BALTIMORE, Oct. 31 /PRNewswire-FirstCall/ -- Bay National Corporation (Nasdaq: BAYN), the holding company for Bay National Bank, today reported a third quarter net loss per diluted share of $.83 compared with net income per diluted share of $.12 reported in the third quarter of 2007. The net loss was $1.8 million compared with net income of $261,145 in the third quarter of last year. The current quarter results include a loan loss provision of $2.5 million. As of September 30, 2008, total assets were $274 million, an increase of 5.08% from September 30, 2007. Net loans rose 6.84% and total deposits increased 3.68% for the twelve-month period ended September 30, 2008.

Hugh W. Mohler, Chairman and Chief Executive Officer, commented, 'Despite a continued pattern of asset growth, both the third quarter and year-to-date earnings were negatively impacted by elevated nonperforming residential construction and reconstruction mortgage loans as compared to our historically low level of nonperforming assets. An experienced team of loan professionals continues to solely dedicate itself to aggressively and expeditiously resolving these non-performing loans.'

Mr. Mohler continued, 'The landscape of the financial industry further -- and dramatically -- changed during the third quarter of 2008 in which we saw the Federal Reserve taking ownership of the world's largest insurance company, two of the largest investments banks taken over by bank holding companies, and the Federal Housing Finance Agency assuming conservatorship of Fannie Mae and Freddie Mac. The crisis, which began in the third quarter of 2007, has had a material impact on our operating results and dampens our previous strong performance.

2008 has been a year of many accomplishments and a seemingly endless number of challenges for the financial services industry. Yet, the Board of Directors and I are confident that we are taking the right steps. We have taken an aggressive stance in provisioning for loan losses and charging off impaired loans, reducing expenses, and, most importantly, managing our liquidity and keeping our balance sheet as strong as possible while we weather this financial storm. In addition, the FDIC has increased its level of insurance coverage from $100,000 to $250,000 per account which gives customers of all FDIC-insured banks, such as Bay National Bank, additional assurance. Throughout all of this turmoil, we have not lost sight of our original business model of maintaining an intense focus on serving our customers and building long-term shareholder value.'

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.