SOURCE:
Vineyard National Bancorp
2008-08-06 08:30:00
Vineyard National Bancorp Reports Results of Operations for the Second Quarter 2008
CORONA, CA–(EMWNews – August 6, 2008) – Vineyard National Bancorp (the “company”)
(
other subsidiaries today reported a loss for the quarter ended June 30,
2008 of $62.5 million, or $6.46 per common share, compared with net
earnings of $6.0 million, or $0.53 per diluted common share, for the
quarter ended June 30, 2007. The net loss for the second quarter of 2008
was due primarily to $40.5 million of provision for loan losses,
principally associated with Vineyard’s land and single family residential
(“SFR”) tract construction loans originated between 2005 and 2007, and a
tax provision of $20.3 million resulting primarily from the creation of a
valuation allowance on the company’s deferred tax asset.
James LeSieur, interim chief executive officer, stated, “Despite the
current economic environment and additional challenges arising in the
second quarter, Vineyard continues to make significant strides toward the
resolution of our asset quality issues and the implementation of other risk
mitigation measures. Payoffs of our luxury home construction loans, loan
sales and the sale of other real estate owned properties have made positive
contributions. We continue to work diligently to maintain core deposit
relationships and have been successful in attracting new deposits.
Management remains committed to executing the strategies necessary to
reduce risk, fulfill the requirements established with our regulators, and
meet our internal objectives. Therefore, although there are still
significant challenges, Vineyard is starting to see positive results from
the strategies that have been put in place.”
Liquidity
Effective April 21, 2008, the Federal Home Loan Bank (“FHLB”) reduced
Vineyard’s borrowing capacity from 40% to 30% of Vineyard’s total assets.
However, the reduction had limited impact as Vineyard’s borrowing
availability was already limited to the amount of eligible collateral that
can be pledged to secure that borrowing facility. At June 30, 2008, based
on its eligible pledged loan and investment collateral, that availability
was $289.4 million of which $155.0 million was outstanding. Therefore,
Vineyard had a remaining borrowing availability of $134.4 million.
On July 24, 2008, Vineyard borrowed $126.0 million from the FHLB,
consisting of four $31.5 million advances with terms ranging from 9 months
to 1 year. As a result of these term borrowings, Vineyard had a remaining
borrowing availability of $2.2 million available against its loan and
investment collateral pledged at the FHLB. The proceeds from the FHLB
advances were invested in federal funds sold for liquidity needs. At July
24, 2008 Vineyard had an aggregate of $178.0 million invested in federal
funds sold.
On August 1, 2008, Vineyard entered into an intercreditor agreement with
the FHLB and Federal Reserve Bank of San Francisco (“FRB”) establishing a
borrowing facility under the FRB Discount Window program whereby certain
eligible loans pledged to the FRB, and approved by the FHLB, may be used to
support any advances from the FRB Discount Window.
Vineyard currently has no unsecured correspondent banking facilities with
borrowing availability.
As a result of the issuance of the Consent Order by the Office of the
Comptroller of the Currency (“OCC”) on July 22, 2008, Vineyard will no
longer be able to accept, renew or rollover brokered deposits unless and
until such time as we receive a waiver from the FDIC. Vineyard has
requested a waiver from the FDIC, but there can be no assurance that such a
waiver will be granted, or granted on the terms requested.
2008 Operating Objectives
As disclosed previously, the company has established the following five
primary objectives as a basis to reduce risk, refocus on core operations
and reposition the company to achieve the long-term success of the
franchise:
1) Reduce the Overall Risk Profile of the company. This objective includes the significant reduction of SFR tract construction lending and related land development projects, enhanced borrower sponsorship requirements, increased and expanded core deposit growth, business and commercial real estate lending in supportive sub-markets, and enhanced balance sheet management; 2) Loan Portfolio Management. In order to produce a base of stabilized long-term earnings, the company will seek to proactively rebalance the existing loan portfolio and diversify new business generation to reduce its risk profile, meet its targeted concentration ranges within sub-markets and sub-portfolios, and maintain an overall portfolio yield consistent with quality and sustainable returns; 3) Liquidity Enhancement and Funding Cost Reduction. The company will seek to reduce its funding costs by an intensified focus on lower cost core deposits, cash management driven business relationships, the effective repricing of its time deposit portfolio in a decreasing interest rate environment, and reduction of its reliance on higher costing liabilities; 4) Corporate Reallocation and Reorganization. To improve its operating efficiencies, the company will continually review its resource allocation to ensure the optimum allocation of talent among functions. The company seeks to continue to deploy and redeploy resources, both personnel and other operating costs, toward achievement of our objectives; and 5) Protection and Preservation of Capital. The company will focus on protecting and preserving capital. Income from Vineyard, in the long term, is expected to be a contributor to increasing capital and accretive to the company's risk based capital ratios. In light of current economic conditions and to address the deterioration in the loan portfolio, the company has significantly curtailed new loan generation, which combined with loan sales and repayments may make additional capital available. In addition, in order to address the financial impact of the abrupt and severe decline in real estate values and the potential continuing deterioration in the loan portfolio, the company will also pursue strategic alternatives, which may include a significant capital raise, to strengthen its capital.
Balance Sheet
As part of the operating objectives described above, the company
implemented actions to manage its loan production levels resulting in a net
contraction of its balance sheet during the first half of 2008. The
company compressed its balance sheet by $118.8 million during the six
months ended June 30, 2008, or 5%, from $2.5 billion at December 31, 2007
to $2.4 billion at June 30, 2008. During the six months ended June 30,
2008, Vineyard decreased its loan balance, including loans held-for-sale,
by $169.8 million. This loan balance decrease was comprised primarily of
$413.3 million in loan payoffs and paydowns, $64.1 million of net
charge-offs and $31.0 million of net loan sales, offset by $338.2 million
in disbursements on new and existing loan commitments.
Following its exit from the tract lending business, the company continues
to work to reduce its existing portfolio exposure in the tract construction
market. At June 30, 2008, Vineyard’s outstanding tract construction loans,
including those SFR tract loans held for sale, totaled $105.3 million, a
decrease of $24.7 million, or 19.0% since March 31, 2008. This second
quarter 2008 decrease was primarily related to the charge-off of $21.5
million of tract construction loans, and $12.1 million of principal
paydowns and payoffs, net of $7.9 million of disbursements on existing
loans. Unfunded commitments for the tract construction portfolio totaled
$15.3 million at June 30, 2008, a decrease of $17.1 million, or 52.7%, from
March 31, 2008.
The company had a net increase of $146.4 million in deposits during the
second quarter of 2008, related primarily to an increase in time deposit
accounts, of which $266.3 million came from brokered CDs. There was also a
$5.0 million increase in exchange balances, which are 1031 exchange
balances associated with 1031 Exchange Advantage, Inc. and 1031 Funding &
Reverse Corp. (collectively, the “exchange companies”). As a result of the
increase in funding deposits and loan paydowns, the company decreased its
FHLB borrowings from $227.0 million at March 31, 2008 to $155.0 million at
June 30, 2008.
Asset Quality
Non-accrual loans
During the second quarter of 2008, non-accrual loans increased to $192.6
million at June 30, 2008 from its $105.2 million level at March 31, 2008.
The increase is principally associated with loans originated between 2005
and 2007. Of the balance of non-accrual loans at June 30, 2008, $12.3
million relates to commercial real estate construction loans, $39.7 million
relates to land loans, $56.1 million relates to luxury construction loans
and $73.5 relates to SFR tract construction loans. The company had a loss
of $3.4 million of interest income associated with new non-accrual loans in
the second quarter of 2008. Loans are placed on non-accrual status if
there is reasonable doubt as to the collectability of principal and
interest in accordance with the original credit terms.
(Dollars in Thousands) June 30, 2008 March 31, 2008
------------------------- -------------------------
Non-accrual Specific Non-accrual Specific
Loan Type Balance Reserve Balance Reserve
------------ ------------ ------------ ------------
Construction and Land:
Single-family tract $ 73,485 $ 2,050 $ 87,042 $ 2,227
Single-family luxury 56,140 3,456 4,523 46
CRE Construction 12,321 - - -
Land 39,660 9,698 6,205 -
Commercial and
residential real
estate 4,642 908 4,965 1,133
SBA 1,569 - 1,533 -
Other 4,832 2,000 903 -
------------ ------------ ------------ ------------
Total $ 192,649 $ 18,113 $ 105,171 $ 3,406
============ ============ ============ ============
Charged-off loans
During the quarter ended June 30, 2008, the company recorded $36.5 million
in net charge-offs, which equates to 1.79% of average gross loans for the
quarter. Of the charge-offs, $21.5 million relate to tract construction
loans and $13.1 million relate to land loans.
Other Real Estate Owned
During the second quarter of 2008, other real estate owned (“OREO”), which
consists of properties obtained through foreclosure, decreased from $12.6
million to $6.2 million.
The decrease is due primarily to the tract land project, which encompassed
one hundred finished residential lots in a 1,788 unit planned development
project within the Temecula Valley region of southern California, sold
during the second quarter of 2008 at its then book value of $6.1 million
resulting in no further loss.
The balance of OREO at June 30, 2008 includes $1.1 million in a SFR tract
construction loan and $0.4 million in a SBA loan, which was transferred to
OREO at the end of second quarter of 2008, and $4.6 million in a SFR
tract construction loan which was transferred to OREO in the fourth quarter
of 2007. That OREO was written down further by $0.6 million during the
second quarter of 2008.
The company is actively pursuing disposition of the foreclosed assets.
Deferred Tax Asset
Deferred tax assets and liabilities are recognized for future tax
consequences of the difference between the carrying amount of assets and
liabilities and their respective tax bases, as well as operating loss and
tax credit carry forwards. A valuation allowance is established against
deferred tax assets when, in the judgment of management, it is more likely
than not that some portion or all of the deferred tax assets will not be
realized.
During the second quarter of 2008, the company provided a full valuation
allowance against its deferred tax asset, due to uncertainty related to its
eventual realizability. The ultimate realizability of the deferred tax
asset is dependent upon the Company’s ability to derive benefits for the
tax deductions inherent in the deferred tax asset by getting refunds for
taxes paid in the past or by reducing future tax obligations. Accordingly,
management’s judgments regarding the nature of future reversals of existing
temporary differences, future taxable income and available tax planning
strategies impact the degree to which a valuation allowance is determined
to be necessary. These judgments are based in part on factors that may or
may not be entirely within the control of management, such as judgments
regarding future economic conditions and changes within the business
environment in which we operate. Depending on how these factors change in
the future, management’s judgment regarding the need for a valuation
allowance against its deferred tax asset could change.
Current Tax Receivable
As of June 30, 2008, we had a current net income tax receivable of $23.8
million primarily reflecting the impact of utilizing net operating losses
generated during the current year to reduce our tax liabilities in prior
tax years. Any remaining net operating losses generated in the current
year, which would expire in 2028, remain available to offset future taxable
income. The utilization of these net operating loss carryforwards to
offset future taxable income could have a positive impact on our future net
income by reducing the amount of income taxes recognized in our
consolidated statements of operations.
Extension of Maturity Date and Subsequent Default on Line of Credit
As previously disclosed, the company and First Tennessee Bank, National
Association (“First Tennessee”) entered into the Fourth Modification and
Covenant Waiver Agreement (the “Agreement”) on July 1, 2008 which, among
other things, extended the maturity date of the company’s line of credit
from First Tennessee from June 30, 2008 to August 29, 2008 at an annual
interest rate of LIBOR plus 3.50%, and granted and/or extended the waiver
by First Tennessee of certain financial and other covenant failures of the
company through August 29, 2008. The outstanding balance of the line of
credit, which is secured by 100% of Vineyard’s common stock, was $48.3
million at June 30, 2008. The company paid First Tennessee a lender fee
equal to 0.25% of the outstanding balance of the line of credit, or $0.1
million, in connection with the Agreement.
Also as previously disclosed, the company notified First Tennessee on July
24, 2008 of, and requested a waiver with respect to, an event of default
under the line of credit which occurred by virtue of the Consent Order that
was issued by the OCC on July 22, 2008. As a result, unless First
Tennessee subsequently waives this event of default, First Tennessee will
be entitled to accelerate the maturity date of the line of credit and
otherwise exercise its rights as a secured party against the collateral to
collect, enforce or satisfy the obligations under the line of credit.
Results of Operations
For the quarter ended June 30, 2008, gross loan interest income was $34.9
million, a decrease of $9.6 million, or 22% as compared to the same period
in 2007. The effective yield of the loan portfolio in the second quarter of
2008 was 6.9%, as compared to 8.8% for the same period in 2007. The
increase in non-accrual loans negatively impacted our gross interest income
and loan yield due to $3.4 million of interest income lost associated with
new non-accrual loans in the second quarter. Had all existing non-accrual
loans performed during the second quarter of 2008, interest income would
have been greater by $9.8 million.
Total net revenues (net interest income plus other operating income) for
the quarter ended June 30, 2008 were $17.8 million, a decrease of $7.0
million, or 28%, as compared to the same period in 2007.
These results of operations produced a net interest margin of 3.14% for the
second quarter of 2008, as compared to 4.13% for the same period in 2007
and 3.47% for the first quarter of 2008.
Total operating expenses for the quarter-ended June 30, 2008 were $19.5
million, as compared to $14.2 million for the same period in 2007. The
increase from 2007 is primarily attributable to additional professional
services fees of approximately $3.5 million which include audit and legal
expenses and approximately $2.0 million in the write down of assets
including Goodwill.
Capital Resources
At June 30, 2008, stockholders’ equity of the company totaled $29.5
million, a decrease of $83.5 million, or 74% as compared to December 31,
2007. In addition, the company’s Tier 1 Risk-Based and Leverage capital
ratios of 1.52% and 1.43%, respectively, were below the minimum regulatory
ratio requirement of 4.0%. Management is currently addressing capital
concerns at the company and is actively pursuing strategic alternatives for
raising capital. The company also expects to enter into an agreement with
the FRB to address the capital needs of the company as well as other risk
management and operational matters.
Despite the impact of the additional provision and charge-offs, Vineyard
has $186.4 million in common equity and was mathematically considered to be
“well capitalized” at June 30, 2008. At June 30, 2008, Vineyard’s Tier 1
Risk-Based and Leverage capital ratios were 8.76% and 8.28%, respectively,
as compared to the “well capitalized” minimum ratios of 6.0% and 5.0%,
respectively. It is intended that the continued effort to strategically
contract assets will assist in bolstering Vineyard’s capital.
By virtue of the Consent Order that was issued by the OCC on July 22, 2008,
Vineyard is now classified as “adequately capitalized” notwithstanding the
fact that its actual capital ratios at June 30, 2008 met the criteria for
being considered “well capitalized.”
Payment of Dividends
The company’s ability to pay cash dividends is limited by California law.
With certain exceptions, a California corporation may not pay a dividend to
its shareholders unless (i) its retained earnings equal at least the amount
of the proposed dividend, or (ii) after giving effect to the dividend, the
corporation’s assets would equal at least 1.25 times its liabilities and,
for corporations with classified balance sheets, the current assets of the
corporation would be at least equal to its current liabilities or, if the
average of the earnings of the corporation before taxes on income and
before interest expense for the two preceding fiscal years was less than
the average of the interest expense of the corporation for those fiscal
years, at least equal to 1.25 times its current liabilities.
At June 30, 2008, the company had an accumulated deficit of $81.2 million
and did not otherwise satisfy the minimum asset to liability ratios for
paying dividends under California law. As a result, the company is legally
prohibited from paying dividends on both its common stock and preferred
stock. The company expects that it will be legally prohibited from paying
dividends on both its common stock and preferred stock for the foreseeable
future.
In addition, the company’s primary regulator, the FRB, on May 16, 2008,
advised the company that in light of the company’s obligation to serve as a
source of financial and managerial strength to Vineyard, the company may
not make payments to third parties, without prior approval from the FRB,
including, without limitation, dividend payments to the holders of its
common stock and preferred stock.
About Vineyard National Bancorp
The company is a $2.4 billion bank holding company headquartered in Corona
and the parent company of Vineyard and the exchange companies. Vineyard,
also headquartered in Corona, operates through sixteen full-service banking
centers and four regional financial centers in the counties of Los Angeles,
Marin, Monterey, Orange, Riverside, San Bernardino, San Diego, Santa Clara
and Ventura, Calif. The exchange companies are headquartered in Encinitas,
Calif. The company’s common stock is traded on the NASDAQ Global Market
System under the symbol “VNBC.” For additional information on the company
visit www.vnbcstock.com or for additional information on Vineyard and to
access internet banking, please visit www.vineyardbank.com. For additional
information on the exchange companies, please visit
www.1031exchangeadvantage.com.
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 SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
(unaudited)
June 30, June 30,
2008 2007 $ Change % Change
----------- ----------- ----------- --------
Assets
Loans, net of unearned
income $ 1,892,947 $ 2,031,872 $ (138,925) -7%
Less: Allowance for
loan losses (52,175) (21,255) (30,920) 145%
----------- ----------- ----------- --------
Net Loans 1,840,772 2,010,617 (169,845) -8%
Loans held-for-sale 64,801 296 64,505 21792%
Investment securities 150,718 223,793 (73,075) -33%
Federal funds sold 178,000 23,000 155,000 674%
----------- ----------- ----------- --------
Total Earnings
Assets 2,234,291 2,257,706 (178,415) -8%
----------- ----------- ----------- --------
Cash and due from banks 27,271 42,526 (15,255) -36%
Premises and equipment,
net 17,225 18,861 (1,636) -9%
Income tax receivable,
net 23,823 (1,582) 25,405 -1606%
Deferred tax asset - 17,056 (17,056) -100%
Other real estate owned 6,175 11,653 (5,478) -47%
Goodwill and other
intangibles 1,553 42,884 (41,331) -96%
Other assets 54,146 23,932 30,214 126%
----------- ----------- ----------- --------
Total Assets $ 2,364,484 $ 2,413,036 $ (48,552) -2%
=========== =========== =========== ========
Liabilities and
Stockholders' Equity
Liabilities
Deposits
Non-interest bearing $ 233,704 $ 301,281 $ (67,577) -22%
Interest-bearing 1,711,591 1,561,211 150,380 10%
----------- ----------- ----------- --------
Total Deposits 1,945,295 1,862,492 82,803 4%
Exchange balances 23,125 - 23,125 100%
Federal Home Loan Bank
advances 155,000 210,000 (55,000) -26%
Other borrowings 48,300 26,000 22,300 86%
Subordinated debt 5,000 5,000 - 0%
Junior subordinated
debentures 115,470 115,470 - 0%
Other liabilities 42,779 22,037 20,742 94%
----------- ----------- ----------- --------
Total Liabilities 2,334,969 2,240,999 93,970 4%
----------- ----------- ----------- --------
Stockholders' Equity
Common stock equity 90,805 102,945 (12,140) -12%
Preferred stock equity 31,615 31,694 (79) 0%
Retained (deficit) /
earnings (82,573) 49,123 (131,696) -268%
Unallocated ESOP shares (4,873) (5,487) 614 -11%
Cumulative other
comprehensive loss (5,459) (6,238) 779 -12%
----------- ----------- ----------- --------
Total
Stockholders'
Equity 29,515 172,037 (142,522) -83%
----------- ----------- ----------- --------
Total
Liabilities
and
Stockholders'
Equity $ 2,364,484 $ 2,413,036 $ (48,552) -2%
=========== =========== =========== ========
Total non-performing
loans/Gross loans (1) 11.64% 0.60%
Number of shares of common
stock outstanding (2) 9,669,661 10,671,690
(1) Total non-performing loans include non-accrual loans, renegotiated
loans and accruing loans that are more than 90 days past due. For
purposes of this calculation, gross loans include loans held-for-sale.
(2) Number of shares of common stock outstanding at June 30, 2008 and June
30, 2007 excludes 217,930 and 245,368 unreleased and unallocated ESOP
shares, respectively.
VINEYARD NATIONAL BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
(unaudited)
June 30, December
2008 31, 2007 $ Change % Change
----------- ----------- ----------- --------
Assets
Loans, net of unearned
income $ 1,892,947 $ 2,008,071 $ (115,124) -6%
Less: Allowance for
loan losses (52,175) (48,849) (3,326) 7%
----------- ----------- ----------- --------
Net Loans 1,840,772 1,959,222 (118,450) -6%
Loans held-for-sale 64,801 119,427 (54,626) -46%
Investment securities 150,718 202,387 (51,669) -26%
Federal funds sold 178,000 36,000 142,000 394%
----------- ----------- ----------- --------
Total Earnings
Assets 2,234,291 2,317,036 (224,745) -10%
----------- ----------- ----------- --------
Cash and due from banks 27,271 47,537 (20,266) -43%
Premises and equipment,
net 17,225 18,326 (1,101) -6%
Income tax receivable,
net 23,823 3,208 20,615 643%
Deferred tax asset - 28,357 (28,357) -100%
Other real estate owned 6,175 17,375 (11,200) -64%
Goodwill and other
intangibles 1,553 4,637 (3,084) -67%
Other assets 54,146 46,803 7,343 16%
----------- ----------- ----------- --------
Total Assets $ 2,364,484 $ 2,483,279 $ (118,795) -5%
=========== =========== =========== ========
Liabilities and
Stockholders' Equity
Liabilities
Deposits
Non-interest bearing $ 233,704 $ 316,905 $ (83,201) -26%
Interest-bearing 1,711,591 1,618,747 92,844 6%
----------- ----------- ----------- --------
Total Deposits 1,945,295 1,935,652 9,643 0%
Exchange balances 23,125 47,515 (24,390) -51%
Federal Home Loan Bank
advances 155,000 175,000 (20,000) -11%
Other borrowings 48,300 45,250 3,050 7%
Subordinated debt 5,000 5,000 - 0%
Junior subordinated
debentures 115,470 115,470 - 0%
Other liabilities 42,779 46,367 (3,588) -8%
----------- ----------- ----------- --------
Total Liabilities 2,334,969 2,370,254 (35,285) -1%
----------- ----------- ----------- --------
Stockholders' Equity
Common stock equity 90,805 94,499 (3,694) -4%
Preferred stock equity 31,615 31,615 - 0%
Retained deficit (82,573) (5,372) (77,201) 1437%
Unallocated ESOP shares (4,873) (5,168) 295 -6%
Cumulative other
comprehensive loss (5,459) (2,549) (2,910) 114%
----------- ----------- ----------- --------
Total
Stockholders'
Equity 29,515 113,025 (83,510) -74%
----------- ----------- ----------- --------
Total
Liabilities
and
Stockholders'
Equity $ 2,364,484 $ 2,483,279 $ (118,795) -5%
=========== =========== =========== ========
Total non-performing
loans/Gross loans (1) 11.64% 3.55%
Number of shares of common
stock outstanding (2) 9,669,661 10,053,994
(1) Total non-performing loans include non-accrual loans, renegotiated
loans and accruing loans that are more than 90 days past due. For
purposes of this calculation, gross loans include loans held-for-sale.
(2) Number of shares of common stock outstanding at June 30, 2008 and
December 31, 2007 excludes 217,930 and 231,781 unreleased and
unallocated ESOP shares, respectively.
VINEYARD NATIONAL BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
(unaudited)
Three Months Ended
June 30,
----------------------
2008 2007 $ Change % Change
---------- ---------- ---------- ----------
Interest Income
Loans, including fees $ 34,945 $ 44,518 $ (9,573) -22%
Investment securities 2,395 2,967 (572) -19%
---------- ---------- ---------- ----------
Total Interest Income 37,340 47,485 (10,145) -21%
Interest Expense
Deposits 15,332 17,181 (1,849) -11%
Borrowings and debt
obligations 4,753 6,934 (2,181) -31%
---------- ---------- ---------- ----------
Total Interest
Expense 20,085 24,115 (4,030) -17%
Net Interest Income 17,255 23,370 (6,115) -26%
Provision for loan losses 40,500 500 40,000 8000%
---------- ---------- ---------- ----------
Net interest (loss) /
income after provision
for loan losses (23,245) 22,870 (46,115) -202%
Other Income
Fees and service charges 424 416 8 2%
Gain on sale of SBA
loans and SBA broker
fee income 4 581 (577) -99%
Gain on sale of non-SBA
loans 48 337 (289) -86%
Other income 70 128 (58) -45%
---------- ---------- ---------- ----------
Total Other Income 546 1,462 (916) -63%
Other Expenses
Salaries and benefits 6,593 7,856 (1,263) -16%
Occupancy and equipment 2,605 2,475 130 5%
Legal services 1,792 286 1,506 527%
Audit services 674 186 488 262%
Other professional
services 1,822 360 1,462 406%
Office supplies, postage
and telephone 534 572 (38) -7%
Business development 351 594 (243) -41%
Insurance and
assessments 640 413 227 55%
Loan related 1,171 267 904 339%
Write down of assets 1,957 - 1,957 100%
Other expense 1,380 1,165 215 18%
---------- ---------- ---------- ----------
Total Other
Expenses 19,519 14,174 5,345 38%
(Loss) / earnings before
income taxes (42,218) 10,158 (52,376) -516%
Income tax provision 20,270 4,156 16,114 388%
---------- ---------- ---------- ----------
Net (Loss) /
Earnings $ (62,488) $ 6,002 $ (68,490) -1141%
========== ========== ========== ==========
Preferred stock dividend $ - $ 231 $ (231) -100%
Weighted average shares
outstanding used in
(loss) / earnings per share
calculation
Basic 9,666,546 10,670,850
Diluted (3) 9,666,546 10,938,741
(Loss) / Earnings per
common share
Basic $ (6.46) $ 0.54 $ (7.00) -1296%
Diluted (3) $ (6.46) $ 0.53 $ (6.99) -1319%
Efficiency Ratio (4) 110% 57%
(3) In a net loss scenario, diluted loss per share equals basic loss per
share.
(4) The efficiency ratio is calculated by dividing total operating expenses
by net interest income and total other income.
VINEYARD NATIONAL BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
(unaudited)
Six Months Ended
June 30,
----------------------
2008 2007 $ Change % Change
---------- ---------- ---------- ----------
Interest Income
Loans, including fees $ 75,418 $ 86,729 $ (11,311) -13%
Investment securities 4,074 5,905 (1,831) -31%
---------- ---------- ---------- ----------
Total Interest Income 79,492 92,634 (13,142) -14%
Interest Expense
Deposits 32,439 34,254 (1,815) -5%
Borrowings and debt
obligations 9,916 12,517 (2,601) -21%
---------- ---------- ---------- ----------
Total Interest Expense 42,355 46,771 (4,416) -9%
Net Interest Income 37,137 45,863 (8,726) -19%
Provision for loan losses 67,400 1,700 65,700 3865%
---------- ---------- ---------- ----------
Net interest (loss) /
income after provision
for loan losses (30,263) 44,163 (74,426) -169%
Other Income
Fees and service charges 772 899 (127) -14%
Gain on sale of SBA loans
and SBA broker fee income 174 1,181 (1,007) -85%
(Loss) / gain on sale of
securities and non-SBA
loans (83) 337 (420) -125%
Other income 144 247 (103) -42%
---------- ---------- ---------- ----------
Total Other Income 1,007 2,664 (1,657) -62%
Other Expenses
Salaries and benefits 14,982 15,450 (468) -3%
Occupancy and equipment 5,309 4,933 376 8%
Legal services 2,474 426 2,048 481%
Audit services 1,502 361 1,141 316%
Other professional
services 3,352 692 2,660 384%
Office supplies, postage
and telephone 1,075 1,199 (124) -10%
Business development 934 1,160 (226) -19%
Insurance and assessments 1,113 765 348 45%
Loan related 1,753 480 1,273 265%
Write down of assets 5,825 - 5,825 100%
Other expense 2,375 1,835 540 29%
---------- ---------- ---------- ----------
Total Other Expenses 40,694 27,301 13,393 49%
(Loss) / earnings before
income taxes (69,950) 19,526 (89,476) -458%
Income tax provision 5,790 8,015 (2,225) -28%
---------- ---------- ---------- ----------
Net (Loss) / Earnings $ (75,740) $ 11,511 $ (87,251) -758%
========== ========== ========== ==========
Preferred stock dividend $ 644 $ 460 $ 184 40%
Weighted average shares
outstanding used in
(loss) / earnings per
share calculation
Basic 9,698,289 10,677,123
Diluted (3) 9,698,289 10,940,857
(Loss) / Earnings per
common share
Basic $ (7.88) $ 1.03 $ (8.91) -865%
Diluted (3) $ (7.88) $ 1.01 $ (8.89) -880%
Efficiency Ratio (4) 107% 56%
(3) In a net loss scenario, diluted loss per share equals basic loss per
share.
(4) The efficiency ratio is calculated by dividing total operating expenses
by net interest income and total other income.
VINEYARD NATIONAL BANCORP AND SUBSIDIARIES
FINANCIAL PERFORMANCE
(unaudited)
(dollars in thousands)
Three Months Ended June 30,
------------------------------------------------------------
2008 2007
----------------------------- -----------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
---------- --------- ------- ---------- --------- -------
Assets
Gross loans
(5) $2,045,364 $ 34,945 6.87% $2,037,736 $ 44,518 8.76%
Investment
securities
(6) 175,784 2,395 5.46% 240,668 2,967 4.93%
---------- --------- ---------- ---------
Total
interest-
earning
assets 2,221,148 37,340 6.76% 2,278,404 47,485 8.36%
Other assets 160,971 129,410
Less:
allowance
for loan
losses (52,656) (21,057)
---------- ----------
Total
average
assets $2,329,463 $2,386,757
========== ==========
Liabilities and
Stockholders'
Equity
Interest-
bearing
deposits
(7) $1,527,069 15,332 4.04% $1,463,184 17,181 4.71%
FHLB
advances 202,002 2,270 4.46% 292,648 3,687 5.02%
Other
borrowings 49,185 827 6.65% 48,285 830 6.80%
Subordinated
debt 5,000 74 5.88% 5,000 109 8.61%
Junior
subordinated
debentures 115,470 1,582 5.42% 115,470 2,308 7.91%
---------- --------- ---------- ---------
Total
interest-
bearing
liabil-
ities 1,898,726 20,085 4.23% 1,924,587 24,115 5.01%
--------- ---------
Demand
deposits 267,744 286,878
Exchange
balances 22,763 -
Other
liabilities 57,639 24,800
---------- ----------
Total
average
liabil-
ities 2,246,872 2,236,265
Preferred
stock
equity 31,615 10,876
Common stock
equity, net
of cumulative
other
comprehensive
loss 50,976 139,616
---------- ----------
Stockhol-
ders'
equity 82,591 150,492
---------- ----------
Total
liabil-
ities and
stockhol-
ders'
equity $2,329,463 $2,386,757
========== ==========
Net interest
spread (8) 2.53% 3.35%
======= =======
Net interest
margin (9) $ 17,255 3.14% $ 23,370 4.13%
========= ======= ========= =======
Return on
Average
Assets -10.80% 1.01%
Return on
Average
Tangible
Assets (10) -10.80% 1.06%
Return on
Average
Common
Equity -491.07% 16.58%
Return on
Average
Tangible
Common
Equity (11) -536.58% 24.74%
Net
Charge-off's/
Average
Gross Loans 1.79% 0.00%
(5) The average loan balances include loans held-for-sale and non-accrual
loans.
(6) The yield for investment securities is based on historical amortized
cost balances.
(7) Includes savings, NOW, money market, and time certificate of deposit
accounts.
(8) Net interest spread represents the average yield earned on
interest-earning assets less the average rate paid on interest-bearing
liabilities.
(9) Net interest margin is computed by dividing net interest income by
total average earning assets.
(10) Return on average tangible assets is computed by dividing net income
excluding core deposit amortization for the period by average tangible
assets. Average tangible assets equal average total assets less
average identifiable intangible assets and goodwill.
(11) Return on average tangible common stockholders' equity is computed by
dividing net income applicable to common stock excluding core deposit
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 SUBSIDIARIES
FINANCIAL PERFORMANCE
(unaudited)
(dollars in thousands)
Six Months Ended June 30,
------------------------------------------------------------
2008 2007
----------------------------- -----------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
---------- --------- ------- ---------- --------- -------
Assets
Gross loans
(5) $2,087,215 $ 75,418 7.27% $1,990,824 $ 86,729 8.79%
Investment
securities
(6) 178,660 4,074 4.57% 240,867 5,905 4.91%
---------- --------- ---------- ---------
Total
interest-
earning
assets 2,265,875 79,492 7.05% 2,231,691 92,634 8.37%
Other assets 153,891 128,675
Less:
allowance
for loan
losses (52,215) (20,488)
---------- ----------
Total
average
assets $2,367,551 $2,339,878
========== ==========
Liabilities
and
Stockholders'
Equity
Interest-
bearing
deposits
(7) $1,550,757 32,439 4.21% $1,474,127 34,254 4.69%
FHLB
advances 197,576 4,541 4.57% 249,220 6,241 5.01%
Other
borrowings 46,908 1,599 6.74% 41,554 1,465 7.01%
Subordinated
debt 5,000 175 6.93% 5,000 218 8.67%
Junior
subordinated
debentures 115,470 3,601 6.17% 115,470 4,593 7.91%
---------- --------- ---------- ---------
Total
interest-
bearing
liabil-
ities 1,915,711 42,355 4.43% 1,885,371 46,771 4.99%
--------- ---------
Demand
deposits 278,206 282,394
Exchange
balances 28,221 -
Other
liabilities 51,423 24,296
---------- ----------
Total
average
liabil-
ities 2,273,561 2,192,061
Preferred
stock
equity 31,615 10,274
Common stock
equity, net
of cumulative
other
comprehensive
loss 62,375 137,543
---------- ----------
Stock-
holders'
equity 93,990 147,817
---------- ----------
Total
liabil-
ities and
stock-
holders'
equity $2,367,551 $2,339,878
========== ==========
Net interest
spread (8) 2.62% 3.38%
======= =======
Net interest
margin (9) $ 37,137 3.31% $ 45,863 4.15%
========= ======= ========= =======
Return on
Average
Assets -6.44% 0.99%
Return on
Average
Tangible
Assets (10) -6.43% 1.04%
Return on
Average
Common
Equity -245.86% 16.20%
Return on
Average
Tangible
Common
Equity (11) -264.06% 24.40%
Net
Charge-off's/
Average Gross
Loans 3.07% 0.01%
(5) The average loan balances include loans held-for-sale and non-accrual
loans.
(6) The yield for investment securities is based on historical amortized
cost balances.
(7) Includes savings, NOW, money market, and time certificate of deposit
accounts.
(8) Net interest spread represents the average yield earned on
interest-earning assets less the average rate paid on interest-bearing
liabilities.
(9) Net interest margin is computed by dividing net interest income by
total average earning assets.
(10) Return on average tangible assets is computed by dividing net income
excluding core deposit amortization for the period by average tangible
assets. Average tangible assets equal average total assets less
average identifiable intangible assets and goodwill.
(11) Return on average tangible common stockholders' equity is computed by
dividing net income applicable to common stock excluding core deposit
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 SUBSIDIARIES
Earning Asset, Funding Liability and Operating Expenses Composition
(unaudited)
(dollars in thousands)
June March December September June
30, 2008 31, 2008 31, 2007 30, 2007 30, 2007
---------- ---------- ---------- ---------- ----------
Earning Assets
Loans
Commercial and
industrial $ 179,345 $ 165,300 $ 156,966 $ 147,799 $ 133,255
Real estate
construction
and land:
Single-family
luxury 536,795 573,104 582,962 577,155 497,494
Single-family
tract 54,431 130,003 146,627 163,396 183,395
Commercial 227,694 218,499 198,186 163,573 162,514
Land:
Single-
family
luxury 25,282 24,560 22,931 16,648 19,946
Single-
family
tract 30,031 59,647 64,405 61,760 38,878
Commercial 12,592 14,766 15,439 19,444 30,686
Other 5,390 906 909 795 25,099
Real estate
mortgage:
Commercial 527,135 525,198 553,531 569,167 604,157
Multi-family
residential 139,152 88,370 93,662 97,971 185,450
All other
residential 53,903 68,584 56,257 60,944 53,533
Consumer loans 99,891 108,736 115,702 112,064 97,752
All other
loans
(including
overdrafts) 58 71 264 54 194
---------- ---------- ---------- ---------- ----------
1,891,699 1,977,744 2,007,841 1,990,770 2,032,353
Unearned
premium on
acquired
loans 2,565 2,863 3,272 3,110 2,627
Deferred loan
fees (1,317) (2,083) (3,042) (3,235) (3,108)
---------- ---------- ---------- ---------- ----------
Loans,
net of
unearned
income 1,892,947 1,978,524 2,008,071 1,990,645 2,031,872
---------- ---------- ---------- ---------- ----------
Loans
held-for-sale 64,801 103,061 119,427 143,737 296
Investment
securities 150,718 158,418 202,387 216,556 223,793
---------- ---------- ---------- ---------- ----------
Total
Earning
Assets $2,108,466 $2,240,003 $2,329,885 $2,350,938 $2,255,961
========== ========== ========== ========== ==========
Unfunded Loan
Commitments
Commercial and
industrial $ 118,778 $ 138,613 $ 151,584 $ 125,431 $ 109,696
Real estate
construction
and land:
Single-
family
luxury 144,275 208,835 243,739 269,863 261,299
Single-
family
tract 15,294 32,355 57,239 59,035 108,898
Commercial 71,960 94,193 115,919 101,719 118,851
Land 1,236 6,617 8,930 10,236 12,928
Real estate
mortgage:
Commercial 8,639 8,841 8,780 14,005 14,736
Multi-family
residential 1,246 1,376 1,662 1,901 709
All other
residential 16,021 16,455 20,684 23,683 19,569
Consumer loans 13,052 12,192 9,799 9,305 5,948
---------- ---------- ---------- ---------- ----------
Total
Unfunded
Loan
Commit-
ments $ 390,501 $ 519,477 $ 618,336 $ 615,178 $ 652,634
========== ========== ========== ========== ==========
Funding
Liabilities
Deposits
Non-interest
bearing $ 233,704 $ 302,886 $ 316,905 $ 292,172 $ 301,281
Money market 366,924 444,989 568,713 597,620 575,867
Savings and
NOW 111,902 145,276 136,982 63,582 69,471
Time deposits 1,232,765 905,707 913,052 897,497 915,873
---------- ---------- ---------- ---------- ----------
Total
Deposits 1,945,295 1,798,858 1,935,652 1,850,871 1,862,492
---------- ---------- ---------- ---------- ----------
Exchange
balances 23,125 18,135 47,515 - -
FHLB advances 155,000 227,000 175,000 271,000 210,000
Other
borrowings 48,300 54,300 45,250 33,100 26,000
Subordinated
debt 5,000 5,000 5,000 5,000 5,000
Junior
subordinated
debentures 115,470 115,470 115,470 115,470 115,470
---------- ---------- ---------- ---------- ----------
Total
Funding
Liabil-
ities $2,292,190 $2,218,763 $2,323,887 $2,275,441 $2,218,962
========== ========== ========== ========== ==========
Quarterly
Operating
Expenses
Salary and
benefits $ 6,593 $ 8,389 $ 7,623 $ 8,132 $ 7,856
Occupancy and
equipment 2,605 2,704 2,513 2,554 2,475
Professional
services 4,288 3,040 1,120 763 832
Office
supplies,
postage and
telephone 534 541 562 567 572
Business
development 351 583 564 500 594
Insurance and
assessments 640 473 535 327 413
Loan related 1,171 582 439 363 267
Write-down of
assets 600 3,868 2,274 397 -
Write-down of
goodwill 1,357 - 40,771 - -
Other
operating
expenses 1,380 995 1,349 1,112 1,165
---------- ---------- ---------- ---------- ----------
Total
Operating
Expenses $ 19,519 $ 21,175 $ 57,750 $ 14,715 $ 14,174
========== ========== ========== ========== ==========
| Contact: Shareholder Relations 951-271-4232 [email protected] |
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