Bay View Capital Corp. of San Mateo, Calif., announced Tuesday that its board has retained the services of Merrill Lynch & Co. to assist in evaluating its "strategic options," including the potential sale of some or all of its business units.

"Our common stock continues to trade below tangible book value and does not reflect the intrinsic value associated with our underlying franchise," said Edward H. Sondker, Bay View's president and chief executive officer. "As a result, we intend to evaluate strategies to capture and return this value to our stockholders."

The $6.4 billion-asset company's principal subsidiary is Bay View Bank, a nationally chartered commercial bank that converted from a thrift in February 1999 in an attempt to bolster earnings. For two years prior to its conversion, Bay View had not originated any single-family mortgage loans.

However, the company has had its troubles meeting earnings targets since its 1999 acquisition of Franchise Mortgage Acceptance Corp., a Los Angeles-based originator of loans to fast-food restaurants, gas stations, and convenience stores.

In the first quarter of this year, Bay View reported net income of just $500,000, or 2 cents per share, compared to $7.1 million, or 37 cents per share, during the first quarter of 1999. Mr. Sondker blamed the earnings drop on the sluggishness in the secondary market, which has forced Bay View to keep the acquired company's higher-yielding loans on its books rather than securitize them.

Investors applauded Bay View's announcement. In heavy trading late Tuesday, Bay View's stock was up nearly 17%, to $9. 5625. However, it is still trading well below its 52-week high of $20.75.

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