BALTIMORE, Feb. 1 /PRNewswire-FirstCall/ -- Bay National
Corporation (OTC:BANI) (BULLETIN BOARD: BANI) , the bank holding
company for Bay National Bank, today reported net income of $2.7
million for the year ended December 31, 2005. The net income for
the year includes a tax benefit of $655,000. Net income per diluted
common share was $1.37 for the year ended December 31, 2005, a 234%
increase from the $0.41 per diluted share earned in 2004. Of the
$1.37 amount, $0.33 was attributable to the tax benefit. For the
quarter ended December 31, 2005, pre-tax net income rose to
$471,000, a 45.4% increase from the $324,000 earned in the fourth
quarter of 2004. Our results this quarter included a provision for
loan losses of $646,000, $500,000 of which was allocated as a
result of the downgrading of one credit. For the year ended
December 31, 2005, there were no loan charge- offs and no
non-accrual loans. Hugh W. Mohler, Chairman and CEO commented, "Our
2005 performance reflects our consistent commitment to our
strategic plan -- to continue to expand our market presence in a
competitive environment, to invest in our people, and to create
shareholder value through a profitable and stable company. We look
forward to continued growth in 2006." As of December 31, 2005, the
Company's assets totaled $210 million, up 23% from December 31,
2004. Net loans rose 31.7% to $196.6 million as of December 31,
2005, as compared to $149.2 million at December 31, 2004. Deposits
increased 18.6% from $153.9 million at December 31, 2004 to $182.6
million at 2005 year-end. The Company's net interest margin and net
interest spread were 4.74% and 4.12%, respectively, for the twelve
months ended December 31, 2005 - both reflecting 31% year-over-year
increases - the result of interest rate increases enacted by the
Federal Reserve and disciplined asset and liability management. The
book value of our common stock increased 20.4% from December 31,
2004 and the market price of the common stock at the close of the
fourth quarter 2005 was $21.00, up 58.5% from the closing price at
December 31, 2004. Bay National Corporation has two full-service
banking offices -- Baltimore and Salisbury, Maryland. It focuses on
filling the void created by the persistent and unprecedented bank
merger and acquisition activity. The bank's niche is small to
middle-market businesses, professional service firms, non- profit
entities and successful individuals. It offers a complete range of
commercial, private, cash management, retail and mortgage banking
services delivered with a high degree of respect and integrity. The
statements in this press release that are not historical facts
constitute "forward-looking statements" as defined by Federal
Securities laws. Such statements, regarding Bay National
Corporation's anticipated future results of operations, are subject
to risks and uncertainties that could cause actual results to
differ materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties
include, but are not limited to, changes in interest rates, deposit
flows, loan demand and real estate values; as well as changes in
economic, competitive, governmental, regulatory, technological and
other factors which may affect Bay National Corporation
specifically or the banking industry generally. Forward- looking
statements speak only as of the date they are made. Bay National
Corporation will not update forward-looking statements to reflect
factual assumptions, circumstances or events that have changed
after a forward-looking statement was made. For further
information, please refer to the Bay National Corporation reports
filed with the U.S. Securities and Exchange Commission. BAY
NATIONAL CORPORATION SELECTED UNAUDITED FINANCIAL DATA AS OF
DECEMBER 31, 2005 and 2004 (dollars in thousands, except per share
data) 2005 2004 Total assets $209,966 $170,763 Cash and due from
banks 1,461 1,403 Federal funds sold and other overnight
investments 6,033 16,709 Investment securities available for sale
1,540 1,544 Other equity securities 794 556 Loans, net 196,590
149,217 Deposits 182,573 153,927 Short-term borrowings 1,444 1,381
Note payable - 1,250 Subordinated Debt 8,000 - Stockholders' equity
16,214 13,419 Common shares outstanding 1,924,436 1,917,710 Book
value per share $ 8.43 $ 7.00 Ratio of interest earning assets to
interest bearing liabilities 126.38% 124.95% Stockholders' equity
as a percentage of assets 7.72% 7.86% SELECTED UNAUDITED FINANCIAL
RATIOS FOR YEARS ENDED DECEMBER 31, 2005 and 2004 Weighted average
yield/rate on: 2005 2004 Loans 7.46% 5.89% Investments and interest
bearing cash balances 2.27% 1.11% Deposits, short-term borrowings
and note payable 2.96% 2.17% Net interest spread 4.12% 3.14% Net
interest margin 4.74% 3.60% SELECTED UNAUDITED OPERATIONAL DATA FOR
THE PERIODS ENDED DECEMBER 31, 2005 and 2004 (dollars in thousands,
except per share data) Three Months Ended Year Ended December 31
December 31 2005 2004 2005 2004 Interest income $ 3,995 $ 2,311 $
12,983 $ 7,624 Interest expense 1,367 726 4,294 2,464 Net interest
income 2,628 1,585 8,689 5,160 Provision for credit losses 646 209
1,179 560 Net interest income after 1,982 1,376 7,510 4,600
provision for credit losses Non-interest income 211 137 750 539
Non-interest expenses 1,722 1,189 6,171 4,337 Income before income
taxes 471 324 2,089 802 Income tax benefit 655 - 655 - Net income $
1,126 $ 324 $ 2,744 $ 802 PER COMMON SHARE Basic net income per
share $ .59 $ .17 $ 1.43 $ .43 Diluted net income per share $ .56 $
.16 $ 1.37 $ .41 Average shares outstanding (Basic) 1,924,436
1,913,906 1,922,580 1,877,929 Average shares outstanding (Diluted)
2,012,969 1,965,327 2,002,225 1,936,693 STOCK PRICE High $ 23.00 $
13.25 $ 23.00 $ 14.00 Low $ 18.80 $ 10.50 $ 13.20 $ 10.00 Close $
21.00 $ 13.25 $ 21.00 $ 13.25 SUPPLEMENTAL INFORMATION: (dollars in
thousands) Reconciliation of total deposits December 31, December
31, to core deposits: 2005 2004 Total deposits $ 182,573 $ 153,927
National market certificates of deposit (33,765) (28,909) Variable
balance accounts (3 customers as of December 31, 2005 and 2004)
(11,982) (16,606) Portion of variable balance accounts considered
to be core 5,000 5,000 Core deposits $ 141,826 $ 113,412
Calculation of diluted income before income taxes Three Months
Ended Year Ended per share: December 31 December 31 2005 2004 2005
2004 Diluted net income per share .56 .16 1.37 .41 Income tax
benefit per share (.33) - (.33) - Diluted income before income .23
.16 1.04 .41 taxes per share PER COMMON SHARE Average shares
outstanding (Basic) 1,924,436 1,913,906 1,922,580 1,877,929 Average
shares outstanding (Diluted) 2,012,969 1,965,327 2,002,225
1,936,693 First Call Analyst: DATASOURCE: Bay National Corporation
CONTACT: Hugh W. Mohler, Chairman & CEO, +1-410-427-3707, or
Mark A. Semanie, Executive Vice President & CFO,
+1-410-427-3715, both Bay National Corporation Web site:
http://www.baynational.com/
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