The company's net interest margin for the fourth quarter 2006 was 4.32%, as compared to 4.33% for the third quarter 2006 and 4.57% for the fourth quarter 2005. "2006 was a challenging year for Vineyard due in part to market dynamics, real estate concerns, the rising effect of interest rates on deposits and the impact to margin compression and ultimately the overall impact of all of these forces on profitability," stated Norman Morales, president and chief executive officer. "The financing of home and commercial construction continues to be a significant component to Vineyard's strategies going forward, and we believe the measured growth in such loan types and our expertise will continue into 2007."

(Click here for details)

Highlighted Links Vineyard Bank, N.A.

Vineyard National Bancorp

"We are pleased that our strategy to make investments in talented individuals in 2006 is gaining traction and as a result, the company benefited from absolute growth in both deposits and loans. We are confident with the outlook for continued growth in our loan portfolio. We will accelerate our focus and efforts on core deposit relationship growth, and we will continue to efficiently leverage our operating infrastructure and optimally use our balance sheet to produce the desired operating results throughout 2007."

Income Statement

For the quarter-ended December 2006, net interest income before the provision for loan losses was $22.8 million, an increase of $4.0 million, or 21% as compared to the same period in 2005. These results produced a net interest margin of 4.32% for the quarter-ended December 2006, as compared to 4.57% for the same period in 2005. The net interest income for the full year-ended December 2006 was $83.1 million, an increase of $15.6 million, or 23% as compared to the same period in 2005. These results produced a net interest margin of 4.38%, as compared to 4.47% for the same period in 2005.

For the quarter-ended December 2006, gross loan interest income was $41.8 million, an increase of $12.6 million, or 43% as compared to the same period in 2005. The effective yield of the loan portfolio in the fourth quarter 2006 was 9.03%. Gross loan interest income for the full year-ended December 2006 was $146.2 million, producing an effective yield on the loan portfolio of 8.95%, as compared to $98.3 million and 8.12% respectively, for the full year-ended December 2005.

Total net revenues (net interest income before provision for loan losses and other operating income) for the quarter-ended December 2006 was $24.3 million, an increase of $4.4 million, or 22% as compared to the same period in 2005. Total net revenues for the year-ended December 2006 were $88.7 million, as compared to $72.8 million for the same period in 2005.

The total provision for loan losses for the quarter-ended December 2006 was $1.1 million, principally due to the organic loan growth within the period of $106.2 million, net of unearned income. By comparison, the provision for loan losses was $1.2 million for the quarter-ended September 2006 and $0.5 million for the quarter-ended December 2005. Net charge-offs for the quarter-ended December 2006 were $0.1 million, as compared to approximately $8,000 in net recoveries for the same period in 2005.

The total provision for loan losses for the full year-ended December 2006 was $4.1 million, as compared to $1.9 million for the full year-ended December 2005. The full year provision for 2006 was principally due to the significant organic loan growth, which approximated $410.4 million (excluding the $118.8 million in loans acquired through the Rancho Bank transaction). Net charge-offs for the full year-ended December 2006 were $0.3 million, as compared to $0.1 million for the full year-ended December 2005.

The provision for loan losses in 2006, along with the acquisition of Rancho Bank, increased the allowance for loan losses to $19.7 million, or 1.03% of the gross loan portfolio at December 2006. The company also has a reserve for unfunded loan commitments, principally related to its construction loans, in the amount of $1.4 million, producing total reserves as a percent of gross loans outstanding of 1.11% at December 2006.

In the third quarter 2006, the company placed an aggregate of $14.4 million of land development loans on non-accrual status, with the largest loan in the amount of $11.7 million. Unrecognized interest income on these loans amounted to approximately $0.8 million as of December 31, 2006. The company is continuing its process in recovering these loans and the corresponding non-accrued income. The loans are well secured and we expect to collect all principal and interest on these loans.

Total operating expenses for the quarter-ended December 2006 were $14.0 million, as compared to $12.0 million for the same period in 2005. Total operating expenses for the full year-ended December 2006 were $51.0 million, as compared to $38.7 million for the same period in 2005. During the fourth quarter 2006, the company incurred approximately $0.6 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. The company incurred approximately $0.7 million of Rancho Bank related acquisition expenses during the third quarter 2006. These amounts will be significantly reduced in future quarters and terminated by the end of 2007.

The company's efficiency ratio, which measures the relationship of total operating expenses and total operating income, was 58%, including those expenses discussed above, for the quarter-ended December 2006, as compared to 60% for the same period in 2005. The efficiency ratio for the full year-ended December 2006 was 58%, as compared to 53% for the full year-ended December 2005.

Balance Sheet

At December 31, 2006, loans outstanding, net of unearned income, were $1.9 billion, as compared to the December 31, 2005 level of $1.4 billion. The largest dollar components of this increase in 2006 are centered in the established commercial real estate and single family residential ("SFR") coastal construction product lines, followed by commercial construction financings, business lending and consumer loans.

The company's specialty lending groups continue to be focused on the origination of construction lending opportunities within the southern California market place. During the quarter-ended December 31, 2006, the company originated $165.4 million in construction loans, consisting of the company's three sub-specialty construction lending disciplines: SFR coastal construction with $67.9 million, SFR tract construction with $28.7 million and commercial real-estate construction with $68.8 million. At December 31, 2006, the total unfunded amounts for the company's three sub-specialty construction disciplines were $265.0 million in SFR coastal construction, $150.7 million in SFR tract construction and $119.1 million in commercial real-estate construction.

The SFR coastal construction group has been one of the catalysts for Vineyard's success since 2000 and continues to significantly contribute to its current operations. The SFR coastal construction group serves the southern California high-end construction housing market with projects primarily located along the ocean communities within Los Angeles County, reaching along the coast as far north as Santa Barbara and south into Orange County. These types of construction loans are made to independent builders, who cater to the luxury home buyers, and generally range from $1.0 million to $5.0 million. In today's dynamic real estate environment, the coastal group continues to see stability in its product, which is driven more by location and quality product than any other factor. This is a market segment that typically serves individuals with accumulated wealth.

During 2006, the SFR coastal construction group originated $434.1 million in loans corresponding to approximately 193 units. This is down from $497.3 million in commitments for 2005, and comparable to $395.7 million in commitments in 2004. The disbursed loan balance was $514.4 million as of December 31, 2006, net of participations sold of $86.7 million, as compared to $392.2 million at December 31, 2005 and $299.0 million at December 31, 2004, net of loan participations sold of $114.7 million and $59.6 million, respectively. There were no non-performing SFR coastal construction loans and no charge-offs on SFR coastal construction loans at and for each of the years ended December 31, 2006, 2005 and 2004.

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 December 2006, was $106.2 million, as compared to loan growth of $244.8 million in the third quarter 2006 (including $118.8 million acquired from Rancho Bank), $31.8 million in the second quarter 2006, and $146.4 million in the first quarter 2006. These quarterly loan growth amounts are net of loan participations sold of $16.2 million, $5.6 million, $71.6 million and $3.4 million, for the fourth quarter 2006, third quarter 2006, second quarter 2006 and first quarter 2006, respectively.

As the company continued its efforts to diversify its loan portfolio, for the quarter-ended and year-ended December 2006, it participated with other community banks approximately $16.2 million and $96.7 million in loans, respectively, with the majority of the participations in construction loan balances of approximately $73.4 million for the year-ended December 2006.

At December 31, 2006, total deposits were $1.8 billion, as compared to the December 31, 2005 level of $1.3 billion. Non-interest bearing demand deposits were $293.6 million at year-end December 2006, an increase of $138.9 million, or 90% over year-end December 2005. Money market deposits, principally concentrated in business relationships, were $562.6 million at year-end 2006, an increase of $148.4 million, or 36% over year-end December 2005.

The company's continuing efforts to build out existing and new banking centers have produced eight offices with deposits in excess of $100 million, four offices with deposit balances of $75 million to $100 million, and four offices with deposit balances of $30 million to $75 million. During the past eighteen months, the company has extended its reach into new markets with banking centers in Irvine (opened June 2005), San Diego (opened in July 2005), and San Rafael (opened in March 2006), with deposit balances in excess of $155 million, $108 million, and $89 million, respectively, in each location.

The company's interest-bearing deposits, whose average balances for the three months ended December 31, 2006 were $1.5 billion, produced an average cost of interest-bearing deposits of 4.62%. For the three months ended September 30, 2006, the company's interest-bearing deposits, whose average balances were $1.4 billion, produced an average cost of interest-bearing deposits of 4.43%. Despite this overall increase in the cost of interest-bearing deposits, the company's overall net interest margin was 4.32% for the three months ended December 31, 2006. For the three months ended September 30, 2006, the company's overall net interest margin was 4.33%.

Capital Resources

At December 31, 2006, total stockholders' equity of the company totaled $142.8 million, an increase of $42.8 million, or 43% as compared to December 31, 2005. The company's net book value per share of its common stock increased from $9.86 at December 31, 2005 to $13.08 per share at December 31, 2006. The tangible book value decreased during this same period from $9.68 to $8.70 per share due to $41.0 million in goodwill related to the Rancho Bank acquisition. For the quarter-ended and year-ended December 2006, the company declared cash dividends for its common stock of $0.7 million and $3.2 million, respectively. For the quarter-ended and year-ended December 2006, the company declared cash dividends for its preferred stock of $0.2 million and $0.9 million, respectively.

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 11.4% at December 31, 2006, 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 four loan production offices located in the counties of Los Angeles, Marin, Monterey, Orange, Riverside, San Bernardino, San Diego, 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) December 31, December 31, 2006 2005 $ Change % Change ----------- ----------- --------- --------- Assets Loans, net of unearned income $ 1,902,244 $ 1,373,099 $ 529,145 39% Less allowance for loan losses (19,689) (13,762) (5,927) 43% ----------- ----------- --------- --------- Net Loans 1,882,555 1,359,337 523,218 38% Investment securities 228,893 267,849 (38,956) -15% ----------- ----------- --------- --------- Total Earnings Assets 2,111,448 1,627,186 484,262 30% ----------- ----------- --------- --------- Cash and cash equivalents 35,129 28,630 6,499 23% Premises and equipment, net 20,402 19,192 1,210 6% Goodwill and other intangibles 44,633 1,670 42,963 2573% Other assets 45,839 36,960 8,879 24% ----------- ----------- --------- --------- Total Assets $ 2,257,451 $ 1,713,638 $ 543,813 32% =========== =========== ========= ========= Liabilities and Stockholders' Equity Liabilities Deposits Noninterest-bearing $ 293,572 $ 154,664 $ 138,908 90% Interest-bearing 1,513,496 1,122,348 391,148 35% ----------- ----------- --------- --------- Total Deposits 1,807,068 1,277,012 530,056 42% Federal Home Loan Bank advances 126,000 214,000 (88,000) -41% Other borrowings 40,000 10,000 30,000 300% Subordinated debt 5,000 5,000 - 0% Junior subordinated debentures 115,470 96,913 18,557 19% Other liabilities 21,142 10,728 10,414 97% ----------- ----------- --------- --------- Total Liabilities 2,114,680 1,613,653 501,027 31% Stockholders' Equity Common stock equity 142,784 101,869 40,915 40% Preferred stock equity 9,665 9,665 - 0% Unallocated ESOP shares (5,765) (6,304) 539 -9% Cumulative other comprehensive loss (3,913) (5,245) 1,332 -25% ----------- ----------- --------- --------- Total Stockholders' Equity 142,771 99,985 42,786 43% ----------- ----------- --------- --------- Total Liabilities and Stockholders' Equity $ 2,257,451 $ 1,713,638 $ 543,813 32% =========== =========== ========= ========= Total non-performing loans/Gross loans 0.88% (1) 0.07% (1) Number of shares of common stock outstanding 10,172,889 (2) 9,159,203 (2) Net book value of common stock (3) $ 13.08 $ 9.86 Tangible book value of common stock (4) $ 8.70 $ 9.68 Net book value of common stock, excluding other comprehensive loss (3) $ 13.47 $ 10.43 (1) Total non-performing loans include non-accrual loans and accrual loans that are more than 90 days past due. (2) Number of shares of common stock outstanding at December 31, 2006 and December 31, 2005 excludes 245,547 and 268,487 unreleased and unallocated ESOP shares, respectively. (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. The net book value of common stock, excluding other comprehensive loss eliminates cumulative other comprehensive loss from the numerator. (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. VINEYARD NATIONAL BANCORP AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share amounts) (unaudited) December 31, September 30, 2006 2006 $ Change % Change ----------- ----------- --------- --------- Assets Loans, net of unearned income $ 1,902,244 $ 1,796,064 $ 106,180 6% Less allowance for loan losses (19,689) (18,740) (949) 5% ----------- ----------- --------- --------- Net Loans 1,882,555 1,777,324 105,231 6% Investment securities 228,893 235,373 (6,480) -3% ----------- ----------- --------- --------- Total Earnings Assets 2,111,448 2,012,697 98,751 5% ----------- ----------- --------- --------- Cash and cash equivalents 35,129 29,761 5,368 18% Premises and equipment, net 20,402 21,162 (760) -4% Goodwill and other intangibles 44,633 45,487 (854) -2% Other assets 45,839 44,003 1,836 4% ----------- ----------- --------- --------- Total Assets $ 2,257,451 $ 2,153,110 $ 104,341 5% =========== =========== ========= ========= Liabilities and Stockholders' Equity Liabilities Deposits Noninterest-bearing $ 293,572 $ 254,534 $ 39,038 15% Interest-bearing 1,513,496 1,458,905 54,591 4% ----------- ----------- --------- --------- Total Deposits 1,807,068 1,713,439 93,629 5% Federal Home Loan Bank advances 126,000 127,000 (1,000) -1% Other borrowings 40,000 35,500 4,500 13% Subordinated debt 5,000 5,000 - 0% Junior subordinated debentures 115,470 115,470 - 0% Other liabilities 21,142 20,117 1,025 5% ----------- ----------- --------- --------- Total Liabilities 2,114,680 2,016,526 98,154 5% Stockholders' Equity Common stock equity 142,784 137,799 4,985 4% Preferred stock equity 9,665 9,665 - 0% Unallocated ESOP shares (5,765) (5,898) 133 -2% Cumulative other comprehensive loss (3,913) (4,982) 1,069 -21% ----------- ----------- --------- --------- Total Stockholders' Equity 142,771 136,584 6,187 5% ----------- ----------- --------- --------- Total Liabilities and Stockholders' Equity $ 2,257,451 $ 2,153,110 $ 104,341 5% =========== =========== ========= ========= Total non-performing loans/Gross loans 0.88% (1) 0.80% (1) Number of shares of common stock outstanding 10,172,889 (2) 10,106,606 (2) Net book value of common stock (3) $ 13.08 $ 12.56 Tangible book value of common stock (4) $ 8.70 $ 8.06 Net book value of common stock, excluding other comprehensive loss (3) $ 13.47 $ 13.05 (1) Total non-performing loans include non-accrual loans and accrual loans that are more than 90 days past due. (2) Number of shares of common stock outstanding at December 31, 2006 and September 30, 2006 excludes 245,547 and 251,227 unreleased and unallocated ESOP shares, respectively. (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. The net book value of common stock, excluding other comprehensive loss eliminates cumulative other comprehensive loss from the numerator. (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. VINEYARD NATIONAL BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF EARNINGS (dollars in thousands, except per share amounts) (unaudited) Three Months Ended December 31, ----------------------- 2006 2005 $ Change % Change ---------- ---------- -------- -------- Interest Income Loans, including fees $ 41,818 $ 29,210 $ 12,608 43% Investment securities 3,035 3,091 (56) -2% ---------- ---------- -------- -------- Total Interest Income 44,853 32,301 12,552 39% Interest Expense Deposits 17,722 8,863 8,859 100% Borrowings and debt obligations 4,331 4,670 (339) -7% ---------- ---------- -------- -------- Total Interest Expense 22,053 13,533 8,520 63% Net Interest Income 22,800 18,768 4,032 21% Provision for loan losses 1,050 536 514 96% ---------- ---------- -------- -------- Net interest income after provision for loan losses 21,750 18,232 3,518 19% Other Income Fees and service charges 558 227 331 146% Gain on sale of SBA loans and SBA broker fee income 783 548 235 43% Gain on sale of other loans 34 262 (228) -87% Other income 159 86 73 85% ---------- ---------- -------- -------- Total Other Income 1,534 1,123 411 37% Gross Operating Income 23,284 19,355 3,929 20% Operating Expenses Salaries and benefits 7,943 7,011 932 13% Occupancy and equipment 2,584 2,129 455 21% Other operating expense 3,485 2,872 613 21% ---------- ---------- -------- -------- Total Operating Expenses 14,012 12,012 2,000 17% Earnings before income taxes 9,272 7,343 1,929 26% Income tax provision 3,782 2,886 896 31% ---------- ---------- -------- -------- Net Earnings $ 5,490 $ 4,457 $ 1,033 23% ========== ========== ======== ======== Weighted average shares outstanding used in diluted EPS calculation 10,402,959 9,637,983 Earnings per common share Basic $ 0.52 $ 0.46 $ 0.06 13% Diluted $ 0.51 $ 0.44 $ 0.07 16% Efficiency Ratio(5) 58% 60% (5) The efficiency ratio is calculated by dividing total operating expenses by net interest income before provision for loan losses plus total other income. VINEYARD NATIONAL BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF EARNINGS (dollars in thousands, except per share amounts) (unaudited) Year Ended December 31, ----------------------- 2006 2005 $ Change % Change ---------- ---------- -------- -------- Interest Income Loans, including fees $ 146,183 $ 98,303 $ 47,880 49% Investment securities 12,137 12,556 (419) -3% ---------- ---------- -------- -------- Total Interest Income 158,320 110,859 47,461 43% Interest Expense Deposits 57,858 28,008 29,850 107% Borrowings and debt obligations 17,372 15,337 2,035 13% ---------- ---------- -------- -------- Total Interest Expense 75,230 43,345 31,885 74% Net Interest Income 83,090 67,514 15,576 23% Provision for loan losses 4,125 1,886 2,239 119% ---------- ---------- -------- -------- Net interest income after provision for loan losses 78,965 65,628 13,337 20% Other Income Fees and service charges 1,825 1,413 412 29% Gain on sale of SBA loans and SBA broker fee income 2,839 2,903 (64) -2% Gain on sale of other loans 456 660 (204) -31% Other income 502 329 173 53% ---------- ---------- -------- -------- Total Other Income 5,622 5,305 317 6% Gross Operating Income 84,587 70,933 13,654 19% Operating Expenses Salaries and benefits 28,764 21,802 6,962 32% Occupancy and equipment 9,247 7,266 1,981 27% Other operating expense 13,006 9,678 3,328 34% ---------- ---------- -------- -------- Total Operating Expenses 51,017 38,746 12,271 32% Earnings before income taxes 33,570 32,187 1,383 4% Income tax provision 13,825 13,276 549 4% ---------- ---------- -------- -------- Net Earnings $ 19,745 $ 18,911 $ 834 4% ========== ========== ======== ======== Weighted average shares outstanding used in diluted EPS calculation 9,997,120 9,744,474 Earnings per common share Basic $ 1.95 $ 1.97 $ (0.02) -1% Diluted $ 1.89 $ 1.89 $ - 0% Efficiency Ratio(5) 58% 53% (5) The efficiency ratio is calculated by dividing total operating expenses by net interest income before provision for loan losses plus total other income. VINEYARD NATIONAL BANCORP AND SUBSIDIARY FINANCIAL PERFORMANCE (unaudited) (dollars in thousands) Three Months Ended December 31, ------------------------------------- 2006 ------------------------------------- Average Average Balance Interest Yield/Cost ----------- ------------ ----------- Assets Gross loans (6) $ 1,837,749 $ 41,818 9.03% Investment securities (7) 257,711 3,035 4.71% ----------- ------------ Total interest-earning assets 2,095,460 44,853 8.50% Other assets 128,286 Less: allowance for loan losses (18,863) ----------- Total average assets $ 2,204,883 =========== Liabilities and Stockholders' Equity Interest-bearing deposits (8) $ 1,521,213 17,722 4.62% FHLB advances 109,971 1,347 4.86% Other borrowings 26,950 531 7.71% Subordinated debt 5,000 110 8.54% Junior subordinated debentures 115,470 2,343 7.94% ----------- ------------ Total interest-bearing liabilities 1,778,604 22,053 4.92% ------------ Demand deposits 264,335 Other liabilities 22,996 ----------- Total average liabilities 2,065,935 Preferred stock equity 9,665 Common stock equity, net of cumulative other comprehensive loss 129,283 ----------- Stockholders' equity 138,948 ----------- Total liabilities and stockholders' equity $ 2,204,883 =========== Net interest spread (9) 3.58% =========== Net interest margin (10) $ 22,800 4.32% ============ =========== Return on Average Assets 0.99% Return on Average Tangible Assets (11) 1.01% Return on Average Common Equity 16.85% Return on Average Tangible Common Equity (12) 25.95% Net Charge-off's/Average Gross Loans 0.01% Three Months Ended December 31, ------------------------------------- 2005 ------------------------------------- Average Average Balance Interest Yield/Cost ----------- ------------ ----------- Assets Gross loans (6) $ 1,344,021 $ 29,210 8.62% Investment securities (7) 286,063 3,091 4.29% ----------- ------------ Total interest-earning assets 1,630,084 32,301 7.86% Other assets 73,119 Less: allowance for loan losses (14,371) ----------- Total average assets $ 1,688,832 =========== Liabilities and Stockholders' Equity Interest-bearing deposits (8) $ 1,028,303 8,863 3.42% FHLB advances 284,273 2,866 4.00% Other borrowings 1,652 27 6.48% Subordinated debt 5,000 93 7.38% Junior subordinated debentures 96,913 1,684 6.89% ----------- ------------ Total interest-bearing liabilities 1,416,141 13,533 3.79% ------------ Demand deposits 160,810 Other liabilities 9,904 ----------- Total average liabilities 1,586,855 Preferred stock equity 9,665 Common stock equity, net of cumulative other comprehensive loss 92,312 ----------- Stockholders' equity 101,977 ----------- Total liabilities and stockholders' equity $ 1,688,832 =========== Net interest spread (9) 4.07% =========== Net interest margin (10) $ 18,768 4.57% ============ =========== Return on Average Assets 1.05% Return on Average Tangible Assets (11) 1.05% Return on Average Common Equity 19.16% Return on Average Tangible Common Equity (12) 19.51% Net Charge-off's/Average Gross Loans 0.00% (6) The average loan balances include loans held for sale and non-accrual loans. (7) The yield for investment securities is based on historical amortized cost balances. (8) Includes savings, NOW, money market, and time certificate of deposit accounts. (9) Net interest spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. (10) Net interest margin is computed by dividing net interest income by total average earning assets. (11) Return on average tangible assets is computed by dividing net income applicable to common stock for the period by average tangible assets. Average tangible assets equals average total assets less average identifiable intangible assets and goodwill. (12) Return on average tangible common stockholders' equity is computed by dividing net income applicable to common stock 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) Year Ended December 31, ------------------------------------- 2006 ------------------------------------- Average Average Balance Interest Yield/Cost ----------- ------------ ----------- Assets Gross loans (6) $ 1,632,995 $ 146,183 8.95% Investment securities (7) 263,214 12,137 4.61% ----------- ------------ Total interest-earning assets 1,896,209 158,320 8.35% Other assets 95,470 Less: allowance for loan losses (16,390) ----------- Total average assets $ 1,975,289 =========== Liabilities and Stockholders' Equity Interest-bearing deposits (8) $ 1,341,767 57,858 4.31% FHLB advances 156,430 7,353 4.70% Other borrowings 14,799 1,119 7.45% Subordinated debt 5,000 423 8.34% Junior subordinated debentures 108,606 8,477 7.70% ----------- ------------ Total interest-bearing liabilities 1,626,602 75,230 4.62% ------------ Demand deposits 206,782 Other liabilities 19,867 ----------- Total average liabilities 1,853,251 Preferred stock equity 9,665 Common stock equity, net of cumulative other comprehensive loss 112,373 ----------- Stockholders' equity 122,038 ----------- Total liabilities and stockholders' equity $ 1,975,289 =========== Net interest spread (9) 3.73% =========== Net interest margin (10) $ 83,090 4.38% ============ =========== Return on Average Assets 1.00% Return on Average Tangible Assets (11) 1.01% Return on Average Common Equity 17.57% Return on Average Tangible Common Equity (12) 21.44% Net Charge-off's/Average Gross Loans 0.02% Year Ended December 31, ------------------------------------- 2005 ------------------------------------- Average Average Balance Interest Yield/Cost ----------- ------------ ----------- Assets Gross loans (6) $ 1,210,673 $ 98,303 8.12% Investment securities (7) 298,295 12,556 4.21% ----------- ------------ Total interest-earning assets 1,508,968 110,859 7.35% Other assets 66,376 Less: allowance for loan losses (13,737) ----------- Total average assets $ 1,561,607 =========== Liabilities and Stockholders' Equity Interest-bearing deposits (8) $ 934,362 28,008 3.00% FHLB advances 290,731 9,624 3.31% Other borrowings 447 28 6.26% Subordinated debt 5,000 333 6.66% Junior subordinated debentures 84,089 5,352 6.36% ----------- ------------ Total interest-bearing liabilities 1,314,629 43,345 3.30% ------------ Demand deposits 141,380 Other liabilities 9,122 ----------- Total average liabilities 1,465,131 Preferred stock equity 6,861 Common stock equity, net of cumulative other comprehensive loss 89,615 ----------- Stockholders' equity 96,476 ----------- Total liabilities and stockholders' equity $ 1,561,607 =========== Net interest spread (9) 4.05% =========== Net interest margin (10) $ 67,514 4.47% ============ =========== Return on Average Assets 1.21% Return on Average Tangible Assets (11) 1.21% Return on Average Common Equity 21.10% Return on Average Tangible Common Equity (12) 21.55% Net Charge-off's/Average Gross Loans 0.01% (6) The average loan balances include loans held for sale and non-accrual loans. (7) The yield for investment securities is based on historical amortized cost balances. (8) Includes savings, NOW, money market, and time certificate of deposit accounts. (9) Net interest spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. (10) Net interest margin is computed by dividing net interest income by total average earning assets. (11) Return on average tangible assets is computed by dividing net income applicable to common stock for the period by average tangible assets. Average tangible assets equals average total assets less average identifiable intangible assets and goodwill. (12) Return on average tangible common stockholders' equity is computed by dividing net income applicable to common stock 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 and Funding Liability Composition (unaudited) (dollars in thousands) December 31, September 30, June 30, 2006 (13) 2006 (13) 2006 ------------- ------------- ----------- Earning Assets Loans Commercial and industrial $ 122,257 $ 111,850 $ 71,774 Real estate construction: Single-family coastal 514,385 507,390 438,788 Single-family tract 152,060 132,966 125,806 Commercial 134,404 90,513 79,389 Real estate mortgage: Commercial 531,159 500,994 392,209 Multi-family residential 222,470 241,113 195,406 Land 112,418 104,082 107,666 All other residential 49,353 58,712 63,237 Consumer loans 65,914 51,785 36,136 All other loans (including overdrafts) 98 139 167 ------------- ------------- ----------- 1,904,518 1,799,544 1,510,578 Unearned premium on acquired loans 1,696 1,239 1,073 Deferred loan fees (3,970) (4,719) (3,939) ------------- ------------- ----------- Loans, net of unearned income 1,902,244 1,796,064 1,507,712 ------------- ------------- ----------- Loans held-for-sale - - 43,601 Investment securities 228,893 235,373 243,316 ------------- ------------- ----------- Total Earning Assets, excluding Allowance for Loan Losses $ 2,131,137 $ 2,031,437 $ 1,794,629 ============= ============= =========== Quarterly Unfunded Commitments $ 684,794 $ 709,201 $ 638,411 ============= ============= =========== Funding Liabilities Deposits Non-interest bearing $ 293,572 $ 254,534 $ 177,090 Money market 562,622 506,532 478,056 Savings and NOW 70,741 75,787 48,243 Time deposits 880,133 876,586 822,167 ------------- ------------- ----------- Total Deposits 1,807,068 1,713,439 1,525,556 ------------- ------------- -----------

FHLB advances 126,000 127,000 72,000 Other borrowings 40,000 35,500 - Subordinated debt 5,000 5,000 5,000 Junior subordinated debentures 115,470 115,470 115,470 ------------- ------------- ----------- Total Funding Liabilities $ 2,093,538 $ 1,996,409 $ 1,718,026 ============= ============= ===========

March 31, December 31, 2006 2005 ------------- ------------- Earning Assets Loans Commercial and industrial $ 65,690 $ 54,757 Real estate construction: Single-family coastal 456,832 392,183 Single-family tract 146,869 129,706 Commercial 56,047 61,392 Real estate mortgage: Commercial 371,085 321,821 Multi-family residential 246,501 246,597 Land 95,936 91,035 All other residential 60,782 64,426 Consumer loans 23,690 15,205 All other loans (including overdrafts) 366 207 ------------- ------------- 1,523,798 1,377,329 Unearned premium on acquired loans 743 484 Deferred loan fees (5,028) (4,714) ------------- ------------- Loans, net of unearned income 1,519,513 1,373,099 ------------- -------------

Loans held-for-sale - - Investment securities 254,139 267,849 ------------- ------------- Total Earning Assets, excluding Allowance for Loan Losses $ 1,773,652 $ 1,640,948 ============= =============

Quarterly Unfunded Commitments $ 621,856 $ 595,301 ============= =============

Funding Liabilities Deposits Non-interest bearing $ 173,975 $ 154,664 Money market 454,017 414,216 Savings and NOW 47,455 45,223 Time deposits 705,638 662,909 ------------- ------------- Total Deposits 1,381,085 1,277,012 ------------- -------------

FHLB advances 249,000 214,000 Other borrowings 10,000 10,000 Subordinated debt 5,000 5,000 Junior subordinated debentures 96,913 96,913 ------------- ------------- Total Funding Liabilities $ 1,741,998 $ 1,602,925 ============= =============

(13) Balances as of December 31, 2006 and September 30, 2006 include $118.8 million of loans acquired and $198.2 million of deposits assumed in the merger with Rancho Bank on July 31, 2006.

Contact: Shareholder Relations 951-271-4232 shareholderinfo@vineyardbank.com

SOURCE: Vineyard National Bancorp

Source: marketwire