different times than interest-earning assets. Our strategy has been to reduce the sensitivity~~ of ~~our~~Inflation ~~earnings to interest rate fluctuations by more closely matching the effective maturities or repricing characteristics of our assets~~ and ~~liabilities.~~Changing ~~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~~Prices 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.

~~Swaps~~ Our consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which generally requires the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time. Due to the fact that most assets and liabilities of a consumer finance company are monetary in nature, interest rates have a more significant impact on a consumer finance company’s performance than do general levels of inflation. Interest rates do not necessarily move in the same direction or magnitude as the prices of goods and services.

WeItem use interest rate exchange agreements, or swaps, to offset mismatches in the rate and maturity of certain of our assets and their funding sources and to mitigate the risk of the effects of interest rate fluctuations on the value of our fixed-rate loans classified as held-for-sale7A. ~~Interest~~Quantitative ~~rate swaps involve the exchange of fixed-rate~~ and ~~variable-rate interest~~Qualitative ~~payment~~Disclosures ~~obligations~~About ~~without~~Market the exchange of the underlying notional amounts. We were a party to interest rate swaps with notional principal amounts of $194.0 million at December 31, 2000 and $256.5 million at December 31, 1999. All of our swaps are common “fixed-for-floating” swaps. A portion of our swaps offset variable-rate funding while other swaps offset the change in fair value of a portion of our fixed-rate franchise loans.Risk

~~Treasury~~ Asset/ ~~Futures~~Liability ~~Contracts~~Management

We Interest ~~had~~rate ~~open~~risk, ~~positions~~the ~~related~~fluctuation toof ~~United~~market ~~States~~interest ~~Treasury~~rates, impacts ~~futures~~the value of our fixed-rate auto contracts. ~~with~~It ~~notional~~also impacts ~~amounts~~the net interest income component of ~~$154.7~~our ~~million~~earnings because atBVAC funds the purchase of fixed-rate auto contracts ~~December~~with 31its warehouse credit facility, ~~2000~~which ~~and~~is ~~$32~~a floating-rate facility.5 ~~million~~The atrate ~~December~~on 31the warehouse facility, ~~1999.~~a ~~These~~revolving purchase ~~contracts~~facility, ~~are~~is ~~used~~tied to ~~offset~~LIBOR ~~fixed-rate~~as ~~franchise~~well ~~loans~~as ~~classified~~commercial aspaper rates ~~held-for-sale~~and subject to frequent adjustments.

~~Forward~~Fixed-rate ~~Sale~~Auto Contracts

We BVAC ~~had~~purchases anfixed-rate ~~open~~auto ~~forward~~contracts ~~contract~~primarily ~~position~~for ~~with~~sale or securitization. Investors in these securitization or whole loan sale transactions require a ~~notional~~yield ~~amount~~that ofis ~~$70~~commensurate with prevailing market interest rates.0 ~~million~~The ~~related~~prices tooffered aby investors ~~Fannie~~in ~~Mae~~these ~~benchmark~~transactions ~~note~~reflect prevailing market interest rates at ~~December~~the 31time of these transactions, ~~2000.~~which ~~This~~creates interest ~~contract~~rate isrisk ~~used~~for tous ~~offset~~during ~~fixed-rate~~the ~~franchise~~period ~~loans~~BVAC ~~classified~~warehouses, asor owns, ~~held~~these fixed-~~for-sale~~rate auto contracts. ~~There~~Accordingly, ~~were~~our noearnings are ~~forward~~affected ~~sale~~by ~~contracts~~changes in ~~effect~~prevailing atmarket ~~December~~interest ~~31,~~rates. Rising ~~1999~~market interest rates generally reduce the value of BVAC’s fixed-rate auto contracts.

~~Caps~~41

InterestTable 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. We use interest rate caps, for which we pay a premium, to protect against rising interest rates on our debt, utilized to fund our recent purchase of GNMA securities, while retaining the ability to benefit from a decline in rates. As of December 31, 2000, we had interest rate caps with notional amounts totaling $180 million and cap rates at 7.00% and a cap index based on either the one-or three-month LIBOR rate. There were no interest rate cap contracts in effect at December 31, 1999.Contents

~~Forward~~Net ~~Sales~~Interest ~~of Mortgage-Backed Securities~~Income

In BVAC ~~the~~funds ~~past,~~purchases weof ~~have~~fixed-rate ~~utilized~~auto ~~forward sales~~ contracts ofwith ~~mortgage~~its floating-~~backed~~rate ~~securities~~warehouse tocredit ~~hedge~~facility. ~~portfolios~~While ofwe ~~mortgage~~own these ~~loans~~contracts, ~~because~~we ofearn ~~their~~net ~~historical~~interest ~~effectiveness~~income, aswhich ais ~~hedge.~~defined Inas ~~connection with~~ the amount ~~market~~by ~~and~~which interest ~~rate~~income ~~volatility~~earned ~~experienced~~on ~~during~~the contracts exceeds the ~~third~~interest ~~quarter~~paid ofon ~~1998,~~BVAC’s ~~the~~warehouse ~~correlation~~credit ~~between~~facility. Changes ~~our~~in ~~outstanding~~prevailing ~~forward~~market ~~sale~~interest ~~contracts~~rates ~~and~~produce corresponding changes in the ~~underlying portfolio~~cost of ~~loans~~BVAC’s ~~was~~floating-rate warehouse ~~disrupted~~credit facility, ~~triggering~~thereby ~~the~~creating ~~settlement~~interest ofrate ~~the~~risk. Rising ~~forward~~market ~~sale~~interest ~~contracts~~rates ~~and~~increase ~~resulting~~the ininterest aexpense ~~$940,000~~we incur ~~recognized~~on ~~loss~~BVAC’s ~~for~~warehouse credit facility, thereby reducing the ~~year~~net ~~ended~~interest ~~December~~income ~~31,~~we ~~1998~~earn.

~~Interest~~ To protect us from interest rate risk, isBVAC ~~the~~may ~~most~~use ~~significant~~various derivative ~~market~~financial ~~risk~~instruments, ~~impacting~~including ~~us;~~interest ~~however~~rate swap contracts, ~~other~~to ~~types~~protect ofthe market ~~risk~~value ~~also~~of ~~affect~~BVAC’s uswarehouse ininventory ~~the normal course~~ of ~~our~~auto ~~business~~contracts ~~activities.~~and ~~The~~the ~~impact~~related onnet usinterest ~~resulting~~income. The ~~from~~market ~~other~~value ~~market~~of ~~risks~~BVAC’s derivatives is ~~deemed~~generally inversely ~~immaterial~~correlated ~~and~~to nothe ~~separate~~market ~~disclosure~~value of ~~quantitative~~its ~~information~~warehouse inventory. ~~related~~Changes toin ~~such~~prevailing market ~~risks~~interest isrates ~~deemed~~will generally ~~necessary~~produce offsetting changes in market values. We domay enter ~~not~~into ~~maintain~~these ~~a portfolio~~derivatives ofas ~~trading~~BVAC ~~securities~~purchases auto contracts and dothe ~~not~~agreements ~~intend~~may tobe ~~engage~~closed inout ~~such~~at ~~activities~~the intime the ~~foreseeable~~underlying auto ~~future~~contracts are securitized or sold.

~~Adoption~~ At December 31, 2005, we had outstanding swap contracts with a total notional amount of ~~Statement~~$50.0 million Nounder which we pay a fixed interest rate of 3.64% ~~133~~and receive a floating interest rate of 4.30%. These contracts mature from May 2007 to May 2008. At December 31, 2005, the fair value of our swap contracts was $1.0 million and was included in other assets. We estimate that an increase in market interest rates of 100 and 200 basis points would have resulted in an approximate unrealized gain of $0.8 million and $1.5 million, respectively; while a decrease in interest rates of 100 and 200 basis points would have resulted in an approximate unrealized loss of $0.8 million and $1.6 million, respectively.

OnWarehouse ~~October~~Credit 1, 2000, we adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities. The standard required us to recognize all derivative instruments on the balance sheet at fair value. The accounting treatment for subsequent changes in the fair value of the derivative instruments depends on the use of the derivative. The adoption of this standard resulted in an after-tax charge to operations of approximately $1.2 million. The adoption also established new assets and liabilities on the balance sheet representing the fair value of our derivative instruments. Effective with the adoption of Statement No. 133, the derivative instruments above are not treated as hedge instruments and are being carried at fair value, with changes in such fair value charged or credited to earnings.Facility

~~Interest~~ Auto ~~Rate~~contracts ~~Sensitivity~~pledged to secure borrowings under BVAC’s warehouse credit facility bear fixed interest rates while amounts borrowed under BVAC’s warehouse credit facility bear a floating interest rate. To provide the Note Purchasers in the warehouse credit facility with protection from interest rate risk embedded in the fixed-rate auto contracts that have been transferred to the trust, the trust enters into out-of-the-money interest rate cap contracts, containing the terms and conditions required by the Note Purchasers. At December 31, 2005, the interest rate caps had a notional amount of $226.6 million with cap strike rates ranging from 5.50% to 6.25%. At December 31, 2005, the fair value of the interest rate caps was $0.4 million.

~~Our~~ Derivative ~~monitoring~~financial ~~activities~~instruments ~~related~~involve, to ~~managing~~varying ~~interest rate risk include both interest rate sensitivity “gap”~~degrees, ~~analysis~~elements ~~and the use~~ of acredit ~~simulation model~~risk. ~~While~~Credit ~~traditional~~risk ~~gap~~is ~~analysis~~defined ~~provides~~as athe possibility ~~simple picture~~ of ~~the~~sustaining ~~interest~~a ~~rate~~loss ~~risk~~because ~~embedded~~a incounterparty ~~the~~to ~~balance sheet, it provides only~~ a financial ~~static~~instrument ~~view~~failed ofto ~~interest~~perform ~~rate sensitivity at a specific point~~ in ~~time~~accordance ~~and~~with the ~~does~~terms ~~not~~of ~~measure~~ the ~~potential~~contract. ~~volatility~~Refer ~~in forecasted results relating~~ to ~~changes~~“Critical inAccounting Policies — Derivatives” ~~market~~at ~~interest rates over time~~Item 7. “Managements ~~Accordingly,~~Discussion weand ~~combine~~Analysis ~~the use~~ of ~~gap~~Financial ~~analysis~~Condition and ~~with~~Results ~~the use~~ of aOperations” ~~simulation~~for ~~model~~comments ~~which~~about ~~provides a dynamic assessment of~~the ~~interest~~accounting ~~rate~~for ~~sensitivity~~our derivatives.

~~The interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets anticipated~~42 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.~~

TheTable following table illustrates our combined asset and liability repricing as of December 31, 2000:Contents

	Repricing Period
	Under One Year		Over One to Three Years		Over Three to Five Years		Over Five Years		Total
	(Dollars in thousands)
Assets
Cash and investments	$ 92,666		$ —		$ —		$ —		$ 92,666
Mortgage-backed securities and loans and leases(1)	2,913,523		667,093		277,730		450,261		4,308,607
Total interest rate sensitive assets	$3,006,189		$ 667,093		$ 277,730		$ 450,261		$4,401,273
Liabilities
Deposits:
Transaction accounts(2)	$1,136,189		$ 430,310		$ 42,000		$ —		$1,608,499
Retail certificates of deposit	1,787,192		82,400		2,215		755		1,872,562
Brokered certificates of deposit	265,251		—		—		—		265,251
Borrowings(3)	727,812		223,363		50,000		242,268		1,243,443
Total interest rate sensitive liabilities	$3,916,444		$ 736,073		$ 94,215		$ 243,023		$4,989,755
Repricing gap-positive (negative) before impact of derivatives	$ (910,255	)	$ (68,980	)	$ 183,515		$ 207,238		$ (588,482	)
Impact of derivatives	140,000		(25,000	)	(25,000	)	(90,000	)
	$ (770,255	)	$ (93,980	)	$ 158,515		$ 117,238
Cumulative repricing gap-positive (negative)	$ (770,255	)	$(864,235	)	$(705,720	)	$(588,482	)

The following table provides information, as of December 31, 2005, about the Company’s derivative and other financial instruments that are sensitive to changes in interest rates. For market risk sensitive assets and liabilities with contractual maturities, the table presents cash flows and related weighted-average interest rates attributable to contractual maturities as well as prepayments estimated at historical levels. For interest rate swap contracts, the table presents notional amounts and weighted-average interest rates by contractual maturity date.

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


Years Ending December 31,		2006			2007			2008			2009			2010			Thereafter			Fair Value

		(Dollars in thousands)
Assets:
Retained interests in securitizations available-for-sale
	Principal amounts	$	14,334		$	5,773		$	—		$	—		$	—		$	—		$	20,107
	Weighted-average yield		8.48	%		9.50	%		0.00	%		0.00	%		0.00	%		0.00	%
Auto installment contracts held-for-investment, net
	Principal amounts	$	197,251		$	175,203		$	155,624		$	105,543		$	—		$	—		$	635,131
	Weighted-average yield		7.43	%		7.44	%		7.48	%		7.48	%		0.00	%		0.00	%

Liabilities:
Warehouse credit facility
	Principal amounts	$	99,727		$	—		$	—		$	—		$	—		$	—		$	99,727
	Weighted-average interest rate		4.92	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Securitization notes payable
	Principal amounts	$	162,923		$	145,905		$	129,485		$	83,255		$	—		$	—		$	518,270
	Weighted-average interest rate		4.34	%		4.50	%		4.64	%		6.08	%		0.00	%		0.00	%
Interest Rate Derivatives:(1)
Interest rate swaps
	Notional amounts	$	50,000		$	15,000		$	—		$	—		$	—		$	—		$	997
	Average rate paid		3.64	%		3.79	%		0.00	%		0.00	%		0.00	%		0.00	%
	Average rate received		4.30	%		4.26	%		0.00	%		0.00	%		0.00	%		0.00	%

(21) WeExcludes ~~estimate~~interest ~~transaction~~rate ~~accounts~~cap ~~repricing~~contracts ~~based~~acquired onin ~~historical~~connection ~~trends~~with ~~and~~BVAC’s ~~the~~warehouse ~~nature~~credit ~~and~~facility ~~types~~for the benefit of ~~our~~the ~~transaction~~Note ~~accounts~~Purchasers.

~~(3) Includes Capital Securities.~~43

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

	Net Interest Income
	-200 bp		-100 bp		+100 bp		+200 bp
Projected effect:
Net interest income	$166,470		$165,726		$155,985		$152,326
% Increase (decrease) from base net interest income	2.38	%	1.93	%	(4.07	)%	(6.32	)%
Policy guideline	0.00	%	(5.00	)%	(10.00	)%	(15.00	)%


Item 8.	Financial Statements and Supplementary Data

~~One application of our simulation model measures the impact of market interest rate changes on the net present value of~~ ~~estimated~~Bay ~~cash~~View ~~flows~~Capital ~~from~~Corporation ~~our assets~~ and liabilities, defined as our market value of equity. This analysis assesses the changes in market values of interest rate sensitive financial instruments that would occur in response to an instantaneous andSubsidiaries sustained increase or decrease in market interest rates of 100 and 200 basis points. At December 31, 2000, our market value of equity exposure related to these changes in market interest rates was within our policy guidelines as illustrated in the following table:

	Market Value of Equity
	-200 bp		-100 bp		+100 bp		+200 bp
Projected effect:
Market value of equity	$490,404		$471,567		$394,461		$348,625
Change in MVE as a percentage of base MVE	14.93	%	10.51	%	(7.56	)%	(18.30	)%
Policy guideline	10.00	%	5.00	%	(10.00	)%	(20.00	)%

Consolidated Statements of Financial Condition

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.


		December 31,			December 31,
		2005			2004

		(Dollars in thousands)
ASSETS
Cash and cash equivalents		$	8,898		$	4,447
Restricted cash			35,138			26,845
Retained interests in securitizations available-for-sale			20,107			22,636
Auto installment contracts and loans held-for-sale:
	Auto installment contracts		—			75,021
	Other loans		—			902
Auto installment contracts held-for-investment, net of allowance for credit losses of $0.7 million at December 31, 2005 and $1.5 million at December 31, 2004			106,822			252,863
Securitized auto installment contracts held-for-investment, net of allowance for credit losses of $5.6 million at December 31, 2005			526,799			—
Investment in operating lease assets, net			—			10,041
Real estate owned, net			552			3,379
Premises and equipment, net			536			733
Repossessed vehicles			542			439
Deferred income taxes, net			—			21,168
Goodwill			1,846			1,846
Other assets			13,521			7,199

Total assets		$	714,761		$	427,519


LIABILITIES AND STOCKHOLDERS’ EQUITY
Borrowings:
	Warehouse credit facility	$	99,727		$	298,755
	Securitization notes payable		521,568			—
	Other borrowings		—			1,895
Current income taxes, net			4,048			4,191
Other liabilities			11,133			9,629
Liquidation reserve			7,770			8,856

Total liabilities			644,246			323,326

Stockholders’ equity:
	Common stock ($.01 par value); authorized, 80,000,000 shares; issued, 2005 — 6,614,516 shares; 2004 — 6,597,303 shares; outstanding, 2005 — 6,613,099 shares; 2004 — 6,593,860 shares		66			66
	Additional paid-in capital		109,585			109,578
	Accumulated deficit		(39,035	)		(4,585	)
	Treasury stock, at cost; 2005 — 1,417 shares; 2004 — 3,443 shares		(252	)		(587	)
	Accumulated other comprehensive gain (loss)		151			(279	)

Total stockholders’ equity			70,515			104,193

Total liabilities and stockholders’ equity		$	714,761		$	427,519

~~Item 8. Financial~~See ~~Statements~~notes ~~and~~to ~~Supplementary~~consolidated ~~Data~~financial statements.

~~BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIES~~44

CONSOLIDATEDTable STATEMENTSof OF FINANCIAL CONDITIONContents

	At December 31,
	2000		1999
	(Dollars in thousands)
Assets
Cash and cash equivalents:
Cash and due from depository institutions	$ 694,934		$ 155,600
Short-term investments	—		188,305
	694,934		343,905
Securities available-for-sale:
Investment securities	33,009		49,063
Mortgage-backed securities	578		10,479
Securities held-to-maturity:
Investment securities	—		9,997
Mortgage-backed securities	535,478		608,668
Mortgage-backed securities due from creditor	106,572		35,566
Loans and leases held-for-sale	345,207		66,247
Loans and leases held-for-investment, net	2,751,794		4,295,246
Investment in operating leased assets, net	479,829		463,088
Investment in stock of the Federal Home Loan Bank of San Francisco	40,190		77,835
Investment in stock of the Federal Reserve Bank	19,590		13,476
Real estate owned, net	1,041		2,467
Premises and equipment, net	17,303		27,216
Intangible assets	134,936		329,005
Other assets	200,470		166,442
Total assets	$5,360,931		$6,498,700
Liabilities and Stockholders’ Equity
Deposits:
Transaction accounts	$1,608,499		$1,703,123
Retail certificates of deposit	1,872,562		1,637,127
Brokered certificates of deposit	265,251		389,530
	3,746,312		3,729,780
Advances from the Federal Home Loan Bank of San Francisco	804,837		1,367,300
Short-term borrowings	197,375		415,421
Subordinated Notes, net	149,567		149,502
Other borrowings	1,664		3,294
Other liabilities	73,327		112,209
Total liabilities	4,973,082		5,777,506
Guaranteed Preferred Beneficial Interest in our Junior Subordinated Debentures (“Capital Securities”)	90,000		90,000
Stockholders’ equity:
Serial preferred stock; authorized, 7,000,000 shares; outstanding, none	—		—
Common stock ($.01 par value); authorized, 60,000,000 shares; issued, 2000—32,640,039 shares; 1999—32,629,056 shares; outstanding, 2000—32,574,987 shares; 1999—32,562,942 shares	326		326
Additional paid-in capital	456,045		455,964
Retained earnings (accumulated deficit) (substantially restricted)	(156,877	)	179,100
Treasury stock, at cost, 2000—65,052 shares; 1999—66,114 shares	(1,081	)	(1,094	)
Accumulated other comprehensive income (loss):
Unrealized gain (loss) on securities available-for-sale, net of tax	10		(293	)
Debt of Employee Stock Ownership Plan	(574	)	(2,809	)
Total stockholders’ equity	297,849		631,194
Total liabilities and stockholders’ equity	$5,360,931		$6,498,700

Bay View Capital Corporation and Subsidiaries

~~The~~ Consolidated ~~accompanying~~Statements ~~notes are an integral part~~ of ~~these~~Operations ~~consolidated~~and ~~financial statements.~~Comprehensive Loss

BAY VIEW CAPITAL CORPORATION AND SUBSIDIARIES


		For the Year		For the Year		For the Three
		Ended		Ended		Months Ended
		December 31, 2005		December 31, 2004		December 31, 2003

		(In thousands, except per share amounts)
Interest income:
	Interest on auto installment contracts and other loans	$	36,549	$	19,700	$	3,757
	Interest on retained interests in securitizations and other investments		3,704		2,878		1,013
	Interest on mortgage-backed securities		—		31		166

			40,253		22,609		4,936
Interest expense:
	Interest on warehouse credit facility and other short-term borrowings		10,167		7,488		742
	Interest on securitization notes payable		12,437		—		—
	Other inte

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