================================================================================

                                  FORM 10-QSB/A

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                                       OR

[X]                TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

[ ]              FOR THE TRANSITION PERIOD FROM ______ TO ______

                         COMMISSION FILE NUMBER: 0-23299

                              BAY BANCSHARES, INC.
        (Exact name of small business issuer as specified in its charter)

                      TEXAS                             76-0046244
         (State or other jurisdiction                (I.R.S. Employer
       of incorporation or organization)            Identification No.)

                             1001 HIGHWAY 146 SOUTH
                              LA PORTE, TEXAS 77571
                    (Address of principal executive offices)

                                 (281) 471-4400
                (Issuer's telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X]     No [ ]

As of November 8, 2000, there were 1,971,783 shares of the registrant's Common
Stock, par value $1.00 per share outstanding.

* The Company's Form 10-QSB for the quarter ended September 30, 2000 is hereby
amended to correct a consolidated balance sheet computation error made in Part
I, Item 1.

================================================================================
<PAGE>
PART I - FINANCIAL INFORMATION

                      BAY BANCSHARES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

                                                   SEPTEMBER 30,    DECEMBER 31,
                                                       2000             1999
                                                     ---------       ---------
                                                    (Unaudited)
ASSETS
Cash and cash equivalents
   Cash and due from banks .......................   $  10,719       $  11,170
   Federal funds sold ............................      13,373           2,715
                                                     ---------       ---------
      Total cash and cash equivalents ............      24,092          13,885

Securities available-for-sale ....................      80,269          75,551
Loans, net of allowance for
  credit losses of $2,095 and $1,985 .............     207,333         197,427
Bank premises and equipment, net .................       8,405           8,881
Other assets .....................................      12,624          13,437
                                                     ---------       ---------
      Total assets ...............................   $ 332,723       $ 309,181
                                                     =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
   Deposits
      Noninterest-bearing ........................   $  60,063       $  56,556
      Interest-bearing deposits ..................     230,543         212,670
                                                     ---------       ---------
      Total deposits .............................     290,606         269,226

   Borrowings ....................................      11,000          11,000
   Other liabilities .............................       2,492           2,343
                                                     ---------       ---------
      Total liabilities ..........................     304,098         282,569

Stockholders' equity
   Common stock ..................................       2,093           2,092
   Additional paid-in capital ....................      17,554          17,548
   Retained earnings .............................      11,739           9,660

   Accumulated other comprehensive loss ..........      (1,358)         (1,592)
                                                     ---------       ---------
                                                        30,028          27,708
Less: Treasury stock .............................      (1,403)         (1,096)
      Total stockholders' equity .................      28,625          26,612
                                                     ---------       ---------
      Total liabilities and stockholders' equity .   $ 332,723       $ 309,181
                                                     =========       =========

      (See accompanying notes to interim consolidated financial statements)

                                        2
<PAGE>
                      BAY BANCSHARES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED        NINE MONTHS ENDED
                                              SEPTEMBER 30,             SEPTEMBER 30,
                                          --------------------      --------------------
                                            2000         1999         2000         1999
                                          -------      -------      -------      -------
<S>                                       <C>          <C>          <C>          <C>
Interest income

  Loans, including fees ............      $ 4,787      $ 4,147      $13,639      $11,808

  Securities .......................        1,271        1,188        3,793        3,347

  Federal funds sold ...............          244           41          523          507
                                          -------      -------      -------      -------
  Total interest income                     6,302        5,376       17,955       15,662

Interest expense

  Deposits .........................        2,634        1,986        7,173        5,796

  Other ............................          193          127          532          226
                                          -------      -------      -------      -------
  Total interest expense ...........        2,827        2,113        7,705        6,022
                                          -------      -------      -------      -------
    Net interest income                     3,475        3,263       10,250        9,640

  Provision for credit losses ......          329          150          864          430
                                          -------      -------      -------      -------
Net interest income after provision
 for credit losses .................        3,146        3,113        9,386        9,210

Noninterest income .................

  Service charges ..................          730          612        1,881        1,758

  Other ............................          401          336        1,283        1,032
                                          -------      -------      -------      -------
    Total noninterest income .......        1,131          948        3,164        2,790

Noninterest expense

  Salaries and employee benefits ...        1,555        1,560        4,652        4,698

  Occupancy expense, net ...........          473          465        1,408        1,391

  Other noninterest expense ........          971          950        2,908        2,891
                                          -------      -------      -------      -------
  Total noninterest expense ........        2,999        2,975        8,968        8,980
                                          -------      -------      -------      -------
Earnings before income taxes .......        1,278        1,086        3,582        3,020

  Provision for income taxes .......          381          366        1,145        1,028
                                          -------      -------      -------      -------
    Net earnings ...................      $   897      $   720      $ 2,437      $ 1,992
                                          =======      =======      =======      =======

    Net earnings per share (basic) .      $  0.45      $  0.36      $  1.23      $  1.00
    Net earnings per share (diluted)         0.43         0.35         1.17         0.97
</TABLE>

      (See accompanying notes to interim consolidated financial statements)

                                        3
<PAGE>
                      BAY BANCSHARES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED           NINE MONTHS ENDED
                                                                      SEPTEMBER 30,               SEPTEMBER 30,
                                                                  ---------------------       ---------------------
                                                                    2000          1999          2000          1999
                                                                  -------       -------       -------       -------
<S>                                                               <C>           <C>           <C>           <C>
Net earnings ...............................................      $   897       $   720       $ 2,437       $ 1,992
Other comprehensive income, net of tax:

Unrealized (losses) gains on securities:
     Unrealized holding (losses) gains arising during period          731          (108)          234        (1,550)
     Less:  reclassification adjustment for gains (losses)
included in net earnings ...................................         --               5          --             (28)
                                                                  -------       -------       -------       -------
                                                                      731          (103)          234        (1,578)
                                                                  -------       -------       -------       -------
Comprehensive income .......................................      $ 1,628       $   617       $ 2,671       $   414
                                                                  =======       =======       =======       =======
</TABLE>

      (See accompanying notes to interim consolidated financial statements)

                                        4
<PAGE>
                      BAY BANCSHARES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                               NINE MONTHS ENDED
                                                                                  SEPTEMBER 30,
                                                                            -----------------------
                                                                              2000           1999
                                                                            --------       --------
<S>                                                                         <C>               <C>
Cash flows from operating activities:

      Net earnings ...................................................      $  2,437          1,992
      Adjustments to reconcile net earnings to
        net cash provided by operating activities:
            Provision for credit losses ..............................           864            430
            Depreciation .............................................           717            896
            Gain on sale of available-for-sale securities ............          --              (42)
            Amortization of premiums, net of accretion and discounts
             on securities ...........................................            37             87
            Effect of phantom stock plan .............................          --               48
            Decrease (increase) in other assets ......................           290           (877)
            Increase in other liabilities ............................            28            881
                                                                            --------       --------
                  Net cash provided by operating activities ..........         4,373          3,415

Cash flows from investing activities:
      Proceeds from sale of available-for-sale securities ............          --            7,943
      Proceeds from principal repayments, maturities, and calls of
        available-for-sale securities ................................         7,051         10,479
      Purchases of available-for-sale securities .....................       (11,451)       (30,012)
      Net increase in loans ..........................................       (10,247)       (24,602)
      Purchases of bank premises and equipment .......................          (241)        (1,017)
                                                                            --------       --------
                  Net cash used in investing activities ..............       (14,888)       (37,209)

Cash flows from financing activities:
      Sale of common stock ...........................................             7              5
      Purchase of treasury stock .....................................          (307)          (374)
      Net increase in deposits .......................................        21,380         12,666
      Advance from Federal Home Loan Bank ............................          --            8,000
      Dividends paid .................................................          (358)          (358)
                                                                            --------       --------


                  Net cash provided  by financing activities .........        20,722         19,939

                  Net increase (decrease) in cash and cash equivalents        10,207        (13,855)


Cash and cash equivalents at beginning of period .....................        13,885         25,456
                                                                            --------       --------
Cash and cash equivalents at end of period ...........................      $ 24,092       $ 11,601
                                                                            ========       ========
</TABLE>

      (See accompanying notes to interim consolidated financial statements)

                                        5
<PAGE>
<TABLE>
<CAPTION>
                                                           NINE MONTHS ENDED                       NINE MONTHS ENDED
                                                          SEPTEMBER 30, 2000                      SEPTEMBER 30, 1999
                                                  ----------------------------------      ----------------------------------
                                                             (UNAUDITED)                                           (UNAUDITED)
                                                                 TAX                                                   TAX
                                                 BEFORE TAX   (EXPENSE)       NET OF     BEFORE TAX    (EXPENSE)      NET OF
                                                   AMOUNT      BENEFIT      TAX AMOUNT     AMOUNT       BENEFIT     TAX AMOUNT
                                                  -------      -------       -------      -------       -------      -------
<S>                                               <C>          <C>           <C>          <C>           <C>          <C>
Unrealized gains on securities:
  Unrealized holding gains (losses)
    arising during period ..................      $   355      $  (121)      $   234      $(2,077)      $   527      $(1,550)
 Less: reclassification adjustments for
    (losses) gains included in net earnings          --           --            --            (42)           14          (28)
                                                  -------      -------       -------      -------       -------      -------
Other comprehensive income .................      $   355      $  (121)      $   234      $(2,119)      $   541      $(1,578)
                                                  =======      =======       =======      =======       =======      =======
</TABLE>

ITEM 2. -MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

      Certain of the matters discussed in this document and in the documents
incorporated into this document by reference, including matters discussed under
the captions "Management's Discussion and Analysis or Plan of Operation," may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, and as such may involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from future results, performance or achievements expressed or implied by such
forward-looking statements. The words "expects," "estimates," "anticipates,"
"contemplated," "intends," "plans," "believes," "seek," "will," "would,"
"should," "projected" and similar expressions are intended to identify such
forward-looking statements.

      The Company's actual results or experience may differ materially from the
results anticipated in such forward-looking statements due to a variety of
factors, including, but not limited to: (1) the effects of future acquisitions,
if any; (2) the concentration of indirect automobile dealer paper in the loan
portfolio; (3) the effects of future economic conditions on the Company and its
customers; (4) governmental monetary and fiscal policies, as well as legislative
and regulatory changes; (5) the risks of changes in interest rates on the level
and composition of deposits, loan demand and the values of loan collateral,
securities and interest rate protection agreements, as well as interest rate
risks; (6) the effects of competition from other commercial banks, thrifts,
mortgage banking firms, insurance companies, money market and other mutual fund
and other financial institutions operation in the Company's market areas and
elsewhere, including competitors offering banking products and services by mail,
telephone, computer and the Internet; (7) the failure of assumptions underlying
the establishment of reserves for credit losses and the fact that estimations of
values of collateral and various financial assets and liabilities and
technological changes, including "Year 2000" data systems compliance issues, are
more difficult or expensive than anticipated; and (8) other uncertainties set
forth in the Company's other public reports and filings and public statements.
All written or oral forward-looking statements attributable to the Company are
expressly qualified in their entirety by these cautionary statements.

      Bay Bancshares, Inc. (the "Company") was incorporated as a business
corporation in 1982 under the laws of the State of Texas to be a multi-bank
holding company for Bayshore National Bank (the "Bank"). The Company currently
serves its market areas from its headquarters in La Porte and ten full-service
banking office locations in La Porte, Liberty, Cleveland, Seabrook, Pasadena,
Baytown, Deer Park and Mont Belvieu, Texas. Additionally, the Company operates
three Loan Production Offices ("LPOs") in the Houston area and an Internet
banking site (WWW.BANKBNB.COM).

      Net earnings for the nine months ended September 30, 2000 was $2.4 million
compared with $2.0 million for the nine months ended September 30, 1999, an
increase of $445,000 or 22.34%. Per share (basic) earnings increased $0.23 to
$1.23 for the nine months ended September 30, 2000 compared to $1.00 for the
same period ended September 30, 1999. Per share (diluted) earnings increased
$0.20 to

                                        7
<PAGE>
$1.17 for the nine months ended September 30, 2000 from $0.97 for the same
period ended September 30, 1999. Net earnings for the third quarter 2000 was
$897,000, an increase of $177,000 or 24.58% compared with $720,000 for the same
period in 1999. Per share (basic) earnings increased $0.09 to $0.45 for the
third quarter 2000 from $0.36 for the same period in 1999. Per share (diluted)
earnings increased $0.08 to $0.43 for the third quarter 2000 from $0.35 for the
same period in 1999.

      On February 2, 1999 the Company announced that the Board of Directors
approved the repurchase of up to $1.0 million of Company Common Stock (the
"Plan"). Additionally, on July 25, 2000 the Company's Board of Directors
approved $500,000 for the repurchase of Company Common Stock bringing the amount
to be repurchased by the Plan to $1.5 million. As of November 8, 2000 the Plan,
using excess funds, has repurchased 44,600 shares of Common Stock in the open
market in eleven separate trades at a total cost of $865,000. As of November 8,
2000 there were 1,971,783 shares of Common Stock outstanding.

RESULTS OF OPERATIONS

Net Interest Income

      Net interest income represents the amount by which interest income on
interest-earning assets, including securities and loans, exceeds interest
expense incurred on interest-bearing liabilities, including deposits and other
borrowed funds. Net interest income is the principal source of the Company's
income. Interest rate fluctuations, as well as changes in the amount and type of
earning assets and liabilities, combine to affect net interest income.

      Net interest income for the nine months ended September 30, 2000 was $10.3
million compared with $9.6 million for the nine months ended September 30, 1999,
an increase of $610,000 or 6.33% and an increase of $212,000 or 6.50% in the
third quarter 2000 as compared with the third quarter 1999. Average
interest-earning assets increased from 88.36% of total average assets at
September 30, 1999 to 89.95% of total average assets at September 30, 2000.
Average interest-earning assets for the nine months ended September 30, 2000
compared to the same period in 1999 increased primarily due to the Company's
internally generated loan growth. Average gross loans increased to $202.5
million for the nine months ended September 30, 2000 from $179.8 million for the
nine months ended September 30, 1999, an increase of $22.7 million or 12.63%.

      Net interest income was improved by an increase in average loans and an
increase in the rate of interest-earning assets from 7.79% in September 30, 1999
to 8.20% for the nine months ended September 30, 2000. Average interest-bearing
liabilities increased to $233.3 million for the nine months ended September 30,
2000 from $209.1 million for the nine months ended September 30, 1999, an
increase of $24.2 million or 11.57%.

      The Company posted net interest margins of 4.68% and 4.79% and net
interest spreads of 3.80% and 3.95% for the periods ended September 30, 2000 and
September 30, 1999, respectively. The decrease in net interest margin for the
nine months ended 1999 compared to the same period during 2000 reflects a 41
basis point increase in the yield on average interest-earning assets and a 56
basis point increase in the cost of interest-bearing liabilities.

                                        8
<PAGE>
      The following table presents for the periods indicated the total dollar
amount of average balances, interest income from average interest-earning assets
and the resultant yields, as well as the interest expense on average
interest-bearing liabilities, expressed both in dollars and rates. No tax
equivalent adjustments were made and all average balances are daily average
balances.

<TABLE>
<CAPTION>
                                                                              NINE MONTHS ENDED SEPTEMBER 30,
                                              ------------------------------------------------------------------------------------
                                                                 2000                                       1999
                                              ----------------------------------------      --------------------------------------
                                               AVERAGE         INTEREST       AVERAGE        AVERAGE      INTEREST        AVERAGE
                                             OUTSTANDING        EARNED/        YIELD/      OUTSTANDING     EARNED/         YIELD/
                                               BALANCE           PAID           RATE         BALANCE        PAID            RATE
                                              ---------       ---------      ---------      ---------     ---------      ---------
<S>                                           <C>             <C>                 <C>       <C>           <C>                 <C>
Assets

Interest-earning assets:

  Loans ...................................   $ 202,485       $  13,639           8.98%     $ 179,803     $  11,808           8.76%

  Securities ..............................      78,941           3,793           6.41%        75,369         3,347           5.92%

  Federal funds sold and other temporary
    Investments ...........................      10,362             523           6.73%        12,982           507           5.21%
                                              ---------       ---------      ---------      ---------     ---------      ---------
    Total interest-earning assets .........     291,788          17,955           8.20%       268,154        15,662           7.79%
                                              ---------       ---------      ---------      ---------     ---------      ---------
  Less allowance for credit losses               (2,039)                                       (1,998)
                                              ---------                                     ---------
    Total interest-earning assets, net of
      Allowance ...........................     289,749                                       266,156

    Nonearning assets .....................      34,629                                        33,924
                                              ---------                                     ---------
      Total assets ........................   $ 324,378                                     $ 300,080
                                              =========                                     =========

Liabilities and stockholders' equity
  Interest-bearing liabilities:

  Interest-bearing demand deposits ........   $  33,299       $     260           1.04%     $  31,767     $     251           1.05%

  Public fund deposits ....................       4,492             124           3.68%         7,484           226           4.03%

  Savings and money market accounts .......      55,139           1,392           3.37%        63,248         1,477           3.11%

  Certificates of deposit .................     129,391           5,397           5.56%       101,168         3,842           5.06%
  Federal funds purchased, FHLB line of
    credit and other borrowings ...........      11,000             532           6.45%         5,481           226           5.50%
                                              ---------       ---------      ---------      ---------     ---------      ---------
      Total interest-bearing liabilities ..     233,321           7,705           4.40%       209,148         6,022           3.84%
                                              ---------       ---------      ---------      ---------     ---------      ---------
Noninterest-bearing liabilities:

  Noninterest-bearing demand deposits .....      61,796                                        63,031

  Other liabilities .......................       2,138                                         1,723
                                              ---------                                     ---------
    Total liabilities .....................     297,255                                       273,902
                                              ---------                                     ---------
Stockholders' equity ......................      27,123                                        26,178
                                              ---------                                     ---------
    Total liabilities and stockholders'
      Equity ..............................   $ 324,378                                     $ 300,080
                                              =========                                     =========
  Net interest income .....................                   $  10,250                                   $   9,640
                                                              =========                                   =========
  Net interest spread .....................                                       3.80%                                       3.95%
                                                                             =========                                   =========
  Net interest margin .....................                                       4.68%                                       4.79%
                                                                             =========                                   =========
</TABLE>

                                        9
<PAGE>
Provision for Credit Losses

      Provisions for credit losses are charged to income in order to bring the
Company's allowance for credit losses to a level deemed appropriate by
Management based on the factors discussed under "-Financial Condition." The
provision for Credit Losses increased to $864,000 for the nine months ended
September 30, 2000 from $430,000 for the same time period in 1999, an increase
of $434,000 or 100.01%. The increase in the provision reflects with the overall
increase in loan volume and Management's analysis of the allowance for credit
losses.

Noninterest Income

      Noninterest income is an important source of revenue for financial
institutions. The Company's primary source of noninterest income is service
charges on deposit accounts and other banking service related fees. Noninterest
income for the nine months ended September 30, 2000 was $3.2 million compared
with $2.8 million for the nine months ended September 30, 1999, an increase of
$374,000 or 13.41%. Noninterest income for the three months ended September 30,
2000 was $1.1 million compared with $948,000 for the three months ended
September 30, 1999, an increase of $183,000 or 19.30%. The Small Business
Administration (SBA) gain component of noninterest income increased during the
third quarter 2000 to $30,000 from $19,000 compared with same period during
1999. Contributing to other noninterest income was an increase in the Company's
ATM fees of $27,000 to $139,000 for the third quarter ended 2000 compared with
the same period in 1999.

      The following table presents for the periods indicated the major
categories of noninterest income:

                                     THREE MONTHS ENDED   NINE MONTHS ENDED
                                       SEPTEMBER 30,        SEPTEMBER 30,
                                      ---------------      ---------------
                                       2000     1999        2000     1999
                                      ------   ------      ------   ------
                                        (Dollars in          (Dollars in
                                         thousands)           thousands)

Service charges on deposit accounts   $  730   $  612      $1,881   $1,758
Gain on sale of SBA loans .........       30       19         180       81
ATM fee income ....................      139      112         396      312
Alternative investments ...........       44       50         136      149
Other noninterest income ..........      188      155         571      490
                                      ------   ------      ------   ------
     Total noninterest income .....   $1,131   $  948      $3,164   $2,790
                                      ======   ======      ======   ======
Noninterest Expense

      In the nine month period ended September 30, 2000, noninterest expense
decreased $12,000 or 0.13% to $9.0 million compared with the nine months ended
1999 and increased $24,000 or 0.81% in the third quarter 2000 as compared with
the third quarter 1999. Employee compensation and benefit expense for the nine
months ended September 30, 2000 was $4.7 million, a decrease of $46,000 or 0.98%
compared with the nine months ended 1999 and a decrease of $5,000 or 0.32% in
the third quarter 2000 as compared with the third quarter 1999. Non-staff
expense for the nine months ended September 30, 2000 was $4.3 million, an
increase of $34,000 or 0.79% from $4.3 million in the same period of 1999 and an
increase of $29,000 or 2.05% in the third quarter 2000 as compared with the
third quarter 1999. Non staff expenses for the nine months ended 2000 compared
to the same period during 1999 increased slightly due the Company's growth. The
Company remains committed to growth while controlling cost and as a result of
this on going commitment, the efficiency ratio decreased to 62.98% from 68.32%
during the third quarter 2000 compared with the same period in 1999.

                                       10
<PAGE>
      The following table presents for the periods indicted the major categories
of noninterest expense:

                                          THREE MONTHS ENDED   NINE MONTHS ENDED
                                             SEPTEMBER 30,       SEPTEMBER 30,
                                           ----------------    ----------------
                                            2000      1999      2000      1999
                                           ------    ------    ------    ------
                                              (DOLLARS IN        (DOLLARS IN
                                               THOUSANDS)         THOUSANDS)

Employee compensation and benefits .....   $1,555    $1,560    $4,652    $4,698
Non-staff expense:
  Net bank premises expense ............      230       225       668       637
  Equipment rentals, depreciation
    and maintenance ....................      243       240       740       754
  Data processing ......................       71        72       204       229
  Professional fees ....................      174       128       386       371
  Regulatory assessments/FDIC
    insurance ..........................       34        32       100        94
  Ad valorem and franchise taxes .......       21        72       160       216
  Other ................................      671       646     2,058     1,981
                                           ------    ------    ------    ------
    Total non-staff expenses ...........    1,444     1,415     4,316     4,282
                                           ------    ------    ------    ------
    Total noninterest expense ..........   $2,999    $2,975    $8,968    $8,980
                                           ======    ======    ======    ======

Financial Condition

      Total assets as of September 30, 2000 were $332.7 million compared with
$309.2 million at December 31, 1999 an increase of $23.5 million or 7.60%. At
September 30, 2000, investment securities totaled $80.3 million, an increase of
$4.7 million or 6.22% from $75.6 million at December 31, 1999. Net loans were
$207.3 million at September 30, 2000, an increase of $9.9 million or 5.02% from
$197.4 million at December 31, 1999. Third quarter 2000 balance sheet growth was
a direct result of the Company's continued customer sales and calling programs.

      The allowance for credit losses is a reserve established through charges
to earnings in the form of a provision for credit losses. Management has
established an allowance for credit losses which it believes is adequate for
estimated losses in the Company's loan portfolio. The Company follows a loan
review program to evaluate the credit risk in the loan portfolio. Through the
loan review process, the Company maintains an internally classified loan watch
list which, along with the delinquency list of loans, helps management assess
the overall quality of the loan portfolio and the adequacy of the allowance for
credit losses. Loans classified as "substandard" are those loans with clear and
defined weaknesses such as a highly-leveraged position, unfavorable financial
ratios, uncertain repayment sources or poor financial condition, which may
jeopardize recoverability of the debt. As loan volume continues to grow,
Management remains committed to increase the allowance for credit losses to
reflect such growth. The allowance for credit losses as of September 30, 2000
was $2.1 million or 1.00% of outstanding loans compared with $2.0 million or
1.00% of outstanding loans as of December 31, 1999.

      At September 30, 2000, deposits totaled $304.1 million, an increase of
$21.5 million or 7.61% from $282.6 million at December 31, 1999.

      Stockholders' equity increased from $26.6 million at December 31, 1999 to
$28.6 million at September 30, 2000, an increase of $2.0 million or 7.52%. As of
September 30, 2000 the Company's ratio of stockholders' equity to total assets
was 8.60% as compared with 8.61% as of December 30, 1999.

      Liquidity involves the Company's ability to raise funds to support asset
growth or reduce assets to meet deposit withdrawals and other payment
obligations, to maintain reserve requirements and otherwise to operate the
Company on an ongoing basis. The Company's liquidity needs are primarily met by
growth in core deposits. Although access to purchased funds from correspondent
banks is available and has been utilized on occasion to take advantage of
investment opportunities, the Company does not rely on these external funding
sources. The cash and federal funds sold position, supplemented by amortizing

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<PAGE>
investment along with payments and maturities within the loan portfolio, have
historically created an adequate liquidity position.

      The Company's cash flows are composed of three classifications: cash flows
from operating activities, cash flows from investing activities, and cash flows
from financing activities. Net cash provided by operating activities was $4.4
million and $3.4 million for the nine months ended September 30, 2000 and 1999
respectively. The increase in net cash provided by operating activities for the
nine months ended September 30, 2000 compared with the same period in 1999 was
primarily due to the decrease in other assets in 2000.

      Net cash used in investing activities was $14.9 million and $37.2 million
for the nine months ended September 30, 2000 and 1999, respectively. The
decrease in net cash used in investing activities for the nine months ended
September 30, 2000 compared with the same period in 1999 was primarily due to
the decrease in purchase of available-for-sale securities in 2000.

      Net cash provided by financing activities was $20.7 million and $19.9
million for the nine months ended September 30, 2000 and 1999, respectively. The
increase in net cash provided by financing activities for the nine months ended
September 30, 2000 compared with the same period in 1999 was primarily due to
the increase in deposits in 2000.

      Capital management consists of providing equity to support both current
and future operations. The Company is subject to capital adequacy requirements
imposed by the Board of Governors of the Federal Reserve System ("Federal
Reserve Board") and the Bank is subject to capital adequacy requirements imposed
by the Office of the Comptroller of Currency ("OCC"). Both the Federal Reserve
board and the OCC have adopted risk-based capital requirements. The following
table provides a comparison of the Company's and the Bank's leverage and risk
weighted capital ratios as of September 30, 2000 and with regulatory standards.

                                                ACTUAL RATIO
                                   MINIMUM      SEPTEMBER 30,
                                   REQUIRED         2000
                                   --------     ------------
THE COMPANY
Leverage ratio                       3.00%          7.63%
Tier 1 risk-based capital            4.00%         10.37%
Risk-based capital ratio             8.00%         11.24%

THE BANK
Leverage ratio                       3.00%          7.22%
Tier 1 risk-based capital            4.00%          9.75%
Risk-based capital ratio             8.00%         10.63%


PART II - Other Information

ITEM 1. - Legal Proceedings

          None

ITEM 2. - Changes in Securities

          None

ITEM 3. - Defaults Upon Senior Securities

          None

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<PAGE>
ITEM 4. - Submission of Matters to a Vote of Security Holders

          None

ITEM 5. - Other Information

          None

ITEM 6. - Exhibits and Reports on Form 8-K

          (a) The following exhibits are filed with this report;

          EXHIBIT
           NUMBER                  DESCRIPTION
          -------                  -----------
             27                    Financial Data Schedule

          (b) No reports on Form 8-K were filed by the Company during the three
              months ended September 30, 2000

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                          BAY BANCSHARES, INC.



                                          By: /s/ L.D. WRIGHT    11/30/00
                                                  L. D. Wright
                                                  Chief Executive Officer

                                          By: /s/ KIM E. LOVE    11/30/00
                                                  Kim E. Love
                                                  Controller

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