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 MARCH 31, 2003

[ ] 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 [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]

APPLICABLE TO CORPORATE ISSUER

Indicate the number of shares outstanding of the issuer’s common stock on the latest practicable date: 2,795,328 shares of common stock as of May 7, 2003.

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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
	ITEM 4. CONTROLS AND PROCEDURES
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
CERTIFICATION
CERTIFICATION
EXHIBIT 99.1

VINEYARD NATIONAL BANCORP
FORM 10-Q INDEX
FOR THE PERIODS ENDED MARCH 31, 2003 AND 2002,
AND DECEMBER 31, 2002


	PART I – FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Consolidated Statements of Financial Condition
	at March 31, 2003 and December 31, 2002	3
	Consolidated Statements of Income
	for the Three Months Ended March 31, 2003 and 2002	4
	Consolidated Statements of Changes in Stockholders’ Equity
	for the Three Months Ended March 31, 2003 and 2002	5
	Consolidated Statements of Cash Flows
	for the Three Months Ended March 31, 2003 and 2002	6
	Notes to Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	23
ITEM 4.	Controls and Procedures	25
	PART II – OTHER INFORMATION
ITEM 1.	Legal Proceedings	26
ITEM 2.	Changes in Securities	26
ITEM 3.	Defaults upon Senior Securities	26
ITEM 4.	Submission of Matters to a Vote of Security Holders	26
ITEM 5.	Other Information	26
ITEM 6.	Exhibits and Reports on Form 8-K	26
Signatures		27
	Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002	28
	Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002	29
Exhibits
Exhibit 99.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the
	Sarbanes-Oxley Act of 2002	30

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.

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PART I

ITEM I. FINANCIAL STATEMENTS

VINEYARD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
AT MARCH 31, 2003 AND DECEMBER 31, 2002
(Unaudited except for December 31, 2002)


					Dollars in Thousands
					March 31,			December 31,
Assets					2003			2002

Cash and due from banks					$	8,882		$	17,533
Federal funds sold						—			15,829

				Total Cash and Cash Equivalents		8,882			33,362

Investment securities, available-for-sale						134,456			87,553
Loans, net of unearned income						306,548			251,139
Loans held for sale						907			2,112
			Less: Allowance for possible loan losses			(3,513	)		(3,003	)

				Net Loans		303,942			250,248
Bank premises and equipment, net						5,525			5,600
Accrued interest						1,928			1,487
Federal Home Loan Bank and other stock, at cost						3,770			2,270
Deferred income tax asset						2,516			2,328
Other assets						3,141			2,454

				Total Assets	$	464,160		$	385,302

				Liabilities and Stockholders’ Equity
Liabilities
	Deposits
			Non-interest bearing		$	63,025		$	61,906
			Interest-bearing			277,148			225,606

				Total Deposits		340,173			287,512
Federal Home Loan Bank advances						70,000			45,000
Other borrowings						6,800			5,000
Subordinated debentures						5,000			5,000
Company obligated preferred securities of subsidiary trust holding floating rate junior subordinated deferrable interest debentures						17,000			17,000
Accrued interest and other liabilities						4,670			5,832

				Total Liabilities		443,643			365,344
Stockholders’ Equity
		Contributed capital
				Perpetual preferred stock – no par value, authorized 10,000,000 Shares, issued and outstanding, 50 shares in 2003 and 2002		2,450			2,450
				Common stock-authorized 25,000,000 shares, no par value; issued and outstanding 2,842,568 and 2,849,680 in 2003 and 2002, respectively		7,693			6,052
			Additional paid-in capital			3,307			3,307
			Stock dividends to be distributed			—			2,026
			Retained earnings			7,218			6,014
			Accumulated other comprehensive (loss) income			(151	)		109

				Total Stockholders’ Equity		20,517			19,958

				Total Liabilities and Stockholders’ Equity	$	464,160		$	385,302

See accompanying notes to financial statements.

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VINEYARD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(Unaudited)


				Dollars in Thousands
				Three Months Ended March 31,

				2003			2002

Interest Income
	Interest and fees on loans			$	5,286		$	3,310
	Interest on investment securities				1,321			452
	Interest on Federal funds sold				23			10

			Total Interest Income		6,630			3,772

Interest Expense
	Interest on savings deposits				16			35
	Interest on NOW and money market deposits				702			176
	Interest on time deposits in denominations of $100,000 or more				424			299
	Interest on other time deposits				379			323
	Interest on other borrowings				563			318

			Total Interest Expense		2,084			1,151

			Net Interest Income		4,546			2,621
Provision for Possible Loan Losses					(500	)		(200	)

			Net Interest Income After Provision for Possible Loan Losses		4,046			2,421

Non-Interest Income
	Fees and service charges				496			387
	Gain on sale of SBA loans				178			—
	Net gain on sale of investment securities				599			77
	Other income				54			64

			Total Non-Interest Income		1,327			528

Non-Interest Expense
		Salaries and employee benefits			1,748			1,321
		Occupancy expense of premises			248			192
		Furniture and equipment			194			148
		Other			1,062			708

			Total Non-Interest Expense		3,252			2,369

Income Before Income Taxes					2,121			580
Income Tax Provision					867			226

Net Income				$	1,254		$	354

Basic Earnings Per Share				$	0.42		$	0.18

Diluted Earnings Per Share				$	0.39		$	0.14

See accompanying notes to financial statements.

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VINEYARD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(Unaudited)


			Dollars in Thousands

					Common Stock							Stock						Accumulated
			Perpetual						Additional		Dividend							Other
			Preferred		Number of				Paid-in		To Be		Comprehensive			Retained		Comprehensive
			Stock		Shares		Amount		Capital		Distributed		Income			Earnings		Income			Total

Balance December 31, 2001			$	—		1,876,126	$	2,151	$	3,307	$	—				$	5,032	$	(35	)	$	10,455
Stock options exercised						9,666		40														40
Conversion of convertible debentures						20,000		100														100
	Comprehensive income
		Net income											$	354			354					354
		Unrealized security holding losses (net of $157 tax)												(217	)				(217	)		(217	)
		Less reclassification adjustment for realized gains (net of $32 tax)												45					45			45

		Total comprehensive income											$	182


Balance, March 31, 2002			$	—		1,905,792	$	2,291	$	3,307	$	—				$	5,386	$	(207	)	$	10,777


			Common Stock								Stock						Accumulated
	Perpetual								Additional		Dividend						Other
	Preferred		Number of						Paid-in		To Be			Comprehensive	Retained		Comprehensive
	Stock		Shares			Amount			Capital		Distributed			Income	Earnings		Income		Total

Balance December 31, 2002	$	2,450		2,849,680		$	6,052		$	3,307	$	2,026			$	6,014	$	109	$	19,958
Stock options exercised				22,250			95													95
Purchase of treasury stock				(29,362	)		(478	)												(478	)
Stock dividends distributed							2,024					(2,024	)							—
Cash paid for fractional shares for stock dividend distribution												(2	)

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