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


                                   FORM 10-QSB


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


               For the quarterly period ended September 30, 2003.

                        Commission file number: 333-87781



                            Bay National Corporation
        (Exact name of small business issuer 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

                                 (410) 494-2580
                            Issuer's telephone number

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

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:

 At November 12, 2003, the issuer had 1,862,710 shares of Common Stock
 outstanding.

 Transitional Small Business Disclosure Format (Check One):    Yes ____ No  X__



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PART I  -     FINANCIAL INFORMATION

Item 1.       Financial Statements
-------       --------------------

                            BAY NATIONAL CORPORATION

                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------
                 As of September 30, 2003 and December 31, 2002

                                                                                 September 30,         December 31,
                                                                                      2003                 2002
                                                                                ----------------      ---------------
ASSETS                                                                            (Unaudited)
<S>                                                                           <C>                    <C>
     Cash and due from banks                                                  $         323,211      $       363,031
     Federal funds sold and other overnight investments                              20,170,087           11,752,705
     Loans held for sale                                                              1,542,120            2,818,500
     Investment securities available for sale (AFS) - at fair value                   1,547,665              948,361
     Other equity securities                                                            481,090              355,840
     Loans, net of unearned fees                                                     96,512,201           68,078,261
         Less: Allowance for credit losses                                           (1,207,000)            (851,500)
                                                                                ----------------      ---------------
              Loans, net                                                             95,305,201           67,226,761
     Premises and equipment, net                                                        677,393              709,203
     Accrued interest receivable and other assets                                       527,459              434,782
                                                                                ----------------      ---------------

              Total Assets                                                    $     120,574,226      $    84,609,183
                                                                                ================      ===============


LIABILITIES

     Non-interest-bearing deposits                                            $      13,194,369      $    10,533,475
     Interest-bearing deposits                                                       93,498,239           65,244,381
                                                                                ----------------      ---------------
         Total deposits                                                             106,692,608           75,777,856

     Short-term borrowings                                                            1,454,000              507,000
     Accrued expenses and other liabilities                                             492,441              714,669
                                                                                ----------------      ---------------

              Total Liabilities                                                     108,639,049           76,999,525
                                                                                ================      ===============

STOCKHOLDERS' EQUITY

     Common stock - $.01 par value, authorized:
         9,000,000 shares authorized, 1,862,710 and 1,242,020 issued and
         outstanding as of September 30, 2003 and December 31, 2002,
         respectively:                                                                   18,627               12,420
     Paid in Capital                                                                 16,850,834           12,407,780
     Accumulated deficit                                                             (4,934,284)          (4,810,542)
                                                                                ----------------      ---------------

              Total Stockholders' Equity                                             11,935,177            7,609,658
                                                                                ----------------      ---------------

              Total Liabilities and Stockholders' Equity                      $     120,574,226      $    84,609,183
                                                                                ================      ===============

</TABLE>


          See accompanying notes to consolidated financial statements.


                                        2
<PAGE>


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<CAPTION>

                            BAY NATIONAL CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------
     For the three and nine-month periods ended September 30, 2003 and 2002
                                   (Unaudited)

                                                Three Months Ending,                 Nine Months Ending,
                                                    September 30                         September 30
                                                2003              2002              2003                2002
                                             ------------      ------------     --------------       ------------
INTEREST INCOME:
<S>                                         <C>               <C>              <C>                  <C>
   Interest and fees on loans               $  1,393,375      $    920,473     $    3,894,375       $  2,297,529
   Interest on federal funds sold and
     other  overnight investments                 37,699            31,533             88,528             88,537
   Taxable interest and dividends on
     investment securities                         5,307             4,164             23,214             13,204
                                             ------------      ------------     --------------       ------------
     Total interest income                     1,436,381           956,170          4,006,117          2,399,270
                                             ------------      ------------     --------------       ------------

INTEREST EXPENSE:
   Interest on deposits                          505,284           357,297          1,439,069            938,033
   Interest on short-term borrowings               2,942             2,556              8,767              3,194
                                             ------------      ------------     --------------       ------------
     Total interest expense                      508,226           359,853          1,447,836            941,227
                                             ------------      ------------     --------------       ------------

Net interest income                              928,155           596,317          2,558,281          1,458,043

Provision for credit losses                       48,000           121,000            355,500            291,000
                                             ------------      ------------     --------------       ------------

Net interest income after provision for
   credit losses                                 880,155           475,317          2,202,781          1,167,043
                                             ------------      ------------     --------------       ------------

NON-INTEREST INCOME:
   Service charges on deposit accounts            58,263            23,805            149,015             72,182
   Gain on sale of mortgage loans                151,800           169,988            506,536            401,766
   Other income                                   10,901             9,480             30,087             26,647
                                             ------------      ------------     --------------       ------------
     Total non-interest income                   220,964           203,273            685,638            500,595
                                             ------------      ------------     --------------       ------------

NON-INTEREST EXPENSES:
   Salaries and employee benefits                580,685           553,712          1,771,197          1,514,600
   Occupancy expenses                             66,041            52,314            193,405            159,313
   Furniture and equipment expenses               60,533            49,131            159,091            150,839
   Legal and professional fees                    39,508            43,367            119,368            105,585
   Data processing and other outside
     services                                    115,245            88,849            335,077            237,536
   Advertising and marketing related
     expenses                                     42,940            42,175            164,284            123,981
   Other expenses                                 88,819            75,780            269,739            218,137
                                             ------------      ------------     --------------       ------------
     Total non-interest expenses                 993,771           905,328          3,012,161          2,509,991
                                             ------------      ------------     --------------       ------------

Income (Loss) before income taxes                107,348          (226,738)          (123,742)          (842,353)
Income tax benefit                                -                 -                 -                   -
                                             ------------      ------------     --------------       ------------
NET INCOME (LOSS)                           $    107,348      $   (226,738)    $     (123,742)      $   (842,353)
                                             ============      ============     ==============       ============


Per Share Data:
   Cash Dividends Paid                      $     -           $     -          $      -             $     -
   Net Income (Loss) (basic)                $        .06      $       (.18)    $         (.08)      $       (.68)
   Net Income (Loss) (diluted)              $        .06      $       (.18)    $         (.08)      $       (.68)
   Average shares outstanding (basic)          1,862,710         1,242,020          1,592,153          1,242,020
   Average shares outstanding (diluted)        1,888,305         1,242,020          1,592,153          1,242,020


          See accompanying notes to consolidated financial statements.

</TABLE>

                                        3
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<TABLE>
<CAPTION>

                            BAY NATIONAL CORPORATION

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
           ----------------------------------------------------------
              For the nine-months ended September 30, 2003 and 2002
                                   (Unaudited)


                                                            Additional
                                                              Paid in           Accumulated
                                         Common Stock         Capital             Deficit         Total
                                         -------------     --------------    ---------------   -------------
<S>                                     <C>               <C>               <C>               <C>
Balances at December 31, 2002           $      12,420     $   12,407,780    $     (4,810,542) $   7,609,658

Issuance of Common Stock                        6,207          4,443,054            -             4,449,261

Net Loss                                      -                  -                  (123,742)      (123,742)

                                         -------------     --------------    ---------------   -------------
Balances at September 30, 2003          $      18,627     $   16,850,834    $     (4,934,284) $  11,935,177
                                         =============     ==============    ===============   =============




                                                            Additional
                                                              Paid in           Accumulated
                                         Common Stock         Capital             Deficit         Total
                                         -------------     --------------    ---------------   -------------
Balances at December 31, 2001           $      12,420     $   12,407,780    $     (3,818,048) $   8,602,152

Net Loss                                      -                  -                  (842,353)      (842,353)

                                         -------------     --------------    ---------------   -------------
Balances at September 30, 2002          $      12,420     $   12,407,780    $     (4,660,401) $   7,759,799
                                         =============     ==============    ===============   =============


</TABLE>


          See accompanying notes to consolidated financial statements.


                                        4
<PAGE>
<TABLE>
<CAPTION>


                            BAY NATIONAL CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
              For the nine-months ended September 30, 2003 and 2002
                                   (Unaudited)

                                                                                2003                   2002
                                                                            -------------          -------------
Cash Flows From Operating Activities
<S>                                                                        <C>                    <C>
   Net loss                                                                $    (123,742)         $    (842,353)
   Adjustments to reconcile net loss to net cash provided (used) by
     operating activities:
       Depreciation                                                              141,611                140,982
       Accretion of investment discounts                                         (11,052)                (4,010)
       Provision for credit losses                                               355,500                291,000
       Gain on sale of loans                                                    (506,536)              (401,766)
       Origination of loans held for sale                                    (30,896,141)           (23,130,720)
       Proceeds from sale of loans                                            32,679,057             22,070,429
       Net increase in accrued interest receivable and other assets              (92,677)              (102,799)
       Net (decrease) increase in accrued expenses and other liabilities        (222,228)                32,177
                                                                            -------------          -------------

            Net cash provided (used) by operating activities                   1,323,792             (1,947,060)
                                                                            -------------          -------------

Cash Flows From Investing Activities
   Purchases of investment securities - AFS                                   (4,738,252)            (1,493,787)
   Maturities of investment securities - AFS                                   4,150,000                750,000
   Purchase of Federal Reserve Bank stock                                        (36,750)               -
   Purchase of Federal Home Loan Bank of Atlanta stock                           (88,500)               (79,900)
   Net increase in loans                                                     (28,433,940)           (23,138,814)
   Capital expenditures                                                         (109,801)               (57,188)
                                                                            -------------          -------------
            Net cash used by investing activities                           (29,257,243 )           (24,019,689)
                                                                            -------------          -------------

Cash Flows From Financing Activities
   Net increase in deposits                                                   30,914,752             27,557,317
   Net increase in short-term borrowings                                         947,000                441,000
   Net proceeds from stock issuance                                            4,449,261                -
                                                                            -------------          -------------
            Net cash provided by financing activities                         36,311,013             27,998,317
                                                                            -------------          -------------

Net increase in cash and cash equivalents                                      8,377,562              2,031,568
Cash and cash equivalents at beginning of period                              12,115,736              9,553,940
                                                                            -------------          -------------

Cash and cash equivalents at end of period                                 $  20,493,298          $  11,585,508
                                                                            =============          =============

</TABLE>


          See accompanying notes to consolidated financial statements.


                                        5
<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. The balances as of December 31, 2002 have been derived from
audited financial statements. These statements should be read in conjunction
with the financial statements and accompanying notes included in Bay National
Corporation's 2002 Annual Report on Form 10-KSB. There have been no significant
changes to the Company's Accounting Policies as disclosed in the 2002 Annual
Report. The results shown in this interim report are not necessarily indicative
of results to be expected for the full year 2003.

         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.


                                        6
<PAGE>


         Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum amounts and ratios. Management
believes, as of September 30, 2003, that the Bank meets all capital adequacy
requirements to which it is subject.

         As of September 30, 2003, 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

            Earnings per common share are computed by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted
net income per common share is computed by dividing net income by the weighted
average number of common shares outstanding during the period, including any
potential dilutive common shares outstanding, such as options and warrants. For
the quarter ended September 30, 2003 there were 56,250 shares excluded from the
diluted net income per share computation because the exercise price exceeded the
average market price and therefore, their effect would be anti-dilutive.

           The Company's common stock equivalents were not considered in the
computation of diluted earnings per share for the three-month period ended
September 30, 2002, and for the nine-month periods ended September 30, 2003 and
2002 because the result would have been anti-dilutive.

5. STOCK-BASED COMPENSATION

         The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123), but applies Accounting Principles Board Opinion
No. 25 and related interpretations in accounting for its stock option plan. No
compensation expenses related to the Company's stock option plan were recorded
during the three-month or nine-month periods ended September 30, 2003 and 2002.




                                        7
<PAGE>



         The following table illustrates the effect on net income (loss) and
earnings per share if the Company had applied the fair value recognition
provisions of SFAS No. 123 and SFAS No. 148 to stock-based employee compensation
for the three-month and nine-month periods ended September 30:
<TABLE>
<CAPTION>


                                                  Three Months Ending,                Nine Months Ending,
                                                      September 30                       September 30
                                                  2003             2002              2003               2002
                                               ------------     ------------     --------------      ------------
INTEREST INCOME:
<S>                                           <C>              <C>              <C>                 <C>
 Net income (loss), as reported               $    107,348     $   (226,738)    $     (123,742)     $   (842,353)

 Less pro forma stock-based compensation
   expense determined under the fair value
   method, net of related tax effects               (1,404)          (1,404)           (68,554)          (14,924)

                                               ------------     ------------     --------------      ------------
 Pro forma net income (loss)                  $    105,944     $   (228,142)    $     (192,296)     $   (857,277)
                                               ============     ============     ==============      ============

 Net income (loss) per share:
   Basic - as reported                        $        .06     $       (.18)    $         (.08)     $       (.68)
   Diluted - as reported                      $        .06     $       (.18)    $         (.08)     $       (.68)
   Basic - pro forma                          $        .06     $       (.18)    $         (.12)     $       (.69)
   Diluted - pro forma                        $        .06     $       (.18)    $         (.12)     $       (.69)

</TABLE>




                                        8
<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 September 30, 2003 and December 31, 2002 and for the
three-month and nine-month periods ended September 30, 2003 and 2002.

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 its 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 of America (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 is 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 credit losses. The allowance for credit losses is an estimate of
the losses in the loan portfolio as of the balance sheet date. 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.

         Management has significant discretion in making the judgments inherent
in the determination of the provision and allowance for credit losses, including
in connection with the valuation of collateral, a borrower's prospects of
repayment, and in establishing allowance factors on the formula allowance and
nonspecific allowance components of the allowance. The establishment of
allowance factors is a continuing exercise, based on management's continuing
assessment of the global factors discussed above and their impact on the
portfolio, and allowance factors may change from period to period, resulting in
an increase or decrease in the amount of the provision or allowance, based upon
the same volume and classification of loans. Changes in allowance factors will
have a direct impact on the amount of the provision, and a corresponding effect
on net income. Errors in management's perception and assessment of the global
factors and their impact on the portfolio could result in the allowance not
being adequate to cover losses in


                                        9
<PAGE>

the portfolio, and may result in additional provisions or charge-offs. For
additional information regarding the allowance for credit losses, refer to the
discussion under the caption "Allowance and Provision for Credit Losses" below.

Financial Condition

         As of September 30, 2003, total assets were $120,574,226. This
represents growth of $35,965,043 or 42.51% since December 31, 2002. The growth
in total assets included increases of $8,417,382 in federal funds sold and other
overnight investments, $599,304 in investment securities available for sale,
$125,250 in other equity securities, $28,078,440 in loans net of the allowance
for credit losses, and $21,047 in other non-earning assets. These increases were
offset by a decrease of $1,276,380 in loans held for sale.

         As of September 30, 2003, loans, excluding loans held for sale (net of
a $1,207,000 allowance for credit losses), totaled $95,305,201. The increase of
41.77%, from a balance of $67,226,761 as of December 31, 2002, is a direct
result of the ongoing marketing efforts of bank employees as well as members of
the Board of Directors, and the Baltimore and Salisbury Advisory Boards. The
composition of the loan portfolio as of September 30, 2003 was approximately
$59.0 million of commercial loans, $3.0 million of consumer loans, and $34.5
million of real estate loans (excluding mortgage loans held for sale). The
composition of the loan portfolio as of December 31, 2002 was approximately
$42.6 million of commercial loans, $4.0 million of consumer loans, and $21.5
million of real estate loans (excluding mortgage loans held for sale). There
were $1,542,120 and $2,818,500 of mortgage loans held for sale as of September
30, 2003 and December 31, 2002, respectively. The mix of loans is consistent
with the initial plans for the business.

         Funds not extended in loans are invested in cash and due from banks,
federal funds sold and other overnight investments, and short-term U.S. Treasury
securities. At September 30, 2003, the Company had federal funds sold and other
overnight investments totaling $20,170,087 as compared to $11,752,705 as of
December 31, 2002. The Company held $312,690 of Federal Reserve Bank stock at
September 30, 2003, as compared to $275,940 at December 31, 2002. The Company
also held Federal Home Loan Bank of Atlanta stock of $168,400 and $79,900 as of
September 30, 2003 and December 31, 2002, respectively, and United States
Treasury bills with a maturity value of $1,550,000 and $950,000 as of September
30, 2003 and December 31, 2002, respectively. The Treasury securities are used
to collateralize repurchase agreements which are classified as short-term
borrowings under which $1,454,000 and $507,000 were outstanding as of September
30, 2003 and December 31, 2002, respectively.

         The growth in assets was funded by deposit growth of $30,914,752, or
40.80%, an increase in short-term borrowings of $947,000, and an increase in
stockholders' equity of $4,325,519 resulting from the successful completion of a
$4.5 million stock offering on April 30, 2003.

         Deposits at September 30, 2003 were $106,692,608. A total of
$7,639,900, or 7.16% of deposits, are related to two customers in one industry.
Total deposits for one of these customers were $6,547,425 or 8.64% of total
deposits as of December 31, 2002; the second customer did not become a customer
until 2003. The deposits for these customers tend to fluctuate significantly; as
a result, management monitors these deposits on a daily basis to ensure that
liquidity levels are adequate to compensate for these fluctuations. The
remaining deposit growth resulted from the continued marketing efforts of
officers and directors, direct mail campaigns, and the 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.


                                       10
<PAGE>


         While the Bank does not rely on or solicit brokered deposits,
regulatory rules require that approximately $896,000 of deposits at September
30, 2003, and $4.0 million of deposits at December 31, 2002 be classified as
brokered deposits. These deposits were obtained through the listing of
certificate of deposit rates on Internet-based listing services. These deposits
were obtained at rates that are typically lower than or equal to the prevailing
market rate for similar deposits in the Company's local markets. The brokered
deposits outstanding at September 30, 2003 were issued with an average interest
rate of 3.83% and an average term of 25.35 months. The Company has never paid
broker fees for deposits and has not accepted any additional brokered deposits
since August 2002.

         Short-term borrowings consist of repurchase agreements collateralized
by pledges of U.S. Government Treasury Securities, based upon their market
values, equal to 100% of the principal and accrued interest of its short-term
borrowings. The outstanding balance of short-term borrowings increased from
$507,000 at December 31, 2002 to $1,454,000 at September 30, 2003, due to
increases in the balance of available funds of the customers participating in
this program.

         On October 31, 2002, Bay National Corporation commenced a private
offering to accredited investors only, of an aggregate of 550,000 shares of its
common stock, which was subsequently increased to 620,690 shares of its common
stock. The purchase price per share was $7.25 for an aggregate purchase price of
$4,500,002. The private offering closed on April 30, 2003 with 620,690 shares
issued and net proceeds, after offering costs, of approximately $4,449,261. As
of December 31, 2002, Bay National Corporation had received and accepted
subscriptions for 41,500 shares. The proceeds from these subscriptions of
$300,875 as of December 31, 2002 were included in accrued expenses and other
liabilities.

         Total stockholders' equity at September 30, 2003 was $11,935,177 as
compared to $7,609,658 at December 31, 2002. The increase in stockholders'
equity is a result of the private offering, described above, less the losses
incurred in 2003. Management believes that this level of capital is adequate to
support expected asset growth for at least the next 12 months.

Results of Operations

         On a consolidated basis, the Company achieved its first profitable
quarter for the three-months ended September 30, 2003. The net income of
$107,348 for the period compares to a net loss of $226,738 for the three-month
period ended September 30, 2002. The Company reported net losses of $123,742 and
842,353 for nine-month periods ended September 30, 2003 and 2002, respectively.
The improvement in results for the three-month and nine-month periods as
compared to the same periods in 2002 are a direct result of the 63.57% growth in
the loan portfolio from $59,000,869 at September 30, 2002 to $96,512,201 at
September 30, 2003.

         The past losses 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. The Company achieved marginal monthly
profitability for the month of June 2003, its 37th full month of operations.
This milestone was achieved during a very challenging economic environment in
which interest margins have been compressed by historically low interest rates.
Management expects continued improvement in operating results over the remainder
of 2003 and into 2004; however, actual results will be subject to the volatility
of the provision for credit losses, which is related to loan growth, and the
volatility of mortgage loan production, which is sensitive to economic and
interest rate fluctuations.



                                       11
<PAGE>


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; while interest-bearing deposits and
other short-term borrowings 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 September 30, 2003
was $928,155, compared to $596,317 for the same period in 2002. Net interest
income for the nine-month period ended September 30, 2003 was $2,558,281,
compared to $1,458,043 for the same period in 2002. The 55.65% and 75.46%
increases for the three and nine-month periods, respectively, are directly
related to the increase in average earning assets for both periods. Average
earning assets increased $48,246,573 or 84.73% for the nine-months ended
September 30, 2003 as compared to the nine-months ended September 30, 2002. The
average yield on these assets was 5.08% for the nine-months ended September 30,
2003 and 5.62% for the nine-months ended September 30, 2002.

         The decline in average yields is directly related to the actions taken
by the Federal Reserve to reduce its target for the federal funds rate from
1.75%, which was in effect for the entire nine-month period ending September 30,
2002, to 1.25%, on November 6, 2002 and subsequently to 1.0%, on June 25, 2003.
Management expects that these actions by the Federal Reserve will continue to
suppress yields and margins, although the actual impact to the Company cannot be
readily determined.

         The market in which the Company operates is very competitive; therefore
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 interest spreads to support the cost of those funds. During the
nine-month period ended September 30, 2003, the Company increased funding from
the listing of certificate of deposit rates on Internet-based listing services
by approximately $11.8 million. The outstanding certificates of deposit, issued
through Internet listings, have an average interest rate of 2.78% and an average
term of 25.76 months. As of September 30, 2003, total deposit balances from
Internet listings were approximately $26.6 million, including the $896,000 of
deposits classified as brokered deposits.

         The average rate on interest-bearing liabilities was 2.31% for the
nine-month period ended September 30, 2003, as compared to 2.86% for the same
period in 2002. The decrease in average rate was the result of the declining
interest rate environment discussed above. It is anticipated that interest
expense will continue to increase during the remainder of 2003 based upon
continued growth in deposits.

         Comparing the nine-month periods ended September 30, 2003 and 2002, the
net interest margin on average earning assets was 3.24% for the nine months
ended September 30, 2003 as compared to 3.41% for the same period in 2002. This
moderate decline reflects the impact of the decrease in asset yields, which was
not completely offset by a reduction in the overall cost of funds. Management's
ability to reduce the overall cost of funds at a rate consistent with the
decline in asset yields is limited due to the fact that deposit rates are
already extremely low by historical standards. If yields continue to decline, it
is possible that management will not be able to reduce the Company's cost of
funds without impacting the Company's ability to attract new deposits.


                                       12
<PAGE>

<TABLE>
<CAPTION>

         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.

                                        Nine Months Ended September 30, 2003

                                                                         Average         Interest         Yield/
                                                                         Balance         and fees          Rate
ASSETS                                                                   -------         --------         -------
<S>                                                                <C>               <C>                     <C>
Loans                                                              $   86,597,916    $  3,894,375            6.00%
Investment Securities                                                   1,767,831          23,214            1.75
Federal funds sold and other overnight investments                     16,824,118          88,528             .70
                                                                    --------------    ------------
         Total Earning Assets                                         105,189,865       4,006,117            5.08%
                                                                                      ------------
Less: Allowance for credit losses                                      (1,048,040)
Cash and due from banks                                                   966,645
Premises and equipment, net                                               697,910
Accrued interest receivable and other assets                              420,175
                                                                    --------------
         Total Assets                                              $  106,226,555
                                                                    ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing demand deposits                                   $   33,305,177         289,794            1.16%
Regular savings deposits                                                2,757,423          14,460             .70
Time deposits                                                          46,480,030       1,134,814            3.26
Short-term borrowings                                                   1,159,959           8,768            1.01
                                                                    --------------    ------------
         Total interest-bearing liabilities                            83,702,589       1,447,836            2.31%
                                                                                      ------------
         Net interest income and spread                                              $  2,558,281            2.77%
                                                                                      ============
Non-interest-bearing demand deposits                                   12,181,260
Accrued expenses and other liabilities                                    357,272
Stockholders' equity                                                    9,985,434
                                                                    --------------
         Total Liabilities and Stockholders' Equity                $  106,226,555
                                                                    ==============

Interest and fee income/earning assets                                       5.08 %
Interest expense/earning assets                                              1.84
                                                                    --------------
Net interest margin                                                          3.24 %
                                                                    ==============

</TABLE>


                                       13
<PAGE>
<TABLE>
<CAPTION>


                                        Nine Months Ended September 30, 2002

                                                                         Average         Interest         Yield/
                                                                         Balance         and fees          Rate
                                                                         -------         --------         -------
ASSETS
<S>                                                                 <C>              <C>                     <C>
Loans                                                               $  46,962,662    $  2,297,529            6.52%
Investment Securities                                                     626,979          13,204            2.81
Federal funds sold and other overnight investments                      9,353,651          88,537            1.26
                                                                     -------------    ------------
         Total Earning Assets                                          56,943,292       2,399,270            5.62%
                                                                                      ------------
Less: Allowance for credit losses                                        (556,745)
Cash and due from banks                                                   615,063
Premises and equipment, net                                               783,251
Accrued interest receivable and other assets                              271,734
                                                                     -------------
         Total Assets                                               $  58,056,595
                                                                     =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing demand deposits                                    $  21,996,695         380,933            2.31%
Regular savings deposits                                                2,429,835          22,706            1.25
Time deposits                                                          19,221,786         534,394            3.71
Short-term borrowings                                                     262,755           3,194            1.62
                                                                     -------------    ------------
         Total interest-bearing liabilities                            43,911,071         941,227            2.86%
                                                                                      ------------
         Net interest income and spread                                              $  1,458,043            2.76%
                                                                                      ============
Non-interest-bearing demand deposits                                    5,760,440
Accrued expenses and other liabilities                                    202,464
Stockholders' equity                                                    8,182,620
                                                                     -------------
         Total Liabilities and Stockholders' Equity                 $  58,056,595
                                                                     =============

Interest and fee income/earning assets                                       5.62 %
Interest expense/earning assets                                              2.21
                                                                     -------------
Net interest margin                                                          3.41 %
                                                                     =============

</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 as of the balance sheet date. 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. Certain higher
risk loans are individually evaluated for potential losses and specific reserves
are established based upon the analysis. A factor, based on the loan grading, is
applied to all other loan balances to reserve for losses. In addition,
management judgmentally establishes an additional non-specific reserve. The
non-specific portion of the allowance reflects management's estimate of probable
inherent but undetected losses within the portfolio due to uncertainties in
economic conditions, delays in obtaining information, including unfavorable
information about a borrower's financial condition, the difficulty in
identifying triggering events that correlate perfectly to subsequent loss rates,
and risk factors that have not yet manifested themselves in loss allocation
factors.


                                       14
<PAGE>


         Based upon management's analysis of the loan portfolio as of September
30, 2003, the allowance for credit losses increased to $1,207,000 as compared to
$851,500 at December 31, 2002. The increase is reflective of the overall
increase in the size of the loan portfolio. The amount equates to 1.25% of
outstanding loans, net of loans held for sale, as of September 30, 2003 and
December 31, 2002, respectively. This percentage remains consistent with peers.
This is an estimate based on limited historical information, and may be revised
over time for changes in economic conditions, experience with the portfolio, and
other factors which may arise.

         Management believes the allowance reflects the possible losses inherent
in the loan portfolio as of the balance sheet date; however, management's
judgment is based upon a number of assumptions, 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 losses or that additional increases in the allowance will not be
required. Management considers, among other things, the findings and
recommendations of the Bank's primary regulator and an independent loan review
service that evaluates management's underwriting decisions in determining the
adequacy of the allowance.

         As of September 30, 2003 the Company had no loans that were more than
90 days past due. The Company has no loans that are classified as non-accrual
loans as of September 30, 2003. The Company has had no loan charge-offs since
inception.

Non-Interest Income

         Non-interest income consists primarily of gains on the sale of mortgage
loans, deposit account service charges, and cash management fees. For the
three-month and nine-month periods ended September 30, 2003, the Company
realized non-interest income in the amount of $220,964 and $685,638 as compared
to $203,273 and $500,595 for the three-month and nine-month periods ended
September 30, 2002. Gains on the sale of mortgage loans of $151,800 and $506,536
are the most significant element of non-interest income, comprising 68.70% and
73.88% of the total for the three-month and nine-month periods ended September
30, 2003. This compares to gains on the sale of mortgage loans of $169,988, or
83.63%, and $401,766, or 80.26%, of total non-interest income for the
three-month and nine-month periods ended September 30, 2002. The level of gains
on the sale of mortgage loans has remained strong due to the ongoing low
interest rate environment, combined with a strong housing market, creating an
exceptional market for mortgage products. An increase in interest rates, or a
slow down in the housing market, could negatively impact the Company's ability
to maintain the same level of income associated with mortgage loan production.

         Service charges on deposit accounts totaled $58,263 and $149,015 for
the three-month and nine-month periods ended September 30, 2003, as compared to
$23,805 and $72,182 for the same periods in 2002. These increases of 144.75% and
106.44% can be directly attributed to the growth in the Company's deposit
portfolio, and an increase in the level of fee-based cash management
relationships.

         The Company will continue to seek ways to expand its sources of
non-interest income. The Company may enter into fee arrangements with strategic
partners that offer investment advisory services, risk management and employee
benefit services. No assurance can be given that such fee arrangements will be
obtained or maintained.


                                       15
<PAGE>



Non-Interest Expense

         Non-interest expense for the three-month and nine-month periods ended
September 30, 2003, totaled $993,771 and $3,012,161, respectively. This compares
to non-interest expense for the comparable periods in 2002, of $905,328 and
$2,509,991, respectively. The increase of $502,170, or 20.01%, for the
nine-month period resulted from an increase in salaries and benefits of $256,597
related to staffing growth to increase marketing efforts, manage the growth of
the loan and deposit portfolios, and support increased operational volume. The
increase in salaries and benefits also includes approximately $62,500 of
increased mortgage commissions and benefits resulting from the heavy mortgage
volume experienced during the period. Occupancy expenses increased by $34,092,
or 21.40%, for the nine-months ended September 30, 2003 as compared to the same
period in 2002. This increase was due to scheduled rent increases as well as a
reduction in sublease income of approximately $11,700 due to expansion of the
Company's corporate office into previously sublet space, and $6,300 of rental
expense associated with new space obtained for the mortgage division. The
$97,541, or 41.06%, increase in data processing and other outside services for
the nine-months ended September 30, 2003 as compared to the same period in 2002
is the result of increased data and item processing costs paid to external
service providers. These costs are volume driven based upon the number of
customer accounts and related transaction volume. As a result, these costs
increase with the growth of the Company. The $40,303, or 32.51%, increase in
advertising and marketing related expenses for the nine-months ended September
30, 2003 as compared to the same period in 2002 is related to increased efforts
to enhance the visibility of the Bank, and attract new customers. The increase
of $51,602, or 23.66%, in other expenses relates to various costs associated
with the increased size and complexity of the Company.

          Non-interest expense for the three-month period ended September 30,
2003 increased by $88,443, or 9.77%, 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 nine-month periods. Management
believes that further growth in the Company's customer base and the related
revenue 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. As of
September 30, 2003, the Company had $323,211 in cash and due from banks, and
$20,170,087 in federal funds sold and other overnight investments. This
represents an increase in liquid assets of $8,377,562, or 69.15%, since December
31, 2002, at which time liquid assets consisted of $363,031 in cash and due from
banks, and $11,752,705 in federal funds sold and other overnight investments. As
of September 30, 2003, the Company had approximately $38.9 million of unfunded
loan commitments, of which $29.7 million represented various types of revolving
credit facilities. Typically, revolving credit facilities are not fully funded.
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.


                                       16
<PAGE>


         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
subject to interest rate pricing within a given time period, including both
floating rate or adjustable rate instruments and instruments which are
approaching maturity.

       The following table sets forth the amount of the Company's
interest-earning assets and interest-bearing liabilities as of September 30,
2003, which are expected to mature or reprice in each of the time periods shown:
<TABLE>
<CAPTION>

<S>                                  <C>               <C>     <C>              <C>           <C>        <C>

                                                                            Maturity or repricing within
                                                  Percent        0 to 3      4 to 12       1 to 5      Over 5
                                       Amount     of Total      Months       Months        Years       Years
                                       -----     ---------      --------   ----------      ------      --------
   Interest-earning assets
      Federal funds sold and other
          overnight investments      $20,170,087       16.77%  $20,170,087 $    -        $    -      $   -
      Loans - Variable rate           67,619,727       56.23    67,619,727      -             -          -
      Loans - Fixed rate              28,892,474       24.03     2,752,341    6,129,514   18,236,203  1,774,416
      Other earning assets             3,570,875        2.97     3,089,785      -             -         481,090
                                      ----------  -----------   ----------- -----------   ---------- ----------
         Total interest-earning
            assets                   $120,253,163     100.00%  $93,631,940 $ 6,129,514   $18,236,203 $2,255,506
                                      ==========  ===========   =========== ===========   ========== ==========
   Interest-bearing liabilities
      Deposits - Variable rate       $41,161,800       43.32%  $41,161,800 $    -        $    -      $   -
      Deposits - Fixed rate           52,336,439       55.08     6,994,623  20,739,451    24,602,365     -
      Short-term borrowings
         Variable rate                 1,514,000        1.60     1,514,000      -             -          -
                                      ----------  -----------   ----------- -----------   ---------- ----------
         Total interest-bearing
            liabilities              $95,012,239      100.00%  $49,670,423 $20,739,451   $24,602,365 $   -
                                      ==========  ===========   =========== ===========   ========== ==========
   Periodic repricing differences

      Periodic gap                                             $43,961,517 $(14,609,93) $ (6,366,16)$ 2,255,506
                                                                =========== ===========  ==========  ==========
      Cumulative gap                                           $43,961,517 $29,351,580  $22,985,418 $25,240,924
                                                                =========== ===========  ==========  ==========

   Ratio of rate sensitive assets
       to rate sensitive
       liabilities                                                  188.51%      29.56%      74.12%      N/A
</TABLE>



         As indicated by the table, the excess of interest-earning assets over
interest-bearing liabilities of $25,240,924 is concentrated in the categories of
items maturing or repricing within three months. These items are somewhat offset
by a large concentration of interest-bearing liabilities maturing or repricing
in 4 months to 5 years. These gaps exist as a result of differences 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 would benefit significantly from increases in
interest rates during that period, and conversely, the Company would experience
significant margin pressure from a continued decline in rates for 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


                                       17
<PAGE>


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 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

         The Company had stockholders' equity at September 30, 2003 of
$11,935,177 as compared to $7,609,658 at December 31, 2002. The increase in
capital is a result of the completion of a private offering with 620,690 shares
issued and net proceeds after offering costs of $4,449,261. The proceeds from
the offering were offset by losses incurred in 2003. Management believes that
this capital is adequate to support expected asset growth for at least the next
12 months.

         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.

         Banking regulations also limit the amount of dividends that may be paid
without prior approval of the Bank's regulatory agencies. Regulatory approval is
required to pay dividends that exceed the Bank's net profits for the current
year plus its retained net profits for the preceding two years. The Bank could
not have paid dividends to the Company without approval from bank regulatory
agencies at September 30, 2003.


                                       18
<PAGE>

Item 3.  Controls and Procedures

         As of the end of the period covered by this quarterly report on Form
10-QSB, Bay National Corporation's Chief Executive Officer and Chief Financial
Officer evaluated the effectiveness of Bay National Corporation's disclosure
controls and procedures. Based upon that evaluation, Bay National Corporation's
Chief Executive Officer and Chief Financial Officer concluded that Bay National
Corporation's disclosure controls and procedures are effective. Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed by Bay National Corporation in
the reports that it files or submits under the Securities Exchange Act of 1934,
as amended, is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.

         In addition, there were no changes in Bay National Corporation's
internal controls over financial reporting (as defined in Rule 13a-15 or Rule
15d-15 under the Securities Act of 1934, as amended) during the quarter ended
September 30, 2003, that have materially affected, or are reasonably likely to
materially affect, Bay National Corporation's internal control over financial
reporting.

Information Regarding Forward-Looking Statements

         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.
Forward-looking statements often use words such as "believe", "expect", "plan",
"may", "will", "should", "project", "contemplate", "anticipate", "forecast",
"intend" or other words of similar meaning. You can also identify them by the
fact that they do not relate strictly to historical or current facts. Our actual
results and the actual outcome of our expectations and strategies could be
different from those anticipated or estimated.

         The statements presented herein with respect to, among other things,
Bay National Corporation's plans, objectives, expectations and intentions,
including statements regarding profitability, liquidity, allowance for loan
losses, interest rate sensitivity, market risk and financial and other goals are
forward looking. These statements are based on Bay National Corporation's
beliefs, assumptions and on information available to Bay National Corporation as
of the date of this filing, and involve risks and uncertainties. These risks and
uncertainties include, among others, those discussed in this Quarterly Report of
Form 10-QSB; Bay National Corporation's limited operating history and initial
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. For a more complete
discussion of these risks and uncertainties see the discussion under the caption
"Factors Affecting Future Results" in Bay National Corporation's Form 10-KSB.

         Bay National Corporation's actual results could differ materially from
those discussed herein and you should not put undue reliance on any
forward-looking statements. All forward-looking statements speak only as of the
date of this filing, and Bay National Corporation undertakes no obligation to
make any revisions to the forward-looking statements to reflect events or
circumstances after the date of this filing or to reflect the occurrence of
unanticipated events.


                                       19
<PAGE>


                           PART II - OTHER INFORMATION

Item 1.    Legal Proceedings.

           None.

Item 2.    Changes in Securities.

            (a)   Not applicable.

            (b)   Not applicable

            (c)   Recent Sales of Unregistered Securities

                  On October 31, 2002, Bay National Corporation commenced a
private offering, to accredited investors only, of an aggregate of 550,000
shares of its common stock, which was subsequently increased to 620,690 shares
of its common stock. The purchase price per share was $7.25 for an aggregate
purchase price of $4,500,002. The private offering terminated on April 30, 2003
with all shares issued and net proceeds, after offering costs, of $4,449,261.

                  There were no underwriting discounts or commissions paid with
respect to the private offering. Bay National Corporation believes that the
private offering was exempt from the registration requirements of the Securities
Act of 1933 by virtue of Section 4(2) of the Securities Act of 1933 and Rule 506
promulgated thereunder. The transaction was not conducted by any form of general
solicitation or general advertising and, in connection with the transaction, Bay
National Corporation took reasonable care to assure that the investors were not
underwriters within the meaning of Section 2(11) of the Securities Act by, among
other things, making reasonable inquiry of each investor to confirm that the
investor was taking his or her securities for investment only and not with a
view to or for sale in connection with any distribution of the securities and by
placing appropriate legends on the share certificates.

            (d)   Not applicable.

Item 3.    Defaults Upon Senior Securities.

           Not applicable.

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

           None

Item 5.    Other Information.

           Not applicable.



                                       20
<PAGE>


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

           (a) Exhibits.

31.1     Certification of Chief Executive Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.

31.2     Certification of Chief Financial Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.

32       Certification of Chief Executive Officer and Chief Financial Officer
         pursuant to Section 906 of  the Sarbanes-Oxley Act of 2002.


            (b)   Reports on Form 8-K.

                      Form 8-K filed, dated July 23, 2003, Items 7 and 9.





                                       21
<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: November 12, 2003        By: /s/ Hugh W. Mohler
                                   ---------------------------------------------
                                   Hugh W. Mohler, President
                                   (Principal Executive Officer)


Date: November 12, 2003        By: /s/ Mark A. Semanie
                                   ---------------------------------------------
                                   Mark A. Semanie, Treasurer
                                   (Principal Accounting and Financial Officer)






                                       22