BAY NATIONAL CORPORATION 
By Mr. Mohler continued, "The landscape of the financial industry further -- and dramatically -- changed during the third quarter of 2008 in which we saw the Federal Reserve taking ownership of the world's largest insurance company, two of the largest investments banks taken over by bank holding companies, and the Federal Housing Finance Agency assuming conservatorship of Fannie Mae and Freddie Mac. The crisis, which began in the third quarter of 2007, has had a material impact on our operating results and dampens our previous strong performance.
2008 has been a year of many accomplishments and a seemingly endless
number of challenges for the financial services industry. Yet, the Board of
Directors and I are confident that we are taking the right steps. We have
taken an aggressive stance in provisioning for loan losses and charging off
impaired loans, reducing expenses, and, most importantly, managing our
liquidity and keeping our balance sheet as strong as possible while we weather
this financial storm. In addition, the FDIC has increased its level of
insurance coverage from
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,
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 non- performing loans and future performance, 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 in the housing markets and in general economic conditions in our market area, further tightening of the credit markets, changes in interest rates, deposit flow and loan demand, as well as changes in 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 SEPTEMBER 30, 2008 and 2007
(dollars in thousands, except per share data)
2008 2007
Total assets $274,123 $260,875
Cash and due from banks 555 15,913
Federal funds sold and other overnight investments 16,603 15,296
Investment securities available for sale - 399
Other equity securities 1,240 1,066
Loans, net 237,957 222,733
Deposits 233,344 225,069
Short-term borrowings 15,717 6,003
Subordinated debt 8,000 8,000
Stockholders' equity 16,033 20,452
Common shares outstanding 2,153,101 2,137,633
Book value per share $7.45 $9.57
Ratio of interest earning assets to interest
bearing liabilities 120.84% 115.67%
Stockholders' equity as a percentage of assets 5.85% 7.84%
SELECTED UNAUDITED FINANCIAL RATIOS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 and 2007
Weighted average yield/rate on: 2008 2007
Loans 6.34% 9.03%
Investments and interest bearing cash balances 1.52% 4.07%
Interest bearing liabilities 3.20% 4.55%
Net interest spread 2.89% 4.04%
Net interest margin 3.48% 4.95%
SELECTED UNAUDITED OPERATIONAL DATA
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 and 2007
(dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
2008 2007 2008 2007
Interest income $3,586 $5,139 $11,805 $15,826
Interest expense 1,578 2,219 5,058 6,708
Net interest income 2,008 2,920 6,747 9,118
Provision for credit losses 2,492 350 5,517 350
Net interest income after
provision for credit losses (484) 2,570 1,230 8,768
Non-interest income 203 148 613 521
Non-interest expenses 2,591 2,275 8,266 6,787
(Loss) income before income
taxes (2,872) 443 (6,423) 2,502
Income tax (benefit) expense (1,093) 182 (2,382) 1,000
Net (loss) income $(1,778) $261 $(4,041) $1,502
PER COMMON SHARE
Basic net (loss) income per
share* $(.83) $.12 $(1.88) $.70
Diluted net (loss) income per
share* $(.83) $.12 $(1.88) $.68
Average shares outstanding
(Basic)* 2,151,825 2,135,688 2,144,519 2,131,671
Average shares outstanding
(Diluted)* 2,151,825 2,212,740 2,144,519 2,211,104
STOCK PRICE
High* $8.03 $16.75 $11.70 $17.55
Low* $4.26 $14.50 $4.26 $14.50
Close* $5.70 $15.35 $5.70 $15.35
* 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)
Sept. 30, Sept. 30,
2008 2007
Reconciliation of total deposits to core
deposits:
Total deposits $233,344 $225,069
Commercial paper sweep balances 14,087 2,845
National market certificates of deposit (72,092) (15,496)
Variable balance accounts (1 customer as of
September 30, 2008 and 2007) (8,373) (24,664)
Portion of variable balance accounts
considered to be core 3,000 3,000
Core deposits $169,966 $190,754
SOURCE Bay National Corporation
