--------------------------------------------------------------------------------
TABLE OF CONTENTS
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To Our Shareholders                                                           2

Selected Financial Data                                                       5

Management's Discussion
and Analysis of Financial Condition
and Results of Operations                                                     6

Balance Sheets                                                               14

Income Statements                                                            15

Statements of Changes in Shareholders' Equity                                16

Statements of Cash Flows                                                     17

Notes to Financial Statements                                                18

Report of Independent Public Accountants                                     36

Directors                                                                    37

Corporate Information                                                        38

<PAGE>

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

We are  pleased to report  that your  Company  remains on course to realize  its
ambitious vision. Our major goals continue as follows:  (1) remain  independent,
(2) grow beyond  $500  million in assets  within two years,  (3)  capitalize  on
opportunities  to  enter  underserved  contiguous  markets,  (4) be the  premier
financial  services  provider  in  markets we serve and (5)  skillfully  utilize
technology for competitive  advantage.  We believe  effective  execution of this
strategy will provide an excellent return on shareholders'  equity and growth in
earnings per share that should  advance us towards our  objective  for North Bay
Bancorp stock to command a market premium and provide consistent liquidity.

Both  subsidiary  banks  exceeded our growth  projections  for 2001,  with a 32%
consolidated growth in assets. Our net income of $3,022,166, or $1.46 per share,
slightly  exceeded  our plan.  The  return  on  average  equity  of  10.61%  was
consistent  with our  plan,  while  the  return  on  average  assets of 1.0% was
slightly below plan due to the growth in deposits outpacing the growth in loans.
The third and fourth quarters of 2001 were  particularly  strong as we were able
to realize financial  returns from our substantial asset growth.  Unlike most of
our  California  community  bank peers,  our net interest  margin did not narrow
significantly  during the year. This is the result of managing our balance sheet
to be as interest rate "neutral" as possible, so that changes in market interest
rates do not significantly impact our net income. We believe this is the optimum
position to assume for the sake of long-term financial returns.

We  anticipate  strong  growth  again in 2002,  bolstered  by the  January  2002
openings of The  Vintage  Bank's St.  Helena  Office and Solano  Bank's  Vallejo
Office. Returns on average equity and average assets are expected to be slightly
better  than in 2001,  but short of our  long-term  goal of  earning a return on
shareholders'  equity  of 15%  or  more.  Solano  Bank  is  projected  to  reach
break-even  operations  during the third  quarter of 2002.  The Vintage  Bank is
expected to continue its strong earnings  through 2002,  although the opening of
the St. Helena Office (and the associated  occupancy and personnel expense) will
have a temporary dampening impact on earnings.  Additionally, we anticipate some
narrowing of our net interest  margin during the year,  an inevitable  result of
our current low interest rate environment and intense price  competition on loan
and deposit rates.  We continue to project that year 2003, when Solano Bank will
be operating  profitably for the entire year, will mark our return to generating
financial returns above our peers. During 2003, we anticipate The Vintage Bank's
St.  Helena  expansion  will be  contributing  to profits  and the  consolidated
Company  attaining a size that allows us to realize  the  economies  of scale we
have sought with our rapid growth strategy.

We have continued to build a "foundation" for our planned growth.  While we have
excellent  physical  facilities  and technology  equipment,  our success is most
dependent on effectively  deploying our human capital.  We have reached  outside
our  Company to attract  people  with  specific  skills  and  backgrounds  while
restructuring  roles  and  responsibilities  of  existing  key  members  of  our
management team to better capitalize on their strengths.  We are evolving into a
Customer  Relationship  Management (CRM)  organization,  structured to focus our
efforts on serving our best and most profitable  customers while attracting more
customers with similar characteristics.


2
<PAGE>

In summary,  we remain on course  towards the vision  initiated in 1999 with the
decision  to  form  a  holding   company  for  The  Vintage  Bank  and  commence
organization of a new bank in Solano County.  The journey thus far has been both
challenging  and rewarding.  We thank you, our  Shareholders,  for embracing the
vision and  supporting  our endeavor.  We remain  convinced  this is the optimum
strategy to best serve your interests.

Very truly yours,


Terry L. Robinson                                          Thomas F. Malloy
President & Chief Executive Officer                        Chairman of the Board

This letter to shareholders 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.


                                                                               3
<PAGE>









                           [Intentionally Left Blank]






                                                                               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,
2001.  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)

                                                     2001        2000        1999        1998         1997
                                                    -------     -------     -------     -------      -------
<S>                                                 <C>         <C>         <C>         <C>          <C>
STATEMENTS OF OPERATIONS DATA:
  Interest income                                   $20,307     $16,700     $13,688     $11,907      $10,085
  Interest expense                                    5,887       5,612       4,364       3,992        3,141
                                                    -------     -------     -------     -------      -------
  Net interest income                                14,420      11,088       9,324       7,915        6,944
  Provision for loan losses                             447         385         240         240          240
                                                    -------     -------     -------     -------      -------
  Net interest income after
     provision for loan losses                       13,973      10,703       9,084       7,675        6,704

  Noninterest income                                  2,691       2,140       1,777       1,397        1,443

  Noninterest expense                                11,955       8,583       6,496       5,660        5,050

  Provision for income taxes                          1,687       1,647       1,650       1,301        1,243
                                                    -------     -------     -------     -------      -------

  Net income                                         $3,022      $2,613      $2,715      $2,111       $1,854
                                                    =======     =======     =======     =======      =======

BASIC PER SHARE DATA: (1)
  Earnings per share                                  $1.47       $1.35       $1.54       $1.22        $1.12
  Average shares outstanding                      2,053,669   1,926,376   1,762,803   1,732,115    1,655,155

DILUTED PER SHARE DATA: (1)
  Earnings per share                                  $1.46       $1.33       $1.50       $1.18        $1.09
  Average shares outstanding                      2,076,143   1,958,853   1,804,496   1,785,957    1,707,431

BALANCE SHEET DATA:
  Total assets                                     $326,806    $247,469    $197,106    $180,291     $146,982
  Net loans                                         183,548     150,008     120,166      94,775       80,991
  Total deposits                                    292,441     216,638     172,380     162,173      131,390
  Shareholders' equity                               29,980      26,636      18,090      16,910       14,486
</TABLE>

(1) All per share amounts have been  adjusted to reflect the 5% stock  dividends
declared January 27, 1997, January 26, 1998, January 28, 1999, January 18, 2000,
January  29, 2001 and  January  28,  2002 as well as a  two-for-one  stock split
effective October 1, 1997.


                                                                               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.
Such  forward-looking  statements  speak  only  as of the  date  on  which  such
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 such  statement  is made or to reflect  the  occurrence  of  unanticipated
events.

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

North Bay Bancorp (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
$3,022,166,  or $1.46 per share, in 2001 compared with $2,612,585,  or $1.33 per
share, in 2000 and $2,715,377, or $1.50 per share, in 1999, equating to a return
on  average  assets of 1.00%,  1.17%  and 1.44% for years  2001,  2000 and 1999,
respectively.  The return on average  equity  was 10.61% in 2001  compared  with
11.70% and 15.52% in 2000 and 1999,  respectively.  The  decrease  in net income
during 2000 compared with 1999 resulted  primarily  from costs  associated  with
opening and operating Solano Bank, which commenced operation in July, 2000.

As of December 31,  2001,  total assets were  $326,805,690  compared  with total
assets of $247,469,066 and $197,106,319 at year end 2000 and 1999, respectively,
representing  a 32%  increase  in 2001  and a 26%  increase  in  2000.  Deposits
increased 35% in 2001 compared  with a 26% increase in 2000.  Loans,  net of the
allowance for loan losses, increased 22% in 2001 compared with a 25% increase in
2000.

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

SUMMARY OF EARNINGS

Net Interest Income

Net  interest  income  before   provision  for  loan  losses  was   $14,420,237,
$11,088,108  and $9,324,483 in 2001, 2000 and 1999,  respectively,  representing
increases of 30% in 2001 and 19% 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 2001  compared  with 2000 was  primarily the
result of volume  increases in loans and  investments.  The net interest  margin
(defined as net interest  income divided by average  earning  assets)  decreased
slightly  in 2001 to  5.30%  from  5.46%  in 2000 as the  loan-to-deposit  ratio
decreased  in 2001  compared to 2000.  The Company has  historically  enjoyed an
overall cost of funds lower than peer institutions of comparable size.

Taxable-equivalent  interest income (defined as interest income adjusted for the
tax benefit for holding tax exempt  securities and loans) increased  $3,590,234,
or 21%, in 2001 compared with 2000. Increases in the


6
<PAGE>

volume of earning assets accounted for increasing interest income by $5,285,413,
offset by a decrease of $1,695,179  attributable  to lower rates. An increase in
taxable-equivalent  income  of  $2,979,385  or 21% in 2000  compared  with  1999
consisted  of a  $2,588,644  increase  due to growth of  earning  assets  and an
increase of $390,741 attributable to higher rates on earning assets.

Interest  paid  on  interest-bearing  liabilities  increased  $274,821  in  2001
compared  with 2000.  Increases in the volume of deposits  and other  borrowings
increased   interest  paid  by  $1,373,981  offset  by  a  $1,099,160   decrease
attributable  to  a  decline  in  rates.   Interest  paid  on   interest-bearing
liabilities  increased  $1,248,242  in 2000  compared  with 1999;  the effect of
volume   increases   accounted   for  $641,073  with  an  increase  of  $607,169
attributable to higher rates.

The net interest margin,  using taxable equivalent interest income, was 5.36% in
2001  compared  with 5.55% in 2000.  The decrease in the net interest  margin is
primarily the result of a lower average  loan-to-deposit  ratio in 2001 compared
to 2000 and changes in the market interest rates.

Assuming there are no dramatic  changes in market interest rates or deposit mix,
the net interest margin is expected to decline modestly during 2002,  consistent
with recent interest rate trends.

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  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 these unknown but 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.
Currently monitoring controls are in place for commercial real estate loans.

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, 2001,  loans increased $34 million,  a 22% increase over that
of 2000. On an average balance basis the Company's loan portfolio  increased $33
million over the average balance in 2000. In 2000,  average  balances  increased
from the  prior  year by 28% or $30  million.  The  increase  in 2001 was due to
strong loan demand for  commercial  real estate  loans along with an  aggressive
calling program.

Management  recognizes  that the estimation of probable loss 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


                                                                               7
<PAGE>

lesser extent,  the Company's off balance sheet  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 the its criteria (loans over
$50,000  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 Bank's  internal  grading  system.  These loans are identified
through the following categories:

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,
off balance  sheet,  etc.,  are taken into  consideration  when  evaluating  the
Company's allowance for loan losses.

As of December 31, 2001 the allowance for loan losses of $2,717,249  represented
1.46%  of  loans  outstanding.  This  compared  with  an  allowance  balance  of
$2,268,048  December 31, 2000,  representing 1.49% of loans outstanding.  During
2001, 2000 and 1999 $447,000, $385,000 and $240,000, respectively was charged to
expense for the provision for 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 it is
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, 2001 and 2000
there were no nonaccrual loans.

Historical Loan Loss & Recovery Experience

<TABLE>
<CAPTION>
                             Solano Bank               The Vintage Bank                 Consolidated
                         2001          2000          2001           2000             2001           2000
                     -----------    ----------   ------------   ------------     ------------   ------------
<S>                  <C>            <C>          <C>            <C>              <C>            <C>
Losses                        $0            $0         $4,105       $105,508           $4,105       $105,508
Recoveries                     0             0          6,306          1,625            6,306          1,625
                     -----------    ----------   ------------   ------------     ------------   ------------
Net loss
(recovery)                     0             0        (2,201)        103,883          (2,201)        103,883

Loan loss reserve        112,000        25,000      2,605,249      2,243,048        2,717,249      2,268,048
% of reserve
charge-off                0.000%        0.000%        -0.001%         0.046%          -0.001%         0.046%

Loan portfolio       $25,827,435    $2,138,063   $160,438,115   $150,137,778     $186,265,550   $152,275,871
% of reserve to
portfolio                   .43%         1.17%          1.62%          1.49%            1.46%          1.49%
</TABLE>

There have been no  transactions  in the past year to impact the  allocation for
loan loss.  The increased  allocation is due primarily to overall  growth in the
loan portfolio and related inherent risk of loss.


8
<PAGE>

Recoveries  for 2001 out paced  charged off loans within the  portfolio  for The
Vintage  Bank.  Solano  Bank,  as a new company,  has  sustained no losses since
opening for business July 2000. The Company reports  minimal  historical loss of
$103,883 for the year 2000.

Conclusion

Based on the current conditions of the loan portfolio,  Management believes that
the  $2,717,249  allowance  for loan losses at December  31, 2001 is adequate to
absorb probable  losses inherent in the Bank's loan portfolio.  No assurance can
be given,  however, that adverse economic conditions or other circumstances will
not result in increased losses in the portfolio.

Noninterest Income

Noninterest  income was $2,690,637 in 2001 compared with  $2,140,266 in 2000 and
$1,777,144 in 1999.  The 26% increase in 2001 was primarily due to realizing net
gains on the sale of investment  securities.  Fee income from service charges on
deposit accounts  increased 24% or $229,270 from the previous year compared with
a decrease of 2% in 2000. The decrease in 2000 was due primarily to a fee "grace
period" and waivers associated with a major systems conversion.

Noninterest Expense

Details of noninterest expense are as follows:

                                                      (In 000's)

                                       2001             2000              1999
                                     -------           ------            ------

Salaries & benefits                   $6,349           $4,574            $3,497
Occupancy                                854              655               401
Equipment/data processing              1,451              747               463
Other                                  3,300            2,607             2,135
                                     -------           ------            ------
   Total                             $11,954           $8,583            $6,496
                                     =======           ======            ======

Salaries  and  benefits  expense  increased  39%  and  31%  in  2001  and  2000,
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 79 at year-end 1999 to 131 at year-end 2001. The increase was
primarily  the result of opening  Solano Bank and new  branches  throughout  the
Company.  It  is  anticipated  that  full-time   equivalents  will  increase  by
approximately 5 during the year 2002 due to additional new branch openings.

The 30%  increase  in  occupancy  expense  during  2001  compared  with 2000 was
primarily in rent and  depreciation  associated  with opening three  branches of
Solano Bank. Occupancy expense is expected to increase  approximately 30% in the
year 2002 compared to 2001 due to the anticipated opening of three new offices.

Equipment and Data Processing  expense increased 94% in 2001 compared with 2000.
The increase was primarily due to an increase in depreciation  expense resulting
from  accelerated  depreciation  on its host banking system in anticipation of a
host system change during 2002.  Equipment is depreciated  over periods of three
to five years.

Major anticipated  capital purchases during 2002 include software for a new host
banking system, leasehold improvements to new branch locations,  some remodel of
existing  offices,  additional  equipment  and  furniture  needed  to equip  new
offices.  Expenditures  in these areas are  anticipated  to total  approximately
$1,750,000.  All other  anticipated  expenditures  for  equipment  during  2002,
including  routine  purchases  of  vehicles  and  miscellaneous  equipment,  are
expected to total less than  $400,000.  The  financial  impact of these  capital
expenditures,  if all are made, will be to increase monthly depreciation expense
by approximately $35,000.


                                                                               9
<PAGE>

The key components of other expenses are as follows:

                                                             (In 000's)

                                         2001             2000             1999
                                        ------           ------           ------

Professional services                     $755             $547             $485
Business promotion                         379              434              328
ATM expenses                               222              167              160
Stationery & supplies                      274              259              200
Insurance                                  111               76               64
Other                                    1,559            1,124              898
                                        ------           ------           ------
   Total                                $3,300           $2,607           $2,135
                                        ======           ======           ======

Professional  services  increased  38% in 2001  compared  with 13% in 2000;  the
increase in 2001 was  primarily  due to  increased  legal fees  associated  with
purchases of real estate and  increases in fees for audits.  Business  promotion
expense  decreased  13% in 2001  compared  with  2000  and  increased  32%  when
comparing 2000 to 1999;  these variations were primarily the result of increased
marketing  expenditures  associated with the opening of Solano Bank in 2000. ATM
expense  increased 33% in 2001 compared with 2000; the increase is primarily due
to an  increase  in the number of ATM's the  Company  operates.  Stationery  and
supplies expense increased 6% and 30% in 2001 and 2000, respectively, reflecting
overall volume  increases and costs  associated  with the system  conversion and
opening Solano Bank in July, 2000. Insurance rates increased 46% and 19% in 2001
and 2000, respectively; these increases are consistent with increases in volumes
and number of locations.  Other expenses increased 39% and 25% in 2001 and 2000,
respectively, primarily due to increased expenses in telephone, postage, courier
services, conferences and other miscellaneous expenses.

The Company  reported a provision for income taxes of $1,687,171  $1,647,347 and
$1,650,000 for years 2001, 2000 and 1999, 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.  The
Company has not been subject to an alternative minimum tax (AMT).

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

Total  assets  as  of  December  31,  2001  were   $326,805,690   compared  with
$247,469,066  and  $197,106,319,  as of  year-end  2000 and 1999,  respectively,
representing  a 32% increase in 2001 and a 26% increase in 2000.  Total deposits
grew $75,803,334 to $292,441,196 in 2001, representing a 35% increase,  compared
with a 26% increase in 2000. Total loans, net of allowance for loan losses, grew
$33,540,508 to $183,548,301 in 2001, representing a 22% increase compared with a
25%  increase in 2000.  Investment  securities  increased  from  $59,604,457  at
year-end 2000 to $86,119,716 in 2001, a 44% increase,  compared with an increase
of 5% during 2000.

Liquidity and Capital Adequacy

The  Company's  liquidity  is  determined  by the level of assets (such as cash,
federal  funds  sold and  marketable  securities  together  with  other  funding
sources) that are readily convertible 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,   2001,
"Held-to-Maturity"   securities   had  an  amortized   cost  of  $1,313,871  and
"Available-for-Sale"  securities  had  a  fair  value  of  $83,564,595  with  an
unrealized  gain, net of income taxes,  of $553,263  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
$1,241,250.


10
<PAGE>

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, 2001,  the
Company  had   approximately  $94  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.  Additionally the Company has a
$1,846,154  unsecured loan which matures  October,  2003. The loan is a variable
rate loan tied to a reference rate consistent with the prime rate with principal
and interest payments due quarterly.

At year-end 2001, liquid assets (defined as cash,  Federal funds sold,  deposits
in   other    financial    institutions    and    securities    categorized   as
available-for-sale)  represented 37% of total assets, as compared with 33% as of
year-end  2000.  The level of liquid  assets at December  31,  2001  exceeds the
liquidity required by the Company's  liquidity policy.  Management expects to be
able to meet the liquidity  needs of the Company during 2002  primarily  through
balancing loan growth with corresponding increases in deposits.

The Company is contemplating  issuing trust preferred securities during the year
2002. Issuing these securities, which have both equity and debt characteristics,
would increase the Company's  liquidity ratios.  Other anticipated  impacts of a
trust preferred issue would be increases in capital ratios and interest expense.
The impact on net  interest  income  would depend on the uses for funds from the
issue. Possible uses for the funds include equipment purchases, debt retirement,
investments,  acquisitions,  capital injections into  subsidiaries,  purchase of
Company stock or any combination of these alternatives.

Interest Rate Sensitivity

The following table sets forth the repricing  opportunities  for  rate-sensitive
assets and  rate-sensitive  liabilities at December 31, 2001.  Rate  sensitivity
analysis usually excludes  Noninterest-bearing demand deposits.  Including these
deposits, which totaled $77,117,476,  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                           $64,367       $12,234          $69,134      $40,531       $186,266
   Interest-bearing deposits in
      Other banks                               0           100                0            0            100
   Investment securities                    1,013        14,878           25,835       44,394         86,120
   Federal funds sold                      18,000             0                0            0         18,000
                                         -------------------------------------------------------------------
                Total                      83,380        27,212           94,969       84,925        290,486

Interest rate-sensitive liabilities:
   Interest-bearing demand
      deposits                            116,809             0                0            0        116,809
   Time deposits >$100,000                 19,260        14,545            3,912          507         38,224
   Other time deposits                     13,198        20,770            4,168        1,266         39,402
   Savings deposits                        20,889             0                0            0         20,889
   Long-term borrowings                     1,846             0                0            0          1,846
                                         -------------------------------------------------------------------
                Total                    $172,002       $35,315           $8,080        1,773       $217,170

Interest rate sensitivity gap            ($88,622)      ($8,103)         $86,889      $83,152        $73,316
                                         ===================================================================

Ratio of interest rate sensitivity to      -30.51%        -2.79%           29.91%       28.63%
    earning assets
</TABLE>

This table  indicates  that the Company has a "negative"  GAP for twelve  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 interest rates on interest-bearing  liabilities reprice downward
more rapidly than rates on earning assets; conversely, earnings would decline in
a rising rate  environment.  This  traditional  analysis  does not  recognize or
assume any "lag" in interest rate changes on


                                                                              11
<PAGE>

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
Company  utilizes a  simulation  model as its primary  tool for  asset/liability
management.  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.  Based on the model,  the Company is  slightly  asset
sensitive, as opposed to being liability sensitive as indicated by the preceding
table using  traditional  GAP  analysis.  As of December 31, 2001,  the analysis
indicates  that our net interest  income for the next 12 months  would  increase
$76,000 or .53% if rates increase 100 basis points, and decrease $96,000 or .67%
if rates decrease100 basis points.

The Company's  capital ratios  remained  relatively  steady during 2001 compared
with 2000 levels.  As of December  31,  2001,  the  Company's  total  risk-based
capital  ratio,  Tier I risk-based  capital ratio and leverage ratio were 13.2%,
12.1% and 9.2%,  respectively.  These  compare  with ratios of 14.9%,  13.7% and
10.8% as of December 31, 2000.

In January,  2002, the Company declared a 5% stock dividend and a $.20 per share
cash dividend for shareholders of record as of March 4, 2002. 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  $400,000,  equating to a  reduction  in the
Company's leverage ratio of approximately .01%.

DESCRIPTION OF OPERATIONS
--------------------------------------------------------------------------------

North Bay Bancorp (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
three 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  and one at 1065 Main  Street  in St.  Helena,  California  opened on
January  31,  2002.  The Vintage  Bank also has a remote ATM at 6498  Washington
Street, Yountville, California. Solano Bank, organized as a state chartered Bank
in July, 2000, 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 1100 Texas
Street, Fairfield, California, one at 1395 E. Second Street, Benicia, California
and a fourth branch located at 976 Admiral  Callahan Lane,  Vallejo,  California
opened January 16, 2002. 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.


12
<PAGE>

SECURITIES OF THE HOLDING COMPANY
--------------------------------------------------------------------------------

The Company's  outstanding  securities  consist of one class,  Common Stock,  of
which there were 1,960,902  shares  outstanding at March 4, 2002,  held by 1,051
shareholders of record.  The Company's  common stock is traded  over-the-counter
and is quoted on the OTC  "Bulletin  Board" under the symbol  NBAN.  The firm of
Hoefer & Arnett serves as the primary market maker in the Company's stock.

The following table (adjusted for the 2001 and 2002 stock dividends)  summarizes
the common  stock high and low bid prices based upon  transactions  of which the
Company is aware:

Quarter ended                       High              Low

March 31, 2000                     $22.68           $17.23
June 30, 2000                       20.64            17.91
September 30, 2000                  20.41            18.59
December 31, 2000                   19.50            18.59
March 31, 2001                      19.95            17.23
June 30, 2001                       19.05            18.10
September 30, 2001                  19.53            18.10
December 31, 2001                   19.52            18.10

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 2001 and
2000.  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, 2001, the Company had retained earnings of $7,453,716  eligible for
dividends.


                                                                              13
<PAGE>

--------------------------------------------------------------------------------
                           CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                                         2001                  2000
                                                                     ----------------------------------
<S>                                                                  <C>                   <C>
                             ASSETS

CASH AND DUE FROM BANKS                                               $19,310,919           $15,881,119
FEDERAL FUNDS SOLD                                                     18,000,000             9,475,000
                                                                     ------------          ------------
              Cash and cash equivalents                                37,310,919            25,356,119

TIME DEPOSITS WITH OTHER
    FINANCIAL INSTITUTIONS                                                100,000               100,000
INVESTMENT SECURITIES:
     Held-to-maturity                                                   1,313,871             1,353,119
     Available-for-sale                                                83,564,595            57,019,538
     Equity securities                                                  1,241,250             1,231,800
                                                                     ------------          ------------
TOTAL INVESTMENT SECURITIES                                            86,119,716            59,604,457
LOANS, net of allowance for loan losses of
    $2,717,249 in 2001 and $2,268,048 in 2000                         183,548,301           150,007,793
BANK PREMISES AND EQUIPMENT, net                                        9,328,592             5,241,687
INTEREST RECEIVABLE AND OTHER ASSETS                                   10,398,162             7,159,010
                                                                     ------------          ------------

             Total assets                                            $326,805,690          $247,469,066
                                                                     ============          ============

              LIABILITIES AND SHAREHOLDERS' EQUITY

DEPOSITS:
   Non-interest bearing                                               $77,117,476           $60,675,518
   Interest-bearing                                                   215,323,720           155,962,344
                                                                     ------------          ------------
               Total deposits                                         292,441,196           216,637,862

LONG-TERM DEBT                                                          1,846,154             2,769,231

INTEREST PAYABLE AND OTHER LIABILITIES                                  2,538,710             1,425,589
                                                                     ------------          ------------

               Total liabilities                                      296,826,060           220,832,682

COMMITMENTS AND CONTINGENT LIABILITIES (Note 5)

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 - 1,960,902 shares in 2001
       And 1,850,445 shares in 2000                                    21,972,651            19,801,538
   Retained earnings                                                    7,453,716             6,752,673
   Accumulated other comprehensive income                                 553,263                82,173
                                                                     ------------          ------------
              Total shareholders' equity                               29,979,630            26,636,384

              Total liabilities and shareholders' equity             $326,805,690          $247,469,066
                                                                     ============          ============
</TABLE>

The accompanying notes are an integral part of these statements.


14
<PAGE>

--------------------------------------------------------------------------------
                         CONSOLIDATED INCOME STATEMENTS
--------------------------------------------------------------------------------
For the Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                         2001               2000                1999
                                                     ---------------------------------------------------
<S>                                                  <C>                 <C>                  <C>
INTEREST INCOME:
   Interest and fees on loans                        $15,318,956         $12,927,364          $9,818,961
   Interest on federal funds sold                      1,012,299             520,563             192,223
   Interest on investment securities - taxable         3,394,718           2,572,133           2,980,760
   Interest on investment securities - tax exempt        574,556             674,823             689,683
   Interest on time deposits with other
     financial institutions                                6,862               5,558               6,947
                                                     -----------         -----------          ----------
              Total interest income                   20,307,391          16,700,441          13,688,574
                                                     -----------         -----------          ----------

INTEREST EXPENSE:
   Interest on interest-bearing
     transaction deposits                              2,164,149           1,655,546           1,338,642
   Interest on time and savings deposits               3,552,246           3,720,455           2,828,380
   Interest on long-term debt                            168,128             146,905                   0
   Interest on short-term borrowings                       2,631              89,427             197,069
                                                     -----------         -----------          ----------
              Total interest expense                   5,887,154           5,612,333           4,364,091
                                                     -----------         -----------          ----------
               Net interest income                    14,420,237          11,088,108           9,324,483

PROVISION FOR LOAN LOSSES                                447,000             385,000             240,000
                                                     -----------         -----------          ----------
               Net interest income after
                 provision for loan losses            13,973,237          10,703,108           9,084,483

NONINTEREST INCOME:
   Service charges on deposit accounts                 1,185,183             955,913             978,858
   Gain (loss) on securities transactions, net           325,456             (2,535)               9,753
   Other                                               1,179,998           1,186,888             788,533
                                                     -----------         -----------          ----------
              Total noninterest income                 2,690,637           2,140,266           1,777,144
                                                     -----------         -----------          ----------

NONINTEREST EXPENSE:
   Salaries and related benefits                       6,349,222           4,573,957           3,496,938
   Occupancy                                             854,163             654,773             401,243
   Equipment                                           1,451,276             747,078             462,579
   Other                                               3,299,876           2,607,634           2,135,490
                                                     -----------         -----------          ----------
              Total noninterest expense               11,954,537           8,583,442           6,496,250
                                                     -----------         -----------          ----------

Income before provision for income taxes               4,709,337           4,259,932           4,365,377

PROVISION FOR INCOME TAXES                             1,687,171           1,647,347           1,650,000
                                                     -----------         -----------          ----------

NET INCOME                                            $3,022,166          $2,612,585          $2,715,377
                                                     ===========         ===========          ==========

BASIC EARNINGS PER SHARE:                                  $1.47               $1.35               $1.54

DILUTED EARNINGS PER SHARE:                                $1.46               $1.33               $1.50
</TABLE>

The accompanying notes are an integral part of these statements.


                                                                              15
<PAGE>

--------------------------------------------------------------------------------
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                         Accumulated
                                                            Other               Total
Common Shares         Common           Retained          Comprehensive       Shareholders'       Comprehensive
 Outstanding          Stock            Earnings          Income (Loss)          Equity               Income
-------------      -----------       -----------         -------------       -------------       -------------
<S>                <C>                <C>                     <C>              <C>                 <C>
  1,437,491        $11,003,574        $5,521,351              $385,106         $16,910,031

     71,442          1,571,724       (1,581,240)                                   (9,516)
                                       (287,498)                                 (287,498)
                                       2,715,377                                 2,715,377         $2,715,377
                                                                                                    (154,379)
                                                                                                  (1,401,415)
                                                                                                   ----------
                                                           (1,555,794)         (1,555,794)        (1,555,794)
                                                                                                   $1,313,962
                                                                                                   ==========
     27,635            317,891                                                     317,891
  ---------        -----------       -----------           -----------         -----------
  1,536,568         12,893,189         6,367,990           (1,170,688)          18,090,491
     76,509          1,912,725       (1,920,588)                                   (7,863)
                                       (307,314)                                 (307,314)
                                       2,612,585                                 2,612,585         $2,612,585
                                                             1,252,861           1,252,861          1,252,861
                                                                                                   ----------
                                                                                                   $3,865,446
                                                                                                   ==========
    227,273          4,867,445                                                   4,867,445
     10,095            128,179                                                     128,179
  ---------        -----------       -----------           -----------         -----------
  1,850,445         19,801,538         6,752,673                82,173          26,636,384
     92,307          1,938,447       (1,949,743)                                  (11,296)
                                       (371,380)                                 (371,380)

                                       3,022,166                                 3,022,166         $3,022,166
                                                               471,090             471,090            471,090
                                                                                                   ----------
                                                                                                   $3,493,256
                                                                                                   ==========
     18,150            232,666                                                     232,666
  ---------        -----------       -----------           -----------         -----------
  1,960,902        $21,972,651        $7,453,716              $553,263         $29,979,630
  =========        ===========       ===========           ===========         ===========
</TABLE>

The accompanying notes are an integral part of these statements.


16
<PAGE>

--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Years Ended December 31, 2001, 2000 and 1999                                    (In 000's)
                                                                              2001         2000         1999
                                                                            ----------------------------------
<S>                                                                         <C>          <C>          <C>
Cash Flows From Operating Activities:
Net income                                                                $  3,022      $  2,613      $  2,715
Adjustments to reconcile net income to net cash
      provided by operating activities:
  Depreciation and amortization                                              1,352           634           362
  Provision for loan losses                                                    447           385           240
  Amortization of deferred loan fees                                          (471)         (288)         (262)
  Amortization (accretion) of investment securities
    premiums (discounts), net                                                  121            13            (3)
  Provision for deferred income taxes                                         (308)         (171)         (186)
  Losses (gains) on sale or retirement of capital assets                         0            11           (15)
  Gain on securities transactions                                             (325)           (7)           (8)
Changes in:
    Interest receivable and other assets                                    (3,265)         (541)          117
    Interest payable and other liabilities                                   1,150          (184)          510
                                                                          --------      --------      --------
       Total adjustments                                                    (1,299)         (148)          755
                                                                          --------      --------      --------
    Net cash provided by operating activities                                1,723         2,465         3,470
                                                                          --------      --------      --------
Cash Flows From Investing Activities:
Investment securities held to maturity:
  Proceeds from maturities and principal payments                               39            37            10
  Purchases                                                                      0             0        (1,400)
Investment securities available for sale:
  Proceeds from maturities and principal payments                           25,981         8,880        15,304
  Proceeds from sales and recoveries                                        12,228         5,156         1,008
  Purchases                                                                (63,745)      (14,577)      (12,062)
Equity securities:
  Proceeds from sales                                                           31             0             0
  Purchases                                                                    (40)         (307)         (148)
Proceeds from sale of time deposits with other financial institutions            0             0           100
Net increase in loans                                                      (33,516)      (29,939)      (25,369)
Sale and disposition of capital assets                                          42             0            22
Capital expenditures                                                        (5,481)       (3,006)         (517)
                                                                          --------      --------      --------
   Net cash used in investing activities                                   (64,461)      (33,756)      (23,052)
                                                                          --------      --------      --------
Cash Flows From Financing Activities:
Net increase in deposits                                                    75,803        44,258        10,207
Increase (decrease) in short-term borrowings                                     0        (5,000)        5,000
Increase in long-term borrowings                                                 0         3,000             0
Re-payment of long-term borrowings                                            (923)         (231)            0
Stock options exercised                                                        196           102           236
Stock issued, net of costs                                                       0         4,867             0
Dividends                                                                     (383)         (315)         (297)
                                                                          --------      --------      --------
   Net cash provided by financing activities                                74,693        46,681        15,146
                                                                          --------      --------      --------
Net increase (decrease) in cash and cash equivalents                        11,955        15,390        (4,436)
Cash and cash equivalents at beginning of year                              25,356         9,966        14,402
                                                                          --------      --------      --------
Cash and cash equivalents at end of year                                  $ 37,311      $ 25,356      $  9,966
                                                                          ========      ========      ========

Supplemental Disclosures of Cash Flow Information:
  Interest paid                                                           $  5,622      $  6,370      $  4,149
  Income taxes paid                                                       $  1,448      $  1,738      $  1,396
  Retirement of fixed assets                                              $    139      $  1,044      $      0
</TABLE>

The accompanying notes are an integral part of these statements.


                                                                              17
<PAGE>

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
December 31, 2001, 2000 and 1999

(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  four 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 the Banks (collectively the
Company)  are  prepared  in  conformity  with  accounting  principles  generally
accepted in the United States and general practice within the banking  industry.
The more significant accounting and reporting policies are discussed below.

Principles of Consolidation The consolidated  financial  statements  include the
accounts of Bancorp and the Banks.  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 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.  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.

Premiums and  discounts  are  amortized or accreted over the life of the related
investment  security  as an  adjustment  to yield using the  effective  interest
method. Dividend and interest incomes are recognized when earned. Realized gains
and losses are computed on the specific  identification method.  Securities with
unrealized  losses judged by the Company to be other than  temporary are written
down in the period such a determination is made.

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. The Company's  policy is to place loans on nonaccrual  status
when  management  believes  the  borrower's  financial  condition,  after giving
consideration  to economic and business  conditions and collection  efforts,  is
such that the  presumption of  collectibility  of interest no longer is prudent.
When a loan is placed on  nonaccrual  status,  any accrued  and unpaid  interest
receivable is reversed and charged  against  current  earnings.  In  determining
income recognition on loans, generally no interest is recognized with respect to
loans on which a default of interest or  principal  has occurred for a period of
90 days or more.

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.


18
<PAGE>

When the measure of the impaired  loan is less than the recorded  investment  in
the loan, the impairment is recorded through a valuation allowance.

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.

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 For financial reporting  purposes,  the Company records a provision
for income taxes using the liability  method.  A deferred tax liability or asset
is recorded for all temporary  differences  between financial and tax reporting.
Deferred tax expense or benefit  results from the net change  during the year of
the  deferred  tax assets and  liabilities.  The  measurement  of tax assets and
liabilities is based on the provisions of enacted tax laws.

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).  Under this method,  compensation  expense is
recognized for awards of options to purchase 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  included in
Note 15.

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 share (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 other comprehensive income.

Accounting and reporting changes Financial  Accounting  Standards Board SFAS No.
133; "Accounting for Derivative  Instruments and Hedging Activities" (as amended
by SFAS  No.  137 and  SFAS  No.  138),  established  accounting  and  reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other  contracts  and for hedging  activities.  It requires  that an
entity  recognize  all  derivatives  as  either  assets  or  liabilities  in the
statements of financial position and measures those instruments at fair value.


                                                                              19
<PAGE>

Effective July 1, 1999,  the Company  adopted SFAS 133. The adoption of SFAS 133
did not  materially  impact  the  Company's  financial  position  or  results of
operations. The Company does not currently utilize derivative instruments in its
operations  and does not engage in hedging  activities.  Under the provisions of
SFAS No. 133, and in  connection  with its  adoption,  the Company  reclassified
investment  securities  carried at $13,506,000  with a fair value of $13,242,000
from   the   held-to-maturity    classification   to   the    available-for-sale
classification.  As a result of this transfer,  an unrealized  loss of $154,000,
net of tax, was recognized in 1999's other comprehensive  income as a cumulative
effect of change in accounting principle.

(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, 2001 are as follows:

<TABLE>
<CAPTION>
                                                             Gross             Gross
                                         Amortized         Unrealized        Unrealized        Estimated
                                            Cost             Gains             Losses         Fair Value
                                        -----------        ----------        ----------       -----------
<S>                                     <C>                <C>                <C>             <C>
Held-to-maturity:
Municipal securities                     $1,313,871                $0               $0         $1,313,871
                                        -----------        ----------         --------        -----------

Available-for-sale:
Securities of the U.S. Treasury
   and other government agencies         24,317,312           248,983                0         24,566,295
Corporate debt securities                17,257,180           388,545                0         17,645,725
Mortgage-backed securities               28,021,340           339,577          148,104         28,212,813
Municipal securities                     13,021,881           163,199           45,318         13,139,762
                                        -----------        ----------         --------        -----------
Total available-for-sale                 82,617,713         1,140,304          193,422         83,564,595

Equity securities                         1,241,250                 0                0          1,241,250
                                        -----------        ----------         --------        -----------

Total investments                       $85,172,834        $1,140,304         $193,422        $86,119,716
                                        ===========        ==========         ========        ===========
</TABLE>

The amortized cost and estimated fair value of investment securities at December
31, 2000 are as follows:

<TABLE>
<CAPTION>
                                                             Gross             Gross
                                         Amortized         Unrealized        Unrealized        Estimated
                                            Cost             Gains             Losses         Fair Value
                                        -----------        ----------        ----------       -----------
<S>                                     <C>                <C>                <C>             <C>
Held-to-maturity:
Municipal securities                     $1,353,119                $0               $0         $1,353,119
                                        -----------          --------         --------        -----------

Available-for-sale:
Securities of the U.S. Treasury
   and other government agencies          5,539,365            25,714           26,499          5,538,580
Corporate debt securities                14,890,844            90,054           38,040         14,942,858
Mortgage-backed securities               23,885,783           162,395          137,324         23,910,854
Municipal securities                     12,562,911           130,150           65,815         12,627,246
                                        -----------          --------         --------        -----------
Total available-for-sale                 56,878,903           408,313          267,678         57,019,538

Equity securities                         1,231,800                 0                0          1,231,800
                                        -----------          --------         --------        -----------

Total investments                       $59,463,822          $408,313         $267,678        $59,604,457
                                        ===========          ========         ========        ===========
</TABLE>


20
<PAGE>

The  following  table  shows the  amortized  cost and  estimated  fair  value of
investment securities by contractual maturity at December 31, 2001:

<TABLE>
<CAPTION>
                                              Held-to-Maturity               Available-for-Sale                  Equities

                                         Amortized       Estimated        Amortized      Estimated       Amortized       Estimated
                                            Cost         Fair Value          Cost        Fair Value         Cost         Fair Value
                                         -----------     -----------     -----------     -----------     -----------     -----------
<S>                                      <C>             <C>             <C>             <C>             <C>             <C>
Within one year                                   $0              $0     $14,221,554     $14,337,509              $0              $0
After one but within five years                    0               0      24,064,356      24,511,015               0               0
After five but within ten years                    0               0       7,860,376       7,940,425               0               0
Over ten years                             1,313,871       1,313,871       8,450,087       8,562,833               0               0
Equity securities                                  0               0               0               0       1,241,250       1,241,250
Mortgage-backed securities                         0               0      28,021,340      28,212,813               0               0
                                         -----------     -----------     -----------     -----------     -----------     -----------
Total                                    $ 1,313,871     $ 1,313,871     $82,617,713     $83,564,595     $ 1,241,250     $ 1,241,250
                                         ===========     ===========     ===========     ===========     ===========     ===========
</TABLE>

As of December 31, 2001 and 2000, securities carried at $1,035,000 and $502,500,
respectively, were pledged to secure public deposits as required by law.

Total proceeds from the sale of securities  available-for-sale  during 2001 were
$12,228,173. Gross gains of $325,456 were realized on those sales.

Total proceeds from the sale of securities  available-for-sale  during 2000 were
$5,150,683.  Gross losses of $7,510 were  realized on those  sales.  The Company
also recovered $4,975 on previously charged off securities.

Total proceeds from the sale of securities  available-for-sale  during 1999 were
$1,004,179. Gross gains of $4,752 were realized on those sales. The Company also
recovered $5,001 on previously charged off securities.

(3) LOANS AND ALLOWANCE FOR LOAN LOSSES

At December 31, 2001 and 2000,  the loan  portfolio  consisted of the following,
net of deferred loan fees of $903,748 and $779,290, respectively:

                                                   2001                2000
                                               ------------        ------------

Real estate loans                              $106,850,930         $86,886,297
Installment loans                                20,301,134          23,431,838
Construction loans                               21,453,418           8,242,918
Commercial loans secured by real estate           7,930,041           5,114,931
Commercial loans                                 29,730,027          28,599,857
                                               ------------        ------------
                                                186,265,550         152,275,841
Less allowance for loan losses                    2,717,249           2,268,048
                                               ------------        ------------
Total                                          $183,548,301        $150,007,793
                                               ============        ============

There were no loans on  nonaccrual  status at December  31, 2001 or December 31,
2000.  There was no interest  foregone during 2001, 2000 or 1999. As of December
31,  2001 and  2000,  there  were no loans  90 days or more  past due but  still
accruing interest.

Changes in the allowance for loan losses are as follows:

                                     2001             2000              1999
                                  -----------      -----------      -----------

Balance, beginning of year        $ 2,268,048      $ 1,986,931      $ 1,751,693
Provision for loan losses             447,000          385,000          240,000
Loans charged off                      (4,105)        (105,508)         (24,382)
Recoveries of loans
   previously charged off               6,306            1,625           19,620
                                  -----------      -----------      -----------
Balance, end of year              $ 2,717,249      $ 2,268,048      $ 1,986,931
                                  ===========      ===========      ===========


                                                                              21
<PAGE>

As of December  31, 2001 and 2000 there were no impaired  loans.  As of December
31, 1999 the Banks' recorded  investment in impaired loans was  $1,084,740,  and
the related  valuation  allowance  was  $231,737.  This  valuation  allowance is
included in the  allowance  for loan losses on the  balance  sheet.  The average
recorded  investment  in impaired  loans was $0, $0 and  $933,000  for the years
ended December 31, 2001, 2000 and 1999, respectively.

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.  The Banks
recognized interest income on impaired loans of $0, $0 and $81,697 in 2001, 2000
and 1999, respectively.

(4) PREMISES AND EQUIPMENT

Premises and equipment at December 31, 2001 and 2000 consisted of the following:

<TABLE>
<CAPTION>
                                                                    Accumulated
                                                                    Depreciation          Net Book
                                                   Cost            & Amortization          Value
                                                -----------        --------------        ----------
<S>                                             <C>                  <C>                 <C>
2001
Land                                             $2,578,200                  $0          $2,578,200
Premises                                          4,673,102             629,978           4,043,124
Furniture, fixtures and equipment                 4,662,400           2,539,237           2,123,163
Leasehold improvements                              893,174             309,069             584,105
                                                -----------          ----------          ----------
Total                                           $12,806,876          $3,478,284          $9,328,592
                                                ===========          ==========          ==========

2000
Land                                               $706,277                  $0            $706,277
Premises                                          1,748,164             439,054           1,309,110
Furniture, fixtures and equipment                 3,839,507           1,549,377           2,290,130
Leasehold improvements                            1,171,259             235,089             936,170
                                                -----------          ----------          ----------
Total                                            $7,465,207          $2,223,520          $5,241,687
                                                ===========          ==========          ==========
</TABLE>

Depreciation  and  amortization  expense,  included  in  occupancy  expense  and
equipment expense, was $1,351,536, $634,336 and $361,854 in 2001, 2000 and 1999,
respectively.

(5) COMMITMENTS AND CONTINGENCIES

The Banks  lease the  premises  for their  various  offices.  Total rent on such
leases was $295,510, $270,154 and $138,654 in 2001, 2000 and 1999, respectively,
and is included in occupancy and equipment expenses. The total commitments under
non-cancelable leases are as follows:

                         Year             Total
                         ----             -----

                         2002           $344,629
                         2003            481,888
                         2004            489,481
                         2005            438,034
                         2006            325,261
                   Thereafter          1,223,688
                                      ----------
                        Total         $3,302,981
                                      ==========

(6) TIME DEPOSITS AND INTEREST ON TIME DEPOSITS

Time  certificates  of deposit in  denominations  of  $100,000  or greater  were
$38,223,872  and  $23,996,758  at  December  31,  2001 and  2000,  respectively.
Interest  expense on these deposits was $1,009,811,  $1,188,766 and $813,293 for
2001, 2000 and 1999, respectively.


22
<PAGE>

At December 31, 2001, the scheduled maturities of time deposits are as follows:

                         Year             Total
                         ----             -----

                         2002         $67,772,004
                         2003           7,131,251
                         2004             948,974
                         2005             961,623
                         2006             758,313
                         2007              53,421
                                      -----------
                        Total         $77,625,586
                                      ===========

(7) BORROWINGS

There were no  short-term  borrowings at December 31, 2001 or December 31, 2000.
Short-term   borrowings   consist  primarily  of  federal  funds  purchased  and
borrowings from the Federal Home Loan Bank of San Francisco (FHLB).  The Company
maintains a collateralized line of credit with the FHLB. Based on the FHLB stock
requirements at December 31, 2001, this line provided for maximum  borrowings of
approximately $83 million; the Company also has available unused lines of credit
totaling $11 million for Federal funds transactions at December 31, 2001.

The Company has an unsecured loan with Union Bank of California.  The balance at
December  31, 2001 was  $1,846,154.  The loan is a variable  rate loan tied to a
reference  rate  consistent  with the prime rate which was 4.75% at December 31,
2001.  Principal and interest payments are due quarterly on the loan and matures
October 3, 2003.

(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  nonperformance  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 2002 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, 2001 were as follows:

                                     Contractual Amounts
                                     -------------------
Loan commitments                             $58,443,000
Standby letters of credit                     $1,249,000

(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  82% of the loans are  secured  by real
estate. This concentration is presented below:


                                                                              23
<PAGE>

                                                                  As of
                                                           December 31, 2001
                                                           -----------------
Construction/Land Development:
     Land development                                          $4,941,336
     Residential                                                5,781,296
     Commercial                                                10,730,786
Real Estate                                                   106,850,930
Commercial loans secured by real estate                         7,930,041
Installment loans secured by real estate                       17,350,185
                                                             ------------
      Total                                                  $153,584,574
                                                             ============

(10) INCOME TAXES

The  provision  (benefit) for federal and state income taxes for the years ended
December 31, 2001, 2000 and 1999 consisted of:

                               2001                2000                 1999
                            -----------         -----------         -----------
Current
   Federal                  $ 1,471,000         $ 1,303,000         $ 1,345,000
   State                        524,000             515,000             491,000
                            -----------         -----------         -----------
                              1,995,000           1,818,000           1,836,000
Deferred
   Federal                     (324,000)           (116,000)           (164,000)
   State                         16,000             (55,000)            (22,000)
                            -----------         -----------         -----------
                               (308,000)        ($  171,000)        ($  186,000)
                            -----------         -----------         -----------

Total                       $ 1,687,000         $ 1,647,000         $ 1,650,000
                            ===========         ===========         ===========

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, 2001 and 2000:

                                                      2001               2000
                                                   ----------         ----------
Deferred Tax Assets:
   Allowance for loan losses                       $1,062,000         $  879,000
   Deferred compensation                              276,000                  0
   State income tax                                   178,000            175,000
   Depreciation                                        44,000                  0
   Other                                                    0            116,000
                                                   ----------         ----------
                                                   $1,560,000         $1,170,000
                                                   ==========         ==========

Deferred Tax Liabilities:
   Unrealized gain on securities                   $  394,000         $   70,000
   Accumulated accretion                              117,000             63,000
   Depreciation                                             0            265,000
   Other                                              323,000             30,000
                                                   ----------         ----------
                                                      834,000            428,000
                                                   ----------         ----------

   Net Deferred Tax Asset                          $  726,000         $  742,000
                                                   ==========         ==========

The Company had no valuation allowance as of December 31, 2001 or 2000.


24
<PAGE>

The total tax  differs  from the  federal  statutory  rate of 34% because of the
following:

<TABLE>
<CAPTION>
                                             2001                       2000                  1999
                                             ----                       ----                  ----
                                      Amount        Rate         Amount     Rate        Amount       Rate
                                      ------        ----         ------     ----        ------       ----
<S>                                <C>              <C>       <C>           <C>       <C>             <C>
Tax provision at statutory rate    $1,628,000       34%       $1,448,000    34%       $1,503,000      34%
Interest on obligations of
   states and political
   subdivisions exempt from
   federal taxation                  (161,000)      (3.4%)      (172,000)    (4%)       (193,000)     (3%)
State franchise taxes                 319,000        6.8%        316,000     7.4%        317,000       7%
Other, net                            (99,000)      (1.6%)        55,000     1.3%         23,000       2%
                                   ----------       ----      ----------    ----      ----------      --
Total                              $1,687,000       35.8%     $1,647,000    38.7%     $1,650,000      40%
                                   ==========       ====      ==========    ====      ==========      ==
</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  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 receipt of dividends from the 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 27, 1999,  January 18, 2000,
January 29, 2001 and January 28, 2002. As a result of the stock  dividends,  the
number of common  shares  outstanding  and  earnings per share data was adjusted
retroactively for all periods presented. 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.


                                                                              25
<PAGE>

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

<TABLE>
<CAPTION>
                                                                     Weighted Average             Per-Share
                                                Net Income                Shares                   Amount
                                                ----------                ------                   ------
<S>                                             <C>                      <C>                        <C>
For the year ended 2001
  Basic earnings per share                      $3,022,166               2,053,669                  $1.47
  Stock options                                                             22,474
  Diluted earnings per share                                             2,076,143                  $1.46

                                                                  For the year ended 2000
  Basic earnings per share                      $2,612,585               1,926,376                  $1.35
  Stock options                                                             32,477
  Diluted earnings per share                                             1,958,853                  $1.33

                                                                  For the year ended 1999
  Basic earnings per share                      $2,715,377               1,762,803                  $1.54
  Stock options                                                             41,693
  Diluted earnings per share                                             1,804,496                  $1.50
</TABLE>

(13) OTHER NONINTEREST INCOME AND EXPENSE

The  components  of Other  Noninterest  Income for the years ended  December 31,
2001, 2000 and 1999 were as follows:

                                         2001            2000            1999
                                      ----------      ----------      ----------
ATM surcharge                         $  248,510      $  359,167      $  223,345
Increase of cash value on
   insurance policies                    296,110         133,753         156,232
Merchant services income                 265,115         149,933         135,183
Commission on sale of non-
   deposit products                      157,952         193,391          74,920
Other                                    212,311         350,644         198,853
                                      ----------      ----------      ----------
Total                                 $1,179,998      $1,186,888      $  788,533
                                      ==========      ==========      ==========

The  components of Other  Noninterest  Expense for the years ended  December 31,
2001, 2000 and 1999 were as follows:

                                       2001             2000             1999
                                    ----------       ----------       ----------
Professional services               $  754,858       $  547,412       $  485,320
Business promotions                    379,181          433,503          328,068
ATM expenses                           222,384          167,002          159,532
Stationary & supplies                  274,369          258,734          199,789
Insurance                              110,503           76,498           64,400
Other                                1,558,581        1,124,485          898,381
                                    ----------       ----------       ----------
Total                               $3,299,876       $2,607,634       $2,135,490
                                    ==========       ==========       ==========

(14) BUSINESS SEGMENTS

The Company's  operating  segments consist of its traditional  community banking
activities  provided  through the Banks' branches and activities  related to the
Bancorp.  Community banking  activities include the Banks' commercial and retail
lending,  deposit gathering and investment and liquidity management  activities.
The Company has  aggregated  the  results of the Banks'  branches  into a single
reportable segment, and the Bancorp activities reported as "Other".


26
<PAGE>

The components of the Company's business segments for 2001 were as follows:

<TABLE>
<CAPTION>
                                                                (In 000's)

                                   Community                               Intersegment
                                     Banking               Other            Adjustments         Consolidated
                                    --------              --------         ------------         ------------
<S>                                 <C>                    <C>               <C>                 <C>
Interest income                      $20,307                    $0                 $0             $20,307
Interest expense                       5,719                   168                  0               5,887
                                    --------              --------           --------            --------
   Net interest income                14,588                  (168)                 0              14,420
Provision for loan losses                447                     0                  0                 447
Noninterest income                     2,856                 4,754             (4,919)              2,691
Equity income of subsidiaries              0                 3,852             (3,852)                  0
Noninterest expense                   10,976                 5,898             (4,919)             11,955
                                    --------              --------           --------            --------
Income before tax                      6,021                 2,540             (3,852)              4,709
Provision for Income taxes             2,169                  (482)                 0               1,687
                                    --------              --------           --------            --------
Net income                            $3,852                $3,022            ($3,852)             $3,022
                                    ========              ========           ========            ========

Assets                              $325,513               $32,771           ($31,478)           $326,806
Loans, net                           183,548                     0                  0             183,548
Deposits                             294,442                     0             (2,001)            292,441
Equity                                29,476                29,980            (29,476)             29,980
</TABLE>

The components of the Company's business segments for 2000 were as follows:

<TABLE>
<CAPTION>
                                                                (In 000's)

                                   Community                          Intersegment
                                     Banking           Other           Adjustments          Consolidated
                                    --------          -------          ------------         ------------
<S>                                <C>                 <C>                <C>                 <C>
Interest income                     $16,850                 $0               ($150)            $16,700
Interest expense                      5,615                147                (150)              5,612
                                   --------           --------            --------            --------
   Net interest income               11,235               (147)                  0              11,088
Provision for loan losses               385                  0                   0                 385
Noninterest income                    2,310              2,266              (2,436)              2,140
Equity income of subsidiaries             0              3,353              (3,353)                  0
Noninterest expense                   7,626              3,393              (2,436)              8,583
                                   --------           --------            --------            --------
Income before tax                     5,534              2,079              (3,353)              4,260
Provision for income taxes            2,176               (529)                  0               1,647
                                   --------           --------            --------            --------
Net income                           $3,358             $2,608             ($3,353)             $2,613
                                   ========           ========            ========            ========

Assets                             $246,055            $29,885            ($28,471)           $247,469
Loans, net                          150,008                  0                   0             150,008
Deposits                            217,455                  0                (817)            216,638
Equity                               27,654             26,636             (27,654)             26,636
</TABLE>


                                                                              27
<PAGE>

The components of the Company's business segments for 1999 were as follows:

<TABLE>
<CAPTION>
                                                                  (In 000's)

                                    Community                            Intersegment
                                     Banking             Other            Adjustments         Consolidated
                                     --------           -------          ------------         ------------
<S>                                  <C>                 <C>                 <C>                 <C>
Interest income                       $13,688                 $0                  $0             $13,688
Interest expense                        4,363                  1                   0               4,364
                                     --------           --------            --------            --------
   Net interest income                  9,325                 (1)                  0               9,324
Provision for loan losses                 240                  0                   0                 240
Noninterest income                      1,777                490                (490)              1,777
Noninterest expense                     6,440                 56                   0               6,496
                                     --------           --------            --------            --------
Income before tax                       4,422                433                (490)              4,365
Provision for income taxes              1,650                  0                   0               1,650
                                     --------           --------            --------            --------
Net income                             $2,772               $433               ($490)             $2,715
                                     ========           ========            ========            ========

Assets                               $197,003            $18,090            ($17,987)           $197,106
Loans, net                            120,166                  0                   0             120,166
Deposits                              173,319                  0                (939)            172,380
Equity                                 17,047             18,090             (17,047)             18,090
</TABLE>

(15) STOCK OPTION PLAN

The  Company  has a stock  option  plan  under  which it may grant up to 555,739
options.  The Company has granted 548,123 options through December 31, 2001. The
option exercise price equals the stock's market price on the date of grant.  The
options become exercisable over five years and expire in five to ten years.

A summary of the status of the Company's stock option plan at December 31, 2001,
2000 and 1999 and stock option activity during the years then ended is presented
in the table below:

<TABLE>
<CAPTION>
                                     2001                           2000                          1999
                                     ----                           ----                          ----
                                           Weighted                       Weighted                       Weighted
                                           Exercise                       Exercise                       Exercise
                              Shares        Price         Shares            Price        Shares            Price
                             --------       ------       --------           -----       --------           -----
<S>                          <C>            <C>          <C>               <C>          <C>               <C>
Outstanding at
    beginning of year         283,576       $16.59        173,800          $13.19        194,525          $11.19
Granted                        69,038       $18.36        140,155          $20.46         27,783          $19.76
Exercised                     (19,396)      $10.17        (11,130)          $8.70        (31,991)          $7.37
Cancelled                        (487)       $6.57        (19,249)         $18.02        (16,517)         $11.67
Outstanding at end of year    332,731       $17.32        283,576          $16.59        173,800          $13.19
Exercisable at end of year    103,413       $15.12         63,211          $12.55         39,744          $11.45
Weighted-average
   fair value of
   options granted
   during the year              $6.23                       $9.02                                          $6.97
</TABLE>


28
<PAGE>

The following table summarizes  information  about stock options  outstanding at
December 31, 2001:

<TABLE>
<CAPTION>
                      Options Outstanding                                                    Options Exercisable
                      -------------------                                                    -------------------

     Range               Number              Weighted-Average                           Number Exercisable
       of            Outstanding at      Remaining Contractual     Weighted-Average             at                Weighted-Average
Exercise Prices         12/31/01             (Life in years)        Exercise Price           12/31/01              Exercise Price
---------------         --------             ---------------        --------------           --------              --------------
<S>                      <C>                     <C>                   <C>                   <C>                       <C>
$12.15 to $18.10         120,644                  .90                  $13.06                 72,603                   $12.88

$20.30 to $21.60          75,246                 3.00                  $20.99                 17,249                   $20.90

$18.10 to $19.96         136,841                 4.10                  $19.80                 13,561                   $19.07
                         -------                                                             -------
                         332,731                                                             103,413
                         =======                                                             =======
</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 2001,  2000 and 1999,  respectively:  risk-free
interest rate of 4.62% and 3.90% for options  issued in 2001,  5.88%,  6.75% and
5.75% for options  issued in 2000 and 4.75% and 6% for  options  issued in 1999;
expected dividend yields of 1.01%, .92% and .94%;  expected lives of 6 years and
expected volatility of 28.02%, 31.05% and 26.32%.

The Company accounts for stock options using the intrinsic value method. Had the
Company  used the fair  value  based  method  prescribed  by SFAS No.  123,  the
Company's  net income and earnings per share  amounts would have been reduced to
the pro forma amounts indicated below:

                               2001                2000                1999
                               ----                ----                ----
Net Income:
     As reported            $3,022,166          $2,612,585            $2,715,377
     Pro forma              $2,608,691          $2,267,333            $2,558,261
Earnings Per Share:
     As reported:
        Basic                    $1.47               $1.35                 $1.54
        Diluted                  $1.46               $1.33                 $1.50
     Pro forma:
       Basic                     $1.27               $1.18                 $1.45
       Diluted                   $1.26               $1.16                 $1.42

(16) 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, 2001 is as follows:

Balance at beginning of year                                       $4,062,052
     Additions                                                     10,090,599
     Repayments                                                     9,545,606
                                                                   ----------
Balance at end of year                                             $4,607,045
                                                                   ==========

Total undisbursed commitments as of December 31, 2001 were $3,069,810.

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 2001, 2000 and 1999
fees of $135,000, $80,000 and $58,000, respectively, were paid to this firm.


                                                                              29
<PAGE>

(17) RESTRICTIONS

The Banks are required to maintain  reserves with the Federal Reserve Bank equal
to a percentage of its reservable deposits.  Reserve balances that were required
by the Federal Reserve Bank were $275,000 and $487,000 for December 31, 2001 and
2000,  respectively,  and are reported in cash and due from banks on the balance
sheet.

(18) 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 $223,200,  $160,000 and $159,000 for the years ended December
31, 2001, 2000 and 1999, respectively.

During 1998, The Vintage Bank implemented a Director's  Supplemental  Retirement
Program.  The  Program  contains  a  non-qualified  defined  benefit  plan and a
non-qualified   defined   contribution  plan.   Directors  and  select  officers
designated  by the Board of  Directors  of the Company are covered by one or the
other of these plans.  The plans are  unfunded,  however the Bank has  purchased
life  insurance  on the lives of the  participants  and  expects to use the cash
values of these policies ($2,892,394 at December 31, 2001) to pay the retirement
obligations.

During  2001,  the  Company   implemented  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 cash values of these policies ($2,843,819 at
December 31, 2001) to pay the retirement  obligations.  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.

(19) FAIR VALUE OF FINANCIAL INSTRUMENTS

The  following  table  presents  the  carrying  amounts  and fair  values of the
Company's financial instruments at December 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                        Carrying            Fair                Carrying             Fair
                                         Amounts            Value               Amounts              Value
                                         -------            -----               -------              -----
                                                                    (In 000's)
                                                   2001                                    2000
                                                   ----                                    ----
<S>                                      <C>               <C>                  <C>                 <C>
Financial Assets:
   Cash and cash equivalents             $37,311           $37,311              $25,356             $25,356
   Time deposits with other
      financial institutions                 100               100                  100                 100
   Investment securities                  86,120            86,120               59,604              59,604
   Loans, net                            183,548           185,633              150,008             149,843
   Accrued interest receivable             2,015             2,015                1,739               1,739

Financial Liabilities:
   Deposits                              292,441           291,995              216,638             216,523
   Short-term borrowings                       0                 0                    0                   0
   Long-term borrowings                    1,846             1,846                2,769               2,769
   Accrued interest payable                  383               383                  118                 118
</TABLE>

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


30
<PAGE>

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.

(20) COMPREHENSIVE INCOME

The changes in the components of other comprehensive income (loss) for the years
ended December 31, 2001, 2000 and 1999 are reported as follows:

<TABLE>
<CAPTION>
                                                                        2001         2000          1999
                                                                      --------    ----------    -----------
<S>                                                                   <C>         <C>           <C>
Unrealized  holding gain (loss) arising during the period, net of
tax expense of $335,157 for 2001, a tax expense of $891,346 for
2000 and a tax benefit of  $1,106,868 for 1999.                        $661,254    $1,251,380   ($1,396,051)
Reclassification  adjustment  for net realized  gains (losses) on
securities  available-for-sale  included in net income during the
year,  net of tax expense of $135,292  for 2001, a tax benefit of
$1,054 for 2000 and tax expense of $3,816 for 1999.                    (190,164)        1,481        (5,364)
                                                                      --------    ----------    -----------
Other comprehensive income (loss)                                      $471,090    $1,252,861   ($1,401,415)
</TABLE>

(21) 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, 2001, that
the Company meets all capital adequacy requirements to which it is subject.

As of December 31, 2001, 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.


                                                                              31
<PAGE>

The Company's  actual capital amounts and ratios are also presented in the table
below:

<TABLE>
<CAPTION>
                                                                                    To Be Well Capitalized
                                                            For Capital             Under Prompt Corrective
                                     Actual              Adequacy Purposes             Action Provisions
                                     ------              -----------------             -----------------
                                                             (In 000's)
                              Amount        Ratio       Amount        Ratio         Amount           Ratio
                              ------        -----       ------        -----         ------           -----
<S>                           <C>           <C>         <C>           <C>          <C>              <C>
As of December 31, 2001:
Total Capital (to Risk
   Weighted Assets)
      Consolidated            $32,117       13.24%      $19,402       >=8.00%        $24,252         >=10.00%
      The Vintage Bank         23,788       11.54%       16,497       >=8.00%         20,621         >=10.00%
      Solano Bank               7,825       22.36%        2,799       >=8.00%          3,498         >=10.00%
Tier I Capital (to Risk
   Weighted Assets)
      Consolidated             29,427       12.13%        9,701       >=4.00%         14,551          >=6.00%
      The Vintage Bank         21,210       10.29%        8,248       >=4.00%         12,373          >=6.00%
      Solano Bank               7,713       22.04%        1,400       >=4.00%          2,099          >=6.00%
Tier I Capital (to
   Average Assets)
      Consolidated             29,427        9.15%       12,866       >=4.00%         16,082          >=5.00%
      The Vintage Bank         21,210        7.75%       10,948       >=4.00%         13,685          >=5.00%
      Solano Bank               7,713       16.09%        1,918       >=4.00%          2,397          >=5.00%

<CAPTION>
                                                                                    To Be Well Capitalized
                                                            For Capital             Under Prompt Corrective
                                     Actual              Adequacy Purposes             Action Provisions
                                     ------              -----------------             -----------------
                                                             (In 000's)
                              Amount        Ratio       Amount        Ratio         Amount           Ratio
                              ------        -----       ------        -----         ------           -----
<S>                           <C>           <C>         <C>            <C>          <C>              <C>
As of December 31, 2000:
Total Capital (to Risk
   Weighted Assets)
      Consolidated            $28,822       14.85%      $15,530       >=8.00%       $19,413         >=10.00%
      The Vintage Bank         21,374       11.78%       14,510       >=8.00%        18,138         >=10.00%
      Solano Bank               8,465       77.56%          873       >=8.00%         1,091         >=10.00%
Tier I Capital (to Risk
   Weighted Assets)
      Consolidated             26,554       13.68%        7,765       >=4.00%        11,648          >=6.00%
      The Vintage Bank         19,131       10.55%        7,255       >=4.00%        10,883          >=6.00%
      Solano Bank               8,440       77.33%          437       >=4.00%           655          >=6.00%
Tier I Capital (to
   Average Assets)
      Consolidated             26,554       10.77%        9,859       >=4.00%        12,323          >=5.00%
      The Vintage Bank         19,131        8.51%        9,792       >=4.00%        12,240          >=5.00%
      Solano Bank               8,440       38.94%          867       >=4.00%         1,084          >=5.00%
</TABLE>


32
<PAGE>

(22) FINANCIAL STATEMENTS OF NORTH BAY BANCORP (Parent Company Only)

The Bancorp was organized as of November 1, 1999. As a result, information below
is for the twelve (12) months ended December 31, 2001 and 2000 and the two month
period ended December 31, 1999.

Condensed Balance Sheets

<TABLE>
<CAPTION>
Assets                                                             2001              2000
                                                                -----------       -----------
<S>                                                              <C>             <C>
Cash and due from banks                                           $1,966,121         $72,764
Investment in The Vintage Bank                                    21,622,962      19,217,467
Investment in Solano Bank                                          7,853,445       8,436,538
Premises and equipment, net                                        1,190,562       1,479,489
Other assets                                                         138,116         678,508
                                                                 -----------     -----------

Total assets                                                     $32,771,206     $29,884,766
                                                                 ===========     ===========

Liabilities and shareholders' equity

Long-term Borrowings                                              $1,846,154      $2,769,231
Other Liabilities                                                    945,422         479,151

Total liabilities                                                 $2,791,576      $3,248,382

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 - 1,960,902 shares in 2001 and
       1,850,445 shares in 2000                                  $21,972,651     $19,801,538
   Retained earnings                                               7,453,716       6,752,673
   Accumulated other comprehensive income (loss)                     553,263          82,173
                                                                 -----------     -----------
Total shareholders' equity                                        29,979,630      26,636,384

Total liabilities and shareholders' equity                       $32,771,206     $29,884,766
                                                                 ===========     ===========
</TABLE>

Condensed Income Statements

<TABLE>
<CAPTION>
                                                                 2001              2000               1999
                                                              ----------        ----------          --------
<S>                                                           <C>               <C>                 <C>
Income
Dividends from subsidiaries                                   $2,500,000        $3,000,000          $490,055
Service fees from subsidiaries                                 4,753,816         2,270,856                 0
                                                              ----------        ----------          --------
Total Income                                                   7,253,816         5,270,856           490,055

Expenses
Interest on borrowings                                           168,128           146,905               826
Salaries and related benefits                                  3,274,914         2,012,749                 0
Other expenses                                                 2,621,920         1,380,699            56,275
                                                              ----------        ----------          --------
Total expenses                                                 6,064,962         3,540,353            57,101

Net income before tax benefit and equity in
   net income of subsidiaries                                  1,188,854         1,730,503           432,954
Tax benefit                                                      482,000           528,653                 0
                                                              ----------        ----------          --------
Net income before equity in undistributed net income of        1,670,854         2,259,156           432,954
subsidiaries
Equity in undistributed net income of subsidiaries             1,351,312           353,429                 0
                                                              ----------        ----------          --------
Net Income                                                     3,022,166         2,612,585           432,954
                                                              ==========        ==========          ========
</TABLE>


                                                                              33
<PAGE>

Condensed Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                 2001              2000               1999
                                                              ----------        ----------          --------
<S>                                                           <C>               <C>                 <C>
Net income                                                    $3,022,166        $2,612,585          $432,954
Adjustments to reconcile net income to net cash
      provided by operating activities:
  Depreciation and amortization                                  803,981           178,083                 0
Changes in:
    Other assets                                                 540,392          (663,088)          (15,420)
    Interest payable and other liabilities                       502,457           503,777                 0
                                                              ----------        ----------          --------
       Total adjustments                                       1,846,830            18,772           (15,420)
                                                              ----------        ----------          --------
    Net cash provided by operating activities                  4,868,996         2,631,357           417,534
                                                              ----------        ----------          --------

Cash Flows From Investing Activities:                               2001              2000              1999

Investment in Solano Bank                                              0        (9,000,000)                0
Sale and disposition of capital assets                             4,392                 0                 0
Capital expenditures                                            (519,446)       (1,568,479)          (88,216)
                                                              ----------        ----------          --------
   Net cash used in investing activities                        (515,054)      (10,568,479)          (88,216)
                                                              ----------        ----------          --------

Cash Flows From Financing Activities:
Increase (decrease) in long-term borrowings, net                (923,077)        2,769,231                 0
Dividend received from The Vintage Bank in excess of
     equity in net income                                              0                 0           609,945
Equity in undistributed net income of subsidaries             (1,351,312)         (353,429)                0
Stock options exercised                                          196,480           102,553                 0
Stock issued, net of cost                                              0         4,867,445                 0
Dividends                                                       (382,676)         (315,177)                0
                                                              ----------        ----------          --------
   Net cash provided by (used in) financing activities        (2,460,585)        7,070,623           609,945
                                                              ----------        ----------          --------
Net increase (decrease) in cash and cash equivalents           1,893,357          (866,499)          939,263
Cash and cash equivalents at beginning of year                    72,764           939,263                 0
                                                              ----------        ----------          --------
Cash and cash equivalents at end of year                      $1,966,121           $72,764          $939,263
                                                              ==========        ==========          ========
</TABLE>


34
<PAGE>

(23) SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (Unaudited)

The following table sets forth the results of operation for the four quarters of
2001 and 2000,  and is  Unaudited.  All per share amounts have been adjusted for
the 2001 and 2002 stock dividends.

<TABLE>
<CAPTION>
                                                          (In 000's, except per share data)
                                                                  2001 Quarters Ended
                                      December 31,         September 31,            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 tax                       575                   414                 362             336
                                            ------                ------              ------          ------
Net income                                    $928                  $918                $622            $554
                                            ======                ======              ======          ======

Basic earnings per share:                     $.47                  $.45                $.30            $.27
Diluted earnings per share:                   $.47                  $.44                $.30            $.27

<CAPTION>
                                                          (In 000's, except per share data)
                                                                  2000 Quarters Ended
                                      December 31,         September 31,            June 30,       March 31,
<S>                                         <C>                   <C>                  <C>             <C>
Interest income                             $4,670                $4,282               4,025           3,723
Interest expense                             1,553                 1,444               1,326           1,289
                                            ------                ------              ------          ------
Net interest income                          3,117                 2,838               2,699           2,434
Provision for loan losses                      105                   100                  90              90
                                            ------                ------              ------          ------
Net interest income after                    3,012                 2,738               2,609           2,344
   provision for loan losses
Noninterest income                             482                   515                 629             514
Noninterest expense                          2,589                 2,294               1,932           1,768
                                            ------                ------              ------          ------
Income before provision for                    905                   959               1,306           1,090
   income taxes
Provision for income tax                       342                   369                 517             419
                                            ------                ------              ------          ------
Net income                                    $563                  $590                $789            $671
                                            ======                ======              ======          ======

Basic earnings per share:                     $.28                  $.29                $.43            $.38
Diluted earnings per share:                   $.27                  $.29                $.42            $.37
</TABLE>


                                                                              35
<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


36
<PAGE>

--------------------------------------------------------------------------------
DIRECTORS
--------------------------------------------------------------------------------

NORTH BAY BANCORP
Thomas N. Gavin           Owner, Gavin & Schreiner

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

Fred J. Hearn, Jr.        CEO, Hearn Pacific Corporation dba Hearn Construction

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

Harlan R. Kurtz           General  Contractor and President of K-H Development
                          Corporation

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

Thomas H. Lowenstein      President, North Bay Plywood

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

Terry L. Robinson         President & Chief Executive Officer

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

CORPORATE SECRETARY
Wyman G. Smith, III       Attorney with Gaw, Van Male, Smith, Myers & Miroglio
                          A Professional Law Corporation

THE VINTAGE BANK          SOLANO BANK

James L. Asbury           Gary J. Falati

Andrew J. Beckstoffer     Thomas N. Gavin
                          Chairman
Sandra H. Funseth

David B. Gaw              David B. Gaw

William L. Kastner        Fred J. Hearn, Jr.

Harlan R. Kurtz           Michael D. O'Brien

Thomas H. Lowenstein      Terry L. Robinson
Chairman

Thomas F. Malloy          Kenneth B. Ross

Andrew J. Nicks, M D      Stephen C. Spencer

Terry L. Robinson         Denise C. Suihkonen
President & CEO           Vice Chairman

Carolyn D. Sherwood       Glen C. Terry
                          President & CEO
James E. Tidgewell
Vice Chairman             Robert J. Wood
Directors Emeritus
Houghton Gifford, M D
Harlan R. Kurtz
Joseph Vallerga


                                                                              37
<PAGE>

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

Corporate Headquarters
1500 Soscol Avenue
Napa, CA 94559-1314

The Vintage Bank Office Locations:
Main Office
1500 Soscol Avenue
Napa, CA  94558-1314

3271 Browns Valley Road
Napa, CA 94558-5499

3626 Bel Aire Plaza
Napa, CA 94558-2831

1065 Main Street
St. Helena, CA 94574

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

1100 Texas Street
Fairfield, CA  94533

1395 E. Second Street
Benicia, CA  94510

976 A Admiral Callaghan Lane
Vallejo, CA 94591

Shareholder Information:

         Trading                          OTC Bulletin Board - Symbol NBAN

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

                                          Wedbush Morgan Securities
                                          1300 S. W. Fifth Ave., Suite 2000
                                          Portland, OR 97201
                                          1 (800) 234-0480

         Transfer Agent                   Registrar & Transfer Company
                                          10 Commerce Drive
                                          Cranford, New Jersey 07016
                                          1 (800) 368-5948

         Notice of Annual Meeting         Green Valley Country Club
                                          35 Country Club Drive
                                          Suisun, CA 94585
                                          April 30, 2002 - 7:00 p.m.

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

Corporate Secretary:                      Wyman G. Smith, III


38
<PAGE>

For additional copies of this report or   Pansy F. Smith
copies of the 10-K Report contact:        Assistant Corporate Secretary
                                          North Bay Bancorp
                                          1500 Soscol Avenue
                                          Napa, CA 94559-1314
                                          (707) 259-2345

Independent Public Accountants:           Arthur Andersen LLP
                                          101 Second Street, Suite 1100
                                          San Francisco, CA 94105-3601

Web Site:                                 www.northbaybancorp.com
--------------------------------------------------------------------------------

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