VINEYARD NATIONAL BANCORP - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED SEPTEMBER 30, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File No. 0-20862

VINEYARD NATIONAL BANCORP

(Exact Name of Registrant as Specified in its Charter)


California (State or other jurisdiction of incorporation or organization)		33-0309110 (IRS employer identification number)

9590 Foothill Boulevard Rancho Cucamonga, California (Address of principal executive offices)		91730 (Zip Code)

Registrant’s telephone number, including area code: (909) 987-0177

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]

APPLICABLE TO CORPORATE ISSUER

Indicate the number of shares outstanding of the issuer’s common stock on the latest practicable date: 2,714,126 shares of common stock as of October 31, 2002.

Page 1 of 27

TABLE OF CONTENTS


PART I
	ITEM I. FINANCIAL STATEMENTS
		CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
		CONSOLIDATED STATEMENTS OF INCOME
		CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
		CONSOLIDATED STATEMENTS OF CASH FLOWS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 2. CHANGES IN SECURITIES
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 5. OTHER INFORMATION
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
EXHIBIT 99.1
EXHIBIT 99.2

VINEYARD NATIONAL BANCORP

FORM 10-Q INDEX
FOR THE PERIODS ENDED SEPTEMBER 30, 2002 AND 2001,
AND DECEMBER 31, 2001

PART I — FINANCIAL INFORMATION


ITEM 1.	Financial Statements
	Consolidated Statements of Financial Condition at September 30, 2002 and December 31, 2001	3
	Consolidated Statements of Income for the Nine Months and Three Months Ended September 30, 2002 and 2001	4
	Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2002 and 2001	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2001	6
	Notes to Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
ITEM 3.	Quantitative and Qualitative Disclosure About Market Risk	22
ITEM 4.	Controls and Procedures	23
	PART II — OTHER INFORMATION
ITEM 1.	Legal Proceedings	24
ITEM 2.	Changes in Securities	24
ITEM 3.	Defaults upon Senior Securities	24
ITEM 4.	Submission of Matters to a Vote of Security Holders	24
ITEM 5.	Other Information	24
ITEM 6.	Exhibits and Reports on Form 8-K	24
Signatures		25

FORWARD-LOOKING STATEMENTS

This report 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.

Page 2 of 27

PART I

ITEM I. FINANCIAL STATEMENTS

VINEYARD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
AT SEPTEMBER 30, 2002 AND DECEMBER 31, 2001
(Unaudited except for December 31, 2001)


					Dollars in Thousands

					September 30,			December 31,
					2002			2001

Assets
Cash and due from banks					$	11,187		$	8,430
Federal funds sold						—			6,280

				Total Cash and Cash Equivalents		11,187			14,710

Investment securities, Available-for-sale						68,915			30,550
Loans, net of unearned income						214,693			133,107
Loans held for sale						949			4,471
			Less: Allowance for possible loan losses			(2,685	)		(1,450	)

				Net Loans		212,957			136,128
Bank premises and equipment						5,495			5,388
Accrued interest						1,286			900
Other real estate owned						—			—
Federal Home Loan Bank and other stock, at cost						1,609			177
Other assets						3,474			3,433

				Total Assets	$	304,923		$	191,286

Liabilities and Stockholders’ Equity
Liabilities
	Deposits
			Demand deposits		$	55,393		$	45,951
			Savings and NOW deposits			32,657			31,277
			Money Market deposits			80,902			19,949
			Time deposits in denomination of $100,000 or more			40,803			27,093
			Other time deposits			43,138			35,111

				Total Deposits		252,893			159,381
Federal Home Loan Bank advances						20,000			3,000
Company obligated preferred securities of subsidiary trust holding floating rate junior subordinated deferrable interest debentures						12,000			12,000
Convertible debenture						—			3,750
Accrued employee salary and benefits						1,375			1,252
Accrued interest and other liabilities						2,181			1,448

				Total Liabilities		288,449			180,831
Stockholders’ Equity
		Contributed capital
				Common stock-authorized 15,000,000 shares, no par value; issued and outstanding 2,662,459 and 1,876,126 in 2002 and 2001, respectively		6,046			2,151
				Additional paid-in surplus		3,307			3,307
			Retained earnings			6,948			5,032
			Accumulated other comprehensive income			173			(35	)

				Total Stockholders’ Equity		16,474			10,455

				Total Liabilities and Stockholders’ Equity	$	304,923		$	191,286

See accompanying notes to financial statements.

Page 3 of 27

VINEYARD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(Unaudited)


					Dollars in Thousands

					Nine Months Ended September 30,						Three Months Ended September 30,

					2002			2001			2002			2001

Interest Income
	Interest and fees on loans				$	11,932		$	7,185		$	4,816		$	2,808
	Interest on Investment Securities Obligations of U.S. Government Agencies and Corporations					1,718			577			642			310
	Interest on other securities					43			8			34			1
	Interest on deposits					—			6			—			—
	Interest on Federal funds sold					73			571			34			125

			Total Interest Income			13,766			8,347			5,526			3,244

Interest Expense
	Interest on savings deposits					93			142			25			50
	Interest on NOW and money market deposits					1,009			408			481			160
	Interest on time deposits in denominations of $100,000 or more					955			668			354			294
	Interest on other time deposits					938			1,154			320			416
	Interest on borrowed funds					1,038			166			374			101

			Total Interest Expense			4,033			2,538			1,554			1,021

			Net Interest Income			9,733			5,809			3,972			2,223
Provision for Possible Loan Losses						(1,145	)		(415	)		(610	)		(115	)

			Net Interest Income After Provision for Possible Loan Losses			8,588			5,394			3,362			2,108

Other Income
	Fees and service charges					1,105			1,403			365			506
	Gain on Sale of Investment Securities					745			—			566			—
	Litigation Recovery					540			—			360			—
	Other income					150			19			48			4

				Total Other Income		2,540			1,422			1,339			510

Other Expense
		Salaries and employee benefits				3,693			3,129			1,418			1,085
		Occupancy expense of premises				626			490			236			180
		Furniture and equipment				570			435			211			154
		Debenture conversion				274			—			274			—
		Other expense				2,739			1,998			1,170			705

						7,902			6,052			3,309			2,124

Income Before Income Taxes						3,226			764			1,392			494
Income Tax Provision/(Benefit)						1,310			(154	)		584			207

Net Income					$	1,916		$	918		$	808		$	287

Basic Earnings Per Share					$	0.96		$	0.49		$	0.37		$	0.15

Diluted Earnings Per Share					$	0.74		$	0.44		$	0.35		$	0.13

See accompanying notes to financial statements.

Page 4 of 27

VINEYARD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(Unaudited)


			Dollars in Thousands

											Accumulated
			Actual Number of				Additional				Other
			Shares		Common		Paid-in		Retained		Comprehensive
			Outstanding		Stock		Capital		Earnings		Income		Total

Balance January 1, 2001				1,864,826	$	2,112	$	3,307	$	3,876	$	—	$	9,295
Stock Options Exercised				6,300		18								18
	Comprehensive income
		Net Income								918				918
		Unrealized security holding gains (net of $64 tax)										90		90

		Total other comprehensive income												90
	Total Comprehensive income													1,008

Balance, September 30, 2001				1,871,126	$	2,130	$	3,307	$	4,794	$	90	$	10,321



												Accumulated
			Actual Number of					Additional				Other
			Shares			Common		Paid-in		Retained		Comprehensive
			Outstanding			Stock		Capital		Earnings		Income			Total

Balance January 1, 2002				1,876,126		$	2,151	$	3,307	$	5,032	$	(35	)	$	10,455
	Stock options exercised			36,333			145									145
	Convertible debenture option			750,000			3,750									3,750
		Comprehensive income
		Net Income									1,916					1,916
		Unrealized security holding gains (net of $464 tax)			<

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