EXHIBIT 13

NORTH BAY BANCORP 2002 ANNUAL REPORT TO SHAREHOLDERS
<PAGE>

FORWARD LOOKING STATEMENT

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

<PAGE>

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

To Our Shareholders                                                            3

Selected Financial Data                                                        5

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

Quantitative and Qualitative Disclosure about Market Risk                     11

Description of Operations                                                     13

Securities of the Holding Company                                             14

Balance Sheets                                                                16

Income Statements                                                             17

Statements of Changes in Shareholders' Equity                                 18

Statements of Cash Flows                                                      19

Notes to Financial Statements                                                 20

Reports of Independent Auditors                                               41

Directors                                                                     43

Corporate Information                                                         44

Change in Accountants                                                         46


2
<PAGE>

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

North Bay Bancorp  passed several  milestones  during the year 2002. The Company
opened two new offices in January--Solano  Bank's Vallejo Office and The Vintage
Bank's St. Helena Office, bringing our full service banking locations to a total
of eight. We completed a $10 million trust preferred  financing in June, thereby
adding  significantly  to our  regulatory  capital  and  financial  flexibility.
Effective  September  3, 2002,  North Bay  Bancorp  began  listing on the Nasdaq
National Market under the symbol NBAN. Lastly, we adopted a Shareholder's Rights
Plan  intended  to  protect  the   long-term   value  of  the  Company  for  its
shareholders.

Another  notable event of 2002 was the change in  responsibilities  of the Chief
Executive  Officers  for  our two  subsidiary  banks.  In  accordance  with  our
long-term plan, Terry Robinson stepped down from his position of President & CEO
of The Vintage Bank to focus full-time  attention on Company  business,  notably
shareholder relations,  expansion opportunities,  capital adequacy and corporate
governance  matters.  Effective April 1, 2002,  Glen Terry,  the founding CEO of
Solano Bank,  assumed the reins as President and CEO of The Vintage  Bank.  John
Nerland,  a banker  with  over 15 years of  commercial  lending  and  management
experience,  was hired to fill the position of President  and CEO of Solano Bank
vacated by Mr. Terry's move.  Although these changes may have temporarily slowed
our  momentum,  they are  beneficial  to the  long-term  interests  of North Bay
Bancorp.  We will be "transitioning" the Board Chairmen at North Bay Bancorp and
The Vintage  Bank during 2003 in  accordance  with our  established  practice of
rotating the Board Chairs every three years;  David Gaw will become  Chairman of
North Bay Bancorp and James  Tidgewell will become  Chairman of The Vintage Bank
following our annual meeting in the Spring of 2003.

Consolidated  growth for the  Company  during 2002 was on target with our plans,
ending the year with total assets of $416  million.  Consolidated  net income of
$3.7 million was 3% below our budget;  the modest shortfall was primarily due to
nonrecurring fees and professional  expenses related to the Nasdaq listing,  the
trust  preferred  financing,  revised stock  option/benefit  plans,  shareholder
rights, new SEC regulations and corporate governance legislation.  We anticipate
2003 to be a  strong  year  for our  Company,  with  consolidated  asset  growth
approaching  20% and net income  growth of nearly 30%.  As we have stated  since
1999 when we formulated  our plans for  organizing  Solano Bank,  the net income
"payoff" from our aggressive growth strategy begins in year 2003.

Our vision and goals remain unchanged:  (1) remain independent,  (2) grow beyond
$500  million  by  year-end  2003,  (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  to a  competitive
advantage.  Serving our shareholders  appropriately while remaining  independent
requires us to grow faster than the  underlying  economy while  maintaining  the
safety and  soundness of our banks and,  over the long term,  attaining  returns
that exceed our industry  peers;  we believe we are on course to deliver on that
vision.  Over  three  years  ago when we set our goal of $500  million  in total
assets by year-end 2003, we believed the goal was attainable  only by completing
an acquisition or starting a second "de novo" bank. While we continue to explore
expansion  opportunities,  reaching  that  goal  from  "internal"  growth is now
feasible. The Vintage Bank unquestionably has attained the position of being the
premier  financial  services  provider in its market and Solano Bank is steadily
building its "franchise" in the Solano market.  Technological  changes completed
in 2002 and those  scheduled  for  implementation  during the first half of 2003
will reduce long-term costs and will place us ahead of virtually all competitors
in our ability to deliver quality electronic-based services.

Year 2002 marked a watershed for shareholder  expectations  regarding  corporate
ethics  and  quality  of  financial  reporting.  Our  Company  has  consistently
maintained the highest ethical standards for directors and employees,  beginning
with the  organization  of The Vintage Bank in 1984. Our culture has always been
one of full disclosure of all relevant  financial  information  accompanied by a
low  tolerance  for credit and  interest  rate risk.  That  culture has remained
despite our significant  growth and structural  changes.  Our Audit


                                                                               3
<PAGE>

Committee  is  composed of  qualified  directors,  skillfully  chaired by Conrad
Hewitt,  former  Ernst & Young  Managing  Partner  and  former  Commissioner  of
Financial  Institutions  for the State of  California.  While work remains to be
done,  we believe  we have been  "ahead of the  curve" on  corporate  governance
issues, and we are committed to continuing in that position.

As always,  we thank our  shareholders  for their support and patronage and look
forward to 2003 with enthusiastic optimism.

Very truly yours,


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


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,
2002.  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)

                                                     2002              2001              2000              1999              1998
                                                  ----------        ----------        ----------        ----------        ----------
<S>                                               <C>               <C>               <C>               <C>               <C>
STATEMENTS OF OPERATIONS DATA:
  Interest income                                 $   21,179        $   20,307        $   16,700        $   13,688        $   11,907
  Interest expense                                     3,691             5,887             5,612             4,364             3,992
                                                  ----------        ----------        ----------        ----------        ----------
  Net interest income                                 17,488            14,420            11,088             9,324             7,915
  Provision for loan losses                              576               447               385               240               240
                                                  ----------        ----------        ----------        ----------        ----------
  Net interest income after
     provision for loan losses                        16,912            13,973            10,703             9,084             7,675

  Noninterest income                                   3,111             2,691             2,140             1,777             1,397

  Noninterest expense                                 14,316            11,955             8,583             6,496             5,660

  Provision for income taxes                           1,999             1,687             1,647             1,650             1,301
                                                  ----------        ----------        ----------        ----------        ----------

  Net Income                                      $    3,708        $    3,022        $    2,613        $    2,715        $    2,111
                                                  ==========        ==========        ==========        ==========        ==========

BASIC PER SHARE DATA: (1)
  Earnings per share                              $     1.68        $     1.40        $     1.29        $     1.47        $     1.16
  Average shares outstanding                       2,203,296         2,156,352         2,022,695         1,850,943         1,818,721

DILUTED PER SHARE DATA: (1)
  Earnings per share                              $     1.64        $     1.39        $     1.27        $     1.43        $     1.12
  Average shares outstanding                       2,258,299         2,179,950         2,056,796         1,894,721         1,875,255

BALANCE SHEET DATA:
  Total assets                                    $  416,458        $  326,806        $  247,469        $  197,106        $  180,291
  Net loans                                          234,337           183,548           150,008           120,166            94,775
  Total deposits                                     367,803           292,441           216,638           172,380           162,173
  Shareholders' equity                                35,343            29,980            26,636            18,090            16,910
</TABLE>

(1) All per share amounts have been  adjusted to reflect the 5% stock  dividends
declared January 26, 1998, January 28, 1999, January 18, 2000, January 29, 2001,
January 28, 2002 and January 27, 2003.


                                                                               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.

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

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
$3,707,836,  or  $1.64  per  diluted  earnings  share,  in  2002  compared  with
$3,022,166,  or $1.39 per diluted  earnings share,  in 2001 and  $2,612,585,  or
$1.27 per  diluted  earnings  share,  in 2000,  equating  to a return on average
assets of .99%, 1.00% and 1.17% for years 2002, 2001 and 2000, respectively. The
return on average  equity was 11.36% in 2002  compared with 10.61% and 11.70% in
2001 and 2000, respectively.

As of December 31,  2002,  total assets were  $416,457,827  compared  with total
assets of $326,805,690 and $247,469,066 at year end 2001 and 2000, respectively,
representing  a 27%  increase  in 2002  and a 32%  increase  in  2001.  Deposits
increased 26% in 2002 compared  with a 35% increase in 2001.  Loans,  net of the
allowance for loan losses, increased 28% in 2002 compared with a 22% increase in
2001.

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

CRITICAL ACCOUNTING POLICIES
--------------------------------------------------------------------------------

The  Securities  and Exchange  Commission  ("SEC")  recently  issued  disclosure
guidance  for  "critical   accounting   policies."  The  SEC  defines  "critical
accounting  policies" as those that require  application  of  management's  most
difficult,  subjective  or complex  judgments,  often as a result of the need to
make estimates about the effect of matters that are inherently uncertain and may
change in future periods.  Not all of these critical accounting policies require
management  to make  difficult,  subjective  or complex  judgments or estimates.
However,  the Company  believes  that the  determination  of the adequacy of its
allowance for loan losses is particularly  susceptible to management's  judgment
and  estimates.  The Company  maintains an


6
<PAGE>

Allowance  for Loan  Losses to absorb  losses  inherent  in the  Company's  loan
portfolio.  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.

SUMMARY OF EARNINGS
--------------------------------------------------------------------------------

Net Interest Income

Net  interest  income  before   provision  for  loan  losses  was   $17,488,224,
$14,420,237, and $11,088,108 in 2002, 2001 and 2000, respectively,  representing
increases of 21% in 2002 and 30% in 2001.

Net  interest  income is  impacted  by  changes in the volume and mix of earning
assets and  interest-bearing  liabilities  and  changes in interest  rates.  The
increase in net interest  income in 2002  compared  with 2001 was  primarily the
result of volume  increases in loans and  investments.  The net interest  margin
(defined as net interest  income divided by average  earning  assets)  decreased
slightly in 2002 to 5.31% from 5.36% in 2001.  The  decrease in the net interest
margin is primarily the result of a lower average  loan-to-deposit ratio in 2002
compared  to 2001 and  changes in the market  interest  rates.  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 of holding tax exempt  securities and loans)  increased  $911,648 or
7%, in 2002  compared  with 2001.  Increases  in the  volume of  earning  assets
accounted for increasing interest income by $4,491,210,  offset by a decrease of
$3,779,562  attributable  to lower  rates.  An  increase  in  taxable-equivalent
interest  income of $3,590,234 or 21% in 2001 compared with 2000  consisted of a
$5,285,413  increase due to growth of earning assets and offset by a decrease of
$1,695,179 attributable to lower rates on earning assets.

Interest  paid on  interest-bearing  liabilities  decreased  $2,196,135  in 2002
compared  with 2001.  Increases in the volume of deposits  and other  borrowings
increased   interest  paid  by  $1,254,416  offset  by  a  $3,450,651   decrease
attributable  to  a  decline  in  rates.   Interest  paid  on   interest-bearing
liabilities  increased $274,821 in 2001 compared with 2000; the effect of volume
increases   accounted  for  $1,373,981   offset  by  a  decrease  of  $1,099,160
attributable to lower rates.

Provision and Allowance for Loan Losses

Credit  risk is inherent in the  business of lending.  As a result,  the Company
maintains  an  Allowance  for Loan  Losses  to  absorb  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.


                                                                               7
<PAGE>

As of December 31, 2002,  net loans  increased $51 million,  a 28% increase from
year-end  2001.  On an  average  balance  basis  the  Company's  loan  portfolio
increased  $39  million  over the  average  balance  in 2001.  In 2001,  average
balances  increased  from the prior year by 22% or $33 million.  The increase in
2002 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 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 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 are
taken into  consideration  when  evaluating  the  Company's  allowance  for loan
losses.

As of December 31, 2002 the allowance for loan losses of $3,290,209  represented
1.38%  of  loans  outstanding.  This  compared  with  an  allowance  balance  of
$2,717,249 at December 31, 2001, representing 1.46% of loans outstanding. During
2002, 2001 and 2000, $576,000,  $447,000 and $385,000,  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, 2002 and 2001
there were no nonaccrual loans.


8
<PAGE>

Historical Loan Loss & Recovery Experience

<TABLE>
<CAPTION>
                                                                           (In 000's)
                                         Solano Bank                    The Vintage Bank                       Consolidated
                                    2002            2001             2002               2001             2002              2001
                                 ---------        ---------        ---------         ---------         ---------         ---------
<S>                              <C>              <C>              <C>               <C>               <C>               <C>
Loans charged-off                $       0        $       0        $      10         $       4         $      10         $       4
Recoveries                               0                0               (7)               (6)               (7)               (6)
                                 ---------        ---------        ---------         ---------         ---------         ---------
Net charge-off
   (recovery)                            0                0                3                (2)                3                (2)

Allowance for loan
   losses                              418              112            2,872             2,605             3,290             2,717
% of charged-off
   loans to the
   reserve                          0.000%           0.000%           0.001%           (0.001%)           0.001%           (0.001%)

Loan portfolio                   $  44,206        $  25,827        $ 193,421         $ 160,438         $ 237,627         $ 186,265
% of reserve to
   portfolio                          .95%             .43%            1.48%             1.62%             1.38%             1.46%
</TABLE>

There have been no  transactions  in the past year to impact the  allocation  of
loan losses. The increased  allocation is due primarily to overall growth in the
loan  portfolio and related  inherent risk of loss. Net loans charged off were a
modest $3,040 within the portfolio for The Vintage Bank and  recoveries for 2001
out- paced charged-off  loans.  Solano Bank, as a new company,  has sustained no
losses since opening for business July 2000.

Based on the current conditions of the loan portfolio,  Management believes that
the  $3,290,209  allowance  for loan losses at December  31, 2002 is adequate to
absorb potential losses inherent in the Banks' loan portfolios. No assurance can
be given,  however, that adverse economic conditions or other circumstances will
not result in increased losses in the portfolio.

Noninterest Income

Details of noninterest income are as follows:

                                                       (In 000's)

                                           2002            2001            2000
                                           ----            ----            ----
      Service charge on deposit
          accounts                       $1,321          $1,186            $956
      Gains (losses) on securities
          transactions                      399             325             (3)
      Other                               1,391           1,180           1,187
                                         ------          ------          ------
         Total                           $3,111          $2,691          $2,140
                                         ======          ======          ======

Noninterest income for year 2002 increased $420,000, or 16%, compared with 2001.
Most  noninterest  income  derives  from  service  charges on deposit  accounts.
Service  charge income  increased  proportionately  less than growth in deposits
because  the  average  balance of deposit  accounts  increased  during the year,
resulting in fewer accounts generating service charges.

Noninterest Expense

Details of noninterest expense are as follows:


                                                                               9
<PAGE>

                                                      (In 000's)

                                          2002            2001            2000
                                         -------         -------         -------

Salaries & benefits                      $ 7,893         $ 6,349         $ 4,574
Occupancy                                    916             855             654
Equipment                                  1,614           1,451             747
Other                                      3,893           3,300           2,608
                                         -------         -------         -------
   Total                                 $14,316         $11,955         $ 8,583
                                         =======         =======         =======

Salaries  and  benefits  expense  increased  24%  and  39%  in  2002  and  2001,
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 141 at year-end 2002. The increase was
primarily  the result of  staffing  for  opening  Solano  Bank and new  branches
throughout the Company.

The 7%  increase  in  occupancy  expense  during  2002  compared  with  2001 was
primarily in rent and depreciation associated with opening two new branches.

Equipment  expense  increased 11% in 2002  compared with 2001.  The increase was
primarily in depreciation and maintenance  expense.  The Company installed a new
core processing  system in 2002.  Equipment is depreciated over periods of three
to five years.

The key components of other expenses are as follows:

                                                         (In 000's)

                                             2002           2001           2000
                                            ------         ------         ------

Professional services                       $  830         $  755         $  547
Business promotion                             525            379            434
ATM expenses                                   261            222            167
Stationery & supplies                          318            274            259
Insurance                                      188            111             76
Other                                        1,771          1,559          1,124
                                            ------         ------         ------
   Total                                    $3,893         $3,300         $2,607
                                            ======         ======         ======

Professional  services  increased  10% in 2002  compared  with a 38% increase in
2001;  the  increase  in 2002 was  primarily  due to  increases  in  legal  fees
associated  with our  Nasdaq  listing,  our trust  preferred  offering,  revised
benefits plans, new corporate  governance  legislation and changes in regulatory
requirements.  The 38% increase in 2001  compared with 2000 was due to increases
in legal fees and fees for audits.  Business  promotion expense increased 39% in
2002 compared with 2001; these variations were primarily the result of increased
marketing expenditures. ATM expense increased 18% in 2002 compared with 2001 and
33% when comparing 2001 to 2000;  these increases are primarily due to increases
in the number of ATM's the Company  operates.  Stationery  and supplies  expense
increased 16% and 6% in 2001 and 2000,  respectively,  reflecting overall volume
increases  and costs  associated  with the system  conversion  and  opening  new
branches.   Insurance   expenses  increased  69%  and  46%  in  2001  and  2000,
respectively;  these  increases  are  consistent  with  increases in volumes and
number of locations,  as well as increases in workers' compensation costs. Other
expenses increased 14% and 39% in 2002 and 2001, 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 $1,999,065,  $1,687,171 and
$1,647,347 for years 2002, 2001 and 2000, respectively. These provisions reflect
accrual  for taxes at the  applicable  rates for Federal  and  California  State
income taxes based upon reported pre-tax income, and adjusted for the beneficial
effect of the Company's  investment in qualified  municipal  securities and life
insurance  products.  The Company has not been subject to an alternative minimum
tax (AMT).

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

Total  assets  as  of  December  31,  2002  were   $416,457,827   compared  with
$326,805,690  and  $247,469,066,  as of  year-end  2001 and 2000,  respectively,
representing  a 27% increase in 2002 and a 32% increase in


10
<PAGE>

2001.  Total deposits grew  $75,362,006 to $367,803,202 in 2002,  representing a
26%  increase,  compared  with a 35%  increase  in  2001.  Total  loans,  net of
allowance  for  loan  losses,   grew   $50,788,811  to   $234,337,112  in  2002,
representing  a 28% increase  compared  with a 22% increase in 2001.  Investment
securities  increased  $20,974,539 from year-end 2001 to $107,094,255 in 2002, a
24% increase, compared with an increase of 44% during 2001.

Liquidity and Capital Adequacy

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

Securities classified as "Held-to-Maturity"  are reported at amortized cost, and
"Available-for-Sale" securities are reported at fair value with unrealized gains
and losses  excluded  from  earnings  and  reported as a separate  component  of
accumulated   other   comprehensive   income.   As   of   December   31,   2002,
"Held-to-Maturity"   securities   had  an  amortized   cost  of  $1,272,020  and
"Available-for-Sale"  securities  had a  fair  value  of  $104,473,355  with  an
unrealized gain, net of income taxes, of $1,343,558  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
$1,348,900.

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, 2002,  the
Company  had  approximately  $126  million  available  from  these  sources  for
borrowing.  The  Company  relies on these  funding  sources to assist in funding
loans when loan demand outpaces deposit growth.

At year-end 2002, liquid assets (defined as cash,  Federal funds sold,  deposits
in   other    financial    institutions    and    securities    categorized   as
available-for-sale)  represented 38% of total assets, as compared with 37% as of
year-end  2001.  The level of liquid  assets at December  31,  2002  exceeds the
liquidity required by the Company's  liquidity policy.  Management expects to be
able to meet the liquidity  needs of the Company during 2003  primarily  through
balancing loan growth with corresponding  increases in deposits. The Company did
not borrow at FHLB or on the federal funds lines during 2002.

The Company's  capital ratios  remained  relatively  steady during 2002 compared
with 2001 levels.  As of December  31,  2002,  the  Company's  total  risk-based
capital  ratio,  Tier I risk-based  capital ratio and leverage ratio were 14.9%,
13.9% and 10.9%,  respectively.  These  compare with ratios of 13.2%,  12.1% and
9.2% as of December 31, 2001.

In January,  2003, the Company declared a 5% stock dividend and a $.20 per share
cash  dividend  for  shareholders  of  record as of March  10,  2003.  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 $430,000,  equating to a reduction in the
Company's leverage ratio of approximately .01%.

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

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

The Company manages  interest rate risk through its Audit Committee which serves
as the Asset Liability  Committee (ALCO).  The ALCO manages the balance sheet to
maintain  the  forecasted  impact on net


                                                                              11
<PAGE>

interest  income and present value of equity within  acceptable  ranges  despite
unforeseeable  changes in interest  rates.  The ALCO  monitors  these risks on a
quarterly basis using both a traditional gap analysis and simulation analysis.

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


12
<PAGE>

Interest Rate Sensitivity

The following table sets forth the repricing  opportunities  for  rate-sensitive
assets and  rate-sensitive  liabilities at December 31, 2002.  Rate  sensitivity
analysis usually excludes  noninterest-bearing demand deposits.  Including these
deposits, which totaled $104,142,052, 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                                     $  79,236         $  26,471         $  87,971         $  43,949        $ 237,627
   Interest-bearing deposits in
      Other banks                                           0                 0               100                 0              100
   Investment securities                                1,005             3,150            45,084            57,855          107,094
   Federal funds sold                                  28,525                 0                 0                 0           28,525
                                                    ---------         ---------         ---------         ---------        ---------
                Total                                 108,766            29,621           133,155           101,804          373,346

Interest rate-sensitive liabilities:
   Interest-bearing demand
      Deposits                                        154,769                 0                 0                 0          154,769
   Time deposits >$100,000                             24,662            10,068             4,695                 0           39,425
   Other time deposits                                 18,091            16,487             5,414                 0           39,992
   Savings deposits                                    29,475                 0                 0                 0           29,475
   Long-term borrowings                                10,000                 0                 0                 0           10,000
                                                    ---------         ---------         ---------         ---------        ---------
                Total                               $ 236,997         $  26,555         $  10,109         $       0        $ 273,661

Interest rate sensitivity gap                       ($128,231)        $   3,066         $ 123,046         $ 101,804        $  99,685
                                                    =========         =========         =========         =========        =========
Cumulative interest rate
   sensitivity gap                                  ($128,231)        ($125,165)        ($  2,119)        $  99,685
                                                    =========         =========         =========         =========

Ratio of interest rate sensitivity
   to earning assets                                  (34.35%)             .82%            32.96%            27.27%
</TABLE>

This table indicates that the Company has a "negative" GAP for three months into
the future and a  "positive"  GAP  beyond.  The  implication  is that during the
negative GAP "horizon" Company earnings will increase in a falling interest rate
environment,  as there are more rate sensitive  liabilities subject to repricing
downward than rate  sensitive  assets;  conversely,  earnings would decline in a
rising rate environment.  This traditional analysis does not recognize or assume
any "lag" in  interest  rate  changes  on earning  assets  and  interest-bearing
liabilities,  and it  assumes  that  all  earning  assets  and  interest-bearing
liabilities reprice to the same absolute degree regardless of the mix of earning
assets and interest-bearing liabilities. The 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 liability  sensitive.  As of December 31, 2002, the analysis
from the model  indicates  that our net  interest  income for the next 12 months
would  decrease  $277,000  or 1.58% if rates  increase  100  basis  points,  and
increase $186,000 or 1.06% if rates decrease 100 basis points.

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
four other business locations, one located in the Brown's Valley


                                                                              13
<PAGE>

Shopping  Center at 3271 Brown's Valley Road,  Napa,  California,  3626 Bel Aire
Plaza, Napa, California,  1065 Main Street in St. Helena,  California and one at
1190 Airport Road, , Napa,  California  which opened in March 2003.  The Vintage
Bank also has a remote ATM at 6498 Washington  Street,  Yountville,  California.
Solano Bank,  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 one located at 976 Admiral
Callahan  Lane,  Vallejo,  California.  The  Banks  conduct  commercial  banking
business,  offering a full range of commercial  banking services to individuals,
businesses and agricultural  communities of Napa and Solano Counties.  The Banks
emphasize  their retail  commercial  banking  operations and accept checking and
savings  deposits,  issues  drafts,  sells  traveler's  checks and provide other
customary banking services.

PROSPECTIVE ACCOUNTING CHANGES
--------------------------------------------------------------------------------

FIBS Statement No. 146,  Accounting for Costs  Associated  with Exit or Disposal
Activities. The provisions of this Statement are effective for exit and disposal
activities that are initiated  after December 31, 2002. This Statement  requires
that a liability  for a cost  associated  with an exit or  disposal  activity be
recognized  when the liability is incurred.  The Company does not currently have
plans to exit or dispose of activities.

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

The Company's  outstanding  securities  consist of one class,  Common Stock,  of
which there were 2,136,563  shares  outstanding at March 10, 2003, held by 1,034
shareholders of record.  The stock is listed in the Nasdaq National Market under
the symbol NBAN effective  September 3, 2002.  Prior to the Nasdaq listing,  the
stock traded over-the-counter and was quoted on the OTC "Bulletin Board".

The following table (adjusted for the 2002 and 2003 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, 2001                 $19.00          $16.41
            June 30, 2001                   18.14           17.24
            September 30, 2001              18.60           17.24
            December 31, 2001               18.59           17.24
            March 31, 2002                  26.19           18.14
            June 30, 2002                   26.19           22.62
            September 30, 2002              27.38           21.05
            December 31, 2002               25.24           22.62

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 2003,
2002 and 2001.  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,


14
<PAGE>

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, 2002, the Company had retained earnings of $8,612,381  eligible for
dividends.


                                                                              15
<PAGE>

--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

December 31, 2002 and 2001

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

                                                                                2002                   2001
                                                                              --------               --------
<S>                                                                           <C>                    <C>
                                        ASSETS
CASH AND DUE FROM BANKS                                                       $ 23,785               $ 19,311
FEDERAL FUNDS SOLD                                                              28,525                 18,000
                                                                              --------               --------
              Cash and cash equivalents                                         52,310                 37,311

TIME DEPOSITS WITH OTHER
    FINANCIAL INSTITUTIONS                                                         100                    100
INVESTMENT SECURITIES:
     Held-to-maturity                                                            1,272                  1,314
     Available-for-sale                                                        104,473                 83,565
     Equity securities                                                           1,349                  1,241
                                                                              --------               --------
               Total investment securities                                     107,094                 86,120
LOANS, net of allowance for loan losses of
    $3,290 in 2002 and $2,717 in 2001                                          234,337                183,548
BANK PREMISES AND EQUIPMENT, net                                                10,800                  9,329
INTEREST RECEIVABLE AND OTHER ASSETS                                            11,817                 10,398
                                                                              --------               --------

             Total assets                                                     $416,458               $326,806
                                                                              ========               ========
                         LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
   Non-interest bearing                                                       $104,142               $ 77,117
   Interest-bearing                                                            263,661                215,324
                                                                              --------               --------
               Total deposits                                                  367,803                292,441
LONG-TERM DEBT                                                                       0                  1,846

INTEREST PAYABLE AND OTHER LIABILITIES                                           3,312                  2,539
                                                                              --------               --------
               Total liabilities                                               371,115                296,826

COMMITMENTS AND CONTINGENT LIABILITIES (Note 5)

FLOATING RATE  SUBORDINATED
    DEBENTURE (Trust Preferred Securities)                                      10,000                      0

SHAREHOLDERS' EQUITY:
   Preferred stock, no par value -  Authorized 500,000 shares;
       Issued and outstanding - None
   Common stock, no par value - Authorized 10,000,000 shares;
       Issued and outstanding -  2,130,288 shares in 2002
       and 1,960,902 shares in 2001                                             25,387                 21,973
   Retained earnings                                                             8,612                  7,454
   Accumulated other comprehensive income                                        1,344                    553
                                                                              --------               --------
              Total shareholders' equity                                        35,343                 29,980

              Total liabilities and shareholders' equity                      $416,458               $326,806
                                                                              ========               ========
</TABLE>

The accompanying notes are an integral part of these statements.


16
<PAGE>

--------------------------------------------------------------------------------
CONSOLIDATED INCOME STATEMENTS
--------------------------------------------------------------------------------

For the Years Ended December 31, 2002, 2001 and 2000

<TABLE>
<CAPTION>
                                                                                            (In 000's except share data)
                                                                                     2002                2001                2000
                                                                                   --------            --------            --------
<S>                                                                                <C>                 <C>                 <C>
INTEREST INCOME:
   Interest and fees on loans                                                      $ 16,602            $ 15,319            $ 12,927
   Interest on federal funds sold                                                       418               1,012                 521
   Interest on investment securities - taxable                                        3,490               3,395               2,572
   Interest on investment securities - tax exempt                                       664                 574                 675
   Interest on time deposits with other
     financial institutions                                                               5                   7                   5
                                                                                   --------            --------            --------
                        Total interest income                                        21,179              20,307              16,700
                                                                                   --------            --------            --------

INTEREST EXPENSE:
   Interest on interest-bearing
     transaction deposits                                                             1,118               2,164               1,656
   Interest on time and savings deposits                                              2,234               3,552               3,720
   Interest on long-term debt                                                           339                 168                 147
   Interest on short-term borrowings                                                      0                   3                  89
                                                                                   --------            --------            --------
                        Total interest expense                                        3,691               5,887               5,612
                                                                                   --------            --------            --------
                         Net interest income                                         17,488              14,420              11,088

PROVISION FOR LOAN LOSSES                                                               576                 447                 385
                                                                                   --------            --------            --------
                       Net interest income after
                          provision for loan losses                                  16,912              13,973              10,703

NONINTEREST INCOME:
   Service charges on deposit accounts                                                1,321               1,186                 956
   Gain (loss) on securities transactions, net                                          399                 325                  (3)
   Other                                                                              1,391               1,180               1,187
                                                                                   --------            --------            --------
                       Total noninterest income                                       3,111               2,691               2,140
                                                                                   --------            --------            --------

NONINTEREST EXPENSE:
   Salaries and related benefits                                                      7,893               6,349               4,574
   Occupancy                                                                            916                 855                 654
   Equipment                                                                          1,614               1,451                 747
   Other                                                                              3,893               3,300               2,608
                                                                                   --------            --------            --------
                      Total noninterest expense                                      14,316              11,955               8,583
                                                                                   --------            --------            --------

 Income before provision for income taxes                                             5,707               4,709               4,260

PROVISION FOR INCOME TAXES                                                            1,999               1,687               1,647
                                                                                   --------            --------            --------

NET INCOME                                                                         $  3,708            $  3,022            $  2,613
                                                                                   ========            ========            ========

BASIC EARNINGS PER SHARE:                                                          $   1.68            $   1.40            $   1.29

DILUTED EARNINGS PER SHARE:                                                        $   1.64            $   1.39            $   1.27
</TABLE>

The accompanying notes are an integral part of these statements.


                                                                              17
<PAGE>

--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY &
COMPREHENSIVE INCOME
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Years Ended December 31,
2002, 2001 and 2000                                                           (In 000's except share data)

                                                                                           Accumulated
                                                                                               Other
                                            Common Shares     Common        Retained     Comprehensive  Shareholders'  Comprehensive
                                             Outstanding       Stock        Earnings     Income (Loss)     Equity          Income
                                              ---------      ---------      --------       ---------      --------       ---------
<S>                                           <C>            <C>            <C>            <C>            <C>            <C>
BALANCE, DECEMBER 31, 1999                    1,536,568      $  12,894      $  6,368          (1,171)     $ 18,091
Stock dividend                                   76,509          1,913        (1,921)                           (8)
Cash dividend                                                                   (307)                         (307)
Comprehensive income:

    Net income                                                                 2,613                         2,613       $   2,613
    Other comprehensive loss, net of tax:
       Change in net unrealized loss on
          available-for-sale
          securities, net of tax and
          reclassification adjustment                                                          1,253         1,253           1,253
                                                                                                                         ---------
Comprehensive income                                                                                                     $   3,866
                                                                                                                         =========
Issuance of common stock, net of                227,273          4,867                                       4,867
issuance expenses of $133
Stock options exercised, including a
tax benefit of $26                               10,095            128                                         128
                                              ---------      ---------      --------       ---------      --------
BALANCE, DECEMBER 31, 2000                    1,850,445         19,802         6,753              82        26,637
Stock dividend                                   92,307          1,938        (1,950)                          (12)
Cash dividend                                                                   (371)                         (371)
Comprehensive income:
    Net income                                                                 3,022                         3,022       $   3,022
    Other comprehensive income, net
    of tax:
       Change in net unrealized gain on
          available-for-sale
          securities, net of tax of and
          reclassification adjustment                                                            471           471             471
                                                                                                                         ---------
Comprehensive income                                                                                                     $   3,493
                                                                                                                         =========
Stock options exercised, including a             18,150            233                                         233
tax benefit of $36
                                              ---------      ---------      --------       ---------      --------
BALANCE, DECEMBER 31, 2001                    1,960,902         21,973         7,454             553        29,980
Stock dividend                                   97,408          2,143        (2,158)                          (15)
Cash dividend                                                                   (392)                         (392)
Comprehensive income:
    Net income                                                                 3,708                         3,708       $   3,708
    Other comprehensive income, net
    of tax:
       Change in net unrealized gain on
          available-for-sale
          securities, net of tax of and
          reclassification adjustment                                                            791           791             791
                                                                                                                         ---------
Comprehensive income                                                                                                     $   4,499
                                                                                                                         =========
Stock options exercised, including a             71,978          1,271                                       1,271
tax benefit of $362
                                              ---------      ---------      --------       ---------      --------
BALANCE, DECEMBER 31, 2002                    2,130,288      $  25,387      $  8,612       $   1,344      $ 35,343
                                              =========      =========      ========       =========      ========
</TABLE>


18
<PAGE>

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

<TABLE>
<CAPTION>
For the Years Ended December 31, 2002, 2001 and 2000                                                 (In 000's)

                                                                                   2002                 2001                 2000
                                                                                 --------             --------             --------
<S>                                                                              <C>                  <C>                  <C>
Cash Flows From Operating Activities:
Net income                                                                       $  3,708             $  3,022             $  2,613
Adjustments to reconcile net income to net cash
      provided by operating activities:
  Depreciation and amortization                                                     1,441                1,352                  634
  Provision for loan losses                                                           576                  447                  385
  Amortization of deferred loan fees                                                 (514)                (471)                (288)
  Amortization of investment securities
    premiums, net                                                                     938                  121                   13
  Provision for deferred income taxes                                                (398)                (308)                (171)
  Losses on sale or retirement of capital assets                                        1                    0                   11
  Gain on securities transactions                                                    (399)                (325)                  (7)
Changes in:
    Interest receivable and other assets                                           (1,582)              (3,265)                (541)
    Interest payable and other liabilities                                          1,135                1,150                 (184)
                                                                                 --------             --------             --------
    Net cash provided by operating activities                                       4,906                1,723                2,465
                                                                                 --------             --------             --------
Cash Flows From Investing Activities:
Investment securities held to maturity:
  Proceeds from maturities and principal payments                                      42                   39                   37
Investment securities available for sale:
  Proceeds from maturities and principal payments                                  40,368               25,981                8,880
  Proceeds from sales and recoveries                                               21,380               12,228                5,156
  Purchases                                                                       (81,842)             (63,745)             (14,577)
Equity securities:
  Proceeds from sales                                                                  10                   31                    0
  Purchases                                                                          (120)                 (40)                (307)
Net increase in loans                                                             (50,851)             (33,516)             (29,939)
Sale and disposition of capital assets                                                  1                   42                    0
Capital expenditures                                                               (2,914)              (5,481)              (3,006)
                                                                                 --------             --------             --------
   Net cash used in investing activities                                          (73,926)             (64,461)             (33,756)
                                                                                 --------             --------             --------
Cash Flows From Financing Activities:
Net increase in deposits                                                           75,362               75,803               44,258
Decrease in short-term borrowings                                                       0                    0               (5,000)
Increase in long-term borrowings                                                        0                    0                3,000
Proceeds from issuance of trust preferred securities                               10,000                    0                    0
Repayment of long-term borrowings                                                  (1,846)                (923)                (231)
Stock options exercised                                                               909                  196                  102
Stock issued, net of costs                                                              0                    0                4,867
Dividends                                                                            (406)                (383)                (315)
                                                                                 --------             --------             --------
   Net cash provided by financing activities                                       84,019               74,693               46,681
                                                                                 --------             --------             --------
Net increase in cash and cash equivalents                                          14,999               11,955               15,390
Cash and cash equivalents at beginning of year                                     37,311               25,356                9,966
                                                                                 --------             --------             --------
Cash and cash equivalents at end of year                                         $ 52,310             $ 37,311             $ 25,356
                                                                                 ========             ========             ========
Supplemental Disclosures of Cash Flow Information:
  Interest paid                                                                  $  3,755             $  5,622             $  6,370
  Income taxes paid                                                              $  2,290             $  1,448             $  1,738
  Retirement of fixed assets                                                     $      0             $    139             $  1,044
</TABLE>

The accompanying notes are an integral part of these statements.


                                                                              19
<PAGE>

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

December 31, 2002, 2001 and 2000

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

Principles of Consolidation The consolidated  financial  statements  include the
accounts of Bancorp 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 of  America  requires  management  to make  estimates  and
assumptions  that  affect  the  reported  amounts  of  assets,  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. For the Company,  the most significant  accounting estimate is
the allowance for loans losses.  See "Allowance  for loan losses" below.  Actual
results could differ from those estimates

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

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

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

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


20
<PAGE>

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

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

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

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

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

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


                                                                              21
<PAGE>

Stock-based  compensation The Company uses the intrinsic value method to account
for its stock option plans (in  accordance  with the  provisions  of  Accounting
Principles Board Opinion No. 25 and related interpretations). Under this method,
compensation  expense is recognized for awards of options to purchase  shares of
common stock to employees under compensatory plans only if the fair market value
of the stock at the option grant date (or other  measurement  date, if later) is
greater than the amount the employee must pay to acquire the stock. Statement of
Financial Accounting  Standards No. 123 (SFAS 123),  "Accounting for Stock-Based
Compensation", permits companies to continue using the intrinsic-value method to
account  for stock  option  plans or adopt a fair value based  method.  The fair
value based method results in recognizing as expense over the vesting period the
fair  value of all  stock-based  awards on the date of grant.  The  Company  has
elected  to  continue  to use the  intrinsic  value  method  and  the pro  forma
disclosures required by SFAS 123 using the fair value method are:

                                              (In 000's except share data)
                                           2002           2001           2000
                                         ---------      ---------      ---------
Net income as reported                   $   3,708      $   3,022      $   2,613
Total stock-based employee
 compensation
 expense determined under
 the fair value based method
 for all awards, net of related
 tax effects                                   235            294            249
                                         ---------      ---------      ---------
     Net income pro forma                $   3,473      $   2,728      $   2,364
Earnings per share:
 As reported:
     Basic                               $    1.68      $    1.40      $    1.29
     Diluted                             $    1.64      $    1.39      $    1.27
 Pro forma:
     Basic                               $    1.58      $    1.33      $    1.29
     Diluted                             $    1.54      $    1.31      $    1.27

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

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

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

Accounting and reporting  changes  Financial  Accounting  Standards Board (FASB)
Statement  No. 142,  Goodwill and Other  Intangible  Assets.  The  Statement was
adopted effective January 1, 2002.  Statement No. 142 requires that goodwill and
intangible  assets with  indefinite  lives no longer be  amortized,  but instead
tested for  impairment at least  annually in accordance  with the  provisions of
Statement No. 142.  Statement No. 142 also requires that intangible  assets with
definite useful lives be amortized over their respective  estimated useful lives
to their estimated  residual  values,  and reviewed for impairment in accordance
with SFAS No. 121,  Accounting for the  Impairment of Long-Lived  Assets and for
Long-Lived  Assets to Be Disposed Of. The Company does not have any goodwill and
intangible assets acquired in business combinations.

FASB  Statement  No.  143,  Accounting  for Asset  Retirement  Obligations.  The
Statement  addresses the  financial  accounting  and  reporting for  obligations
associated with the retirement of tangible  long-lived assets and the associated
asset retirement  costs.  The Statement  requires the Company to record the fair
value of an asset retirement obligation as a liability in the period in which it
incurs  a  legal  obligation


22
<PAGE>

associated with the retirement of a tangible  long-lived  asset.  This Statement
was adopted  effective June 15, 2002 and adoption din not have a material impact
on the Company.

FASB Statement No. 144,  Accounting for the Impairment or Disposal of Long-Lived
Assets.  Statement No. 144 addresses financial  accounting and reporting for the
impairment or disposal of long-lived  assets.  The  provisions of this Statement
were adopted effective January 1, 2002.  Adoption did not have a material impact
on the financial condition or operating results of the Company.

FASB  Statement  No.  145,  Rescission  of FASB  Statements  No. 4, 44,  and 64,
Amendment of FASB  Statement No. 13, and Technical  Corrections.  This clarifies
and  simplifies  existing  accounting  pronouncements.  The  provisions  of this
Statement  related to the  rescission  of Statement 4 are  applicable  in fiscal
years beginning after May 15, 2002. The provisions of this Statement  related to
Statement 13 are effective for  transactions  occurring  after May 15, 2002. All
other provisions of this Statement are effective for financial statements issued
on or after May 15,  2002.  Adoption of the  provisions  applicable  to the year
ended  December  31,  2002  did not  have a  material  impact  on the  financial
condition or operating  results of the Company.  The Company does not expect the
provisions  related to Statement No. 4 or Statement No. 13 to have any impact on
the financial condition or operating results of the Company.

FASB Interpretation No. 45, Guarantor's  Accounting and Disclosure  Requirements
for Guarantees,  Including Indirect  Guarantees of Indebtedness of Others.  This
Interpretation addresses the disclosure to be made by a guarantor in its interim
and annual financial  statements about its obligations under  guarantees.  These
disclosure requirements are included in footnote 8 to the consolidated financial
statements. The Interpretation also requires the recognition of a liability by a
guarantor at the inception of certain guarantees.

The  Interpretation  requires the  guarantor  to  recognize a liability  for the
non-contingent  component of the  guarantee,  that is, the  obligation  to stand
ready to perform in the event that  specified  triggering  events or  conditions
occur.  The  initial  measurement  of this  liability  is the fair  value of the
guarantee at inception.  The recognition of the liability is required even it is
not  probable  that  payments  will be required  under the  guarantee  or if the
guarantee  was issued with a premium  payment or as part of a  transaction  with
multiple elements.

As noted  above the  Company has  adopted  the  disclosure  requirements  of the
Interpretation  (see footnote 8) and will apply the  recognition and measurement
provisions for all guarantees  entered into or modified after December 31, 2002.
To date the Company has not entered into or modified  guarantees pursuant to the
provisions of the Interpretation.

FASB  Interpretation No. 46,  Consolidation of Variable Interest Entities.  This
Interpretation  addresses  consolidation  by  business  enterprises  of variable
interest entities, which have one or both of the following  characteristics:  1)
the equity  investment at risk is not sufficient to permit the entity to finance
its activities  without additional  financial support from other parties,  or 2)
the equity investors lack one or more of the following essential characteristics
of a controlling  financial interest:  a) the direct or indirect ability to make
decisions about the entity's activities through voting or similar rights, b) the
obligation to absorb the expected  losses of the entity if they occur, or c) the
right to receive the expected  residual returns of the entity if they occur. The
Interpretation  requires  existing variable interest entities to be consolidated
if those entities do not effectively disburse risks among parties involved.  The
Company has determined that it has no ownership in variable interest entities.

FASB Statement No. 148, Accounting for Stock-Based Compensation - Transition and
Disclosure.  The  provisions  of this  Statement  amend FASB  Statement No. 123,
Accounting for  Stock-Based  Compensation,  and provide  alternative  methods of
transition  for  enterprises  that elect to change to the Statement No. 123 fair
value method of accounting for stock-based employee compensation.  The Statement
also  amends  the  disclosure  requirements  of  Statement  No.  123 to  require
prominent  disclosures  about the method of accounting for stock-based  employee
compensation and the effect of the method used on reported results.  The Company
has elected not to change its accounting  method for  stock-based  compensation.
The  Company  will  continue  to  account  for the stock  option  plan under the
recognition and measurement principles of the APB Opinion No. 25, Accounting for
Stock Issued to Employees.


                                                                              23
<PAGE>

(2) INVESTMENT SECURITIES

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

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

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

                                                                    Gross              Gross
                                              Amortized          Unrealized          Unrealized           Estimated
                                                 Cost               Gains              Losses             Fair Value
                                              ---------          ----------          ----------           ---------
<S>                                            <C>                 <C>                 <C>                 <C>
Held-to-maturity:
Municipal securities                           $  1,272            $      0            $      0            $  1,272
                                               --------            --------            --------            --------

Available-for-sale:
Securities of the U.S. Treasury
   and other government agencies                 34,089                 642                   0              34,731
Corporate debt securities                        11,524                 239                   0              11,763
Mortgage-backed securities                       44,226                 735                  27              44,934
Municipal securities                             12,334                 711                   0              13,045
                                               --------            --------            --------            --------
Total available-for-sale                        102,173               2,327                  27             104,473

Equity securities                                 1,349                   0                   0               1,349
                                               --------            --------            --------            --------

Total investments                              $104,794            $  2,327            $     27            $107,094
                                               ========            ========            ========            ========
</TABLE>

The amortized cost and estimated fair value of investment securities at December
31, 2001 are as follows:

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

                                                                    Gross               Gross
                                              Amortized           Unrealized          Unrealized          Estimated
                                                 Cost                Gains              Losses            Fair Value
                                              ---------           ----------          ----------          ---------
<S>                                             <C>                 <C>                 <C>                 <C>
Held-to-maturity:
Municipal securities                            $ 1,314             $     0             $     0             $ 1,314
                                                -------             -------             -------             -------

Available-for-sale:
Securities of the U.S. Treasury
   and other government agencies                 24,317                 249                   0              24,566
Corporate debt securities                        17,257                 389                   0              17,646
Mortgage-backed securities                       28,021                 340                 148              28,213
Municipal securities                             13,022                 163                  45              13,140
                                                -------             -------             -------             -------
Total available-for-sale                         82,617               1,141                 193              83,565

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

Total investments                               $85,172             $ 1,141             $   193             $86,120
                                                =======             =======             =======             =======
</TABLE>


24
<PAGE>

The following  table shows the amortized  cost and estimated  fair value of debt
securities by contractual maturity at December 31, 2002:

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

                                       Held-to-Maturity             Available-for-Sale

                                    Amortized     Estimated     Amortized     Estimated
                                       Cost       Fair Value       Cost       Fair Value
                                    ---------     ----------    ---------     ----------
<S>                                  <C>           <C>           <C>           <C>
Within one year                      $      0      $      0      $  3,970      $  4,041
After one but within five years             0             0        40,694        41,606
After five but within ten years             0             0         7,696         8,160
Over ten years                          1,272         1,272         5,587         5,732
Mortgage-backed securities                  0             0        44,226        44,934
                                     --------      --------      --------      --------
Total                                $  1,272      $  1,272      $102,173      $104,473
                                     ========      ========      ========      ========
</TABLE>

As of  December  31,  2002  and  2001,  securities  carried  at  $2,080,787  and
$1,035,000,  respectively, were pledged to secure public deposits as required by
law.

Total proceeds from the sale of securities  available-for-sale  during 2002 were
$21,379,585. Gross gains of $399,197 were realized on those sales.

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.

(3) LOANS AND ALLOWANCE FOR LOAN LOSSES

At December 31, 2002 and 2001,  the loan  portfolio  consisted of the following,
net of deferred loan fees of $1,347,864 and $903,748, respectively:

                                                               (In 000's)

                                                          2002            2001
                                                        --------        --------

Real estate loans                                       $131,167        $106,851
Installment loans                                         24,102          20,301
Construction loans                                        19,306          21,453
Commercial loans secured by real estate                   16,991           7,930
Commercial loans                                          46,061          29,730
                                                        --------        --------
                                                         237,627         186,265
Less allowance for loan losses                             3,290           2,717
                                                        --------        --------
Total                                                   $234,337        $183,548
                                                        ========        ========

There were no loans on  nonaccrual  status at December  31, 2002 or December 31,
2001.  There was no interest  foregone during 2002, 2001 or 2000. As of December
31,  2002 and  2001,  there  were no loans  90 days or more  past due but  still
accruing interest. There were no restructured loans during 2002 or 2001.

Changes in the allowance for loan losses are as follows:

                                                      (In 000's)

                                         2002            2001            2000
                                        -------         -------         -------

Balance, beginning of year              $ 2,717         $ 2,268         $ 1,987
Provision for loan losses                   576             447             385
Loans charged off                           (10)             (4)           (105)
Recoveries of loans
   previously charged off                     7               6               1
                                        -------         -------         -------
Balance, end of year                    $ 3,290         $ 2,717         $ 2,268
                                        =======         =======         =======


                                                                              25
<PAGE>

As of December 31, 2002, 2001 and 2000 there were no impaired loans.

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

(4) PREMISES AND EQUIPMENT

Premises and equipment at December 31, 2002 and 2001 consisted of the following:

                                                        (In 000's)

                                                       Accumulated
                                                       Depreciation     Net Book
                                             Cost     & Amortization     Value
                                            -------   --------------    --------
2002
Land                                        $ 2,800       $     0       $ 2,800
Premises                                      5,027           786         4,241
Furniture, fixtures and equipment             6,635         3,670         2,965
Leasehold improvements                        1,250           456           794
                                            -------       -------       -------
Total                                       $15,712       $ 4,912       $10,800
                                            =======       =======       =======

2001
Land                                        $ 2,578       $     0       $ 2,578
Premises                                      4,673           630         4,043
Furniture, fixtures and equipment             4,662         2,539         2,123
Leasehold improvements                          893           308           585
                                            -------       -------       -------
Total                                       $12,806       $ 3,477       $ 9,329
                                            =======       =======       =======

Depreciation  and  amortization  expense,  included  in  occupancy  expense  and
equipment  expense,  was  $1,441,142,  $1,351,536 and $634,336 in 2002, 2001 and
2000, respectively.

(5) COMMITMENTS AND CONTINGENCIES

The Banks  lease the  premises  for their  various  offices.  Total rent on such
leases was $373,560, $321,409 and $270,154 in 2002, 2001 and 2000, respectively,
and is included in occupancy and equipment expenses. The total commitments under
non-cancelable operating leases are as follows:

                                         (In 000's)

                              Year                 Total
                              ----                 -----

                              2003                  $614
                              2004                   631
                              2005                   580
                              2006                   462
                              2007                   342
                        Thereafter                 1,023
                                                  ------
                             Total                $3,652
                                                  ======

(6) TIME DEPOSITS AND INTEREST ON TIME DEPOSITS

Time  certificates  of deposit in  denominations  of  $100,000  or greater  were
$39,425,275  and  $38,223,872  at  December  31,  2002 and  2001,  respectively.
Interest  expense on these deposits was $893,277,  $1,009,811 and $1,188,766 for
2002, 2001 and 2000, respectively.


26
<PAGE>

At December 31, 2002, the scheduled maturities of time deposits are as follows:

                                       (In 000's)

                              Year                   Total
                              ----                   -----

                              2003                 $69,308
                              2004                   4,570
                              2005                   2,730
                              2006                     810
                              2007                   1,999
                              2008                       0
                                                   -------
                             Total                 $79,417
                                                   =======

(7) BORROWINGS

There were no  short-term  borrowings at December 31, 2002 or December 31, 2001.
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, 2002, this line provided for maximum  borrowings of
approximately  $110  million;  the Company  also has  available  unused lines of
credit totaling $16 million for federal funds transactions at December 31, 2002.

On June 26, 2002, North Bay Statutory Trust I (Trust),  a Connecticut  statutory
business  trust and  wholly-owned  subsidiary  of North Bay Bancorp,  issued $10
million in floating rate Cumulative Trust Preferred Securities (Securities). The
Securities  bear a rate of the 90 day LIBOR plus 3.45% which changes  quarterly.
The rate at December 31, 2002 was 4.85%.  The Securities will mature on June 26,
2032, but earlier redemption is permitted under certain  circumstances,  such as
changes in tax or regulatory  capital rules. The principal asset of the trust is
a $10,310,000 floating rate subordinated debenture of the Company.

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

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

The Company had a $3,000,000  unsecured loan with Union Bank of California  that
was to mature in 2003 with principal and interest  payments due  quarterly.  The
balance at December 31, 2001 was  $1,846,154.  The loan was a variable rate loan
tied to Union Bank's  reference rate. The Company paid the loan in full in June,
2002 with the proceeds of the Trust Preferred Securities.

(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.


                                                                              27
<PAGE>

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

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

                                                            (In 000's)

                                                        Contractual Amounts
                                                      2002              2001
                                                      ----              ----
Loan commitments                                   $83,835           $58,443
Standby letters of credit                             $729            $1,249

The Banks issue both financial and performance  standby  letters of credit.  The
financial  standby letters of credit are primarily to guarantee payment to third
parties.  At December 31, 2002 there were $288,000  issued in financial  standby
letters of credit and the Banks carried no liability.  The  performance  standby
letters of credit are typically issued to municipalities as specific performance
bonds.  At December 31, 2002 there were $441,000  issued in performance  standby
letters  of  credit  and the  Banks  carried  no  liability.  The  terms  of the
guarantees will expire  primarily in 2003 and 2004 with 3% expiring in 2007. The
Banks have experienced no draws on these letters of credit, and do not expect to
in the future;  however,  should a triggering event occur, the Banks either have
collateral in excess of the letter of credit or imbedded  agreements of recourse
from the customer.

(9) CONCENTRATIONS OF CREDIT RISKS

The  majority  of  the  Banks'  loan  activity  is  with  customers  located  in
California,  primarily in the  counties of Napa and Solano.  Although the Banks'
have a  diversified  loan  portfolio,  a large  portion  of their  loans are for
commercial property,  and many of the Banks' loans are secured by real estate in
Napa and  Solano  County.  Approximately  78% of the loans are  secured  by real
estate. This concentration is presented below:

                                                           (In 000's)

                                                     As of December 31, 2002
Construction/land development:
     Land development                                                 $4,575
     Residential                                                       6,506
     Commercial                                                        8,224
Real estate                                                          131,167
Commercial loans secured by real estate                               16,992
Installment loans secured by real estate                              18,917
                                                                    --------
      Total                                                         $186,381
                                                                    ========

(10) INCOME TAXES

The  provision  (benefit) for federal and state income taxes for the years ended
December 31, 2002, 2001 and 2000 consisted of: (In 000's)

                                    2002              2001               2000
                                  -------            -------            -------
Current
   Federal                        $ 1,712            $ 1,471            $ 1,303
   State                              685                524                515
                                  -------            -------            -------
                                    2,397              1,995              1,818
Deferred
   Federal                           (297)              (324)              (116)
   State                             (101)                16                (55)
                                  -------            -------            -------
                                     (398)           ($  308)           ($  171)
                                  -------            -------            -------

Total                             $ 1,999            $ 1,687            $ 1,647
                                  =======            =======            =======


28
<PAGE>

Deferred tax assets and liabilities result from differences in the timing of the
recognition of certain income and expense items for tax and financial accounting
purposes. The sources of these differences and the amount of each are as follows
as of December 31, 2002 and 2001:

                                                               (In 000's)

                                                          2002             2001
                                                         ------           ------
Deferred Tax Assets:
   Allowance for loan losses                             $1,300           $1,062
   Deferred compensation                                    372              276
   State income tax                                         191              178
   Depreciation                                              68               44
   Other                                                     33                0
                                                         ------           ------
                                                         $1,964           $1,560
                                                         ======           ======

Deferred Tax Liabilities:
   Unrealized gain on securities                         $  956           $  394
   Accumulated accretion                                    147              117
   Depreciation                                               0                0
   Other                                                      0               24
                                                         ------           ------
                                                          1,103              535
                                                         ------           ------

   Net Deferred Tax Asset                                $  861           $1,025
                                                         ======           ======

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

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

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

                                             2002                      2001                      2000
                                             ----                      ----                      ----

                                     Amount        Rate         Amount       Rate         Amount       Rate
                                     -------       ----        -------       ----        -------       ----
<S>                                  <C>           <C>         <C>           <C>         <C>           <C>
Tax provision at statutory rate      $ 1,940       34.0%       $ 1,601       34.0%       $ 1,448       34.0%
Interest on obligations of
   states and political
   subdivisions exempt from
   federal taxation                     (191)      (3.3%)         (161)      (3.4%)         (172)        (4%)
State franchise taxes                    385        6.7%           319        6.8%           316        7.4%
Life insurance policies                 (133)      (2.3%)         (101)      (2.2%)
Other, net                                (2)       (.1%)           29         .6%            55        1.3%
                                     -------       ----        -------       ----        -------       ----
Total                                $ 1,999       35.0%       $ 1,687       35.8%       $ 1,647       38.7%
                                     =======       ====        =======       ====        =======       ====
</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


                                                                              29
<PAGE>

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

(12) SHAREHOLDERS' EQUITY AND EARNINGS PER SHARE

The Company  declared 5% stock dividends on January 18, 2000,  January 29, 2001,
January 28, 2002 and January 27, 2003. 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.  There  were  no  shares  considered
anti-dilutive in 2002 or 2000.

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

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

                                                                              Weighted Average                  Per-Share
                                                       Net Income                  Shares                          Amount
                                                       ----------                  ------                          ------
<S>                                                        <C>                       <C>                            <C>
                                                                        For the year ended 2002
                                                                        -----------------------
Basic earnings per share                                   $3,708                    2,203,296                      $1.68
Stock options                                                                           55,003
Diluted earnings per share                                                           2,258,299                      $1.64

                                                                        For the year ended 2001
                                                                        -----------------------
Basic earnings per share                                   $3,022                    2,156,352                      $1.40
Stock options                                                                           23,598
Diluted earnings per share                                                           2,179,950                      $1.39

                                                                        For the year ended 2000
                                                                        -----------------------
Basic earnings per share                                   $2,613                    2,022,695                      $1.29
Stock options                                                                           34,101
Diluted earnings per share                                                           2,056,796                      $1.27
</TABLE>

(13) OTHER NONINTEREST INCOME AND EXPENSE

The  components  of Other  Noninterest  Income for the years ended  December 31,
2002, 2001 and 2000 were as follows:

                                                         (In 000's)

                                             2002           2001           2000
                                            ------         ------         ------
ATM surcharge                               $  294         $  249         $  359
Increase of cash value on
   insurance policies                          393            296            134
Merchant services income                       280            265            150
Commission on sale of non-
   deposit products                            204            158            193
Other                                          220            212            351
                                            ------         ------         ------
Total                                       $1,391         $1,180         $1,187
                                            ======         ======         ======


30
<PAGE>

The  components of Other  Noninterest  Expense for the years ended  December 31,
2002, 2001 and 2000 were as follows:

                                                         (In 000's)

                                             2002           2001           2000
                                            ------         ------         ------
Professional services                       $  830         $  755         $  547
Business promotions                            525            379            434
ATM expenses                                   261            222            167
Stationary & supplies                          318            274            259
Insurance                                      188            111             76
Other                                        1,771          1,559          1,125
                                            ------         ------         ------
Total                                       $3,893         $3,300         $2,608
                                            ======         ======         ======

(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".

The components of the Company's business segments for 2002 were as follows:

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

                                            Community                                  Intersegment
                                             Banking                Other               Adjustments            Consolidated
                                            ---------              --------            -------------           ------------
<S>                                          <C>                   <C>                    <C>                    <C>
Interest income                              $ 21,151              $     41               ($    13)              $ 21,179
Interest expense                                3,365                   339                    (13)                 3,691
                                             --------              --------               --------               --------
   Net interest income                         17,786                  (298)                     0                 17,488
Provision for loan
   losses                                         576                     0                      0                    576
Noninterest income                              3,275                 5,681                 (5,845)                 3,111
Equity income of
   subsidiaries                                     0                 4,497                 (4,497)                     0
Noninterest expense                            13,415                 6,746                 (5,845)                14,316
                                             --------              --------               --------               --------
Income before tax                               7,070                 3,134                 (4,497)                 5,707
Provision for
   income taxes                                 2,573                 1,128                 (1,702)                 1,999
                                             --------              --------               --------               --------
Net income                                   $  4,497              $  2,006               ($ 2,795)              $  3,708
                                             ========              ========               ========               ========

Assets                                       $411,196              $ 46,728               ($41,466)              $416,458
Loans, net                                    234,337                     0                      0                234,337
Deposits                                      374,536                     0                 (6,733)               367,803
Equity                                         34,733                35,343                (34,733)                35,343
</TABLE>


                                                                              31
<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                   914                 (1,396)                 1,687
                                            --------              --------               --------               --------
Net income                                  $  3,852              $  1,626               ($ 2,456)              $  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                   748                 (1,277)                 1,647
                                             --------              --------               --------               --------
Net income                                   $  3,358              $  1,331               ($ 2,076)              $  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>

The Company has determined that there are not separate  reporting  segments,  as
defined by the Financial  Accounting Standards Board;  therefore,  this schedule
will not be included in future financial reports.

(15) STOCK OPTION PLAN

The  Company  has a stock  option  plan  under  which it may grant up to 830,276
options.  The Company has granted 606,504 options through December 31, 2002. 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 or more years. The
Equity compensation plans have been approved by the security holders.


32
<PAGE>

A summary of the status of the Company's stock option plan at December 31, 2002,
2001 and 2000 and stock option activity during the years then ended is presented
in the table below:

<TABLE>
<CAPTION>
                                    2002                         2001                       2000
                                    ----                         ----                       ----

                                         Weighted                     Weighted                     Weighted
                                         Exercise                     Exercise                     Exercise
                            Shares        Price         Shares         Price         Shares         Price
                           -------        ------        -------        ------        -------        ------
<S>                        <C>            <C>           <C>            <C>           <C>            <C>
Outstanding at
    beginning of year      349,368        $16.50        297,755        $15.80        182,490        $12.56
Granted                     30,975        $24.34         72,490        $17.49        147,163        $19.48
Exercised                  (75,577)       $11.46        (20,366)       $ 9.69        (11,687)       $ 8.29
Cancelled                  (17,205)       $18.68           (511)       $ 6.26        (20,211)       $17.16
Outstanding at
    end of year            287,561        $18.38        349,368        $16.50        297,755        $15.80
Exercisable at
    end of year            102,259        $17.23        108,584        $14.40         66,372        $11.95
Weighted-average
   fair value of
   options granted
   during the year                 $ 6.94                       $ 6.23                       $ 9.02
</TABLE>

The following table summarizes  information  about stock options  outstanding at
December 31, 2002:

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

         Range                Number           Weighted-Average                      Number Exercisable
           of             Outstanding at   Remaining Contractual  Weighted-Average            at               Weighted-Average
    Exercise Prices          12/31/02          (Life in years)     Exercise Price         12/31/02               Exercise Price
    ---------------          --------          ---------------     --------------         --------               --------------

<S>                           <C>                  <C>                <C>                 <C>                       <C>
 $11.57 to $19.33              63,249               .76               $14.22               38,761                   $14.22

$17.71 to  $20.06             124,155              2.24               $19.51               49,662                   $19.51

$17.23 to  $24.47             100,157              3.65               $19.62               13,836                   $17.49
                              -------                                                     -------
                              287,561                                                     102,259
                              =======                                                     =======
</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 2002,  2001 and 2000,  respectively:  risk-free
interest rate of 4.07% and 3.25% for options issued in 2002, 4.62% and 3.90% for
options  issued in 2001 and 5.88%,  6.75% and 5.75% for options  issued in 2000;
expected dividend yields of .80%, 1.01% and .93%;  expected lives of 5 years and
expected volatility of 21.67%, 28.02% and 31.05%.

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, 2002 is as follows:

                                                                (In 000's)

Balance at beginning of year                                      $4,607
     Additions                                                     4,094
     Repayments                                                    3,359
Balance at end of year                                            $5,342

Total undisbursed commitments as of December 31, 2002 were $6,566,606.


                                                                              33
<PAGE>

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 2002, 2001 and 2000
fees of $165,000, $135,000 and $80,000, respectively, were paid to this firm.

(17) RESTRICTIONS

The Banks are required to maintain reserves with the Federal Reserve Bank of San
Francisco  equal to a percentage of its reservable  deposits.  Reserve  balances
that were  required by the Federal  Reserve Bank were  $220,000 and $275,000 for
December 31, 2002 and 2001, 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 $263,300,  $223,200 and $160,000 for the years ended December
31, 2002, 2001 and 2000, respectively.

During 1998, The Vintage Bank implemented a Director's  Supplemental  Retirement
Program.  The Program contains a non-qualified  defined benefit plan.  Directors
and select  officers  designated  by the Board of  Directors  of the Company are
covered by this plan. The plan is unfunded,  however the Bank has purchased life
insurance on the lives of the participants and expects to use the cash values of
these policies to pay  retirement  obligations.  Management's  intentions are to
hold the policies as an investment  until the death of the insured.  Cash values
for these  policies at December 31, 2002 were  $3,050,846.  At December 31, 2002
$287,406 was carried as a liability to fund the benefit.  The program provides a
death benefit to beneficiaries of a deceased participant.

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 ($2,998,489 at
December  31,  2002) to pay the  retirement  obligations.  At December  31, 2002
$218,316 was carried as a liability to fund the benefit.  The Plan also provides
a life insurance benefit to the designated  beneficiary of the participants upon
their death pursuant to the Executive  Officer  Endorsement  Method Split Dollar
Life Insurance component of the Plan.


34
<PAGE>

(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, 2002 and 2001:

<TABLE>
<CAPTION>
                                                             Carrying              Fair                Carrying              Fair
                                                              Amounts              Value                Amounts              Value
                                                             --------             --------             --------             --------

                                                                                             (In 000's)

                                                                         2002                                      2001
                                                                         ----                                      ----
<S>                                                          <C>                  <C>                  <C>                  <C>
Financial Assets:
   Cash and cash equivalents                                 $ 52,310             $ 52,310             $ 37,311             $ 37,311
   Time deposits with other
      financial institutions                                      100                  100                  100                  100
   Investment securities                                      107,094              107,094               86,120               86,120
   Loans, net                                                 234,337              236,147              183,548              185,633
   Accrued interest receivable                                  2,256                2,256                2,015                2,015

Financial Liabilities:
   Deposits                                                  $367,803             $367,486             $292,441             $291,995
   Long-term borrowings                                             0                    0                1,846                1,846
   Trust Preferred Securities                                  10,000               10,000                    0                    0
   Accrued interest payable                                       319                  319                  383                  383
</TABLE>

<TABLE>
<CAPTION>
                                                 Contract      Carrying           Fair      Contract      Carrying          Fair
                                                  Amounts       Amounts          Value       Amounts       Amounts         Value
                                                  -------       -------          -----       -------       -------         -----
                                                                                     (In 000's)
                                                                    2002                                      2001
                                                                    ----                                      ----
<S>                                               <C>                <C>          <C>        <C>                <C>         <C>
Unrecognized financial instruments:
   Loan commitments                               $83,835            $0           $436       $58,443            $0          $304
   Standby letters of credit                         $729            $0             $5        $1,249            $0            $8
</TABLE>

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

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

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

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

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

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

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

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


                                                                              35
<PAGE>

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

(20) COMPREHENSIVE INCOME

The changes in the components of other comprehensive income (loss) for the years
ended December 31, 2002, 2001 and 2000 are reported as follows:

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

                                                                                        2002           2001               2000
                                                                                        ----           ----               ----
<S>                                                                                    <C>               <C>             <C>
Unrealized holding gain (loss) arising during the period, net of
   tax expense of $562 for 2002, a tax expense of $335 for
    2001 and a tax expense of  $891 for 2000.                                          $1,024            $661            $1,251
Reclassification adjustment for net realized gains (losses) on
   securities available-for-sale included in net income during the
   year, net of tax expense of $166 for 2002, a tax expense of
   $135 in 2001 and a tax benefit of $2 for 2000.                                       (233)           (190)                 2
                                                                                       ------            ----            ------
Other comprehensive income                                                             $  791            $471            $1,253
                                                                                       ======            ====            ======
</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, 2002, that
the Company meets all capital adequacy requirements to which it is subject.

As of December 31, 2002, 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.


36
<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, 2002:
Total capital (to risk
   weighted assets)
      Consolidated                  $47,289          14.88%        $25,419         >=8.00%          $31,773            >=10.00%
      The Vintage Bank               28,825          11.03%         20,902         >=8.00%           26,128            >=10.00%
      Solano Bank                     7,815          14.57%          4,291         >=8.00%            5,363            >=10.00%
Tier I capital (to risk
   weighted assets)
      Consolidated                   43,999          13.85%         12,709         >=4.00%           19,064             >=6.00%
      The Vintage Bank               25,953           9.93%         10,451         >=4.00%           15,677             >=6.00%
      Solano Bank                     7,397          13.79%          2,145         >=4.00%            3,218             >=6.00%
Tier I capital (to
   average assets)
      Consolidated                   43,999          10.86%         16,203         >=4.00%           20,253             >=5.00%
      The Vintage Bank               25,953           7.52%         13,808         >=4.00%           17,260             >=5.00%
      Solano Bank                     7,397          12.36%          2,394         >=4.00%            2,993             >=5.00%

<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%
</TABLE>


                                                                              37
<PAGE>

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

For the Years Ended December 31, 2002, 2001 and 2000

CONDENSED BALANCE SHEETS

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

Assets                                                                 2002                   2001
                                                                      -------                -------
<S>                                                                   <C>                    <C>
Cash and due from banks                                               $ 6,921                $ 1,966
Available-for-sale investment securities                                2,854                      0
Investment in The Vintage Bank                                         27,166                 21,623
Investment in Solano Bank                                               7,567                  7,853
Investment in North Bay Statutory Trust 1                                 310                      0
Premises and equipment, net                                             1,794                  1,191
Other assets                                                              426                    138
                                                                      -------                -------
          Total assets                                                $47,038                $32,771
                                                                      =======                =======
Liabilities and shareholders' equity
Long-term borrowings                                                  $     0                $ 1,846
Other liabilities                                                       1,385                    945
                                                                      -------                -------
        Total liabilities                                             $ 1,385                $ 2,791
Floating rate subordinated
   debenture (trust preferred securities)                              10,310                      0
Shareholders' equity
   Preferred stock, no par value -  Authorized 500,000 shares
       Issued and outstanding - None
   Common stock, no par value - Authorized 10,000,000 shares
       Issued and outstanding -  2,130,288 shares in 2002 and
       1,960,902 shares in 2001                                        25,387                 21,973
   Retained earnings                                                    8,612                  7,454
   Accumulated other comprehensive income                               1,344                    553
                                                                      -------                -------
     Total shareholders' equity                                        35,343                 29,980
         Total liabilities and shareholders' equity                   $47,038                $32,771
                                                                      =======                =======
</TABLE>

CONDENSED INCOME STATEMENTS

<TABLE>
<CAPTION>
                                                                                                           (In 000's)
Income                                                                                       2002             2001            2000
                                                                                            -------          -------         -------
<S>                                                                                         <C>              <C>             <C>
Interest on investment securities                                                           $    41          $     0         $     0
Dividends from subsidiaries                                                                       0            2,500           3,000
Service fees from subsidiaries                                                                5,681            4,754           2,271
                                                                                            -------          -------         -------
Total Income                                                                                  5,722            7,254           5,271
Expenses
Interest on borrowings                                                                          339              168             147
Salaries and related benefits                                                                 3,836            3,275           2,013
Other expenses                                                                                2,910            2,622           1,380
                                                                                            -------          -------         -------
Total expenses                                                                                7,085            6,065           3,540
Net income (loss) before tax benefit and equity in
   net  income of  subsidiaries                                                              (1,363)           1,189           1,731
Tax benefit                                                                                     574              482             529
                                                                                            -------          -------         -------
Net income (loss) before equity in undistributed net income of subsidiaries                    (789)           1,671           2,260
Equity in undistributed net income of subsidiaries                                            4,497            1,351             353
                                                                                            -------          -------         -------
Net Income                                                                                  $ 3,708          $ 3,022         $ 2,613
                                                                                            =======          =======         =======
</TABLE>


38
<PAGE>

CONDENSED STATEMENTS OF CASH FLOWS

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

                                                                                   2002                 2001                 2000
                                                                                 --------             --------             --------
<S>                                                                              <C>                  <C>                  <C>
Cash Flows From Operating Activities:
Net income                                                                       $  3,708             $  3,022             $  2,612
Adjustments to reconcile net income to net cash
      provided by operating activities:
Depreciation and amortization                                                         737                  804                  178
Amortization (accretion) of investment securities
    premiums (discounts), net                                                           5                   --                   --
Equity in undistributed net income of subsidiaries                                 (4,497)              (1,351)                (353)
Changes in:
    Other assets                                                                     (288)                 541                 (662)
    Interest payable and other liabilities                                            468                  502                  504
                                                                                 --------             --------             --------
    Net cash provided by operating activities                                         133                3,518                2,279
                                                                                 --------             --------             --------

Cash Flows From Investing Activities:
Investment in Solano Bank                                                               0                    0               (9,000)
Investment securities available for sale:
  Proceeds from maturities and principal payments                                     201                   --                   --
  Purchases                                                                        (3,006)                  --                   --
Sale and disposition of capital assets                                                  0                    4                    0
Capital expenditures                                                               (1,340)                (519)              (1,568)
                                                                                 --------             --------             --------
Net cash used in investing activities                                              (4,145)                (515)             (10,568)
                                                                                 --------             --------             --------

<CAPTION>
                                                                                   2002                 2001                 2000
                                                                                 --------             --------             --------
<S>                                                                                <C>                    <C>                 <C>
Cash Flows From Financing Activities:
Increase (decrease) in long-term borrowings, net                                   (1,846)                (923)               2,769
Dividend received from The Vintage Bank in excess of
     equity in net income                                                               0                    0                    0
Proceeds from issuance of Trust Preferred Securities                               10,310                    0                    0
Stock options exercised                                                               909                  196                  102
Stock issued, net of cost                                                               0                    0                4,867
Dividends                                                                            (406)                (383)                (315)
                                                                                 --------             --------             --------
   Net cash provided by (used in) financing activities                              8,967               (1,110)               7,423
                                                                                 --------             --------             --------
Net increase (decrease) in cash and cash equivalents                                4,955                1,893                 (866)
Cash and cash equivalents at beginning of year                                      1,966                   73                  939
                                                                                 --------             --------             --------
Cash and cash equivalents at end of year                                         $  6,921             $  1,966             $     73
                                                                                 ========             ========             ========
</TABLE>


                                                                              39
<PAGE>

(23) SUMMARY OF UNAUDITED QUARTERLY RESULTS OF OPERATIONS

The  following  table sets forth the results of operation  for the four quarters
unaudited of 2002 and 2001.  All per share  amounts  have been  adjusted for the
2001, 2002 and 2003 stock dividends.

<TABLE>
<CAPTION>
                                                          (In 000's, except per share data)
                                                                 2002 Quarters Ended
                                     December 31,       September 31,            June 30,           March 31,
<S>                                        <C>                 <C>                 <C>                 <C>
Interest income                            $5,638              $5,495              $5,173              $4,873
Interest expense                              988               1,012                 841                 850
                                           ------              ------              ------              ------
Net interest income                         4,650               4,483               4,332               4,023
Provision for loan losses                     144                 144                 144                 144
                                           ------              ------              ------              ------
Net Interest Income after                   4,506               4,339               4,188               3,879
   provision for loan losses
Noninterest income                          1,036                 731                 645                 699
Noninterest expense                         3,797               3,697               3,455               3,367
                                           ------              ------              ------              ------
Income before provision for                 1,745               1,373               1,378               1,211
   income taxes
Provision for income taxes                    619                 446                 501                 433
                                           ------              ------              ------              ------
Net income                                 $1,126              $  927              $  877              $  778
                                           ======              ======              ======              ======

Basic earnings per share:                  $  .50              $  .42              $  .40              $  .36
Diluted earnings per share:                $  .49              $  .41              $  .39              $  .35
</TABLE>

<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 taxes                    575                 414                 362                 336
                                           ------              ------              ------              ------
Net income                                 $  928              $  918              $  622              $  554
                                           ======              ======              ======              ======

Basic earnings per share:                  $  .45              $  .43              $  .29              $  .26
Diluted earnings per share:                $  .45              $  .42              $  .29              $  .26
</TABLE>


40
<PAGE>

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

The Board of Directors
North Bay Bancorp:

We have  audited  the  consolidated  balance  sheet of  North  Bay  Bancorp  and
subsidiaries as of December 31, 2002 and the related consolidated  statements of
income,  statements of changes in shareholders' equity and comprehensive income,
and  statements  of cash  flows for the year  ended  December  31,  2002.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial  statements  based  on our  audit.  The  2001  and  2000  consolidated
financial  statements  of North Bay Bancorp were  audited by other  auditors who
have ceased operations. Those auditors expressed an unqualified opinion on those
consolidated financial statements in their report dated February 19, 2002.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  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
audit provides a reasonable basis for our opinion.

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

/s/ KPMG LLP

San Francisco, California
January 29, 2003


                                                                              41
<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.


/s/ Arthur Andersen LLP

San Francisco, California
February 19, 2002

This report is a copy of a previously issued report.

The predecessor auditor, Arthur Andersen, has not reissued the report.


42
<PAGE>

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

<TABLE>
<S>                                  <C>
NORTH BAY BANCORP

Thomas N. Gavin                      Owner, Gavin & Schreiner, New York Life Insurance Agency

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, Chairman           Senior Partner, Malloy Imrie & Vasconi Insurance Services LLC

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

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

CORPORATE SECRETARY

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

THE VINTAGE BANK                     SOLANO BANK

James L. Asbury                      Jack Anthony, III
Andrew J. Beckstoffer                Gary J. Falati
David B. Gaw                         Thomas N. Gavin, Chairman
William L. Kastner                   David B. Gaw
Thomas H. Lowenstein, Chairman       Fred J. Hearn, Jr.
Thomas F. Malloy                     Connie Klimisch
Andrew J. Nicks, M D                 John A. Nerland, President & CEO
Terry L. Robinson                    Michael D. O'Brien
Glen C. Terry, President & CEO       Terry L. Robinson
Carolyn D. Sherwood                  Stephen C. Spencer
James E. Tidgewell, Vice Chairman    Denise C. Suihkonen, Vice Chairman
                                     Robert J. Wood

Directors Emeritus

Sandi Funseth
Houghton Gifford, M D
Harlan R. Kurtz
Joseph Vallerga
</TABLE>


                                                                              43
<PAGE>

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

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

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

3271 Browns Valley Road
Napa, CA 94558-5499

3626 Bel Aire Plaza
Napa, CA 94558-2831

1065 Main Street
St. Helena, CA 94574

1190 Airport Road, Suite 100
Napa, CA  94558

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

1100 Texas Street
Fairfield, CA  94533

1395 E. Second Street
Benicia, CA  94510

976 A Admiral Callaghan Lane
Vallejo, CA 94591

Shareholder Information:

           Trading                        Nasdaq NMS - Symbol NBAN

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

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

                                          Wedbush Morgan Securities
                                          1300 S. W. Fifth Ave., Suite 2000
                                          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       North Bay Bancorp Executive Offices
                                          1190 Airport Road, Suite 101
                                          Napa, CA 94558
                                          May 8, 2003- 7:00 p.m.

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


44
<PAGE>

Corporate Secretary:                        Wyman G. Smith

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

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

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


                                                                              45
<PAGE>

Changes in Accountants

On April 8, 2002,  the Audit  Committee  of the Board of  Directors of North Bay
Bancorp  dismissed  Arthur  Andersen  LLP,  San  Francisco,  California,  as the
independent  accountant  chosen to audit the  Company's  consolidated  financial
statements.

Arthur Andersen's report on the consolidated  financial  statements of North Bay
for  either of the years  ended  December  31,  2001 or 2000 did not  contain an
adverse opinion or a disclaimer of opinion, and was not qualified or modified as
to uncertainty, audit scope, or accounting principles.

During  North  Bay's two most recent  fiscal  years,  and during the  subsequent
interim period preceding the date of Arthur Andersen's  dismissal,  there was no
disagreement  with Arthur  Andersen on any matter of  accounting  principles  or
practices,  financial statement disclosure or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of Arthur Andersen, would have
caused  Arthur  Andersen  to  make a  reference  to the  subject  matter  of the
disagreement in connection with its report.

During  North  Bay's two most recent  fiscal  years,  and during the  subsequent
interim  period  preceding  the date of Arthur  Andersen  's  dismissal,  Arthur
Andersen did not advise North Bay:

      o     that the  internal  controls  necessary  for  North  Bay to  develop
            reliable financial information do not exist;

      o     that  information had come to Arthur  Andersen's  attention that has
            led it to no longer rely on management's representations or that has
            made it unwilling to be  associated  with the  financial  statements
            prepared by management;

      o     of the need to significantly  expand the scope of Arthur  Andersen's
            audit or that  information has come to Arthur  Andersen's  attention
            during North Bay's two most  current  fiscal  years,  and during the
            subsequent  interim period  preceding the date of Arthur  Andersen's
            dismissal, that if further investigated may:

            o     materially  impact the  fairness  or  reliability  of either a
                  previously  issued  audit report or the  underlying  financial
                  statements,  or the financial statements to be issued covering
                  the fiscal period(s) subsequent to the date of the most recent
                  statements  covered by an audit report (including  information
                  that may prevent it from rendering an unqualified audit report
                  on those financial statements), or

            o     cause Arthur  Andersen to be unwilling to rely on management's
                  representations  or be associated  with North Bay's  financial
                  statement;

            o     and, due to the Arthur Andersen's dismissal,  or for any other
                  reason,  Arthur  Andersen  did not so expand  the scope of its
                  audit or conduct a further investigation; or,

      o     that information has come to Arthur Andersen's attention that it has
            concluded materially impacts the fairness or reliability of either:

            o     a previously  issued audit report or the underlying  financial
                  statements, or

            o     the  financial  statements  to be issued  covering  the fiscal
                  period(s) subsequent to the date of the most recent statements
                  covered by an audit  report  (including  information  that may
                  prevent it from rendering an unqualified audit report on those
                  financial statements);

            o     due to Arthur Andersen's  dismissal,  or for any other reason,
                  the  issue  has  not  been   resolved  to  Arthur   Andersen's
                  satisfaction prior to the dismissal.

In connection with a Current Report on Form 8-K filed by North Bay in April 2002
reporting the change of  accountants,  North Bay provided Arthur Andersen with a
copy of the Current Report and requested that Arthur Andersen  furnish North Bay
a letter addressed to the Securities and Exchange  Commission stating whether or
not Arthur Andersen agreed with the above statements.  By letter dated April 11,
2002, Arthur Andersen agreed with the above statements.


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