Fitch Places Bay View On Rating Watch Evolving.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 23, 2002

Fitch Ratings has placed Bay View Capital Corporation (BVC) and its subsidiary Bay View Bank, N.A. (BVB) on Rating Watch Evolving. The rating action is in response to the announced definitive agreement between BVC and U.S. Bancorp (USB) that calls for USB to acquire BVC's retail branch network and selected loans, and to assume its deposit obligations. The transactions are expected to close by yearend 2002. A complete list of affected ratings is included at the end of this release.

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

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

Fitch anticipates that the rating watch status will remain until completion of the various transactions. However, Fitch will address the evolving rating watch with a more definitive action once it has completed an assessment of the quality of the remaining assets, the plans for asset securitization and the importance and role of BVC's plans to fund continued loan originations. It is anticipated this review 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'.