EXHIBIT 13

              North Bay Bancorp 2004 Annual Report to Shareholders


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;  (5)  the  ability  to  satisfy  the
requirements of the Sarbanes-Oxley Act and other regulations  governing internal
controls;  and (6) other risks  detailed in the North Bay Bancorp  reports filed
with the Securities and Exchange Commission.


                                                                               1
<PAGE>
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------


To Our Shareholders

Selected Financial Data

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

Quantitative and Qualitative Disclosure about Market Risk

Description of Operations

Market Information

Consolidated Balance Sheets

Consolidated Income Statements

Consolidated Statements of Changes in Shareholders' Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Directors

Corporate Information



2
<PAGE>
--------------------------------------------------------------------------------
TO OUR SHAREHOLDERS
--------------------------------------------------------------------------------

March 31, 2005


Dear Fellow Shareholders:

Twenty years ago, in January  1985,  The Vintage Bank first opened its doors for
business.  Now, two decades  later,  your  company has achieved  year-after-year
growth in  nineteen  of our twenty  years in  business.  Along the way,  we have
invested  in our  infrastructure,  growing to two  franchises  with ten  offices
supported by a  technology-rich  enterprise  that will serve our markets now and
into the future.  These investments  continue to propel us from one milestone to
the next, and 2004 was no exception. In 2004, your company:

     >>   Completed our "footprint" in Napa and Solano Counties with the opening
          of our 10th office in American  Canyon, a high-growth area in southern
          Napa County.

     >>   Maintained  exemplary loan quality with zero non-performing  assets at
          year-end,  our  sixth  consecutive  year-end  with  unblemished  asset
          quality.

     >>   Passed $500 million in total  assets--a 23% compounded  average growth
          rate over five years.

     >>   Consolidated  and  streamlined  our  corporate  structure  to  improve
          efficiency and transparency.

     >>   Completed a 3-for-2 stock split to improve liquidity for shareholders.

     >>   Dramatically improved productivity, with the efficiency ratio dropping
          217 basis points to 66.93%.

In its first 20 years,  The  Vintage  Bank has built a premier  bank in the Napa
area with a 15% share of the $2.3  billion in  deposits  in the  county.  When I
joined  the  Company in the Fall of 1988,  we had two  offices,  $26  million in
assets  and 35  employees.  Today we stand at $562  million  in  assets  and 160
employees.  Many of those  employees  have  been  with us in excess of 15 years.
Based on deposits,  The Vintage  Bank ranks  second in Napa County  market share
among commercial banks and is closing in on number one. Solano Bank continues to
raise its profile within its communities and rapidly gaining market share.  Napa
and Solano Counties are home to many thriving small  businesses and we are proud
to be the bankers of choice for many of the leading firms in these markets.


The  beginning of 2005 not only marks our 20th  anniversary,  but also a turning
point in our business focus. In the past two decades,  we've invested in a solid
platform for profitability,  building a complete network of branches serving the
major  business and  residential  centers in our market area with the technology
our customers  demand.  Our task in 2005 and beyond is to leverage that platform
into sustainable earnings growth.


                                                                               3
<PAGE>

Through the hard work and dedication of our team members,  we are now positioned
to  improve  our return on equity and  increase  earnings  per share at a higher
rate. Through year 2006, we believe we can continue to increase both lending and
deposit  activities  without  additional  investments  in new branches.  Growing
revenues while holding costs stable is our highest  priority.  Consolidating The
Vintage  Bank and Solano Bank  charters  and  combining  the three boards into a
single entity represent just two of the steps we are taking to improve processes
and better manage expenses.  While significant additional costs will be required
in  2005 to  insure  compliance  with  new  securities  regulations,  we  remain
extremely optimistic about our future.


Your  company was started as, and remains,  a true  community  bank.  As we have
grown our franchise and added more sophisticated  services, we have been able to
take on larger and more  sophisticated  business clients while remaining true to
our original values and mission.

Our goal in 2005 is to produce  returns on equity in line with peer  institution
averages,  and rank in the top  quartile of that group in 2006 and beyond.  Your
Board of Directors and management team look to the next decade with  confidence.
We appreciate your support,  and we remain  committed to maximizing the value of
your stake in North Bay Bancorp.


Kindest Regards,


Terry Robinson
President and CEO

March 31,  2005



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,
2004.  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 and per share data)

                                                      2004              2003              2002              2001              2000
                                                  ----------        ----------        ----------        ----------        ----------
<S>                                               <C>               <C>               <C>               <C>               <C>
STATEMENTS OF OPERATIONS DATA:
  Interest income                                 $   26,585        $   22,251        $   21,179        $   20,307        $   16,700
  Interest expense                                     3,543             2,995             3,691             5,887             5,612
                                                  ----------        ----------        ----------        ----------        ----------
  Net interest income                                 23,042            19,256            17,488            14,420            11,088
  Provision for loan losses                              620               238               576               447               385
                                                  ----------        ----------        ----------        ----------        ----------
  Net interest income after
     provision for loan losses                        22,422            19,018            16,912            13,973            10,703

  Noninterest income                                   4,198             3,847             3,111             2,691             2,140

  Noninterest expense                                 18,536            16,315            14,316            11,955             8,583

  Provision for income taxes                           3,020             2,179             1,999             1,687             1,647
                                                  ----------        ----------        ----------        ----------        ----------



  Net income                                      $    5,064        $    4,371        $    3,708        $    3,022        $    2,613
                                                  ==========        ==========        ==========        ==========        ==========


BASIC PER SHARE DATA: (1)
  Earnings per share                              $     1.33        $     1.16        $     1.02        $      .85        $      .78
  Average shares outstanding                       3,820,386         3,751,796         3,643,701         3,566,067         3,345,032

DILUTED PER SHARE DATA: (1)
  Earnings per share                              $     1.29        $     1.14        $      .99        $      .84        $      .77
  Average shares outstanding                       3,920,160         3,842,376         3,734,662         3,605,092         3,401,426

BALANCE SHEET DATA:
  Total assets                                    $  562,063        $  459,482        $  416,458        $  326,806        $  247,469
  Net loans                                          373,629           303,139           234,337           183,548           150,008
  Total deposits                                     484,493           406,445           367,803           292,441           216,638
  Shareholders' equity                                44,134            39,441            35,343            29,980            26,636

<FN>
(1) All per share amounts have been  adjusted to reflect the 5% stock  dividends
declared January 8, 2000,  January 29, 2001, January 28, 2002, January 27, 2003,
January 26, 2004 and January 24, 2005, as well as a 3-for-2 stock split declared
November 22, 2004.
</FN>
</TABLE>

                                                                               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,    accounting   for
available-for-sale  securities  and deferred  assets,  simulation  of changes in
interest rates and litigation results. Actual results may differ materially from
those  expressed  or  implied  as a result of  certain  risks and  uncertainties
including,  but not limited to,  changes in political  and economic  conditions,
interest rate fluctuations, competitive product and pricing pressures within the
Company's  markets,  equity and fixed income market  fluctuations,  personal and
corporate customers' bankruptcies,  inflation,  acquisitions and integrations of
acquired businesses,  technological  change,  changes in law, changes in fiscal,
monetary, regulatory and tax policies, monetary fluctuations, success in gaining
regulatory  approvals  when  required as well as other risks and  uncertainties.
These  forward-looking  statements  speak  only as of the  date on  which  these
statements  are made,  and the Company  undertakes  no  obligation to update any
forward-looking  statement to reflect events or circumstances  after the date on
which these  statements are made or to reflect the  occurrence of  unanticipated
events.

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

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


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

North Bay Bancorp,  organized  November 1, 1999, is the holding  company for The
Vintage  Bank and Solano  Bank  (Banks),  which are wholly  owned  subsidiaries.
Effective January 15, 2005 the Company merged Solano Bank into The Vintage Bank.
The consolidated entity (the Company) reported net income of $5,064,000 or $1.29
per diluted share,  in 2004 compared with $4,371,000 or $1.14 per diluted share,
in 2003 and $3,708,000 or $.99 per diluted share, in 2002,  equating to a return
on  average  assets  of .97%,  1.00%  and .99% for  years  2004,  2003 and 2002,
respectively.  The return on average  equity  was 12.34% in 2004  compared  with
11.70% and 11.36% in 2003 and 2002, respectively.

As of December 31,  2004,  total assets were  $562,063,000  compared  with total
assets of $459,482,000 and $416,458,000 at year end 2003 and 2002, respectively,
representing  a 22%  increase  in 2004  and a 10%  increase  in  2003.  Deposits
increased 19% in 2004 compared with an 11% increase in 2003.  Loans,  net of the
allowance for loan losses, increased 23% in 2004 compared with a 29% increase in
2003.


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

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


6
<PAGE>
Allowance for Loan  Losses.
The allowance for loan losses  represents  management's  best estimate of losses
inherent  in the  existing  loan  portfolio.  The  allowance  for loan losses is
increased  by the  provision  for loan losses  charged to expense and reduced by
loans charged-off, net of recoveries.

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

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

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

Specific allowances defined as:
     o    Management assessment of all loans classified as substandard or worse,
          with an outstanding balance of $100,000
     o    A specific  allowance  is provided  for any amount by which the loan's
          collateral   fair  value  is   insufficient  to  cover  the  loan;  or
          discounting  estimated  future cash flows,  or by observing the loan's
          market price if it is of a kind for which there is a secondary market

General allowance defined as:
     o    An allowance  for all loans  outstanding  within the portfolio and not
          contained in the specific allowance

Judgmental allowance defined as:
     o    National and local economic trends and conditions
     o    Trends in volume of loans
     o    Changes in underwriting standards and/or lending personnel
     o    Concentrations of credit within the portfolio

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

Available for Sale Securities.

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


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


                                                                               7
<PAGE>
SUMMARY OF EARNINGS
--------------------------------------------------------------------------------

Net Interest Income
Net  interest  income  before   provision  for  loan  losses  was   $23,042,000,
$19,256,000 and $17,488,000 in 2004, 2003 and 2002,  respectively,  representing
increases of 20% in 2004 and 10% in 2003.

The following  table sets forth average daily  balances of assets,  liabilities,
and  shareholders'  equity during 2004, 2003 and 2002, along with total interest
income  earned and expense  paid,  and the average  yields  earned or rates paid
thereon and the net interest  margin for the years ended December 31, 2004, 2003
and 2002.

<TABLE>
<CAPTION>
                                                                              ($ in 000's)
                                         December 31, 2004                  December 31, 2003                December 31, 2002
                                   -----------------------------     ---------------------------     -------------------------------
                                    Average     Income/    Rate/     Average     Income/   Rate/     Average       Income/     Rate/
                                    Balance     Expense    Yield     Balance     Expense   Yield     Balance       Expense     Yield
                                   --------     -------     ----     --------    -------    ----     --------      -------     -----
<S>                                <C>          <C>         <C>      <C>         <C>        <C>      <C>           <C>         <C>
ASSETS
 Loans  (1)                        $352,863     $22,828     6.47%    $277,220    $18,782    6.78%    $212,735      $16,602     7.80%
                                   --------     -------              --------    -------             --------      -------
 Investment securities:
   Taxable                           78,007       2,945     3.77%      78,457      2,535    3.23%      78,186        3,490     4.46%
   Non-taxable (2)                   13,719         691     5.04%      16,948        958    5.65%      14,002          868     6.20%
                                   --------     -------              --------    -------             --------      -------
Total loans and investment          444,589      26,464     5.95%     372,625     22,275    5.98%     304,923       20,960     6.87%
securities

 Due from banks, time                   100           3     3.00%         100          2    2.00%         100            5     5.59%
 Federal funds sold                  19,710         287     1.46%      18,104        207    1.14%      28,138          418     1.49%
                                   --------     -------              --------    -------             --------      -------

Total earning assets                464,399      26,754     5.76%     390,829     22,484    5.75%     333,161       21,383     6.42%
                                   --------     -------              --------    -------             --------      -------

 Cash and due from banks             38,602                            28,216                          20,376
 Allowance for loan losses          (3,814)                           (3,403)                         (3,031)
 Premises and equipment, net         10,724                            11,125                          10,484
 Accrued interest receivable
   and other assets                  13,417                            12,157                          11,951
                                   --------                          --------                        --------
Total assets                       $523,328                          $438,924                        $372,941
                                   ========                          ========                        ========

LIABILITIES AND SHAREHOLDERS'
EQUITY
 Deposits:
   Interest bearing demand         $215,854       1,201     0.56%    $176,724        916    0.52%    $136,134        1,118     0.82%
   Savings                           41,858          97     0.23%      32,678        107    0.33%      25,798          228     0.88%
   Time                              76,114       1,290     1.69%      77,198      1,430    1.85%      77,112        2,006     2.60%
                                   --------     -------              --------    -------             --------      -------
 Total deposits                     333,826       2,588     0.78%     286,600      2,453    0.86%     239,044        3,352     1.40%

Borrowings                           23,325         955     4.09%      10,750        542    5.04%       6,468          339     5.25%

Total interest bearing
   liabilities                      357,151       3,543      .99%     297,350      2,995    1.01%     245,512        3,691     1.50%
                                   --------     -------              --------    -------             --------      -------

 Noninterest bearing demand         120,777                           100,342                          91,763
 Accrued interest payable
   and other liabilities              4,347                             3,876                           3,039
 Shareholders' equity                41,053                            37,356                          32,627
                                   --------                          --------                        --------

Total liabilities and
    shareholders' equity           $523,328                          $438,924                        $372,941
                                   ========                          ========                        ========
Net interest income                             $23,211                          $19,489                           $17,692
Net interest income to
   average earning assets
(Net interest margin (3))                                    5.00%                          4.99%                              5.31%
<FN>
(1)  Loan interest income includes loan fee income of $1,054 in 2004,  $1,119 in
     2003 and $1,167 in 2002.

(2)  Average yields shown are  taxable-equivalent.  On a non-taxable basis, 2004
     interest  income was $522 with an  average  yield of 3.80%,  2003  interest
     income was $725 with an average yield of 4.28%; and in 2002 interest income
     was $664 and the average yield was 4.74%.

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

8
<PAGE>
The following  table sets forth a summary of the changes in interest  earned and
interest  paid in December  31, 2004 over 2003,  December 31, 2003 over 2002 and
December 31, 2002 over 2001  resulting  from  changes in assets and  liabilities
volumes and rates.  The change in interest  due to both rate and volume has been
allocated in proportion to the relationship of absolute dollar amounts of change
in each.
<TABLE>
<CAPTION>

                                                                              (In 000's)
                                            2004 over 2003                   2003 over 2002                   2002 over 2001
                                     -----------------------------    -----------------------------    -----------------------------
                                      Volume     Rate       Total      Volume      Rate      Total      Volume    Rate       Total
                                     -------    -------    -------    -------    -------    -------    -------   -------    -------
<S>                                  <C>        <C>        <C>        <C>        <C>        <C>        <C>       <C>        <C>
Increase (decrease) in
 Interest and fee income

   Loans                             $ 5,141    ($1,095)   $ 4,046    $ 5,032    ($2,852)   $ 2,180    $ 3,402   ($2,119)   $ 1,283
   Time deposits with other
    Financial institutions                 0          1          1          0         (3)        (3)         0        (2)        (2)

   Investment securities:
     Taxable                             (15)       425        410         12       (967)      (955)     1,218    (1,123)        95
     Non-taxable (1)                    (183)       (84)      (267)       183        (93)        90         11       118        129
   Federal funds sold                     18         62         80       (149)       (62)      (211)        60      (654)      (594)
                                     -------    -------    -------    -------    -------    -------    -------   -------    -------
   Total interest and fee              4,961       (691)     4,270      5,078     (3,977)     1,101      4,691    (3,780)       911
income


Increase (decrease) in
 Interest expense

   Deposits:
     Interest bearing
     Transaction accounts                205         80        285        333       (535)      (202)       627    (1,673)    (1,046)
     Savings                              31        (41)       (10)        61       (182)      (121)        79       (85)        (6)
     Time deposits                       (22)      (118)      (140)         2       (578)      (576)       220    (1,532)    (1,312)
                                     -------    -------    -------    -------    -------    -------    -------   -------    -------
   Total deposits                        214        (79)       135        396     (1,295)      (899)       926    (3,290)    (2,364)

   Borrowings                            698       (285)       413        224        (21)       203        328      (160)       168
                                     -------    -------    -------    -------    -------    -------    -------   -------    -------
   Total interest expense                912       (364)       548        620     (1,316)      (696)     1,254    (3,450)    (2,196)
                                     -------    -------    -------    -------    -------    -------    -------   -------    -------
   Net Interest income               $ 4,049    ($  327)   $ 3,722    $ 4,458    ($2,661)   $ 1,797    $ 3,437   ($  330)   $ 3,107
                                     =======    =======    =======    =======    =======    =======    =======   =======    =======
<FN>
(1)  The interest  earned is  taxable-equivalent.  On a  non-taxable  basis 2004
     interest  income was $203 less than 2003; 2003 interest income was $62 more
     than in 2002; and 2002 interest income was $88 more than in 2001.
</FN>
</TABLE>

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 2004  compared  with 2003 was  primarily the
result of volume  increases in loans.  The net interest  margin  (defined as net
interest  income  divided by average  earning  assets)  remained  stable in 2004
compared with 2003,  equating to 5.00% in 2004 compared with 4.99% in 2003.  The
Company  continues to enjoy a net interest margin higher than peer  institutions
of comparable size due to its low cost of funds.

Taxable-equivalent  interest income (defined as interest income adjusted for the
tax benefit of holding tax exempt securities and loans) increased  $4,270,000 or
19%,  in 2004  compared  with 2003.  Increases  in the volume of earning  assets
accounted for increasing interest income by $4,961,000,  offset by a decrease of
$691,000 attributable to lower rates. An increase in taxable-equivalent interest
income of $1,101,000 or 5% in 2003 compared with 2002  consisted of a $5,078,000
increase  due to growth of earning  assets  offset by a decrease  of  $3,977,000
attributable to lower rates on earning assets.

Interest  paid  on  interest-bearing  liabilities  increased  $548,000  in  2004
compared  with 2003.  Increases in the volume of deposits  and other  borrowings
increased  interest paid by $912,000 offset by a $364,000 decrease  attributable
to a decline in rates.  Interest paid on interest-bearing  liabilities decreased
$696,000 in 2003 compared with 2002;  the effect of volume  increases  accounted
for $620,000 offset by a decrease of $1,316,000 attributable to lower rates.

Provision and Allowance for Loan Losses
Credit  risk is inherent in the  business of lending.  As a result,  the Company
maintains an Allowance for Loan Losses to absorb probable losses inherent in the
Company's  loan  portfolio.  This is  maintained  through  periodic  charges  to
earnings.  These  charges  are shown in the  Consolidated  Income  Statement  as


                                                                               9
<PAGE>

provision for loan losses. All specifically identifiable and quantifiable losses
are  immediately  charged off against the allowance.  However,  for a variety of
reasons,  not all losses are immediately known to the Company and, of those that
are known,  the full extent of the loss may not be quantifiable at that point in
time.  The balance of the Company's  Allowance for Loan Losses is meant to be an
estimate of the probable losses inherent in the portfolio.

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

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

As of December 31, 2004, net loans increased $70.5 million,  from year-end 2003,
a 23%  increase.  On an  average  balance  basis the  Company's  loan  portfolio
increased $75 million, or 27% over the average balance in 2003. In 2003, average
balances increased from the prior year by $64 million,  or 30%. The increases in
2004 and 2003 were due to strong loan demand for  commercial  real estate  loans
along with an aggressive calling program.

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

Assessment of the Adequacy of the Allowance for Loan Losses and the
Allocation Process
The Company  formally  assesses  the  adequacy of the  allowance  on a quarterly
basis.  Determination  of the  adequacy is based on ongoing  assessments  of the
probable risk in the  outstanding  loan  portfolio.  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 classified  loans will occur at least  monthly.
Confirmation  of the quality of the grading  process is obtained by  independent
credit reviews conducted by consultants  specifically hired for this purpose and
by regulatory examiners.

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

Pass            - These loans consist of the portfolio graded as excellent, good
                  and satisfactory.

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.

10
<PAGE>

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.

Loss            - Loans classified loss are considered uncollectible and of such
                  little value that their  continuance as bankable assets is not
                  warranted.

The above,  along with specific  allocations for  concentrations in real estate,
SBA 7A  program  and leases are taken into  consideration  when  evaluating  the
Company's allowance for loan losses.

As of December 31, 2004 the allowance for loan losses of $4,136,000 representing
1.09% of loans outstanding,  as compared with an allowance balance of $3,524,000
at December 31, 2003, representing 1.15% of loans outstanding. During 2004, 2003
and 2002, $620,000, $238,000 and $576,000,  respectively, was charged to expense
for the provision of loan losses.

Non-performing Loans
The  Company's  policy is to place  loans on  nonaccrual  status  when,  for any
reason,  principal  or  interest is past due for ninety days or more unless they
are both well secured and in the process of  collection.  Any interest  accrued,
but  unpaid,  is  reversed  against  current  income.  Thereafter,  interest  is
recognized  as income only as it is collected  in cash.  As of December 31, 2004
and 2003 there were no nonaccrual loans, loans that were past due ninety days or
more, or troubled debt restructurings.

Historical Loan Loss & Recovery Experience
The following  table  provides a summary of the Banks' loan loss  experience for
the years ended December 31, 2004, 2003, 2002, 2001 and 2000.

<TABLE>
<CAPTION>

                                                            ($ in 000's)
                                                             December 31,
                                    ---------------------------------------------------------------
                                       2004          2003         2002         2001          2000
                                    ---------     ---------    ---------    ---------     ---------
<S>                                 <C>           <C>          <C>          <C>           <C>
Average loans for the period        $ 352,863     $ 277,220    $ 212,735    $ 174,050     $ 141,076
Loans outstanding at end
    of  period                        377,765       306,663      237,627      186,265       152,276

Allowance for Loan Losses

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

Less loans charged off:
    Real estate loans                      74             0            0            0             0
    Commercial loans                       15             0            0            0            99
    Installment loans                      11            12           10            4             6
                                    ---------     ---------    ---------    ---------     ---------
Total loans charged off                   100            12           10            4           105

Recoveries:
    Real estate loans                      78             0            0            0             0
    Commercial loans                        3             0            0            0             1
    Installment loans                      11             8            7            6             0
                                    ---------     ---------    ---------    ---------     ---------
Total recoveries                           92             8            7            6             1

Net loans charged off                       8             4            3           (2)          104
(recovered)

Provision for loan losses                 620           238          576          447           385
                                    ---------     ---------    ---------    ---------     ---------

Balance, end of period              $   4,136     $   3,524    $   3,290    $   2,717     $   2,268
                                    =========     =========    =========    =========     =========
</TABLE>

                                                                              11
<PAGE>

<TABLE>
<CAPTION>
<S>                                 <C>           <C>          <C>          <C>           <C>
Net loans charged off (recovered)
  to average loans by types:
       Real estate loans               (0.001%)       0.000%       0.000%       0.000%        0.000%
       Commercial loans                 0.003%        0.000%       0.000%       0.000%        0.069%
       Installment loans                0.000%        0.001%       0.001%      (0.001%)       0.004%

Net losses (recoveries) to
  average loans outstanding             0.002%        0.001%       0.001%      (0.001%)       0.074%

</TABLE>

The following  tables,  in thousands,  summarize the allocation of the allowance
for loan losses  among loan types at December  31, 2004,  2003,  2002,  2001 and
2000.
<TABLE>
<CAPTION>

                                  ($ in 000's)
                                                              December 31, 2004
                                        ------------------------------------------------------------------
                                                                                      Percentage of Loans
                                                              Amount Allocated for    in Each Category to
                                        Composition of Loans           Loan Losses            Total Loans
                                        --------------------           -----------            -----------
<S>                                                 <C>                     <C>                    <C>
Commercial loans                                    $ 67,068                $  926                 17.8%
Commercial loans secured by
    real estate                                       26,447                   278                  7.0%
Installment loans                                     36,339                   221                  9.6%
Real estate loans                                    220,316                 2,397                 58.3%
Construction loans                                    27,595                   314                  7.3%
                                                    --------                ------                ------
Total loans outstanding                              377,765                                      100.0%
Less allowance for loan losses                         4,136                $4,136
                                                    --------

Total loans, net                                    $373,629
                                                    ========
</TABLE>

<TABLE>
<CAPTION>
                                                              December 31, 2003
                                        ------------------------------------------------------------------
                                                                                      Percentage of Loans
                                                              Amount Allocated for    in Each Category to
                                        Composition of Loans           Loan Losses            Total Loans
                                        --------------------           -----------            -----------
<S>                                                 <C>                     <C>                    <C>
Commercial loans                                     $45,991                $  801                 15.0%
Commercial loans secured by
    real estate                                       33,519                   186                 10.9%
Installment loans                                     28,860                   158                  9.4%
Real estate loans                                    163,088                 2,018                 53.2%
Construction loans                                    35,205                   361                 11.5%
                                                    --------                ------                ------
Total loans outstanding                              306,663                                      100.0%
Less allowance for loan losses                         3,524                $3,524
                                                    --------

Total loans, net                                    $303,139
                                                    ========
</TABLE>

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

Total loans, net                                    $234,337
                                                    ========
</TABLE>


12
<PAGE>

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

Total loans, net                                    $183,548
                                                    ========
</TABLE>

<TABLE>
<CAPTION>
                                                              December 31, 2000
                                        ------------------------------------------------------------------
                                                                                      Percentage of Loans
                                                              Amount Allocated for    in Each Category to
                                        Composition of Loans           Loan Losses            Total Loans
                                        --------------------           -----------            -----------
<S>                                                 <C>                     <C>                    <C>

Commercial loans                                    $ 28,600                $  703                 18.8%
Commercial loans secured by
    real estate                                        5,115                    61                  3.4%
Installment loans                                     23,432                   193                 15.4%
Real estate loans                                     86,886                 1,195                 57.0%
Construction loans                                     8,243                   116                  5.4%
                                                    --------                ------                ------
Total loans outstanding                              152,276                                      100.0%
Less allowance for loan losses                         2,268                $2,268
                                                    --------

Total loans, net                                    $150,008
                                                    ========
</TABLE>

The increase in the allowance for loan losses is due primarily to overall growth
in the loan  portfolio and related  inherent risk of loss. Net loans charged off
were a modest  $8,000 within the portfolio for The Vintage Bank in 2004 compared
with net charge offs of $4,000 in 2003.  Solano Bank  sustained  no losses since
opening for business July 2000.

Based on the current conditions of the loan portfolio,  Management believes that
the  $4,136,000  allowance  for loan losses at December  31, 2004 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.


In the course of examination, regulators may require the Company to increase its
amount in its allowance for loan losses based on  information  available to them
at the time of their evaluation .


                                                                              13
<PAGE>

Noninterest Income
Details of noninterest income are as follows:

                                                           (In 000's)

                                                 2004         2003         2002
                                                ------       ------       ------
Service charge on deposit
    accounts                                    $2,249       $1,645       $1,321
Gains on securities transactions                   262          637          399
Other                                            1,687        1,565        1,391
                                                ------       ------       ------
   Total                                        $4,198       $3,847       $3,111
                                                ======       ======       ======

Noninterest income for year 2004 increased $351,000,  or 9%, compared with 2003.
Increases during 2003 compared with 2002 were $736,000, or 24%. Most noninterest
income derives from service charges on deposit  accounts.  Service charge income
increased  proportionately  more than  growth in  deposits  because of  improved
collection  efforts and  implementation  of an overdraft  privilege program that
commenced on September 15, 2003.

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

Noninterest Expense
Details of noninterest expense are as follows:

                                                         (In 000's)
                                             2004           2003           2002
                                           -------        -------        -------

Salaries & benefits                        $ 9,993        $ 8,795        $ 7,893
Occupancy                                    1,487          1,289            916
Equipment                                    2,018          1,703          1,875
Other                                        5,038          4,528          3,632
                                           -------        -------        -------
   Total                                   $18,536        $16,315        $14,316
                                           =======        =======        =======

Salaries  and  benefits  expense  increased  14%  and  11%  in  2004  and  2003,
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  131 at year-end 2001 to 157 at year-end  2004. The increase
was primarily the result of staffing for new branches throughout the Company.

The 15%  increase  in  occupancy  expense  during  2004  compared  with 2003 was
primarily  in rent and  depreciation  associated  with  opening a new  branch in
American  Canyon.  The 41% in occupancy  expense in 2003  compared with 2002 was
primarily in rent and depreciation  associated with opening a new branch,  along
with new executive offices and an administration center during the first quarter
of 2003.

Equipment  expense  increased 18% in 2004 compared with 2003. The increases were
primarily  due  to the  Company  reversing  approximately  $168,000  in  accrued
maintenance fees during 2003 as the result of settling  litigation with a former
software supplier and additional cost associated with maintaining ATMs.

The key components of other expenses are as follows:

                                                        (In 000's)
                                             2004           2003           2002
                                            ------         ------         ------

Professional services                       $1,240         $1,387         $  830
Business promotion                             658            554            525
Stationery & supplies                          393            380            318
Insurance                                      320            224            188
Other                                        2,427          1,983          1,771
                                            ------         ------         ------
   Total                                    $5,038         $4,528         $3,632
                                            ======         ======         ======


14
<PAGE>

Professional  services  decreased 11% in 2004 compared with the prior year; 2003
expenses  were 67% higher than 2002.  The decrease in 2004 was  primarily due to
lower legal fees,  offset by increased  audit expense.  The increase in 2003 was
primarily  due to legal fees  associated  with  litigation  with our former host
system provider,  outsourced information technology and tax consulting services.
Business  promotion  expense  increased  19% in 2004  compared  with  2003;  the
increase  was  primarily  the  result  of  increased   marketing   expenditures.
Stationery  and  supplies  expense  increased  3%  and  19%  in  2004  and  2003
respectively,  reflecting overall volume increases and costs associated with the
system conversion and opening new branches. Insurance expenses increased 43% and
19% in  2004  and  2003,  respectively;  these  increases  are  consistent  with
increases in volumes and number of  locations,  as well as increases in workers'
compensation  costs.  Other  expenses  increased  22% and 12% in 2004  and  2003
respectively,  primarily due to increased expenses for loans,  postage,  courier
services, conferences and other miscellaneous expenses.

Provision for Income Taxes
The Company reported a provision for income taxes of $3,020,000,  $2,179,000 and
$1,999,000 for years 2004, 2003 and 2002, respectively. These provisions reflect
accrual  for taxes at the  applicable  rates for Federal  and  California  State
income taxes based upon reported pre-tax income, and adjusted for the beneficial
effect of the Company's  investment in qualified  municipal  securities and life
insurance  products.  The Company has not been subject to an alternative minimum
tax (AMT).

Return on Equity and Assets
The following  sets forth key ratios for the periods  ending  December 31, 2004,
2003 and 2002.

                                              2004          2003          2002
                                            -------       -------       -------
Net income as a percentage of
    average assets                             .97%         1.00%          .99%
Net income as a percentage of
    average equity                           12.34%        11.70%        11.36%
Average equity as a percentage
    of average assets                         7.84%         8.50%         8.75%
Dividends declared per share
    as a percentage of net
    Income per share                         11.27%        11.17%        12.20%


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

Total  assets  as  of  December  31,  2004  were   $562,063,000   compared  with
$459,482,000  and  $416,458,000,  as of  year-end  2003 and 2002,  respectively,
representing  a 22% increase in 2004 and a 10% increase in 2003.  Total deposits
grew $78,048,000 to $484,493,000 in 2004, representing a 19% increase,  compared
with an 11%  increase in 2003.  Total loans,  net of allowance  for loan losses,
grew $70,490,000 to $373,629,000 in 2004,  representing a 23% increase  compared
with a 29% increase in 2003.  Investment  securities  increased  $7,377,000 from
year-end 2003 to $99,383,000  in 2004, an 8% increase,  compared with a decrease
of 14% during 2003.

Junior Subordinated Debentures
On June 26, 2002,  the Company  formed North Bay  Statutory  Trust I (Trust),  a
Connecticut  statutory  business  trust,  for the purpose of issuing  guaranteed
undivided  beneficial   interests  in  junior  subordinated   debentures  (trust
preferred  securities).  During  June  2002,  the Trust  issued  $10  million in
floating rate Cumulative Trust Preferred Securities (Securities). The Securities
bear interest at a rate of Libor plus 3.45% and had an initial  interest rate of
5.34%; as of December 31, 2004 the interest rate was 6.00%;  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 Company  de-consolidated  the Trust as of March 31, 2004.  As a result,  the
junior  subordinated  debentures  issued by the  Company to the Trust,  totaling
$10,310,000 are reflected on the Company's consolidated balance sheet, under the
caption Junior Subordinated Debentures. The Company also recognized its $310,000
investment  in the Trust,  which is recorded in Investment  in  Subsidiary.  The
Trust has no independent assets or operations and exists for the sole purpose of
issuing trust  preferred  securities  and  investing the proceeds  thereof in an
equivalent amount of junior subordinated debentures issued by the Company.

                                                                              15
<PAGE>

The  Securities,  the  junior  subordinated  debenture  issued  by the  Trust is
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 the junior  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 junior subordinated debentures.

Off Balance Sheet Arrangement
The  Company  does  not have  off-balance  sheet  arrangements,  as  defined  by
Regulation  S-K. The Company does have loan  commitments  and letters of credit.
For  additional  information  please  see Note 8 to the  Consolidated  Financial
Statements.

Borrowings
Total long-term  borrowings were $19 million at December 31, 2004. The following
table summarizes the borrowings:

                              Fixed Rate Borrowings
                                  ($ in 000's)

                                      Amount     Maturity Date     Interest Rate
                                      ------     -------------     -------------
Federal Home Loan Bank Advance       $ 5,000         4-17-2006             2.24%
Federal Home Loan Bank Advance         5,000         4-16-2007             2.83%
Federal Home Loan Bank Advance         9,000         4-14-2008             3.23%
                                     -------
Total                                $19,000
Weighted average interest rate                                             2.86%


There were no  short-term  borrowings at December 31, 2004 or December 31, 2003.
Short-term   borrowings   consist  primarily  of  federal  funds  purchased  and
borrowings  from the Federal Home Loan Bank of San Francisco  (FHLB).  The Banks
maintain  collateralized  lines of credit with the FHLB. Based on the FHLB stock
requirements at December 31, 2004, the lines provided for maximum  borrowings of
approximately  $123.3  million;  the Company also has available  unused lines of
credit  totaling  $17.5 million for Federal funds  transactions  at December 31,
2004.

Contractual Obligations
The Company has entered into non-cancelable  contracts for leased premises, data
processing and other service agreements.  The Company has no capital leases. The
following   table   summarizes  our  significant   contractual   obligation  and
commitments as of December 31, 2004:

<TABLE>
<CAPTION>
                                                                     (In 000's)
                                                   Less than          One to        Three to
                                        Total       one year     three years      five years       Thereafter
                                        -----       --------     -----------      ----------       ----------
<S>                                    <C>           <C>             <C>             <C>             <C>
Junior subordinated debentures         $10,310       $     0         $     0         $     0         $10,310
Operating leases                         3,970           769           1,268             862           1,071
Other obligations                          300           250              50               0               0
                                       -------       -------         -------         -------         -------
Total                                  $14,580       $ 1,019         $ 1,318         $   862         $11,381
                                       =======       =======         =======         =======         =======
</TABLE>

16
<PAGE>


Time Deposits
The following  table sets forth the maturity of time  certificates of deposit of
$100,000 or more at December 31, 2004, 2003 and 2002.

                                               (In 000's)
                               2004               2003                2002
                         ---------------    ----------------    ---------------
3 months or less         $18,557    42.6%   $17,584    49.8%    $24,661    62.5%

Over 3 months through
6 months                   8,624    19.8%     6,122    17.4%      6,182    15.7%

Over 6 months through
12 months                  4,793    11.0%     3,822    10.8%      3,887     9.9%

Over 12 months            11,620    26.6%     7,762    22.00   %  4,695    11.9%
                         -------   -----    -------   ------    -------   -----
                         $43,594     100%   $35,290      100%   $39,425     100%
                         =======   =====    =======   ======    =======   =====


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  "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,
2004  "Available-for-Sale"  securities had a fair value of  $94,788,000  with an
unrealized  gain, net of income taxes,  of $161,000  reflected as a component of
accumulated other  comprehensive  income in the shareholders'  equity section of
the Balance  Sheet.  The Company  owns  equity  securities  carried at a cost of
$4,595,000.

The Company also has  available  funding from other  sources such as the Federal
Home Loan Bank and federal fund lines of credit.  As of December  31, 2004,  the
Company  had  approximately  $140.8  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 2004, liquid assets (defined as cash,  Federal funds sold,  deposits
in   other    financial    institutions    and    securities    categorized   as
available-for-sale)  represented 28% of total assets, as compared with 28% as of
year-end  2003.  The level of liquid  assets at December  31,  2004  exceeds the
liquidity required by the Company's  liquidity policy.  Management expects to be
able to meet the liquidity  needs of the Company during 2005  primarily  through
balancing loan growth with corresponding  increases in deposits. The Company did
occasionally  rely on borrowings from FHLB and on the federal funds lines during
2004. For additional information please see Note 7 to the Consolidated Financial
Statements.

The Company's  capital ratios  remained  relatively  steady during 2004 compared
with 2003 levels.  As of December  31,  2004,  the  Company's  total  risk-based
capital  ratio,  Tier I risk-based  capital ratio and leverage ratio were 12.5%,
11.6% and 9.4%,  respectively.  These  compare  with ratios of 13.5%,  12.6% and
10.6% as of December 31, 2003.

In January,  2005, the Company declared a 5% stock dividend and a $.15 per share
cash  dividend  for  shareholders  of  record as of March  18,  2004.  The stock
dividend  will affect the Company's  capital and its capital  ratios only to the
extent that cash is distributed in lieu of fractional shares.  Accordingly,  the
stock dividend will not materially  impact the Company's  overall  capital.  The
cash dividend will total approximately $550,000,  equating to a reduction in the
Company's leverage ratio of approximately .1%.


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

                                                                              17
<PAGE>

credit risk. Other types of market risks, such as foreign currency exchange rate
risk, do not arise in the normal course of the  Company's  business  activities.
The  majority of the  Company's  interest  rate risk  arises  from  instruments,
positions and  transactions  entered into for purposes other than trading.  They
include loans, securities  available-for-sale,  deposit liabilities,  short-term
borrowings  and  long-term  debt.  Interest  rate risk  occurs  when  assets and
liabilities reprice at different times as interest rates change.

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

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

Interest Rate Sensitivity
The following table sets forth the repricing  opportunities  for  rate-sensitive
assets and  rate-sensitive  liabilities at December 31, 2004.  Rate  sensitivity
analysis usually  excludes  noninterest-bearing  demand deposits,  which totaled
$127,250,000..   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                        $  72,456     $  40,247     $ 205,755    $  59,307    $ 377,765
   Interest-bearing deposits in
      other banks                              0             0           100            0          100
   Investment securities                       0           844        42,237       56,302       99,383
   Federal funds sold                     32,865             0             0            0       32,865
                                       ---------     ---------     ---------    ---------    ---------
                Total                    105,321        41,091       248,092      115,609      510,113

Interest rate-sensitive liabilities:
   Interest-bearing demand
      Deposits                           236,515             0             0            0      236,515
   Time deposits >$100,000                18,557        13,417        11,620            0       43,594
   Other time deposits                    16,262        12,086         5,364            0       33,712
   Savings deposits                       43,422             0             0            0       43,422
   Long-term borrowings                   10,310             0             0            0       10,310
                                       ---------     ---------     ---------    ---------    ---------
                Total                  $ 325,066     $  25,503     $  16,984    $       0    $ 367,553

Interest rate sensitivity gap          ($219,745)    $  15,588     $ 231,108    $ 115,609    $ 142,560
                                       =========     =========     =========    =========    =========
Cumulative interest rate
   sensitivity gap                     ($219,745)    ($204,157)    $  26,951    $ 142,560
                                       =========     =========     =========    =========

Ratio of interest rate sensitivity
   to earning assets                     (43.08%)        3.06%       45.31%       22.66%
</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. During a positive GAP "horizon" earnings would decrease
in a falling  interest rate  environment,  as there would be more rate sensitive
assets  subject to repricing  downwards than rate  sensitive  liabilities.  This
traditional  analysis  does not  recognize or assume any "lag" in interest  rate
changes on earning assets and interest-bearing  liabilities, and it assumes that


18
<PAGE>

all earning assets and interest-bearing liabilities reprice to the same absolute
degree regardless of the mix of earning assets and interest-bearing liabilities.

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


                                                                              19
<PAGE>

<TABLE>
<CAPTION>
                                                                  (In 000's)
                                                              December 31, 2004
                                   ------------------------------------------------------------------------------
                                   Dollar change in net interest income     Percent change in net interest income
                                   ------------------------------------     -------------------------------------
<S>                                             <C>                                       <C>
Change in interest rates:
   100 basis points decline                      $60                                       .26%
   200 basis points decline                      $120                                      .52%
   100 basis points rise                        ($251)                                    (1.09%)
   200 basis points rise                        ($503)                                    (2.18%)
</TABLE>

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

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

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


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

North Bay Bancorp is a California  corporation organized November 1, 1999 and is
registered  with the Board of Governors of the Federal  Reserve System as a Bank
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 five
additional business locations, one located in the Brown's Valley Shopping Center
at 3271  Brown's  Valley  Road,  Napa,  California,  3626 Bel Aire Plaza,  Napa,
California, 1065 Main Street in St. Helena,  California,1190 Airport Road, Napa,
California  and 3417 Broadway  Suite J-2,  American  Canyon,  California.  which
opened in August 2004. The Vintage Bank also has a remote ATM at 6498 Washington
Street,  Yountville,  California.  Solano  Bank also  engages in the  commercial
banking  business in Solano County from its main banking  office  located at 403
Davis  Street,  Vacaville,  California.  Solano  Bank has three  other  business
locations, one located at 1411 Oliver Road, Fairfield,  California,  one at 1395
E. Second Street,  Benicia,  California and one located at 976 Admiral  Callahan
Lane,  Vallejo,  California.  Solano  Bank also has a remote  ATM at 1100  Texas
Street,  Fairfield,  California.  The Banks conduct commercial banking business,
offering a full range of commercial banking services to individuals,  businesses
and agricultural  communities of Napa and Solano  Counties.  The Banks emphasize
their  retail  commercial  banking  operations  and accept  checking and savings
deposits,  issue  drafts,  sell   traveler's  checks and provide other customary
banking  services.  In January,  2005,  Solano Bank was merged with and into The
Vintage Bank.


20
<PAGE>

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

The Company's  outstanding  securities  consist of one class,  Common Stock,  of
which there were 3,698,925  shares  outstanding  at March 18, 2005,  held by 967
shareholders  of  record.  The stock was listed on the  Nasdaq  National  Market
System under the symbol NBAN  effective  September 3, 2002.  Prior to the Nasdaq
listing,  the stock traded  over-the-counter and was quoted on the OTC "Bulletin
Board".


The following  table  (adjusted for the 2005 and 2004 stock  dividends and stock
splits)  summarizes the common stock high and low prices based upon transactions
of which the Company is aware:

Quarter ended                        High              Low
-------------                        ----              ---
March 31, 2003                     $18.29           $15.42
June 30, 2003                       17.54            15.36
September 30, 2003                  16.88            15.12
December 31, 2003                   18.67            15.48
March 31, 2004                      21.43            18.98
June 30, 2004                       22.36            19.68
September 30, 2004                  20.79            17.80
December 31, 2004                   28.81            18.92

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 $0.13 per share in each of the years 2004,
2003 and 2002 and $.15 per share in 2005.  The  holders  of common  stock of the
Company are entitled to receive cash dividends when and as declared by the Board
of Directors out of funds legally  available.  Federal Reserve Board regulations
prohibit cash dividends, except under limited circumstances, if the distribution
would result in a withdrawal of capital or exceed the Company's net profits then
on hand after  deducting its losses and bad debts.  Furthermore,  cash dividends
cannot be paid without the prior written  approval of the Federal  Reserve Board
if the total of all  dividends  declared  in one year  exceeds  the total of net
profits for that year plus the preceding two calendar  years,  less any required
transfers  to surplus  under state or federal law.  The  shareholders'  right to
receive  dividends  is  also  subject  to  the  restrictions  set  forth  in the
California  General  Corporation  Law.  The  Corporation  Law  provides  that  a
corporation  may make a distribution to its  shareholders  if the  corporation's
retained  earnings equal at least the amount of the proposed  distribution.  The
Corporation  Law further  provides that, in the event that  sufficient  retained
earnings are not available  for the proposed  distribution,  a  corporation  may
nevertheless make a distribution to its shareholders if it meets two conditions,
which generally  stated are as follows:  (1) The  corporation's  assets equal at
least 1.25 times its liabilities; and (2) the corporation's current assets equal
at least  its  current  liabilities  or,  if the  average  of the  corporation's
earnings  before  taxes  on  income  and  before  interest  expense  for the two
preceding fiscal years was less than the average of the  corporation's  interest
expense for such fiscal years, then the corporation's  current assets must equal
at least 1.25 times its  current  liabilities.  As of  December  31,  2004,  the
Company had retained earnings of $10,500,000 eligible for dividends.

On October 28,  2002,  the Board of  Directors  of North Bay Bancorp  declared a
dividend of one share purchase right (a "Right") for each  outstanding  share of
common  stock,  no par value of the  Company,  payable  on  December  6, 2002 to
shareholders  of record  as of  November  15,  2002.  Each  Right  entitles  the
registered  holder to purchase for the Company one  one-hundredth  of a share (a
"Unit") of Series A Preferred Stock (the "Preferred Stock") of the Company, at a
price of $90.00 per Unit,  subject to adjustment.  The  description and terms of
the Rights are set forth in a Rights Agreement between the Company and Registrar
and Transfer Company as Rights Agent.

                                                                              21
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------------------------------------------------------------
December 31, 2004 and 2003
<CAPTION>
                                                                                                       (In 000's except share data)
                                                                                                         2004                 2003
                                                                                                       --------             --------
<S>                                                                                                    <C>                  <C>
                                     ASSETS
CASH AND DUE FROM BANKS                                                                                $ 27,342             $ 28,756
FEDERAL FUNDS SOLD                                                                                       32,865                9,195
                                                                                                       --------             --------
              Cash and cash equivalents                                                                  60,207               37,951

TIME DEPOSITS WITH OTHER
    FINANCIAL INSTITUTIONS                                                                                  100                  100
INVESTMENT SECURITIES:
     Available-for-sale                                                                                  94,788               90,655
     Equity securities                                                                                    4,595                1,351
                                                                                                       --------             --------
               Total investment securities                                                               99,383               92,006
LOANS, net of allowance for loan losses of
    $4,136 in 2004 and $3,524 in 2003                                                                   373,629              303,139
LOANS HELD FOR SALE                                                                                       4,604                3,095
INVESTMENT IN SUBSIDIARY                                                                                    310                    0
BANK PREMISES AND EQUIPMENT, net                                                                         10,336               10,909
INTEREST RECEIVABLE AND OTHER ASSETS                                                                     13,494               12,282
                                                                                                       --------             --------

             Total assets                                                                              $562,063             $459,482
                                                                                                       ========             ========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

DEPOSITS:
   Non-interest bearing                                                                                $127,250             $103,401
   Interest-bearing                                                                                     357,243              303,044
                                                                                                       --------             --------
               Total deposits                                                                           484,493              406,445

JUNIOR SUBORDINATED DEBENTURES                                                                           10,310               10,000

LONG TERM BORROWINGS                                                                                     19,000                    0

INTEREST PAYABLE AND OTHER LIABILITIES                                                                    4,126                3,596
                                                                                                       --------             --------

               Total liabilities                                                                        517,929              420,041

SHAREHOLDERS' EQUITY:

   Preferred stock, no par value -  Authorized 500,000 shares;
       Issued and outstanding - None
   Common stock, no par value - Authorized 15,000,000 shares;
       Issued and outstanding -  3,641,289 shares in 2004
       and 3,428,469 shares in 2003                                                                      33,473               29,210
   Retained earnings                                                                                     10,500                9,623
   Accumulated other comprehensive income                                                                   161                  608
                                                                                                       --------             --------
              Total shareholders' equity                                                                 44,134               39,441

              Total liabilities and shareholders' equity                                               $562,063             $459,482
                                                                                                       ========             ========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>

22
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED INCOME STATEMENTS
------------------------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31, 2004, 2003 and 2002
<CAPTION>
                                                                                              (In 000's except share data)
                                                                                         2004               2003              2002
                                                                                       -------            -------            -------
<S>                                                                                    <C>                <C>                <C>
INTEREST INCOME:
   Interest and fees on loans                                                          $22,828            $18,782            $16,602
   Interest on federal funds sold                                                          287                207                418
   Interest on investment securities - taxable                                           2,945              2,535              3,490
   Interest on investment securities - tax exempt                                          522                725                664
   Interest on time deposits with other
     financial institutions                                                                  3                  2                  5
                                                                                       -------            -------            -------
                             Total interest income                                      26,585             22,251             21,179
                                                                                       -------            -------            -------

INTEREST EXPENSE:
   Interest on interest-bearing
     transaction deposits                                                                1,201                916              1,118
   Interest on time and savings deposits                                                 1,387              1,537              2,234
   Interest on long-term debt                                                              955                531                339
   Interest on short-term borrowings                                                         0                 11                  0
                                                                                       -------            -------            -------
                             Total interest expense                                      3,543              2,995              3,691
                                                                                       -------            -------            -------
                              Net interest income                                       23,042             19,256             17,488

PROVISION FOR LOAN LOSSES                                                                  620                238                576
                                                                                       -------            -------            -------
                       Net interest income after
                          provision for loan losses                                     22,422             19,018             16,912

NONINTEREST INCOME:
   Service charges on deposit accounts                                                   2,249              1,645              1,321
   Gain on securities transactions, net                                                    262                637                399
   Other                                                                                 1,687              1,565              1,391
                                                                                       -------            -------            -------
                            Total noninterest income                                     4,198              3,847              3,111
                                                                                       -------            -------            -------

NONINTEREST EXPENSE:
   Salaries and related benefits                                                         9,993              8,795              7,893
   Occupancy                                                                             1,487              1,289                916
   Equipment                                                                             2,018              1,703              1,875
   Other                                                                                 5,038              4,528              3,632
                                                                                       -------            -------            -------
                           Total noninterest expense                                    18,536             16,315             14,316
                                                                                       -------            -------            -------

 Income before provision for income taxes                                                8,084              6,550              5,707

PROVISION FOR INCOME TAXES                                                               3,020              2,179              1,999
                                                                                       -------            -------            -------

NET INCOME                                                                             $ 5,064            $ 4,371            $ 3,708
                                                                                       =======            =======            =======

BASIC EARNINGS PER SHARE:                                                              $  1.33            $  1.16            $  1.02

DILUTED EARNINGS PER SHARE:                                                            $  1.29            $  1.14            $  0.99

<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>

                                                                              23
<PAGE>

<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY & COMPREHENSIVE INCOME
------------------------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31, 2004, 2003 and 2002
<CAPTION>
                                                                        (In 000's except share data)
                                                                                                        Accumulated
                                                                                                            Other           Total
                                                    Common Shares  Common   Retained    Comprehensive   Shareholders'  Comprehensive
                                                     Outstanding    Stock    Earnings    Income (Loss)      Equity          Income
                                                     -----------    -----    --------    -------------      ------          ------
<S>                                                  <C>          <C>         <C>               <C>        <C>             <C>
BALANCE, DECEMBER 31, 2001                           2,941,353    $21,973     $7,454            $553       $29,980

Stock dividend                                         146,112      2,143     (2,158)                          (15)
Cash dividend                                                                   (392)                         (392)
Comprehensive income:
    Net income                                                                 3,708                         3,708          $3,708
    Other comprehensive income, net of tax:
       Change in net unrealized gain on
          available-for-sale securities,
          net of tax of $562 and
          reclassification adjustment                                                            791           791             791
                                                                                                                      -------------
Comprehensive income                                                                                                        $4,499
                                                                                                                      =============
Stock options exercised,
    including a tax benefit of $362                    107,967      1,271                                    1,271
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2002                           3,195,432     25,387      8,612           1,344        35,343

Stock dividend                                         159,442      2,918     (2,933)                          (15)
Cash dividend                                                                   (427)                         (427)
Comprehensive income:
    Net income                                                                 4,371                         4,371          $4,371
    Other comprehensive loss, net of tax:
       Change in net unrealized gain on
          available-for-sale securities,
          net of tax of $523 and
          reclassification adjustment                                                           (736)         (736)           (736)
                                                                                                                      -------------
Comprehensive income                                                                                                        $3,635
                                                                                                                      =============
Stock options exercised,
    including a tax benefit of $261                     73,595        905                                      905
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2003                           3,428,469     29,210      9,623             608        39,441

Stock dividend                                         170,753      3,706     (3,729)                          (23)
Cash dividend                                                                   (458)                         (458)
Comprehensive income:
    Net income                                                                 5,064                         5,064          $5,064
    Other comprehensive loss, net of tax:
       Change in net unrealized gain on
          available-for-sale securities,
          net of tax of $318 and
          reclassification adjustment                                                           (447)         (447)           (447)
                                                                                                                      -------------
Comprehensive income                                                                                                        $4,617
                                                                                                                      =============
Stock options exercised,
    including a tax benefit of $65                      42,067        557                                      557
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2004                           3,641,289    $33,473    $10,500            $161       $44,134
===================================================================================================================
<FN>

The accompanying notes are an integral part of these statements.
</FN>
</TABLE>

24
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31, 2004, 2003 and 2002                                                     (In 000's)
<CAPTION>
                                                                                             2004            2003            2002
                                                                                          ---------       ---------       ---------
<S>                                                                                       <C>             <C>             <C>
Cash Flows From Operating Activities:
Net income                                                                                $   5,064       $   4,371       $   3,708
Adjustments to reconcile net income to net cash
      provided by operating activities:
  Depreciation and amortization                                                               1,628           1,569           1,441
  Provision for loan losses                                                                     620             238             576
  Proceeds from sale of loans-held-for sale                                                 293,296         280,225               0
  Purchase of loans-held-for sale                                                          (294,805)       (283,320)              0
  Amortization of deferred loan fees                                                           (631)           (665)           (514)
  Amortization of investment securities
    premiums, net                                                                               208           1,079             938
  Provision for deferred income taxes                                                          (177)             56            (398)
  Losses on sale or retirement of capital assets                                                  0               0               1
  Gain on securities transactions                                                              (262)           (637)           (399)
Changes in:
    Interest receivable and other assets                                                       (716)              2          (1,582)
    Interest payable and other liabilities                                                      595             543           1,136
                                                                                          ---------       ---------       ---------
    Net cash provided by operating activities                                                 4,820           3,461           4,907
                                                                                          ---------       ---------       ---------

Cash Flows From Investing Activities:
Investment securities held to maturity:
  Proceeds from maturities and principal payments                                                 0           1,272              42
Investment securities available for sale:
  Proceeds from maturities and principal payments                                            35,672          36,783          40,368
  Proceeds from sales and recoveries                                                          4,322          34,626          21,380
  Purchases                                                                                 (44,839)        (59,290)        (81,842)
Equity securities:
  Proceeds from sales                                                                             0              56              10
  Purchases                                                                                  (3,244)            (58)           (120)
Net increase in loans                                                                       (70,479)        (68,375)        (50,851)
Sale and disposition of capital assets                                                            0               0               1
Capital expenditures                                                                         (1,055)         (1,678)         (2,914)
                                                                                          ---------       ---------       ---------
   Net cash used in investing activities                                                    (79,623)        (56,664)        (73,926)
                                                                                          ---------       ---------       ---------

Cash Flows From Financing Activities:
Net increase in deposits                                                                     78,048          38,642          75,362
Proceeds from issuance of junior subordinated debentures                                          0               0          10,000
Proceeds (payment) on long-term borrowings                                                   19,000               0          (1,846)
Stock options exercised                                                                         492             644             909
Dividends                                                                                      (481)           (442)           (407)
                                                                                          ---------       ---------       ---------
   Net cash provided by financing activities                                                 97,059          38,844          84,018
                                                                                          ---------       ---------       ---------
Net (decrease) increase in cash and cash equivalents                                         22,256         (14,359)         14,999
Cash and cash equivalents at beginning of year                                               37,951          52,310          37,311
                                                                                          ---------       ---------       ---------
Cash and cash equivalents at end of year                                                  $  60,207       $  37,951       $  52,310
                                                                                          =========       =========       =========

Supplemental Disclosures of non-cash investing and financing activities:
Unrealized (loss) gain on securities                                                      ($    766)      ($  1,257)      $   1,352
Tax benefit on non-quailified options exercised                                           $      65       $     261       $     362
Stock dividends                                                                           $   3,706       $   2,918       $   2,143


Supplemental Disclosures of Cash Flow Information:
  Interest paid                                                                           $   3,376       $   3,084       $   3,755
  Income taxes paid                                                                       $   3,777       $   1,345       $   2,290

<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>

                                                                              25
<PAGE>

--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
December 31, 2004, 2003 and 2002

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
North Bay Bancorp  (Bancorp) is a registered bank 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.  Effective January 15, 2005
Solano Bank was merged into The Vintage  Bank.  The Banks operate six offices in
the  California  county of Napa and four  offices  in the  California  county of
Solano.  The  Banks  offer  a full  range  of  commercial  banking  services  to
individuals and the business and  agricultural  communities.  Most of the Banks'
customers are retail customers and small to medium-sized businesses.

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

Principles of consolidation The consolidated  financial  statements  include the
accounts of Bancorp 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 loan 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


26
<PAGE>

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

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

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

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

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

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

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

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


                                                                              27
<PAGE>

                                                 (In 000's except share data)
                                             2004          2003          2002
                                           ---------     ---------     ---------
Net income as reported                     $   5,064     $   4,371     $   3,708
  Total stock-based employee
    compensation expense
    determined under the fair
    value based method for all
    awards, net of related
    tax effects                                  380           268           235
                                           ---------     ---------     ---------
         Net income pro forma              $   4,684     $   4,103     $   3,473
                                           =========     =========     =========
Earnings per share:
  As reported:
    Basic                                  $    1.33     $    1.16     $    1.02
    Diluted                                $    1.29     $    1.14     $     .99
  Pro forma:
    Basic                                  $    1.23     $    1.09     $     .96
    Diluted                                $    1.19     $    1.07     $     .93


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

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

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

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

In December 2003, FASB standard No. 132,  Employers'  Disclosure  about Pensions
and Other  Postretirement  Benefits,  (SFAS 132 revised) was issued.  SFAS 132-R
prescribes  employers'  disclosures about pension plans and other postretirement
benefit plans; it does not change the measurement or recognition of those plans.
SFAS 132-R  retains and revises the  disclosure  requirements  contained  in the
original SFAS 132. It also  requires  additional  disclosures  about the assets,
obligations,  cash  flows,  and net  periodic  benefit  cost of defined  benefit
pension plans and other postretirement benefit plans. The Statement is generally
effective for fiscal years ended after December 15, 2003.  Disclosures  required
by this  standard  are  included  in the notes to these  consolidated  financial
statements.

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


28
<PAGE>

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

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

 In December  2004, the FASB revised FAS 123 through the issuance of FAS No. 123
Share Based  Payment,  revised  ("FAS  123-R").  FAS 123-R is effective  for the
Company  commencing in the third quarter of 2005. FAS 123-R, among other things,
eliminates the  alternative to use the intrinsic  value method of accounting for
stock based compensation and requires entities to recognize the cost of employee
services  received in  exchange  for awards of equity  instruments  based on the
grant-date fair value of those awards (with limited exceptions).  The fair value
based method in FAS 123-R is similar to the  fair-value-based  method in FAS 123
in most  respects,  subject to certain  key  differences.  The Company is in the
process of evaluating the impacts of adopting FAS-123-R.

In March 2004, the United States Securities and Exchange Commission (SEC) issued
SEC Staff Accounting Bulletin No. 105,  Application of Accounting  Principles to
Loan  Commitments  (SAB 105), which summarizes the views of the staff of the SEC
regarding the application of generally  accepted  accounting  principles to loan
commitments accounted for as derivative  instruments.  SAB 105 provided that the
fair value of recorded loan  commitments  that are accounted for as  derivatives
under SFAS 133,  Accounting for Derivative  Instruments and Hedging  Activities,
should not  incorporate the expected future cash flows related to the associated
servicing of the future  loan.  In addition,  SAB 105  requires  registrants  to
disclose their accounting policy for loan commitments. The provisions of SAB 105
must be  applied  to loan  commitments  accounted  for as  derivatives  that are
entered into after March 31, 2004. The adoption of this accounting  standard did
not have a material impact on the Company's consolidated financial statements.

In December  2003,  the  American  Institutes  of Certified  Public  Accountants
(AICPA) issued  Statement of Position No. 03-3,  Accounting for Certain Loans or
Debt Securities  Acquired in a Transfer (SOP 03-3),  which addresses  accounting
for  differences  between the  contractual  cash flows of certain loans and debt
securities  and the cash  flows  expected  to be  collected  when  loans or debt
securities  are  acquired  in a  transfer  and those cash flow  differences  are
attributable,  as least in part, to credit quality. As such, SOP 03-3 applies to
loans and debt securities acquired individually,  in pools or part of a business
combination and does not apply to originated  loans. The application of SOP 03-3
limits the interest  income,  including  accretion of purchase price  discounts,
that may be recognized for certain loans and debt securities.  Additionally, SOP
03-3  does not allow  the  excess of  contractual  cash  flows  over cash  flows
expected to be  collected  to be  recognized  as an  adjustment  of yield,  loss
accrual or valuation allowance,  such as the allowance for possible loan losses.
SOP 03-3  requires  that  increases  in expected  cash flows  subsequent  to the
initial investment be recognized  prospectively  through adjustment of the yield
on the loan or debt security over its remaining life. Decreases in expected cash
flows should be recognized  as  impairment.  In the case of loans  acquired in a
business  combination  where the loans show signs of credit  deterioration,  SOP
03-3 represents a significant change from current purchase  accounting  practice
whereby  the  acquiree's  allowance  for loan losses is  typically  added to the
acquirer's  allowance for loan losses.  SOP 03-3 is effective for loans and debt
securities  acquired by the Company  beginning  January 1, 2005. The adoption of
this new  standard is not  expected to have a material  impact on the  Company's
consolidated financial statements.


                                                                              29
<PAGE>
(2) INVESTMENT SECURITIES
The amortized  cost and estimated  fair value of  investments in debt and equity
securities at December 31, 2004 are summarized in the following tables.
<TABLE>
<CAPTION>
                                                                      (In 000's)
                                                              Gross             Gross
                                          Amortized        Unrealized         Unrealized        Estimated
                                             Cost             Gains            Losses           Fair Value
                                           -------           -------           -------           -------
<S>                                        <C>               <C>               <C>               <C>
Available-for-sale:
Securities of the U.S. Treasury
   and other government agencies           $39,335           $    61           $   255           $39,141
Mortgage-backed securities                  40,289               203               116            40,376
Municipal securities                        14,890               435                54            15,271
                                           -------           -------           -------           -------
Total available-for-sale                    94,514               699               425            94,788

Equity securities                            4,595                 0                 0             4,595
                                           -------           -------           -------           -------

Total investments                          $99,109           $   699           $   425           $99,383
                                           =======           =======           =======           =======
</TABLE>

The following table shows investments in equity securities  carried at cost. The
equity securities do not have readily determinable fair values because ownership
is restricted and they lack a market.

                                      December 31, 2004       December 31, 2003
                                      -----------------       -----------------
                                                     (In 000's)
Federal Home Loan Bank Stock                     $1,932                    $743
Federal Reserve Bank Stock                          663                     608
CRA Mutual Fund                                   2,000                       0
                                                 ------                  ------
Total equity securities                          $4,595                  $1,351
                                                 ======                  ======

The following table shows fair value and unrealized  losses of securities in the
available  for sale  portfolio  at  December  31,  2004,  by length of time that
individual  securities in each category have been in a continuous loss position.
The Company had a limited number of securities in a continuous loss position for
12 or more  months at  December  31,  2004.  The  unrealized  losses were in the
portfolio  categories of U.S. Government agencies,  mortgage-backed  securities,
and municipals. It is the belief of the Company that the U.S. Government agency,
Freddie Mac,  Fannie Mae,  Ginnie Mae and/or the  municipality  issuing the debt
will honor its interest and debt payments.  The Company purchased the securities
for their economic value and has the ability to hold these  investments  until a
market price recovery,  maturity,  or a modification of the Company's investment
strategy.  Because  the  declines  in fair  value  were due to changes in market
interest rates and not other  factors,  it is the conclusion of the Company that
the securities are not considered other-than-temporarily impaired.

<TABLE>
<CAPTION>
                                                                                 As of December 31, 2004
                                                                                       (In 000's)

                                                     Less than 12 months           12 months or more                  Total
                                                  -----------------------       -----------------------       ----------------------
                                                                 Gross                         Gross                        Gross
                                                   Fair        Unrealized        Fair        Unrealized        Fair       Unrealized
                                                   Value         Losses          Value         Losses          Value        Losses
                                                  -------        -------        -------        -------        -------       -------
<S>                                               <C>            <C>            <C>            <C>            <C>           <C>
Description of Securities:
U.S. Government and
  agency obligations                              $12,389        $    38        $17,060        $   217        $29,449       $   255
Municipal obligations                                   0              0          6,693             54          6,693            54
Mortgage-backed
  securities and
  collateralized mortgage                          18,411             35          4,993             81         23,404           116
                                                  -------        -------        -------        -------        -------       -------
                                                  $30,800        $    73        $28,746        $   352        $59,546       $   425
                                                  =======        =======        =======        =======        =======       =======
</TABLE>

30
<PAGE>


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

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

Equity securities                                1,351              0                0              1,351
                                               -------         ------             ----            -------

Total investments                              $90,965         $1,337             $296            $92,006
                                               =======         ======             ====            =======
</TABLE>

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

The following  table shows the amortized  cost and estimated  fair value of debt
securities by contractual maturity at December 31, 2004:

                                                              (In 000's)
                                                           Available-for-Sale

                                                      Amortized       Estimated
                                                        Cost          Fair Value
                                                       -------         -------
Within one year                                        $   835         $   844
After one but within five years                         39,686          39,775
After five but within ten years                          3,896           3,960
Over ten years                                           9,808           9,833
Mortgage-backed securities                              40,289          40,376
                                                       -------         -------
Total                                                  $94,514         $94,788
                                                       =======         =======

The following  table provides a summary of the  maturities and weighted  average
yields of debt securities as of December 31, 2004.
<TABLE>
<CAPTION>
                                                                         (In 000's)

                                                      After One           After Five
                                In One Year            Through              Through               After
                                  or Less             Five Years           Ten Years            Ten Years               Total
                              --------------       ---------------      ---------------      ----------------      ----------------
                              Amount   Yield       Amount    Yield      Amount    Yield      Amount     Yield      Amount     Yield
                              ------   -----       ------    -----      ------    -----      ------     -----      ------     -----
<S>                            <C>      <C>       <C>         <C>       <C>        <C>       <C>         <C>       <C>         <C>
Available-for-sale
  securities:
Securities of the
  U.S. Treasury
  and other
  government agencies          $  0     0.00%     $29,308     3.25%     $    0     0.00%     $ 9,833     5.13%     $39,141     3.72%
Mortgage-backed
  securities (1)                  0     0.00%           0     0.00%      1,116     6.49%      39,260     4.38%      40,376     4.44%
Municipal securities (2)        844     5.20%      10,467     4.52%      3,960     4.75%           0     0.00%      15,271     4.62%
                               ----     ----      -------     ----      ------     ----      -------     ----      -------     ----
Total                          $844     5.20%     $39,775     3.58%     $5,076     5.13%     $49,093     4.53%     $94,788     4.17%
                               ====     ====      =======     ====      ======     ====      =======     ====      =======     ====
<FN>
(1)  The  maturity  of  mortgage-backed   securities  is  based  on  contractual
     maturity. The average expected life is approximately five years.

(2)  Yields shown are taxable-equivalent.
</FN>
</TABLE>

                                                                              31
<PAGE>


As of  December  31,  2004  and  2003,  securities  carried  at  $5,763,000  and
$2,740,000,  respectively, were pledged to secure public deposits as required by
law.

Total proceeds from the sale of securities  available-for-sale during 2004, 2003
and 2002 were $4,322,000, $34,626,000 and $21,380,000, respectively. Gross gains
of $262,000,  $637,000 and $399,000 were  realized on those sales in 2004,  2003
and 2002, respectively.


32
<PAGE>

(3) LOANS AND ALLOWANCE FOR LOAN LOSSES
At December 31, 2004 and 2003,  the loan  portfolio  consisted of the following,
net of deferred loan fees of $1,485,000 and $1,248,000, respectively:

                                                                (In 000's)

                                                           2004           2003
                                                         --------       --------
Real estate loans                                        $220,316       $163,088
Installment loans                                          36,339         28,860
Construction loans                                         27,595         35,205
Commercial loans secured by real estate                    26,447         33,519
Commercial loans                                           67,068         45,991
                                                         --------       --------
                                                          377,765        306,663
Less allowance for loan losses                              4,136          3,524
                                                         --------       --------
Total                                                    $373,629       $303,139
                                                         ========       ========

There were no loans on  nonaccrual  status at December  31, 2004 or December 31,
2003.  There was no interest  foregone during 2004, 2003 or 2002. As of December
31,  2004 and  2003,  there  were no loans  90 days or more  past due but  still
accruing interest. There were no restructured loans during 2004 or 2003.

Changes in the allowance for loan losses are as follows:

                                                         (In 000's)
                                              2004          2003          2002
                                            -------       -------       -------

Balance, beginning of year                  $ 3,524       $ 3,290       $ 2,717
Provision for loan losses                       620           238           576
Loans charged off                              (100)          (12)          (10)
Recoveries of loans previously
    charged off                                  92             8             7
                                            -------       -------       -------
Balance, end of year                        $ 4,136       $ 3,524       $ 3,290
                                            =======       =======       =======


As of December 31, 2004, 2003 and 2002 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, 2004 and 2003 consisted of the following:

                                                           (In 000's)

                                                         Accumulated       Net
                                                         Depreciation      Book
                                                 Cost   & Amortization    Value
                                               -------  --------------   -------
2004
----
Land                                           $ 2,800      $     0      $ 2,800
Premises                                         5,223        1,119        4,104
Furniture, fixtures and equipment                8,537        6,102        2,435
Leasehold improvements                           1,869          872          997
                                               -------      -------      -------
Total                                          $18,429      $ 8,093      $10,336
                                               =======      =======      =======

2003
----
Land                                           $ 2,800      $     0      $ 2,800
Premises                                         5,080          944        4,136
Furniture, fixtures and equipment                7,803        4,888        2,915
Leasehold improvements                           1,707          649        1,058
                                               -------      -------      -------
Total                                          $17,390      $ 6,481      $10,909
                                               =======      =======      =======


                                                                              33
<PAGE>

Depreciation  and  amortization  expense,  included  in  occupancy  expense  and
equipment expense,  was $1,628,000,  $1,569,000 and $1,441,000 in 2004, 2003 and
2002, respectively.

(5) COMMITMENTS AND CONTINGENCIES
The Company leases premises for their various offices. Total rent on such leases
was $833,000, $662,000 and $374,000 in 2004, 2003 and 2002, 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
                                      ----               -----
                                      2005              $  769
                                      2006                 687
                                      2007                 581
                                      2008                 479
                                      2009                 383
                                Thereafter               1,071
                                                        ------
             Future minimum lease payments              $3,970
                                                        ======

(6) DEPOSITS
Following is a summary of deposits at December 31, 2004 and 2003:

                                                                (In 000's)
                                                           2004           2003
                                                         --------       --------
Non-interest bearing demand                              $127,250       $103,401
NOW and savings                                           151,053        132,570
Money market                                              128,884         98,074
Time certificates of deposit:
   Denominations of less than $100,000                     33,712         37,110
   Denominations of $100,000 or more                       43,594         35,290
                                                         --------       --------
Total                                                    $484,493       $406,445
                                                         ========       ========

Interest  expense on time  certificates  of deposits  greater than  $100,000 was
$785,000, $757,000 and $893,000 for 2004, 2003 and 2002, respectively.

At December 31, 2004,  the  scheduled  maturities  of total time deposits are as
follows:

                                (In 000's)
                         Year               Total
                         ----               -----
                         2005             $60,323
                         2006              10,236
                         2007               3,202
                         2008               2,078
                         2009               1,467
                                          -------
                        Total             $77,306
                                          =======

(7) BORROWINGS
Total  borrowings  were $19 million at December 31, 2004.  The  following  table
summarizes the borrowings:

                   Fixed Rate Borrowings at December 31, 2004
                                  ($ in 000's)
                                        Amount    Maturity Date   Interest Rate
                                        ------    -------------   -------------
Federal Home Loan Bank Advance         $ 5,000      4-17-2006         2.24%
Federal Home Loan Bank Advance           5,000      4-16-2007         2.83%
Federal Home Loan Bank Advance           9,000      4-14-2008         3.23%
                                       -------
Total                                  $19,000
Weighted average interest rate                                        2.86%


34
<PAGE>

There were no  short-term  borrowings at December 31, 2004 or December 31, 2003.
Short-term   borrowings   consist  primarily  of  federal  funds  purchased  and
borrowings from the Federal Home Loan Bank of San Francisco (FHLB).  The Company
maintains collateralized lines of credit with the FHLB. The Company pledges both
loans and  investment  securities  to FHLB as needed  to secure  borrowings.  At
December 31, 2004 $19,833,000 in investment securities were pledged to the FHLB.
There were no loans  pledged to secure  borrowings at December 31, 2004 or 2003.
Based on the FHLB stock  requirements at December 31, 2004, these lines provided
for maximum  borrowings of  approximately  $123.3 million;  the Company also has
available  unused  unsecured  lines of credit totaling $17.5 million for federal
funds transactions at December 31, 2004.

On June 26, 2002,  the Company  formed North Bay  Statutory  Trust I (Trust),  a
Connecticut  statutory  business  trust,  for the purpose of issuing  guaranteed
undivided  beneficial   interests  in  junior  subordinated   debentures  (trust
preferred  securities).  During  June  2002,  the Trust  issued  $10  million in
floating rate Cumulative Trust Preferred Securities (Securities). The Securities
bear interest at a rate of Libor plus 3.45% and had an initial  interest rate of
5.34%; as of December 31, 2004 the interest rate was 6.00%;  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 junior subordinated  debenture issued by the Trust is 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 the junior  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 junior subordinated debentures.

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

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

The  Banks  also  issue  standby  letters  of  credit,   which  are  conditional
commitments to guarantee the  performance of a customer to a third party.  These
guarantees are primarily issued to support construction bonds, private borrowing
arrangements and similar  transactions.  Most of these guarantees are short-term
commitments  expiring in decreasing amounts through 2009 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, 2004 and 2003 were as follows:

                                                 (In 000's)
                                            Contractual Amounts
                                            -------------------
                                            2004           2003
                                          --------        -------
Loan commitments                          $106,883        $86,984
Standby letters of credit                 $  2,391        $ 1,108

                                                                              35
<PAGE>

The Banks issue both financial and performance  standby  letters of credit.  The
financial  standby letters of credit are primarily to guarantee payment to third
parties.  At December 31, 2004 there was $1,601,000  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, 2004 there was $790,000  issued in  performance  standby
letters  of  credit  and the  Banks  carried  no  liability.  The  terms  of the
guarantees  will expire  primarily in 2005 with 4% expiring in 2006, 4% expiring
in 2007, and 13% expiring in 2008. The Banks have  experienced no draws on these
letters  of  credit,  and do not  expect  to in the  future;  however,  should a
triggering event occur, the Banks either have collateral in excess of the letter
of credit or imbedded agreements of recourse from the customer.

(9) CONCENTRATIONS OF CREDIT RISKS
The  majority  of  the  Banks'  loan  activity  is  with  customers  located  in
California,  primarily in the  counties of Napa and Solano.  Although the Banks'
have a  diversified  loan  portfolio,  a large  portion  of their  loans are for
commercial property,  and many of the Banks' loans are secured by real estate in
Napa and  Solano  County.  Approximately  76% of the loans are  secured  by real
estate. This concentration is presented below:

                                                                      (In 000's)
                                                               December 31, 2004
                                                               -----------------
Construction/land development:
     Land development                                                   $  5,274
     Residential                                                           4,458
     Commercial                                                           17,310
Real estate                                                              220,315
Commercial loans secured by real estate                                   26,447
Installment loans secured by real estate                                  32,271
                                                                        --------
      Total                                                             $306,075
                                                                        ========


(10) INCOME TAXES
The  provision  (benefit) for federal and state income taxes for the years ended
December 31, 2004, 2003 and 2002 consisted of:

                                                      (In 000's)
                                        2004             2003             2002
                                      -------          -------          -------
Current
    Federal                           $ 2,186          $ 1,521          $ 1,712
    State                               1,011              602              685
                                      -------          -------          -------
                                        3,197            2,123            2,397

Deferred
    Federal                               (13)              70             (297)
    State                                (164)             (14)            (101)
                                      -------          -------          -------
                                         (177)              56             (398)
                                      -------          -------          -------
Total                                 $ 3,020          $ 2,179          $ 1,999
                                      =======          =======          =======


36
<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, 2004 and 2003:

                                                                (In 000's)

                                                            2004           2003
                                                           ------         ------
Deferred tax assets:
   Allowance for loan losses                               $1,690         $1,398
   Deferred compensation                                      658            512
   State income tax                                           301            213
                                                           ------         ------
                                                           $2,649         $2,123
                                                           ------         ------

Deferred tax liabilities:

   Unrealized gain on securities                           $  113         $  433
   Accumulated accretion                                      189            162
   Depreciation                                               147            139
   Leases                                                     287              0
   Other                                                       89             61
                                                           ------         ------

                                                           $  825         $  795
                                                           ------         ------

   Net deferred tax asset                                  $1,824         $1,328
                                                           ======         ======

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)
                                                               2004                         2003                       2002
                                                        ------------------          -------------------         ------------------
                                                        Amount        Rate          Amount        Rate          Amount        Rate
                                                        ------        ----          ------        ----          ------        ----
<S>                                                    <C>            <C>          <C>            <C>          <C>            <C>
Tax provision at statutory rate                        $ 2,748        34.0%        $ 2,227        34.0%        $ 1,940        34.0%
Interest on obligations of
   states and political
   subdivisions exempt from
   federal taxation                                       (192)       (2.4%)          (233)       (3.5%)          (191)       (3.3%)
State franchise taxes                                      559         6.9%            382         5.8%            385         6.7%
Life insurance policies                                   (121)       (1.5%)          (115)       (1.8%)          (133)       (2.3%)
Other, net                                                  26          .4%            (82)       (1.2%)            (2)        (.1%)
                                                       -------        ----         -------        ----         -------        ----
Total                                                  $ 3,020        37.4%        $ 2,179        33.3%        $ 1,999        35.0%
                                                       =======        ====         =======        ====         =======        ====
</TABLE>

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

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


                                                                              37
<PAGE>

current  assets  must  equal at least 1.25 times its  current  liabilities.  The
Company  could also be restricted  from  declaring or paying cash dividend if it
elected to defer interest payments on the subordinated debenture.

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 28, 2002,  January 27, 2003,
January 26, 2004 and January 24, 2005, as well as a 3-for-2 stock split November
22,  2004.  As a result  of the stock  dividends,  the  number of common  shares
outstanding  and per  share  data was  adjusted  retroactively  for all  periods
presented  in the  following  tables.  In 2004 the  effect of 1,158  outstanding
options have been excluded from the calculation of diluted earnings per share as
their  inclusion  would  be  anti-dilutive.  There  were  no  shares  considered
anti-dilutive in 2002 or 2003.

The following  table  reconciles the numerator and  denominator of the Basic and
Diluted earnings per share computations:
<TABLE>
<CAPTION>
                                                         (In 000's except share data)

                                                                     Weighted Average              Per-Share
                                                   Net Income             Shares                    Amount
                                                   ----------             ------                    ------
                                                              For the year ended 2004
                                                              -----------------------
<S>                                                 <C>                  <C>                        <C>
Basic earnings per share                            $5,064               3,820,386                  $1.33
Stock options                                                               99,774
Diluted earnings per share                                               3,920,160                  $1.29

                                                              For the year ended 2003
                                                              -----------------------
Basic earnings per share                            $4,371               3,751,796                  $1.16
Stock options                                                               90,580
Diluted earnings per share                                               3,842,376                  $1.14

                                                              For the year ended 2002
                                                              -----------------------
Basic earnings per share                            $3,708               3,643,701                  $1.02
Stock options                                                               90,961
Diluted earnings per share                                               3,734,662                   $.99
</TABLE>

(13) OTHER NONINTEREST INCOME AND EXPENSE
The  components  of Other  Noninterest  Income for the years ended  December 31,
2004, 2003 and 2002 were as follows:

                                                          (In 000's)

                                                 2004         2003         2002
                                                ------       ------       ------
ATM surcharge                                   $  371       $  279       $  294
Increase of cash value on
   insurance policies                              357          338          393
Merchant services income                           433          293          280
Commission on sale of non-
   deposit products                                247          214          204
Commission on sale of
   mortgage products                                45          232            0
Other                                              234          209          220
                                                ------       ------       ------
Total                                           $1,687       $1,565       $1,391
                                                ======       ======       ======

38
<PAGE>

The  components of Other  Noninterest  Expense for the years ended  December 31,
2004, 2003 and 2002 were as follows:

                                                        (In 000's)

                                             2004           2003           2002
                                            ------         ------         ------
Professional services                       $1,240         $1,387         $  830
Business promotions                            658            554            525
Stationary & supplies                          393            380            318
Insurance                                      320            224            188
Other                                        2,427          1,983          1,771
                                            ------         ------         ------
Total                                       $5,038         $4,528         $3,632
                                            ======         ======         ======


(14) STOCK OPTION PLAN
The  Company has a stock  option  plan under which it may grant up to  1,373,070
options.  The Company has granted  1,285,229  options through December 31, 2004.
The option  exercise price equals the stock's market price on the date of grant.
The  options  become  exercisable  over four or five years and expire in five or
more years.  The equity  compensation  plans have been  approved by the security
holders.


A summary of the status of the Company's stock option plan at December 31, 2004,
2003 and 2002 and stock option activity during the years then ended is presented
in the table below:

<TABLE>
<CAPTION>
                                                      2004                          2003                            2002
                                            -------------------------      -------------------------      -------------------------
                                                            Weighted                       Weighted                       Weighted
                                                            Exercise                       Exercise                       Exercise
                                            Shares            Price        Shares            Price        Shares            Price
                                            -------         ---------      -------         ---------      -------         ---------
<S>                                         <C>             <C>            <C>             <C>            <C>             <C>
Outstanding at
    beginning of year                       501,596         $   13.21      475,554         $   11.11      557,768         $    9.97
Granted                                     139,624         $   22.16      136,616         $   15.90       51,225         $   14.72
Exercised                                   (44,527)        $    6.97      (81,789)        $    7.46     (124,985)        $    6.93
Cancelled                                    (8,685)        $    9.03      (28,785)        $   10.07      (28,453)        $   11.30

Outstanding at
    end of year                             588,008         $   15.48      501,596         $   13.21      475,554         $   11.11
Exercisable at
    end of year                             270,388         $   13.53      189,595         $   11.70      169,111         $   10.42
Weighted-average
   fair value of
   options granted
   during the year                             --           $    7.29         --           $    6.16         --           $    6.94
</TABLE>

The following table summarizes  information  about stock options  outstanding at
December 31, 2004:

<TABLE>
<CAPTION>

                                         Options Outstanding                             Options Exercisable
                       -----------------------------------------------------    --------------------------------------
                                        Weighted-Average
       Range             Number            Remaining        Weighted-Average    Number Exercisable    Weighted-Average
         of            Outstanding         Contractual          Exercise               at                 Exercise
  Exercise Prices      at 12/31/04       (Life in years)         Price              12/31/04               Price
  ---------------      -----------       ---------------         -----              --------               -----
<S>                      <C>                   <C>               <C>                <C>                    <C>
$10.42 to $12.13         230,862               .58               $11.59             175,022                $11.65

$10.70 to  $17.98        217,522              3.40               $15.32              61,897                $14.16

$19.99 to  $25.97        139,624              4.91               $22.16              33,469                $22.22
                         -------                                                    -------
                         588,008                                                    270,388
                         =======                                                    =======
</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 2004,  2003 and 2002,  respectively:  risk-free
interest  rate of 2.98%,  3.36% and 3.72%  for  options  issued in 2004;  2.48%,


                                                                              39
<PAGE>

2.66%, 2.82%, 3.27% 3.37%, 3.46% and 3.55% for options issued in 2003; and 4.07%
and 3.25% for options issued in 2002; expected dividend yields of .60%, .73% and
..80%;  expected lives of 5 years and expected  volatility of 18.16%,  16.08% and
21.67%.

(15) RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Banks make loans to directors,  officers
and principal  shareholders on substantially the same terms,  including interest
rates and collateral,  as those for comparable  transactions  with  unaffiliated
persons. An analysis of net loans to related parties for the year ended December
31, 2004 is as follows:

                                                   (In 000's)
Balance at beginning of year                          $10,157
     Additions                                          8,721
     Repayments                                         4,460
                                                      --------
Balance at end of year                                $14,418
                                                      =======

Total undisbursed commitments as of December 31, 2004 were $4,442,000.

A law firm in which one of the  Company's  directors and one of its officers are
principals serves as the Company's  general counsel.  During 2004, 2003 and 2002
fees of $195,000, $196,000 and $165,000, respectively, were paid to this firm.

(16) RESTRICTIONS
The Banks are required to maintain reserves with the Federal Reserve Bank of San
Francisco  equal to a percentage of its reservable  deposits.  Reserve  balances
that were  required by the Federal  Reserve  Bank were  $25,000 for December 31,
2004 and 2003, respectively,  and are reported in cash and due from banks on the
balance sheet.

(17) RETIREMENT PLANS
The Company has a Profit Sharing and Salary  Deferral  401(K) Plan to enable its
employees to share in the Company's profits and to defer receipt of a portion of
their  salaries.  Employees  can defer up to 15% of their  base  pay,  up to the
maximum  amount allowed by the Internal  Revenue Code. In addition,  the Company
makes  discretionary  contributions to the profit sharing account and the 401(K)
account,  which are  determined  by the Board of  Directors  each year.  Amounts
charged  to  operating  expenses  under  this plan  representing  the  Company's
contribution  were $301,000,  $415,000 and $263,000 for the years ended December
31, 2004, 2003 and 2002, respectively.


The  Company  has a  Director's  Supplemental  Retirement  Program.  The Program
contains a  non-qualified  defined  benefit plan.  Directors and select officers
designated  by the Board of  Directors  of the Company are covered by this plan.
The plan is  unfunded,  however  the  Company  has  purchased  bank  owned  life
insurance on the lives of the  participants and expects to use the death benefit
of these policies to pay the obligation in event the participants death precedes
retirement.  Management's  intentions  are to hold the policies as an investment
until the death of the insured.  Cash values for these  policies at December 31,
2004 were  $3,353,000.  At December 31, 2004 $473,000 was carried as a liability
to fund the benefit.  The program provides a death benefit to beneficiaries of a
deceased participant.

The Company has an Executive Officer Supplemental Retirement Plan. The Executive
Supplemental Compensation Agreements entered into with select executive officers
of the Company  pursuant to the Plan provide for a defined cash benefit  payable
monthly  upon  retirement  upon  reaching age 65 (or upon or after age 62 with a
reduced benefit). Benefits under these agreements vest over five year periods at
the rate of 20% per year after five years' of service with credit for up to five
years of prior service. The plan is unfunded,  however the Company has purchased
bank owned life  insurance on the lives of the  participants  and expects to use
the  death  benefit  of  these  policies  to pay the  obligation  in  event  the
participants death precedes retirement.  Management's intentions are to hold the
policies as an investment until the death of the insured.  Cash values for these
policies at December 31, 2004 were $3,259,000. At December 31, 2004 $449,000 was
carried  as a  liability  to fund the  benefit.  The Plan also  provides  a life
insurance  benefit to the designated  beneficiary of the participants upon their
death  pursuant to the Executive  Officer  Endorsement  Method Split Dollar Life
Insurance component of the Plan.



40
<PAGE>

(18) FAIR VALUE OF FINANCIAL INSTRUMENTS
The  following  table  presents  the  carrying  amounts  and fair  values of the
Company's financial instruments at December 31, 2004 and 2003:
<TABLE>
<CAPTION>
                                                                                             (In 000's)

                                                                              2004                                 2003
                                                                   ---------------------------          ----------------------------
                                                                   Carrying            Fair             Carrying              Fair
                                                                    Amounts            Value             Amounts              Value
                                                                   --------           --------           --------           --------
<S>                                                                <C>                <C>                <C>                <C>
Financial assets:
   Cash and cash equivalents                                       $ 60,207           $ 60,207           $ 37,951           $ 37,951
   Time deposits with other
      financial institutions                                            100                100                100                100
   Investment securities                                             99,383             99,383             92,006             92,006
   Loans, net                                                       373,629            373,264            303,139            305,874
   Accrued interest receivable                                        2,244              2,244              2,051              2,051

Financial liabilities:
   Deposits                                                        $484,493           $484,277           $406,445           $406,209
   Borrowings                                                        19,000             19,889                  0                  0
   Junior subordinate debentures                                     10,310             10,310             10,000             10,000
   Accrued interest payable                                             404                404                237                237
</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 as these instruments have short-term maturities

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 fair value of  borrowings  is  estimated  by  discounting  the
contractual cash flows at current rates offered for similar instruments with the
same remaining maturities.

Junior subordinated  debentures - The balance approximates its fair value due to
the structure having frequent repricing interest rate.

Off balance sheet items - The estimated  fair value of the Company's off balance
sheet items are not material to the fair value of financial instruments included
in the consolidated balance sheets.


                                                                              41
<PAGE>

(19) COMPREHENSIVE INCOME
The changes in the components of other comprehensive income (loss) for the years
ended December 31, 2004, 2003 and 2002 are reported as follows:
<TABLE>
<CAPTION>
                                                                                     (In 000's)

                                                                           2004        2003            2002
                                                                          -----        -----           ----
<S>                                                                       <C>          <C>              <C>
Unrealized holding (loss) gain arising during the period,
         net of tax benefit of
         $318 and $523 for 2004 and 2003,
         respectively, and tax expense of $562 for 2002.                  ($294)       ($363)         $1,024
Reclassification adjustment for net realized gains  on securities
         available-for-sale  included  in net  income  during the
         year,  net of tax  expense  of  $109,  $265 and $166 for
         2004,  2003 and 2002, respectively.                               (153)        (373)          (233)
                                                                          -----        -----            ----
Other comprehensive (loss) income                                         ($447)       ($736)           $791
                                                                          ======       ======           ====
</TABLE>

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

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  the Company to  maintain  minimum  amounts and ratios (set forth in the
table below) of total and Tier I capital to risk-weighted  assets, and of Tier I
capital to average assets.  Management  believes,  as of December 31, 2004, that
the Company meets all capital adequacy requirements to which it is subject.

As of December 31, 2004 the Company was 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 December 31, 2004 that management  believes have changed the institution's
category.


42
<PAGE>

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

<TABLE>
<CAPTION>

                                                (In 000's)
                                                                                     To Be Well Capitalized
                                                           For Capital              Under Prompt Corrective
                                    Actual               Adequacy Purposes             Action Provisions
                              -------------------       -------------------         -----------------------
                              Amount        Ratio       Amount        Ratio         Amount           Ratio
                              ------        -----       ------        -----         ------           -----
<S>                           <C>           <C>         <C>            <C>          <C>              <C>
As of December 31, 2004:
Total capital (to risk
   weighted assets)
      Consolidated            $58,216       12.49%      $37,280       >8.00%        $46,600         >10.00%
                                                                      -                             -
      The Vintage Bank         41,169       11.57%       28,458       >8.00%         35,573         >10.00%
                                                                      -                             -
      Solano Bank              12,004       10.93%        8,785       >8.00%         10,981         >10.00%
                                                                      -                             -
Tier I capital (to risk
   weighted assets)
      Consolidated             53,973       11.58%       18,640       >4.00%         27,960          >6.00%
                                                                      -                              -
      The Vintage Bank         37,949       10.67%       14,229       >4.00%         21,344          >6.00%
                                                                      -                              -
      Solano Bank              10,981       10.00%        4,392       >4.00%          6,589          >6.00%
                                                                      -                              -
Tier I capital (to
   average assets)
      Consolidated             53,973        9.38%       23,010       >4.00%         28,763          >5.00%
                                                                      -                              -
      The Vintage Bank         37,949        8.43%       18,004       >4.00%         22,506          >5.00%
                                                                      -                              -
      Solano Bank              10,981        9.31%        4,716       >4.00%          5,895          >5.00%
                                                                      -                              -
</TABLE>
<TABLE>
<CAPTION>
                                                (In 000's)
                                                                                     To Be Well Capitalized
                                                           For Capital              Under Prompt Corrective
                                    Actual               Adequacy Purposes             Action Provisions
                              -------------------       -------------------         -----------------------
                              Amount        Ratio       Amount        Ratio         Amount           Ratio
                              ------        -----       ------        -----         ------           -----
<S>                           <C>           <C>         <C>            <C>          <C>              <C>
As of December 31, 2003:
Total capital (to risk
   weighted assets)
      Consolidated            $52,356       13.47%      $31,089       >8.00%        $38,861         >10.00%
                                                                      -                             -
      The Vintage Bank         34,321       11.07%       24,806       >8.00%         31,007         >10.00%
                                                                      -                             -
      Solano Bank               8,029       10.70%        6,001       >8.00%          7,501         >10.00%
                                                                      -                             -
Tier I capital (to risk
   weighted assets)
      Consolidated             48,833       12.57%       15,544       >4.00%         23,316          >6.00%
                                                                      -                              -
      The Vintage Bank         31,442       10.14%       12,403       >4.00%         18,604          >6.00%
                                                                      -                              -
      Solano Bank               7,385        9.84%        3,001       >4.00%          4,501          >6.00%
                                                                      -                              -
Tier I capital (to
   average assets)
      Consolidated             48,833       10.61%       18,408       >4.00%         23,010          >5.00%
                                                                      -                              -
      The Vintage Bank         31,442        8.66%       14,517       >4.00%         18,146          >5.00%
                                                                      -                              -
      Solano Bank               7,385        8.82%        3,350       >4.00%          4,187          >5.00%
                                                                      -                              -
</TABLE>

                                                                              43
<PAGE>


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

For the Years Ended December 31, 2004, 2003 and 2002

<TABLE>
<CAPTION>
CONDENSED BALANCE SHEETS

                                                            (In 000's except share data)
                                                                  2004           2003
                                                                -------        -------
<S>                                                             <C>            <C>
Assets
Cash and due from banks                                         $ 5,167        $ 2,949
Available-for-sale investment securities                              0          6,503
Investment in The Vintage Bank                                   38,122         32,010
Investment in Solano Bank                                        10,969          7,407
Investment in North Bay Statutory Trust 1                           310            310
Premises and equipment, net                                           0          1,761
Other assets                                                        150            461
                                                                -------        -------
          Total assets                                          $54,718        $51,401
                                                                =======        =======

Liabilities and shareholders' equity

Floating rate subordinated
   debenture (trust preferred securities)                       $10,310        $10,310
Other liabilities                                                   274          1,650
                                                                -------        -------
        Total liabilities                                        10,584         11,960


Shareholders' equity
   Preferred stock, no par value -  Authorized 500,000 shares
       Issued and outstanding - None
   Common stock, no par value - Authorized 15,000,000 shares
       Issued and outstanding -  3,641,289 shares in 2004 and
       3,428,469 shares in 2003                                  33,473         29,210
   Retained earnings                                             10,500          9,623
   Accumulated other comprehensive income                           161            608
                                                                -------        -------
     Total shareholders' equity                                  44,134         39,441

         Total liabilities and shareholders' equity             $54,718        $51,401
                                                                =======        =======
</TABLE>
<TABLE>
<CAPTION>
CONDENSED INCOME STATEMENTS
                                                                                                          (In 000's)
                                                                                               2004           2003           2002
                                                                                             --------       --------       --------
<S>                                                                                          <C>            <C>            <C>
Income
Interest on investment securities                                                            $     74       $    123       $     41
Dividends from subsidiaries                                                                         0              0              0
Service fees from subsidiaries                                                                  5,231          6,177          5,681
                                                                                             --------       --------       --------
Total income                                                                                    5,305          6,300          5,722

Expenses
Interest on borrowings                                                                            559            531            339
Salaries and related benefits                                                                   4,441          4,104          3,836
Other expenses                                                                                  3,760          3,342          2,910
                                                                                             --------       --------       --------
Total expenses                                                                                  8,760          7,977          7,085

Net (loss) income before tax benefit and equity in
   net  income of  subsidiaries                                                                (3,455)        (1,677)        (1,363)
Tax benefit                                                                                     1,415            642            574
                                                                                             --------       --------       --------
Net (loss) income before equity in undistributed net income of subsidiaries                    (2,040)        (1,035)          (789)
Equity in undistributed net income of subsidiaries                                              7,104          5,406          4,497
                                                                                             --------       --------       --------
Net income                                                                                   $  5,064       $  4,371       $  3,708
                                                                                             ========       ========       ========

</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS
                                                                                                           (In 000's)
                                                                                               2004           2003           2002
                                                                                             --------       --------       --------
<S>                                                                                          <C>            <C>            <C>
Cash Flows From Operating Activities:
Net income                                                                                   $  5,064       $  4,371       $  3,708
Adjustments to reconcile net income to net cash
      provided by operating activities:
Depreciation and amortization                                                                     823            812            737
Amortization of investment securities
    premiums, net                                                                                  71            117              5
Equity in undistributed net income of subsidiaries                                             (7,104)        (5,406)        (4,497)
Changes in:
    Interest receivable and other assets                                                          326            (35)          (288)
    Interest payable and other liabilities                                                     (1,311)           533            469
                                                                                             --------       --------       --------
    Net cash provided by operating activities                                                  (2,131)           392            134
                                                                                             --------       --------       --------

Cash Flows From Investing Activities:
Investment in Solano Bank                                                                      (3,000)             0              0
Investment securities available for sale:
  Proceeds from maturities and principal payments                                               6,400            785            201
  Purchases                                                                                         0         (4,573)        (3,006)
Sale and disposition of capital assets                                                          1,335              0              0
Capital expenditures                                                                             (397)          (779)        (1,340)
                                                                                             --------       --------       --------
   Net cash used in investing activities                                                        4,338         (4,567)        (4,145)
                                                                                             --------       --------       --------

Cash Flows From Financing Activities:
Decrease in long-term borrowings, net                                                               0              0         (1,846)
Proceeds from issuance of trust preferred securities                                                0              0         10,310
Stock options exercised                                                                           492            644            909
Dividends                                                                                        (481)          (441)          (407)
                                                                                             --------       --------       --------
   Net cash provided by (used in) financing activities                                             11            203          8,966
                                                                                             --------       --------       --------
Net (decrease) increase in cash and cash equivalents                                            2,218         (3,972)         4,955
Cash and cash equivalents at beginning of year                                                  2,949          6,921          1,966
                                                                                             --------       --------       --------
Cash and cash equivalents at end of year                                                     $  5,167       $  2,949       $  6,921
                                                                                             ========       ========       ========
</TABLE>


                                                                              45
<PAGE>


(22) SUMMARY OF UNAUDITED QUARTERLY RESULTS OF OPERATIONS
The  following  table sets forth the results of operation  for the four quarters
unaudited of 2004,  2003 and 2002.  All per share amounts have been adjusted for
the 2002,  2003,  2004 and 2005 stock  dividends,  as well as the 3-for-2  stock
split in 2004.

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

                                                                                         2004 Quarters Ended
                                                                --------------------------------------------------------------------
                                                                December 31,       September 30,          June 30,         March 31,
                                                                ------------       -------------          --------         ---------
<S>                                                                  <C>                 <C>                <C>               <C>
Interest income                                                      $7,405              $6,822             $6,294            $6,064
Interest expense                                                      1,035                 961                859               688
                                                                     ------              ------             ------            ------
Net interest income                                                   6,370               5,861              5,435             5,376
Provision for loan losses                                                80                 180                174               186
                                                                     ------              ------             ------            ------
Net interest income after                                             6,290               5,681              5,261             5,190
   provision for loan losses
Noninterest income                                                      969                 986              1,257               986
Noninterest expense                                                   4,701               4,667              4,571             4,597
                                                                     ------              ------             ------            ------
Income before provision for                                           2,558               2,000              1,947             1,579
   income taxes
Provision for income taxes                                              986                 750                740               544
                                                                     ------              ------             ------            ------
Net income                                                           $1,572              $1,250             $1,207            $1,035
                                                                     ======              ======             ======            ======

Basic earnings per share:                                            $  .41              $  .33             $  .32            $  .27
Diluted earnings per share:                                          $  .39              $  .32             $  .31            $  .27
</TABLE>

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

Basic earnings per share:                                            $  .34              $  .30             $  .27            $  .24
Diluted earnings per share:                                          $  .34              $  .30             $  .27            $  .23

</TABLE>

46
<PAGE>

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

Basic earnings per share:                                            $  .30              $  .25             $  .24            $  .22
Diluted earnings per share:                                          $  .30              $  .25             $  .23            $  .22

</TABLE>

                                                                              47
<PAGE>

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

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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


The Board of Directors and Shareholders
North Bay Bancorp:

We have  audited  the  accompanying  consolidated  balance  sheets  of North Bay
Bancorp  and  subsidiaries  as of December  31,  2004 and 2003,  and the related
consolidated   statements  of  income,   changes  in  shareholders'  equity  and
comprehensive  income,  and cash  flows for each of the years in the  three-year
period ended December 31, 2004. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.


We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (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 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,  2004 and 2003,  and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended December 31, 2004 in conformity with U.S. generally accepted accounting.



                                                /s/ KPMG LLP


San Francisco, California


March 22, 2005


48

<PAGE>
<TABLE>
-------------------------------------------------------------------------------------------------------------
DIRECTORS
-------------------------------------------------------------------------------------------------------------
<S>                                         <C>
NORTH BAY BANCORP

Lauren A. Ackerman                          Marketing Consultant

John B. Anthony, III                        CEO, Anthony Industries, Inc. DBA 7 Flags Car Washes

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

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

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

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

Connie L. Klimisch                          CEO, Klimisch's, Inc.

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

Thomas H. Lowenstein                        President, North Bay Plywood

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

Andrew J. Nicks, M D                        Partner, Radiology Medical Group of Napa

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

Thomas H. Shelton                           Pres/CEO, Joseph Phelps Vineyards

Stephen C. Spencer                          President, Solano Gateway Realty

Denise C. Suihkonen                         Partner, Suihkonen CPAs & Consultants, LLP

James E. Tidgewell                          Managing Partner/CPA, G & J Seiberlich & Co LLP

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


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

                                                                              49
<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

3417 Broadway, Suite J2
American Canyon, CA 94503

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

1411 Oliver Road
Fairfield, CA  94534

1395 E. Second Street
Benicia, CA  94510

976 A Admiral Callaghan Lane
Vallejo, CA 94591

Shareholder Information:
         Trading                          Nasdaq NMS - Symbol NBAN

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

         Notice                           of Annual Meeting COPIA 500
                                          First Street Napa, CA 94559
                                          May 12, 2005- 6:00 p.m.

         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 +4104

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



50
<PAGE>





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

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

Registered Public Accounting Firm:        KPMG LLP
                                          55 Second Street, Suite 1400
                                          San Francisco, CA 94105

Web Site:                                 www.northbaybancorp.com

                                                                              51