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 March 31, 2007





Commission
      file number: 000-51765







**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.
                Employerincorporation
                or organization)
            
            Identification
                No.)





2328
      West Joppa Road, Lutherville, MD 21093


Address
      of principal executive offices





(410)
      494-2580


Issuer’s
      telephone number





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).         Yes
      ____  No X





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





At
      May
      11, 2007, the issuer had 1,937,369 shares of Common Stock
      outstanding.





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








**PART
      I -**  **FINANCIAL
      INFORMATION**





**Item
      1.****Financial
      Statements**





**BAY
      NATIONAL CORPORATION**





CONSOLIDATED
      BALANCE SHEETS


As
      of
      March 31, 2007 and December 31, 2006





March
                31, 2007
            
            
            December
                31, 2006ASSETS
            
            
            
            
            (Unaudited)Cash
                and due from banks
            
            
            
            $
            2,159,321
            
            $
            2,348,304Federal
                funds sold and other overnight investments
            
            
            
            
            18,004,874
            
            
            31,549,900Investment
                securities available for sale (AFS) - at fair value
            
            
            
            
            697,392
            
            
            697,526Other
                equity securities
            
            
            
            
            1,155,800
            
            
            1,117,100Loans
                held for sale
            
            
            
            
            6,830,650
            
            
            1,444,303Loans,
                net of unearned fees
            
            
            
            
            220,296,030
            
            
            216,571,375Total
                loans
            
            
            
            
            227,126,680
            
            
            218,015,678Less:
                Allowance for credit losses
            
            
            
            
            (3,202,930
            )
            
            (3,175,000
            )Loans,
                net
            
            
            
            
            223,923,750
            
            
            214,840,678Premises
                and equipment, net
            
            
            
            
            1,100,441
            
            
            1,100,220Accrued
                interest receivable and other assets
            
            
            
            
            3,174,961
            
            
            3,151,119Total
                Assets
            
            
            
            $
            250,216,539
            
            $
            254,804,847LIABILITIESNon-interest-bearing
                deposits
            
            
            
            $
            31,597,066
            
            $
            34,808,624Interest-bearing
                deposits
            
            
            
            
            186,665,292
            
            
            189,340,328Total
                deposits
            
            
            
            
            218,262,358
            
            
            224,148,952Short-term
                borrowings
            
            
            
            
            2,681,000
            
            
            1,545,000Subordinated
                debt
            
            
            
            
            8,000,000
            
            
            8,000,000Accrued
                expenses and other liabilities
            
            
            
            
            1,794,719
            
            
            2,268,402Total
                Liabilities
            
            
            
            
            230,738,077
            
            
            235,962,354STOCKHOLDERS'
                EQUITYCommon
                stock - $.01 par value, authorized:9,000,000
                shares authorized, 1,935,369 issuedand
                outstanding as of March 31, 2007 and December 31, 2006
            
            
            
            
            19,354
            
            
            19,354Additional
                paid in capital
            
            
            
            
            17,666,178
            
            
            17,649,678Retained
                earnings
            
            
            
            
            1,792,930
            
            
            1,173,461Total
                Stockholders' Equity
            
            
            
            
            19,478,462
            
            
            18,842,493Total
                Liabilities and Stockholders' Equity
            
            
            
            $
            250,216,539
            
            $
            254,804,847




See
      accompanying notes to consolidated financial statements.





1


**BAY
      NATIONAL CORPORATION**





CONSOLIDATED
      STATEMENTS OF OPERATIONS


For
      the
      three-month periods ended March 31, 2007 and 2006


(Unaudited)


Three
                Months Ended
              March
                312007
            
            
            2006INTEREST
                INCOME:Interest
                and fees on loans
            
            
            
            
            
            
            $
            5,084,808
            
            $
            4,223,414Interest
                on federal funds sold and other overnight investments
            
            
            
            
            
            
            
            242,286
            
            
            62,389Taxable
                interest and dividends on investmentsecurities
            
            
            
            
            
            
            
            16,120
            
            
            21,442Total
                interest income
            
            
            
            
            
            
            
            5,343,214
            
            
            4,307,245INTEREST
                EXPENSE:Interest
                on deposits
            
            
            
            
            
            
            
            2,029,447
            
            
            1,434,862Interest
                on short-term borrowings
            
            
            
            
            
            
            
            21,181
            
            
            17,720Interest
                on subordinated debt
            
            
            
            
            
            
            
            148,454
            
            
            149,989Total
                interest expense
            
            
            
            
            
            
            
            2,199,082
            
            
            1,602,571Net
                interest income
            
            
            
            
            
            
            
            3,144,132
            
            
            2,704,674Provision
                for credit losses
            
            
            
            
            
            
            
            -
            
            
            -Net
                interest income after provision forcredit
                losses
            
            
            
            
            
            
            
            3,144,132
            
            
            2,704,674NON-INTEREST
                INCOME:Service
                charges on deposit accounts
            
            
            
            
            
            
            
            36,941
            
            
            40,739Gain
                on sale of mortgage loans
            
            
            
            
            
            
            
            135,449
            
            
            83,256Other
                income
            
            
            
            
            
            
            
            19,838
            
            
            16,285Total
                non-interest income
            
            
            
            
            
            
            
            192,228
            
            
            140,280NON-INTEREST
                EXPENSES:Salaries
                and employee benefits
            
            
            
            
            
            
            
            1,497,189
            
            
            1,230,142Occupancy
                expenses
            
            
            
            
            
            
            
            157,214
            
            
            122,408Furniture
                and equipment expenses
            
            
            
            
            
            
            
            85,237
            
            
            83,674Legal
                and professional fees
            
            
            
            
            
            
            
            63,861
            
            
            35,583Data
                processing and other outside services
            
            
            
            
            
            
            
            186,656
            
            
            162,164Advertising
                and marketing related expenses
            
            
            
            
            
            
            
            125,582
            
            
            68,634Other
                expenses
            
            
            
            
            
            
            
            179,152
            
            
            142,917Total
                non-interest expenses
            
            
            
            
            
            
            
            2,294,891
            
            
            1,845,522Income
                before income taxes
            
            
            
            
            
            
            
            1,041,469
            
            
            999,432Income
                tax expense
            
            
            
            
            
            
            
            422,000
            
            
            397,357NET
                INCOME
            
            
            
            
            
            
            $
            619,469
            
            $
            602,075Per
                Share Data:Net
                Income (basic)
            
            
            
            
            
            
            $
            .32
            
            
            .31Net
                Income (diluted)
            
            
            
            
            
            
            $
            .31
            
            
            .30Weighted
                Average shares outstanding (basic)
            
            
            
            
            
            
            
            1,935,369
            
            
            1,926,038Effect
                of Dilution - Stock options and Restricted shares
            
            
            
            
            
            
            
            74,728
            
            
            84,804Weighted
                Average shares outstanding (diluted)
            
            
            
            
            
            
            
            2,010,097
            
            
            2,010,842




See
      accompanying notes to consolidated financial statements.


2


**BAY
      NATIONAL CORPORATION**





CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


For
      the
      three-months ended March 31, 2007 and 2006


(Unaudited)











Common
              Stock
            
            
            Additional
              Paid
                in
              Capital
            
            
            Retained
              Earnings
            
            
            Total
              Stockholders’
              EquityBalances
                at January 1, 2007
            $
            19,354
            
            $
            17,649,678
            
            $
            1,173,461
            
            $
            18,842,493Stock-based
                compensation expense
            
            -
            
            
            16,500
            
            
            -
            
            
            16,500Net
                Income
            
            -
            
            
            -
            
            
            619,469
            
            
            619,469Balances
                at March 31, 2007
            $
            19,354
            
            $
            17,666,178
            
            $
            1,792,930
            
            $
            19,478,462Common
              Stock
            
            
            Additional
              Paid
                in
              Capital
            
            
            Accumulated
              Deficit
            
            
            Total
              Stockholders’
              EquityBalances
                at January 1, 2006
            $
            19,244
            
            $
            17,451,201
            
            $
            (1,256,367
            )
            $
            16,214,078Issuance
                of Common Stock
            
            35
            
            
            26,177
            
            
            -
            
            
            26,212Stock-based
                compensation expense
            
            -
            
            
            17,894
            
            
            -
            
            
            17,894Net
                Income
            
            -
            
            
            -
            
            
            602,075
            
            
            602,075Balances
                at March 31, 2006
            $
            19,279
            
            $
            17,495,272
            
            $
            (654,292
            )
            $
            16,860,259







See
      accompanying notes to consolidated financial statements.





3


**BAY
      NATIONAL CORPORATION**





CONSOLIDATED
      STATEMENTS OF CASH FLOWS


For
      the
      three-months ended March 31, 2007 and 2006


(Unaudited)





2007
            
            
            2006Cash
                Flows From Operating ActivitiesNet
                income
            $
            619,469
            
            $
            602,075Adjustments
                to reconcile net income to net cash provided by (used in)operating
                activities:Depreciation
            
            65,297
            
            
            50,540Accretion
                of investment discounts
            
            (8,672
            )
            
            (16,871
            )Stock-based
                compensation expense
            
            16,500
            
            
            17,894Gain
                on sale of mortgage loans
            
            (135,449
            )
            
            (83,256
            )Origination
                of loans held for sale
            
            (26,902,721
            )
            
            (31,876,629
            )Proceeds
                from sale of loans
            
            21,651,823
            
            
            45,649,447Net
                (increase) decrease in accrued interest receivable and other
                assets
            
            (23,842
            )
            
            263,472Net
                decrease in accrued expenses and other liabilities
            
            (473,683
            )
            
            (343,051
            )Net
                cash (used in) provided by operating activities
            
            (5,191,278
            )
            
            14,263,621Cash
                Flows From Investing ActivitiesPurchases
                of investment securities - AFS
            
            (691,194
            )
            
            (1,927,985
            )Maturities
                of investment securities - AFS
            
            700,000
            
            
            1,550,000Purchase
                of Federal Reserve Bank stock
            
            -
            
            
            (70,850
            )Purchase
                of Federal Home Loan Bank of Atlanta stock
            
            (38,700
            )
            
            (77,700
            )Loan
                disbursements in excess of principal payments
            
            (3,696,725
            )
            
            (17,524,595
            )Capital
                expenditures
            
            (65,518
            )
            
            (333,495
            )Net
                cash used in investing activities
            
            (3,792,137
            )
            
            (18,384,625
            )Cash
                Flows From Financing ActivitiesNet
                (decrease) increase in deposits
            
            (5,886,594
            )
            
            7,057,222Net
                increase (decrease) in short-term borrowings
            
            1,136,000
            
            
            (875,158
            )Net
                proceeds from stock issuance
            
            -
            
            
            26,212Net
                cash (used in) provided by financing activities
            
            (4,750,594
            )
            
            6,208,276Net
                (decrease) increase in cash and cash equivalents
            
            (13,734,009
            )
            
            2,087,272Cash
                and cash equivalents at beginning of period
            
            33,898,204
            
            
            7,493,621Cash
                and cash equivalents at end of period
            $
            20,164,195
            
            $
            9,580,893Cash
                paid for:Interest
            $
            2,180,100
            
            $
            1,465,563Income
                taxes
            $
            215,000
            
            $
            431,357







See
      accompanying notes to consolidated financial statements.





4


**BAY
      NATIONAL CORPORATION**





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Three Months Ended March 31, 2007 and 2006


(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 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, 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
      periods have been included. The balances as of December 31, 2006 have been
      derived from audited financial statements. These consolidated financial
      statements should be read in conjunction with the financial statements and
      accompanying notes included in Bay National Corporation’s 2006 Annual Report on
      Form 10-KSB. There have been no significant changes to the Company’s Accounting
      Policies as disclosed in the 2006 Annual Report. The results shown in this
      interim report are not necessarily indicative of results to be expected for
      the
      full year 2007 or any other interim period.





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





*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




Quantitative
      measures established by regulation to ensure capital adequacy require the Bank
      to maintain minimum amounts and ratios. Management believes, as of March 31,
      2007, that the Bank meets all capital adequacy requirements to which it is
      subject.





As
      of
      March 31, 2007, 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
      Statement of Financial Accounting Standards (“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 basis 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.





**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 earnings 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.




**5.
      STOCK-BASED COMPENSATION**





Effective
      January 1, 2006, the Company adopted SFAS No. 123(R), *Share-based
      Payment,* and
      has
      included the stock-based employee compensation cost in its income statements
      for
      the three-month periods ended March 31, 2007 and 2006. ** Amounts
      recognized in the financial statements with respect to stock-based compensation
      are as follows:





Three
                Months Ended
              March
                312007
            
            2006Amounts
                charged against income, before tax benefit
            
            $
            16,500
            
            $
            17,894Amount
                of related income tax benefit recognized in income
            
            $
            5,610
            
            $
            883





The
      fair
      value of each option grant is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following weighted average
      assumptions used for grants during the year ended December 31,
      2002:





Dividend
                yield
            
            -Expected
                volatility
            
            
            20.00
            %Risk-free
                interest rate
            
            
            4.17
            %Expected
                lives (in years)
            
            
            8





No
      stock
      options have been issued since 2002.





The
      Company’s 2001 Stock Option Plan (“Option Plan”) provides for the granting of
      incentive and non-qualifying stock options to the Company’s directors and to
      selected employees on a periodic basis at the discretion of the Board of
      Directors. The Option Plan authorizes the issuance of up to 200,000 shares
      of






6




common
      stock, has a term of ten years, and is administered by the Compensation
      Committee of the Board of Directors. The Compensation Committee consists of
      at
      least three non-employee directors appointed by the Board of Directors. In
      general, the options have an exercise price equal to 100% of the fair market
      value of the common stock on the date of the grant, must be exercised within
      eight years of the date of grant and vest over a period of six
      years.





The
      unrecognized compensation cost related to unvested stock option awards was
      $29,432 for the quarter ended March 31, 2007 based upon a weighted average
      fair
      value of $3.05.





The
      following is a summary of changes in outstanding options for the three-month
      periods ended March 31, 2007 and 2006:





**Number
                of**
              **Shares**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**Balance,
                January 1, 2006
            
            
            140,766
            
            $
            7.67Granted
            
            
            -
            
            
            -Cancelled
            
            
            (1,242
            )
            $
            7.58Exercised
            
            
            (3,458
            )
            $
            7.58Balance,
                March 31, 2006
            
            
            136,066
            
            $
            7.68Balance,
                January 1, 2007
            
            
            128,591
            
            $
            7.68Granted
            
            
            -
            
            
            -Cancelled
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Balance,
                March 31, 2007
            
            
            128,591
            
            $
            7.68Weighted
                average fair value of options granted during 2002
            
            $
            3.05





The
      following table summarizes information about options outstanding at March 31,
      2007:





**Options
                Outstanding**
            
            
            **Options
                Exercisable****Range
                of Exercise Price**
            
            **Number**
            
            **Weighted**
              **Average**
              **Remaining**
              **Contractual**
              **Life**
              **(in
                years)**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**
            
            
            **Number**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**$7.58
            
            111,776
            
            2
            
            $7.58
            
            
            109,784
            
            $7.58$8.37
            
            16,815
            
            3
            
            $8.37
            
            
            9,157
            
            $8.37128,591
            
            
            
            $7.68
            
            
            118,941
            
            $7.64





The
      aggregate intrinsic value of options outstanding and exercisable as of March
      31,
      2007 was $1,423,078 and $1,321,337, respectively, based upon a closing price
      of
      $18.75 per share.





**Restricted
      Stock Units**





Pursuant
      to an employment agreement (“Agreement”) dated June 1, 2006, a grant of 12,000
      shares of the Company’s common stock was awarded to a member of senior
      management. The stock grant vests as follows: 25% (3,000 shares) on the first
      anniversary of the Agreement; 25% (3,000 shares) on the second






7




anniversary
      of the Agreement; 25% (3,000 shares) on the third anniversary of the Agreement;
      and 25% (3,000 shares) on the fourth anniversary of the Agreement. The vesting
      of the shares is subject to the individual being employed under this Agreement
      at each vesting date. Additional shares may be awarded from time to time subject
      to approval of the Board of Directors. The Company incurred compensation expense
      associated with this restricted stock of $14,212 for the three-month period
      ended March 31, 2007.





The
      unrecognized compensation cost related to unvested restricted stock awards
      was
      $180,025 for the quarter ended March 31, 2007 based upon a fair value of $18.95.





The
      following table summarizes the changes in outstanding shares under restricted
      stock grants for the three-month period ended March 31, 2007.





**Number
                of**
              **Shares**
            
            **Value
                at**
              **Issuance
                Date**Unvested
                grants at January 1, 2007
            
            
            12,000
            
            $
            18.95Granted
            
            
            -
            
            
            -Vested
            
            
            -
            
            
            -Cancelled
            
            
            -
            
            
            -Unvested
                grants at March 31, 2007
            
            
            12,000
            
            $
            18.95







8





**Item
      2.**  **Management's
      Discussion and Analysis**





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 March 31, 2007 and December 31, 2006 and for the three-month
      periods ended March 31, 2007 and 2006.





**Overview**





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
      serves the business communities of North Baltimore and Salisbury,
      Maryland.





Loan
      growth continued at a moderate pace for the three-month period ended March
      31,
      2007, while operating results improved over prior year results. Key measurements
      for the three-month period ended March 31, 2007 include the
      following:





·
            Total
                assets at March 31, 2007 decreased to $250.2 million from $254.8
                million
                as of December 31, 2006.





·
            Net
                loans outstanding increased from $214.8 million as of December 31,
                2006 to
                $223.9 million as of March 31,
                2007.





·
            There
                was one loan, of approximately $37,000, that was considered a non-accrual
                loan as of March 31, 2007. There were no non-performing loans as
                of March
                31, 2007. The Company continues to maintain appropriate reserves
                for
                credit losses.





·
            Deposits
                at March 31, 2007 decreased to $218.3 million from $224.1 million
                as of
                December 31, 2006.





·
            During
                March 2006, the Company began using brokered certificates of deposit
                through the Promontory Financial Network. This network provides the
                Company with the ability to offer its customers access to FDIC-insured
                deposit products in aggregate amounts exceeding current insurance
                limits.
                When the Company places funds through the certificate of deposit
                account
                registry service (CDARS) on behalf of a customer, it receives matching
                deposits through the network. The Company also has the ability to
                raise
                deposits directly through the network. These deposits are considered
                “Brokered Deposits” for bank regulatory purposes. As of March 31, 2007,
                the Company had approximately $5.9 million of CDARS deposits
                outstanding.





·
            Net
                income was $619,469 for the three-month period ended March 31, 2007,
                compared to $602,075 for the same period in 2006. This represents
                an
                increase of 2.9% over net income for the three-month period ended
                March
                31, 2006.





·
            Net
                interest income, the Company’s main source of income, was $3.1 million
                during the three-month period ended March 31, 2007, compared to $2.7
                million for the same period in 2006. This represents an increase
                of 16.2%
                for the three-month period.






9





·
            There
                were no charge-offs for the three-month period ended March 31, 2007.
                There
                was a full recovery of a 2006 charge-off of approximately $28,000
                during
                the three-month period ended March 31, 2007. There were no charge-offs
                or
                recoveries for the three-month period ended March 31,
                2006.





·
            Non-interest
                income increased by $51,948, or 37.0% for the three-month period
                ended
                March 31, 2007, as compared to the same period in 2006.





·
            Non-interest
                   expenses increased by $449,369, or 24.3%, for the three-month
                period ended
                March 31, 2007, as compared to the same period in 2006.





·
            The
                Company’s common stock closed at $18.75 on March 30, 2007, which
                represented a 2.1% decline from its closing price of $19.15 on March
                31,
                2006.





A
      detailed discussion of the factors leading to these changes can be found in
      the
      discussion below.





**Results
      of Operations**





*General*





The
      Company recorded net income of $619,469 for the three-month period ended March
      31, 2007. This compares to net income of $602,075 for the same period in 2006.
      This is an increase of $17,394, or 2.9%, for the three-month period. The
      year-over-year improvement in results is due to the continued year-over-year
      growth of the loan portfolio, resulting in increased interest and fees on loans.
      The results were also aided by growth in gains recognized through the sale
      of
      residential mortgage loans.





The
      Bank’s mortgage origination operations, located in Towson and Salisbury,
      Maryland, originate conventional first and second lien residential mortgage
      loans. The Bank sells most of its first and second lien residential mortgage
      loans in the secondary market and typically recognizes a gain on the sale of
      these loans after the payment of commissions to the loan origination officer.
      Since its inception in February 2001, the Salisbury mortgage division has been
      a
      significant contributor to operating results. The Towson mortgage operation
      was
      initiated in February 2005 and began to contribute to the Company’s overall
      profitability during the second half of 2005. For the three-month periods ended
      March 31, 2007 and 2006, net gains on the sale of mortgage loans totaled
      $135,449 and $83,256, respectively.





Gains
      on
      the sale of mortgage loans have increased for the three-month period ended
      March
      31, 2007 as compared to the same period in 2006 due to the Towson origination
      operation’s portfolio of construction and rehabilitation loans that were
      modified to permanent financing upon completion of the project. The permanent
      financing is then sold in the secondary market. This portfolio did not have
      significant modification activity in the first quarter of 2006 due to the fact
      that it was still relatively new. Management believes that this type of
      residential lending is less sensitive to the fluctuation of interest rates
      than
      conventional mortgage loans however, demand for these types of loans is still
      subject to the overall strength of the housing market.





During
      the second quarter of 2004, the Company began purchasing 100% participations
      in
      mortgage loans originated by a mortgage company in the Baltimore metropolitan
      area. These participations are for loans which a secondary market investor
      has
      committed to purchase. The participations are typically held for a period of
      three to four weeks before being sold to the secondary market investor. This
      holding period represents the amount of time taken by the






10




secondary
      market investor to review the loan files for completeness and accuracy. During
      this holding period, the Company earns interest on these loans at a rate indexed
      to the prime rate.





As
      of
      March 31, 2007, the Company held $3.9 million of these loans which were
      classified as held for sale. The Company earned $59,335 of interest on this
      program for the three-month period ended March 31, 2007. This compares to
      $137,159 for the same period in 2006. The decline in interest from this program
      is due to a decline in average balances from $7.3 million for the three-months
      ended March 31, 2006 to $3.2 million for the same period in 2007. The activity
      in this program declined significantly because the originating mortgage company
      utilized other available funding sources.





Management
      expects 2007 to be a challenging year for earnings and asset growth as a result
      of the slowing economy and the Company’s need to continue to invest in personnel
      to support the long-term growth of the Company. Actual results will be subject
      to the volatility of the provision for credit losses, which is related to loan
      growth, the impact of declining volume in the mortgage participations purchasing
      program, the volatility of existing mortgage loan production, which is sensitive
      to economic and interest rate fluctuations and other competitive pressure that
      arises in a slowing economy.





*Net
      Interest Income*





Net
      interest income is the difference between income on earning assets and the
      cost
      of funds supporting those assets. Earning assets are composed primarily of
      loans, investments, and federal funds sold. Interest-bearing deposits, other
      short-term borrowings and subordinated debt 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.





As
      previously stated, net interest income was $3.1 million for the three-month
      period ended March 31, 2007, as compared to $2.7 million for the same period
      in
      2006. This represents an increase of 16.2% for the three-months ended March
      31,
      2007, as compared to the same period in 2006.





Interest
      income from loans and investments for the three-month period ended March 31,
      2007 was $5.3 million, compared to $4.3 million for the three-month period
      ended
      March 31, 2006. The 24.1% increase for the three-month period, over the same
      period in 2006 was directly related to the 17.1% increase in average
      interest-earning assets for the three-months ended March 31, 2007 as compared
      to
      the same period in 2006. The increase in interest income was also aided by
      an
      increase in average yields due to an increase in the target federal funds rate
      from 4.75% as of March 28, 2006 to the current target of 5.25% which has been
      in
      effect since June 29, 2006. The yields on interest earning assets increased
      from
      8.28% for the three-months ended March 31, 2006 to 8.77% for the three-months
      ended March 31, 2007.





The
      percentage of average interest-earning assets represented by loans was 90.0%
      and
      94.1% for the three-month periods ended March 31, 2007 and 2006, respectively.
      The high percentage of loans to earning assets is consistent with management’s
      strategy to maximize net interest income by maintaining a higher concentration
      of loans, which typically earn higher yields than investment securities. For
      the
      three-month period ended March 31, 2007, the average yield on the loan portfolio
      increased to 9.28% from 8.63% for the three-month period ended March 31, 2006.
      This increase is primarily due to the Federal Reserve increasing its target
      for
      the federal funds rate from 4.25% as of January 1, 2006 to 5.25% as of March
      31,
      2007. The growth of the construction and rehabilitation loan portfolio also
      contributed to improved yields since these loans often are priced higher than
      other loans.









11


The
      average yield on the investment portfolio and other earning assets, such as
      federal funds sold, was 4.25% for the three-month period ended March 31, 2007
      as
      compared to 2.74% for the same period in 2006. This improvement in the average
      yield was a direct result of the Federal Reserve actions discussed above, as
      well as an increase in the Company’s holdings of Federal Reserve and Federal
      Home Loan Bank stocks, which pay dividend yields greater than those earned
      by
      the Company’s cash and cash equivalents. The percentage of average
      interest-earning assets represented by investments was 10.0% and 5.9% for the
      three-month periods ended March 31, 2007 and 2006, respectively.





Interest
      expense from deposits and borrowings for the three-month period ended March
      31,
      2007 was $2.2 million, compared to $1.6 million for the comparable period in
      2006. This 37.2% increase for the three-month period, is the result of a 15.4%
      increase  in
      average interest-bearing liabilities for the three-month period ended March
      31,
      2007 as compared to the same period in 2006 as well as an increase in average
      rates paid. Average rates paid on these liabilities increased from 3.82% for
      the
      three-month period ended March 31, 2006 to 4.54% for the three-month period
      ended March 31, 2007. The increase in rates paid is directly attributable to
      the
      Federal Reserve actions discussed above.





As
      a
      result of the factors discussed above, net interest margins remained relatively
      flat at 5.16% for the three-month period ended March 31, 2007 as compared to
      5.20% for the same period in 2006. Although market rates of interest have
      increased since March 31, 2006, management has been able to carefully implement
      deposit rate increases, which has allowed for consistent margins. Management
      expects that pressure to increase rates paid on deposits will increase if the
      target for the federal funds rate continues to rise.


12


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.





No
      tax
      equivalent adjustments were made and no income was exempt from federal income
      taxes. All average balances are daily average balances. The amortization of
      loan
      fees is included in computing interest income; however, such fees are not
      material.





**Three
                Months Ended March 31, 2007****Average**
              **Balance**
            
            
            **Interest****and fees**
            
            
            **Yield/**
              **Rate**ASSETSLoans
                and loans held for sale
            
            $
            222,318,445
            
            $
            5,084,808
            
            
            9.28
            %Investment
                securities
            
            
            1,813,643
            
            
            16,120
            
            
            3.60Federal
                funds sold and other overnight investments
            
            
            22,834,795
            
            
            242,286
            
            
            4.30Total
                earning assets
            
            
            246,966,883
            
            
            5,343,214
            
            
            8.77
            %Less:
                Allowance for credit losses
            
            
            (3,184,310
            )Cash
                and due from banks
            
            
            2,154,643Premises
                and equipment, net
            
            
            1,112,504Accrued
                interest receivable and other assets
            
            
            2,774,005Total
                assets
            
            $
            249,823,725LIABILITIES
                AND STOCKHOLDERS’ EQUITYInterest-bearing
                demand deposits
            
            $
            67,345,355
            
            
            588,386
            
            
            3.54
            %Regular
                savings deposits
            
            
            6,191,421
            
            
            33,456
            
            
            2.19Time
                deposits
            
            
            112,854,354
            
            
            1,407,605
            
            
            5.06Short-term
                borrowings
            
            
            1,935,300
            
            
            21,181
            
            
            4.44Subordinated
                debt
            
            
            8,000,000
            
            
            148,454
            
            
            7.53Total
                interest-bearing liabilities
            
            
            196,326,430
            
            
            2,199,082
            
            
            4.54
            %Net
                interest income and spread
            
            
            
            
            $
            3,144,132
            
            
            4.23
            %Non-interest-bearing
                demand deposits
            
            
            32,355,446Accrued
                expenses and other liabilities
            
            
            1,822,967Stockholders’
                equity
            
            
            19,318,882Total
                liabilities and stockholders’ equity
            
            $
            249,823,725Interest
                and fee income/earning assets
            
            
            8.77
            %Interest
                expense/earning assets
            
            
            3.61Net
                interest margin
            
            
            5.16
            %Return
                on Average Assets (Annualized)
            
            
            1.01
            %Return
                on Average Equity (Annualized)
            
            
            13.00
            %Average
                Equity to Average Assets
            
            
            7.73
            %








13





**Three
                Months Ended March 31, 2006****Average**
              **Balance**
            
            
            **Interest****and fees**
            
            
            **Yield/**
              **Rate**ASSETSLoans
                and loans held for sale
            
            $
            198,417,445
            
            $
            4,223,414
            
            
            8.63
            %Investment
                securities
            
            
            2,514,546
            
            
            21,442
            
            
            3.46Federal
                funds sold and other overnight investments
            
            
            9,896,110
            
            
            62,389
            
            
            2.56Total
                earning assets
            
            
            210,828,101
            
            
            4,307,245
            
            
            8.28
            %Less:
                Allowance for credit losses
            
            
            (3,000,000
            )Cash
                and due from banks
            
            
            2,018,514Premises
                and equipment, net
            
            
            996,564Accrued
                interest receivable and other assets
            
            
            2,577,895Total
                assets
            
            $
            213,421,074LIABILITIES
                AND STOCKHOLDERS’ EQUITYInterest-bearing
                demand deposits
            
            $
            53,327,622
            
            
            393,507
            
            
            2.99
            %Regular
                savings deposits
            
            
            10,331,445
            
            
            16,599
            
            
            .65Time
                deposits
            
            
            96,558,104
            
            
            1,024,756
            
            
            4.30Short-term
                borrowings
            
            
            1,875,344
            
            
            17,720
            
            
            3.83Subordinated
                debt
            
            
            8,000,000
            
            
            149,989
            
            
            7.60Total
                interest-bearing liabilities
            
            
            170,092,515
            
            
            1,602,571
            
            
            3.82
            %Net
                interest income and spread
            
            
            
            
            $
            2,704,674
            
            
            4.47
            %Non-interest-bearing
                demand deposits
            
            
            25,333,352Accrued
                expenses and other liabilities
            
            
            1,475,407Stockholders’
                equity
            
            
            16,519,800Total
                liabilities and stockholders’ equity
            
            $
            213,421,074Interest
                and fee income/earning assets
            
            
            8.28
            %Interest
                expense/earning assets
            
            
            3.08Net
                interest margin
            
            
            5.20
            %Return
                on Average Assets (Annualized)
            
            
            1.14
            %Return
                on Average Equity (Annualized)
            
            
            14.78
            %Average
                Equity to Average Assets
            
            
            7.74
            %


14


*Provision
      for Credit Losses*





There
      was
      no provision ****** for
      credit losses for either of the three-month periods ended March 31, 2007 and
      2006. The provision for credit losses is normally reflective of the growth
      in
      loan balances outstanding in all segments of the portfolio as well as changes
      in
      the relative level of risk in the portfolio. No provisions were necessary for
      the three-month periods ended March 31, 2007 and 2006 due to the fact that
      improvements in the relative risk mix of the portfolio offset increases in
      the
      overall level of loans outstanding. For additional information regarding the
      methodology used to determine the provision for credit losses, see the
      Management Discussion and Analysis section entitled “Allowance for Credit Losses
      and Credit Risk Management.”





*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 period
      ended March 31, 2007, the Company realized non-interest income of $192,228
      as
      compared to $140,280 for the three-month period ended March 31, 2006. Gains
      on
      the sale of mortgage loans of $135,449 comprised 70.5% of the total for the
      three-month period ended March 31, 2007. This compares to gains on the sale
      of
      mortgage loans of $83,256, or 59.4%, of total non-interest income for the
      three-month period ended March 31, 2006.





The
      level
      of gains on the sale of mortgage loans increased for the three-month period
      ended March 31, 2007 due to the Towson origination operation’s portfolio of
      construction and rehabilitation loans that were modified to permanent financing
      upon completion of the project. This portfolio was still building during the
      first three months of 2006 after the Towson origination operation was added
      in
      February 2005. Although these additional capabilities have increased the level
      of gains on the sale of mortgage loans, while also providing interest income
      on
      construction loans, it should be noted that additional increases in interest
      rates or an extended slowdown in the housing market could impact the Company’s
      ability to generate consistent non-interest income associated with mortgage
      loan
      production.





Service
      charges on deposit accounts totaled $36,941 for the three-month period ended
      March 31, 2007, as compared to $40,739 for the same period in 2006. The decrease
      of 9.3% is primarily attributable to a decline in the level of overdraft fees
      charged on transaction accounts. This decline occurred as the average level
      of
      overdrawn balances declined by approximately 25.7% for the three-month period
      ended March 31, 2007 as compared to the same period in 2006. The decline is
      a
      result of the Company’s ongoing emphasis of attracting relationships that tend
      to maintain higher account balances.





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





*Non-Interest
      Expense*





Non-interest
      expense for the three-month period ended March 31, 2007 totaled $2.3 million.
      This compares to non-interest expense for the comparable period in 2006 of
      $1.8
      million. The majority of the increase of $449,369, or 24.3%, resulted from
      a
      period-over-period increase in salaries and benefits of $267,047, or 21.7%.
      The
      increases in salaries and benefits related to staffing growth, including the
      addition of a Senior Business Development Officer in June 2006, as well as
      staffing growth in residential real estate lending, commercial account portfolio
      managers and other operational support. These additions were made to continue
      to
      expand the






15


Bank’s
      market presence, as well as to manage the growth of the loan and deposit
      portfolios and support increased operational volume.





Occupancy
      expenses increased by $34,806 for the three-months ended March 31, 2007, as
      compared to the same period in 2006. The 28.4% increase for the period was
      due
      to scheduled rent increases and the acquisition of new space obtained to
      facilitate the relocation of the Company’s Towson residential lending operation
      during the fourth quarter of 2006.





Legal
      and
      professional fees increased $28,278, or 79.5%, for the three-months ended March
      31, 2007, as compared to the same period in 2006. The increase was related
      to
      legal fees incurred in connection with the drafting of a Stock Incentive Plan,
      as well as increased costs associated with drafting the Annual Report and Proxy
      materials. There was also an increase in internal and external audit, and other
      accounting fees related to Company growth and implementation of provisions
      of
      the Sarbanes-Oxley Act of 2002 related to the documentation and testing of
      internal control over financial reporting.





Data
      processing and other outside services expense increased $24,492, or 15.1%,
      for
      the three-months ended March 31, 2007 as compared to the same period in 2006.
      The increase for the period is due to the cost of supporting a computer
      infrastructure at an additional location, the costs associated with enhanced
      security and preventive maintenance programs and an increase in outsourced
      data
      and item processing costs that are a function of the growth of the bank and
      the
      number of customer accounts.




Advertising
      and marketing-related expenses increased $56,948, or 83.0%, for the three-months
      ended March 31, 2007, as compared to the same period in 2006. The increase
      was
      related to the number of business development professionals on staff, an
      enhanced effort to increase the Company’s name recognition in order to continue
      the growth of the customer base and an increase of $32,000 in charitable
      contributions.




The
      $37,798, or 16.7%, increase in all other non-interest expense items for the
      three-month period ended March 31, 2007, relates to a $24,000 increase in
      director fees as well as increases in other various costs associated with the
      increased size and complexity of the Company. The increase in director fees
      was
      designed to attract and retain governance professionals that can capably oversee
      the strategic direction of the Company.





The
      banking industry utilizes an “efficiency ratio” as a key measure of expense
      management and overall operating efficiency. This ratio is computed by dividing
      non-interest expense by the sum of net interest income before the loan loss
      provision and non-interest income. The Company’s efficiency ratio was 68.8% for
      the three-month period ended March 31, 2007. This compares to 64.9% for the
      same
      period in 2006. The increase in the efficiency ratio from the prior year is
      a
      result of management’s decision to continue to invest in personnel to support
      the long-term growth of the Company.





Management
      will continue to focus on leveraging its cost structure to generate profitable
      growth. Management believes that, while continued growth of the Company’s
      customer base will require additional staffing and space in order to generate
      new business, service customers and effectively manage the business, this
      additional growth can continue without impairing the long-term efficiency of
      the
      Company.





*Income
      Taxes*





For
      the
      three-month periods ended March
      31,
      2007 and 2006 ,
      the
      Company recorded income tax expense of $422,000 and $397,357, respectively.
      The
      increase is primarily a result of an increase in taxable income for the 2007
      period.








16





**Financial
      Condition**





*Composition
      of the Balance Sheet*





As
      of
      March 31, 2007 total assets were $250,216,539. This represents a decrease of
      $4,588,308, or 1.8%, since December 31, 2006. The change in total assets
      includes decreases of $188,983 in cash and due from banks, $13,545,026 in
      Federal funds sold and other overnight investments and $134 in investment
      securities available for sale. These decreases were partially offset by
      increases of $38,700 in other equity securities, $9,083,072 in loans net of
      the
      allowance for credit losses and $24,063 in other non-earning assets.





During
      the second quarter of 2004, the Company introduced a new loan program for
      conventional first lien and second lien residential mortgage loans. Under this
      program, the Company purchases a 100% participation in mortgage loans originated
      by a mortgage company in the Baltimore metropolitan area. These participations
      are for loans that a secondary market investor has committed to purchase. The
      participations are typically held for a period of three to four weeks before
      being sold to the secondary market investor, during which time the secondary
      market investor reviews the files for completeness and accuracy. The Company
      earns interest on these loans at a rate indexed to the prime rate. The primary
      risk of this program is that the secondary market investor may decline to
      purchase the loans due to documentary deficiencies or errors. The Company
      attempts to manage this risk by conducting a thorough review of the
      documentation prior to purchasing the participation. If the secondary market
      investor declines to purchase the loan, the Company could attempt to sell the
      loan to other investors or hold the loan in its loan portfolio.





As
      of
      March 31, 2007, the Company held $3.9 million of these loans which were
      classified as held for sale. There were no loans outstanding under this program
      as of December 31, 2006. This fluctuation in balances is indicative of the
      mortgage company’s ability to use other funding sources as its volume
      fluctuates. The remaining increase in loans held for sale resulted from normal
      fluctuations of loan volume originated by the Company’s Towson and Salisbury
      mortgage operations.





As
      of
      March 31, 2007, loans, excluding
      loans held for sale, totaled $220,296,030. This represents an increase of
      $3,724,655, or 1.7%, from a balance of $216,571,375 as of December 31, 2006.
      All
      of this growth is a result of residential construction and rehabilitation
      lending generated by the Towson residential lending group. Excluding Towson
      residential construction and rehabilitation loans, outstanding loans declined
      by
      approximately $1.1 million due to significant pay downs and payoffs. A total of approximately $8.7 million in
      loans, that were outstanding as of December 31, 2006, were paid off during
      the
      first three months of 2007. This activity, combined with normal fluctuations
      in
      revolving credit balances and installment payments on amortizing loans, offset
      all of the approximately $10.5 million in new loans funded during that same
      period. The Company continues to seek prudent growth through the identification
      of new market segments, hiring of experienced commercial lenders, and the
      development and use of referral sources including accountants, lawyers and
      existing customers, as well as members of the Board of Directors and the
      Baltimore and Salisbury Advisory Boards.





The
      composition of the loan portfolio as of March 31, 2007 was approximately $87.8
      million of commercial loans, $3.5 million of consumer loans, and $129.0 million
      of real estate loans (excluding mortgage loans held for sale). The composition
      of the loan portfolio as of December 31, 2006 was approximately $88.5 million
      of
      commercial loans, $3.3 million of consumer loans, and $124.8 million of real
      estate loans (excluding mortgage loans held for sale). Mortgage loans held
      for
      sale were $6.8 million and $1.4 million as of March 31, 2007 and December 31,
      2006, respectively.






17





Funds
      not
      extended in loans are invested in cash and due from banks and various
      investments, including federal funds sold and other overnight investments,
      U.S.
      Treasury securities, Federal Reserve Bank stock and Federal Home Loan Bank
      stock. These investments totaled approximately $22.0 million as of March 31,
      2007 compared to approximately $35.7 million as of December 31, 2006.





At
      March
      31, 2007, the Company had federal funds sold and other overnight investments
      totaling $18,004,874 as compared to $31,549,900 as of December 31, 2006. This
      decrease is a result of management’s decision to maintain margins by using
      available liquidity to fund loan growth and allow non-core time deposits to
      mature. The Company held $607,300 of Federal Reserve Bank stock as of both
      March
      31, 2007 and December 31, 2006. The Company also held Federal Home Loan Bank
      of
      Atlanta stock of $548,500 and $509,800 as of March 31, 2007 and December 31,
      2006, respectively, and United States Treasury bills with a maturity value
      of
      $700,000 as of both March 31, 2007 and December 31, 2006. The Treasury
      securities are used to collateralize repurchase agreements, which are classified
      as short-term borrowings under which $300,000 were outstanding as of December
      31, 2006. There were no outstanding borrowings under repurchase agreements
      as of
      March 31, 2007. As of March 31, 2007 and December 31, 2006, approximately
      $307,000 and $334,000, respectively, of Treasury securities were pledged to
      collateralize uninsured deposits held for a municipal government. Management
      has
      made a decision to maintain an appropriate level of liquidity in the investment
      portfolio in order to ensure that funds are readily available to fund the growth
      of the loan portfolio and to meet the needs of deposit customers.





Deposits
      at March 31, 2007 were $218.3 million, of which approximately $10.2 million,
      or
      4.7%, was related to one customer. Deposits at December 31, 2006 were $224.1
      million, of which deposits for this same customer stood at approximately $8.2
      million, or 3.7%, of total deposits. The deposits for this customer tends 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.





In
      the
      first quarter of 2006, the Company began using brokered certificates of deposit
      through the Promontory Financial Network. Through this deposit matching network
      and its certificate of deposit account registry service (CDARS), the Company
      has
      the ability to offer its customers access to FDIC-insured deposit products
      in
      aggregate amounts exceeding current insurance limits. When the Company places
      funds through CDARS on behalf of a customer, it receives matching deposits
      through the network. The Company also has the ability to raise deposits directly
      through the network. These deposits are also considered “Brokered Deposits” for
      bank regulatory purposes. As of March 31, 2007, the Company had approximately
      $5.9 million of CDARS deposits outstanding of which $2.8 million was placed
      on
      behalf of customers and $3.1 million was raised by the Company. As of December
      31, 2006, the Company had approximately $4.6 million of CDARS deposits
      outstanding of which $1.6 million was placed on behalf of customers and $3.0
      million was raised by the Company.





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 large 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. As of March 31, 2007, the Company had
      outstanding certificates of deposit of approximately $23.3 million that were
      either obtained through the listing of certificate of deposit rates on two
      Internet-based listing services (such deposits are sometimes referred to herein
      as national market certificates of deposit). The national market certificates
      of
      deposit were issued with an average yield of 5.11% and an average term of 32.4
      months. Included




18




in
      the
      $23.3 million are national market certificates of deposit totaling $1.4 million
      that have been classified as “Brokered Deposits” for bank regulatory purposes.
      These “Brokered Deposits” were issued with an average yield of 5.55% and an
      average term of 21.6 months. As of December 31, 2006, the total certificates
      of
      deposit obtained through the listing of certificate of deposit rates on the
      Internet-based listing services were approximately $26.6 million. Included
      in
      the $26.6 million are national market certificates of deposit totaling $1.4
      million that have been classified as “Brokered Deposits” for bank regulatory
      purposes.





Core
      deposits, which management categorizes as all deposits other than national
      market certificates of deposit, CDARS deposits and $7.2 million of the $10.2
      million deposits from the large customer described above, stood at $184.5
      million as of March 31, 2007, down 2.6% from $189.4 million as of December
      31,
      2006. The decrease in core deposits was due to careful management of interest
      rates during the period. The Company did not aggressively compete for new
      deposits since adequate liquidity was available to fund loan growth. Core
      deposits are closely monitored by management because they consider such deposits
      not only a relatively stable source of funding but also reflective of the growth
      of commercial and consumer depository relationships.





As
      of
      March 31, 2007, short-term borrowings included borrowings of $2.7 million of
      borrowings under an Overnight Commercial Paper program. These borrowings are
      unsecured and are subordinated to all deposits.





As
      of
      December 31, 2006, short-term borrowings included $300,000 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. Short-term borrowings as of December
      31,
      2006 also included $1.2 million of borrowings under the Overnight Commercial
      Paper program.




Subordinated
      debt consists of $8 million of fixed interest rate trust preferred securities
      (the “Trust Preferred Securities”), issued through a Delaware trust subsidiary,
      Bay National Capital Trust I (the “Trust”). The Company formed the Trust on
      December 12, 2005, and the Trust issued $8 million of trust preferred securities
      to investors at a fixed interest rate of 7.20%. The preferred securities bear
      a
      maturity date of February 23, 2036, but may be redeemed at the Company’s option
      on any February 23, May 23, August 23 or November 23 on or after February 23,
      2011, and require quarterly distributions by the trust to the holder of the
      trust preferred securities. The securities are subordinated to the prior payment
      of any other indebtedness of the Company that, by its terms, is not similarly
      subordinated securities. The trust preferred securities qualify as Tier 1
      capital, subject to regulatory guidelines that limit the amount included to
      an
      aggregate of 25% of Tier 1 capital.





*Allowance
      for Credit Losses and Credit Risk Management*





Originating
      loans involves a degree of risk that credit losses will occur in varying amounts
      according to, among other factors, the type of loans being made, the
      credit-worthiness of the borrowers over the term of the loans, the quality
      of
      the collateral for the loan, if any, as well as general economic conditions.
      The
      Company charges the provision for credit losses to earnings to maintain the
      total allowance for credit losses at a level considered by management to
      represent its best estimate of the losses known and inherent in the portfolio
      that are both probable and reasonable to estimate, based on, among other
      factors, prior loss experience, volume and type of lending conducted, estimated
      value of any underlying collateral, economic conditions (particularly as such
      conditions relate to the Company’s market area), regulatory guidance, peer
      statistics, management’s judgment, past due loans in the loan portfolio, loan
      charge off experience and concentrations of risk (if any). The Company charges
      losses on loans against the






19




allowance
      when it believes that collection of loan principal is unlikely. Recoveries
      on
      loans previously charged off are added back to the allowance.





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. In
      addition, management judgmentally establishes an additional nonspecific reserve.
      The nonspecific 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.





The
      reserve factors used are based on management’s judgment as to appropriate
      reserve percentages for various categories of loans, and those values are
      adjusted based on the following: historical losses in each category, historical
      and current delinquency in each category, underwriting standards in each
      category, comparison of losses and delinquencies to peer group performance
      and
      an assessment of the likely impact of economic and other external conditions
      on
      the performance of each category.





A
      test of
      the adequacy of the allowance for credit losses is performed and reported to
      the
      Board of Directors on a monthly basis. Management uses the information available
      to make a determination with respect to the allowance for credit losses,
      recognizing that the determination is inherently subjective and that future
      adjustments may be necessary depending upon, among other factors, a change
      in
      economic conditions of specific borrowers, or generally in the economy, and
      new
      information that becomes available. However, there are no assurances that the
      allowance for credit losses will be sufficient to absorb losses on nonperforming
      assets or that the allowance will be sufficient to cover losses on nonperforming
      assets in the future.





The
      allowance for credit losses as of March 31, 2007 and December 31, 2006 was
      $3,202,930 and $3,175,000, respectively. The amount equates to 1.41% and 1.46%
      of outstanding loans, including loans held for sale, as of March 31, 2007 and
      December 31, 2006, respectively. The decreased percentage as of March 31, 2007
      was due to the decreased level of risk in the loan portfolio as of March 31,
      2007 as some higher risk loans were paid off during the year. Bay National
      Corporation has no exposure to foreign countries or foreign
      borrowers.





As
      of
      March 31, 2007, the Company had one non-accrual loan with an unpaid principal
      balance and fees of approximately $37,000. Management believes that the
      allowance for credit losses is adequate for this loan. Any losses on this loan
      will be charged off as soon as the amount of loss is determinable.





The
      Company recovered $27,930 of 2006 charge-offs during the three-month period
      ended March 31, 2007 and there were no charge-offs or recoveries during the
      same
      period in 2006.





Management
      believes that the overall allowance for credit losses is adequate for each
      period presented.





*Liquidity*





The
      Company’s overall asset/liability strategy takes into account the need to
      maintain adequate liquidity to fund asset growth and deposit runoff. Management
      monitors the liquidity position daily.






20





The
      Company’s primary sources of funds are deposits, short-term borrowings in the
      form of repurchase agreements, borrowings under Federal funds and Federal Home
      Loan Bank credit facilities, scheduled amortization and prepayment of loans,
      funds provided by operations and capital. While scheduled principal repayments
      on loans are a relatively predictable source of funds, deposit flows and loan
      prepayments are greatly influenced by economic conditions and rates offered
      by
      our competition.





The
      Company's most liquid assets are cash and assets that can be readily converted
      into cash, including investment securities maturing within one year. As of
      March
      31, 2007, the Company had $2,159,321 in cash and due from banks, $18,004,874
      in
      federal funds sold and other overnight investments, $697,392 in three-month
      U.S.
      Treasury Securities, and $6,830,650 in loans expected to be sold within 60
      days.
      As of December 31, 2006, the Company had $2,348,304 in cash and due from banks,
      $31,549,900 in federal funds sold and other overnight investments, $697,526
      in
      three-month U.S. Treasury Securities, and $1,444,303 in loans expected to be
      sold within 60 days.





The
      decrease in the overall level of liquid assets is the result of a deliberate
      effort by management to tightly manage liquidity by allowing higher cost
      certificates of deposits to mature in order to better match liquidity with
      loan
      growth to maximize net interest margin. 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
      Company has commitments for a total of $9.0 million of borrowing availability
      under unsecured Federal funds lines of credit with three separate financial
      institutions. The Company also has approximately $22 million of borrowing
      capacity with the Federal Home Loan Bank of Atlanta as of March 31, 2007. These
      credit facilities can be used in conjunction with the normal deposit strategies,
      which include pricing changes to increase deposits as necessary. From time
      to
      time, the Company may sell or participate out loans to create additional
      liquidity as required.





The
      Company has sufficient liquidity to meet its loan commitments as well as
      fluctuations in deposits. The Company will choose to retain maturing
      certificates of deposit, when necessary, by offering competitive rates.





Management
      is not aware of any known trends, events or uncertainties that will have or
      are
      reasonably likely to have a material effect on liquidity, capital or operations,
      nor is management aware of any current recommendation by regulatory authorities,
      which if implemented, would have a material effect on liquidity, capital or
      operations.





*Interest
      Rate Sensitivity*





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






21




The
      following table sets forth the amount of the Company's interest-earning assets
      and interest-bearing liabilities as of March 31, 2007, which are expected to
      mature or reprice in each of the time periods shown:




**Maturity
                or repricing within****Amount**
            
            **Percent
                of**
              **Total**
            
            
            **0
                to 3**
              **Months**
            
            **4
                to 12**
              **Months**
            
            
            **1
                to 5******
              **Years**
            
            **Over
                5**
              **Years**Interest-earning
                assetsFederal
                funds sold and other
              overnight
                investments
            $
            18,004,874
            
            7.29%
            
            $
            18,004,874
            $
            -
            
            $
            -
            $
            -Loans
                held for sale
            
            6,830,650
            
            2.76%
            
            
            6,830,650
            
            -
            
            
            -
            
            -Loans
                - Variable rate
            
            109,873,853
            
            44.49%
            
            
            109,873,853
            
            -
            
            
            -
            
            -Loans
                - Fixed rate
            
            110,422,177
            
            44.71%
            
            
            28,001,127
            
            36,823,236
            
            
            42,606,993
            
            2,990,821Other
                earning assets
            
            1,853,192
            
            0.75%
            
            
            697,392
            
            -
            
            
            -
            
            1,155,800Total
                interest-earning assets
            $
            246,984,746
            
            100.00%
            
            $
            163,407,896
            $
            36,823,236
            
            $
            42,606,993
            $
            4,146,621Interest-bearing
                liabilitiesDeposits
                - Variable rate
            $
            73,771,906
            
            37.38%
            
            $
            73,771,906
            $
            -
            
            $
            -
            $
            -Deposits
                - Fixed rate
            
            112,893,386
            
            57.21%
            
            
            36,880,174
            
            49,750,350
            
            
            26,262,862
            
            -Short-term
                borrowings - Variable rate
            
            2,681,000
            
            1.36%
            
            
            2,681,000
            
            -
            
            
            -
            
            -Subordinated
                debt
            
            8,000,000
            
            4.05%
            
            
            -
            
            -
            
            
            -
            
            8,000,000Total
                interest-bearing liabilities
            $
            197,346,292
            
            100.00%
            
            $
            113,333,080
            $
            49,750,350
            
            $
            26,262,862
            $
            8,000,000Periodic
                repricing differencesPeriodic
                gap
            
            
            
            
            
            $
            50,074,816
            $
            (12,927,114
            )
            $
            16,344,131
            $
            (3,853,379
            )Cumulative
                gap
            
            
            
            
            
            $
            50,074,816
            $
            37,147,702
            
            $
            53,491,833
            $
            49,638,454Ratio
                of rate sensitive assets to rate
              sensitive
                liabilities
            
            
            
            
            
            
            144.18%
            
            74.02%
            
            
            162.23%
            
            51.83%




The
      Company has 54.5% of its interest-earning assets and 38.7% of its
      interest-bearing liabilities in variable rate balances. Interest-earning assets
      exceed interest-bearing liabilities by $49,638,454. The majority of this gap
      is
      concentrated in items maturing or repricing within one year. This gap is
      generally reflective of the Company’s emphasis on originating variable rate
      loans and short-term fixed rate loans and the demand in the market for higher
      yielding fixed rate deposits. This analysis indicates that the Company generally
      will benefit from increasing market rates of interest. 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
      constantly monitors and manages the structure of the Company's balance sheet,
      seeks to control interest rate exposure, and evaluates pricing strategies.
      Strategies to better match maturities of interest-earning assets and
      interest-bearing liabilities include structuring loans with rate floors and
      ceilings on variable-rate notes and providing for repricing opportunities on
      fixed rate notes. Management believes that a lending strategy focusing on
      variable-rate loans and short-term fixed rate loans will best facilitate the
      goal of minimizing interest rate risk. However, management will
      opportunistically enter into longer term 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




22




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 deposit maturity 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 attempts 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.





*Off-Balance
      Sheet Arrangements*





In
      the
      normal course of business, the Company is a party to financial instruments
      with
      off-balance sheet risk. These financial instruments primarily include
      commitments to extend credit, lines of credit and standby letters of credit.
      The
      Company uses these financial instruments to meet the financing needs of its
      customers. These financial instruments involve, to varying degrees, elements
      of
      credit, interest rate, and liquidity risk.





Outstanding
      loan commitments and lines and letters of credit as of March 31, 2007 and
      December 31, 2006 are as follows:





**March
                31,**
              **2007**
            
            **December
                31,**
              **2006**Loan
                commitments
            
            $
            31,909,082
            
            $
            33,782,891Unused
                lines of credit
            
            
            71,651,288
            
            
            66,660,250Letters
                of credit
            
            
            2,632,445
            
            
            2,188,659





Commitments
      to extend credit are agreements to lend to a customer as long as there is no
      violation of any condition established in the contract. Commitments generally
      have interest rates fixed at current market amounts, fixed expiration dates
      or
      other termination clauses and may require payment of a fee. Unused lines of
      credit represent the unused portion of lines of credit previously extended
      and
      available to the customer as long as there is no violation of any contractual
      condition. These lines generally have variable interest rates. Since many of
      the
      commitments are expected to expire without being drawn upon, and since it is
      unlikely that customers will draw upon their line of credit in full at any
      time,
      the total commitment amount or line of credit amount does not necessarily
      represent future cash requirements. The Company is not aware of any loss it
      would incur by funding its commitments or lines of credit.





Standby
      letters of credit are conditional commitments issued to guarantee the
      performance of a customer to a third party. The Company’s exposure to credit
      loss in the event of nonperformance by the customer is the contract amount
      of
      the commitment.





In
      general, loan commitments, lines of credit and letters of credit are made on
      the
      same terms, including with respect to collateral, as outstanding loans. Each
      customer’s credit-worthiness and collateral requirement is evaluated on a
      case-by-case basis.





The
      decrease in the overall level of loan commitments as of March 31, 2007 as
      compared to December 31, 2006 is due to a decline in construction lending
      activity resulting from the overall slow down in real estate activity. The
      increase in unused lines of credit as of March 31, 2007 as compared to December
      31, 2006 is reflective of the level of business development activity undertaken
      during the year.


23


*Capital
      Resources*





The
      Company had stockholders’ equity at March 31, 2007 of $19,478,462 as compared to
      $18,842,493 at December 31, 2006. The increase in capital is
      a
      result of the positive operating results for the three-months ended March 31,
      2007 . Management
      believes that the Company has adequate capital to support projected asset growth
      over 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 have paid
      dividends to the Company without approval from bank regulatory agencies at
      March
      31, 2007; however, such payments are not currently planned.





**Reconciliation
      of Non-GAAP Measures**





Below
      is
      a reconciliation of total deposits to core deposits as of March 31, 2007 and
      December 31, 2006, respectively:





**March
                31,**
              **2007**
            
            **December
                31,**
              **2006**Total
                deposits
            
            $
            218,262,358
            
            $
            224,148,952National
                market certificates of deposit (includes CDARS deposits)
            
            
            (26,518,057
            )
            
            (29,586,997
            )Variable
                balance accounts (1 customer at March 31, 2007 and December 31,
                2006)
            
            
            (10,222,514
            )
            
            (8,197,951
            )Portion
                of variable balance accounts considered to be core
            
            
            3,000,000
            
            
            3,000,000Core
                deposits
            
            $
            184,521,787
            
            $
            189,364,004




**Application
      of Critical Accounting Policies**





The
      Company’s consolidated financial statements are prepared in accordance with
      accounting principles generally accepted in the United States of America and
      follow general practices within the industries in which it operates. Application
      of these principles requires management to make estimates, assumptions and
      judgments that affect the amounts reported in the consolidated financial
      statements and accompanying notes. These estimates, assumptions and judgments
      are based on information available as of the date of the financial statements;
      accordingly, as this information changes, the financial statements could reflect
      different estimates, assumptions and judgments. Certain policies inherently
      have
      a greater reliance on the use of estimates, assumptions and judgments and as
      such, have a greater possibility of producing results that could be materially
      different than originally reported. Estimates, assumptions and judgments are
      necessary when assets and liabilities are required to be recorded at fair value,
      when a decline in the value of an asset not carried on the financial statements
      at fair value warrants an impairment write-down or valuation reserve to be
      established, or when an asset or liability must be recorded contingent upon
      a
      future event. Carrying assets and liabilities at fair value inherently results
      in more financial statement volatility. The fair values and the information
      used
      to record valuation adjustments for certain assets and liabilities are based
      either on quoted market prices or are provided by other third-party sources,
      when available.






24





Based
      on
      the valuation techniques used and the sensitivity of financial statement amounts
      to the methods, assumptions and estimates underlying those amounts, management
      has identified the determination of the allowance for credit losses as the
      accounting area that requires the most subjective or complex judgments, and
      as
      such could be most subject to revision as new information becomes available.





Management
      has significant discretion in making the judgments inherent in the determination
      of the provision and allowance for credit losses. The establishment of allowance
      factors is a continuing exercise and allowance factors may change over time,
      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 or in management’s interpretation of those factors will have a direct
      impact on the amount of the provision and a corresponding effect on income
      and
      assets. Also, errors in management’s perception and assessment of the allowance
      factors could result in the allowance not being adequate to cover losses in
      the
      portfolio, and may result in additional provisions or charge-offs, which would
      adversely affect income and capital.





For
      additional information regarding the allowance for loan and lease losses, see
      “Allowance for Credit Losses and Credit Risk Management.”





25


**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, as
      defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended
      (“Exchange Act”) .
      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 as of March 31, 2007. 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 Exchange Act 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 control
      over financial reporting (as defined in Rule 13a-15 under the Exchange Act)
      during the quarter ended March 31, 2007, 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*





This
      report contains certain forward-looking statements within the meaning of
      Section 27A of the Securities Exchange Act of 1933, as amended and
      Section 21E of the Exchange Act. Forward-looking statements also may be
      included in other statements that we make. All statements that are not
      descriptions of historical facts are 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.





The
      statements presented herein with respect to, among other things, the Company’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 the Company’s beliefs and assumptions, and on information available
      to it as of the date of this filing, and involve risks and uncertainties. These
      risks and uncertainties include, among others, those discussed in this report
      on
      Form 10-QSB; the Company’s limited operating history; dependence on key
      personnel; risks related to the Bank’s choice of loan portfolio; risks related
      to the Bank’s lending limit; risks of a competitive market; the impact of any
      new or amended government regulations on operating results; and the effects
      of
      developments in technology. For a more complete discussion of these risks and
      uncertainties, see the discussion under the caption “Risk Factors” in Bay
      National Corporation’s Form 10-KSB for the year ended December 31, 2006. The
      Company’s actual results and the actual outcome of our expectations and
      strategies could differ materially from those anticipated or estimated because
      of these risks and uncertainties 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 the Company undertakes no obligation to update the
      forward-looking statements to reflect factual assumptions, circumstances or
      events that have changed after the forward-looking statements are made.


26


**PART
      II - OTHER INFORMATION**





Item
      1.Legal
      Proceedings.





None





Item
      2.Unregistered
      Sales of Equity Securities and Use of Proceeds.





None





Item
      3.Defaults
      Upon Senior Securities.





Not
      applicable.





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





None





Item
      5.  Other
      Information.





None





Item
      6.Exhibits.





(a)
            Exhibits.




31.1 Rule
                13a-14(a)Certification
                of Chief Executive Officer




31.2Rule
                13a-14(a)Certification
                of Chief Financial Officer




32 
Rule
                13a-14(b)Certification
                of Chief Executive Officer and Chief Financial
                Officer







27




**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 CorporationDate:
                May 14, 2007
            
            By:
            /s/
                Hugh W. MohlerHugh
                W. Mohler, President(Principal
                Executive Officer)Date:
                May 14, 2007
            
            By:
            /s/
                Mark A. SemanieMark
                A. Semanie, Treasurer(Principal
                Accounting and Financial Officer)





28