FORWARD LOOKING STATEMENT

This annual  report  contains  forward-looking  statements  with  respect to the
financial condition,  results of operation and business of North Bay Bancorp and
its subsidiaries.  These include, but are not limited to, statements that relate
to or are  dependent on estimates or  assumptions  relating to the  prospects of
loan growth,  credit quality and certain operating  efficiencies  resulting from
the  operations  of The  Vintage  Bank and Solano  Bank.  These  forward-looking
statements  involve  certain  risks and  uncertainties.  Factors  that may cause
actual  results  to  differ   materially   from  those   contemplated   by  such
forward-looking  statements include, among others, the following  possibilities:
(1)  competitive   pressure  among  financial   services   companies   increases
significantly;  (2) changes in the interest  rate  environment  reduce  interest
margins; (3) general economic conditions, internationally,  nationally or in the
State of  California  are less  favorable  than  expected;  (4)  legislation  or
regulatory  requirements or changes  adversely  affect the business in which the
combined organization will be engaged; and (5) other risks detailed in the North
Bay Bancorp reports filed with the Securities and Exchange Commission.

                                                                               1
<PAGE>

--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------


To Our Shareholders

Selected Financial Data

Management's Discussion
   and Analysis of Financial Condition
   and Results of Operations

Quantitative and Qualitative Disclosure about Market Risk

Description of Operations

Market Information

Consolidated Balance Sheets

Consolidated Income Statements

Consolidated Statements of Changes in Shareholders' Equity

Consolidated Statements of Cash Flows

Consolidated Notes to Financial Statements

Report of Independent Auditors

Directors

Corporate Information


2
<PAGE>

--------------------------------------------------------------------------------
TO OUR SHAREHOLDERS
--------------------------------------------------------------------------------

As we grow into the physical  infrastructure  put in place this and prior years,
we anticipate our profitability will continue to improve.

Our 2003  results  reflect  the  solid  foundation  laid in prior  years and new
initiatives implemented to stimulate future growth. Our sales teams continued to
do an  exceptional  job of developing new business  relationships  and expanding
existing ones, while our lending teams  significantly  increased loan production
capacity and maintained exceptionally high credit quality.

Highlights for the year include the following:

     o    Net interest income increased 10% to $19.3 million.

     o    Pre-tax income rose 15% to $6.6 million.

     o    Net income increased 18% to $4.4 million.

     o    Earnings per share increased 15% to $1.79.

     o    Total  loans grew 29% to $306.7  million.

     o    Solano Bank was solidly  profitable by year-end and continues to build
          momentum.

     o    The Vintage Bank generated excellent loan growth and continues to gain
          market share.

     o    Asset quality remained  exemplary with zero  non-performing  assets at
          year end.

We took numerous  actions to expand and improve our franchise in 2003  including
opening a new Vintage Bank  Gateway  office,  located in the growing  industrial
area south of downtown Napa; we occupied new administrative  offices in and near
the Gateway branch and relocated  Solano Bank's  Fairfield office to a much more
dynamic location.  While the investment for these expansions  increased costs in
2003, we are confident they will provide solid  contributions to earnings in the
future.

In addition to the start-up costs for our franchise expansion, two unusual items
impacted 2003 earnings.  First,  we incurred  abnormally  high legal fees in the
first  half of the  year  due to  litigation  with our  former  data  processing
provider.  We also  incurred  significant  professional  fees related to tax and
technology-related  consulting.  With our expansion  efforts during the past few
years now  beginning  to  contribute  to  profitability,  excluding  any unusual
events, we anticipate our operating costs will level out.

Our net interest  margin  dropped more than we had  anticipated in 2003 to 4.99%
from 5.31% in 2002, as declining  interest  rates  impacted  yields on loans and
investments  more than the cost of funds.  Fourth  quarter  margin  increased to
5.14% from 4.94% in the fourth  quarter of 2002.  More than 25% of our  deposits
are in non-interest  bearing accounts,  and an additional 50% of deposits are in
money  market and NOW  accounts  which are our  second  most  efficient  funding
source.  While interest rates have remained  relatively stable in the first part
of 2004,  competition  for deposits is  increasing  in our markets,  which could
further impact margins this year.

Over the course of last year,  we  recognized  that in order to reach our profit
targets and  continue to generate  record  results,  we needed to be diligent in
controlling discretionary expenses and staffing levels. Consequently, our number
of full time equivalent  employees was below budget and  discretionary  spending
was kept to a minimum.  Our efficiency  ratio for the year reflected the unusual
items referred to above and rose to 69.00% from 67.71% in 2002. The cost control
efforts,  however,  generated solid  improvement in our efficiency  ratio in the
fourth quarter, dropping to 59.43% from 65.24% in the fourth quarter of 2002.

In June 2003, we took further steps to improve our management processes to bring
more  structure  and   accountability   to  our  operations  and  to  facilitate
communications  as we grow. With some professional  assistance,  we developed an
organizational model that more logically groups functions within departments and
accommodates  future  growth.  These changes are producing  sound results and we
anticipate further benefits from them in 2004.

We have also  decided to simplify  and  streamline  our  corporate  structure by
combining our three Boards of directors into a single Board. The charters of The
Vintage  Bank  and  Solano  Bank  will be  combined,


                                                                               3
<PAGE>

conditional on obtaining  regulatory  approval.  The Board of Directors of North
Bay will be  expanded  from 9 members to 16 with new seats  filled by members of
the Boards of The Vintage Bank and Solano Bank.  We believe  these  changes will
greatly  enhance  the  efficiency  of  our  management  team  in  directing  the
operations  of both banks and the  holding  company by saving  costs and freeing
senior  management to devote more time and attention to customers and prospects.
These structural changes will not affect the day-to-day  operations of our banks
and should be transparent to our customers and employees.

As we grow into the physical  infrastructure  put in place this and prior years,
we anticipate our  profitability  will continue to improve.  Our staffing levels
and branch  footprint now have more than adequate  capacity to  accommodate  our
growth plans for the next few years and take advantage of the  opportunities  in
our  markets.  Our  strategy  and vision  remain on course.  We continue to seek
opportunities for expansion in contiguous  markets while gaining market share in
our existing markets.  We are committed to being the premier financial  services
provider  in markets we serve,  to  skillfully  use  technology  to  competitive
advantage and to generate financial returns that exceed industry peers.

I am grateful to our  employees  for their hard work,  to the directors of North
Bay, The Vintage Bank and Solano Bank for their dedication, to our customers for
their  continuing  partnership,  and to our  shareholders for entrusting us with
their capital.  We  successfully  met the challenges of 2003 and now are looking
forward to a fast-paced and prosperous year in 2004.

Sincerely,


Terry Robinson
President and CEO


4
<PAGE>

--------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------
The following table presents a summary of selected  consolidated  data for North
Bay Bancorp and subsidiaries (the Company) for the five years ended December 31,
2003.  This  information   should  be  read  in  conjunction  with  Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements and notes thereto appearing elsewhere in the annual report:

<TABLE>
<CAPTION>
                                                (In 000's except share data)

                                    2003         2002         2001         2000         1999
                                 ----------   ----------   ----------   ----------   ----------
<S>                              <C>          <C>          <C>          <C>          <C>
STATEMENTS OF OPERATIONS DATA:
  Interest income                $   22,251   $   21,179   $   20,307   $   16,700   $   13,688
  Interest expense                    2,995        3,691        5,887        5,612        4,364
                                 ----------   ----------   ----------   ----------   ----------
  Net interest income                19,256       17,488       14,420       11,088        9,324
  Provision for loan losses             238          576          447          385          240
                                 ----------   ----------   ----------   ----------   ----------
  Net interest income after
     provision for loan losses       19,018       16,912       13,973       10,703        9,084

  Noninterest income                  3,847        3,111        2,691        2,140        1,777

  Noninterest expense                16,315       14,316       11,955        8,583        6,496

  Provision for income taxes          2,179        1,999        1,687        1,647        1,650
                                 ----------   ----------   ----------   ----------   ----------

  Net Income                     $    4,371   $    3,708   $    3,022   $    2,613   $    2,715
                                 ==========   ==========   ==========   ==========   ==========
BASIC PER SHARE DATA: (1)
  Earnings per share             $     1.83   $     1.60   $     1.33   $     1.23   $     1.40
  Average shares outstanding      2,382,093    2,313,461    2,264,170    2,123,830    1,943,490

DILUTED PER SHARE DATA: (1)
  Earnings per share             $     1.79   $     1.56   $     1.32   $     1.21   $     1.36
  Average shares outstanding      2,439,604    2,371,214    2,288,948    2,159,636    1,989,457

BALANCE SHEET DATA:
  Total assets                   $  459,482   $  416,458   $  326,806   $  247,469   $  197,106
  Net loans                         303,139      234,337      183,548      150,008      120,166
  Total deposits                    406,445      367,803      292,441      216,638      172,380
  Shareholders' equity               39,441       35,343       29,980       26,636       18,090
</TABLE>

(1) All per share amounts have been  adjusted to reflect the 5% stock  dividends
declared January 28, 1999,  January 8, 2000, January 29, 2001, January 28, 2002,
January 27, 2003 and January 26, 2004.

                                                                               5
<PAGE>

--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION
--------------------------------------------------------------------------------
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENT
--------------------------------------------------------------------------------

This Annual Report contains statements relating to future results of the Company
that are considered to be "forward looking statements" within the meaning of the
Private  Securities  Litigation  Reform Act of 1995. These statements relate to,
among  other  things,  loan loss  reserve  adequacy,  simulation  of  changes in
interest rates and litigation results. Actual results may differ materially from
those  expressed  or  implied  as a result of  certain  risks and  uncertainties
including,  but not limited to,  changes in political  and economic  conditions,
interest rate fluctuations, competitive product and pricing pressures within the
Company's  markets,  equity and fixed income market  fluctuations,  personal and
corporate customers' bankruptcies,  inflation,  acquisitions and integrations of
acquired businesses,  technological  change,  changes in law, changes in fiscal,
monetary, regulatory and tax policies, monetary fluctuations, success in gaining
regulatory  approvals  when  required as well as other risks and  uncertainties.
These  forward-looking  statements  speak  only as of the  date on  which  these
statements  are made,  and the Company  undertakes  no  obligation to update any
forward-looking  statement to reflect events or circumstances  after the date on
which these  statement  is made or to reflect the  occurrence  of  unanticipated
events.

Moreover,  wherever phrases such as or similar to "in Managements  opinion",  or
"Management  considers"  are used,  these  statements  are as of and based  upon
knowledge  of  Management,  at the time  made and are  subject  to change by the
passage of time and/or  subsequent  events,  and accordingly such statements are
subject  to the  same  risk  and  uncertainties  noted  above  with  respect  to
forward-looking statements.

These  financial  statements  should be read in  conjunction  with the financial
statements and the notes included herein.

OVERVIEW
--------------------------------------------------------------------------------

North Bay Bancorp,  organized  November 1, 1999, is the holding  company for The
Vintage Bank and Solano Bank (Banks),  which are wholly owned subsidiaries.  The
consolidated entity (the Company) reported net income of $4,371,000 or $1.79 per
diluted share,  in 2003 compared with  $3,708,000 or $1.56 per diluted share, in
2002 and $3,022,000 or $1.32 per diluted share, in 2001, equating to a return on
average  assets  of  1.00%,  .99% and  1.00%  for  years  2003,  2002 and  2001,
respectively.  The return on average  equity  was 11.70% in 2003  compared  with
11.36% and 10.61% in 2002 and 2001, respectively.

As of December 31,  2003,  total assets were  $459,482,000  compared  with total
assets of $416,458,000 and $326,806,000 at year end 2002 and 2001, respectively,
representing  a 10%  increase  in 2003  and a 27%  increase  in  2002.  Deposits
increased 11% in 2003 compared  with a 26% increase in 2002.  Loans,  net of the
allowance for loan losses, increased 29% in 2003 compared with a 28% increase in
2002.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
--------------------------------------------------------------------------------

The  Company's  accounting  policies are integral to  understanding  the results
reported.  The most complex accounting policies require management's judgment to
ascertain the valuation of assets,  liabilities,  commitments and contingencies.
The Company has established  detailed  policies and control  procedures that are
intended  to  ensure   valuation   methods  are  well   controlled  and  applied
consistently from period to period. In addition, the policies and procedures are
intended  to ensure that the process  for  changing  methodologies  occurs in an
appropriate  manner.  The  following  is a  brief  description  of  our  current
accounting policies involving significant management valuation judgments.


6
<PAGE>

Allowance for Loan  Losses.

The allowance for loan losses  represents  management's  best estimate of losses
inherent  in the  existing  loan  portfolio.  The  allowance  for loan losses is
increased  by the  provision  for loan losses  charged to expense and reduced by
loans charged-off, net of recoveries.

We evaluate our allowance for loan loss on a monthly basis.  We believe that the
allowance for loan loss is a "critical  accounting estimate" because it is based
upon management's  assessment of various factors affecting the collectibility of
the loans,  including  current and projected  economic  conditions,  past credit
experience,  delinquency status, the value of the underlying collateral, if any,
and a continuing review of the portfolio of loans and commitments.

We determine the appropriate  level of the allowance for loan losses,  primarily
on an analysis of the various  components of the loan  portfolio,  including all
significant  credits on an individual basis. We segment the loan portfolios into
as many  components as practical.  Each  component  would  normally have similar
characteristics,  such as risk  classification,  past due status,  type of loan,
industry or collateral.

Management  has an  established  methodology  for  calculating  the level of the
allowance for loan losses. We analyze the following  components of the portfolio
and provide for them in the allowance for loan losses:

Specific allowances defined as:

     o    Management assessment of all loans classified as substandard or worse,
          with an outstanding balance of $100,000.

     o    A specific  allowance  is provided  for any amount by which the loan's
          collateral   fair  value  is   insufficient  to  cover  the  loan;  or
          discounting  estimated  further cash flows, or by observing the loan's
          market price if it is of a kind for which there is a secondary market.

General allowance defined as:

     o    An allowance  for all loans  outstanding  within the portfolio and not
          contained in the specific reserve

Judgmental allowance defined as:

     o    National and local economic trends and conditions

     o    Trends in volume of loans

     o    Changes in underwriting standards and/or lending personnel

     o    Concentrations of credit within the portfolio

No assurance can be given that the company will not sustain loan losses that are
sizable in relation to the amount  reserved,  or that subsequent  evaluations of
the loan  portfolio  will not require an increase in the  allowance.  Prevailing
factors  in  association  with  the  methodology  may  include   improvement  or
deterioration  of  individual  commitments  or pools of similar  loans,  or loan
concentrations.

Available for Sale Securities.

SFAS 115 requires that  Available for Sale  securities be carried at fair value.
We believe this is a "critical  accounting estimate" in that the fair value of a
security is based on quoted  market  prices or if quoted  market  prices are not
available,  fair  values  are  extrapolated  from the  quoted  prices of similar
instruments.  Adjustments to the Available for Sale securities fair value impact
the  consolidated  financial  statements by increasing or decreasing  assets and
stockholders' equity.

Deferred Tax Assets.

Deferred  income  taxes  reflect the  estimated  future tax effects of temporary
differences  between the reported amount of assets and liabilities for financial
reporting purposes and such amounts as measured by tax laws and regulations.  We
use an estimate of future  earnings to support our position  that the benefit of
our  deferred  tax  assets  will be  realized.  If future  income  should  prove
non-existent  or less than the amount of the deferred tax assets  within the tax
years to which they may be applied,  the asset may not be  realized  and our net
income will be reduced.


                                                                               7
<PAGE>

SUMMARY OF EARNINGS
--------------------------------------------------------------------------------
Net Interest Income

Net  interest  income  before   provision  for  loan  losses  was   $19,256,000,
$17,488,000 and $14,420,000 in 2003, 2002 and 2001,  respectively,  representing
increases of 10% in 2003 and 21% in 2002.

The following  table sets forth average daily  balances of assets,  liabilities,
and  shareholders'  equity during 2003, 2002 and 2001, along with total interest
income  earned and expense  paid,  and the average  yields  earned or rates paid
thereon and the net interest  margin for the years ended December 31, 2003, 2002
and 2001.
<TABLE>
<CAPTION>
                                                                         (In 000's)
                                        December 31, 2003              December 31, 2002                   December 31, 2001
                                   ----------------------------   -----------------------------       ------------------------------
                                    Average     Income/   Rate/    Average    Income/     Rate/       Average      Income/    Rate/
                                    Balance     Expense   Yield    Balance    Expense     Yield       Balance      Expense    Yield
                                   --------    -------    -----   --------    -------     -----       --------     -------    ------
<S>                                <C>         <C>        <C>      <C>        <C>         <C>         <C>          <C>         <C>
ASSETS
 Loans  (1)                        $277,220    $18,782    6.78%    $212,735   $16,602     7.80%       $174,050     $15,319     8.80%
 Investment securities:
   Taxable                           78,457      2,535    3.23%      78,186     3,490     4.46%         57,501       3,395     5.90%
   Non-taxable (2)                   16,948        958    5.65%      14,002       868     6.20%         13,797         739     5.36%
                                   --------    -------             --------   -------                 --------     -------
Total loans and investment          372,625     22,275    5.98%     304,923    20,960     6.87%        245,348      19,453     7.93%
securities

 Due from banks, time                   100          2    2.00%         100         5     5.59%            100           7     6.86%
 Federal funds sold                  18,104        207    1.14%      28,138       418     1.49%         26,577       1,012     3.81%
                                   --------    -------             --------   -------                 --------     -------
Total earning assets                390,829     22,484    5.75%     333,161    21,383     6.42%        272,025      20,472     7.53%
                                   --------    -------             --------   -------                 --------     -------
 Cash and due from banks             28,216                          20,376                             17,124
 Allowance for loan losses          (3,403)                         (3,031)                            (2,507)
 Premises and equipment, net         11,125                          10,484                              8,006
 Accrued interest receivable
   and other assets                  12,157                          11,951                              6,928
                                   --------                        --------                           --------
Total assets                       $438,924                        $372,941                           $301,576
                                   ========                        ========                           ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
 Deposits:
   Interest bearing demand         $176,724        916    0.52%    $136,134     1,118     0.82%       $105,485       2,164     2.05%
   Savings                           32,678        107    0.33%      25,798       228     0.88%         19,381         234     1.21%
   Time                              77,198      1,430    1.85%      77,112     2,006     2.60%         72,291       3,318     4.59%
                                   --------    -------             --------   -------                 --------     -------
 Total deposits                     286,600      2,453    0.86%     239,044     3,352     1.40%        197,157       5,716     2.90%

Borrowings                           10,750        542    5.04%       6,468       339     5.25%          2,212         171     7.72%

Total interest bearing
   liabilities                      297,350      2,995    1.01%     245,512     3,691     1.50%        199,369       5,887     2.95%
                                   --------    -------             --------   -------                 --------     -------
 Noninterest bearing demand         100,342                          91,763                             71,798
 Accrued interest payable
   and other liabilities              3,876                           3,039                              1,919
 Shareholders' equity                37,356                          32,627                             28,490
                                   --------                        --------                           --------
Total liabilities and
    shareholders' equity           $438,924                        $372,941                           $301,576
                                   ========                        ========                           ========
Net interest income                            $19,489                        $17,692                              $14,585
Net interest income to
   average earning assets
(Net interest margin (3))                                 4.99%                           5.31%                                5.36%
</TABLE>

(1) Loan interest income  includes loan fee income of $1,119 in 2003,  $1,167 in
2002 and $1,053 in 2001.

(2) Average yields shown are  taxable-equivalent.  On a non-taxable  basis, 2003
interest  income was $725 with an average yield of 4.28%,  2002 interest  income
was $663 with an average yield of 4.74%; and in 2001 non-taxable interest income
was $575 and the average yield was 4.16%.

(3) Net interest  margin is  calculated  by dividing net interest  income by the
average balance of total earning assets for the applicable year.


8
<PAGE>

The following  table sets forth a summary of the changes in interest  earned and
interest  paid in December  31, 2003 over 2002,  December 31, 2002 over 2001 and
December 31, 2001 over 2000  resulting  from  changes in assets and  liabilities
volumes and rates.  The change in interest  due to both rate and volume has been
allocated in proportion to the relationship of absolute dollar amounts of change
in each.
<TABLE>
<CAPTION>
                                                            (In 000's)
                                   2003 over 2002         2002 over 2001             2001 over 2000
                            ------------------------  -----------------------  ------------------------
                             Volume      Rate  Total  Volume    Rate    Total  Volume      Rate   Total
                            ------------------------  -----------------------  ------------------------
<S>                          <C>     <C>      <C>     <C>     <C>       <C>     <C>       <C>     <C>
Increase (decrease) in
 Interest and fee income
   Loans                     $5,032  ($2,852) $2,180  $3,402  ($2,119)  $1,283  $3,016    ($624)  $2,392
   Time deposits with other
    financial institutions        0       (3)    (3)       0       (2)      (2)      0        2        2

   Investment securities:
     Taxable                     12     (967)  (955)   1,218   (1,123)      95   1,194     (371)     823
     Non-taxable (1)            183      (93)     90      11      118      129     (12)    (105)    (117)
   Federal funds sold         (149)      (62)  (211)      60     (654)    (594)  1,087     (596)     491
                             ------  -------  ------  ------    -----   ------  ------    -----   ------
   Total interest and fee
     income                   5,078   (3,977)  1,101   4,691   (3,780)     911   5,285   (1,694)   3,591

Increase (decrease) in
 Interest expense

   Deposits:
     Interest bearing
     Transaction accounts       333     (535)  (202)     627   (1,673)  (1,046)    960     (452)     508
     Savings                     61     (182)  (121)      79      (85)      (6)     63     (128)     (65)
     Time deposits                2     (578)  (576)     220   (1,532)  (1,312)    440     (543)    (103)
                             ------  -------  ------  ------    -----   ------  ------    -----   ------
   Total deposits               396   (1,295)  (899)     926   (3,290)  (2,364)  1,463   (1,123)     340

   Borrowings                   224      (21)   203      328     (160)     168     (88)      23      (65)
                             ------  -------  ------  ------    -----   ------  ------    -----   ------
   Total interest expense       620   (1,316)  (696)   1,254   (3,450)  (2,196)  1,375   (1,100)     275
                             ------  -------  ------  ------    -----   ------  ------    -----   ------
   Net Interest income       $4,458  ($2,661) $1,797  $3,437    ($330)  $3,107  $3,910    ($594)  $3,316
                             ======  =======  ======  ======    =====   ======  ======    =====   ======
</TABLE>

(1) The  interest  earned is  taxable-equivalent.  On a  non-taxable  basis 2003
income  interest was $62 more than 2002;  2002 interest income was $88 more than
in 2001; and 2001 interest income was $100 less than in 2000.

Net  interest  income is  impacted  by  changes in the volume and mix of earning
assets and  interest-bearing  liabilities  and  changes in interest  rates.  The
increase in net interest  income in 2002  compared  with 2001 was  primarily the
result of volume  increases in loans.  The net interest  margin  (defined as net
interest income divided by average earning assets)  decreased  significantly  in
2003 to 4.99% from 5.31% in 2002.  The  decrease in the net  interest  margin is
primarily  the result of a lower  average  yields on earning  assets,  partially
offset by lower expenses on deposits.  The impact of declining  general interest
rates during the first half of 2003 to  unprecedented  low levels  resulted in a
significant narrowing of the margin, as reductions in rates paid on deposits and
other borrowings could not adequately  offset the reduction in yields on earning
assets.  Also,  investment  portfolio yield  reductions were  intensified by the
impact of  having  mortgage-backed  securities  purchased  at a  premium  in the
portfolio;  the  premium  is  amortized  over the  estimated  average  life of a
particular  security.  Higher than  anticipated  prepayments  on the  underlying
mortgages resulted in significant  reductions in the yield on these investments.
Despite  these  factors,  the Company  continues to enjoy a net interest  margin
higher than peer institutions of comparable size due to its low cost of funds.

Taxable-equivalent  interest income (defined as interest income adjusted for the
tax benefit of holding tax exempt securities and loans) increased  $1,101,000 or
5%, in 2003  compared  with 2002.  Increases  in the  volume of  earning  assets
accounted for increasing interest income by $5,078,000,  offset by a decrease of
$3,977,000  attributable  to lower  rates.  An  increase  in  taxable-equivalent
interest  income of $911,000 or 7% in 2002  compared  with 2001  consisted  of a
$4,491,000  increase  due to growth of earning  assets  offset by a decrease  of
$3,779,000 attributable to lower rates on earning assets.

Interest  paid  on  interest-bearing  liabilities  decreased  $696,000  in  2003
compared  with 2002.  Increases in the volume of deposits  and other  borrowings
increased interest paid by $620,000 offset by a $1,316,000


                                                                               9
<PAGE>

decrease  attributable to a decline in rates.  Interest paid on interest-bearing
liabilities  decreased  $2,196,000  in 2002  compared  with 2001;  the effect of
volume  increases  accounted for  $1,254,000  offset by a decrease of $3,450,000
attributable to lower rates.

Provision and Allowance for Loan Losses

Credit  risk is inherent in the  business of lending.  As a result,  the Company
maintains an Allowance for Loan Losses to absorb probable losses inherent in the
Company's  loan  portfolio.  This is  maintained  through  periodic  charges  to
earnings.  These  charges  are shown in the  Consolidated  Income  Statement  as
provision for loan losses. All specifically identifiable and quantifiable losses
are  immediately  charged off against the allowance.  However,  for a variety of
reasons,  not all losses are immediately known to the Company and, of those that
are known,  the full extent of the loss may not be quantifiable at that point in
time.  The balance of the Company's  Allowance for Loan Losses is meant to be an
estimate of the probable losses inherent in the portfolio.

The  Company's  written  lending  policies,   along  with  applicable  laws  and
regulations governing the extension of credit,  require risk analysis as well as
ongoing  portfolio and credit management  through loan product  diversification,
lending  limits,  ongoing  credit  reviews both internal and external along with
approval policies prior to funding of any loan. The Company manages and controls
credit  risk  through   diversification,   close  monitoring  of  any  portfolio
concentrations,  loan limits to  individuals  and  reviewing  historical  losses
incurred by the Company.  Loans that are performing but have shown some signs of
weakness are subjected to more stringent reporting and oversight. Management has
established a monitoring system for any concentration within the portfolio.

The  existing  portfolio  consists  of  commercial  loans  to  businesses,  both
commercial  and  residential  real  estate  loans  and  consumer  products.  The
portfolio  contains variable rate loans as well as loans with rates fixed for up
to ten  years.  Fixed rate  loans  primarily  are  associated  with real  estate
lending.

As of December 31, 2003, net loans increased $69 million,  from year-end 2002, a
29% increase. On an average balance basis the Company's loan portfolio increased
$64 million,  or 30% over the average balance in 2002. In 2002, average balances
increased from the prior year by $39 million,  or 22%. The increases in 2003 and
2002 were due to strong loan demand for commercial  real estate loans along with
an aggressive calling program.

Management recognizes that the estimation of probable losses in the portfolio is
not a  science  and  therefore  the  current  Allowance  for Loan  Losses is not
expected to be equal to the result of the assessment.  It is expected,  however,
that the  assessment  will  demonstrate  that the actual reserve is adequate for
coverage of probable loan losses in the existing  portfolio.  To the extent that
the  current  allowance  is  deemed   insufficient  to  cover  the  estimate  of
unidentified  losses,  Management  will record an additional  provision for loan
loss.  If the  allowance is greater than appears to be required at that point in
time, the provision expense may be adjusted accordingly.

Assessment of the Adequacy of the  Allowance for Loan Losses and the  Allocation
Process

The Company  formally  assesses  the  adequacy of the  allowance  on a quarterly
basis.  Determination  of the  adequacy is based on ongoing  assessments  of the
probable risk in the  outstanding  loan portfolio  and, to a lesser extent,  the
Company's  unfunded  loan  commitments.   These  assessments   include  periodic
re-grading   of   credits   based  on  changes   in  their   individual   credit
characteristics including delinquency,  seasoning,  recent financial performance
of the borrower,  economic  factors,  changes in the interest rate  environment,
growth of the portfolio as a whole or by segment and other factors as warranted.
Loans are  initially  graded when  originated.  They are  re-graded  as they are
renewed,  when there is a new loan to the same borrower,  when identified  facts
demonstrate  heightened  risk of  nonpayment  or if they become  delinquent on a
frequent  basis.  Re-grading  of  problem  loans  will  occur at least  monthly.
Confirmation  of the quality of the grading  process is obtained by  independent
credit reviews conducted by consultants  specifically hired for this purpose and
by regulatory examiners.

The  Company  evaluates  individual  loans that meet its  criteria  (loans  over
$100,000  and graded  substandard  or lower) to  determine  if  impaired  and to
establish a specific allowance as necessary.  The Company establishes percentage
allowance requirements for all other loans, according to their classification as
determined by the Company's internal grading system.  These loans are identified
through the following categories:


10
<PAGE>

Watch           -  These  loans are not classified, but they contain potentially
unsatisfactory  characteristics.

Special Mention - These assets constitute an undue and unwarranted  credit risk,
but not to the point of justifying a classification to substandard.

Substandard     - These are loans inadequately protected by current sound worth,
paying  capacity  of the  borrower  or  pledged  collateral.  Substandard  loans
normally have one or more  well-defined  weaknesses  that could  jeopardize  the
repayment of the debt.

Doubtful        - The  possibility of loss  is extremely  high, but  because  of
certain important and reasonably  specific pending factors which may work to the
advantage and strengthening of the asset,  writing down the loan and recognizing
the loss is deferred until its more exact status may be determined.

The above, along with specific allocations for concentrations in real estate are
taken into  consideration  when  evaluating  the  Company's  allowance  for loan
losses.

As of December 31, 2003 the allowance for loan losses of $3,524,000 representing
1.15% of loans outstanding,  as compared with an allowance balance of $3,290,000
at December 31, 2002, representing 1.38% of loans outstanding. During 2003, 2002
and 2001, $238,000, $576,000 and $447,000,  respectively, was charged to expense
for the provision of loan losses.

Non-performing Loans

The  Company's  policy is to place  loans on  nonaccrual  status  when,  for any
reason,  principal  or  interest is past due for ninety days or more unless they
are both well secured and in the process of  collection.  Any interest  accrued,
but  unpaid,  is  reversed  against  current  income.  Thereafter,  interest  is
recognized  as income only as it is collected  in cash.  As of December 31, 2003
and 2002 there were no nonaccrual loans, loans that were past due ninety days or
more, or trouble debt restructurings.

Historical Loan Loss & Recovery Experience

The following  table  provides a summary of the Banks' loan loss  experience for
the years ended December 31, 2003, 2002, 2001, 2000 and 1999.
<TABLE>
<CAPTION>
                                                                       (In 000's)
                                                                      December 31,
                                                                      ------------
                                               2003          2002          2001          2000          1999
                                            ---------     ---------     ---------      ---------     ---------
<S>                                         <C>           <C>           <C>            <C>           <C>
Average loans for the period                $ 277,220     $ 212,735     $ 174,050      $ 141,076     $ 110,609
Loans outstanding at end
    of  period                                306,663       237,627       186,265        152,276       122,152

Allowance for Loan Losses

Balance, beginning of period                $   3,290     $   2,717     $   2,268      $   1,987     $   1,752

Less loans charged off:
    Real estate loans                               0             0             0              0            13
    Commercial loans                                0             0             0             99             0
    Installment loans                              12            10             4              6            12
                                            ---------     ---------     ---------      ---------     ---------
Total loans charged off                            12            10             4            105            25

Recoveries:
    Real estate loans                               0             0             0              0             0
    Commercial loans                                0             0             0              1             7
    Installment loans                               8             7             6              0            13
                                            ---------     ---------     ---------      ---------     ---------
Total recoveries                                    8             7             6              1            20

Net loans charged off
  (recovered)                                       4             3            (2)           104             5

Provision for loan losses                         238           576           447            385           240
                                            ---------     ---------     ---------      ---------     ---------

Balance, end of period                      $   3,524     $   3,290     $   2,717      $   2,268     $   1,987
                                            =========     =========     =========      =========     =========

Net loans charged off (recovered)
  to average loans by types:
       Real estate loans                         0.00%         0.00%         0.00%          0.00%         .001%
       Commercial loans                          0.00%         0.00%         0.00%          .069%        (.006%)
       Installment loans                          .01%          .01%        (.001%)         .004%         .001%

Net losses (recoveries) to average loans
outstanding                                      .001%         .001%        (.001%)         .074%         .004%
</TABLE>


                                                                              11
<PAGE>

The following  tables,  in thousands,  summarize the allocation of the allowance
for loan losses  among loan types at December  31, 2003,  2002,  2001,  2000 and
1999.
<TABLE>
<CAPTION>
                                                              December 31, 2003
                                        ------------------------------------------------------------------
                                                                                      Percentage of Loans
                                                              Amount Allocated for    in Each Category to
                                        Composition of Loans       Loan Losses            Total Loans
                                        --------------------  --------------------    --------------------
<S>                                          <C>                    <C>                       <C>
Commercial loans                             $ 45,991               $    801                  15.0%
Commercial loans secured by
    real estate                                33,519                    186                  10.9%
Installment loans                              28,860                    158                   9.4%
Real estate loans                             163,088                  2,018                  53.2%
Construction loans                             35,205                    361                  11.5%
                                             --------               --------                  ----
Total loans outstanding                       306,663
Less allowance for loan losses                  3,524               $  3,524                 100.0%
                                             --------
Total loans, net                             $303,139
                                             ========

<CAPTION>
                                                              December 31, 2002
                                        ------------------------------------------------------------------
                                                                                      Percentage of Loans
                                                              Amount Allocated for    in Each Category to
                                        Composition of Loans       Loan Losses            Total Loans
                                        --------------------  --------------------    --------------------
<S>                                          <C>                    <C>                       <C>
Commercial loans                             $ 46,061               $    587                  19.4%
Commercial loans secured by
    real estate                                16,991                    294                   7.2%
Installment loans                              24,102                    272                  10.1%
Real estate loans                             131,167                  1,688                  55.2%
Construction loans                             19,306                    449                   8.1%
                                             --------               --------                  ----
Total loans outstanding                       237,627
Less allowance for loan losses                  3,290               $  3,290                 100.0%
                                             --------
Total loans, net                             $234,337
                                             ========

<CAPTION>
                                                              December 31, 2001
                                        ------------------------------------------------------------------
                                                                                      Percentage of Loans
                                                              Amount Allocated for    in Each Category to
                                        Composition of Loans       Loan Losses            Total Loans
                                        --------------------  --------------------    --------------------
<S>                                          <C>                    <C>                       <C>
Commercial loans                             $ 29,730               $    632                  16.0%
Commercial loans secured by
    real estate                                 7,930                     71                   4.3%
Installment loans                              20,301                    259                  10.9%
Real estate loans                             106,851                  1,588                  57.3%
Construction loans                             21,453                    167                  11.5%
                                             --------               --------                  ----
Total loans outstanding                       186,265
Less allowance for loan losses                  2,717               $  2,717                 100.0%
                                             --------
Total loans, net                             $183,548
                                             ========

<CAPTION>


12
<PAGE>

                                                              December 31, 2000
                                        ------------------------------------------------------------------
                                                                                      Percentage of Loans
                                                              Amount Allocated for    in Each Category to
                                        Composition of Loans       Loan Losses            Total Loans
                                        --------------------  --------------------    --------------------
<S>                                          <C>                    <C>                       <C>
Commercial loans                             $ 28,600               $    703                  18.8%
Commercial loans secured by
    real estate                                 5,115                     61                   3.4%
Installment loans                              23,432                    193                  15.4%
Real estate loans                              86,886                  1,195                  57.0%
Construction loans                              8,243                    116                   5.4%
                                             --------               --------                  ----
Total loans outstanding                       152,276
Less allowance for loan losses                  2,268               $  2,268                 100.0%
                                             --------
Total loans, net                             $150,008
                                             ========

<CAPTION>
                                                              December 31, 1999
                                        ------------------------------------------------------------------
                                                                                      Percentage of Loans
                                                              Amount Allocated for    in Each Category to
                                        Composition of Loans       Loan Losses            Total Loans
                                        --------------------  --------------------    --------------------
<S>                                          <C>                    <C>                       <C>
Commercial loans                             $ 21,463               $    350                  17.6%
Commercial loans secured by
    real estate                                13,011                    212                  10.6%
Installment loans                              20,869                    338                  17.1%
Real estate loans                              58,368                    950                  47.8%
Construction loans                              8,441                    137                   6.9%
                                             --------               --------                  ----
Total loans outstanding                       122,152
Less allowance for loan losses                  1,987               $  1,987                 100.0%
                                             --------
Total loans, net                             $120,165
                                             ========
</TABLE>

The increase in the loan loss reserve is due primarily to overall  growth in the
loan  portfolio and related  inherent risk of loss. Net loans charged off were a
modest  $4,000  within the  portfolio for The Vintage Bank in 2003 compared with
net charge offs of $3,000 in 2002.  Solano Bank has  sustained  no losses  since
opening for business July 2000.

Based on the current conditions of the loan portfolio,  Management believes that
the  $3,524,000  allowance  for loan losses at December  31, 2003 is adequate to
absorb potential losses inherent in the Banks' loan portfolios. No assurance can
be given,  however, that adverse economic conditions or other circumstances will
not result in increased losses in the portfolio.

Noninterest Income

Details of noninterest income are as follows:

                                                  (In 000's)
                                        2003          2002          2001
                                       ------        ------        ------
   Service charge on deposit
       accounts                        $1,645        $1,321        $1,186
   Gains (losses) on securities
       transactions                       637           399           325
   Other                                1,565         1,391         1,180
                                       ------        ------        ------
      Total                            $3,847        $3,111        $2,691
                                       ======        ======        ======

Noninterest income for year 2003 increased $736,000, or 24%, compared with 2002.
Increases during 2002 compared with 2001 were $420,000, or 16%. Most noninterest
income derives from service charges on deposit  accounts.  Service charge income
increased  proportionately  more than  growth in  deposits  because


                                                                              13
<PAGE>

of improved  collection  efforts and  implementation  of an overdraft  privilege
program  that  commenced  on  September  15,  2003.  Service  charges  increased
approximately  $200,000 in the fourth quarter of 2003 compared with the previous
quarter.

Gains on securities  transactions  in all three years  resulted  primarily  from
selling  securities  with less than one year to maturity to provide  funding for
loans or to reinvest in securities with a longer  duration and higher  effective
yield to maturity.  In an overall environment of falling general interest rates,
as has  characterized  the  market  for the past  several  years,  net gain will
normally result.

Noninterest Expense

Details of noninterest expense are as follows:

                                            (In 000's)
                               2003            2002               2001
                             -------          -------           -------
Salaries & benefits           $8,795           $7,893            $6,349
Occupancy                      1,289              916               855
Equipment                      1,453            1,614             1,451
Other                          4,778            3,893             3,300
                             -------          -------           -------
   Total                     $16,315          $14,316           $11,955
                             =======          =======           =======

Salaries  and  benefits  expense  increased  11%  and  24%  in  2003  and  2002,
respectively,  from the previous  year.  The  increases  were  primarily  due to
increases in the number of full-time equivalent  employees,  which has increased
from  approximately  132 at year-end 2000 to 151 at year-end  2003. The increase
was primarily the result of staffing for new branches throughout the Company.

The 41%  increase  in  occupancy  expense  during  2003  compared  with 2002 was
primarily in rent and depreciation  associated with opening a new branch,  along
with new executive offices and an administration center during the first quarter
of 2003.

Equipment  expense decreased in 2003 compared with 2002. During 2002 the Company
had additional  depreciation expense resulting from accelerated  depreciation on
the host  banking  system,  which was replaced in July 2002.  Also,  the Company
reversed  approximately  $168,000 in accrual maintenance fees during 2003 as the
result of settling litigation with a former software supplier.


14
<PAGE>

The key components of other expenses are as follows:

                                          (In 000's)
                                2003             2002              2001
                               ------           ------            ------
Professional services          $1,387             $830              $755
Business promotion                554              525               379
ATM expenses                      250              261               222
Stationery & supplies             380              318               274
Insurance                         224              188               111
Other                           1,983            1,771             1,559
                               ------           ------            ------
   Total                       $4,778           $3,893            $3,300
                               ======           ======            ======

Professional  services  increased 67% in 2003 compared with the prior year; 2002
expenses  were 10% higher than 2001.  The increase in 2003 was  primarily due to
increases in legal fees  associated  with litigation with our former host system
provider and outsourced  information technology and tax consulting services. The
10% increase in 2002  compared with 2001 was due to NASDAQ  listing  fees,  fees
associated with the trust preferred offering and consulting fees associated with
revised  benefits  plans,  new corporate  governance  legislation and changes in
regulatory  requirements.  Business  promotion  expense  increased  6%  in  2003
compared with 2002; the increase was primarily the result of increased marketing
expenditures.  ATM expense  decreased in 2003 compared with 2002,  primarily the
result of a major card replacement  project during 2002. The 18% increase in ATM
expenses  when  comparing  2002 to 2001 was  primarily  due to  increases in the
number of ATM's the Company operates and the card  replacement  project in 2002.
Stationery  and  supplies  expense  increased  19%  and 16% in  2003  and  2002,
respectively,  reflecting overall volume increases and costs associated with the
system conversion and opening new branches. Insurance expenses increased 19% and
69% in  2003  and  2002,  respectively;  these  increases  are  consistent  with
increases in volumes and number of  locations,  as well as increases in workers'
compensation  costs.  Other  expenses  increased  12% and 14% in 2003 and  2002,
respectively,  primarily  due to  increased  expenses  for  telephone,  postage,
courier services, conferences and other miscellaneous expenses.

Provision for Income Taxes

The Company reported a provision for income taxes of $2,179,000,  $1,999,000 and
$1,687,0000  for years  2003,  2002 and  2001,  respectively.  These  provisions
reflect  accrual for taxes at the  applicable  rates for Federal and  California
State  income taxes based upon  reported  pre-tax  income,  and adjusted for the
beneficial effect of the Company's  investment in qualified municipal securities
and life insurance products.  The Company has not been subject to an alternative
minimum tax (AMT).

Return on Equity and Assets

The following  sets forth key ratios for the periods  ending  December 31, 2003,
2002 and 2001.

                                       2003          2002           2001
                                      ------        ------         ------
Net income as a percentage of
    average assets                     1.00%          .99%          1.00%
Net income as a percentage of
    average equity                    11.70%        11.36%         10.61%
Average equity as a percentage
    of average assets                  8.50%         8.75%          9.45%
Dividends declared per share
    as a percentage of net
    Income per share                  11.17%        12.20%         13.70%


                                                                              15
<PAGE>

BALANCE SHEET
--------------------------------------------------------------------------------

Total  assets  as  of  December  31,  2003  were   $459,482,000   compared  with
$416,458,000  and  $326,806,000,  as of  year-end  2002 and 2001,  respectively,
representing  a 10% increase in 2003 and a 27% increase in 2002.  Total deposits
grew $38,642,000 to $406,445,000 in 2003, representing an 11% increase, compared
with a 26% increase in 2002. Total loans, net of allowance for loan losses, grew
$68,802,000 to $303,139,000 in 2003, representing a 29% increase compared with a
28% increase in 2002.  Investment securities decreased $15,088,000 from year-end
2002 to  $92,006,000  in 2003, a 14% decrease,  compared with an increase of 24%
during 2002.

Trust Preferred Securities

On June 26, 2002, North Bay Statutory Trust I (Trust),  a Connecticut  statutory
business  trust and  wholly-owned  subsidiary  of North Bay Bancorp,  issued $10
million in floating rate Cumulative Trust Preferred Securities (Securities). The
Securities  bear a rate of 90 day Libor plus  3.45% and had an initial  interest
rate of 5.34% and the rate as of  December  31, 2003 was 4.62%;  the  Securities
will mature on June 26, 2032, but earlier  redemption is permitted under certain
circumstances, such as changes in tax or regulatory capital rules. The principal
asset of the trust is a $10,310,000 floating rate subordinated  debenture of the
Company.

The Securities, the subordinated debentures, and the common securities issued by
the Trust are  redeemable  in whole or in part on or after June 26, 2007,  or at
any time in whole,  but not in part, upon the occurrence of certain events.  The
Securities  are  included  in Tier 1 capital  for  regulatory  capital  adequacy
determination  purposes,  subject to certain limitations.  The Company fully and
unconditionally  guarantees  the  obligations  of the Trust with  respect to the
issuance of the Securities.

Subject to certain  exceptions  and  limitations,  the Company may, from time to
time, defer subordinated  debenture  interest payments,  which would result in a
deferral  of   distribution   payments  on  the  Securities  and,  with  certain
exceptions,  prevent the Company from declaring or paying cash  distributions on
the  Company's  common  stock  or  debt  securities  that  rank  junior  to  the
subordinated debentures.

Off Balance Sheet Arrangement

The  Company  does  not have  off-balance  sheet  arrangements,  as  defined  by
Regulation SK. The Company does have loan commitments and letters of credit. For
additional  information please see footnote eight to the Consolidated  Financial
Statements.

Borrowings

There were no  short-term  borrowings at December 31, 2003 or December 31, 2002.
Short-term   borrowings   consist  primarily  of  federal  funds  purchased  and
borrowings  from the Federal Home Loan Bank of San Francisco  (FHLB).  The Banks
maintain  collateralized  lines of credit with the FHLB. Based on the FHLB stock
requirements at December 31, 2003, the lines provided for maximum  borrowings of
approximately  $116  million;  the Company  also has  available  unused lines of
credit  totaling  $17.5 million for Federal funds  transactions  at December 31,
2003. At December 31, 2003 and 2002, there were no outstanding borrowings.

Contractual Obligations

The Company has entered into non-cancelable  contracts for leased premises, data
processing and other service agreements.  The Company has no capital leases. The
following   table   summarizes  our  significant   contractual   obligation  and
commitments as of December 31, 2003:
<TABLE>
<CAPTION>
                                                     (In 000's)
                                      Less than     One to        Four to
                               Total   one year   three years    five years     Thereafter
                             -------  ---------   ------------   ----------   ------------
<S>                          <C>             <C>           <C>           <C>       <C>
Trust preferred securities   $10,000         $0            $0            $0        $10,000
Operating leases               4,079        703         1,210           784          1,382
Other obligations                102         80            22             0              0
                             -------       ----        ------          ----        -------
Total                        $14,181       $783        $1,232          $784        $11,382
                             =======       ====        ======          ====        =======
</TABLE>


16
<PAGE>

Time Deposits

The following  table sets forth the maturity of time  certificates of deposit of
$100,000 or more at December 31, 2003, 2002 and 2001.

<TABLE>
<CAPTION>
                                                      (In 000's)
                                   2003                  2002                   2001
                                   ----                  ----                   ----

<S>                        <C>         <C>       <C>          <C>       <C>         <C>
3 months or less           $17,584     49.8%     $24,661      62.5%     $19,260     50.4%

Over 3 months through
6 months                     6,122     17.4%       6,182      15.7%       8,243     21.6%

Over 6 months through
12 months                    3,822     10.8%       3,887       9.9%       6,302     16.5%

Over 12 months               7,762    22.00%       4,695      11.9%       4,419     11.5%
                           -------    ------     -------      -----     -------     -----
                           $35,290      100%     $39,425       100%     $38,224      100%
                           =======    ======     =======      =====     =======     =====
</TABLE>

Liquidity and Capital Adequacy

The  Company's  liquidity  is  determined  by the level of assets (such as cash,
federal  funds sold and  unpledged  marketable  securities  together  with other
funding  sources) that are readily  convertible to cash and cash equivalents and
other funding  sources to meet customer  withdrawal  and  borrowing  needs.  The
Company's  liquidity  position is reviewed by  management  on a regular basis to
verify  that it is  adequate  to  meet  projected  loan  funding  and  potential
withdrawal  of  deposits.  The  Company  has  a  comprehensive   Asset/Liability
Management and Liquidity Policy that it uses to determine adequate liquidity.

Securities classified as "Held-to-Maturity"  are reported at amortized cost, and
"Available-for-Sale" securities are reported at fair value with unrealized gains
and losses  excluded  from  earnings  and  reported as a separate  component  of
accumulated other comprehensive income. As of December 31, 2003, the Company had
no securities carried as "Held-to-Maturity". "Available-for-Sale" securities had
a fair value of $90,655,000  with an unrealized  gain,  net of income taxes,  of
$608,000 reflected as a component of accumulated other  comprehensive  income in
the  shareholders'  equity section of the Balance Sheet. The Company owns equity
securities carried at a cost of $1,351,000.

The Company also has  available  funding from other  sources such as the Federal
Home Loan Bank and federal fund lines of credit.  As of December  31, 2003,  the
Company  had  approximately  $133.5  million  available  from these  sources for
borrowing.  The  Company  relies on these  funding  sources to assist in funding
loans when loan demand outpaces deposit growth.

At year-end 2003, liquid assets (defined as cash,  Federal funds sold,  deposits
in   other    financial    institutions    and    securities    categorized   as
available-for-sale)  represented 28% of total assets, as compared with 38% as of
year-end  2002.  The level of liquid  assets at December  31,  2003  exceeds the
liquidity required by the Company's  liquidity policy.  Management expects to be
able to meet the liquidity  needs of the Company during 2004  primarily  through
balancing loan growth with corresponding  increases in deposits. The Company did
occasionally  rely on borrowings from FHLB and on the federal funds lines during
2003.

The Company's  capital ratios  remained  relatively  steady during 2003 compared
with 2002 levels.  As of December  31,  2003,  the  Company's  total  risk-based
capital  ratio,  Tier I risk-based  capital ratio and leverage ratio were 13.5%,
12.6% and 10.6%,  respectively.  These  compare with ratios of 14.9%,  13.9% and
10.9% as of December 31, 2002.

In January,  2004, the Company declared a 5% stock dividend and a $.20 per share
cash  dividend  for  shareholders  of  record as of March  12,  2004.  The stock
dividend  will affect the Company's  capital and its capital  ratios only to the
extent that cash is distributed in lieu of fractional shares.  Accordingly,  the
stock dividend will not materially  impact the Company's  overall  capital.  The
cash dividend will total approximately $460,000,  equating to a reduction in the
Company's leverage ratio of approximately .01%.


                                                                              17
<PAGE>

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
--------------------------------------------------------------------------------

Market risk is the exposure to loss  resulting  from changes in interest  rates,
foreign currency  exchange rates,  commodity prices and equity prices.  Although
the Company manages other risks, as in credit quality and liquidity risk, in the
normal  course  of  business,  management  considers  interest  rate  risk to be
principally  a  market  risk.  The  Company  relies  on  loan  reviews,  prudent
underwriting  standards  and an adequate  allowance  for loan losses to mitigate
credit risk. Other types of market risks, such as foreign currency exchange rate
risk, do not arise in the normal course of the  Company's  business  activities.
The  majority of the  Company's  interest  rate risk  arises  from  instruments,
positions and  transactions  entered into for purposes other than trading.  They
include loans, securities  available-for-sale,  deposit liabilities,  short-term
borrowings  and  long-term  debt.  Interest  rate risk  occurs  when  assets and
liabilities reprice at different times as interest rates change.

The Company manages  interest rate risk through its Audit Committee which serves
as the Asset Liability  Committee (ALCO).  The ALCO manages the balance sheet to
maintain  the  forecasted  impact on net  interest  income and present  value of
equity within acceptable ranges despite unforeseeable changes in interest rates.
The ALCO monitors these risks on a quarterly  basis using both a traditional gap
analysis and simulation analysis.

The Company  utilizes a simulation  model as its primary tool for interest  rate
risk. This model considers the effects of lags and different  ranges of interest
rate  changes  among  various  classes  of earning  assets and  interest-bearing
liabilities  following a 1% or 2% change in the Fed Funds rate,  and  produces a
more accurate  projection of the impact changing interest rates will have on the
Company.  Readers are referred to management's  "Forward  Looking  Statement" in
connection with this information.

Interest Rate Sensitivity

The following table sets forth the repricing  opportunities  for  rate-sensitive
assets and  rate-sensitive  liabilities at December 31, 2003.  Rate  sensitivity
analysis usually excludes  noninterest-bearing demand deposits.  Including these
deposits, which totaled $103,401,000, would result in a significant shift in the
gap  position.   Rate-sensitive   assets  and  rate-sensitive   liabilities  are
classified by the earliest possible repricing date or maturity,  whichever comes
first.
<TABLE>
<CAPTION>
                                                                (In 000's)
                                         3 Months     Over 3 Mos.    Over 1 Yr.     Over 5
                                          or Less       To 1 Yr.      To 5 Yrs.     Years       Total
                                         ---------      -------       --------     --------    --------
<S>                                       <C>          <C>            <C>          <C>         <C>
Interest rate-sensitive assets:
   Loans, gross                           $ 58,340     $ 43,028       $146,251     $ 59,044    $306,663
   Interest-bearing deposits in
      other banks                                0          100              0            0         100
   Investment securities                     1,001          439         36,798       53,768      92,006
   Federal funds sold                        9,195            0              0            0       9,195
                                         ---------      -------       --------     --------    --------
                Total                       68,536       43,567        183,049      112,812     407,964

Interest rate-sensitive liabilities:
   Interest-bearing demand
      Deposits                             194,046            0              0            0     194,046
   Time deposits >$100,000                  17,584        9,944          7,762            0      35,290
   Other time deposits                      17,720       13,894          5,494            0      37,108
   Savings deposits                         36,599            0              0            0      36,599
   Long-term borrowings                     10,000            0              0            0      10,000
                                         ---------      -------       --------     --------    --------
                Total                     $275,949     $ 23,838       $ 13,256     $      0    $313,043
Interest rate sensitivity gap            ($207,413)    $ 19,729       $169,793     $112,812    $ 94,921
                                         =========    =========       ========      =======    ========
Cumulative interest rate
   sensitivity gap                       ($207,413)   ($187,684)      ($17,891)     $94,921
                                         =========    =========       ========      =======
Ratio of interest rate sensitivity
   to earning assets                       (50.84%)        4.84%         41.62%       27.65%
</TABLE>


18
<PAGE>

This table indicates that the Company has a "negative" GAP for three months into
the future and a  "positive"  GAP  beyond.  The  implication  is that during the
negative GAP "horizon" Company earnings will increase in a falling interest rate
environment,  as there are more rate sensitive  liabilities subject to repricing
downward than rate  sensitive  assets;  conversely,  earnings would decline in a
rising rate environment. During a positive GAP "horizon" earnings would decrease
in a falling  interest rate  environment,  as there would be more rate sensitive
assets  subject to repricing  downwards than rate  sensitive  liabilities.  This
traditional  analysis  does not  recognize or assume any "lag" in interest  rate
changes on earning assets and interest-bearing  liabilities, and it assumes that
all earning assets and interest-bearing liabilities reprice to the same absolute
degree regardless of the mix of earning assets and interest-bearing liabilities.

The following table, utilizing a simulation model to measure interest rate risk,
shows the  approximate  pre-tax dollar and  percentage  change in forecasted net
interest income over a 12-month period.  The simulation  analysis uses an income
simulation  approach to measure the change in interest  income and expense under
rate shock conditions. The model considers the three major factors of (a) volume
differences,  (b) repricing differences and (c) timing in its income simulation.
The model begins by disseminating data into appropriate  repricing buckets based
on internally  supplied  algorithms (or overridden by  calibration).  Next, each
major asset and liability  type is assigned a  "multiplier"  or beta to simulate
how much that particular  balance sheet category type will reprice when interest
rates change. The model uses eight asset and liability multipliers consisting of
bank-specific  or default  multipliers.  The  remaining  step is to simulate the
timing effect of assets and liabilities by modeling a month-by-month  simulation
to estimate  the change in interest  income and expense  over the next  12-month
period.


                                                                              19
<PAGE>

                                                     (In 000's)
                                                December 31, 2003
                                   ---------------------------------------------
                                    Dollar change in          Percent change in
Change in interest rates:          net interest income       net interest income
   100 basis points decline             $261                        1.36%
   100 basis points rise               ($460)                      (2.39%)
   200 basis points rise               ($931)                      (4.83%)

                                                    (In 000's)
                                                December 31, 2002
                                   ---------------------------------------------
                                    Dollar change in          Percent change in
Change in interest rates:          net interest income       net interest income
   100 basis points decline             $186                        1.06%
   100 basis points rise               ($277)                      (1.58%)
   200 basis points rise               ($552)                      (3.16%)

As  illustrated  in  the  above  tables,  the  Company  is  currently  liability
sensitive.  The implication of this is that the Company's earnings will increase
in a  falling  interest  rate  environment,  as there  are more  rate  sensitive
liabilities subject to reprice downward than rate sensitive assets;  conversely,
earnings would decrease in a rising rate environment.  Therefore, an increase in
market rates could adversely affect net interest income. In contrast, a decrease
in market rates may improve net interest income.

It should be noted that the tools used to manage  interest rate risk do not take
into account future management  actions that may be undertaken,  should a change
occur in actual market interest rates during the year. Also, certain assumptions
are required to perform modeling simulations that may have significant impact on
the results.  These include  assumptions about composition or mix of the balance
sheet, level of interest rates,  balance changes of deposit products that do not
have stated maturities and assumptions of industry standards and future expected
pricing  behaviors.  The results indicated by the model could vary significantly
due  to  external  factor  such  as  changes  in  the  prepayment   assumptions,
competition or early withdrawal of deposits.

DESCRIPTION OF OPERATIONS

--------------------------------------------------------------------------------

North Bay Bancorp is a California  corporation organized November 1, 1999 and is
registered  with the  Board of  Governors  of the  Federal  Reserve  System as a
financial  holding  company  under  the Bank  Holding  Company  Act of 1956,  as
amended. The Vintage Bank is a wholly-owned subsidiary of the Bancorp, organized
as a state chartered Bank in 1984; Solano Bank is also a wholly-owned subsidiary
of the Bancorp,  organized as a state  chartered  Bank in 2000. The Vintage Bank
engages in the commercial  banking business in Napa County from its main banking
office located at 1500 Soscol  Avenue,  Napa,  California.  The Vintage Bank has
four other business locations, one located in the Brown's Valley Shopping Center
at 3271  Brown's  Valley  Road,  Napa,  California,  3626 Bel Aire Plaza,  Napa,
California,  1065 Main Street in St. Helena,  California and one at 1190 Airport
Road,  Napa,  California which opened in March 2003. The Vintage Bank also has a
remote ATM at 6498 Washington Street, Yountville,  California.  Solano Bank also
engages  in the  commercial  banking  business  in Solano  County  from its main
banking office located at 403 Davis Street, Vacaville,  California.  Solano Bank
has three other business locations,  one located at 1411 Oliver Road, Fairfield,
California, one at 1395 E. Second Street, Benicia, California and one located at
976 Admiral Callahan Lane,  Vallejo,  California.  Solano Bank also has a remote
ATM at 1100 Texas Street,  Fairfield,  California.  The Banks conduct commercial
banking  business,  offering  a full range of  commercial  banking  services  to
individuals,   businesses  and  agricultural  communities  of  Napa  and  Solano
Counties.  The Banks emphasize their retail  commercial  banking  operations and
accept checking and savings deposits, issues drafts, sells traveler's checks and
provide other customary banking services.

SECURITIES OF THE HOLDING COMPANY

--------------------------------------------------------------------------------

The Company's  outstanding  securities  consist of one class,  Common Stock,  of
which there were 2,290,174  shares  outstanding at March 12, 2004, held by 1,001
shareholders of record. The stock is listed on the Nasdaq National Market System
under the symbol NBAN effective  September 3, 2002. Prior to the Nasdaq listing,
the stock traded over-the-counter and was quoted on the OTC "Bulletin Board".


20
<PAGE>

The following table (adjusted for the 2003 and 2004 stock dividends)  summarizes
the  common  stock  high and low prices  based  upon  transactions  of which the
Company is aware:

         Quarter ended                        High              Low

         March 31, 2002                     $24.94           $17.28
         June 30, 2002                       24.94            21.54
         September 30, 2002                  26.08            20.05
         December 31, 2002                   24.04            21.54
         March 31, 2003                      28.81            24.29
         June 30, 2003                       27.62            24.19
         September 30, 2003                  26.59            23.81
         December 31, 2003                   29.40            24.38

There  may be  other  transactions  of  which  the  Company  is not  aware  and,
accordingly,  they are not reflected in the range of actual sales prices stated.
Further,   quotations  reflect   inter-dealer  prices  without  retail  mark-up,
mark-down or commission and may not represent actual transactions. Additionally,
since  trading in the  Company's  common  stock is limited,  the range of prices
stated are not  necessarily  representative  of prices that would  result from a
more active market.

The Company  paid cash  dividends  of $0.20 per share in each of the years 2004,
2003 and 2002.  The  holders of common  stock of the  Company  are  entitled  to
receive cash  dividends  when and as declared by the Board of  Directors  out of
funds  legally  available.  Federal  Reserve  Board  regulations  prohibit  cash
dividends, except under limited circumstances,  if the distribution would result
in a  withdrawal  of capital or exceed the  Company's  net profits  then on hand
after deducting its losses and bad debts. Furthermore,  cash dividends cannot be
paid  without the prior  written  approval of the Federal  Reserve  Board if the
total of all dividends declared in one year exceeds the total of net profits for
that year plus the preceding two calendar years, less any required  transfers to
surplus under state or federal law. The shareholders' right to receive dividends
is  also  subject  to the  restrictions  set  forth  in the  California  General
Corporation  Law. The  Corporation  Law provides that a  corporation  may make a
distribution to its shareholders if the corporation's retained earnings equal at
least the amount of the  proposed  distribution.  The  Corporation  Law  further
provides that, in the event that sufficient  retained earnings are not available
for  the  proposed   distribution,   a  corporation  may  nevertheless   make  a
distribution to its  shareholders  if it meets two  conditions,  which generally
stated are as follows:  (1) The  corporation's  assets equal at least 1.25 times
its  liabilities;  and (2) the  corporation's  current assets equal at least its
current  liabilities  or, if the average of the  corporation's  earnings  before
taxes on income and before interest  expense for the two preceding  fiscal years
was less than the average of the corporation's  interest expense for such fiscal
years, then the corporation's  current assets must equal at least 1.25 times its
current liabilities.  As of December 31, 2003, the Company had retained earnings
of $9,623,000 eligible for dividends.


                                                                              21
<PAGE>

--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
December 31, 2003 and 2002
<TABLE>
<CAPTION>
                                                                   (In 000's except share data)
                                                                       2003           2002
                                                                     --------       --------
<S>                                                                  <C>            <C>
                             ASSETS
CASH AND DUE FROM BANKS                                              $ 28,756       $ 23,785
FEDERAL FUNDS SOLD                                                      9,195         28,525
                                                                     --------       --------
              Cash and cash equivalents                                37,951         52,310

TIME DEPOSITS WITH OTHER
    FINANCIAL INSTITUTIONS                                                100            100
INVESTMENT SECURITIES:
     Held-to-maturity                                                       0          1,272
     Available-for-sale                                                90,655        104,473
     Equity securities                                                  1,351          1,349
                                                                     --------       --------
               Total investment securities                             92,006        107,094
LOANS, net of allowance for loan losses of
    $3,524 in 2003 and $3,290 in 2002                                 303,139        234,337
LOANS HELD FOR SALE                                                     3,095              0
BANK PREMISES AND EQUIPMENT, net                                       10,909         10,800
INTEREST RECEIVABLE AND OTHER ASSETS                                   12,282         11,817
                                                                     --------       --------

             Total assets                                            $459,482       $416,458
                                                                     ========       ========

              LIABILITIES AND SHAREHOLDERS' EQUITY

DEPOSITS:
   Non-interest bearing                                              $103,401       $104,142
   Interest-bearing                                                   303,044        263,661
                                                                     --------       --------
               Total deposits                                         406,445        367,803

TRUST PREFERRED SECURITIES                                             10,000         10,000

INTEREST PAYABLE AND OTHER LIABILITIES                                  3,596          3,312
                                                                     --------       --------

               Total liabilities                                      420,041        381,115

SHAREHOLDERS' EQUITY:

   Preferred stock, no par value -  Authorized 500,000 shares;
       Issued and outstanding - None
   Common stock, no par value - Authorized 10,000,000 shares;
       Issued and outstanding -  2,285,646 shares in 2003
       and 2,130,288 shares in 2002                                    29,210         25,387
   Retained earnings                                                    9,623          8,612
   Accumulated other comprehensive income                                 608          1,344
                                                                     --------       --------
              Total shareholders' equity                               39,441         35,343

              Total liabilities and shareholders' equity             $459,482       $416,458
                                                                     ========       ========
</TABLE>
The accompanying notes are an integral part of these statements.


22
<PAGE>

--------------------------------------------------------------------------------
CONSOLIDATED INCOME STATEMENTS
--------------------------------------------------------------------------------
For the Years Ended December 31, 2003, 2002 and 2001
<TABLE>
<CAPTION>
                                                          (In 000's except share data)
                                                         2003        2002        2001
                                                        -------     -------     -------
<S>                                                     <C>         <C>         <C>
INTEREST INCOME:
   Interest and fees on loans                           $18,782     $16,602     $15,319
   Interest on federal funds sold                           207         418       1,012
   Interest on investment securities - taxable            2,535       3,490       3,395
   Interest on investment securities - tax exempt           725         664         574
   Interest on time deposits with other
     financial institutions                                   2           5           7
                                                        -------     -------     -------
              Total interest income                      22,251      21,179      20,307
                                                        -------     -------     -------

INTEREST EXPENSE:
   Interest on interest-bearing
     transaction deposits                                   916       1,118       2,164
   Interest on time and savings deposits                  1,537       2,234       3,552
   Interest on long-term debt                               531         339         168
   Interest on short-term borrowings                         11           0           3
                                                        -------     -------     -------
              Total interest expense                      2,995       3,691       5,887
                                                        -------     -------     -------
               Net interest income                       19,256      17,488      14,420

PROVISION FOR LOAN LOSSES                                   238         576         447
                                                        -------     -------     -------
                       Net interest income after
                          provision for loan losses      19,018      16,912      13,973

NONINTEREST INCOME:
   Service charges on deposit accounts                    1,645       1,321       1,186
   Gain on securities transactions, net                     637         399         325
   Other                                                  1,565       1,391       1,180
                                                        -------     -------     -------
             Total noninterest income                     3,847       3,111       2,691
                                                        -------     -------     -------

NONINTEREST EXPENSE:
   Salaries and related benefits                          8,795       7,893       6,349
   Occupancy                                              1,289         916         855
   Equipment                                              1,453       1,614       1,451
   Other                                                  4,778       3,893       3,300
                                                        -------     -------     -------
            Total noninterest expense                    16,315      14,316      11,955
                                                        -------     -------     -------

 Income before provision for income taxes                 6,550       5,707       4,709

PROVISION FOR INCOME TAXES                                2,179       1,999       1,687
                                                        -------     -------     -------

NET INCOME                                              $ 4,371     $ 3,708     $ 3,022
                                                        =======     =======     =======

BASIC EARNINGS PER SHARE:                               $  1.83     $  1.60     $  1.33

DILUTED EARNINGS PER SHARE:                             $  1.79     $  1.56     $  1.32
</TABLE>

The accompanying notes are an integral part of these statements.


                                                                              23
<PAGE>

--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES
--------------------------------------------------------------------------------

   IN SHAREHOLDERS' EQUITY & COMPREHENSIVE INCOME
For the Years Ended December 31, 2003, 2002 and 2001
<TABLE>
<CAPTION>
                                                                          (In 000's except share data)
                                                                                         Accumulated
                                                                                            Other         Total
                                                Common Shares    Common      Retained    Comprehensive  Shareholders'  Comprehensive
                                                 Outstanding     Stock       Earnings    Income (Loss)     Equity          Income
                                                 ----------    ----------   ----------    ----------     ----------      ----------
<S>                                               <C>          <C>          <C>           <C>            <C>             <C>

BALANCE, DECEMBER 31, 2000                        1,850,445    $   19,802   $    6,753    $       82     $   26,637

Stock dividend                                       92,307         1,938       (1,950)                         (12)
Cash dividend                                                                     (371)                        (371)
Comprehensive income:
    Net income                                                                   3,022                        3,022         $3,022
    Other comprehensive loss, net of tax:
       Change in net unrealized loss on
          available-for-sale securities,
          net of tax of $335 and
          reclassification adjustment                                                            471            471            471
                                                                                                                         ---------
                                                                                                                            $3,493
                                                                                                                         =========
Comprehensive income
Stock options exercised, including
    a tax benefit of $36                             18,150           233                                       233
                                                 ----------    ----------   ----------    ----------     ----------
BALANCE, DECEMBER 31, 2001                        1,960,902        21,973        7,454           553         29,980
Stock dividend                                       97,408         2,143       (2,158)                         (15)
Cash dividend                                                                     (392)                        (392)
Comprehensive income:
    Net income                                                                   3,708                        3,708          3,708
    Other comprehensive income, net of tax:
       Change in net unrealized gain on
          available-for-sale securities,
          net of tax of $562 and
          reclassification adjustment                                                            791            791            791
                                                                                                                         ---------
Comprehensive income                                                                                                       $4,499
                                                                                                                         =========
Stock options exercised, including
    a tax benefit of $362                            71,978         1,271                                     1,271
                                                 ----------    ----------   ----------    ----------     ----------
BALANCE, DECEMBER 31, 2002                        2,130,288        25,387        8,612         1,344         35,343
Stock dividend                                      106,295         2,918       (2,933)                         (15)
Cash dividend                                                                     (427)                        (427)
Comprehensive income:
    Net income                                                                   4,371                        4,371         $4,371
    Other comprehensive loss, net of tax:
       Change in net unrealized gain on
          available-for-sale securities,
          net of tax of $523 and
          reclassification adjustment                                                           (736)          (736)          (736)
                                                                                                                         ---------
                                                                                                                            $3,635
                                                                                                                         =========
Comprehensive income
Stock options exercised, including
    a tax benefit of $261                            49,063           905                                       905
                                                 ----------    ----------   ----------    ----------     ----------
BALANCE, DECEMBER 31, 2003                        2,285,646    $   29,210   $    9,623    $      608     $   39,441
                                                 ==========    ==========   ==========    ==========     ==========
</TABLE>
The accompanying notes are an integral part of these statements.

24
<PAGE>

--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
For the Years Ended December 31, 2003, 2002 and 2001
<TABLE>
<CAPTION>
                                                                       (In 000's)
                                                           2003           2002           2001
                                                         ---------      ---------      ---------
<S>                                                      <C>            <C>            <C>
Cash Flows From Operating Activities:
Net income                                               $   4,371      $   3,708      $   3,022
Adjustments to reconcile net income to net cash
      provided by operating activities:
  Depreciation and amortization                              1,569          1,441          1,352
  Provision for loan losses                                    238            576            447
  Proceeds from sale of loans-held-for sale                280,225              0              0
  Purchase of loans-held-for sale                         (283,320)             0              0
  Amortization of deferred loan fees                          (665)          (514)          (471)
  Amortization of investment securities
    premiums, net                                            1,079            938            121
  Provision for deferred income taxes                          (56)          (398)          (308)
  Losses on sale or retirement of capital assets                 0              1              0
  Gain on securities transactions                             (637)          (399)          (325)
Changes in:
    Interest receivable and other assets                       114         (1,582)        (3,265)
    Interest payable and other liabilities                     543          1,135          1,150
                                                         ---------      ---------      ---------
    Net cash provided by operating activities                3,461          4,906          1,723
                                                         ---------      ---------      ---------

Cash Flows From Investing Activities:
Investment securities held to maturity:
  Proceeds from maturities and principal payments            1,272             42             39
Investment securities available for sale:
  Proceeds from maturities and principal payments           36,783         40,368         25,981
  Proceeds from sales and recoveries                        34,626         21,380         12,228
  Purchases                                                (59,290)       (81,842)       (63,745)
Equity securities:
  Proceeds from sales                                           56             10             31
  Purchases                                                    (58)          (120)           (40)
Net increase in loans                                      (68,375)       (50,851)       (33,516)
Sale and disposition of capital assets                           0              1             42
Capital expenditures                                        (1,678)        (2,914)        (5,481)
                                                         ---------      ---------      ---------
   Net cash used in investing activities                   (56,664)       (73,926)       (64,461)
                                                         ---------      ---------      ---------

Cash Flows From Financing Activities:
Net increase in deposits                                    38,642         75,362         75,803
Proceeds from issuance of trust preferred securities             0         10,000              0
Repayment of long-term borrowings                                0         (1,846)          (923)
Stock options exercised                                        644            909            196
Dividends                                                     (442)          (406)          (383)
                                                         ---------      ---------      ---------
   Net cash provided by financing activities                38,844         84,019         74,693
                                                         ---------      ---------      ---------
Net (decrease) increase in cash and cash equivalents       (14,359)        14,999         11,955
Cash and cash equivalents at beginning of year              52,310         37,311         25,356
                                                         ---------      ---------      ---------
Cash and cash equivalents at end of year                 $  37,951      $  52,310      $  37,311
                                                         =========      =========      =========

Supplemental Disclosures of Cash Flow Information:
  Interest paid                                          $   3,084      $   3,755      $   5,622
  Income taxes paid                                      $   1,345      $   2,290      $   1,448
  Retirement of fixed assets                             $       0      $       0      $     139
</TABLE>
The accompanying notes are an integral part of these statements.


25
<PAGE>

--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
December 31, 2003, 2002 and 2001

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

North  Bay  Bancorp   (Bancorp)  is  a  registered   financial  holding  company
headquartered in Napa,  California,  established on November 1, 1999.  Bancorp's
principal line of business is serving as a holding  company for The Vintage Bank
and Solano Bank (the Banks),  both California  state chartered  banks. The Banks
operate  five offices in the  California  county of Napa and four offices in the
California county of Solano.  The Banks offer a full range of commercial banking
services to individuals and the business and agricultural  communities.  Most of
the Banks' customers are retail customers and small to medium-sized businesses.

The consolidated financial statements of Bancorp and subsidiaries  (collectively
the Company) are prepared in conformity  with  accounting  principles  generally
accepted in the United States of America.  The more  significant  accounting and
reporting policies are discussed below.

Principles of consolidation The consolidated  financial  statements  include the
accounts of Bancorp,  North Bay Statutory Trust I, the Banks and the Real Estate
Investment Trust. All material intercompany  transactions and accounts have been
eliminated in consolidation.

Use of estimates in the  preparation of financial  statements The preparation of
financial statements in conformity with generally accepted accounting principles
in the United  States of  America  requires  management  to make  estimates  and
assumptions  that  affect  the  reported  amounts  of  assets,  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. For the Company,  the most significant  accounting estimate is
the allowance for loans losses.  See "Allowance  for loan losses" below.  Actual
results could differ from those estimates

Investment  securities  Investments in debt and equity securities are classified
as  "held-to-maturity"  or   "available-for-sale".   Investments  classified  as
held-to-maturity  are those that the  Company has the ability and intent to hold
until  maturity  and are  reported at cost,  adjusted  for the  amortization  or
accretion of premiums or discounts. Investments classified as available-for-sale
are reported at fair value with unrealized  gains and losses net of related tax,
if any, reported as other comprehensive income and are included in shareholders'
equity.

A decline  in the market  value of any  available-for-sale  or  held-to-maturity
security below cost that is deemed other than  temporary  results in a charge to
earnings  and  the  corresponding  establishment  of a new  cost  basis  for the
security.  Premiums and discounts are amortized or accreted over the life of the
related  held-to-maturity  or  available-for-sale  security as an  adjustment to
yield using the  effective  interest  method.  Dividend and interest  income are
recognized when earned.  Realized gains and losses for securities  classified as
available-for-sale and held-to-maturity are included in earnings and are derived
using the specific  identification method for determining the cost of securities
sold.

Loans  Loans are stated at the  principal  amount  outstanding  net of  unearned
income.  Nonrefundable  loan  origination  fees and loan  origination  costs are
deferred and amortized  into income over the  contractual  life of the loan. The
majority of the Company's interest income is accrued on a simple interest basis.

Loans on which the accrual of interest has been  discontinued  are designated as
nonaccrual  loans.  Accrual of  interest  on loans is  discontinued  either when
reasonable  doubt  exists as to the full and timely  collection  of  interest or
principal or when a loan becomes  contractually  past due by ninety days or more
with  respect to  interest  or  principal.  When a loan is placed on  nonaccrual
status,  all interest  previously  accrued but not collected is reversed against
current period interest income. Interest accruals are resumed on such loans only
when they are brought  fully  current with respect to interest and principal and
when,  in the  judgment  of  management,  the  loans are  estimated  to be fully
collectible as to both principal and interest.  Restructured  loans are loans on
which concessions in terms have been granted because of the borrowers' financial
difficulties. Interest is generally accrued on such loans in accordance with the
new terms.


26
<PAGE>

The Banks define a loan as impaired when it is probable the Banks will be unable
to collect  all  amounts  due  according  to the  contractual  terms of the loan
agreement.  Impaired  loans are measured  based on the present value of expected
future cash flows discounted at the loan's original  effective  interest rate or
based on the loan's  observable market price or the fair value of the collateral
if the loan is  collateral  dependent.  When the measure of the impaired loan is
less than the  recorded  investment  in the loan,  the  impairment  is  recorded
through a valuation allowance.

Loans  held-for-sale  Loans originated or purchased and considered held for sale
are carried at the lower of cost or estimated market value in the aggregate. Net
unrealized  losses are  recognized  through a valuation  allowance by charges to
income.

Allowance  for loan losses The Banks  maintain an allowance for loan losses at a
level  considered  adequate  to provide  for  probable  losses  inherent  in the
existing  loan  portfolio.  The  allowance is increased by  provisions  for loan
losses and reduced by net charge-offs. The allowance for loan losses is based on
estimates, and ultimate losses may vary from current estimates.  These estimates
are  reviewed  periodically  and,  as  adjustments  become  necessary,  they are
reported in earnings in the periods in which they become  known.  The Banks make
credit reviews of the loan portfolio and consider current  economic  conditions,
historical loan loss  experience,  and other factors in determining the adequacy
of the allowance.

Other real estate owned Other real estate owned  represents real estate acquired
through  foreclosure  and is  carried  at the lower of cost or fair  value  less
estimated selling costs.

Bank  premises  and  equipment  Premises,  leasehold  improvements,   furniture,
fixtures and equipment are carried at cost net of accumulated  depreciation  and
amortization,  which are calculated on a straight-line  basis over the estimated
useful  life of the  property or the term of the lease (if less).  Premises  are
depreciated  over 40 years,  furniture and fixtures are depreciated over five to
15 years, and equipment is generally depreciated over three to five years.

Income  taxes  Income  taxes are  accounted  for  under the asset and  liability
method.  Deferred tax assets and  liabilities  are recognized for the future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases and operating loss and tax credit  carryforwards.  Deferred tax assets and
liabilities  are measured  using enacted tax rates  expected to apply to taxable
income in the years in which  those  temporary  differences  are  expected to be
recovered  or settled.  The effect on deferred tax assets and  liabilities  of a
change in tax rates is  recognized  in income in the period  that  includes  the
enactment date.

Statements of cash flows The Company  defines cash, due from banks,  and federal
funds sold as cash and cash equivalents for the statements of cash flows.

Stock-based  compensation The Company uses the intrinsic value method to account
for its stock option plans (in  accordance  with the  provisions  of  Accounting
Principles Board Opinion No. 25 and related interpretations). Under this method,
compensation expense is recognized for awards of options to purchase


                                                                              27
<PAGE>

shares of common stock to employees  under  compensatory  plans only if the fair
market value of the stock at the option grant date (or other  measurement  date,
if later) is greater than the amount the employee must pay to acquire the stock.
Statement of Financial Accounting Standards No. 123 (SFAS 123),  "Accounting for
Stock-Based   Compensation",   permits   companies   to   continue   using   the
intrinsic-value  method to account for stock  option plans or adopt a fair value
based method. The fair value based method results in recognizing as expense over
the  vesting  period  the fair  value of all  stock-based  awards on the date of
grant. The Company has elected to continue to use the intrinsic value method and
the pro forma disclosures required by SFAS 123 using the fair value method are:

                                            (In 000's except share data)
                                            2003        2002        2001
                                          --------     -------     -------
Net income as reported                    $  4,371     $ 3,708     $ 3,022
Total stock-based employee
   compensation expense
   determined under the fair
   value based method for all
   awards, net of related tax effects          268         235         294
                                          --------     -------     -------
        Net income pro forma              $  4,103     $ 3,473     $ 2,728
                                          ========     =======     =======
Earnings per share:
        As reported:
        Basic                             $   1.83     $  1.60     $  1.33
        Diluted                           $   1.79     $  1.56     $  1.32
   Pro forma:
        Basic                             $   1.72     $  1.50     $  1.27
        Diluted                           $   1.68     $  1.46     $  1.25

Earnings per common  share Basic  Earnings per Share is computed by dividing net
income  by the  weighted  average  common  shares  outstanding.  Diluted  EPS is
computed by dividing net income by weighted  average  common shares  outstanding
including the dilutive effects of potential common shares (e.g. stock options).

Comprehensive  income For the Company,  comprehensive income includes net income
reported  on  the  income  statement  and  changes  in  the  fair  value  of its
available-for-sale  investments  reported  as  accumulated  other  comprehensive
income.

Derivative  instruments  Derivative  instruments,  including certain  derivative
instruments  embedded in other contracts and for hedging activities are required
to be recognized as either assets or  liabilities in the statements of financial
position  and measures  those  instruments  at fair value.  The Company does not
currently utilize  derivative  instruments in its operations and does not engage
in hedging activities.

Accounting and reporting  changes  Financial  Accounting  Standards Board (FASB)
Interpretation  No.  46,  (as  revised),   Consolidation  of  Variable  Interest
Entities. This Interpretation addresses consolidation by business enterprises of
variable   interest   entities,   which  have  one  or  both  of  the  following
characteristics:  1) the equity  investment at risk is not  sufficient to permit
the entity to finance its activities without  additional  financial support from
other  parties,  or 2) the equity  investors  lack one or more of the  following
essential  characteristics of a controlling financial interest: a) the direct or
indirect ability to make decisions about the entity's  activities through voting
or similar rights, b) the obligation to absorb the expected losses of the entity
if they occur, or c) the right to receive the expected  residual  returns of the
entity if they occur. The  Interpretation  requires  existing  variable interest
entities to be consolidated if those entities do not effectively  disburse risks
among parties involved.  In accordance with the FASB  Interpretation  No. 46, as
revised, the Company will deconsolidate North Bay Statutory Trust I in the first
quarter of 2004.

FASB  Statement  No. 150,  Accounting  for Certain  Financial  Instruments  with
Characteristics  of Both Liabilities and Equity.  The Statement requires issuers
to classify as  liabilities  (or assets in some  circumstance)  three classes of
freestanding financial instruments that embody obligations for the issuer.


28
<PAGE>

Generally,  the Statement is effective for financial instruments entered into or
modified  after May 31, 2003 and is otherwise  effective at the beginning of the
first interim  period  beginning  after June 15, 2003.  The Company  adopted the
provisions of the Statement on July 1, 2003.

The Company did not enter into any financial instruments within the scope of the
Statement  during June 2003.  However,  as a result of adopting the Statement on
July 1, 2003 for existing  financial  instruments  entered into on or before May
31, 2003, the trust preferred securities (floating rate subordinated  debenture)
of $10 million were reclassified as liabilities on July 1, 2003.


                                                                              29
<PAGE>

(2) INVESTMENT SECURITIES

The amortized  cost and estimated  fair value of  investments in debt and equity
securities  are summarized in the following  tables.  Included in the tables are
equity  securities  that do not have readily  determinable  fair values  because
ownership is restricted and they lack a market.  These securities are carried at
cost and consist of Federal Reserve and Federal Home Loan Bank stock.

The amortized cost and estimated fair value of investment securities at December
31, 2003 are as follows:

                                                    (In 000's)
                                                Gross      Gross
                                  Amortized  Unrealized  Unrealized   Estimated
                                    Cost        Gains      Losses     Fair Value
                                   -------      ------     ------     ---------
Available-for-sale:
Securities of the U.S. Treasury
   and other government agencies   $35,942         $91       $108       $35,925
Corporate debt securities            1,221           7          0         1,228
Mortgage-backed securities          32,977         380        149        33,208
Municipal securities                19,474         859         39        20,294
                                   -------      ------       ----       -------
Total available-for-sale            89,614       1,337        296        90,655

Equity securities                    1,351           0          0         1,351
                                   -------      ------       ----       -------
Total investments                  $90,965      $1,337       $296       $92,006
                                   =======      ======       ====       =======

There were no unrealized  losses greater than 12 months.  The unrealized  losses
were due to changes in market rates and not attributed to credit quality.

The amortized cost and estimated fair value of investment securities at December
31, 2002 are as follows:

                                                   (In 000's)
                                                Gross       Gross
                                 Amortized   Unrealized  Unrealized   Estimated
                                    Cost        Gains       Losses    Fair Value
                                  --------    --------     --------   ----------
Held-to-maturity:
Municipal securities              $  1,272    $      0     $      0     $  1,272
                                  --------    --------     --------     --------
Available-for-sale:
Securities of the U.S. Treasury
   and other government agencies    34,089         642            0       34,731
Corporate debt securities           11,524         239            0       11,763
Mortgage-backed securities          44,226         735           27       44,934
Municipal securities                12,334         711            0       13,045
                                  --------    --------     --------     --------
Total available-for-sale           102,173       2,327           27      104,473

Equity securities                    1,349           0            0        1,349
                                  --------    --------     --------     --------
Total investments                 $104,794    $  2,327     $     27     $107,094
                                  ========    ========     ========     ========

There were no unrealized  losses greater than 12 months.  The unrealized  losses
were due to changes in market rates and not attributed to credit quality.


30
<PAGE>

The following  table shows the amortized  cost and estimated  fair value of debt
securities by contractual maturity at December 31, 2003: (In 000's)

                                        Available-for-Sale

                                      Amortized      Estimated
                                         Cost        Fair Value
                                       -------        -------
Within one year                         $1,428         $1,440
After one but within five years         36,465         36,792
After five but within ten years         10,767         11,187
Over ten years                           7,977          8,028
Mortgage-backed securities              32,977         33,208
                                       -------        -------
Total                                  $89,614        $90,655
                                       =======        =======


The following  table provides a summary of the  maturities and weighted  average
yields of investment securities as of December 31, 2003.
<TABLE>
<CAPTION>
                                                                            (In 000's)

                                                            After One        After Five
                                        In One Year          Through           Through              After
                                           or Less          Five Years         Ten Years           Ten Years             Total
                                       Amount   Yield    Amount     Yield    Amount   Yield      Amount   Yield      Amount    Yield
                                      -------  ------    -------   ------   -------  ------      ------   -----      ------    -----
<S>                                       <C>   <C>      <C>        <C>          <C>   <C>       <C>       <C>      <C>        <C>
Available-for-sale securities:
Securities of the U.S. Treasury
    and other government agencies         $0    0.00%    $28,908    3.23%        $0    0.00%     $7,017    1.82%    $35,925    2.95%
Mortgage-backed securities (1)             0    0.00%          6    8.84%     1,686    6.47%     31,516    4.16%     33,208    4.28%
Municipal securities (2)                 439    5.78%      7,884    4.41%    11,187    5.26%        784    7.11%     20,294    5.01%
Corporate debt securities              1,001    1.52%          0    0.00%         0    0.00%        227    6.22%      1,228    2.39%
                                      ------    ----     -------    ----    -------    ----     -------    ----     -------    ----
Total                                 $1,440    2.82%    $36,798    3.48%   $12,873    5.42%    $39,544    3.82%    $90,655    3.89%

Equity securities:
Equity stocks (3)                         $0    0.00%         $0    0.00%        $0    0.00%     $1,351    5.80%     $1,351    5.80%
                                      ------    ----     -------    ----    -------    ----     -------    ----     -------    ----
                                          $0    0.00%         $0    0.00%        $0    0.00%     $1,351    5.80%     $1,351    5.80%
</TABLE>
(1) The maturity of mortgage-backed securities is based on contractual maturity.
The average  expected  life is  approximately  five years.
(2) Yields shown are taxable-equivalent.
(3) Consists of Federal Reserve Bank and Federal Home Loan Bank Stock

As of  December  31,  2003  and  2002,  securities  carried  at  $2,740,000  and
$2,081,000,  respectively, were pledged to secure public deposits as required by
law.

Total proceeds from the sale of securities  available-for-sale during 2003, 2002
and 2001 were  $34,626,000,  $21,380,000 and  $12,228,000,  respectively.  Gross
gains of $637,000,  $399,000 and $325,000  were realized on those sales in 2003,
2002 and 2001, respectively.


                                                                              31
<PAGE>

(3) LOANS AND ALLOWANCE FOR LOAN LOSSES

At December 31, 2003 and 2002,  the loan  portfolio  consisted of the following,
net of deferred loan fees of $1,248,000 and $1,348,000, respectively:

                                            (In 000's)
                                               2003                2002
                                             --------            --------
Real estate loans                            $163,088            $131,167
Installment loans                              28,860              24,102
Construction loans                             35,205              19,306
Commercial loans secured by real estate        33,519              16,991
Commercial loans                               45,991              46,061
                                             --------            --------
                                              306,663             237,627
Less allowance for loan losses                  3,524               3,290
                                             --------            --------
Total                                        $303,139            $234,337
                                             ========            ========

There were no loans on  nonaccrual  status at December  31, 2003 or December 31,
2002.  There was no interest  foregone during 2003, 2002 or 2001. As of December
31,  2003 and  2002,  there  were no loans  90 days or more  past due but  still
accruing interest. There were no restructured loans during 2003 or 2002.

Changes in the allowance for loan losses are as follows:

                                                   (In 000's)
                                        2003          2002           2001
                                       ------        ------         ------
Balance, beginning of year             $3,290        $2,717         $2,268
Provision for loan losses                 238           576            447
Loans charged off                        (12)          (10)            (4)
Recoveries of loans previously
    charged off                             8             7              6
                                       ------        ------         ------
Balance, end of year                   $3,524        $3,290         $2,717
                                       ======        ======         ======

As of December 31, 2003, 2002 and 2001 there were no impaired loans.

Interest  payments  received on impaired  loans are recorded as interest  income
unless  collection of the remaining  recorded  investment is doubtful,  in which
case payments received are recorded as reductions of principal.


32
<PAGE>

(4) PREMISES AND EQUIPMENT
Premises and equipment at December 31, 2003 and 2002 consisted of the following:

                                                    (In 000's)
                                                    Accumulated
                                                    Depreciation     Net Book
                                          Cost     & Amortization     Value
                                        -------    --------------    --------
2003
Land                                     $2,800            $0         $2,800
Premises                                  5,080           944          4,136
Furniture, fixtures and equipment         7,803         4,888          2,915
Leasehold improvements                    1,707           649          1,058
                                        -------        ------        -------
Total                                   $17,390        $6,481        $10,909
                                        =======        ======        =======
2002
Land                                     $2,800            $0         $2,800
Premises                                  5,027           786          4,241
Furniture, fixtures and equipment         6,635         3,670          2,965
Leasehold improvements                    1,250           456            794
                                        -------        ------        -------
Total                                   $15,712        $4,912        $10,800
                                        =======        ======        =======

Depreciation  and  amortization  expense,  included  in  occupancy  expense  and
equipment expense,  was $1,569,000,  $1,441,000 and $1,352,000 in 2003, 2002 and
2001, respectively.

(5) COMMITMENTS AND CONTINGENCIES

The Company leases premises for their various offices. Total rent on such leases
was $662,000, $374,000 and $321,000 in 2003, 2002 and 2001, respectively, and is
included in  occupancy  and  equipment  expenses.  The total  commitments  under
non-cancelable operating leases are as follows:

                               (In 000's)
                         Year               Total
                         ----               -----
                         2004               $703
                         2005                654
                         2006                556
                         2007                446
                         2008                338
                   Thereafter              1,382
                                          ------
                        Total             $4,079
                                          ======

(6) TIME DEPOSITS AND INTEREST ON TIME DEPOSITS

Time  certificates  of deposit in  denominations  of  $100,000  or greater  were
$35,290,000  and  $39,425,000  at  December  31,  2003 and  2002,  respectively.
Interest  expense on these  deposits was $757,000,  $893,000 and  $1,010,000 for
2003, 2002 and 2001, respectively.

At December 31, 2003,  the  scheduled  maturities  of total time deposits are as
follows:

                                (In 000's)
                         Year              Total
                         ----             -------
                         2004             $59,142
                         2005               6,251
                         2006               2,755
                         2007               2,156
                         2008               2,094
                                          -------
                        Total             $72,398
                                          =======


                                                                              33
<PAGE>

(7) BORROWINGS

There were no  short-term  borrowings at December 31, 2003 or December 31, 2002.
Short-term   borrowings   consist  primarily  of  federal  funds  purchased  and
borrowings from the Federal Home Loan Bank of San Francisco (FHLB).  The Company
maintains  collateralized lines of credit with the FHLB. Based on the FHLB stock
requirements at December 31, 2003,  these lines provided for maximum  borrowings
of  approximately  $116 million;  the Company also has available unused lines of
credit  totaling  $17.5 million for federal funds  transactions  at December 31,
2003.

On June 26, 2002, North Bay Statutory Trust I (Trust),  a Connecticut  statutory
business  trust and  wholly-owned  subsidiary  of North Bay Bancorp,  issued $10
million in floating rate Cumulative Trust Preferred Securities (Securities). The
Securities  bear a rate of the 90 day LIBOR plus 3.45% which changes  quarterly.
The rate at December 31, 2003 was 4.62%.  The Securities will mature on June 26,
2032, but earlier redemption is permitted under certain  circumstances,  such as
changes in tax or regulatory  capital rules. The principal asset of the trust is
a $10,310,000 floating rate subordinated debenture of the Company.

The Securities,  the subordinated debenture, and the common securities issued by
the Trust are  redeemable  in whole or in part on or after June 26, 2007,  or at
any time in whole,  but not in part, upon the occurrence of certain events.  The
Securities  are  included  in Tier 1 capital  for  regulatory  capital  adequacy
determination  purposes,  subject to certain limitations.  The Company fully and
unconditionally  guarantees  the  obligations  of the Trust with  respect to the
issuance of the Securities.

Subject to certain  exceptions  and  limitations,  the Company may, from time to
time, defer subordinated  debenture  interest payments,  which would result in a
deferral  of   distribution   payments  on  the  Securities  and,  with  certain
exceptions,  prevent the Company from declaring or paying cash  distributions on
the  Company's  common  stock  or  debt  securities  that  rank  junior  to  the
subordinated debentures.

(8) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Banks make  commitments to extend credit in the normal course of business to
meet the financing  needs of their  customers.  Commitments to extend credit are
agreements  to  lend to a  customer  as long as  there  is no  violation  of any
condition  established  in  the  contract.   Commitments  generally  have  fixed
expiration dates or other termination  clauses and may require payment of a fee.
Since many of the  commitments  are expected to expire without being drawn upon,
the  total  commitment  amount  does  not  necessarily   represent  future  cash
requirements.

The Banks are exposed to credit  loss,  in the event of  non-performance  by the
borrower,  in the  contract  amount  of the  commitment.  The Banks use the same
credit  policies  in  making   commitments  as  they  do  for   on-balance-sheet
instruments  and evaluate each  customer's  creditworthiness  on a  case-by-case
basis. The amount of collateral obtained,  if deemed necessary by the Banks, are
based on management's credit evaluation of the borrower. Collateral held varies,
but may include  accounts  receivable,  inventory,  plant and equipment and real
property.

The  Banks  also  issue  standby  letters  of  credit,   which  are  conditional
commitments to guarantee the  performance of a customer to a third party.  These
guarantees are primarily issued to support construction bonds, private borrowing
arrangements and similar  transactions.  Most of these guarantees are short-term
commitments  expiring in decreasing amounts through 2003 and are not expected to
be drawn  upon.  The  credit  risk  involved  in  issuing  letters  of credit is
essentially the same as that involved in extending loan facilities to customers.
The Banks hold collateral as deemed necessary, as described above.

The  contract  amounts of  commitments  not  reflected  on the Balance  Sheet at
December 31, 2003 and 2002 were as follows:

                                          (In 000's)
                                     Contractual Amounts
                                    ----------------------
                                     2003           2002
                                    -------        -------
Loan commitments                    $86,984        $83,835
Standby letters of credit            $1,108           $729


34
<PAGE>

The Banks issue both financial and performance  standby  letters of credit.  The
financial  standby letters of credit are primarily to guarantee payment to third
parties.  At December  31, 2003 there was $369,000  issued in financial  standby
letters of credit and the Banks carried no liability.  The  performance  standby
letters of credit are typically issued to municipalities as specific performance
bonds.  At December 31, 2003 there were $739,000  issued in performance  standby
letters  of  credit  and the  Banks  carried  no  liability.  The  terms  of the
guarantees  will  expire  primarily  in 2004  with 1%  expiring  in 2007 and 27%
expiring  in 2008.  The Banks  have  experienced  no draws on these  letters  of
credit, and do not expect to in the future;  however,  should a triggering event
occur,  the Banks  either have  collateral  in excess of the letter of credit or
imbedded agreements of recourse from the customer.

(9) CONCENTRATIONS OF CREDIT RISKS

The  majority  of  the  Banks'  loan  activity  is  with  customers  located  in
California,  primarily in the  counties of Napa and Solano.  Although the Banks'
have a  diversified  loan  portfolio,  a large  portion  of their  loans are for
commercial property,  and many of the Banks' loans are secured by real estate in
Napa and  Solano  County.  Approximately  84% of the loans are  secured  by real
estate. This concentration is presented below:

                                                         (In 000's)
                                                  December 31, 2003
Construction/land development:                    -----------------
     Land development                                        $7,181
     Residential                                              7,212
     Commercial                                              20,812
Real estate                                                 163,088
Commercial loans secured by real estate                      33,519
Installment loans secured by real estate                     24,884
                                                           --------
      Total                                                $256,696
                                                           ========

(10) INCOME TAXES

The  provision  (benefit) for federal and state income taxes for the years ended
December 31, 2003, 2002 and 2001 consisted of:

                                     (In 000's)
                        2003            2002            2001
                       ------          ------          ------
Current
    Federal            $1,521          $1,712          $1,471
    State                 602             685             524
                       ------          ------          ------
                        2,123           2,397           1,995

Deferred
    Federal                70           (297)           (324)
    State                (14)           (101)              16
                       ------          ------          ------
                           56           (398)           (308)
                       ------          ------          ------
Total                  $2,179          $1,999          $1,687
                       ======          ======          ======


                                                                              35
<PAGE>

Deferred tax assets and liabilities result from differences in the timing of the
recognition of certain income and expense items for tax and financial accounting
purposes. The sources of these differences and the amount of each are as follows
as of December 31, 2003 and 2002:

                                              (In 000's)
                                         2003            2002
                                        ------          ------
Deferred tax assets:
   Allowance for loan losses            $1,398          $1,300
   Deferred compensation                   512             372
   State income tax                        213             191
   Depreciation                              0              68
   Other                                     0              33
                                        ------          ------
                                        $2,123          $1,964
                                        ------          ------
Deferred tax liabilities:
   Unrealized gain on securities        $  433          $  956
   Accumulated accretion                   162             147
   Depreciation                            139               0
   Other                                    61               0
                                        ------          ------
                                        $  795          $1,103
                                        ------          ------
   Net deferred tax asset               $1,328          $  861
                                        ======          ======

The  Company  believes  that a valuation  allowance  is not needed to reduce the
deferred  tax assets as it is more likely than not that the  deferred tax assets
will be realized through recovery of taxes previously paid and/or future taxable
income.

The total tax  differs  from the  federal  statutory  rate of 34% because of the
following:
<TABLE>
<CAPTION>
                                                       (In 000's)
                                        2003               2002                  2001
                                  --------------     ----------------     -----------------
                                  Amount    Rate     Amount     Rate      Amount      Rate
                                  ------   -----     ------    ------     ------      -----
<S>                               <C>       <C>      <C>        <C>       <C>         <C>
Tax provision at statutory rate   $2,227    34.0%    $1,940     34.0%     $1,601      34.0%
Interest on obligations of
   states and political
   subdivisions exempt from
   federal taxation                (233)   (3.5%)     (191)    (3.3%)      (161)     (3.4%)
State franchise taxes                382     5.8%       385      6.7%        319       6.8%
Life insurance policies            (115)   (1.8%)     (133)    (2.3%)      (101)     (2.2%)
Other, net                          (82)   (1.2%)       (2)     (.1%)         29        .6%
                                  ------   -----     ------    ------     ------      -----
Total                             $2,179    33.3%    $1,999     35.0%     $1,687      35.8%
                                  ======   ======    ======    ======     ======      =====
</TABLE>

(11) DIVIDEND RESTRICTIONS

The  Company is  regulated  by the Board of  Governors  of the  Federal  Reserve
System. Federal Reserve Board regulations prohibit cash dividends,  except under
limited  circumstances,  if the  distribution  would result in a  withdrawal  of
capital or exceed the  Bancorp's  net profits then on hand after  deducting  its
losses and bad debts.  Furthermore,  cash  dividends  cannot be paid without the
prior  written  approval  of the  Federal  Reserve  Board  if the  total  of all
dividends  declared in one year  exceeds the total of net profits for that year,
plus the  preceding  two  calendar  years,  and less any  required  transfers to
surplus under state or federal law.

The shareholders of North Bay Bancorp are entitled to receive dividends when and
as declared by its Board of Directors out of funds legally available, subject to
the  restrictions  set forth in the  California  General  Corporation  Law.  The
Corporation  Law provides  that a  corporation  may make a  distribution  to its
shareholders if the corporation's retained earnings equal at least the amount of
the proposed  distribution.  The Corporation  Law further  provides that, in the
event that  sufficient  retained  earnings  are not  available  for the proposed
distribution,  a  corporation  may  nevertheless  make  a  distribution  to  its
shareholders if it meets two conditions,  which generally stated are as follows:
1) the  corporation's  assets equal at least 1.25 times its liabilities;  and 2)
the corporation's  current assets equal at least its current  liabilities or, if
the


36
<PAGE>

average of the  corporation's  earnings  before  taxes on income and before
interest expense for the two preceding fiscal years was less than the average of
the corporation's interest expense for such fiscal years, then the corporation's
current assets must equal at least 1.25 times its current liabilities.

One of the primary sources of income for the Company, on a stand-alone basis, is
the management  fees charged to Banks.  The  availability  of dividends from the
Banks is limited by various statutes and  regulations.  California law restricts
the amount available for cash dividends by  state-chartered  banks to the lesser
of  retained  earning or the bank's net income for its last three  fiscal  years
(less any distributions to shareholders made during such period). In the event a
bank is unable to pay cash dividends due to  insufficient  retained  earnings or
net income for its last three fiscal  years,  cash  dividends  may be paid under
certain  circumstances  with the prior approval of the California  Department of
Financial Institutions (the "DFI").

(12) SHAREHOLDERS' EQUITY AND EARNINGS PER SHARE

The Company  declared 5% stock dividends on January 29, 2001,  January 28, 2002,
January 27, 2003 and January 26, 2004. As a result of the stock  dividends,  the
number  of  common   shares   outstanding   and  per  share  data  was  adjusted
retroactively  for all periods  presented in the following  tables.  In 2001 the
effect of 8,092  outstanding  options have been excluded from the calculation of
diluted earnings per share as their inclusion would be anti-dilutive. There were
no shares considered anti-dilutive in 2002 or 2003.

The following  table  reconciles the numerator and  denominator of the Basic and
Diluted earnings per share computations:

                                           (In 000's except share data)
                                                  Weighted Average     Per-Share
                              Net Income               Shares           Amount
                              ----------               ------           ------
                                             For the year ended 2003
                                             -----------------------
Basic earnings per share        $4,371               2,382,093            $1.83
Stock options                                           57,511
Diluted earnings per share                           2,439,604            $1.79

                                             For the year ended 2002
                                             -----------------------
Basic earnings per share        $3,708               2,313,461            $1.60
Stock options                                           57,753
Diluted earnings per share                           2,371,214            $1.56

                                             For the year ended 2001
                                             -----------------------
Basic earnings per share        $3,022               2,264,170            $1.33
Stock options                                           24,778
Diluted earnings per share                           2,288,948            $1.32

(13) OTHER NONINTEREST INCOME AND EXPENSE

The  components  of Other  Noninterest  Income for the years ended  December 31,
2003, 2002 and 2001 were as follows:

                                                (In 000's)
                                      2003          2002            2001
                                    ------        ------          ------
  ATM surcharge                       $279          $294            $249
  Increase of cash value on
     insurance policies                338           393             296
  Merchant services income             293           280             265
  Commission on sale of non-
     deposit products                  214           204             158
  Commission on sale of
     mortgage products                 232             0               0
  Other                                209           220             212
                                    ------        ------          ------
  Total                             $1,565        $1,391          $1,180
                                    ======        ======          ======


                                                                              37
<PAGE>

The  components of Other  Noninterest  Expense for the years ended  December 31,
2003, 2002 and 2001 were as follows:

                                              (In 000's)
                                2003             2002             2001
                               ------           ------          ------
  Professional services        $1,387             $830            $755
  Business promotions             554              525             379
  ATM expenses                    250              261             222
  Stationary & supplies           380              318             274
  Insurance                       224              188             111
  Other                         1,983            1,771           1,559
                               ------           ------          ------
  Total                        $4,778           $3,893          $3,300
                               ======           ======          ======

(14) STOCK OPTION PLAN

The  Company  has a stock  option  plan  under  which it may grant up to 871,790
options.  The Company has granted 723,570 options through December 31, 2003. The
option exercise price equals the stock's market price on the date of grant.  The
options  become  exercisable  over four or five years and expire in five or more
years. The equity compensation plans have been approved by the security holders.


A summary of the status of the Company's stock option plan at December 31, 2003,
2002 and 2001 and stock option activity during the years then ended is presented
in the table below:
<TABLE>
<CAPTION>
                                        2003              2002                              2001
                                     Weighted                   Weighted                  Weighted
                                     Exercise                   Exercise                  Exercise
                           Shares      Price      Shares         Price        Shares       Price
                           ------      -----      ------         -----        ------       -----
<S>                       <C>         <C>         <C>            <C>          <C>          <C>
Outstanding at
    beginning of year     301,939     $17.50      366,836        $15.71       312,642      $15.05
Granted                    86,741     $25.05       32,524        $23.18        76,114      $16.65
Exercised                (51,930)     $11.74     (79,356)        $10.91      (21,383)      $ 9.22
Cancelled                (18,276)     $15.86     (18,065)        $17.79         (537)      $ 5.96
Outstanding at
    end of year           318,474     $20.80      301,939        $17.50       366,836      $15.71
Exercisable at
    end of year           120,377     $18.44      107,372        $16.41       114,013      $13.71
Weighted-average
   fair value of
   options granted
   during the year               $6.16                    $6.94                      $6.23
</TABLE>

The following table summarizes  information  about stock options  outstanding at
December 31, 2003:
<TABLE>
<CAPTION>
                                      Options Outstanding                            Options Exercisable
                                      -------------------                            -------------------
       Range             Number          Weighted-Average     Weighted-           Number            Weighted-
        of           Outstanding at        Contractual         Average         Exercisable at        Average
 Exercise Prices        12/31/03         (Life in years)    Exercise Price        12/31/03        Exercise Price
-----------------    --------------      ----------------   --------------    ----------------    --------------
<S>                      <C>                  <C>               <C>                 <C>              <C>
 $16.42 to $19.58         93,807              1.03              $18.68              61,006           $18.57

$16.41 to  $18.10        105,402              2.20              $17.37              51,815           $17.52

$23.13 to  $28.31        119,265              4.25              $25.51               7,556           $23.60
                         -------                                                   -------
                         318,474                                                   120,377
                         =======                                                   =======

</TABLE>
The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option   pricing  model  with  the  following   weighted-average
assumptions used for grants in 2003, 2002 and 2001,


38
<PAGE>

respectively: risk-free interest rate of 2.48%, 2.66%, 2.82%, 3.27% 3.37%, 3.46%
and 3.55% for options issued in 2003, 4.07% and 3.25% for options issued in 2002
and 4.62% and 3.90% for  options  issued in 2001;  expected  dividend  yields of
..73%,  .80% and 1.01%;  expected  lives of 5 years and  expected  volatility  of
16.08%, 21.67% and 28.02%.

(15) RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Banks make loans to directors,  officers
and principal  shareholders on substantially the same terms,  including interest
rates and collateral,  as those for comparable  transactions  with  unaffiliated
persons. An analysis of net loans to related parties for the year ended December
31, 2003 is as follows:

                                           (In 000's)
Balance at beginning of year                   $5,342
     Additions                                  7,788
     Repayments                                 2,973
                                              -------
Balance at end of year                        $10,157
                                              =======

Total undisbursed commitments as of December 31, 2002 were $5,329,000.

A law firm in which one of the  Company's  directors and one of its officers are
principals serves as the Company's  general counsel.  During 2003, 2002 and 2001
fees of $196,000, $165,000 and $135,000, respectively, were paid to this firm.

(16) RESTRICTIONS

The Banks are required to maintain reserves with the Federal Reserve Bank of San
Francisco  equal to a percentage of its reservable  deposits.  Reserve  balances
that were  required by the Federal  Reserve  Bank were  $25,000 and $220,000 for
December 31, 2003 and 2002, respectively,  and are reported in cash and due from
banks on the balance sheet.

(17) RETIREMENT PLANS

The Company has a Profit Sharing and Salary  Deferral  401(K) Plan to enable its
employees to share in the Company's profits and to defer receipt of a portion of
their  salaries.  Employees  can defer up to 15% of their  base  pay,  up to the
maximum  amount allowed by the Internal  Revenue Code. In addition,  the Company
makes  discretionary  contributions to the profit sharing account and the 401(K)
account,  which are  determined  by the Board of  Directors  each year.  Amounts
charged  to  operating  expenses  under  this plan  representing  the  Company's
contribution  were $415,000,  $263,000 and $223,000 for the years ended December
31, 2003, 2002 and 2001, respectively.

The  Company  has a  Director's  Supplemental  Retirement  Program.  The Program
contains a  non-qualified  defined  benefit plan.  Directors and select officers
designated  by the Board of  Directors  of the Company are covered by this plan.
The plan is unfunded,  however the Company has purchased  life  insurance on the
lives of the participants and expects to use the death benefit of these policies
to pay the  obligation  in event the  participants  death  precedes  retirement.
Management's  intentions  are to hold the  policies as an  investment  until the
death of the insured.  Cash values for these  policies at December 31, 2003 were
$3,188,000. At December 31, 2003 $387,000 was carried as a liability to fund the
benefit.  The program  provides a death benefit to  beneficiaries  of a deceased
participant.

The Company has an Executive Officer Supplemental Retirement Plan. The Executive
Supplemental Compensation Agreements entered into with select executive officers
of the Company  pursuant to the Plan provide for a defined cash benefit  payable
monthly  upon  retirement  upon  reaching age 65 (or upon or after age 62 with a
reduced benefit). Benefits under these agreements vest over five year periods at
the rate of 20% per year after five years' of service with credit for up to five
years of prior service. The plan is unfunded,  however the Company has purchased
life  insurance  on the lives of the  participants  and expects to use the death
benefit of these policies to pay the obligation in event the participants  death
precedes retirement. At December 31, 2003 $314,000 was carried as a liability to
fund the  benefit.  The Plan  also  provides  a life  insurance  benefit  to the
designated  beneficiary  of the  participants  upon their death  pursuant to the
Executive Officer  Endorsement  Method Split Dollar Life Insurance  component of
the Plan.


                                                                              39
<PAGE>

 (18) FAIR VALUE OF FINANCIAL INSTRUMENTS

The  following  table  presents  the  carrying  amounts  and fair  values of the
Company's financial instruments at December 31, 2003 and 2002:

                                                   (In 000's)
                                          2003                       2002
                                  --------------------     ---------------------
                                  Carrying      Fair        Carrying       Fair
                                   Amounts      Value       Amounts        Value
                                  --------    --------     --------     --------
Financial assets:
   Cash and cash equivalents       $37,951     $37,951      $52,310      $52,310
   Time deposits with other
      financial institutions           100         100          100          100
   Investment securities            92,006      92,006      107,094      107,094
   Loans, net                      303,139     305,874      234,337      236,147
   Accrued interest receivable       2,051       2,051        2,256        2,256

Financial liabilities:
   Deposits                       $406,445    $406,209     $367,803     $367,486
   Trust preferred securities       10,000      10,000       10,000       10,000
   Accrued interest payable            237         237          319          319

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instruments:

Cash  and cash  equivalents  - Cash and cash  equivalents  are  valued  at their
carrying amounts because of the short-term nature of these instruments.

Investment  securities  -  Investment  securities  are  valued at quoted  market
prices. See Note 2 for further analysis.

Loans - Loans with variable  interest  rates are valued at the current  carrying
value,  because  these loans are regularly  adjusted to market  rates.  The fair
value of fixed rate loans is  estimated  by  discounting  the future  cash flows
using  current  rates at which  similar  loans would be made to  borrowers  with
similar  credit  ratings for the same  remaining  maturities.  The fair value of
impaired loans is stated net of the related valuation allowance, if any.

Accrued  interest  receivable  and payable - The balance  approximates  its fair
value.

Deposits,  time deposits  with other banks - The fair value of demand  deposits,
savings accounts and interest-bearing transaction accounts is the amount payable
on demand at the reporting date. The fair value of time deposits is estimated by
discounting  the  contractual  cash flows at current  rates  offered for similar
instruments with the same remaining maturities.

Borrowings  - The  balance  approximates  its fair  value due to the  short-term
nature of these  borrowings  and the long-term  borrowing has variable  interest
rate.

Trust preferred  securities - The balance approximates its fair value due to the
structure having a variable interest rate.

Loan  commitments  and standby  letters of credit - The fair value is  estimated
using the fees currently charged to enter into similar agreements.




40
<PAGE>

(19) COMPREHENSIVE INCOME

The changes in the components of other comprehensive income (loss) for the years
ended December 31, 2003, 2002 and 2001 are reported as follows:
<TABLE>
<CAPTION>
                                                                            (In 000's)
                                                                      2003     2002     2001
                                                                     -----     ----     ----
<S>                                                                  <C>     <C>        <C>
Unrealized holding (loss) gain arising during the period,
         net of tax benefit of $523 for 2003 and tax expense of
         $562  and $335 for 2002 and 2001, respectively              ($363)  $1,024     $661
Reclassification adjustment for net realized gains  on securities
         available-for-sale  included  in net  income  during the
         year,  net of tax  expense  of  $265,  $166 and $135 for
         2003,  2002 and 2001, respectively.                          (373)   (233)    (190)
                                                                     -----     ----     ----
Other comprehensive (loss) income                                    ($736)    $791     $471
                                                                     =====     ====     ====
</TABLE>

(20) REGULATORY MATTERS

The Company is subject to various  regulatory capital  requirements.  Failure to
meet minimum capital requirements can initiate certain  mandatory--and  possible
additional  discretionary--actions by regulators that, if undertaken, could have
a direct material effect on the Company's  financial  statements.  Under capital
adequacy  guidelines and the regulatory  framework for prompt corrective action,
the Company must meet  specific  capital  guidelines  that involve  quantitative
measures of the  Company's  assets,  liabilities  and certain  off-balance-sheet
items as calculated under regulatory accounting practices. The Company's capital
amounts and  classification  are also  subject to  qualitative  judgments by the
regulators about components, risk weightings and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  the Company to  maintain  minimum  amounts and ratios (set forth in the
table below) of total and Tier I capital to risk-weighted  assets, and of Tier I
capital to average assets.  Management  believes,  as of December 31, 2003, that
the Company meets all capital adequacy requirements to which it is subject.

As of December 31, 2003, the most recent  notification  from the Federal Reserve
Bank categorized the Company as well capitalized under the regulatory  framework
for prompt corrective action. To be categorized as well capitalized, the Company
must maintain  minimum total  risk-based,  Tier I risk-based and Tier I leverage
ratios as set forth in the table.  There are no  conditions or events since that
notification that management believes have changed the institution's category.


                                                                              41
<PAGE>

The Company's  actual capital amounts and ratios are also presented in thousands
in the following tables:
<TABLE>
<CAPTION>

                                                             (In 000's)
                                                                                  To Be Well Capitalized
                                                            For Capital           Under Prompt Corrective
                                      Actual             Adequacy Purposes           Action Provisions
                              --------------------      --------------------      -----------------------
                               Amount        Ratio       Amount        Ratio       Amount           Ratio
<S>                           <C>           <C>         <C>            <C>        <C>              <C>
As of December 31, 2003:
Total capital (to risk
   weighted assets)
      Consolidated            $52,356       13.47%      $31,089       >8.00%      $38,861         >10.00%
      The Vintage Bank         34,321       11.07%       24,806       >8.00%       31,007         >10.00%
      Solano Bank               8,029       10.70%        6,001       >8.00%        7,501         >10.00%
Tier I capital (to risk
   weighted assets)
      Consolidated             48,833       12.57%       15,544       >4.00%       23,316          >6.00%
      The Vintage Bank         31,442       10.14%       12,403       >4.00%       18,604          >6.00%
      Solano Bank               7,385        9.84%        3,001       >4.00%        4,501          >6.00%
Tier I capital (to
   average assets)
      Consolidated             48,833       10.61%       18,408       >4.00%       23,010          >5.00%
      The Vintage Bank         31,442        8.66%       14,517       >4.00%       18,146          >5.00%
      Solano Bank               7,385        8.82%        3,350       >4.00%        4,187          >5.00%
<CAPTION>
                                                             (In 000's)
                                                                                  To Be Well Capitalized
                                                            For Capital           Under Prompt Corrective
                                      Actual             Adequacy Purposes           Action Provisions
                              --------------------      --------------------      -----------------------
                               Amount        Ratio       Amount        Ratio       Amount           Ratio
<S>                           <C>           <C>         <C>            <C>        <C>              <C>
As of December 31, 2002:
Total capital (to risk
   weighted assets)
      Consolidated            $47,289       14.88%      $25,419       >8.00%      $31,773         >10.00%
      The Vintage Bank         28,825       11.03%       20,902       >8.00%       26,128         >10.00%
      Solano Bank               7,815       14.57%        4,291       >8.00%        5,363         >10.00%
Tier I capital (to risk
   weighted assets)
      Consolidated             43,999       13.85%       12,709       >4.00%       19,064          >6.00%
      The Vintage Bank         25,953        9.93%       10,451       >4.00%       15,677          >6.00%
      Solano Bank               7,397       13.79%        2,145       >4.00%        3,218          >6.00%
Tier I capital (to
   average assets)
      Consolidated             43,999       10.86%       16,203       >4.00%       20,253          >5.00%
      The Vintage Bank         25,953        7.52%       13,808       >4.00%       17,260          >5.00%
      Solano Bank               7,397       12.36%        2,394       >4.00%        2,993          >5.00%
</TABLE>


42
<PAGE>

(21) FINANCIAL STATEMENTS OF NORTH BAY BANCORP (Parent Company Only)
For the Years Ended December 31, 2003, 2002 and 2001

CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                    (In 000's except share data)
Assets                                                                  2003             2002
                                                                       -------          -------
<S>                                                                    <C>              <C>
Cash and due from banks                                                $ 2,949          $ 6,921
Available-for-sale investment securities                                 6,503            2,854
Investment in The Vintage Bank                                          32,010           27,166
Investment in Solano Bank                                                7,407            7,567
Investment in North Bay Statutory Trust 1                                  310              310
Premises and equipment, net                                              1,761            1,794
Other assets                                                               461              426
                                                                       -------          -------
          Total assets                                                 $51,401          $47,038
                                                                       =======          =======
Liabilities and shareholders' equity

Floating rate subordinated
   debenture (trust preferred securities)                              $10,310          $10,310
Other liabilities                                                        1,650            1,385
                                                                       -------          -------

        Total liabilities                                              $11,960          $11,695

Shareholders' equity
   Preferred stock, no par value -  Authorized 500,000 shares
       Issued and outstanding - None
   Common stock, no par value - Authorized 10,000,000 shares
       Issued and outstanding -  2,285,646 shares in 2003 and
       2,130,288 shares in 2002                                         29,210           25,387
   Retained earnings                                                     9,623            8,612
   Accumulated other comprehensive income                                  608            1,344
                                                                       -------          -------
     Total shareholders' equity                                         39,441           35,343

         Total liabilities and shareholders' equity                    $51,401          $47,038
                                                                       =======          =======
</TABLE>


                                                                              43
<PAGE>

CONDENSED INCOME STATEMENTS
                                                              (In 000's)
<TABLE>
<CAPTION>
                                                         2003      2002       2001
                                                       -------    -------    -------
<S>                                                    <C>        <C>        <C>
Income
Interest on investment securities                      $   123    $    41    $     0
Dividends from subsidiaries                                  0          0      2,500
Service fees from subsidiaries                           6,177      5,681      4,754
                                                       -------    -------    -------
Total Income                                             6,300      5,722      7,254

Expenses
Interest on borrowings                                     531        339        168
Salaries and related benefits                            4,104      3,836      3,275
Other expenses                                           3,342      2,910      2,622
                                                       -------    -------    -------
Total expenses                                           7,977      7,085      6,065

Net (loss) income before tax benefit and equity in
   net income of subsidiaries                           (1,677)    (1,363)     1,189
Tax benefit                                                642        574        482
                                                       -------    -------    -------
Net (loss) income before equity in undistributed net
  income of subsidiaries                                (1,035)      (789)     1,671
Equity in undistributed net income of subsidiaries       5,406      4,497      1,351
                                                       -------    -------    -------
Net Income                                             $ 4,371    $ 3,708    $ 3,022
                                                       =======    =======    =======
</TABLE>


44
<PAGE>

CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                             2003           2002          2001
                                                           --------       --------      --------
<S>                                                        <C>            <C>           <C>
Cash Flows From Operating Activities:
Net income                                                 $  4,371       $  3,708      $  3,022
Adjustments to reconcile net income to net cash
      provided by operating activities:
Depreciation and amortization                                   812            737           804
Amortization of investment securities
    premiums, net                                               117              5             0
Equity in undistributed net income of subsidiaries           (5,406)        (4,497)       (1,351)
Changes in:
    Interest receivable and other assets                        (35)          (288)          541
    Interest payable and other liabilities                      533            468           502
                                                           --------       --------      --------
    Net cash provided by operating activities                   392            133         3,518
                                                           --------       --------      --------

Cash Flows From Investing Activities:
Investment securities available for sale:
  Proceeds from maturities and principal payments               785            201             0
  Purchases                                                  (4,573)        (3,006)            0
Sale and disposition of capital assets                            0              0             4
Capital expenditures                                           (779)        (1,340)         (519)
                                                           --------       --------      --------
   Net cash used in investing activities                     (4,567)        (4,145)         (515)
                                                           --------       --------      --------

Cash Flows From Financing Activities:
Decrease in long-term borrowings, net                             0         (1,846)         (923)
Proceeds from issuance of Trust Preferred Securities              0         10,310             0
Stock options exercised                                         644            909           196
Dividends                                                      (441)          (406)         (383)
                                                           --------       --------      --------
   Net cash provided by (used in) financing activities          203          8,967        (1,110)
                                                           --------       --------      --------
Net (decrease) increase in cash and cash equivalents         (3,972)         4,955         1,893
Cash and cash equivalents at beginning of year                6,921          1,966            73
                                                           --------       --------      --------
Cash and cash equivalents at end of year                   $  2,949       $  6,921      $  1,966
                                                           ========       ========      ========
</TABLE>


                                                                              45
<PAGE>

(22) SUMMARY OF UNAUDITED QUARTERLY RESULTS OF OPERATIONS

The  following  table sets forth the results of operation  for the four quarters
unaudited of 2003,  2002 and 2001.  All per share amounts have been adjusted for
the 2001, 2002, 2003 and 2004 stock dividends.
<TABLE>
<CAPTION>
                                                 (In 000's except share data)

                                                      2003 Quarters Ended
                                    December 31,   September 30,     June 30,        March 31,
                                    ------------   -------------     --------        ---------
<S>                                   <C>             <C>             <C>             <C>
Interest income                       $5,842          $5,554          $5,494          $5,361
Interest expense                         667             681             819             828
                                      ------          ------          ------          ------
Net interest income                    5,175           4,873           4,675           4,533
Provision for loan losses                103              45              45              45
                                      ------          ------          ------          ------
Net interest income after              5,072           4,828           4,630           4,488
   provision for loan losses
Noninterest income                       925           1,055           1,059             808
Noninterest expense                    3,722           4,267           4,311           4,015
                                      ------          ------          ------          ------
Income before provision for            2,275           1,616           1,378           1,281
   income taxes
Provision for income taxes               975             452             366             386
                                      ------          ------          ------          ------
Net income                            $1,300          $1,164          $1,012          $  895
                                      ======          ======          ======          ======

Basic earnings per share:             $  .53          $  .47          $  .43          $  .38
Diluted earnings per share:           $  .53          $  .47          $  .42          $  .37

<CAPTION>
                                                      2002 Quarters Ended
                                    December 31,   September 30,     June 30,        March 31,
                                    ------------   -------------     --------        ---------
<S>                                   <C>             <C>             <C>             <C>
Interest income                       $5,638          $5,495          $5,173          $4,873
Interest expense                         988           1,012             841             850
                                      ------          ------          ------          ------
Net interest income                    4,650           4,483           4,332           4,023
Provision for loan losses                144             144             144             144
                                      ------          ------          ------          ------
Net Interest Income after              4,506           4,339           4,188           3,879
   provision for loan losses
Noninterest income                     1,036             731             645             699
Noninterest expense                    3,797           3,697           3,455           3,367
                                      ------          ------          ------          ------
Income before provision for            1,745           1,373           1,378           1,211
   income taxes
Provision for income taxes               619             446             501             433
                                      ------          ------          ------          ------
Net income                            $1,126          $  927          $  877          $  778
                                      ======          ======          ======          ======

Basic earnings per share:             $  .48          $  .40          $  .38          $  .34
Diluted earnings per share:           $  .47          $  .39          $  .37          $  .34
</TABLE>

46
<PAGE>
<TABLE>
<CAPTION>
                                                      2001 Quarters Ended
                                    December 31,   September 30,     June 30,        March 31,
                                    ------------   -------------     --------        ---------
<S>                                   <C>             <C>             <C>             <C>
Interest income                       $5,142          $5,324          $5,086          $4,755
Interest expense                       1,094           1,482           1,683           1,628
                                      ------          ------          ------          ------
Net interest income                    4,048           3,842           3,403           3,127
Provision for loan losses                114             111             111             111
                                      ------          ------          ------          ------
Net Interest Income after              3,934           3,731           3,292           3,016
   provision for loan losses
Noninterest income                     1,032             547             567             545
Noninterest expense                    3,463           2,946           2,875           2,671
                                      ------          ------          ------          ------
Income before provision for            1,503           1,332             984             890
   income taxes
Provision for income taxes               575             414             362             336
                                      ------          ------          ------          ------
Net income                            $  928          $  918          $  622          $  554
                                      ======          ======          ======          ======

Basic earnings per share:             $  .43          $  .41          $  .28          $  .25
Diluted earnings per share:           $  .43          $  .40          $  .28          $  .25
</TABLE>


                                                                              47
<PAGE>

--------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
--------------------------------------------------------------------------------

The Board of Directors
North Bay Bancorp:

We have  audited  the  accompanying  consolidated  balance  sheets  of North Bay
Bancorp  and  subsidiaries  as of December  31,  2003 and 2002,  and the related
consolidated  income statements,  statements of changes in shareholders'  equity
and comprehensive  income,  and cash flows for each of the years in the two-year
period ended December 31, 2003. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. The 2001
consolidated  financial  statements  of North Bay Bancorp  were audited by other
auditors who have ceased  operations.  Those  auditors  expressed an unqualified
opinion  on  those  consolidated  financial  statements  in their  report  dated
February 19, 2002.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of North Bay Bancorp
and  subsidiaries  as of December  31,  2003 and 2002,  and the results of their
operations and their cash flows for each the years in the two-year  period ended
December 31, 2003 in conformity with accounting principles generally accepted in
the United States of America.


                                    /s/ KPMG LLP


February 19, 2004


48
<PAGE>

--------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------

To the Shareholders and Board of Directors of North Bay Bancorp:

We have  audited  the  accompanying  consolidated  balance  sheets  of North Bay
Bancorp (a California  Corporation) and subsidiaries as of December 31, 2001 and
2000 and the related consolidated statements of income, changes in shareholders'
equity and cash flows for each of the three years in the period  ended  December
31, 2001.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated financial position of North Bay Bancorp
and  subsidiaries  as of  December  31,  2001 and 2000 and the  results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United States.


San Francisco, California
February 19, 2002


This report is a copy of a previously issued report.
The predecessor auditor, Arthur Andersen, has not reissued the report.


                                                                              49
<PAGE>

--------------------------------------------------------------------------------
DIRECTORS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH BAY BANCORP
<S>                                   <C>
Thomas N. Gavin                       Owner, Gavin & Schreiner, New York Life Insurance Agency

David B. Gaw,  Chairman               Attorney with Gaw, Van Male, Smith, Myers & Miroglio
                                      A Professional Law Corporation

Fred J. Hearn, Jr.                    Chief Executive Officer
                                      Hearn Pacific Corporation dba Hearn Construction

Conrad W. Hewitt                      Retired,  Commissioner of California  State  Department of Financial
                                      Institutions

Richard S. Long, Vice Chairman        Chief Executive Officer
                                      Regulus Integrated Solutions, LLC

Thomas H. Lowenstein                  President, North Bay Plywood

Thomas F. Malloy                      Senior Partner, Malloy Imrie & Vasconi Insurance Services LLC

Terry L. Robinson                     President & Chief Executive Officer, North Bay Bancorp

James E. Tidgewell                    Certified Public Accountant, G & J Seiberlich & Co LLP

CORPORATE SECRETARY
Wyman G. Smith                        Attorney with Gaw, Van Male, Smith, Myers & Miroglio
                                      A Professional Law Corporation
</TABLE>
THE VINTAGE BANK                      SOLANO BANK
Lauren Ackerman                       John Anthony, III
James L. Asbury                       Gary J. Falati
Andrew J. Beckstoffer                 David B. Gaw
William L. Kastner                    Fred J. Hearn, Jr.
Thomas H. Lowenstein                  Connie Klimisch
Thomas F. Malloy                      Michael D. O'Brien
Terry L. Robinson                     Terry L. Robinson
Thomas H. Shelton                     Stephen C. Spencer
Stephen T. Silva                      Robert J. Wood
Carolyn D. Sherwood                   John A. Nerland, President and CEO
Glen C. Terry, President & CEO        Thomas N. Gavin, Chairman
James E. Tidgewell, Chairman          Denise C. Suikhonen, Vice Chairman
Andrew J. Nicks, M D, Vice Chairman

Directors Emeritus
Sandi Funseth
Houghton Gifford, M D
Harlan R. Kurtz
Joseph Vallerga


50
<PAGE>

--------------------------------------------------------------------------------
CORPORATE INFORMATION
--------------------------------------------------------------------------------

Corporate Headquarters
1190 Airport Road, Suite 101
Napa, CA  94558

The Vintage Bank Office Locations:
Main Office
1500 Soscol Avenue
Napa, CA 94559-1314

3271 Browns Valley Road
Napa, CA 94558-5499

3626 Bel Aire Plaza
Napa, CA 94558-2831

1065 Main Street
St. Helena, CA 94574

1190 Airport Road, Suite 100
Napa, CA  94558

Solano Bank Office Locations:
Main Office
403 Davis Street
Vacaville, CA  95688

1411 Oliver Road
Fairfield, CA  94533

1395 E. Second Street
Benicia, CA  94510

976 A Admiral Callaghan Lane
Vallejo, CA 94591

Shareholder Information:
Trading
Nasdaq NMS - Symbol NBAN
<TABLE>
<CAPTION>
<S>                                         <C>
Transfer Agent                              Registrar & Transfer Company
                                            10 Commerce Drive
                                            Cranford, New Jersey 07016
                                            1 (800) 368-5948

Notice of Annual Meeting                    COPIA 500
                                            First Street Napa, CA 94559
                                            May 6, 2004- 7:00 p.m.

General Counsel:                            Wyman G. Smith
                                            Gaw, Van Male, Smith, Myers & Miroglio
                                            1000 Main Street, Suite 300
                                            Napa, CA 94559

Corporate Secretary:                        Wyman G. Smith

Market Makers                               Hoefer & Arnett
                                            353 Sacramento Street, 10th Floor
                                            San Francisco, CA 94111
                                            1 (800) 346-5544

                                            Keefe, Bruyette & Woods, Inc.
                                            235 Pine St., Suite 1818
                                            San Francisco, CA 94104

                                            Wedbush Morgan Securities
                                            1300 S. W. Fifth Ave., Suite 2000
                                            Potland, OR 97201
                                            1 (800) 368-5948

For additional copies of this report or     Pansy F. Smith
copies of the 10-K Report contact:          Assistant Corporate Secretary
                                            North Bay Bancorp
                                            1190 Airport Road, Suite 101
                                            Napa, CA 94558
                                            (707) 252-5026

Independent Auditors:                       KPMG LLP
                                            Three Embarcadero Center, Suite 2000
                                            San Francisco, CA 94111

Web Site:                                   www.northbaybancorp.com
</TABLE>
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------


                                                                              51