SOURCE: Vineyard National Bancorp

July 18, 2007 08:30 ET

Vineyard National Bancorp Reports Second Quarter Results: Record Quarterly Earnings, EPS Growth of 6%, Net Earnings Growth of 10%, and Total Assets of $2.4 Billion

CORONA, CA--(Marketwire - July 18, 2007) - Vineyard National Bancorp (the "company") (NASDAQ: VNBC), and its subsidiary Vineyard Bank, N.A. ("Vineyard"), today reported record earnings for the quarter-ended June 2007 of $6.0 million, or $0.53 per diluted share, compared with net earnings of $5.4 million, or $0.50 per diluted share, for the quarter-ended June 2006. Second quarter 2007 diluted earnings per share and net earnings increased by 6% and 10%, respectively, over the results for the same quarter in 2006.

For the six months ended June 2007, the company reported record net earnings of $11.5 million, or $1.01 per diluted share, compared with net earnings of $9.6 million, or $0.92 per diluted share, for the comparable period in 2006. For that period, diluted earnings per share and net earnings increased by 10% and 20%, respectively, over the results for the same period in 2006.

All diluted earnings per share amounts have been adjusted to reflect the company's 5% stock dividend which occurred during the second quarter of 2007.

Second Quarter 2007 Operating Highlights:

--  Total assets were $2.4 billion at quarter-end June 2007, an increase
    of $552.6 million, or 30% over the quarter-end June 2006 level, and an
    increase of $158.8 million, or 7% over year-end December 2006;
    
--  Total loans, net of unearned income, were $2.0 billion at quarter-end
    June 2007, an increase of $524.2 million, or 35% over the quarter-end June
    2006 level, and an increase of $129.6 million, or 7% over year-end December
    2006;
    
--  Loans sold during the quarter-ended June 2007 amounted to $65.8
    million, which included $58.6 million of single family residential ("SFR")
    luxury construction loan participations;
    
--  Total deposits were $1.9 billion at quarter-end June 2007, an increase
    of $337.6 million, or 22% over quarter-end June 2006, and an increase of
    $56.1 million, or 3% from year-end December 2006;
    
--  Demand deposit growth increased balances to over $301.2 million at
    June 30, 2007, the highest level in the company's history;
    
--  Provision for loan losses during the second quarter 2007 was $0.5
    million, with $0.1 million of net loan charge-offs;
    
--  The company's operating efficiency ratio was 57% for the second
    quarter 2007, as compared to 55% and 58% for the first quarter 2007 and
    fourth quarter 2006, respectively;
    
--  The company's net interest margin for the second quarter 2007 was
    4.13%, as compared to 4.18% for the first quarter 2007; and
    
--  The company raised a net $22.0 million in Series D Noncumulative
    Perpetual Preferred Stock ("Series D Preferred Stock") with an annual
    coupon rate of 7.5%.
    

"The company's operating performance for the second quarter, though adequate, allows for increased opportunities for improvement. Our efforts to use our balance sheet more efficiently will include additional loan participation sales as we build upon our core strengths. Our focus on efficiently leveraging our current resources, while attracting additional deposit-focused personnel, continues to be a high priority. Our asset quality trends remain solid, with occasional spottiness related to borrower capacity or fatigue as opposed to collateral adequacy," stated Norman Morales, president and chief executive officer.

Income Statement

For the quarter-ended June 2007, net interest income before the provision for loan losses was $23.4 million, an increase of $3.0 million, or 15% as compared to the same period in 2006. These results produced a net interest margin of 4.13% for the quarter-ended June 2007, as compared to 4.18% for the quarter-ended March 2007 and 4.45% for the same period in 2006.

The net interest margin for the second quarter of 2007 was impacted by: 1) increased short-term borrowing costs, 2) decreased loan yields due to continued diversification of the portfolio into more commercial business loans and commercial income property mortgages, and 3) increased prepayment expenses related to early payoffs on consumer and SBA-related loans.

The company's net interest margin has also experienced some compression related to the rise in cost of funding portions of the commercial income property portfolio without the benefit of the resetting of rates on those portfolios until the appropriate reset period. For the remainder of 2007, approximately $44.4 million in income property loans is scheduled to reset at contractual rates that are approximately 100 basis points higher than the current contractual rates. The resetting of these assets should provide additional expansion opportunities to the net interest margin.

For the quarter-ended June 2007, gross loan interest income was $44.5 million, an increase of $9.2 million, or 26% as compared to the same period in 2006. The effective yield of the loan portfolio for the quarter-ended June 2007 was 8.76% as compared to 8.81% for the quarter-ended March 2007 and 9.02% for the same period in 2006. Over the course of the last year, the company has increased its efforts to broaden and diversify the composition of its loan portfolio, with two of the largest percentage increases in portfolio growth centered in commercial business loans and commercial income property mortgages.

Total net revenue (or net interest income and other operating income before provision for loan losses) for the quarter-ended June 2007 was $24.8 million, an increase of $2.7 million, or 12% as compared to the same period in 2006.

The provision for loan losses for the quarter-ended June 2007 was $0.5 million based on management's review of several factors, including loan growth, underlying loan collateral, delinquency trends, current economic conditions and historic loan loss experience. By comparison, the provision for loan losses was $1.2 million for the quarter-ended March 2007 and $0.7 million for the quarter-ended June 2006. There were $0.1 million of net charge-offs for each of the quarter-ended June 2007 and the quarter-end March 2007.

The provision for loan losses increased the allowance for loan losses to $21.3 million, or 1.05% of the gross loan portfolio at June 2007. The company also has a reserve for unfunded loan commitments, principally related to its construction loans, in the amount of $1.0 million (recorded in other liabilities), producing total reserves as a percent of gross loans outstanding of 1.09% at June 2007. Management believes these reserves are at an appropriate level based upon its evaluation and analysis of portfolio credit quality and prevailing economic conditions.

Total operating expenses for the quarter-ended June 2007 were $14.2 million, as compared to $12.1 million for the same period in 2006, which did not include the impact of operating costs related to the acquisition of Rancho Bank on July 31, 2006. The acquisition was completed in the third quarter of 2006. Total operating expenses for the first quarter 2007 and fourth quarter 2006 were $13.1 million and $14.0 million, respectively.

The company's expenses related to salaries and benefits was $7.9 million for the quarter-ended June 2007, as compared to $7.6 million for the first quarter 2007 and $7.9 million for the fourth quarter 2006. During the second quarter 2007, the company incurred approximately $0.2 million in expenses related to the Rancho Bank acquisition, principally related to contractual obligations to certain former executives of Rancho Bank continuing as employees of Vineyard. These amounts will continue to reduce each quarter and will terminate by the end of 2007. During the quarter, and thru the balance of the operating year, strategic recruitment of additional personnel dedicated toward core deposit production and business banking efforts will continue. At the same time, the company is focusing on reducing other operating expenses to partially fund these new investments in personnel.

The company's efficiency ratio, which measures the relationship of total operating expenses and total operating income, increased to 57% for the quarter-ended June 2007, as compared to 55% for the first quarter 2007 and the same period in 2006. The company's desired long-term efficiency ratio is a range of 50% to 52%, which it believes best leverages the established infrastructure and allows for acquisition of new client relationships.

Balance Sheet

At June 30, 2007, loans outstanding, net of unearned income, were $2.0 billion, as compared to the June 30, 2006 level of $1.5 billion. The largest dollar components of this increase are centered in the established commercial real estate and SFR luxury construction product lines, followed by commercial construction financings, business lending and consumer loans.

Construction Lending Specialties:

The company's specialty construction lending groups continue to be focused on the origination of construction lending opportunities within several sub-markets of the southern California market place. During the quarter-ended June 30, 2007, the company originated $231.6 million in new construction and land development commitments within the four sub-specialty construction and land lending disciplines: SFR luxury construction with $94.0 million, SFR tract construction with $29.3 million, commercial real estate construction with $56.7 million and land-related loans with $51.6 million. All extensions of credit within these four segments were underwritten consistent with current market conditions, borrower sponsorship and liquidity, and project strength. Related to these same four specialty lending disciplines, payoffs and principal payments during the second quarter were $157.0 million.

At June 30, 2007, the total unfunded amounts for the company's three sub-specialty construction disciplines were $261.3 million in SFR luxury construction, $108.9 million in SFR tract construction and $118.9 million in commercial real estate construction.

Over the course of the past twelve months, the company has been carefully monitoring its SFR tract construction exposure, its builder relationships, project strength, and absorption rates. While a significant majority of all of the remaining tract construction exposure is related to established and well-managed projects, absorption rates on new sales have slowed as general inventory levels on competitive offerings from major home builders within the Inland Empire and elsewhere continue to be significant.

The company's largest concentration in construction loans is centered in its SFR luxury line of business, which continues to demonstrate strong liquidity and demand for the product. At June 30, 2007, approximately $129.2 million or 28% of total disbursed balances represented in 89 loans, were 95% complete or greater, and expected to be completed and sold within the next few months. This current level is consistent with historical levels of portfolio composition and absorption rates.

The company's efforts continue to be focused on the measured growth of its loan and deposit portfolios in the desired compositions. Loan growth, net of unearned income, for the quarter-ended June 2007, was $35.4 million, net of participations sold of $65.8 million, as compared to loan growth of $94.5 million, net of participations sold of $8.2 million in the first quarter 2007, and $106.2 million, net of participations sold of $16.2 million in the fourth quarter 2006.

During the quarter, the company completed loan participation sales of $58.6 million of its SFR luxury construction assets. These sales allow the company to earn a significant servicing spread, a fee recapture and a transactional gain while reducing resources allocated towards capital, funding and loan loss reserves. The company will continue with this strategy as it increases and diversifies its lending operations.

Asset Quality

At June 30, 2007, Vineyard's non-performing loans amounted to $12.2 million. Of that amount, six real estate secured loans, in the aggregate amount of $11.2 million, were delinquent in payments or had matured and were not performing according to the terms of the original credit extension.

The largest loan, in the amount of $5.5 million, is related to a luxury construction project comprised of four production homes and five finished lots. The homes are near completion and three have been pre-sold. A second real estate secured non-performing loan in the amount of $3.3 million is related to a completed condominium project in the final stages of liquidation, with many units already sold and closed escrow. At March 31, 2007, this loan had an aggregate balance of $5.8 million. A third real estate secured loan in the amount of $1.2 million carries a SBA-guarantee. The company believes the remaining non-performing assets are adequately collateralized or maintain sufficient guarantees. The amount of unrecognized interest income related to these non-performing loans, as of the end of the second quarter 2007, was $0.6 million.

On May 29, 2007, Vineyard foreclosed on a single non-performing SFR Tract development land loan, in the amount of $11.7 million which was placed on non-accrual in the third quarter of 2006. This land is comprised of one hundred residential lots in a planned development project within the Temecula Valley region of southern California. Vineyard is actively pursuing the disposition of this foreclosed asset.

Deposit Acquisition and Funding Strategies

At June 30, 2007, total deposits were $1.9 billion, as compared to the June 30, 2006 level of $1.5 billion. Total deposits at December 31, 2006 were $1.8 billion, or $56.1 million less as compared to June 30, 2007.

Non-interest bearing demand deposits were $301.3 million at quarter-end June 2007, an increase of $124.9 million, or 71% over quarter-end June 2006. Non-interest bearing demand deposits were $287.9 million at March 31, 2007. The company's efforts to increase its core commercial demand base has seen positive results in the establishment of new accounts, supported by electronic deposit technology and other state-of-the-art cash management services.

Money market deposits, principally concentrated in business relationships, were $575.9 million at quarter-end June 2007, an increase of $97.8 million, or 20.5% over quarter-end June 2006. Money market deposits decreased by $43.1 million, or 7%, during the second quarter of 2007, the slight decrease in balances is reflective of seasonal fluctuations with client's funds related to taxes and other working capital requirements.

The company's interest-bearing deposits, whose average balances for the three months ended June 30, 2007 were $1.5 billion, produced an average cost of interest-bearing deposits of 4.71%. For the three months ended June 30, 2006, the company's interest-bearing deposits, whose average balances were $1.3 billion, produced an average cost of interest-bearing deposits of 4.24%.

Capital Resources

At June 30, 2007, total stockholders' equity of the company totaled $172.0 million, an increase of $43.1 million, or 33% as compared to June 30, 2006. The company's net book value per share of its common stock increased from $11.26 at June 30, 2006 to $13.15 per share at June 30, 2007. The tangible book value decreased during this same period from $11.12 to $9.05 per share due to the addition of $40.5 million in goodwill related to the Rancho Bank acquisition.

For the quarter-ended June 2007, the company declared cash dividends for its common stock of $0.9 million and for its preferred stock of $0.2 million. In addition, for the quarter-ended June 2007, the company declared a 5% stock dividend for its common stock and raised $22.0 million of capital with the issuance of Series D Preferred Stock.

On June 26, 2007, the company completed an offering of 2.3 million shares of the company's 7.50% Series D Preferred Stock, with a $10.00 liquidation preference per share. The Series D Preferred Stock may be redeemed for cash at their $10.00 liquidation preference, in whole or in part, at any time on or after June 25, 2012.

Vineyard continues to be "well-capitalized" pursuant to the guidelines established by regulatory agencies. To be considered "well-capitalized" a bank must have total risk-based capital of 10% or greater, and a leverage ratio of 5% or greater. Vineyard's total risk-based and leverage capital ratios were 12.2% and 11.2% at June 30, 2007, respectively.

As a continuing component of its Shareholders' Relations Program, the company is preparing a presentation describing its operating performance and strategies. The presentation will be accessible at www.vnbcstock.com.

The company is a financial holding company headquartered in Corona, and the parent company of Vineyard, also headquartered in Corona. Vineyard operates through 16 full-service banking centers and five corporate production offices located in the counties of Los Angeles, Marin, Monterey, Orange, Riverside, San Bernardino, San Diego, Santa Clara and Ventura, Calif. The company's common stock is traded on the NASDAQ Global Market System under the symbol "VNBC."

This press release contains forward-looking statements as referenced in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently unreliable and actual results may vary. Factors which could cause actual results to differ from these forward-looking statements include changes in the competitive marketplace, changes in the interest rate environment, economic conditions, outcome of pending litigation, risks associated with credit quality and other factors discussed in the company's filings with the Securities and Exchange Commission. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

                 VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                        CONSOLIDATED BALANCE SHEETS
             (dollars in thousands, except per share amounts)
                                (unaudited)


                               June 30,     December                  %
                                 2007       31, 2006     $ Change   Change
                             -----------  -----------  -----------  ------
Assets
  Loans, net of unearned
   income                    $ 2,031,872  $ 1,902,244  $   129,628       7%
    Less allowance for
     loan losses                 (21,255)     (19,689)      (1,566)      8%
                             -----------  -----------  -----------  ------
      Net Loans                2,010,617    1,882,555      128,062       7%
  Loans held-for-sale                296            -          296     100%
  Investment securities          223,793      233,600       (9,807)     -4%
                             -----------  -----------  -----------  ------
    Total Earnings Assets      2,234,706    2,116,155      118,551       6%
                             -----------  -----------  -----------  ------

  Cash and cash equivalents       65,526       35,129       30,397      87%
  Premises and equipment,
   net                            18,861       20,402       (1,541)     -8%
  Other real estate owned         11,653            -       11,653     100%
  Goodwill and other
   intangibles                    43,737       44,198         (461)     -1%
  Other assets                    42,068       41,855          213       1%
                             -----------  -----------  -----------  ------
     Total Assets            $ 2,416,551  $ 2,257,739  $   158,812       7%
                             ===========  ===========  ===========  ======

Liabilities and
 Stockholders' Equity
Liabilities
  Deposits
    Non-interest bearing     $   301,281  $   292,917  $     8,364       3%
    Interest-bearing           1,561,211    1,513,496       47,715       3%
                             -----------  -----------  -----------  ------
      Total Deposits           1,862,492    1,806,413       56,079       3%

  Federal Home Loan Bank
   advances                      210,000      126,000       84,000      67%
  Other borrowings                26,000       40,000      (14,000)    -35%
  Subordinated debt                5,000        5,000            -       0%
  Junior subordinated
   debentures                    115,470      115,470            -       0%
  Other liabilities               25,552       21,796        3,756      17%
                             -----------  -----------  -----------  ------
    Total Liabilities          2,244,514    2,114,679      129,835       6%

Stockholders' Equity
  Common stock equity            152,068      143,073        8,995       6%
  Preferred stock equity          31,694        9,665       22,029     228%
  Unallocated ESOP shares         (5,487)      (5,765)         278      -5%
  Cumulative other
   comprehensive loss             (6,238)      (3,913)      (2,325)     59%
                             -----------  -----------  -----------  ------
    Total Stockholders'
     Equity                      172,037      143,060       28,977      20%
                             -----------  -----------  -----------  ------
      Total Liabilities and
       Stockholders' Equity  $ 2,416,551  $ 2,257,739  $   158,812       7%
                             ===========  ===========  ===========  ======

Total non-performing
 loans/Gross loans (1)              0.60%        0.88%

Number of shares of common
 stock outstanding (2)        10,671,682   10,681,482

Net book value of common
 stock (3)                   $     13.15  $     12.49
Tangible book value of
 common stock (4)            $      9.05  $      8.35
Net book value of common
 stock,excluding other
 comprehensive loss (3)      $     13.74  $     12.85

(1) Total non-performing loans include non-accrual loans and accrual loans
that are more than 90 days past due.  Gross loans include loans, net of
unearned income and loans held-for-sale.
(2) Number of shares of common stock outstanding at June 30, 2007 and
December 31, 2006 excludes 245,376 and  257,828 unreleased and unallocated
ESOP shares, respectively. The outstanding shares were  retrospectively
adjusted for the 5% stock dividend issued June 22, 2007.
(3) "Net book value of common stock" is calculated by dividing
stockholders' equity available to common shareholders by the number of
shares of common stock outstanding at period-end. "Net book value of
common stock, excluding other comprehensive loss" eliminates cumulative
other comprehensive loss from the numerator. Book value per share was
retrospectively adjusted for the 5% stock dividend issued June 22, 2007.
(4) Tangible book value of common stock is calculated by dividing
stockholders' equity available to common shareholders, less goodwill and
other intangible assets, by the number of common shares outstanding at
period-end. Book value per share was retrospectively adjusted for the 5%
stock dividend issued June 22, 2007.



                 VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                        CONSOLIDATED BALANCE SHEETS
             (dollars in thousands, except per share amounts)
                                (unaudited)


                               June 30,     June 30,                  %
                                 2007         2006       $ Change   Change
                             -----------  -----------  -----------  ------
Assets
  Loans, net of unearned
   income                    $ 2,031,872  $ 1,507,712  $   524,160      35%
    Less allowance for
     loan losses                 (21,255)     (15,693)      (5,562)     35%
                             -----------  -----------  -----------  ------
      Net Loans                2,010,617    1,492,019      518,598      35%
  Loans held-for-sale                296       43,601      (43,305)    -99%
  Investment securities          223,793      247,543      (23,750)    -10%
                             -----------  -----------  -----------  ------
    Total Earnings Assets      2,234,706    1,783,163      451,543      25%
                             -----------  -----------  -----------  ------

  Cash and cash equivalents       65,526       25,097       40,429     161%
  Premises and equipment,
   net                            18,861       19,617         (756)     -4%
  Other real estate owned         11,653            -       11,653     100%
  Goodwill and other
   intangibles                    43,737        1,554       42,183    2714%
  Other assets                    42,068       34,531        7,537      22%
                             -----------  -----------  -----------  ------
     Total Assets            $ 2,416,551  $ 1,863,962  $   552,589      30%
                             ===========  ===========  ===========  ======

Liabilities and
 Stockholders' Equity
Liabilities
  Deposits
    Non-interest bearing     $   301,281  $   176,398  $   124,883      71%
    Interest-bearing           1,561,211    1,348,466      212,745      16%
                             -----------  -----------  -----------  ------
      Total Deposits           1,862,492    1,524,864      337,628      22%

  Federal Home Loan Bank
   advances                      210,000       72,000      138,000     192%
  Other borrowings                26,000            -       26,000     100%
  Subordinated debt                5,000        5,000            -       0%
  Junior subordinated
   debentures                    115,470      115,470            -       0%
  Other liabilities               25,552       17,731        7,821      44%
                             -----------  -----------  -----------  ------
    Total Liabilities          2,244,514    1,735,065      509,449      29%

Stockholders' Equity
  Common stock equity            152,068      133,931       18,137      14%
  Preferred stock equity          31,694        9,665       22,029     228%
  Unallocated ESOP shares         (5,487)      (6,033)         546      -9%
  Cumulative other
   comprehensive loss             (6,238)      (8,666)       2,428     -28%
                             -----------  -----------  -----------  ------
    Total Stockholders'
     Equity                      172,037      128,897       43,140      33%
                             -----------  -----------  -----------  ------
     Total Liabilities and
      Stockholders' Equity   $ 2,416,551  $ 1,863,962  $   552,589      30%
                             ===========  ===========  ===========  ======

Total non-performing
 loans/Gross loans (1)              0.60%        0.13%

Number of shares of common
 stock outstanding (2)        10,671,682   10,586,818

Net book value of common
 stock (3)                   $     13.15  $     11.26
Tangible book value of
 common stock (4)            $      9.05  $     11.12
Net book value of common
 stock, excluding other
 comprehensive loss (3)      $     13.74  $     12.08


(1) Total non-performing loans include non-accrual loans and accrual loans
that are more than 90 days past due.  Gross loans include loans, net of
unearned income and loans held-for-sale.
(2) Number of shares of common stock outstanding at June 30, 2007 and June
30, 2006 excludes 245,376 and  269,817 unreleased and unallocated ESOP
shares, respectively. The outstanding shares were  retrospectively adjusted
for the 5% stock dividend issued June 22, 2007.
(3) "Net book value of common stock" is calculated by dividing
stockholders' equity available to common shareholders by the number of
shares of common stock outstanding at period-end. "Net book value of
common stock, excluding other comprehensive loss" eliminates cumulative
other comprehensive loss from the numerator. Book value per share was
retrospectively adjusted for the 5% stock dividend issued June 22, 2007.
(4) Tangible book value of common stock is calculated by dividing
stockholders' equity available to common shareholders, less goodwill and
other intangible assets, by the number of common shares outstanding at
period-end. Book value per share was retrospectively adjusted for the 5%
stock dividend issued June 22, 2007.





                 VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                    CONSOLIDATED STATEMENT OF EARNINGS
             (dollars in thousands, except per share amounts)
                                (unaudited)


                                  Three Months Ended
                                       June 30,
                                ----------------------
                                                                      %
                                   2007        2006      $ Change   Change
                                ----------  ----------  ----------  ------
Interest Income
  Loans, including fees         $   44,518  $   35,274  $    9,244      26%
  Investment securities              2,967       3,020         (53)     -2%
                                ----------  ----------  ----------  ------
    Total Interest Income           47,485      38,294       9,191      24%
                                ----------  ----------  ----------  ------

Interest Expense
  Deposits                          17,181      13,554       3,627      27%
  Borrowings and debt
   obligations                       6,934       4,394       2,540      58%
                                ----------  ----------  ----------  ------
    Total Interest Expense          24,115      17,948       6,167      34%
                                ----------  ----------  ----------  ------

Net Interest Income                 23,370      20,346       3,024      15%
Provision for loan losses              500         700        (200)    -29%
                                ----------  ----------  ----------  ------
  Net interest income after
   provision for loan losses        22,870      19,646       3,224      16%
                                ----------  ----------  ----------  ------

Other Income
  Fees and service charges             416         442         (26)     -6%
  Gain on sale of SBA loans
   and SBA broker fee income           581         853        (272)    -32%
  Gain on sale of non-SBA loans        337         386         (49)    -13%
  Other income                         128         116          12      10%
                                ----------  ----------  ----------  ------
    Total Other Income               1,462       1,797        (335)    -19%
                                ----------  ----------  ----------  ------

    Gross Operating Income          24,332      21,443       2,889      13%

Operating Expenses
  Salaries and benefits              7,856       6,672       1,184      18%
  Occupancy and equipment            2,475       2,134         341      16%
  Marketing                            227         484        (257)    -53%
  Professional services                832         854         (22)     -3%
  Business development                 594         513          81      16%
  Other operating expense            2,190       1,489         701      47%
                                ----------  ----------  ----------  ------
    Total Operating Expenses        14,174      12,146       2,028      17%
                                ----------  ----------  ----------  ------

Earnings before income taxes        10,158       9,297         861       9%
Income tax provision                 4,156       3,857         299       8%
                                ----------  ----------  ----------  ------
  Net Earnings                  $    6,002  $    5,440  $      562      10%
                                ==========  ==========  ==========  ======

Weighted average shares
 outstanding used in
 diluted EPS calculation (6)    10,938,322  10,471,888

Earnings per common share (6)
  Basic                         $     0.54  $     0.52  $     0.02       5%
  Diluted                       $     0.53  $     0.50  $     0.03       6%

Efficiency Ratio (5)                    57%         55%


(5) The efficiency ratio is calculated by dividing total operating expenses
by net interest income before provision for loan losses plus total other
income.
(6) Number of shares and earnings per share were retrospectively adjusted
to reflect the 5% stock dividend issued June 22, 2007.



                 VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                    CONSOLIDATED STATEMENT OF EARNINGS
             (dollars in thousands, except per share amounts)
                                (unaudited)


                                  Six Months Ended
                                       June 30,
                                ----------------------                 %
                                   2007        2006      $ Change   Change
                                ----------  ----------  ----------  ------
Interest Income
  Loans, including fees         $   86,729  $   66,449  $   20,280      31%
  Investment securities              5,905       6,092        (187)     -3%
                                ----------  ----------  ----------  ------
    Total Interest Income           92,634      72,541      20,093      28%
                                ----------  ----------  ----------  ------

Interest Expense
  Deposits                          34,254      24,070      10,184      42%
  Borrowings and debt
   obligations                      12,517       9,374       3,143      34%
                                ----------  ----------  ----------  ------
    Total Interest Expense          46,771      33,444      13,327      40%
                                ----------  ----------  ----------  ------

Net Interest Income                 45,863      39,097       6,766      17%
Provision for loan losses            1,700       1,900        (200)    -11%
                                ----------  ----------  ----------  ------
  Net interest income after
   provision for loan losses        44,163      37,197       6,966      19%
                                ----------  ----------  ----------  ------

Other Income
  Fees and service charges             899         719         180      25%
  Gain on sale of SBA loans
   and SBA broker fee income         1,181       1,397        (216)    -15%
  Gain on sale of non-SBA loans        337         386         (49)    -13%
  Other income                         247         226          21       9%
                                ----------  ----------  ----------  ------
    Total Other Income               2,664       2,728         (64)     -2%
                                ----------  ----------  ----------  ------

    Gross Operating Income          46,827      39,925       6,902      17%

Operating Expenses
  Salaries and benefits             15,450      13,173       2,277      17%
  Occupancy and equipment            4,933       4,252         681      16%
  Marketing                            423         700        (277)    -40%
  Professional services              1,479       1,279         200      16%
  Business development               1,160       1,095          65       6%
  Other operating expense            3,856       2,996         860      29%
                                ----------  ----------  ----------  ------
    Total Operating Expenses        27,301      23,495       3,806      16%
                                ----------  ----------  ----------  ------

Earnings before income taxes        19,526      16,430       3,096      19%
Income tax provision                 8,015       6,829       1,186      17%
                                ----------  ----------  ----------  ------
  Net Earnings                  $   11,511  $    9,601  $    1,910      20%
                                ==========  ==========  ==========  ======

Weighted average shares
 outstanding used in
 diluted EPS calculation (6)    10,941,934  10,022,366

Earnings per common share (6)
  Basic                         $     1.03  $     0.95  $     0.09       9%
  Diluted                       $     1.01  $     0.92  $     0.09      10%

Efficiency Ratio (5)                    56%         56%


(5) The efficiency ratio is calculated by dividing total operating expenses
by net interest income before provision for loan losses plus total other
income.
(6) Number of shares and earnings per share were retrospectively adjusted
to reflect the 5% stock dividend issued June 22, 2007.



                 VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                          FINANCIAL PERFORMANCE
                                (unaudited)
                          (dollars in thousands)


                              Three Months Ended June 30,
              ------------------------------------------------------------
                          2007                           2006
              -----------------------------  -----------------------------
                                    Average                        Average
                Average             Yield/     Average             Yield/
                Balance    Interest  Cost      Balance    Interest  Cost
              -----------  -------- -------  -----------  -------- -------
Assets
  Gross loans
   (7)        $ 2,037,736  $ 44,518    8.76% $ 1,568,103  $ 35,274    9.02%
  Investment
   securities
   (8)            240,668     2,967    4.93%     267,562     3,020    4.52%
              -----------  --------          -----------  --------
   Total
    interest-
    earning
    assets      2,278,404    47,485    8.36%   1,835,665    38,294    8.37%
 Other assets     129,410                         63,619
 Less:
  allowance
  for loan
  losses          (21,057)                       (15,355)
              -----------                    -----------
    Total
     average
     assets   $ 2,386,757                    $ 1,883,929
              ===========                    ===========

Liabilities
 and
 Stockholders'
 Equity
  Interest-
  bearing
  deposits
  (9)         $ 1,463,184    17,181    4.71% $ 1,282,462    13,554    4.24%
  Federal Home
   Loan Bank
   advances       292,648     3,687    5.02%     180,496     2,173    4.83%
  Other
   borrowings      48,285       830    6.80%       3,901        66    6.70%
  Subordinated
   debt             5,000       109    8.61%       5,000       104    8.26%
  Junior
   subordinated
   debentures     115,470     2,308    7.91%     106,293     2,051    7.64%
              -----------  --------          -----------  --------
   Total
    interest-
    bearing
    liabilities 1,924,587    24,115    5.01%   1,578,152    17,948    4.55%
                           --------                       --------
  Demand
   deposits       286,878                        170,363
  Other
   liabilities     25,341                         17,948
              -----------                    -----------
    Total
     average
     liab-
     ilities   2,236,806                      1,766,463
  Preferred
   stock
   equity         10,876                          9,665
  Common stock
   equity,
   net of
   cumulative
   other
   comprehen-
   sive loss      139,075                        107,801
              -----------                    -----------
    Stockhol-
     ders'
     equity       149,951                        117,466
              -----------                    -----------
    Total
     liabili-
     ties and
     stockho-
     lders'
     equity   $ 2,386,757                    $ 1,883,929
              ===========                    ===========

Net interest
 spread (10)                           3.35%                          3.82%
                                    =======                        =======
Net interest
 margin (11)               $ 23,370    4.13%              $ 20,346    4.45%
                           ======== =======               ======== =======


Return on
 Average
 Assets                                1.01%                          1.16%
Return on
 Average
 Tangible
 Assets (12)                           1.08%                          1.20%
Return on
 Average
 Common
 Equity                               16.64%                         19.41%
Return on
 Average
 Tangible
 Common
 Equity (13)                          25.51%                         20.37%
Net
 Charge-off's
 /Average
 Gross Loans                           0.00%                          0.00%

(7) The average loan balances include loans held for sale and non-accrual
loans.
(8) The yield for investment securities is based on historical amortized
cost balances.
(9) Includes savings, NOW, money market, and time certificate of deposit
accounts.
(10) Net interest spread represents the average yield earned on
interest-earning assets less the average rate paid on interest-bearing
liabilities.
(11) Net interest margin is computed by dividing net interest income by
total average earning assets.
(12) Return on average tangible assets is computed by dividing net income
excluding core deposit and other intangible amortization for the period by
average tangible assets. Average tangible assets equal average total assets
less average identifiable  intangible assets and goodwill.
(13) Return on average tangible common stockholders’ equity is computed by
dividing net income applicable to common stock excluding core deposit and
other intangible amortization for the period by average tangible common
stockholders’ equity. Average tangible common stockholders’ equity equals
average total common stockholders’ equity less average identifiable
intangible assets and goodwill.




                 VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                          FINANCIAL PERFORMANCE
                                (unaudited)
                          (dollars in thousands)


                                Six Months Ended June 30,
                ----------------------------------------------------------
                            2007                          2006
              -----------------------------  -----------------------------
                                    Average                         Average
                Average             Yield/     Average              Yield/
                Balance    Interest   Cost     Balance    Interest   Cost
              -----------  -------- -------  -----------  -------- -------
Assets
  Gross loans
   (7)          $ 1,990,824  $ 86,729   8.79% $ 1,504,497  $ 66,449   8.91%
  Investment
   securities
   (8)              240,867     5,905   4.91%     270,854     6,092   4.50%
                -----------  --------         -----------  --------
   Total
    interest-
    earning
    assets        2,231,691    92,634   8.37%   1,775,351    72,541   8.23%
   Other assets     128,675                        69,357
   Less:
    allowance
    for loan
    losses          (20,488)                      (14,766)
                -----------                   -----------
     Total
      average
      assets    $ 2,339,878                   $ 1,829,942
                ===========                   ===========

Liabilities and
 Stockholders'
 Equity
   Interest-
    bearing
    deposits
    (9)         $ 1,474,127    34,254   4.69% $ 1,200,543    24,070   4.04%
   Federal Home
    Loan Bank
    advances        249,220     6,241   5.01%     223,666     5,145   4.64%
   Other
    borrowings       41,554     1,465   7.01%       6,956       235   6.73%
   Subordinated
    debt              5,000       218   8.67%       5,000       202   8.04%
   Junior
    subordinated
    debentures      115,470     4,593   7.91%     101,629     3,792   7.42%
                -----------  --------         -----------  --------
    Total
     interest-
     bearing
     liabil-
     ities        1,885,371    46,771   4.99%   1,537,794    33,444   4.38%
                             --------                      --------
   Demand
    deposits        282,394                       166,173
   Other
    liabilities      24,568                        16,281
                -----------                   -----------
     Total
      average
      liabil-
      ities       2,192,333                     1,720,248
   Preferred
    stock
    equity           10,274                         9,665
   Common stock
    equity, net
    of
    cumulative
    other
    comprehens-
    ive loss        137,271                       100,029
                -----------                   -----------
     Stockhold-
      ers'
      equity        147,545                       109,694
                -----------                   -----------
     Total
      liabil-
      ities
      and
      stock-
      holders'
      equity    $ 2,339,878                   $ 1,829,942
                ===========                   ===========

Net interest
 spread (10)                            3.38%                         3.85%
                                      ======                        ======
Net interest
 margin (11)                 $ 45,863   4.15%              $ 39,097   4.44%
                             ======== ======               ======== ======


Return on
 Average Assets                         0.99%                         1.06%
Return on
 Average
 Tangible
 Assets (12)                            1.07%                         1.10%
Return on
 Average Common
 Equity                                16.23%                        18.49%
Return on
 Average
 Tangible
 Common Equity
 (13)                                  25.24%                        19.50%
Net
 Charge-off's/
 Average Gross
 Loans                                  0.01%                         0.00%

(7) The average loan balances include loans held for sale and non-accrual
loans.
(8) The yield for investment securities is based on historical amortized
cost balances.
(9) Includes savings, NOW, money market, and time certificate of deposit
accounts.
(10) Net interest spread represents the average yield earned on
interest-earning assets less the average rate paid on interest-bearing
liabilities.
(11) Net interest margin is computed by dividing net interest income by
total average earning assets.
(12) Return on average tangible assets is computed by dividing net income
excluding core deposit and other intangible amortization for the period by
average tangible assets. Average tangible assets equal average total
assets less average identifiable intangible assets and goodwill.
(13) Return on average tangible common stockholders’ equity is computed by
dividing net income applicable to common stock excluding core deposit and
other intangible amortization for the period by average tangible common
stockholders’ equity. Average tangible common stockholders’ equity equals
average total common stockholders’ equity less average identifiable
intangible assets and goodwill.



                 VINEYARD NATIONAL BANCORP AND SUBSIDIARY
    Earning Asset, Funding Liability and Operating Expenses Composition
                                (unaudited)
                          (dollars in thousands)



                                       June 30,    March 31,   December 31,
                                       2007 (14)   2007 (14)     2006 (14)
                                     -----------  -----------  -----------
Earning Assets
Loans
   Commercial and industrial         $   133,255  $   127,164  $   122,257
   Real estate construction and
    land:
     Single-family luxury                497,494      553,333      514,385
     Single-family tract                 183,395      160,270      152,060
     Commercial                          162,514      136,465      134,404
     Land:                                                         112,418
       Single-family luxury (15)          19,946       17,382          N/A
       Single-family tract (15)           38,878       70,761          N/A
       Commercial (15)                    30,686       23,046          N/A
       Other (15)                         25,099        6,284          N/A
   Real estate mortgage:
     Commercial                          604,157      565,199      531,159
     Multi-family residential            185,450      213,877      222,470
     All other residential                53,533       43,954       49,353
   Consumer loans                         97,752       80,306       65,914
   All other loans (including
    overdrafts)                              194           70           98
                                     -----------  -----------  -----------
                                       2,032,353    1,998,111    1,904,518
   Unearned premium on acquired
    loans                                  2,627        2,050        1,696
   Deferred loan fees                     (3,108)      (3,842)      (3,970)
                                     -----------  -----------  -----------
       Loans, net of unearned income   2,031,872    1,996,319    1,902,244
                                     -----------  -----------  -----------

Loans held-for-sale                          296          441            -
Investment securities                    223,793      232,504      233,600
                                     -----------  -----------  -----------
     Total Earning Assets, excluding
      Allowance for Loan Losses      $ 2,255,961  $ 2,229,264  $ 2,135,844
                                     ===========  ===========  ===========

Unfunded Loan Commitments
   Commercial and industrial         $   109,696  $   110,649  $    97,655
   Real estate construction and
    land:
     Single-family luxury                261,299      281,842      264,967
     Single-family tract                 108,898      126,463      150,702
     Commercial                          118,851      102,308      119,134
     Land                                 12,928       13,495       16,336
   Real estate mortgage:
     Commercial                           14,736       13,388       14,221
     Multi-family residential                709          961        1,194
     All other residential                19,569       19,388       16,496
   Consumer loans                          5,948        5,663        4,089
                                     -----------  -----------  -----------
       Total Unfunded Loan
        Commitments                  $   652,634  $   674,157  $   684,794
                                     ===========  ===========  ===========

Funding Liabilities
Deposits
   Non-interest bearing              $   301,281  $   287,866  $   292,917
   Money market                          575,867      618,954      562,622
   Savings and NOW                        69,471       69,947       70,741
   Time deposits                         915,873      790,965      880,133
                                     -----------  -----------  -----------
       Total Deposits                  1,862,492    1,767,732    1,806,413
                                     -----------  -----------  -----------

FHLB advances                            210,000      244,000      126,000
Other borrowings                          26,000       45,400       40,000
Subordinated debt                          5,000        5,000        5,000
Junior subordinated debentures           115,470      115,470      115,470
                                     -----------  -----------  -----------
         Total Funding Liabilities   $ 2,218,962  $ 2,177,602  $ 2,092,883
                                     ===========  ===========  ===========


Operating expenses
   Salary and benefits               $     7,856  $     7,594  $     7,943
   Occupancy and equipment                 2,475        2,458        2,584
   Marketing                                 227          196          230
   Professional services                     832          647          818
   Business development                      594          566          579
   Other operating expenses                2,190        1,666        1,858
                                     -----------  -----------  -----------
       Total operating expenses      $    14,174  $    13,127  $    14,012
                                     ===========  ===========  ===========



                                     September 30,  June 30,
                                      2006 (14)      2006
                                     -----------  -----------
Earning Assets
Loans
   Commercial and industrial         $   111,850  $    71,774
   Real estate construction and
    land:
     Single-family luxury                507,390      438,788
     Single-family tract                 132,966      125,806
     Commercial                           90,513       79,389
     Land:                               104,082      107,666
       Single-family luxury (15)             N/A          N/A
       Single-family tract (15)              N/A          N/A
       Commercial (15)                       N/A          N/A
       Other (15)                            N/A          N/A
   Real estate mortgage:
     Commercial                          500,994      392,209
     Multi-family residential            241,113      195,406
     All other residential                58,712       63,237
   Consumer loans                         51,785       36,136
   All other loans (including
    overdrafts)                              139          167
                                     -----------  -----------
                                       1,799,544    1,510,578
   Unearned premium on acquired
    loans                                  1,239        1,073
   Deferred loan fees                     (4,719)      (3,939)
                                     -----------  -----------
       Loans, net of unearned income   1,796,064    1,507,712
                                     -----------  -----------

Loans held-for-sale                            -       43,601
Investment securities                    235,373      243,316
                                     -----------  -----------
     Total Earning Assets, excluding
      Allowance for Loan Losses      $ 2,031,437  $ 1,794,629
                                     ===========  ===========

Unfunded Loan Commitments
   Commercial and industrial         $    87,283  $    77,120
   Real estate construction and
    land:
     Single-family luxury                290,434      295,124
     Single-family tract                 164,737      153,080
     Commercial                          103,563       70,250
     Land                                 26,026       16,307
   Real estate mortgage:
     Commercial                           15,836       11,770
     Multi-family residential              2,176        1,031
     All other residential                15,085       10,873
   Consumer loans                          4,061        2,856
                                     -----------  -----------
       Total Unfunded Loan
        Commitments                  $   709,201  $   638,411
                                     ===========  ===========

Funding Liabilities
Deposits
   Non-interest bearing              $   253,927  $   176,398
   Money market                          506,532      478,056
   Savings and NOW                        75,787       48,243
   Time deposits                         876,586      822,167
                                     -----------  -----------
       Total Deposits                  1,712,832    1,524,864
                                     -----------  -----------

FHLB advances                            127,000       72,000
Other borrowings                          35,500            -
Subordinated debt                          5,000        5,000
Junior subordinated debentures           115,470      115,470
                                     -----------  -----------
         Total Funding Liabilities   $ 1,995,802  $ 1,717,334
                                     ===========  ===========


Operating expenses
   Salary and benefits               $     7,648  $     6,672
   Occupancy and equipment                 2,411        2,134
   Marketing                                 323          484
   Professional services                     669          854
   Business development                      542          513
   Other operating expenses                1,917        1,489
                                     -----------  -----------
       Total operating expenses      $    13,510  $    12,146
                                     ===========  ===========

(14) Balances as of June 30, 2007, March 31, 2007, December 31, 2006 and
September 30, 2006 include loans acquired and deposits assumed in the
merger with Rancho Bank on July 31, 2006.
(15) Land loans by category were not previously tracked. The Company began
tracking the land loan type in the first quarter of 2007 and will continue
to do so going forward.