SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-QSB


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


                      For the quarter ended June 30, 2002.

                        Commission file number: 333-87781



                            Bay National Corporation
             (Exact name of Registrant as specified in its charter)

                Maryland                                     52-2176710
----------------------------------------           -----------------------------
     (State or other jurisdiction of                      (I.R.S. Employer
     incorporation or organization)                     Identification No.)

  2328 West Joppa Road, Lutherville, MD                        21093
----------------------------------------           -----------------------------
(Address of principal executive offices)                     (Zip Code)

        Registrant's telephone number including area code: (410) 494-2580

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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
                      ----------                        ----------


The number of shares outstanding of the registrant's common stock on August 12,
2002:

         $.01 Par Value - 1,242,020




<PAGE>


20

PART I  -     FINANCIAL INFORMATION

Item 1.       Financial Statements

                                               BAY NATIONAL CORPORATION

                                              CONSOLIDATED BALANCE SHEETS
                                       As of June 30, 2002 and December 31, 2001

<TABLE>
<CAPTION>
                                                                                    June 30,           December 31,
                                                                                      2002                 2001
                                                                                 ---------------      ---------------
<S>                                                                             <C>                  <C>
ASSETS                                                                            (Unaudited)
     Cash and due from banks                                                    $       344,087      $     3,065,479
     Federal funds sold and other overnight investments                              10,428,955            6,488,461
     Loans held for sale                                                              1,554,625              682,000
     Investment securities available for sale (AFS) - at fair value                     747,662             -
     Federal Reserve Bank stock                                                         275,940              275,940
     Federal Home Loan Bank of Atlanta stock                                             79,900             -
     Loans, net of unearned fees                                                     49,312,716           35,862,055
         Less: Allowance for credit losses                                             (617,000)            (447,000)
                                                                                 ---------------      ---------------
              Loans, net                                                             48,695,716           35,415,055
     Premises and equipment, net                                                        763,491              830,626
     Accrued interest receivable and other assets                                       331,819              268,265
                                                                                 ---------------      ---------------

              Total Assets                                                      $    63,222,195      $    47,025,826
                                                                                 ===============      ===============


LIABILITIES

     Non-interest-bearing deposits                                              $     6,800,282      $     6,025,624
     Interest-bearing deposits                                                       47,759,833           32,113,503
                                                                                 ---------------      ---------------
         Total deposits                                                              54,560,115           38,139,127

     Short-term borrowings                                                              407,000             -
     Accrued expenses and other liabilities                                             268,543              284,547
                                                                                 ---------------      ---------------

              Total Liabilities                                                      55,235,658           38,423,674
                                                                                 ---------------      ---------------

STOCKHOLDERS' EQUITY

     Common stock - $.01 par value, authorized: 9,000,000 shares authorized,
         1,242,020 issued and outstanding as of June 30, 2002 and December 31,
         2001, respectively:                                                             12,420               12,420
     Surplus                                                                         12,407,780           12,407,780
     Accumulated deficit                                                             (4,433,663)          (3,818,048)
                                                                                 ---------------      ---------------

              Total Stockholders' Equity                                              7,986,537            8,602,152
                                                                                 ---------------      ---------------

              Total Liabilities and Stockholders' Equity                        $    63,222,195      $    47,025,826
                                                                                 ===============      ===============







                             See accompanying notes to consolidated financial statements.
</TABLE>


                                                          2
<PAGE>
<TABLE>
<CAPTION>
                                             BAY NATIONAL CORPORATION

                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                         For the three and six month periods ended June 30, 2002 and 2001
                                                    (Unaudited)

                                                         Three Months Ending                  Six Months
                                                              June 30,                     Ending June 30,
                                                       2002            2001              2002            2001
                                                    ------------    ------------     -------------    -----------
<S>                                                <C>             <C>              <C>              <C>
INTEREST INCOME:
   Interest and fees on loans                      $    752,267    $    314,921     $   1,377,056    $   466,536
   Interest on federal funds sold and other
     overnight investments                               25,814         115,853            57,004        320,098
   Taxable interest and dividends on investment
     securities                                           9,040           8,100             9,040          8,100
                                                    ------------    ------------     -------------    -----------
     Total interest income                              787,121         438,874         1,443,100        794,734
                                                    ------------    ------------     -------------    -----------

INTEREST EXPENSE:
   Interest on deposits                                 292,120         147,207           580,736        296,507
   Interest on short-term borrowings                        638          -                    638         -
                                                    ------------    ------------     -------------    -----------
     Total interest expense                             292,758         147,207           581,374        296,507
                                                    ------------    ------------     -------------    -----------

Net interest income                                     494,363         291,667           861,726        498,227

Provision for credit losses                             112,000         126,500           170,000        174,000
                                                    ------------    ------------     -------------    -----------

Net interest income after provision for
   credit losses                                        382,363         165,167           691,726        324,227
                                                    ------------    ------------     -------------    -----------

NON-INTEREST INCOME:
   Service charges on deposit accounts                   29,979           6,585            48,377          9,675
   Gain on sale of mortgage loans                       114,085          66,944           231,778         77,636
   Other income                                           8,961          14,699            17,167         17,713
                                                    ------------    ------------     -------------    -----------
     Total non-interest income                          153,025          88,228           297,322        105,024
                                                    ------------    ------------     -------------    -----------

NON-INTEREST EXPENSES:
   Salaries and employee benefits                       512,907         386,958           960,888        727,562
   Occupancy expenses                                    54,044          54,787           106,999         98,922
   Furniture and equipment expenses                      52,633          42,093           101,708         89,059
   Legal and professional fees                           33,118          32,216            62,218         67,690
   Data processing and other outside services            82,643          76,291           148,687        143,884
   Other expenses                                       124,575          84,446           224,163        148,187
                                                    ------------    ------------     -------------    -----------
     Total non-interest expenses                        859,920         676,791         1,604,663      1,275,304
                                                    ------------    ------------     -------------    -----------

Loss before income taxes                               (324,532)       (423,396)         (615,615)      (846,053)
Income tax benefit                                       -               -                -               -
                                                    ------------    ------------     -------------    -----------
NET LOSS                                           $   (324,532)   $   (423,396)    $    (615,615)   $  (846,053)
                                                   =============   =============    ==============   ============

Per Share Data:
   Cash Dividends Paid                             $     -         $     -          $     -          $    -

   Net Loss (Basic and diluted)                    $       (.26)   $       (.34)    $        (.50)   $      (.68)
   Average Shares Outstanding (Basic and diluted)     1,242,020       1,242,020         1,242,020      1,242,020


                           See accompanying notes to consolidated financial statements.
</TABLE>



                                                        3
<PAGE>

<TABLE>
<CAPTION>
                                            BAY NATIONAL CORPORATION

                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             For the six-month periods ended June 30, 2002 and 2001
                                                   (Unaudited)

                                                                                2002                   2001
                                                                           -------------          -------------
<S>                                                                        <C>                    <C>
Cash Flows From Operating Activities
   Net loss                                                                $    (615,615)         $    (846,053)
   Adjustments to reconcile net loss to net cash used by
     operating activities:
       Depreciation                                                               93,046                 90,991
       Amortization of investment discounts                                         (940)               -
       Provision for credit losses                                               170,000                174,000
       Gain on sale of loans                                                    (231,778)               (77,636)
       Origination of loans held for sale                                    (13,350,213)            (5,847,450)
       Proceeds from sale of loans                                            12,709,366              5,304,286
       Net increase in accrued interest receivable and other assets              (63,554)               (79,894)
       Net (decrease) increase in accrued expenses and other liabilities         (16,004)                33,183
                                                                           -------------          -------------

            Net cash used by operating activities                             (1,305,692)            (1,248,573)
                                                                           -------------          -------------

Cash Flows From Investing Activities
    Purchases of investment securities - AFS                                    (746,722)               -
   Purchase of Federal Home Loan Bank of Atlanta stock                           (79,900)               -
   Net increase in loans                                                     (13,450,661)           (13,865,005)
   Capital expenditures                                                          (25,911)               (35,214)
                                                                           -------------          -------------
            Net cash used by investing activities                            (14,303,194)           (13,900,219)
                                                                           -------------          -------------

Cash Flows From Financing Activities
   Net increase in deposits                                                   16,420,988              6,294,501
   Net increase in short-term borrowings                                         407,000                -
                                                                           -------------          -------------
            Net cash provided by financing activities                         16,827,988              6,294,501
                                                                           -------------          -------------

Net increase (decrease) in cash and cash equivalents                           1,219,102             (8,854,291)
Cash and cash equivalents at beginning of period                               9,553,940             17,148,515
                                                                           -------------          -------------

Cash and cash equivalents at end of period                                 $  10,773,042          $   8,294,224
                                                                           =============          =============


















                          See accompanying notes to consolidated financial statements.

</TABLE>



                                                       4
<PAGE>


                            BAY NATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.   GENERAL

         Organization

         Bay National  Corporation  (the "Company") was  incorporated on June 3,
1999  under the laws of the  State of  Maryland  to  operate  as a bank  holding
company of a national bank with the name Bay National Bank (the "Bank").  On May
12,  2000,  the Company  purchased  all the shares of common stock issued by the
Bank.  The  Company's  operations  through  that date were limited to taking the
necessary  actions to organize and capitalize the Company and the Bank. The Bank
commenced  operations on May 12, 2000 after successfully  meeting the conditions
of the Office of the  Comptroller  of the  Currency  (the  "OCC") to receive its
charter  authorizing it to commence operations as a national bank, and obtaining
the approval of the Federal Deposit Insurance  Corporation to insure its deposit
accounts, and meeting certain other regulatory requirements.

         Basis of Presentation

         The accompanying consolidated financial statements include the activity
of Bay National Corporation and its wholly owned subsidiary,  Bay National Bank.
All significant  intercompany  transactions and balances have been eliminated in
consolidation.

         The foregoing consolidated financial statements are unaudited; however,
in the opinion of management,  all adjustments (comprising only normal recurring
accruals) necessary for a fair presentation of the results of the interim period
have been included.  These  statements  should be read in  conjunction  with the
financial   statements   and   accompanying   notes  included  in  Bay  National
Corporation's  2001 Annual  Report on Form  10-KSB.  The  results  shown in this
interim report are not necessarily  indicative of results to be expected for the
full year 2002.

         The  accounting  and  reporting  policies  of the  Company  conform  to
accounting principles generally accepted in the United States of America.

         Reclassifications

         Certain reclassifications have been made to amounts previously reported
to conform to the current presentation. These reclassifications had no effect on
previously reported results of operations or retained earnings.

2.   REGULATORY MATTERS

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







                                       5

<PAGE>

         Quantitative  measures  established  by  regulation  to ensure  capital
adequacy  require the Bank to maintain  minimum  amounts and ratios.  Management
believes,  as of June 30,  2002,  that  the  Bank  meets  all  capital  adequacy
requirements to which it is subject.

         As  of  June  30,  2002,  the  Bank  has  been   categorized  as  "Well
Capitalized"  by the OCC under the  regulatory  framework for prompt  corrective
action.  To be categorized as well  capitalized,  the Bank must maintain minimum
total risk-based, Tier I risk-based, and Tier I leverage ratios.

3.   INCOME TAXES

         The Company uses the liability method of accounting for income taxes as
required by SFAS No. 109,  "Accounting  for Income  Taxes".  Under the liability
method,  deferred-tax assets and liabilities are determined based on differences
between the financial  statement  carrying amounts and the tax bases of existing
assets and liabilities  (i.e.,  temporary  differences)  and are measured at the
enacted rates that will be in effect when these  differences  reverse.  Deferred
income taxes will be recognized  when it is deemed more likely than not that the
benefits  of such  deferred  income  taxes  will be  realized,  accordingly,  no
deferred income taxes or income tax benefits have been recorded by the Company.

4.   EARNINGS PER SHARE

         The  Company's  common stock  equivalents  were not  considered  in the
computation  of diluted  earnings  per share  because the result would have been
anti-dilutive.





















                                       6
<PAGE>


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

         This  discussion  and  analysis  provides an overview of the  financial
condition and results of operations of Bay National  Corporation  (the "Parent")
and its national bank subsidiary,  Bay National Bank (the "Bank"),  collectively
(the  "Company"),  as of June 30, 2002 and 2001 and for the three and  six-month
periods ended June 30, 2002 and 2001.

General

         On May 12, 2000 the Parent became a bank holding  company by purchasing
all of the common stock of the Bank. The Bank opened its first office on May 12,
2000, and a second office on May 26, 2000.

         The  Bank  was  formed  to  serve  the  business  communities  of North
Baltimore and Salisbury, Maryland.

Critical Accounting Policies

The Company's  financial  statements are prepared in accordance  with accounting
principles  generally  accepted  in the  United  States  (GAAP).  The  financial
information  contained  within the  financial  statements  is, to a  significant
extent, financial information that is based on measures of the financial effects
of  transactions  and events that have  already  occurred.  A variety of factors
could affect the  ultimate  value that is obtained  either when earning  income,
recognizing an expense, recovering an asset or relieving a liability. Management
uses many  factors  including  economic  conditions  and  trends,  the value and
adequacy  of  collateral,  the  volume  and  mix  of  the  loan  portfolio,  the
performance  of the  portfolio,  and internal  loan  processes of the Company in
determining  the  inherent  loss  that  may be  present  in the  Company's  loan
portfolio. Actual losses could differ significantly from management's estimates.
In addition,  GAAP itself may change from one  previously  acceptable  method to
another. Although the economics of transactions would be the same, the timing of
events that would impact the transactions could change.

The  Company  believes  its  most  critical  accounting  policy  relates  to the
allowance  for loan losses.  The allowance for loan losses is an estimate of the
losses that may be sustained in the loan  portfolio.  The  allowance is based on
two basic  principles of accounting:  (i) SFAS 5, Accounting for  Contingencies,
which  requires  that losses be accrued when they are probable of occurring  and
estimable,  and (ii) SFAS 114, Accounting by Creditors for Impairment of a Loan,
which requires that losses be accrued based on the differences  between the loan
balance  and the value of  collateral,  present  value of future  cash  flows or
values that are observable in the secondary market.

Financial Condition

         As of June 30, 2002,  total assets were  $63,222,195.  This  represents
growth of  $16,196,369  or 34.44% since  December 31, 2001. The growth in assets
was  funded by deposit  growth of  $16,420,988  or 43.06%  during the six months
ended June 30, 2002. Deposits at June 30, 2002 were $54,560,115.  Deposit growth
resulted from various  marketing  efforts including direct marketing by officers
and  directors,   direct  mail  campaigns,  and  listing  of  money  market  and
certificate  of  deposit  rates  in  print  publications  and on  the  Internet.
Management  has set the interest rates paid on deposits to be competitive in the
market  and will  continue  its  marketing  activities  to  generate  growth  in
deposits.

         While  the  Bank  does  not  rely  on  or  solicit  brokered  deposits,
regulatory rules require that approximately $5.3 million of deposits at June 30,
2002,  and $700,000 of deposits at December 31, 2001 be  classified  as brokered



                                       7
<PAGE>

deposits.  These  deposits were obtained  through the listing of  certificate of
deposit rates on Internet based listing  services.  These deposits were obtained
at rates competitive with the prevailing market rate for similar deposits in the
Company's local markets.  The  certificates  of deposit  outstanding at June 30,
2002 had an average  interest rate of 3.12% and an average term of 12.77 months.
Management  expects that it will continue to use this service as a complimentary
source of readily  available funds whenever the rates are competitive with local
sources of funding. The Company has not paid broker fees for deposits as of June
30, 2002.

         As of June 30,  2002,  loans  excluding  loans  held for sale (net of a
$617,000  allowance for credit losses) totaled  $48,695,716.  This represents an
increase of $13,280,661 or 37.50% from December 31, 2001. The composition of the
loan portfolio as of June 30, 2002 was approximately $33.2 million of commercial
loans,  $1.7 million of consumer loans,  and $14.4 million of real estate loans.
The composition of the loan portfolio as of December 31, 2001 was  approximately
$23.5 million of commercial  loans,  $2.1 million of consumer  loans,  and $10.3
million of real estate  loans.  There were  $1,554,625  and $682,000 of mortgage
loans held for sale as of June 30, 2002 and  December  31,  2001,  respectively.
Growth in the loan portfolio is a direct result of the marketing efforts of bank
employees as well as members of the Board of  Directors,  and the  Baltimore and
Salisbury Advisory Boards. The mix of loans is consistent with the initial plans
for the business.

         Funds  not  extended  in loans  are  held in cash  and due from  banks,
federal funds sold and other overnight  investments,  short-term  U.S.  Treasury
securities,  Federal  Reserve Bank stock,  and Federal Home Loan Bank of Atlanta
(FHLB)  stock.  At June 30, 2002,  the Company had federal  funds sold and other
overnight  investments  totaling  $10,428,955  as compared to  $6,488,461  as of
December 31, 2001.  The Company held  $275,940 of Federal  Reserve Bank stock at
both June 30, 2002,  and December 31, 2001. The Company  purchased  Federal Home
Loan Bank of Atlanta stock for $79,900,  and United States Treasury bills with a
maturity  value of $750,000  during the three months  ended June 30,  2002.  The
purchase  of the FHLB  stock  was made in order to  become a member of the FHLB.
This  membership  brings  certain  benefits  to the  Bank  including  access  to
borrowing  facilities  that can be used to meet liquidity  needs,  and access to
innovative  deposit  products that can be offered to the Bank's  customers.  The
Treasury securities are used to collateralize  repurchase agreements under which
$407,000 is outstanding as of June 30, 2002.

         Total capital at June 30, 2002 was $7,986,537 as compared to $8,602,152
at December 31, 2001. The decrease in capital is a result of the losses incurred
in  2002  and  is  consistent  with  the  initial  expectations  of  management.
Management  believes  that this capital is adequate to support  asset growth and
losses in 2002  similar to those  achieved in the year ended  December 31, 2001.
However,  management  expects  that  additional  capital  may be required in the
future  to  support  growth.  Management  and the Board of  Directors  regularly
monitor capital levels,  and are actively  evaluating  various  alternatives for
raising  capital  in  advance  of the  actual  need.  Any such  capital  raising
alternatives, if available at all, may be on terms which are not as favorable to
the Company as desired by management and may result in dilution to the Company's
shareholders.  If adequate capital is not available, the Company may be required
to curtail significantly its expected growth strategy.

Results of Operations

         On a consolidated  basis,  the Company  recorded a net loss of $324,532
and $615,615 for the three-month and six-month periods ended June 30, 2002, this
compares  to a net  loss  of  $423,396  and  $846,053  for the  three-month  and
six-month  periods  ended June 30,  2001.  The  improvement  in results  for the
six-month  period as compared  to the same period in 2001 is a direct  result of
the overall growth in the loan  portfolio  from  $19,513,326 at June 30, 2001 to
$49,312,716 at June 30, 2002.  Operating results for subsequent  periods in 2002


                                       8
<PAGE>

and for the year ending  December 31, 2002 are also projected to reflect losses.
The losses for the periods ended June 30, 2002 and 2001 were expected since loan
and deposit growth  initially  were not expected to produce net interest  income
sufficient  to cover  operating  expenses.  On average,  community  banks do not
achieve profitability for the first 24 to 36 months of operation.

Net Interest Income

         Net interest income is the difference  between income on assets and the
cost of funds supporting those assets.  Earning assets are composed primarily of
loans,  investments,  and federal funds sold;  interest-bearing deposits make up
the cost of funds.  Non-interest  bearing  deposits and capital are also funding
sources.  Changes in the volume and mix of earning  assets and  funding  sources
along  with  changes  in  associated  interest  rates  determine  changes in net
interest income.

         Net interest income for the three-month  period ended June 30, 2002 was
$494,363,  compared to $291,667 for the same period in 2001. Net interest income
for the six-month period ended June 30, 2002 was $861,726,  compared to $498,227
for the same period in 2001.  The 69.50% and 72.96%  increases for the three and
six-month periods are directly related to the increase in average earning assets
for the periods. Average earning assets increased $26,381,676 or 104.53% for the
six-months  ended June 30,  2002 as compared  to the  six-months  ended June 30,
2001.  The yields on these assets were 5.59% for the  six-months  ended June 30,
2002 and 6.30% for the  six-months  ended June 30, 2001.  The decline in average
yields is directly  related to the declining  interest rate environment over the
past 18 months.

         The percentage of average earning assets represented by loans increased
from 45.31% for the  six-month  period  ended June 30,  2001,  to 81.84% for the
six-month   period  ended  June  30,   2002.   Growth  in  the   percentage   of
interest-earning  assets  represented  by the loan  portfolio  would normally be
expected  to result in an  increase in average  yields on earning  assets.  This
would  occur  because  the yields on loans are  normally  higher  than yields on
investment securities. However, the Bank's significant loan growth was partially
offset by a reduction in loan and investment yields as a result of actions taken
by the  Federal  Reserve to reduce its  target for the  federal  funds rate from
6.50% at December  31,  2000 to 3.75% at June 30, 2001 to its current  target of
1.75% which has been in effect since December 11, 2001.

         For the six-month  period ended June 30, 2002, the average yield on the
loan  portfolio  decreased to 6.52% from 8.16% for the same period in 2001.  The
decrease  in average  yield was the  result of the  declining  rate  environment
discussed  above.  The decline of 1.64% is less than the 2.00%  reduction in the
target for the federal  funds rate since June 30, 2001.  Management  was able to
manage this decline by maintaining  pricing  discipline  throughout 2001 and the
first six months of 2002,  as well as  increasing  the  percentage of fixed rate
loans in the loan portfolio.  The average yield on the investment  portfolio was
1.41%  for the  six-months  ended  June 30,  2002 as  compared  to 4.76% for the
comparable  period in 2001.  The  reduction  in  investment  yields is  entirely
related to the declining rate environment.

         The market in which the Company operates is very  competitive,  and the
rates  of  interest  paid on  deposits  are  affected  by  rates  paid by  other
depository  institutions.  Management  closely  monitors  rates offered by other
institutions  and seeks to be  competitive  within the  market.  The Company has
chosen to selectively  compete for jumbo  certificates of deposits.  The Company
will choose to pursue such  deposits  when  expected  loan growth  provides  for
adequate spreads to support the cost of those funds. During the six-month period
ended June 30,  2002,  the Company  obtained  approximately  $8.6 million in new
funds, including $4.6 million of deposits classified as brokered deposits,  from
the listing of certificate of deposit rates on Internet based listing  services.
These certificates of deposit were issued with an average interest rate of 3.31%
and an average term of 18.1 months.



                                       9
<PAGE>

         The  average  rate on  interest  bearing  deposits  was  2.97%  for the
six-month  period ended June 30, 2002,  as compared to 3.93% for the same period
in 2001.  The  decrease  in average  rate was the result of the  declining  rate
environment  discussed  above.  It is  anticipated  that  interest  expense will
continue to increase during the remainder of 2002 based upon continued growth in
deposits.

         Comparing the six-month  periods ended June 30, 2002 and 2001,  the net
interest  margin  decreased by 61 basis points,  to 3.34% in 2002, from 3.95% in
2001,  reflecting  the  impact of  declining  yields in the loan and  investment
portfolios  which were not completely  offset by  corresponding  declines in the
rates paid on deposits.

















                                       10
<PAGE>


         The following tables set forth, for the periods indicated,  information
regarding the average balances of interest-earning  assets and  interest-bearing
liabilities,  the  amount  of  interest  income  and  interest  expense  and the
resulting  yields on average  interest-earning  assets and rates paid on average
interest-bearing   liabilities.   Average   balances   are  also   provided  for
non-interest-earning assets and non-interest-bearing liabilities.

                                           Six Months Ended June 30, 2002
<TABLE>
<CAPTION>
                                                                       Average         Interest         Yield/
                                                                       Balance         and fees          Rate
<S>                                                                 <C>              <C>                     <C>
ASSETS
Loans:
    Real Estate - Home Equity Line of Credit                        $   6,243,532    $    142,671            4.57%
    Real Estate - Construction                                          1,514,735          46,341            6.12
    Commercial                                                         31,649,595       1,078,216            6.81
    Consumer                                                            1,767,522          64,897            7.34
    Loans held for sale                                                 1,070,462          44,931            8.39
                                                                     -------------    ------------
         Total Loans                                                   42,245,846       1,377,056            6.52
Investment Securities                                                     388,727           9,040            4.65
Federal funds sold and other overnight investments                      8,985,655          57,004            1.27
                                                                     -------------    ------------
         Total Earning Assets                                          51,620,228       1,443,100            5.59%
                                                                                      ------------
Less: Allowance for credit losses                                        (506,122)
Cash and due from banks                                                   679,465
Premises and equipment, net                                               795,051
Accrued interest receivable and other assets                              260,278
                                                                     -------------
         Total Assets                                               $  52,848,900
                                                                     =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing demand deposits                                    $  20,228,970         263,474            2.60%
Regular savings deposits                                                2,338,481          14,486            1.24
Time deposits                                                          16,523,476         302,776            3.66
Short-term borrowings                                                      85,514             638            1.49
                                                                     -------------    ------------
         Total interest-bearing liabilities                            39,176,441         581,374            2.97%
                                                                                      ------------    ------------
         Net interest income and spread                                              $    861,726            2.62%
                                                                                      ============    ============
Non-interest-bearing demand deposits                                    5,193,356
Accrued expenses and other liabilities                                    176,700
Stockholders' equity                                                    8,302,403
                                                                     -------------
         Total Liabilities and Stockholders' Equity                 $  52,848,900
                                                                     =============

Interest and fee income/earning assets                                       5.59 %
Interest expense/earning assets                                              2.25
                                                                     -------------
Net interest margin                                                          3.34 %
                                                                     =============












                                                        11
<PAGE>



                         Six Months Ended June 30, 2001

                                                                       Average                          Yield/
                                                                       Balance          Interest         Rate
ASSETS
Loans:
    Real Estate - Home Equity Line of Credit                        $   2,635,672     $   104,355            7.92%
    Real Estate - Construction                                            264,748          10,131            7.65
    Commercial                                                          7,122,970         293,079            8.23
    Consumer                                                            1,138,731          45,621            8.01
    Loans held for sale                                                   273,170          13,350            9.77
                                                                     -------------     -----------
         Total Loans                                                   11,435,291         466,536            8.16
Investment Securities                                                     275,940           8,100            5.87
Federal funds sold and other overnight investments                     13,527,321         320,098            4.73
                                                                     -------------     -----------
         Total Earning Assets                                          25,238,552         794,734            6.30%
                                                                                       -----------
Less: Allowance for credit losses                                        (126,022)
Cash and due from banks                                                   880,757
Premises and equipment, net                                               956,277
Accrued interest receivable and other assets                               71,104
                                                                     -------------
         Total Assets                                               $  27,020,668
                                                                     =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing demand deposits                                    $  11,550,005         227,083            3.93%
Regular savings deposits                                                1,929,353          22,805            2.36
Time deposits                                                           1,596,978          46,619            5.84
                                                                     -------------     -----------
         Total interest-bearing liabilities                            15,076,336         296,507            3.93%
                                                                                       -----------    ------------
         Net interest income and spread                                               $   498,227            2.37%
                                                                                       ===========    ============
Non-interest-bearing demand deposits                                    2,029,059
Accrued expenses and other liabilities                                    142,819
Stockholders' equity                                                    9,772,454
                                                                     -------------
         Total Liabilities and Stockholders' Equity                 $  27,020,668
                                                                     =============

Interest and fee income/earning assets                                       6.30 %
Interest expense/earning assets                                              2.35
                                                                     -------------
Net interest margin                                                          3.95 %
                                                                     =============
</TABLE>


Allowance and Provision for Credit Losses

         The  provision  for  credit  losses  represents  an expense to fund the
allowance for credit  losses.  This  allowance is  established  to absorb credit
losses in the current loan portfolio.  The amount of the allowance is determined
by management based on many factors  including  economic  conditions and trends,
the value and adequacy of collateral,  the volume and mix of the loan portfolio,
the performance of the portfolio, and internal loan processes of the Company.

         Management  uses a loan grading system where all loans are graded based
on  management's  evaluation  of the risk  associated  with each loan. A factor,
based on the loan  grading,  is  applied  to the loan  balance  to  reserve  for
potential  losses.   Management  also  judgmentally  establishes  an  additional
unallocated  reserve  based upon the belief that the loan  portfolio  is not yet
large, diversified and seasoned enough to fully validate the assumptions used in
the loan grading system.

         Based upon  management's  analysis of the loan portfolio as of June 30,
2002,  management  allocated  $617,000  to the  allowance  for credit  losses as
compared  to  $447,000  at December  31,  2001.  The amount  equates to 1.25% of
outstanding  loans,  net of loans held for sale as of June 30, 2002 and December
31, 2001. This allocation is an estimate based on limited historical



                                       12
<PAGE>

information, management's analysis, and the results of a third-party independent
loan review,  and may be revised  over time for changes in economic  conditions,
experience with the portfolio, and other factors that may arise.

         Management  considers the allowance  appropriate  and adequate to cover
possible losses inherent in the loan portfolio;  however,  management's judgment
is based upon a number of assumptions about future events, which are believed to
be  reasonable,  but  which may or may not prove  valid.  Thus,  there can be no
assurance  that  charge-offs in future periods will not exceed the allowance for
credit loss or that additional increases in the allowance will not be required.

Non-Interest Income

         Non-interest income consists primarily of gains on the sale of mortgage
loans,  mortgage  origination  fees,  deposit account service charges,  and cash
management fees. For the three-month and six-month  periods ended June 30, 2002,
the Company realized  non-interest income in the amount of $153,025 and $297,322
as compared to $88,228 and $105,024 for the  three-month  and six-month  periods
ended  June 30,  2001.  Gains  on the sale of  mortgage  loans of  $114,085  and
$231,778 is the most  significant  element of  non-interest  income,  comprising
74.55% and 77.96% of the total for the  three-months  and six-months  ended June
30,  2002.  This  compares to gains on the sale of mortgage  loans of $66,944 or
75.88% and $77,636 or 73.92% of total  non-interest  income for the  three-month
and six-month  periods ended June 30, 2001. The increase in gains on the sale of
mortgage loans is due to the fact that the Company began  originating  mortgages
in February  2001 and, as a result,  production  was limited for the  six-months
ended June 30, 2001.  In addition,  the current low interest  rate  environment,
combined  with a strong  housing  market  creating  an  exceptional  market  for
mortgage products, has aided 2002 production. An increase in interest rates or a
slow down in the housing  market could  negatively  impact the Bank's ability to
maintain the same level of income associated with mortgage loan production.

         Service charges on deposit accounts totaled $29,979 and $48,377 for the
three-month and six-month  periods ended June 30, 2002 as compared to $6,585 and
$9,675 for the same periods in 2001.  These increases of 355.26% and 400.02% can
be directly attributed to the growth in the Company's deposit portfolio.

         The  Company  will  continue  to seek ways to  expand  its  sources  of
non-interest  income. The Company is working aggressively to enhance its ability
to offer cash management  services to commercial  customers in order to generate
additional  deposits or increase cash management fee income. In the future,  the
Company may also enter into fee arrangements with strategic  partners that offer
mutual fund investment  products,  investment  advisory services,  and insurance
products.  No assurance can be given that such fee arrangements will be obtained
or maintained.

Non-Interest Expense

         Non-interest  expense for the three-month  and six-month  periods ended
June 30, 2002, totaled $859,920 and $1,604,663,  respectively.  This compares to
non-interest  expense for the comparable periods in 2001,  totaling $676,791 and
$1,275,304,  respectively.  The increase of $329,359 or 25.83% for the six-month
period resulted from an increase in salaries and benefits of $233,326 related to
staff growth to increase  marketing  efforts,  manage the growth of the loan and
deposit portfolios,  and support increased operational volume. In addition,  the
heavy mortgage volume resulted in increased mortgage commissions and benefits of
approximately  $88,000. The $75,976 or 51.27% increase in other expenses for the
six  months  ended June 30,  2002 as  compared  to the same  period in 2001 is a
result of increased marketing  expenditures of approximately $37,000, as well as
approximately  $33,000  of  increased  operating  expenses  such  as  telephone,
postage,  courier,  and printing  expenses which have increased with the growing
customer base. Non-interest expense for the three-month period ended June 30,



                                       13
<PAGE>

2002  increased  by  $183,129  or 27.06% as  compared to the same period for the
prior year.  The  increase is directly  attributable  to the same  factors  that
resulted  in the  increase  for the  comparable  six-month  periods.  Management
believes that further growth in the Company's  customer base can be accommodated
without proportionate increases in these costs.

Liquidity And Interest Rate Sensitivity

         The Company's  principal  sources of liquidity are cash and assets that
can be readily converted into cash,  including  investment  securities  maturing
within one year.  As of June 30, 2002,  the Company had $344,087 in cash and due
from  banks,   and  $10,428,955  in  federal  funds  sold  and  other  overnight
investments.  This  represents  an increase in liquid  assets of  $1,219,102  or
12.76% since  December 31, 2001, at which time liquid  assets were  comprised of
$3,065,479 in cash and due from banks,  and $6,488,461 in federal funds sold and
other  overnight  investments.  As of June 30, 2002, the bank had  approximately
$18.4 million of unfunded loan commitments,  of which various types of revolving
credit   facilities,   which  are  not  typically   fully  funded,   represented
approximately  $14.3 million.  Growth in the Company's loan  portfolio,  without
corresponding growth in deposits would reduce liquidity,  as would reductions in
the level of customer deposits.

         The primary  objective of  asset/liability  management is to ensure the
steady growth of the Company's primary earnings component,  net interest income.
Net interest income can fluctuate with significant  interest rate movements.  To
minimize  the risk  associated  with  these  rate  swings,  management  works to
structure  the  Company's  balance  sheet so that the  ability  exists to adjust
pricing on interest-earning  assets and interest-bearing  liabilities in roughly
equivalent amounts at approximately the same time intervals. Imbalances in these
repricing   opportunities  at  any  point  in  time  constitute   interest  rate
sensitivity.

         The measurement of the Company's  interest rate sensitivity,  or "gap,"
is one of the  principal  techniques  used in  asset/liability  management.  The
interest  sensitive gap is the dollar difference  between assets and liabilities
which are subject to interest rate pricing within a given time period, including
both floating rate or adjustable  rate  instruments  and  instruments  which are
approaching maturity.





                                       14
<PAGE>


         The   following   table  sets   forth  the  amount  of  the   Company's
interest-earning  assets and  interest-bearing  liabilities as of June 30, 2002,
which are expected to mature or reprice in each of the time periods shown:

<TABLE>
<CAPTION>
                                                                    Maturity or repricing within
                                                   Percent of     0 to 3           4 to 12            1 to 5             Over 5
                                     Amount           Total       Months            Months            Years               Years
<S>                                <C>                <C>       <C>               <C>               <C>               <C>
Interest-earning assets
   Federal funds sold and other
   overnight investments           $10,428,955        16.71%    $10,428,955       $      --         $      --         $      --
   Loans - Variable rate            29,883,944        47.89      29,883,944              --                --                --
   Loans - Fixed rate               19,428,772        31.14       1,217,877         2,545,349        14,592,073         1,073,473
   Other earning assets              2,658,127         4.26       2,302,287              --                --             355,840
                                    ----------       ------       ---------         ---------        ----------         ---------
      Total interest-earning
         assets                    $62,399,798       100.00%    $43,833,063       $ 2,545,349       $14,592,073       $ 1,429,313
                                    ==========       ======       =========         =========        ==========         =========

Interest-bearing liabilities
   Deposits - Variable rate        $25,211,692        52.34%    $25,211,692       $      --         $      --         $      --
   Deposits - Fixed rate            22,548,141        46.81       5,762,761         8,559,837         8,225,543              --
   Short-term borrowings -
        Variable rate                  407,000          .85         407,000              --                --                --
                                    ----------       ------       ---------         ---------        ----------         ---------
      Total interest-bearing
         liabilities               $48,166,833       100.00%    $31,381,453       $ 8,559,837       $ 8,225,543       $      --
                                    ==========       ======      ==========         =========        ==========         =========

   Periodic repricing differences
      Periodic gap                                             $ 12,451,610        $(6,014,48)       $6,366,530        $1,429,313
                                                               ============        ==========       ===========       ===========
      Cumulative gap                                           $ 12,451,610        $6,437,122       $12,803,652       $14,232,965
                                                               ============        ==========       ===========       ===========

   Ratio of rate sensitive assets
       to rate sensitive
       liabilities                                                   139.68%            29.74%           177.40%              N/A
</TABLE>



         As indicated by the table, the excess of  interest-earning  assets over
interest-bearing liabilities of $14,232,965 is concentrated in the categories of
items maturing or repricing within three months, and items maturing or repricing
in 12  months  or more.  These  items are  offset  by a large  concentration  of
interest-bearing liabilities maturing or repricing in 4 to 12 months. These gaps
exist as a result of mismatches in the demand for  maturities on fixed rate loan
products  as  compared  to the  demand  for  maturities  on fixed  rate  deposit
products.   The  excess  of  interest   earning  assets  over   interest-bearing
liabilities  maturing or repricing in the next 12 months would indicate that the
Company  should  benefit from  increases  in interest  rates during that period.
However, since all interest rates and yields do not adjust at the same pace, the
gap is only a general  indicator of interest rate  sensitivity.  The analysis of
the Company's interest-earning assets and interest-bearing  liabilities presents
only a static  view of the timing of  maturities  and  repricing  opportunities,
without taking into consideration the fact that changes in interest rates do not
affect all assets and liabilities  equally.  Net interest income may be affected
by other  significant  factors in a given interest rate  environment,  including
changes in the volume and mix of  interest-earning  assets and  interest-bearing
liabilities.

         Management  will  constantly  monitor and manage the  structure  of the
Company's  balance sheet,  control interest rate exposure,  and evaluate pricing
strategies. Strategies to better match maturities of interest-earning assets and
interest-bearing  liabilities  could include  structuring loans with rate floors
and ceilings on variable rate notes and by providing for repricing opportunities
on fixed rate notes.  Management  believes that a lending  strategy  focusing on
variable rate loans will best  facilitate  the goal of minimizing  interest rate
risk  through  the  origination  of  variable  rate and short  term  fixed  rate
products. However, management will opportunistically enter into fixed rate loans
and/or investments when, in management's  judgment,  rates adequately compensate
the  Company  for the  interest  rate risk.  The  Company's  current  investment
concentration in federal funds sold and other overnight investments provides the
most flexibility and control over rate sensitivity since it generally can be


                                       15
<PAGE>

restructured  more  quickly  than the loan  portfolio.  On the  liability  side,
deposit  products can be  restructured  so as to offer  incentives to attain the
maturity  distribution  desired  although  competitive  factors  sometimes  make
control over deposits difficult.

         In theory, maintaining a nominal level of interest rate sensitivity can
diminish interest rate risk. In practice,  this is made difficult by a number of
factors,  including  cyclical  variation  in loan demand,  different  impacts on
interest  sensitive assets and liabilities  when interest rates change,  and the
availability of funding sources. Management generally will attempt to maintain a
balance between  rate-sensitive assets and liabilities as the exposure period is
lengthened to minimize the overall interest rate risk to the Company.

Capital Resources

         Stockholders'  equity at June 30, 2002 was $7,986,537.  The Company has
declared no cash dividends since its inception.

         Banking   regulatory   authorities  have  implemented   strict  capital
guidelines  directly related to the credit risk associated with an institution's
assets. Banks and bank holding companies are required to maintain capital levels
based on their "risk  adjusted"  assets so that categories of assets with higher
"defined"  credit risks will require more capital support than assets with lower
risks. The Bank has exceeded its capital adequacy requirements to date.

         IN ADDITION TO THE HISTORICAL  INFORMATION  CONTAINED IN PART I OF THIS
QUARTERLY  REPORT ON FORM 10-QSB,  THE  DISCUSSION  IN PART I OF THIS  QUARTERLY
REPORT  ON FORM  10-QSB  CONTAINS  CERTAIN  FORWARD-LOOKING  STATEMENTS  SUCH AS
STATEMENTS OF BAY NATIONAL  CORPORATION'S  PLANS,  OBJECTIVES,  EXPECTATIONS AND
INTENTIONS THAT INVOLVE RISKS AND  UNCERTAINTIES.  THESE RISKS AND UNCERTAINTIES
INCLUDE, AMONG OTHERS, THOSE DISCUSSED IN BAY NATIONAL CORPORATION'S FORM 10-KSB
UNDER THE CAPTION  "FACTORS  AFFECTING  FUTURE  RESULTS"  SUCH AS THE  COMPANY'S
LIMITED  OPERATING  HISTORY  AND  EXPECTATION  OF  LOSSES;   DEPENDENCE  ON  KEY
PERSONNEL;  RISKS RELATED TO BAY NATIONAL BANK'S CHOICE OF LOAN PORTFOLIO; RISKS
RELATED TO BAY NATIONAL  BANK'S  LENDING LIMIT;  RISKS OF A COMPETITIVE  MARKET;
IMPACT OF GOVERNMENT REGULATION ON OPERATING RESULTS; AND EFFECT OF DEVELOPMENTS
IN TECHNOLOGY. BAY NATIONAL CORPORATION'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE DISCUSSED HEREIN.










                                       16
<PAGE>


                           PART II - OTHER INFORMATION

Item 1.    Legal Proceedings.

           None.

Item 2.    Changes in Securities.

           None.

Item 3.    Defaults Upon Senior Securities.

           Not applicable.

Item 4.    Submission of Matters to a Vote of Securities Holders.

         At the Company's Annual Meeting of Stockholders  held May 20, 2002, the
following  directors  were elected to serve a three-year  term expiring upon the
date of the Company's 2005 Annual Meeting or until their  respective  successors
are duly elected and qualified.

                                               Votes Cast

                              For                Withheld             Total
Carroll A. Bodie            909,913                 -                909,913
Charles E. Bounds           904,913               5,000              909,913
John R. Lerch               909,913                 -                909,913


Names of other directors continuing in office:

Donald G. McClure, Jr.
Hugh W. Mohler
Robert L. Moore
H. Victor Rieger, Jr.
Margaret K. Riehl
William B. Rinnier
Edwin A. Rommel III
Henry H. Stansbury
Kenneth H. Trout
Eugene M. Waldron, Jr.

           At the Company's Annual Meeting of Stockholders held May 20, 2002,
the selection of Stegman & Company to serve as independent auditors for the 2002
fiscal year was ratified by the following vote:

                                       Votes Cast

            For              Against              Abstain              Total

          908,913               -                  1,000              909,913

There were no broker nonvotes on these matters.










                                       17
<PAGE>


Item 5.    Other Information.

           Not applicable.

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

           (a)        Exhibits.

           99.1     Certification  of Periodic  Financial  Report pursuant to 18
                    U.S.C. Section 1350

           (b)        Reports on Form 8-K.

           None.














                                       18
<PAGE>


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                Bay National Corporation


Date: August 13, 2002           By: /s/ Hugh W. Mohler
                                    --------------------------------------------
                                    Hugh W. Mohler, President
                                    (Principal Executive Officer)


Date: August 13, 2002           By: /s/ Mark A. Semanie
                                    --------------------------------------------
                                    Mark A. Semanie, Treasurer
                                    (Principal Accounting and Financial Officer)

















                                       19