BALTIMORE, July 24 /PRNewswire-FirstCall/ -- Bay National Corporation (the "Company") (Nasdaq: BAYN), the bank holding company for Bay National Bank, today reported a second quarter net loss of $776,000 or ($0.36) per diluted share, as compared to net income of $622,000 or $0.28 per diluted share reported for the quarter ending June 30, 2007.

As of June 30, 2008, total assets were $275.8 million, an increase of 6.8 percent from June 30, 2007. Commercial and consumer loan growth during the second quarter of 2008 reached record highs. In addition, both net loans and deposits rose 8.9 percent from the year-ago quarter.

Hugh W. Mohler, Chairman and CEO, stated, "Consistent with our expectations, we continue to feel the pressure of the turmoil in the financial markets and the deterioration of economic conditions. However, we believe we have made significant progress during our second quarter. Asset quality and the resolution of credit issues within our residential mortgage portfolio remain our top priorities for 2008.

Despite three difficult quarters, we have protected our capital base and remain 'well-capitalized' (the highest rating by regulatory capital measures) at all levels. These strong balance sheet measurements have been further fortified with a commitment offer for up to a $6 million line of credit, which will allow us to maintain our capital levels while we selectively pursue high- quality business.

Our Board of Directors and management team remain steadfast in our determination to preserve capital, manage asset/portfolio risk and improve our operating efficiencies. To that end, we have properly scaled back staffing by 10% during the second quarter and should see meaningful accretion to the bottom line later this year.

Candidly, this is one of the most challenging financial environments I have seen in my 40-year banking career. However, I am confident that we have the strength and capacity to manage through this cycle and we will continue to follow our strategic plan with the ultimate goal of building long-term shareholder value.

Now, more than ever, is the time to differentiate ourselves from our competition. Banking remains a people business, and I believe we have some of the finest bankers in the region supported by a Bank with a strong capital base," Mr. Mohler concluded.

Bay National Bank was founded in 2000 in response to banking industry consolidation and the distinct void these mergers created in servicing, in particular, small and mid-size businesses and their owners, business professionals, and high net worth individuals. Bay National Bank believes that it now occupies a unique niche in the banking industry. It also believes that it has positioned itself between the much larger banks, whose size and bureaucracy can preclude them from delivering exceptional and responsive service, and between much smaller banks, which may not be able to deliver the full range of products and services sought by growing businesses and sophisticated customers.

Bay National Corporation has two full-service banking offices, Baltimore and Salisbury, Maryland, residential mortgage lending operations in both Baltimore and the Eastern Shore of Maryland, and a recently-opened commercial banking office in the Baltimore-Washington Corridor. It offers a complete range of commercial, private, cash management, retail, and residential mortgage banking services delivered with a high degree of respect and integrity.

The statements in this press release that are not historical facts constitute "forward-looking statements" as defined by Federal Securities laws. Forward-looking statements can generally be identified by the use of forward- looking terminology such as "believes," "expects," "intends," "may," "will," "should," "anticipates" or similar terminology. Such statements, specifically regarding Bay National Corporation's intentions regarding resolution of credit issues in the mortgage portfolio, maintenance of capital levels and the pursuit of high-quality business, commitment for a line of credit, the impact of staffing reductions on operating results, and long-term shareholder value, are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by such forward- looking statements. Potential risks and uncertainties include, but are not limited to, further deterioration of the housing market in our market areas, changes in interest rates, deposit flows, loan demand and real estate values, as well as changes in economic, competitive, governmental, regulatory, technological and other factors which may affect Bay National Corporation specifically or the banking industry generally. Forward-looking statements speak only as of the date they are made. Bay National Corporation will not update forward-looking statements to reflect factual assumptions, circumstances or events that have changed after a forward-looking statement was made. For further information, please refer to the Bay National Corporation reports filed with the U.S. Securities and Exchange Commission.




    SELECTED UNAUDITED FINANCIAL DATA
    AS OF JUNE 30, 2008 and 2007
    (dollars in thousands, except per share data)


                                                   2008         2007

    Total assets                               $275,826     $258,334
    Cash and due from banks                         459        2,672
    Federal funds sold and other overnight
     investments                                 12,184       21,842
    Investment securities available for sale         -           399
    Other equity securities                       1,503        1,786
    Loans, net                                  247,721      227,471
    Deposits                                    227,152      208,508
    Short-term borrowings                        21,811       20,227
    Subordinated debt                             8,000        8,000
    Stockholders' equity                         17,801       20,130

    Common shares outstanding                 2,147,551    2,131,076
    Book value per share                          $8.29        $9.45
    Ratio of interest earning to interest
     bearing liabilities                         124.26%      124.21%
    Stockholders' equity as a percentage
     of assets                                     6.45%        7.79%


    SELECTED UNAUDITED FINANCIAL RATIOS
    FOR THE SIX MONTHS ENDED JUNE 30, 2008 and 2007



    Weighted average yield/rate                    2008         2007
    on:
    Loans                                          6.62%        9.16%
    Investments and interest bearing cash
     balances                                      1.76%        4.22%
    Interest bearing liabilities                   3.36%        4.57%
    Net interest spread                            2.99%        4.13%
    Net interest margin                            3.62%        5.05%


    SELECTED UNAUDITED OPERATIONAL DATA
    FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 and 2007
    (dollars in thousands, except per share data)


                                     Three Months Ended    Six Months Ended
                                          June 30               June 30
                                      2008       2007       2008       2007

    Interest income                  $3,724     $5,344     $8,093    $10,688
    Interest expense                  1,597      2,290      3,480      4,490
    Net interest income               2,127      3,054      4,613      6,198
    Provision for credit losses         558          -      3,026          -
    Net interest income after
     provision for credit losses      1,569      3,054      1,587      6,198
    Non-interest income                 202        181        410        373
    Non-interest expenses             2,867      2,217      5,549      4,512
    Income (loss) before income
     taxes                           (1,096)     1,018     (3,552)     2,059
    Income tax (benefit) expense       (320)       396     (1,290)       818
    Net (loss) income                 $(776)      $622    $(2,262)    $1,241

    PER COMMON SHARE
    Basic net (loss) income per
     share*                           $(.36)      $.29     $(1.06)      $.58
    Diluted net (loss) income
     per share*                       $(.36)      $.28     $(1.06)      $.56
    Average shares outstanding
     (Basic)*                     2,141,806  2,130,375  2,140,825  2,129,629

    Average shares outstanding
     (Diluted)*                   2,141,806  2,210,241  2,140,825  2,210,017

    STOCK PRICE
       High*                         $10.20     $16.83     $11.70     $17.55
       Low*                           $7.80     $14.77      $7.80     $14.77
       Close*                         $7.80     $16.53      $7.80     $16.53


    * All periods have been adjusted to reflect a 1.1 to 1 stock split in the
      form of a 10% stock dividend recorded on June 29, 2007


    SUPPLEMENTAL INFORMATION:
    (dollars in thousands)

                                                June 30, 2008   June 30, 2007
    Reconciliation of total to core deposits:
    Total deposits                                 $227,152       $208,508
    Commercial paper sweep balances                  13,661          4,227
    National market certificates of deposit         (44,395)       (16,831)
    Variable balance accounts (1 customer as
     of June 30, 2008 and 2007)                      (7,804)        (5,369)
         Portion of variable balance accounts
          considered to be core                       3,000          3,000
    Core deposits                                  $191,614       $193,535

SOURCE Bay National Corporation