BALTIMORE, July 24 /PRNewswire-FirstCall/ -- Bay National Corporation (the 'Company') (Nasdaq: BAYN), the bank holding company for Bay National Bank, today reported a second quarter net loss of $776,000 or ($0.36) per diluted share, as compared to net income of $622,000 or $0.28 per diluted share reported for the quarter ending June 30, 2007.

As of June 30, 2008, total assets were $275.8 million, an increase of 6.8 percent from June 30, 2007. Commercial and consumer loan growth during the second quarter of 2008 reached record highs. In addition, both net loans and deposits rose 8.9 percent from the year-ago quarter.

Hugh W. Mohler, Chairman and CEO, stated, 'Consistent with our expectations, we continue to feel the pressure of the turmoil in the financial markets and the deterioration of economic conditions. However, we believe we have made significant progress during our second quarter. Asset quality and the resolution of credit issues within our residential mortgage portfolio remain our top priorities for 2008.

Despite three difficult quarters, we have protected our capital base and remain 'well-capitalized' (the highest rating by regulatory capital measures) at all levels. These strong balance sheet measurements have been further fortified with a commitment offer for up to a $6 million line of credit, which will allow us to maintain our capital levels while we selectively pursue high- quality business.

Our Board of Directors and management team remain steadfast in our determination to preserve capital, manage asset/portfolio risk and improve our operating efficiencies. To that end, we have properly scaled back staffing by 10% during the second quarter and should see meaningful accretion to the bottom line later this year.

Candidly, this is one of the most challenging financial environments I have seen in my 40-year banking career. However, I am confident that we have the strength and capacity to manage through this cycle and we will continue to follow our strategic plan with the ultimate goal of building long-term shareholder value.

Now, more than ever, is the time to differentiate ourselves from our competition. Banking remains a people business, and I believe we have some of the finest bankers in the region supported by a Bank with a strong capital base,' Mr. Mohler concluded.

Bay National Bank was founded in 2000 in response to banking industry consolidation and the distinct void these mergers created in servicing, in particular, small and mid-size businesses and their owners, business professionals, and high net worth individuals. Bay National Bank believes that it now occupies a unique niche in the banking industry.