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Fitch Places Bay View On Rating WatchEvolving

NEW YORK--(BUSINESS WIRE)--July 23, 2002--Fitch Ratings has placedBay View Capital Corporation (BVC) and its subsidiary Bay View Bank,N.A. (BVB) on Rating Watch Evolving. The rating action is in responseto the announced definitive agreement between BVC and U.S. Bancorp(USB) that calls for USB to acquire BVC's retail branch network andselected loans, and to assume its deposit obligations. Thetransactions are expected to close by yearend 2002. A complete list ofaffected ratings is included at the end of this release.

The rating action reflects the potential positive effect theannounced transaction will have on current BVB depositors under theexpectations that USB will be able to effectively integrate BVC'sbranch network and deposit customers into its regional franchise. Theevolving status also reflects the uncertainty of the terms andconditions of other transactions necessary to fund the deposit sale toUSB, as well as the risk remaining on BVC's balance sheet once all theplanned transactions have been completed, including the $1 bln loansale to Washington Mutual that is expected to close by mid-August.

Fitch is concerned that the remaining risk associated with thebalance sheet of the going concern entity may be significantly higherthan BVC's current mix of assets; and thus, views the transaction aspotentially negative from a credit standpoint. That said, Fitchexpects to see the surviving entity hold capital and reserves thatcorrespond with the inherent risk of the remaining portfolio, which,in our opinion, would call for considerably higher capital andreserves than BVC has maintained in recent years.

Fitch anticipates that the rating watch status will remain untilcompletion of the various transactions. However, Fitch will addressthe evolving rating watch with a more definitive action once it hascompleted an assessment of the quality of the remaining assets, theplans for asset securitization and the importance and role of BVC'splans to fund continued loan originations. It is anticipated thisreview will be completed within the next 90 days.

Bay View Capital Corporation

--Long-term debt, 'B-';

--Subordinated debt, 'CCC';

--Individual, 'D';

--Support, '5';

--Rating Watch 'Evolving'.

Bay View Bank

--Long-term deposits, 'B+';

--Long-term debt, 'B-';

--Short-term deposits, 'B';

--Short-term debt, 'B';

--Subordinated debt, 'CCC';

--Individual, 'D';

--Support, '5';

--Rating Watch 'Evolving'.

Bay View Capital Trust I

--Preferred Stock, 'CC'.


CONTACT: Fitch Ratings

Harold Thomas 212/908-0755

Kenneth Ritz, 212/908-0368 (New York)

James Jockle, 212/908-0547 (Media Relations, New York)



SOURCE: Fitch Ratings

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