Exhibit 13

         1999 Annual Report to Shareholders (parts not incorporated by
reference are furnished for informational purposes only and not filed herewith).



<PAGE>


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


To Our Shareholders                                    2

Selected Financial Data                                4

Management's Discussion
and Analysis of Financial Condition
and Results of Operations                              5

Balance Sheets                                        14

Income Statements                                     15

Shareholders' Statement                               16

Statements of Cash Flows                              17

Notes to Financial Statements                         18

Report of Independent Public Accountants              31

Directors                                             32

Corporate Information                                 33


                                                                               1
<PAGE>


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

Nineteen hundred ninety nine was an exceptional year for your Company.  We again
generated sound growth and record profits. Perhaps more importantly,  your Board
made some major decisions and initiated  actions that will profoundly affect the
direction of your Company for the next several years.

In early 1999 The Vintage Bank's Board identified an exceptional opportunity for
community banking in Solano County. The I-80 corridor from Vacaville to Benicia,
home to nearly 350,000  residents,  had only one community bank with significant
market share and it was poised for sale. Our research identified a strong desire
for a community bank based in Central and Western Solano County that would focus
on the needs of the local constituency. Concurrent with our study of the region,
Glen Terry,  an  exceptional  candidate for the position of President & CEO of a
Solano based community bank, expressed interest in being part of a new bank as a
result of the acquisition of Sierra West Bank by Bank of the West.

In August,  1999, Mr. Terry,  formerly Regional  President for Sierra West Bank,
affiliated  with The  Vintage  Bank as  Senior  Vice  President/Solano  Regional
Manager.  Shortly thereafter,  the Bank opened a Loan Production Office (LPO) on
Oliver Road in  Fairfield,  California.  In addition to loan  services,  the LPO
offers alternative investment services through an affiliation with Raymond James
Financial Services, Inc.

In order to  position  ourselves  to organize a new bank and take  advantage  of
other opportunities, we formed our Holding Company, North Bay Bancorp. Following
shareholder  approval of a plan of reorganization  and merger,  The Vintage Bank
became a wholly  owned  subsidiary  of North Bay Bancorp  effective  November 1,
1999. In December,  1999, we submitted an application for  organization of a new
bank in Solano County with the California  Department of Financial  Institutions
and  for  Federal  deposit   insurance  with  the  Federal   Deposit   Insurance
Corporation.  The proposed  bank will also apply for  membership  in the Federal
Reserve  System.  Solano Bank  (Proposed) is anticipated to open in June,  2000,
providing  we  receive  regulatory  approval.  (We  must  refer  to the  Bank as
"Proposed"  until  regulatory  approval  is  obtained.)  Initially,  offices are
planned for Vacaville, Fairfield and Benicia.

In preparing  your Company for expansion  beyond a single bank  operation,  your
Directors  added  Conrad W.  Hewitt and Richard S. Long to the North Bay Bancorp
Board.  Mr. Hewitt  retired to Napa after serving as  Commissioner  of Financial
Institutions  for the State of  California.  Prior to his term as  Commissioner,
Conrad worked 33 years for Ernst & Young, serving as Managing Partner, North Bay
area  prior to his  retirement.  Mr.  Hewitt  currently  serves on the Boards of
several  public  companies  and  nonprofit  corporations.  Richard  S.  Long,  a
long-time  Napa  resident,  currently  serves as  President  and CEO of  Regulus
Corporation,  a remittance  processor  for major  banks.  Mr. Long sold his Napa
based  company,  Quantum  Information  Systems,  to Regulus  in 1998.  These new
Directors  provide us experience and perspective  that will be invaluable in our
expanding operating environment.

Another  major  undertaking  initiated  by your  Board was a  commitment  to new
technology.  We converted to a new item  processing/imaging  system in February,
2000.  We are  currently  in the final  stages of testing our  internet  banking
product,  using software from Q-Up, a major internet banking solution vendor. We
are preparing for  conversion to a new core banking  system using Open Solutions
(OSI) software.  We anticipate Solano Bank (Proposed) will first utilize the new
core banking  software  with The Vintage Bank  converting to the OSI platform in
July,  2000.  The item  processing  and core  processing  systems  are owned and
operated by North Bay Bancorp,  which will provide data  processing  and support
services to our two subsidiary banks,  providing Solano Bank (Proposed) receives
regulatory approval. With our new system in place, we will have technology-based
service  capabilities  that exceed any of our  competitors,  including  the very
large banks.

To capitalize the new bank,  your Company is offering for sale $5,000,000 in new
stock at $25 per share. As disclosed in the Prospectus, we are giving preference
to Solano County  residents and business  owners in subscribing to the new stock
in order to build a  shareholder  base that will  patronize,  support and


2

<PAGE>

market Solano Bank (Proposed). The total initial capital of the proposed bank is
set at $9 million,  with the additional $4 million coming from North Bay Bancorp
through a combination of dividends from The Vintage Bank and outside borrowings.

As disclosed in this Annual Report, your Company has continued to generate sound
profits,  even after absorbing  significant  costs associated with forming North
Bay Bancorp and  preparing the new bank charter  application.  Earnings for 1999
were a record $2,715,377, or $1.66 per share, compared with $2,110,736, or $1.30
per share, in 1998. Total assets as of December 31, 1999 were $197,106,319.  Net
income for the year equates to a return of 1.44% on average  assets and 15.5% on
average  shareholders'  equity,  thereby meeting our stated goal of achieving or
exceeding 15% on equity on a consolidated basis. Due to the unavoidable expenses
associated with opening a new bank, we anticipate that  consolidated  net income
for 2000 will be less  than  1999 net  income.  In the long  run,  however,  the
combined Company will be significantly larger than a single bank operation, with
the  capacity for higher  earnings per share and higher  return on equity due to
efficiencies and better leverage of our capital.

Our chartering a new bank in Solano County in no way diverts us from our goal of
insuring that The Vintage Bank be the premier community bank of the Napa Valley.
The recently  announced  sale of Napa  National Bank not only leaves us with the
sole community bank based in Napa Valley, we believe it opens new opportunities,
most notably in St. Helena.  Two recent additions to The Vintage Bank Board, Dr.
Andrew Nicks and Andrew  Beckstoffer,  attest to our focus and  commitment.  The
addition of Dr.  Nicks  maintains  and expands our close ties with the  Valley's
medical community in anticipation of the retirement of our founding director and
largest  shareholder,  Dr. Houghton Gifford.  Andrew Beckstoffer brings us a St.
Helena presence and exceptional knowledge of and contacts with grape growers and
vintners,  thereby  assisting  us with our goal of  increasing  our presence and
activities in the wine industry.

These decisions and activities  represent a new era for your Company. We believe
they are prudent and  necessary  for us to realize our  objectives  of remaining
independent  while increasing  shareholder  value over the long term. In today's
environment,  these objectives require us to invest heavily in technology,  grow
in assets each year, leverage our capital  appropriately,  increase earnings per
share and increase  liquidity in our stock.  If we can achieve  these goals over
the long term,  we will meet our  objectives  and thereby  continue to serve our
customers and you, our Shareholders.

Very truly yours,



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



                                                                               3
<PAGE>


--------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------
<TABLE>
The  following  table  presents a summary of selected data for North Bay Bancorp
consolidated  (the  Company) for the five years ended  December  31, 1999.  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:
<CAPTION>
                                                 (In 000's except share data)

                                     1999         1998         1997         1996         1995
                                 ----------   ----------   ----------   ----------   ----------
<S>                              <C>          <C>          <C>          <C>          <C>
STATEMENTS OF OPERATIONS DATA:
  Interest income                $   13,688   $   11,907   $   10,085   $    9,154   $    8,309
  Interest expense                    4,364        3,992        3,141        2,982        2,641
                                 ----------   ----------   ----------   ----------   ----------
  Net interest income                 9,324        7,915        6,944        6,172        5,668
  Provision for loan losses             240          240          240          240          180
                                 ----------   ----------   ----------   ----------   ----------
  Net interest income after
     provision for loan losses        9,084        7,675        6,704        5,932        5,488

  Noninterest income                  1,777        1,397        1,443          776          320

  Noninterest expense                 6,496        5,660        5,050        3,989        3,648

  Provision for income taxes          1,650        1,301        1,243        1,073          792
                                 ----------   ----------   ----------   ----------   ----------


  Net income                     $    2,715   $    2,111   $    1,854   $    1,646   $    1,368
                                 ==========   ==========   ==========   ==========   ==========

BASIC PER SHARE DATA: (1)
  Earnings per share             $     1.70   $     1.34   $     1.24   $     1.12   $      .95
  Average shares outstanding      1,598,914    1,571,079    1,501,274    1,475,304    1,433,356

DILUTED PER SHARE DATA: (1)
  Earnings per share             $     1.66   $     1.30   $     1.20   $     1.10   $      .94
  Average shares outstanding      1,636,731    1,619,915    1,548,690    1,500,493    1,458,393

BALANCE SHEET DATA:
  Net loans                      $  120,166   $   94,775   $   80,991   $   70,780   $   63,370
  Total assets                      197,106      180,291      146,982      122,740      110,124
  Total deposits                    172,380      162,173      131,390      109,849       96,488
  Shareholders' equity               18,090       16,910       14,486       12,116       10,458

<FN>
(1) All per share amounts have been  adjusted to reflect the 5% stock  dividends
declared  February 27, 1995,  January 22,  1996,  January 27, 1997,  January 26,
1998, January 28, 1999 and January 18, 2000 as well as a two-for-one stock split
effective October 1, 1997.
</FN>
</TABLE>


4
<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,  credit loss  reserve  adequacy,  simulation  of changes in
interest rates and litigation results. Actual results may differ materially from
those  expressed  or  implied as a result of  certain  risks and  uncertainties,
including,  but not limited to,  changes in political  and economic  conditions,
interest rate fluctuations, competitive product and pricing pressures within the
Company's  markets,  equity and fixed income market  fluctuations,  personal and
corporate customers' bankruptcies,  inflation, acquisitions and integration's of
acquired businesses,  technological  change,  changes in law, changes in fiscal,
monetary, regulatory and tax policies, monetary fluctuations, success in gaining
regulatory  approvals  when  required as well as other risks and  uncertainties.
Such  forward-looking  statements  speak  only  as of the  date  on  which  such
statements are made, and the corporation  undertakes no obligation to update any
forward-looking  statement to reflect events or circumstances  after the date on
which such  statement  is made or to reflect  the  occurrence  of  unanticipated
events.

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

North Bay  Bancorp  (Bancorp)  incorporated  November  1, 1999,  is the  Holding
Company for The Vintage Bank (Bank), a wholly owned subsidiary. The consolidated
entity (the  Company)  reported net income of  $2,715,377  or $1.66 per share in
1999 compared with  $2,110,736,  or $1.30 per share, in 1998 and $1,854,076,  or
$1.20 per share, in 1997, equating to a return on average assets of 1.44%, 1.29%
and 1.39% for years  1999,  1998 and 1997,  respectively.  The return on average
equity  was  15.52% in 1999  compared  with  13.45% and 14.17% in 1998 and 1997,
respectively. The increase in net income during 1999 compared with 1998 resulted
primarily from growth in net interest income.

As of December 31,  1999,  total assets were  $197,106,319  compared  with total
assets of $180,290,550 and $146,982,232 at year end 1998 and 1997, respectively,
representing  a 9%  increase  in  1999  and a 23%  increase  in  1998.  Deposits
increased 6% in 1999  compared  with a 23% increase in 1998.  Loans,  net of the
allowance for loan losses, increased 27% in 1999 compared with a 17% increase in
1998.

SUMMARY OF EARNINGS

Net Interest Income

Net interest income before provision for loan losses (total interest income less
total interest expense) was $9,324,483,  $7,914,604 and $6,943,764 in 1999, 1998
and 1997, respectively,  representing increases of 18% and 14% in 1999 and 1998,
respectively.

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 1999  compared  with 1998 was  primarily the
result of volume  increases in loans.  The net interest  margin  (defined as net
interest income divided by average earning assets) increased slightly in 1999 as
the  loan-to-deposit  ratio  increased in 1999 compared to 1998. The Company has
traditionally  enjoyed an overall cost of funds lower than peer  institutions of
comparable size.

Taxable-equivalent  interest income  increased  $1,837,360 in 1999 compared with
1998. Increases in the volume of earning assets accounted for $2,434,752 of this
increase,  with a decrease of $596,392  attributable to lower rates. An increase
of $1,901,256 in 1998 compared with 1997 consisted of a


                                                                               5
<PAGE>

$2,241,994  increase due to growth of earning  assets and a decrease of $340,738
attributable to lower rates on earning assets.

Interest  paid  on  interest-bearing  liabilities  increased  $372,265  in  1999
compared  with 1998.  Increases in the volume of deposits  and other  borrowings
accounted for $571,289 of this increase,  with a $199,024 decrease  attributable
to a decline in rates.  Interest paid on interest-bearing  liabilities increased
$850,321 in 1998 compared with 1997;  the effect of volume  increases  accounted
for $623,652 with $226,669 attributable to an increase in rates.

The net interest margin,  using taxable equivalent interest income, was 5.47% in
1999  compared  with 5.36% in 1998.  The increase in the net interest  margin is
primarily the result of a higher average  loan-to-deposit ratio in 1999 compared
to 1998.

The net  interest  margin is expected to remain  fairly  consistent  during 2000
unless  general  rates  increase  or  decrease  significantly  during  the year.
Assuming there are no dramatic changes in general interest rates or deposit mix,
total net interest  income is expected to increase  during 2000  consistent with
the expected increase with volumes of earning assets.

Provision and Allowance for Loan Losses

Credit  risk is inherent in the  business of lending.  As a result,  the Company
maintains  an  Allowance  for Loan  Losses  to  absorb  losses  inherent  in the
Company's  loan  portfolio.  This is  maintained  through  periodic  charges  to
earnings.  These  charges  are shown in the  Consolidated  Income  Statement  as
Provision for Loan Losses. All specifically identifiable and quantifiable losses
are  immediately  charged off against the allowance.  However,  for a variety of
reasons,  not all losses are immediately known to the Company and, of those that
are known,  the full extent of the loss may not be quantifiable at that point in
time.  The balance of the Company's  Allowance for Loan Losses is meant to be an
estimate of 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 and approval policies prior to funding of
any loan. The Company manages and controls credit risk through  diversification,
dollar limits on loans to one  borrower,  and by  restricting  loans made to its
principal  market area.  Loans that are  performing but have shown some signs of
weakness are subjected to more stringent  reporting and oversight.  The existing
portfolio  consists of  commercial  loans to  businesses,  both  commercial  and
residential real estate loans and consumer products. The portfolio contains five
and 10 year fixed rate loans.  Fixed rate loans  primarily are  associated  with
real estate lending.

As of December 31,  1999,  loans  increased  approximately  $25  million,  a 27%
increase from December 31, 1998. On an average balance basis, the Company's loan
portfolio increased  approximately $22 million over the average balance in 1998.
In 1998,  average balances  increased from the prior year by 13% or $10 million.
The  increase in 1999 was due to strong loan demand for  commercial  real estate
loans along with an aggressive marketing of loan services.

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

The Company  formally  assesses  the  adequacy of the  allowance  on a quarterly
basis.  Determination  of the  adequacy is based on ongoing  assessments  of the
probable risk in the  outstanding  loan portfolio  and, to a lesser extent,  the
Company's off balance sheet  commitments.  These  assessments  include  periodic
re-grading   of   credits   based  on  changes   in  their   individual   credit
characteristics including delinquency,  seasoning,  recent financial performance
of the borrower,  economic  factors,  changes in the interest rate  environment,
growth of the portfolio as a whole or by segment and other factors as warranted.
Loans are  initially  graded when  originated.  They are  re-graded  as they are
renewed,  when there is a new loan to the same borrower,  when identified  facts
demonstrate  heightened  risk of  nonpayment  or if they become  delinquent on a
frequent  basis.  Re-grading of larger  problem loans occur at least  quarterly.
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  quarterly  provision  and  allowance  for  loss
evaluation  establishes a specific allowance for all impaired loans over $50,000
and establishes


6
<PAGE>


percentage  allowance  requirements  for all  other  loans  according  to  their
classification as determined by the Bank's internal grading system.

As of December 31, 1999 the allowance for loan losses of $1,986,931  represented
1.63% of loans  outstanding,  compared  with an  allowance  balance of 1.81% and
1.86% of loans outstanding at year-end 1998 and 1997, respectively. During 1999,
1998, and 1997,  $240,000 was charged to expense each year for the provision for
loan losses.

Management  recognizes  that the estimation of probable loss in the portfolio is
not a science and  therefore  actual  losses may differ from the  estimate.  The
current  Allowance for Loan Losses is reviewed  periodically and, as adjustments
become  necessary,  they are reported in earnings in the period that they become
known.

Non Performing Loans

The  Company's  policy is to place loans on  non-accrual  status  when,  for any
reason,  principal  or interest is past due for ninety days or more unless it is
both well secured and in the process of collection.  Any interest  accrued,  but
unpaid, is reversed against current income.  Thereafter,  interest is recognized
as  income  only as it is  collected  in cash  and if  collection  of  remaining
principal  is  reasonably  assured.  As of  December  31,  1999,  there  were no
non-accrual loans compared to $88,694 at the end of 1998.

Noninterest Income

Noninterest  income was $1,777,144 in 1999 compared with  $1,397,158 in 1998 and
$1,443,473  in 1997.  Fee  income  from  service  charges  on  deposit  accounts
increased  from  the  previous  year  32%  and  10%  in  years  1999  and  1998,
respectively.

Noninterest Expense

Details of noninterest expense are as follows:

                                  (In 000's)

                              1999     1998     1997
                            ------   ------   ------

Salaries & Benefits         $3,497   $3,069   $2,636
Occupancy                      401      392      361
Equipment/Data Processing      463      450      474
Other                        2,135    1,749    1,579
                            ------   ------   ------
   Total                    $6,496   $5,660   $5,050
                            ======   ======   ======

Salaries  and  benefits  expense  increased  14%  and  16%  in  1999  and  1998,
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 58 at year-end 1996 to 77 at year-end 1999. It is anticipated
that full-time  equivalents  will increase by  approximately  15 during the year
2000 due to the proposed Solano Bank opening.

The increase in occupancy  expense  during 1999 compared with 1998 was primarily
in  rent  and   depreciation.   Occupancy   expense  is   expected  to  increase
approximately  50% in the year  2000  compared  to 1999  due to the  anticipated
opening  of  three  offices  of  the  proposed  Solano  Bank  and  the  possible
establishment of a new Vintage Bank Branch in St. Helena.

Equipment and Data Processing  expense  increased 3% in 1999 compared with 1998.
The increase was primarily due to an increase in maintenance on older equipment.
Equipment is depreciated  over periods of three to five years.  Purchases of all
types of equipment during 1999 totaled approximately $360,000.

Major anticipated  equipment purchases during 2000 include hardware and software
associated  with a new bank-wide  information  system and an item processing and
imaging system. The Company will also be purchasing  necessary  furniture needed
to equip new  offices.  Expenditures  in these  areas are  anticipated  to total
approximately  $2,000,000.  All other  anticipated  expenditures  for  equipment
during  2000,   including   routine  purchases  of  vehicles  and  miscellaneous
equipment,  are expected to total less than  $400,000.  The


                                                                               7
<PAGE>

financial  impact of these  capital  expenditures,  if all are made,  will be to
increase monthly depreciation by approximately $50,000.

The key components of other expenses are as follows:

                                (In 000's)

                          1999     1998     1997
                        ------   ------   ------

Business Promotion      $  328   $  274   $  236
Professional Services      485      350      321
ATM Expenses               160      109       85
Stationery & Supplies      200      172      159
Insurance                   64       54       49
Other                      898      790      729
                        ------   ------   ------
   Total                $2,135   $1,749   $1,579
                        ======   ======   ======

Business promotion expense increased in both 1999 and 1998 compared to the prior
year primarily due to increases in advertising,  customer  relations expense and
donations.  Professional services increased in 1999 compared with 1998 primarily
due to costs  associated  with formation of the new Company.  Also, ATM expenses
increased  by  approximately  46%  and  28%  in  1999  and  1998,  respectively,
reflecting  costs  associated  with  adding  two  additional  ATM's  in 1997 and
additional  expenses to issue new debit cards in 1999.  Stationery  and supplies
expense increased 16% and 8% in 1999 and 1998, respectively,  reflecting overall
volume increases. Insurance expenses have remained relatively constant for three
years,  reflecting the benefits of generally  lower  premiums  resulting from an
improving insurance market,  offsetting the effects on premiums of the Company's
increasing size and volumes. Other expenses increased  approximately $100,000 in
1999  compared  with 1998,  primarily  due to increased  expenses in  telephone,
postage,  courier services,  conferences and other miscellaneous expenses. These
expense increases were generally less than proportionate with our overall growth
and volume increases.

The Company reported a provision for income taxes of $1,650,000, $1,301,000, and
$1,243,000 for years 1999, 1998 and 1997, respectively. These provisions reflect
accrual  for taxes at the  applicable  rates for Federal  and  California  State
income taxes based upon reported pre-tax income, and adjusted for the beneficial
effect of the  Company's  investment  in  qualified  municipal  securities.  The
Company has not been subject to an alternative minimum tax (AMT).

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

Total  assets  as  of  December  31,  1999  were   $197,106,319   compared  with
$180,290,550,  and  $146,982,232  as of year end 1998  and  1997,  respectively,
representing  a 9% increase in 1999 and a 23% increase in 1998.  Total  deposits
grew $10,206,833 to $172,380,039 in 1999,  representing a 6% increase,  compared
with a 23% increase in 1998. Total loans, net of allowance for loan losses, grew
$25,390,353 to $120,165,530 in 1999, representing a 27% increase compared with a
17%  increase in 1998.  Investment  securities  decreased  from  $62,018,042  at
year-end 1998 to $56,654,407  in 1999, a 9% decrease,  compared with an increase
of 57% during 1998.

Liquidity and Capital Adequacy

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

Securities classified as "Held-to-Maturity"  are reported at amortized cost, and
"Available-for-Sale" securities are reported at fair value with unrealized gains
and losses  excluded  from  earnings  and  reported as a separate  component  of
accumulated   other   comprehensive   income.   As   of   December   31,   1999,
"Held-to-


8
<PAGE>

Maturity"    securities    had   an   amortized    cost   of   $1,389,964    and
"Available-for-Sale"  securities  had  a  fair  value  of  $55,264,443  with  an
unrealized loss, net of income taxes, of $1,170,688  reflected as a component of
accumulated other  comprehensive  income in the shareholders'  equity section of
the Balance Sheet.

The Company also has  available  funding from other  sources such as the Federal
Home Loan Bank.  As of December 31, 1999 the Company had  $58,708,000  available
from these sources for borrowing.

At year end 1999 liquid assets represented 34% of total assets, as compared with
42% and 39% in liquid  assets as of year-end  1998 and 1997,  respectively.  The
level of liquid  assets at December 31, 1999 exceeds the  liquidity  required by
the  Company's  liquidity  policy.  Management  expects  to be able to meet  the
liquidity  needs of the Company  during 2000  primarily  through  balancing loan
growth with corresponding increases in deposits.

Interest Rate Sensitivity
<TABLE>
The following table sets forth the repricing  opportunities  for  rate-sensitive
assets and  rate-sensitive  liabilities at December 31, 1999.  Rate  sensitivity
analysis usually excludes  Noninterest-bearing demand deposits.  Including these
deposits, which totaled $38,337,447,  would result in a significant shift in the
gap  position.   Rate-sensitive   assets  and  rate-sensitive   liabilities  are
classified by the earliest possible repricing date or maturity,  whichever comes
first.
<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                                     $  54,815     $   4,651     $  24,391    $  38,295    $ 122,152
   Interest-bearing deposits in
      other banks                                         100             0             0            0          100
   Investment securities                                1,000         4,141        15,119       36,394       56,654
   Federal funds sold                                   1,500             0             0            0        1,500
                                                    ---------------------------------------------------------------
                Total                                  57,415         8,792        39,510       74,689      180,406

Interest rate-sensitive liabilities:
Interest-bearing demand
      deposits                                         57,166             0             0            0       57,166
   Time deposits >$100,000                             11,927         9,128           866            0       21,922
   Other time deposits                                 19,535        17,205         2,501            0       39,241
   Savings deposits                                    15,714             0             0            0       15,714
   Short-term borrowings                                5,000             0             0            0        5,000
                                                    ---------------------------------------------------------------
                Total                               $ 109,343     $  26,333     $   3,367            0    $ 139,043

Interest rate sensitivity gap                       ($ 51,928)    ($ 17,541)    $  36,143    $  74,689    $  46,363
                                                    ===============================================================

Ratio of interest rate sensitivity to                 (28.78%)       (9.72%)        20.03%       41.40%
    earning assets
</TABLE>

This table indicates that the Company has a "negative" GAP for one year into the
future and a "positive" GAP beyond one year. The  implication is that during the
negative GAP "horizon" Company earnings will increase in a falling interest rate
environment, as interest rates on interest-bearing  liabilities reprice downward
more rapidly than rates on earning assets; conversely, earnings would decline in
a rising rate  environment.  This  traditional  analysis  does not  recognize or
assume any "lag" in interest rate changes on earning assets and interest-bearing
liabilities,  and it  assumes  that  all  earning  assets  and  interest-bearing
liabilities  reprice  to the  same  absolute  degree,  regardless  of the mix of
earning  assets  and  interest-bearing   liabilities.  The  Company  utilizes  a
simulation model as its primary tool for asset/liability  management. This model
considers  the effects of lags and  different  ranges of interest  rate  changes
among various  classes of earning assets and  interest-bearing  liabilities  and
produces a more accurate  projection of the impact


                                                                               9
<PAGE>

changing  interest  rates  will have on the  Company.  Based on the  model,  the
Company is free of material  interest rate risk for the one-year  horizon (i.e.,
the  earnings  will not change  significantly  with an  increase  or decrease in
interest rates),  as opposed to being  liability-sensitive  as indicated by this
table using traditional GAP analysis.

The Company's  capital ratios  remained  relatively  steady during 1999 compared
with 1998 levels. As of December 31, 1999 the Company's total risk-based capital
ratio, Tier I risk-based  capital ratio and leverage ratio were 14.1%, 12.8% and
9.6%,  respectively.  These  compare with ratios of 14.4%,  13.1% and 9.3% as of
December  31,  1998.  The Company is in the process of raising $5 million of new
capital through a secondary stock issue.  Projections  indicate that the Company
will remain  capitalized in accordance  with our policies for five years even if
consolidated growth exceeds projections.

In January,  2000, the Company declared a 5% stock dividend and a $.20 per share
cash dividend for shareholders of record as of March 1, 2000. 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  $310,000,  equating to a  reduction  in the
Company's leverage ratio of approximately .02%.

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

North Bay Bancorp (Bancorp) is a California corporation incorporated 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 (Bank) is a  wholly-owned  subsidiary of the Bancorp,
organized  as a state  chartered  Bank in  1984.  (The  consolidated  entity  is
referred to herein as the "Company"). The Bank engages in the commercial banking
business  in Napa  County from its main  banking  office  located at 1500 Soscol
Avenue, Napa, California. The Bank has two other business locations, one located
in the  Brown's  Valley  Shopping  Center at 3271  Brown's  Valley  Road,  Napa,
California  and one at 3626 Bel Aire  Plaza,  Napa,  California.  The Bank has a
remote ATM and night drop services at 629 Factory  Stores  Drive,  Suite B, Napa
California  and at 6498  Washington  Street,  Yountville,  California.  The Bank
conducts a  commercial  banking  business,  offering a full range of  commercial
banking services to individuals, businesses and agricultural communities in Napa
County. The Bank emphasizes its retail commercial banking operations and accepts
checking  and savings  deposits,  issues  drafts,  sells  traveler's  checks and
provides other customary banking services.

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

The Company's outstanding securities consist of one class; common stock of which
there  were  1,536,568  shares  outstanding  at  March  1,  2000,  held  by  892
shareholders of record.  The Company's  common stock is traded  over-the-counter
and is quoted on the OTC  "Bulletin  Board" under the symbol  NBAN.  The firm of
Hoefer & Arnett serves as the primary market maker in the Company's stock.

The following table  (adjusted for the 1999 and 2000 stock dividend)  summarizes
the common  stock high and low bid prices based upon  transactions  of which the
Company is aware:

Quarter ended                        High              Low

March 31, 1998                     $24.49           $20.86
June 30, 1998                       20.86            18.14
September 30, 1998                  19.73            16.33
December 31, 1998                   18.59            16.10
March 31, 1999                      22.86            19.05
June 30, 1999                       22.86            19.05
September 30, 1999                  25.71            22.38
December 31, 1999                   25.71            24.05

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


10
<PAGE>

retail   mark-up,   mark-down  or  commission  and  may  not  represent   actual
transactions.  Additionally,  since  trading in the  Company's  common  stock is
limited, the range of prices stated are not necessarily representative of prices
that would result from a more active market.

The Company paid cash dividends of $0.20 per share in 1999 and $.20 in 1998. 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 of North Bay 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 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.

In the past,  The Vintage Bank has in the past paid cash and stock  dividends on
its common  stock.  It is  contemplated  that North Bay will  follow The Vintage
Bank's policy of paying cash and stock dividends  subject to the restrictions on
payments  of cash  dividends  as  described  above,  the  earnings of North Bay,
management's  assessment  of  the  future  capital  needs,  and  other  factors.
Initially,  the funds for  payment of  dividends  and  expenses of North Bay are
expected to be obtained from  dividends paid by The Vintage Bank. As of December
31,  1999,  the  Company  had  retained  earnings  of  $6,367,990  eligible  for
dividends.

YEAR 2000 DATA PROCESSING ISSUES

The Company  previously  recognized the material  nature of the business  issues
surrounding computer processing of dates into and beyond the Year 2000 and began
taking  corrective  action as required  pursuant to the  interagency  statements
issued by the Federal Financial Institutions Examination Council.

Management  believes the Company has completed all of the activities  within its
control  to ensure  that the  Company's  systems  are Year 2000  compliant.  The
Company has not experienced any  interruptions  to normal  operations due to the
start of the Year 2000.

The Company's Year 2000 readiness costs were approximately  $75,000. The Company
does not  currently  expect  to apply any  further  funds to  address  Year 2000
issues.

As of March 3, 2000, the Company has not experienced any material disruptions of
its internal  computer systems or software  applications and has not experienced
any problems  with the computer  systems or software  applications  of its third
party  vendors,  suppliers or service  providers.  The Company will  continue to
monitor these third parties to determine the impact, if any, on its business and
the actions it must take, if any, in the event of non-compliance by any of these
third  parties.  Based upon the  Company's  assessment  of  compliance  by third
parties,  there  appears  to be no  material  business  risk  posed  by any such
non-compliance.

Although the Company's Year 2000 rollover did not present any material  business
disruption,  there may be some  remaining  Year 2000 related  risks.  Management
believes that  appropriate  actions have been taken to address  these  remaining
Year 2000 issues and  contingency  plans are in place to minimize the  financial
impact to the  Company.  Management,  however,  cannot be certain that Year 2000
issues affecting its customers,  suppliers or service  providers will not have a
material adverse impact on the Company.


                                                                              11
<PAGE>

<TABLE>
--------------------------------------------------------------------------------------------------
CONSOLIDATED
BALANCE SHEETS
--------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1999 and 1998
                                                                        1999               1998
                                                                  -------------      -------------
<S>                                                               <C>                <C>
                             ASSETS
CASH AND DUE FROM BANKS                                           $   8,465,636      $   8,401,566
FEDERAL FUNDS SOLD                                                    1,500,000          6,000,000
                                                                  -------------      -------------
              Cash and cash equivalents                               9,965,636         14,401,566

TIME DEPOSITS WITH OTHER
    FINANCIAL INSTITUTIONS                                              100,000            200,000
INVESTMENT SECURITIES:
     Held-to-maturity                                                 1,389,964         13,512,384
     Available-for-sale                                              55,264,443         48,505,658
                                                                  -------------      -------------
TOTAL INVESTMENT SECURITIES                                          56,654,407         62,018,042
LOANS, net of allowance for loan losses of
    $1,986,931 in 1999 and $1,751,693 in 1998                       120,165,530         94,775,177
BANK PREMISES AND EQUIPMENT, net                                      2,882,776          2,733,834
INTEREST RECEIVABLE AND OTHER ASSETS                                  7,337,970          6,161,931
                                                                  -------------      -------------

             Total assets                                         $ 197,106,319      $ 180,290,550
                                                                  =============      =============

              LIABILITIES AND SHAREHOLDERS' EQUITY

DEPOSITS:
   Demand                                                         $  38,337,447      $  39,469,756
   Interest-bearing transaction                                      57,165,864         54,500,653
   Time and savings                                                  76,876,728         68,202,797
                                                                  -------------      -------------
               Total deposits                                       172,380,039        162,173,206

SHORT-TERM BORROWINGS                                                 5,000,000                  0

INTEREST PAYABLE AND OTHER LIABILITIES                                1,635,789          1,207,313
                                                                  -------------      -------------

               Total liabilities                                    179,015,828        163,380,519

COMMITMENTS AND CONTINGENT LIABILITIES (Note 5)

SHAREHOLDERS' EQUITY:

   Preferred stock, no par value - Authorized 500,000 shares
     Issued and outstanding - None
     Common stock, no par value - Authorized 10,000,000
     shares Issued and outstanding - 1,536,568 shares in 1999
     and 1,437,491 shares in 1998 12,893,189 11,003,574
   Retained earnings                                                  6,367,990          5,521,351
   Accumulated other comprehensive income (loss)                     (1,170,688)           385,106
                                                                  -------------      -------------
              Total shareholders' equity                             18,090,491         16,910,031

              Total liabilities and shareholders' equity          $ 197,106,319      $ 180,290,550
                                                                  =============      =============
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>


12
<PAGE>

<TABLE>
---------------------------------------------------------------------------------------------------------
CONSOLIDATED INCOME
STATEMENTS
---------------------------------------------------------------------------------------------------------
<CAPTION>
For the Years Ended December 31, 1999, 1998 and 1997
                                                           1999             1998              1997
                                                      ------------     ------------      ------------
<S>                                                   <C>              <C>               <C>
INTEREST INCOME:
   Interest and fees on loans                         $  9,818,961     $  8,465,003      $  7,537,434
   Interest on federal funds sold                          192,223          461,039           142,480
   Interest on investment securities - taxable           2,980,760        2,472,704         2,144,912
   Interest on investment securities - tax exempt          689,683          496,666           249,000
   Interest on time deposits with other
     financial institutions                                  6,947           11,018            11,443
                                                      ------------     ------------      ------------
              Total interest income                     13,688,574       11,906,430        10,085,269
                                                      ------------     ------------      ------------

INTEREST EXPENSE:
   Interest on interest-bearing
     transaction deposits                                1,338,642        1,104,570           595,046
   Interest on time and savings deposits                 2,828,380        2,886,573         2,520,219
   Interest on short-term borrowings                       197,069              683            26,240
                                                      ------------     ------------      ------------
              Total interest expense                     4,364,091        3,991,826         3,141,505
                                                      ------------     ------------      ------------
                Net interest income                      9,324,483        7,914,604         6,943,764

PROVISION FOR LOAN LOSSES                                  240,000          240,000           240,000
                                                      ------------     ------------      ------------
              Net interest income after
                provision for loan                       9,084,483        7,674,604         6,703,764
losses

NONINTEREST INCOME:
   Service charges on deposit accounts                     978,858          743,291           674,219
   Gain on securities transactions, net                      9,753           65,278           395,252
   Gain (loss) on sale of other real estate owned                0           (2,512)           24,180
   Other                                                   788,533          591,101           349,822
                                                      ------------     ------------      ------------
              Total noninterest income                   1,777,144        1,397,158         1,443,473
                                                      ------------     ------------      ------------

NONINTEREST EXPENSE:
   Salaries and related benefits                         3,496,938        3,068,958         2,636,617
   Occupancy                                               401,243          392,357           360,744
   Equipment                                               462,579          450,118           474,141
   Other                                                 2,135,490        1,748,593         1,578,659
                                                      ------------     ------------      ------------
             Total noninterest expense                   6,496,250        5,660,026         5,050,161
                                                      ------------     ------------      ------------

 Income before provision for income taxes                4,365,377        3,411,736         3,097,076

PROVISION FOR INCOME TAXES                               1,650,000        1,301,000         1,243,000
                                                      ------------     ------------      ------------

NET INCOME                                            $  2,715,377     $  2,110,736      $  1,854,076
                                                      ============     ============      ============

BASIC EARNINGS PER SHARE:                             $       1.70     $       1.34      $       1.24

DILUTED EARNINGS PER SHARE:                           $       1.66     $       1.30      $       1.20

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


                                                                              13
<PAGE>



<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED  STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY

For the Years Ended December 31, 1999, 1998 and 1997
<CAPTION>
                                                                                           Accumulated
                                                      Common                                 Other         Total
                                                      Shares        Common     Retained   Comprehensive Shareholders  Comprehensive
                                                    Outstanding     Stock      Earnings    Income(los)     Equity        Income
                                                    ----------- ------------  ----------   -----------   -----------   -------------
<S>                                                  <C>        <C>           <C>          <C>           <C>          <C>
BALANCE, DECEMBER 31, 1996                           1,219,300  $ 7,403,310   $4,604,110   $   108,708   $12,116,128

Stock dividend                                          60,198      872,871     (883,992)                    (11,121)
Cash dividend                                                                   (213,378)                   (213,378)
Comprehensive income:
    Net income                                                                 1,854,076          -        1,854,076  $ 1,854,076
    Other comprehensive income, net of tax:
    Change in net unrealized gains on available-
    for-sale securities, net of tax of $137,771,
    net of reclassification adjustment                                                                                    192,219
                                                                                                                      -----------
    Total other comprehensive income                                                           192,219       192,219      192,219
                                                                                                                      -----------
Comprehensive income                                                                                                    2,046,295
                                                                                                                      ===========
Stock options exercised                                 47,359      547,958                                  547,958
                                                     ---------  ------------  ----------   -----------   -----------
BALANCE, DECEMBER 31, 1997                           1,326,857    8,824,139    5,360,816       300,927    14,485,882

Stock dividend                                          66,788    1,669,700   (1,681,208)                    (11,508)
Cash dividend                                                                   (268,993)                   (268,993)
Comprehensive income:
    Net income                                                                 2,110,736                   2,110,736    2,110,736
    Other comprehensive income, net of tax:
       Change in net unrealized gains on
       available-for-sale securities, net
       of tax of $60,334, net of reclassification
       adjustment                                                                                                          84,179
                                                                                                                      -----------
    Total other comprehensive income                                                            84,179        84,179       84,179
                                                                                                                      -----------
Comprehensive income                                                                                                    2,194,915
                                                                                                                      ===========
Stock options exercised                                 43,846      509,735                                  509,735
                                                     ---------  ------------  ----------   -----------   -----------
BALANCE, DECEMBER 31, 1998                           1,437,491   11,003,574    5,521,351       385,106    16,910,031

Stock dividend                                          71,442    1,571,724   (1,581,240)                     (9,516)
Cash dividend                                                                   (287,498)                   (287,498)
Comprehensive income:
    Net income                                                                 2,715,377                   2,715,377    2,715,377
    Other comprehensive income, net of tax:
       Cumulative effect of change in
       accounting  principle                                                                                             (154,379)
       Change in unrealized loss on securities,
       net of tax of $832,885, net of
       reclassification adjustment                                                                                     (1,401,415)
                                                                                                                      -----------
    Total other comprehensive income (loss)                                                 (1,555,794)   (1,555,794)  (1,555,794)
                                                                                                                      -----------
Comprehensive income                                                                                                    1,159,583
                                                                                                                      ===========
Stock  options exercised                                27,635      317,891                                  317,891
                                                     ---------  ------------  ----------   -----------   -----------
BALANCE, DECEMBER 31, 1999                           1,536,568  $12,893,189   $6,367,990   $(1,170,688)  $18,090,491
                                                     =========  ============  ==========   ===========   ===========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>


14
<PAGE>

<TABLE>
---------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------------------------------------------------------------------------
<CAPTION>
For the Years Ended December 31, 1999, 1998 and                                        (In 000's)
1997
                                                                          1999        1998        1997
                                                                        --------    --------    --------
<S>                                                                     <C>         <C>         <C>
Cash Flows From Operating Activities:
Net income                                                              $  2,715    $  2,111    $  1,854
Adjustments to reconcile net income to net cash
      provided by operating activities:
  Depreciation and amortization                                              362         388         404
  Provision for loan losses                                                  240         240         240
  Amortization of deferred loan fees                                        (262)       (161)       (149)
  Amortization (accretion) of investment securities
    premiums (discounts), net                                                 (3)        (60)        (14)
  Provision for deferred income taxes                                       (186)         (6)         47
  Loss (gain) on sale of OREO                                                  0           3         (24)
  Gain on sale or retirement of capital assets                               (15)          0           0
  Gain on securities transactions                                             (8)        (65)       (395)
Changes in:
    Interest receivable and other assets                                     117        (589)     (2,875)
    Interest payable and other liabilities                                   428         102         332
                                                                        --------    --------    --------
       Total adjustments                                                     673        (148)     (2,434)
                                                                        --------    --------    --------
    Net cash provided (used) by operating activities                       3,388       1,963        (580)
                                                                        --------    --------    --------

Cash Flows From Investing Activities:
Investment securities held to maturity:
  Proceeds from maturities and principal payments                             10         540       1,530
  Purchases                                                               (1,400)    (10,043)       (749)
Investment securities available for sale:
  Proceeds from maturities and principal payments                         15,304      17,786       2,348
  Proceeds from sales and recoveries                                       1,008       4,341       4,411
  Purchases                                                              (12,210)    (34,809)     (8,849)
Proceeds from sale of time deposits with other financial institutions        100           0           0
Net increase in loans                                                    (25,369)    (13,874)    (10,302)
Proceeds from sale of OREO                                                     0          11         366
Sale of capital assets                                                        22           0           0
Capital expenditures                                                        (517)       (146)       (702)
                                                                        --------    --------    --------
   Net cash used in investing activities                                 (23,052)    (36,194)    (11,947)
                                                                        --------    --------    --------

Cash Flows From Financing Activities:
Net increase in deposits                                                  10,207      30,783      21,541
Increase in short-term borrowings                                          5,000           0           0
Stock options exercised                                                      318         510         548
Dividends                                                                   (297)       (281)       (224)
                                                                        --------    --------    --------
   Net cash provided by financing activities                              15,228      31,012      21,865
                                                                        --------    --------    --------
Net increase (decrease) in cash and cash equivalents                      (4,436)     (3,219)      9,338
Cash and cash equivalents at beginning of year                            14,402      17,621       8,283
                                                                        --------    --------    --------
Cash and cash equivalents at end of year                                $  9,966    $ 14,402    $ 17,621
                                                                        ========    ========    ========

Supplemental Disclosures of Cash Flow Information:
  Interest paid                                                         $  4,149    $  3,984    $  2,987
  Income taxes paid                                                     $  1,396    $  1,254    $  1,232
<FN>
The accompanying notes are an integral part of these statements.
</FN>

                                                                                                       15
</TABLE>


<PAGE>


--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
December 31, 1999, 1998 and 1997

(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  (Bank) a
California  state  chartered  bank.  The Bank  operates  three  branches  in the
California  county of Napa.  The Bank offers a full range of commercial  banking
services to individuals  and the business and  agricultural  communities of Napa
County.  Most  of the  Bank's  customers  are  retail  customers  and  small  to
medium-sized businesses.

The  consolidated  financial  statements of Bancorp and Bank  (collectively  the
Company)  are  prepared  in  conformity  with  generally   accepted   accounting
principles  and  general  practice  within  the  banking   industry.   The  more
significant accounting and reporting policies are discussed below.

Principals of Consolidation.  The consolidated financial statements includes the
accounts  of  Bancorp  and Bank.  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
requires  management to make estimates and assumptions  that affect the reported
amounts  of  assets,   liabilities  and  disclosure  of  contingent  assets  and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

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

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

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

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

The Bank defines a loan as impaired  when it is probable the Bank 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.


16
<PAGE>

Allowance  for loan losses The Bank  maintains 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 Bank makes
credit reviews of the loan portfolio and considers current economic  conditions,
historical loan loss  experience,  and other factors in determining the adequacy
of the allowance balance.

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

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

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

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

Stock-based  compensation The Company uses the intrinsic value method to account
for its stock option plans (in  accordance  with the  provisions  of  Accounting
Principles  Board Opinion No. 25).  Under this method,  compensation  expense is
recognized for awards of options to purchase shares of common stock to employees
under  compensatory  plans  only if the fair  market  value of the  stock at the
option  grant date (or other  measurement  date,  if later) is greater  than the
amount the  employee  must pay to  acquire  the stock.  Statement  of  Financial
Accounting   Standards  No.  123;  (SFAS  123)   "Accounting   for   Stock-Based
Compensation" permits companies to continue using the intrinsic-value  method to
account  for  stock  option  plans.  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 and are included in Note 15.

Earnings per common share In 1997, the Company  adopted SFAS No. 128,  "Earnings
Per Share",  which establishes  standards for computing and presenting  earnings
per share (EPS).  It replaced the  presentation of primary and fully diluted EPS
with a presentation of basic and diluted EPS. It also requires a  reconciliation
of the numerator and  denominator of the basic EPS  computation to the numerator
and  denominator  of the diluted EPS  computation.  The  implementation  of this
statement had no effect on Company's reported financial position or net income.

Comprehensive Income Effective January 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting  Comprehensive  Income" (SFAS
130).  This  statement  establishes  standards  for the reporting and display of
comprehensive  income and its  components in the financial  statements.  For the
Company,  comprehensive  income  includes  net  income  reported  on the  income
statement  and changes in the fair value of its  available-for-sale  investments
reported as other comprehensive income.

Segment  reporting  Effective  January 1, 1998, the Company adopted Statement of
Financial  Accounting  Standards  No.  131,  "Disclosures  About  Segments of an
Enterprise and Related  Information,"  (SFAS 131).  This  Statement  establishes
standards for the reporting and display of information about operating  segments
and  related  disclosures.  The  Company's  operating  segments  consist  of its
traditional  community  banking


                                                                              17
<PAGE>

activities  provided through its branches and activities related to the Bancorp.
Community banking  activities  include the Bank's commercial and retail lending,
deposit  gathering,  and  investment  and liquidity  management  activities.  As
permitted  under the  Statement,  the Company has  aggregated the results of the
branches into a single reportable  segment,  and the Bancorp activities reported
as "Other". See Note 14 for details.

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

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

(2) INVESTMENT SECURITIES
<TABLE>
The amortized cost and estimated fair value of investment securities at December
31, 1999 are as follows:
<CAPTION>
                                                    Gross        Gross
                                    Amortized    Unrealized    Unrealized     Estimated
                                       Cost         Gains        Losses       Fair Value
                                   -----------   -----------   -----------   -----------
<S>                                <C>           <C>           <C>           <C>
Held-to-maturity:
Municipal securities               $ 1,389,964   $         0   $         0   $ 1,389,964
                                   ===========   ===========   ===========   ===========

Available-for-sale:
Equity securities                  $   924,750   $         0   $         0   $   924,750
Securities of the U.S. Treasury
   And other government agencies    10,579,971         6,578       202,606    10,383,943
Corporate debt securities           11,900,060         5,267       291,839    11,613,488
Mortgage-backed securities          20,904,085        11,225       937,982    19,977,328
Municipal securities                12,959,148        36,651       630,865    12,364,934
                                   -----------   -----------   -----------   -----------
Total                              $57,268,014   $    59,721   $ 2,063,292   $55,264,443
                                   ===========   ===========   ===========   ===========
</TABLE>
<TABLE>
The amortized cost and estimated fair value of investment securities at December
31, 1998 are as follows:
<CAPTION>
                                                   Gross        Gross
                                    Amortized    Unrealized    Unrealized     Estimated
                                       Cost         Gains        Losses       Fair Value
                                   -----------   -----------   -----------   -----------
<S>                                <C>           <C>           <C>           <C>
Held-to-maturity:
Municipal securities               $13,512,384   $   289,032   $    44,644   $13,756,772
                                   ===========   ===========   ===========   ===========

Available-for-sale:
Equity securities                  $   777,200   $         0   $         0   $   777,200
Securities of the U.S. Treasury
   And other government agencies    11,531,766       172,189           523    11,703,432
Corporate debt securities           12,272,305       179,936             7    12,452,234
Mortgage-backed securities          23,265,298       340,384        32,890    23,572,792
                                   -----------   -----------   -----------   -----------
Total                              $47,846,569   $   692,509   $    33,420   $48,505,658
                                   ===========   ===========   ===========   ===========
</TABLE>


18
<PAGE>

<TABLE>
The  following  table  shows the  amortized  cost and  estimated  fair  value of
investment securities by contractual maturity at December 31, 1999:
<CAPTION>
                                       Held-to-Maturity          Available-for-Sale
                                   Amortized       Fair        Amortized        Fair
                                      Cost         Value          Cost          Value
                                  -----------   -----------   -----------   -----------
<S>                               <C>           <C>           <C>           <C>
Within one year                   $         0   $         0   $ 5,128,100   $ 5,141,125
After one but within five years             0             0    14,479,453    14,146,959
After five but within ten years             0             0     7,661,119     7,309,434
Over ten years                      1,389,964     1,389,964     8,170,507     7,764,847
Equity securities                           0             0       924,750       924,750
Mortgage-backed securities                  0             0    20,904,085    19,977,328
                                  -----------   -----------   -----------   -----------
Total                             $ 1,389,964   $ 1,389,964   $57,268,014   $55,264,443
                                  ===========   ===========   ===========   ===========
</TABLE>

As  of  December  31,  1999  and  1998  securities  carried  at  $2,005,310  and
$2,067,813,  respectively,  were pledged to secure public and other  deposits as
required by law.

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

Total proceeds from the sale of securities  available-for-sale  during 1998 were
$4,327,823.  Gross gains of $52,600 were  realized on those  sales.  The Company
also recovered $12,678 on previously charged off securities.

Total proceeds from the sale of securities  available-for-sale  during 1997 were
$4,003,516.  Gross gains of $7,699 and gross losses of $19,377 were  realized on
those  sales.  The Company also  recovered  $406,930 on  previously  charged off
securities.

(3) LOANS AND ALLOWANCE FOR LOAN LOSSES

At December 31, 1999 and 1998,  the loan  portfolio  consisted of the following,
net of deferred loan fees of $590,881 and $439,302 respectively:

                                               1999           1998
                                          ------------   ------------

Real estate loans                         $ 58,368,548   $ 51,643,406
Installment loans                           20,868,859     18,460,555
Construction loans                           8,441,142      5,950,207
Commercial loans secured by real estate     13,010,890      6,062,585
Commercial loans                            21,463,022     14,410,117
                                          ------------   ------------
                                           122,152,461     96,526,870
Less allowance for loan losses               1,986,931      1,751,693
                                          ------------   ------------
Total                                     $120,165,530   $ 94,775,177
                                          ============   ============

There were no nonaccrual  loans at December 31, 1999 and  nonaccrual  loans were
$88,694 at December 31, 1998. As a result of being placed on nonaccrual  status,
approximately  $65,905 in interest income was foregone during 1997. There was no
interest  foregone during 1999 or 1998. As of December 31, 1999 and 1998,  there
were no loans 90 days or more past due but still accruing interest.


                                                                              19
<PAGE>


Changes in the allowance for loan losses are as follows:
                                 1999           1998           1997
                             -----------    -----------    -----------

Balance, beginning of year   $ 1,751,693    $ 1,532,128    $ 1,474,437
Provision for loan losses        240,000        240,000        240,000
Loans charged off                (24,382)       (59,210)      (195,903)
Recoveries of loans
   previously charged off         19,620         38,775         13,594
                             -----------    -----------    -----------
Balance, end of year         $ 1,986,931    $ 1,751,693    $ 1,532,128
                             ===========    ===========    ===========

As of December 31, 1999 and 1998,  the Bank's  recorded  investment  in impaired
loans was $1,084,740 and  $1,174,054,  respectively,  and the related  valuation
allowance  as of those  dates  was  $231,737  and  $120,000  respectively.  This
valuation  allowance is included in the allowance for loan losses on the balance
sheet.  The  average  recorded   investment  in  impaired  loans  was  $933,000,
$1,660,000 and $1,906,000 for the years ended December 31, 1999,  1998 and 1997,
respectively.

Interest  payments  received on impaired  loans are recorded as interest  income
unless  collection of the remaining  recorded  investment is doubtful,  in which
case  payments  received  are  recorded as  reductions  of  principal.  The Bank
recognized interest income on impaired loans of $81,697,  $106,379, and $202,262
in 1999, 1998 and 1997, respectively.

(4)  PREMISES AND EQUIPMENT

Premises and equipment at December 31, 1999 and 1998 consisted of the following:


                                                 Accumulated      Net
                                                Depreciation      Book
                                       Cost    & Amortization    Value
                                    ----------   ----------   ----------
1999
Land                                $  706,277   $        0   $  706,277
Premises                             1,745,867      386,832    1,359,035
Furniture, fixtures and equipment    2,697,017    2,091,451      605,566
Leasehold improvements                 335,446      123,548      211,898
                                    ----------   ----------   ----------
Total                               $5,484,607   $2,601,831   $2,882,776
                                    ==========   ==========   ==========

1998
Land                                $  706,277   $        0   $  706,277
Premises                             1,611,508      337,419    1,274,089
Furniture, fixtures and equipment    2,368,523    1,838,755      529,768
Leasehold improvements                 312,335       88,635      223,700
                                    ----------   ----------   ----------
Total                               $4,998,643   $2,264,809   $2,733,834
                                    ==========   ==========   ==========

Depreciation  and  amortization  expense,  included  in  occupancy  expense  and
equipment expense,  was $361,854,  $388,632 and $403,593 in 1999, 1998 and 1997,
respectively.

(5) COMMITMENTS AND CONTINGENCIES

The Bank leases the premises for its Brown's Valley and Bel Aire offices.  Total
rent was $138,654  $128,043 and $113,271 in 1999,  1998 and 1997,  respectively,
and is included in occupancy and equipment expenses. The total commitments under
non-cancelable leases are as follows:

                               Year          Total
                            ----------   ----------
                                  2000   $  211,428
                                  2001      192,372
                                  2002      198,996
                                  2003      198,996
                                  2004      198,996
                            Thereafter      220,792
                                         ----------
                            Total        $1,221,580
                                         ==========


20

<PAGE>

(6) TIME DEPOSITS AND INTEREST ON TIME DEPOSITS

Time  certificates  of deposit in  denominations  of  $100,000  or greater  were
$21,921,918  and  $17,443,413  at  December  31,  1999 and  1998,  respectively.
Interest  expense on these  deposits was  $813,293,  $831,094,  and $717,442 for
1999, 1998 and 1997, respectively.

At December 31, 1999, the scheduled maturities of Time Deposits are as follows:

                               Year         Total
                              ------  -----------
                               2000   $57,796,643
                               2001     1,934,913
                               2002       342,099
                               2003     1,002,101
                               2004        87,038
                                      -----------
                                      $61,162,794

(7) SHORT-TERM BORROWINGS

The Company maintains a collateralized line of credit with the Federal Home Loan
Bank of San  Francisco.  Based on the FHLB stock  requirements  at December  31,
1999,  this  line  provided  for  maximum  borrowings  of  $54,708,000  of which
$5,000,000 was outstanding:  leaving $49,708,000 available. The Company also has
available  unused  lines  of  credit  totaling   $9,000,000  for  Federal  funds
transactions at December 31, 1999.

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

The Bank makes  commitments to extend credit in the normal course of business to
meet the  financing  needs of its  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 Bank is  exposed  to  credit  loss,  in the event of  nonperformance  by the
borrower,  in the  contract  amount  of the  commitment.  The Bank uses the same
credit  policies  in  making   commitments  as  it  does  for   on-balance-sheet
instruments  and evaluates each  customer's  creditworthiness  on a case-by-case
basis.  The amount of collateral  obtained,  if deemed  necessary by the Bank is
based on management's credit evaluation of the borrower. Held collateral varies,
but may include  accounts  receivable,  inventory,  plant and equipment and real
property.

The  Bank  also  issues  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 2000 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 Bank holds collateral as deemed necessary, as described above.
The  contract  amounts of  commitments  not  reflected  on the Balance  Sheet at
December 31, 1999 were as follows:

                                                    Contract Amounts
                                                    ----------------
     Loan Commitments                                   $33,559,000
     Standby Letters of Credit                          $ 1,521,000


                                                                              21
<PAGE>


(9) CONCENTRATIONS OF CREDIT RISKS

The  majority of the Bank's  loan  activity  is with  customers  located in Napa
County, California.  Although the Bank has a diversified loan portfolio, a large
portion of its loans is for  construction of residences,  and many of the Bank's
commercial loans are secured by real estate in Napa County. Approximately 79% of
the Bank's loans are secured by real  estate.  This  concentration  is presented
below:

                                                       As of
                                                 December 31, 1999
                                                 -----------------
Construction/Land Development:
     Land Development                               $ 1,091,000
     Owner Occupied Residential                       3,951,000
     Non-owner Occupied Residential                   1,179,000
     Commercial                                       2,220,000
Real Estate                                          58,369,000
Commercial - Real Estate Secured                     13,011,000
Installment - Real Estate Secured                    17,205,000
                                                    -----------
      Total                                         $97,026,000
                                                    ===========

(10) INCOME TAXES

The  provision  (benefits)  federal and state  income  taxes for the years ended
December 31, 1999, 1998 and 1997 consisted of:

                 1999           1998           1997
             -----------    -----------    -----------
Current
   Federal   $ 1,345,000    $   926,000    $   873,000
   State         491,000        381,000        323,000
             -----------    -----------    -----------
               1,836,000      1,307,000      1,196,000
Deferred
   Federal      (164,000)        (1,000)        31,500
   State         (22,000)        (5,000)        15,500
             -----------    -----------    -----------
                (186,000)   ($    6,000)        47,000
             -----------    -----------    -----------

Total        $ 1,650,000    $ 1,301,000    $ 1,243,000
             ===========    ===========    ===========

Deferred tax assets and liabilities result from differences in the timing of the
recognition of certain income and expense items for tax and financial accounting
purposes. The sources of these differences and the amount of each are as follows
as of December 31, 1999 and 1998:


                                      1999         1998
                                   ----------   ----------
Deferred Tax Assets:
   Allowance for loan losses       $  849,000   $  674,000
   Unrealized loss on securities      833,000            0
   Other                              269,000      171,000
                                   ----------   ----------
                                   $1,951,000   $  845,000
                                   ==========   ==========

Deferred Tax Liabilities:
   Unrealized gain on securities   $        0   $  274,000
   Accumulated accretion              101,000       36,000
   Depreciation more than book         45,000       60,000
   State income taxes                  75,000       65,000
   Other                              257,000      230,000
                                   ----------   ----------
                                      478,000      665,000
                                   ----------   ----------

   Net Deferred Tax Asset          $1,473,000   $  180,000
                                   ==========   ==========

The Company had no valuation allowance as of December 31, 1999 or 1998.



22
<PAGE>

<TABLE>
The total tax  differs  from the  federal  statutory  rate of 34% because of the
following:
<CAPTION>

                                              1999                          1998                          1997
                                  --------------------------     --------------------------    ---------------------------
                                     Amount          Rate           Amount          Rate          Amount          Rate
                                  -----------    -----------     -----------    -----------     -----------    -----------
<S>                               <C>                     <C>    <C>                     <C>    <C>                     <C>
Tax provision at statutory rate   $ 1,503,000             34%    $ 1,160,000             34%    $ 1,053,000             34%
Interest on obligations of
   states and political
   subdivisions exempt from
   federal taxation                  (193,000)            (3%)      (154,000)            (3%)       (77,000)            (3%)
State franchise taxes                 317,000              7%        245,000              7%        221,500              7%
Other, net                             23,000              2%         50,000              2%         45,500              2%
                                  -----------    -----------     -----------    -----------     -----------    -----------
Total                             $ 1,650,000             40%    $ 1,301,000             40%    $ 1,243,000             40%
                                  ===========    ===========     ===========    ===========     ===========    ===========
</TABLE>

(11) DIVIDEND RESTRICTIONS

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

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

(12) SHAREHOLDERS' EQUITY AND EARNINGS PER SHARE

The Company  declared 5% stock dividends on January 22, 1996,  January 27, 1997,
January 26,  1998,  January 28,  1999 and January 18,  2000.  As a result of the
stock  dividends and stock split,  the number of common shares  outstanding  and
earnings per share data was adjusted retroactively for all periods presented.

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


                                                                              23
<PAGE>

<TABLE>
<CAPTION>
                                                          Weighted Average             Per-Share
                                     Net Income                Shares                    Amount
                                     ----------                ------                    ------
<S>                                  <C>               <C>                               <C>
                                                       For the year ended 1999
                                                       -----------------------
  Basic earnings per share           $2,715,377               1,598,914                  $1.70
  Stock options                                                  37,817
  Diluted earnings per share                                  1,636,731                  $1.66

                                                       For the year ended 1998
                                                       -----------------------

  Basic earnings per share           $2,110,736               1,571,079                  $1.34
  Stock options                                                  48,836
  Diluted earnings per share                                  1,619,915                  $1.30

                                                       For the year ended 1997
                                                       -----------------------
  Basic earnings per share           $1,854,076               1,501,274                  $1.24
  Stock options                                                  48,416
  Diluted earnings per share                                  1,549,690                  $1.20
</TABLE>

 (13) OTHER NONINTEREST INCOME AND EXPENSE

The  components  of Other  Noninterest  Income for the years ended  December 31,
1999, 1998 and 1997 were as follows:



                              1999       1998       1997
                            --------   --------   --------
ATM Surcharge               $223,345   $104,480   $ 42,447
Increase of Cash Value on
   Insurance Policies        156,232    155,819     82,972
Other                        408,956    330,802    224,403
                            --------   --------   --------
Total                       $788,533   $591,101   $349,822
                            ========   ========   ========

The  components of Other  Noninterest  Expense for the years ended  December 31,
1999, 1998 and 1997 were as follows:

                            1999         1998         1997
                        ----------   ----------   ----------
Professional Services   $  485,320   $  350,119   $  320,890
Business Promotions        328,068      273,985      235,982
ATM Expenses               159,532      108,721       84,820
Stationary & Supplies      199,789      171,654      158,675
Other                      962,781      844,114      778,312
                        ----------   ----------   ----------
Total                   $2,135,490   $1,748,593   $1,578,659
                        ==========   ==========   ==========

(14) BUSINESS SEGMENTS

The Company's  operating  segments consist of its traditional  community banking
activities  provided  through its three branches and  activities  related to the
Bancorp.  Community banking  activities include the Bank's commercial and retail
lending,  deposit gathering and investment and liquidity management  activities.
The Company has aggregated the results of the branches into a single  reportable
segment, and the Bancorp activities reported as "Other".  Segment data for prior
reporting  period were not applicable  since the Holding Company was established
in 1999.

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


24
<PAGE>

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

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

Assets                         $197,003      $ 18,090       ($17,986)      $197,106
Loans, Net                      120,166             0              0        120,166
Deposits                        173,319             0           (939)       172,380
Equity                           17,047        18,090        (17,047)        18,090
</TABLE>

(15) STOCK OPTION PLAN

The  Company  has a stock  option  plan  under  which it may grant up to 354,072
options.  The Company has granted 310,545 options through December 31, 1999. The
option exercise price equals the stock's market price on the date of grant.  The
options become exercisable over five years and expire in five to 10 years.
<TABLE>
A summary of the status of the Company's stock option plan at December 31, 1999,
1998 and 1997 and stock option activity during the years then ended is presented
in the table below:
<CAPTION>
                                      1999                     1998                       1997
                            -----------------------   ------------------------    -----------------------
                                           Weighted                   Weighted                   Weighted
                                           Exercise                   Exercise                   Exercise
                             Shares         Price      Shares          Price      Shares          Price
                            --------      ---------   --------       ---------    -------       ---------
<S>                         <C>           <C>          <C>           <C>          <C>           <C>
Outstanding at
    Beginning of year       176,440       $   12.34    220,617       $   10.61    142,020       $    5.96
Granted                      25,200       $   21.79      4,410       $   18.93    138,915       $   13.49
Exercised                   (29,017)      $    8.13    (48,587)      $    5.94    (54,824)      $    5.54

Cancelled                   (14,981)      $   12.87          0       $    0        (5,494)      $    6.16
Outstanding at
    End of year             157,642       $   14.54    176,440       $   12.34    220,617       $   10.61

Exercisable at
    End of year              36,049       $   12.62     32,368       $    9.10     46,342       $    5.84

Weighted-average
   Fair value of
   Options granted
   During the year             --         $    7.42       --         $    6.97       --         $    5.81


The following table summarizes  information  about stock options  outstanding at
December 31, 1999:

                                                                                                       25

</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                    Options Outstanding                                   Options Exercisable
                    -------------------                                   -------------------
                                        Weighted-
        Range             Number         Average          Weighted-         Number Exercisable       Weighted-
         of            Outstanding      Remaining          Average                 at                Average
  Exercise Prices      at 12/31/99   Contractual Life   Exercise Price          12/31/99          Exercise Price
  ---------------      -----------   ----------------   --------------          --------          --------------
<S>                      <C>               <C>              <C>                   <C>                 <C>
     $7.61                11,784           1.25             $ 7.61                 6,436              $ 7.61
$13.39 to $22.38         145,858           3.32             $15.10                29,613              $13.70
                         -------
                         157,642
</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 1999,  1998 and 1997,  respectively:  risk-free
interest  rate of 4.75% and 6% for  options  issued in 1999,  4.62% for  options
issued in 1998 and 6.33% and 6.65% for options issued in 1997; expected dividend
yields of .92%, .94% and 1.01%;  expected lives of 6, 6 and 6 years and expected
volatility of 26.32%, 30.85% and 27.42%.

The Company accounts for stock options under APB Opinion No. 25. Had the Company
used the fair value based method  prescribed  by SFAS No. 123, the Company's net
income and earnings per share  amounts  would have been reduced to the pro forma
amounts indicated below:

                              1999               1998               1997
                         -------------      -------------      -------------
Net Income:
     As Reported         $   2,715,377      $   2,110,736      $   1,854,076
     Pro Forma           $   2,558,261      $   1,984,736      $   1,733,004
Earnings Per Share:
     As Reported:
        Basic            $     1.70         $     1.34         $     1.23
        Diluted          $     1.66         $     1.30         $     1.20
     Pro Forma:
       Basic             $     1.60         $     1.26         $     1.20
       Diluted           $     1.56         $     1.22         $     1.17



26
<PAGE>


(16) RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Bank makes 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, 1999 is as follows:

Balance at beginning of year             4,105,000
     Additions                           3,479,000
     Repayments                          2,852,000
                                         ---------
Balance at end of year                   4,732,000
                                         =========

Total undisbursed commitments as of December 31, 1999 were $3,073,163.

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 1999, 1998 and 1997
fees of $58,000, $38,000 and $31,000, respectively, were paid to this firm.

(17) RESTRICTIONS

The Bank is required to maintain reserves with the Federal Reserve Bank equal to
a percentage of its reservable deposits.  Reserve balances that were required by
the Federal  Reserve Bank were  $2,805,000  and $1,506,000 for December 31, 1999
and  1998,  respectively  and are  reported  in cash and due  from  banks on the
balance sheet.

(18) RETIREMENT PLANS

The Company has a Profit Sharing and Salary  Deferral  401(K) Plan to enable its
employees to share in the Company's profits and to defer receipt of a portion of
their  salaries.  Employees  can defer up to 15% of their  base  pay,  up to the
maximum  amount allowed by the Internal  Revenue Code. In addition,  the Company
makes  discretionary  contributions to the profit sharing account and the 401(K)
account,  which are  determined  by the Board of  Directors  each year.  Amounts
charged  to  operating  expenses  under  this plan  representing  the  Company's
contribution  were $159,000,  $120,000 and $109,000 for the years ended December
31, 1999, 1998 and 1997, respectively.

During 1998, The Vintage Bank implemented a Director's  Supplemental  Retirement
Program.  The  Program  contains  a  non-qualified  defined  benefit  plan and a
non-qualified   defined   contribution  plan.   Directors  and  select  officers
designated  by the Board of  Directors of the Vintage Bank are covered by one or
the other of these plans. The plans are unfunded, however the Bank has purchased
life  insurance  on the lives of the  participants  and  expects to use the cash
values of these policies ($2,617,533 at December 31, 1999) to pay the retirement
obligations.

(19) FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
The  following  table  presents  the  carrying  amounts  and fair  values of the
Company's financial instruments at December 31, 1999 and 1998:
<CAPTION>
                                   Carrying         Fair        Carrying       Fair
                                    Amounts         Value        Amounts       Value
                                    -------       --------      --------      --------
                                                        (In 000's)
                                             1999                        1998
                                    ----------------------      ----------------------
<S>                                 <C>           <C>           <C>           <C>
Financial Assets:
   Cash and cash equivalents        $  9,966      $  9,966      $ 14,402      $ 14,402
   Time deposits with other
      financial institutions             100           100           200           200
   Investment securities              56,654        56,654        62,018        62,262
   Loans, net                        120,166       119,264        94,775        95,828
   Accrued interest receivable         1,447         1,447         1,335         1,335

Financial Liabilities:
   Deposits                          172,380       172,430      $162,173      $162,385
   Short term borrowing                5,000         5,000             0             0
   Accrued interest payable              725           725           509           509


                                                                                    27
</TABLE>
<PAGE>

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

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

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

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

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

Deposits,  time deposits with other Bank's - 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.

Short-Term  Borrowing  - The  balance  approximates  its fair  value  due to the
short-term nature of these borrowings.

(20) COMPREHENSIVE INCOME

The changes in the components of other comprehensive income (loss) for the years
ended December 31 1999, 1998 and 1997 are reported as follows:


                                         1999          1998          1997
                                      -----------   -----------   -----------
Unrealized holding gain (loss)
arising during the period, net of
tax benefit of $1,106,868 for 1999
and tax expense of $59,889 and
$136,754 for 1998 and 1997,
respectively                          ($1,396,051)  $   122,321   $   421,412

  Reclassification adjustment for
  net realized gains (losses) on
  securities available-for-sale
  included in net income during the
  year, net of tax expenses of
  $3,816, $27,136 and $163,059,
  respectively                             (5,364)      (38,142)     (229,193)
                                      -----------   -----------   -----------

Other comprehensive income (loss)     ($1,401,415)  $    84,179   $   192,219


(21) REGULATORY MATTERS

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

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  the Company to  maintain  minimum  amounts and ratios (set forth in the
table below) of total and Tier I capital to risk-weighted  assets, and of Tier I
capital to average assets.  Management  believes,  as of December 31, 1999, that
the Company meets all capital adequacy requirements to which it is subject.


28
<PAGE>

As of December 31, 1999, the most recent  notification  from the Federal Reserve
Bank categorized the Company as well capitalized under the regulatory  framework
for prompt corrective action. To be categorized as well capitalized, the Company
must maintain  minimum total  risk-based,  Tier I risk-based and Tier I leverage
ratios as set forth in the table.  There were no conditions or events since that
notification that management believes have changed the institution's category.


                                                                              29
<PAGE>



<TABLE>
The Company's  actual capital amounts and ratios are also presented in the table
below:
<CAPTION>
                                                                          To Be Well Capitalized
                                                        For Capital       Under Prompt Corrective
                                    Actual           Adequacy Purposes       Action Provisions
                                    ------           -----------------       -----------------

                                                        (In 000's)
                               Amount      Ratio     Amount      Ratio       Amount       Ratio
                               ------      -----     ------      -----       ------       -----
<S>                           <C>          <C>      <C>          <C>         <C>          <C>
As of December 31, 1999:
Total Capital (to Risk
   Weighted Assets)
      Consolidated            $21,141      14.07%   $12,019      >8.00%      $15,023      >10.00%
                                                                 -                        -
      The Vintage Bank         20,154      13.02%    12,384      >8.00%       15,480      >10.00%
                                                                 -                        -
Tier I Capital (to Risk
   Weighted Assets)
      Consolidated             19,262      12,82%     6,009      >4.00%        9,014      >6.00%
                                                                 -                        -
      The Vintage Bank         18,218      11.77%     6,192      >4.00%        9,288      >6.00%
                                                                 -                        -

Tier I Capital (to
   Average Assets)
      Consolidated             19,262       9.58%     8,046      >4.00%       10,058      >5.00%
                                                                 -                        -
      The Vintage Bank         18,218       9.06%     8,046      >4.00%       10,058      >5.00%
                                                                 -                        -


As of December 31, 1998:
Total Capital (to Risk
   Weighted Assets)           $18,100      14.39%   $10,065      >8.0%       $12,581      >10.0%
                                                                 -                        -

Tier I Capital (to Risk
   Weighted Assets)            16,525      13.14%     5,032      >4.0%         7,548      >6.0%
                                                                 -                        -

Tier I Capital (to
   Average Assets)             16,525       9.29%     7,114      >4.0%         8,892      >5.0%
                                                                 -                        -
</TABLE>

30
<PAGE>


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

The Bancorp was  organized  as of  November  1, 1999.  As a result,  comparative
financial  information is not available  information  below is for the two month
period ended December 31, 1999.


Balance Sheet
                                                                      1999
                                                                  ------------
Assets

Cash                                                              $    939,263
Investment in The Vintage Bank                                      17,047,592
Equipment                                                               88,216
Other assets                                                            15,420
                                                                  ------------

Total assets                                                      $ 18,090,491

Liabilities and shareholders' equity

Total Liabilities                                                 $          0

Shareholders' equity
   Preferred stock, no par value - Authorized 500,000 shares
       Issued and outstanding - None
   Common stock, no par value - Authorized 10,000,000 shares
       Issued and outstanding - 1,536,568                           12,893,189
shares in 1999
   Retained earnings                                                 6,367,990
   Accumulated other comprehensive income                           (1,170,688)
                                                                  ------------
Total shareholders' equity                                          18,090,491

Total liabilities and shareholders' equity                        $ 18,090,491

Income Statement
                                                                      1999
                                                                  ------------
Equity Income of  Bank
   Distributed                                                    $    490,055
Interest Expense                                                           826
Other Administrative Expenses                                           56,275
                                                                  ------------
Net Income                                                        $    432,954

Statement of Cash Flows
                                                                       1999
                                                                  ------------
Operating Activities:
Net income                                                        $    432,954
Adjustments to reconcile net income to net cash
      provided by operating activities:
Changes in:
    Interest receivable and other assets                               (15,420)

       Total adjustments                                               (15,420)
                                                                  ------------
    Net cash provided by operating activities                          417,534
                                                                  ------------

Investing Activities:
Capital expenditures                                                   (88,216)
                                                                  ------------
   Net cash used in investing activities                               (88,216)
                                                                  ------------
Financing Activities:
   Net cash provided by financing activities
   Dividend received from The Vintage Bank in
   excess of equity in net income                                      609,945
                                                                  ------------
Net increase (decrease) in cash and cash                               939,263
equivalents
Cash and cash equivalents at beginning of year                               0
                                                                  ------------
Cash and cash equivalents at end of year                          $    939,263
                                                                  ============


                                                                              31
<PAGE>


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

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

We have  audited  the  accompanying  consolidated  balance  sheets  of North Bay
Bancorp (a  California  state-chartered  Holding  Company) and  subsidiary as of
December 31, 1999 and 1998 and the related  consolidated  statements  of income,
changes in  shareholders'  equity and cash flows for each of the three  years in
the  period  ended  December  31,  1999.  These  financial  statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of  North  Bay  Bancorp  and
subsidiary as of December 31, 1999 and 1998 and the results of their  operations
and their cash flows for each of the three  years in the period  ended  December
31, 1999 in conformity  with  accounting  principles  generally  accepted in the
United States.


                                        /s/ ARTHUR ANDERSEN LLP

San Francisco, California
February 25, 2000


32
<PAGE>


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
DIRECTORS
------------------------------------------------------------------------------------------------------
<S>                              <C>
NORTH BAY BANCORP
Conrad W. Hewitt                 Retired, Commissioner of State Department of Financial Institutions

Richard S. Long                  President, Quantum Information Corp.


NORTH BAY BANCORP AND THE VINTAGE BANK
David B. Gaw                     Attorney with Gaw, Van Male, Smith, Myers & Miroglio
                                 A Professional Law Corporation

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

Thomas H. Lowenstein             President, North Bay Plywood

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

Terry L. Robinson                President & Chief Executive Officer

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


THE VINTAGE BANK

Andrew J. Berkstoffer            CEO and Chairman, Beckstoffer Vineyards

Sandra H. Funseth                Investor

Houghton Gifford, M D            Physician and Attorney, Retired

William L. Kastner               President, Kastner Pontiac-Olds-GMC-Honda

Andrew J. Nicks, M D             Physician

Carolyn D. Sherwood              Real Estate Broker Coldwell Banker/Brokers of the Valley

Director Emeritus                Chairman of the Board
Joseph Vallerga                  Vallerga's Markets


North Bay Bancorp & The Vintage Bank Corporate Secretary
Wyman G. Smith, III              Attorney with Gaw, Van Male, Smith, Myers & Miroglio
                                 A Professional Law Corporation


                                                                                                    33
</TABLE>
<PAGE>


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
CORPORATE INFORMATION
-------------------------------------------------------------------------------------------------------------
<S>                                                  <C>
Corporate Headquarters & Main Office Location:
1500 Soscol Avenue
Napa, CA 94559-1314

Branch Locations:
3271 Browns Valley Road
Napa, CA 94558-5499

3626 Bel Aire Plaza
Napa, CA 94558-2831

Shareholder Information:
         Trading                                     OTC Bulletin Board - Symbol NBAN

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

                                                     Van Kasper & Company
                                                     600 California Street, Suite 1700
                                                     San Francisco, CA 94108
                                                     1 (800) 652-1747

                                                     Pacific Crest Securities
                                                     111 SW Fifth Avenue, 42nd Floor
                                                     Portland, OR 97204
                                                     1 (800) 473-3775

         Transfer Agent                              ChaseMellon Shareholder Services, L.L.C.
                                                     Shareholder Relations
                                                     P. O. Box 3315
                                                     South Hackensack, New Jersey 07606
                                                     1 (800) 356-2017
                                                     TTD FOR HEARING IMPAIRED: 1 (800) 231-5469
                                                     Foreign Shareholders: (201) 329-8660
                                                     Internet Address:  www.chasemellon.com

         Notice of Annual Meeting                    Marriott Hotel - Napa Valley
                                                     3425 Solano Ave.
                                                     Napa, CA 94558
                                                     May 9, 2000 - 7:00 p.m.

General Counsel:                                     Wyman G. Smith, III
                                                     Gaw, Van Male, Smith, Myers & Mirogilo
                                                     944 Main Street
                                                     Napa, CA 94559

Corporate Secretary:                                 Wyman G. Smith, III

For additional copies of this report or              Pansy F. Smith
copies of the 10-KSB Report contact:                 Assistant Corporate Secretary
                                                     North Bay Bancorp
                                                     1500 Soscol Avenue
                                                     Napa, CA 94559-1314
                                                     (707) 258-3971

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

Web Site:                                            www.vintagebank.com
</TABLE>

35