**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-K**

**VINEYARD      NATIONAL BANCORP**

|  California(State                of other jurisdiction ofincorporation                or organization)                                     |   |  33-0309110(IRS                EmployerIdentification                Number)  |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|
|                                                                                                                                                 |   |                                                                                    |
|  9590                Foothill BoulevardRancho                Cucamonga, California(Address                of principal executive offices)  |   |  91730(Zip                Code)                                               |

**Common      Stock, no par value**

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**TABLE      OF CONTENTS**

| PART                I   |                                                                                            | PAGE   |
|-------------------------|-------------------------------------------------------------------------------------------------|--------|
|                    |                                                                                            |   |
| ITEM                1.  | Business                                                                                        | 3      |
|                    |                                                                                            |   |
| ITEM                1A. | Risk                Factors                                                                     | 8      |
|                    |                                                                                            |   |
| ITEM                1B. | Unresolved                Staff Comments                                                        | 14     |
|                    |                                                                                            |   |
| ITEM                2.  | Properties                                                                                      | 36     |
|                    |                                                                                            |   |
| ITEM                3.  | Legal                Proceedings                                                                | 38     |
|                    |                                                                                            |   |
| ITEM                4.  | Submission                of Matters to a Vote of Security                Holders               | 38     |
|                    |                                                                                            |   |
| PART                II  |                                                                                            |   |
|                    |                                                                                            |   |
| ITEM                5.  | Market                for Registrant’s Common Equity, Related Stockholder                 |   |
|                    | Matters                and Issuer Purchases of Equity                Securities                 | 38     |
|                    |                                                                                            |   |
| ITEM                6.  | Selected                Financial Data                                                          | 40     |
|                    |                                                                                            |   |
| ITEM                7.  | Management’s                Discussion and Analysis of Financial                Condition |   |
|                    | and                Results of Operations                                                        | 41     |
|                    |                                                                                            |   |
| ITEM7A.                 | Quantitative                and Qualitative Disclosures About Market                Risk        | 55     |
|                    |                                                                                            |   |
| ITEM                8.  | Financial                Statements and Supplementary                Data                       | 56     |
|                    |                                                                                            |   |
| ITEM                9.  | Changes                in and Disagreements With Accountants on                Accounting       |   |
|                    | and                Financial Disclosure                                                         | 92     |
|                    |                                                                                            |   |
| ITEM                9A. | Controls                and Procedures                                                          | 92     |
|                    |                                                                                            |   |
| ITEM                9B. | Other                Information                                                                | 95     |
|                    |                                                                                            |   |
| PART                III |                                                                                            |   |
|                    |                                                                                            |   |
| ITEM                10. | Director                and Executive Officers of the                Registrant                 | 95     |
|                    |                                                                                            |   |
| ITEM                11. | Executive                Compensation                                                           | 95     |
|                    |                                                                                            |   |
| ITEM                12. | Security                Ownership of Certain Beneficial Owners and                Management    | 95     |
|                    |                                                                                            |   |
| ITEM                13. | Certain                Relationships and Related                Transactions                    | 95     |
|                    |                                                                                            |   |
| ITEM                14. | Principal                Accountant Fees and Services                                           | 95     |
|                    |                                                                                            |   |
| PART                IV  |                                                                                            |   |
|                    |                                                                                            |   |
| ITEM                15. | Exhibits                and Financial Statement                Schedules                        | 95     |
|                    |                                                                                            |   |
| Signatures              |                                                                                            |   |

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*Table            of Contents*

**Forward-looking      Statements**

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*Table            of Contents*

**PART      I**

**ITEM      1. B****usiness**

**Vineyard      National Bancorp**

** **

**Vineyard      Bank**

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*Table          of Contents*

*Market      Area. *

|   | (i) | the Inland Empire region of Southern California,                which                primarily includes San Bernardino and Riverside                Counties;     |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | the                  coastal communities of Los Angeles, California; |
|--------|------|----------------------------------------------------------------------|

|   | (iii) | the                San Gabriel Valley region of Los Angeles; |
|--------|-------|--------------------------------------------------------------|

|   | (iv) | the                coastal communities of south Orange County and San Diego; and |
|--------|------|----------------------------------------------------------------------------------|

|   | (v) | Marin                County, California. |
|--------|-----|------------------------------------------|

*Specialty      Product Offering. *

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*Table          of Contents*

|   | · | Coastal                Construction Lending* *                The Bank originates high-end single-family construction loans within                Los                Angeles’ “south bay” coastal communities (primarily Manhattan Beach,                Hermosa Beach and Redondo Beach, as well as the Palos Verdes Peninsula                area), Los Angeles’ upper end “west side” (including Beverly Hills,                Brentwood and Malibu) and Orange County coastal regions where it                believes                it has a competitive advantage based on established builder and customer                relationships and expertise in the construction market.  The demand                for new luxury construction in many of these communities continues                to be                strong. These types of construction loans typically range from $1.0                million to $5.0 million. During 2005, gross commitments generated                for this                loan product amounted to $516.4 million. The Bank’s single-family                residential coastal construction loans amounted to $392.2 million and                $299.0 million at December 31, 2005 and 2004, respectively, net of                participations sold of $114.7 million and $59.6 million,                respectively. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Tract                Construction Lending                The Bank originates single-family residential tract construction                loans,                primarily secured by newly-constructed, entry to mid-level detached                and                attached homes.  While these loans are predominantly originated                within the Inland Empire of Southern California, the Bank has financed                projects throughout California.  Its builders operate within                approximately twenty communities where demand for new affordable                housing                is consistently exceeding new production supply, with a substantial                amount                of new housing starts pre-sold to qualified buyers. The Inland Empire’s                resale and new home markets continue to be supported by a growing                labor                base and relatively low mortgage rates. These types of construction                loans                typically range from $3.0 million to $10.0 million. During 2005,                gross commitments generated for this loan product amounted to $260.7                million. The Bank’s single-family residential tract construction loans                amounted to $129.7 million and $129.9 million at December 31, 2005                and                2004, respectively, net of participations sold of $11.6 million and                $1.7                million, respectively. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | SBA                Lending                The Bank offers SBA 7(a) and 504 loans to small businesses throughout                its                market area. The Bank emphasizes these types of loans, as they are                a                complement to the Bank’s focus on strengthening and supporting the local                community. The Company had $12.8 million and $18.0 million of                outstanding SBA loans at December 31, 2005 and 2004, respectively,                net of                participations sold of $42.0 million and $29.0 million, respectively. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Religious                Lending                The Bank originates religious loans, which are comprised of loans                to                churches and private schools throughout its market area. The Bank                emphasizes these types of loans, as they are a complement to the                Bank’s                focus on strengthening and supporting the local community. Religious                loans                amounted to $30.3 million and $23.8 million at December 31, 2005 and                2004, respectively. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Income                Property Lending                The Bank has an income property lending division to service the growing                markets for commercial real estate and multifamily/apartments in                Southern                California. The commercial real estate portfolio includes office                buildings, retail outlets and industrial warehouses, the majority                of which                are located in the Inland Empire region, and Los Angeles and Orange                counties. The Southern California office market has witnessed strong                demand for space, as evidenced by decreased vacancy rates. The Bank’s                multifamily/apartment loan portfolio is centered in Los Angeles and                Orange                counties, with some lending in the Inland Empire region. Given the                relatively high home prices in Southern California, the apartment                market                has experienced solid rental performance. Vacancy rates remain relatively                low as renters are finding little product available for lease. Commercial                real estate loans generated from this division typically range from                $2.0                million to $10.0 million, while apartment loans typically range from                $0.5                million to $5.0 million. At December 31, 2005 and 2004, the balance                of                loans generated from this division amounted to $264.1 million and                $91.6                million, respectively, for commercial real estate loans and $234.4                million                and $177.9 million, respectively, for apartment loans. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table          of Contents*

|   | · | Community                Banking Group                In                order to expand the Bank’s core deposit franchise, the Community Banking                Group of the Bank has focused on offering competitive interest rate                products and providing value-added consumer services by introducing                additional products and services. The Company’s core deposit franchise has                been built around the community banking system, which has resulted                in                deposit growth of 32.3% for the year ended December 31, 2005 and                60.0% for                the year ended December 31, 2004. The Community Banking Group also                focuses on commercial and business banking and the origination of                commercial business loans. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Commercial                and Business Banking                The Bank is committed to providing customized credit solutions to                assist                customers in remaining competitive in their respective marketplaces.                To                this end, the Bank has coupled convenience and technology in expanding                its                deposit franchise, while supplementing customer service with new                and                complementary products. Business deposits have been pursued by offering                an                expanded courier network, by the introduction of cash management                products                and by specific targeting of small business customers. The Bank intends                to                capture additional business accounts by bundling new products and                services                with other cash management services. Expanded courier services and                technology-based products contribute to providing a high level of                service                to its business clientele. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Commercial                Business Loans* *The                Bank originates commercial business loans which generally consist                of loans                to small businesses. The Bank offers business revolving lines of                credit,                to ensure that businesses’ operating capital needs are met in a timely                manner. Commercial loans in the SBA’s 7(a) program are also included in                this category. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Loan      and Deposit Portfolios*

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*Table          of Contents*

*Relationship      Banking Centers*

*Strategic      Expansion. *

|   | § | Specialty                Group Organization* *The                Company believes that it can facilitate continued loan and deposit                growth                by the identification of new and the continued organization of lending                and                funding specialty groups. The loan and deposit portfolios are sectioned                into specialty products, and each product base is enhanced by a group                of                seasoned banking professionals who have expertise in their specialty                product and are able to offer a high level of service and maintain                long-term customer relationships. The Company will continue to identify                new specialty groups with new products to generate volume in both                loans                and deposits and to diversify the existing loan and deposit portfolios.                In                addition, the Company will focus on expanding the existing specialty                groups to generate a higher volume of loans and deposits. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Organic                Deposit and Lending Growth* *The                Company plans to achieve a consistent growth in its deposit and lending                base through the retention and expansion of community banking                relationships. The Company will also expand its presence in existing                markets and enter new geographic markets through the hiring of new                business development individuals or teams, and will expand further                through                possible acquisitions of loan portfolios and deposit portfolios in                new                markets. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Strategic                Acquisitions                In                alignment with the Company’s strategic plan, it may consider making                strategic acquisitions of whole banks or individual branches. The                Company                will consider making acquisitions that are complements to its existing                products and services, complements to its current geographic and                demographic footprints, and are accretive to earnings. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Capital                Strategy* *The                Company’s strategic plan includes various methods of generating capital.                The Company may offer and sell securities in order to raise additional                capital. To that end, the Company recently filed a shelf registration                with                the SEC, which provides the Company with the flexibility to publicly                issue                in the future up to $125 million in debt and/or equity securities.                In                addition, the Company may raise capital through private transactions                or                through the private issuance of trust preferred securities. The Company’s                objective with its capital strategy is to maintain consistent capital                ratios for both the Company and the Bank, while having a minimal                dilutive                impact to shareholders. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table          of Contents*

|   | 1) | Los                Angeles County - The high-end single family construction lending                division                of the Bank has been operating in the Manhattan Beach banking center                and                will continue to focus on expanding its product in that area along                with                commercial income property lending and SBA lending. The Manhattan                Beach                banking center will increase its office square footage at the beginning                of                2006 to better serve its clients in the depository function. The                Bank’s                focus will be to continue expanding in this “established market” by                attracting commercial deposit accounts and an established deposit                base.                Greater effort will be made in the area of commercial and business                lending                along with corporate cash management                services. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2) | Orange                County - The Bank will expand its existing lending products, including                commercial income property, SBA and high-end single family construction                in                Orange county and surrounding areas. Additionally, the Company anticipates                capturing new depository relationships in commercial and business                banking,                entrepreneur services, cash management and community banking operations                in                the Irvine office. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3) | San                Diego County - The SBA division of the Bank has been operating out                of San                Diego over the last three years and will continue to expand its product                in                the San Diego market along with commercial income property lending                and                high-end single family construction lending. A new loan production                office                was opened in Carlsbad as a satellite extension of the San Diego                office.                Recently, the Bank acquired a new team of deposit relationship managers                as                the San Diego office was converted to a full-service banking center                for                the purpose of commercial and business banking, entrepreneur services,                cash management and community banking operations. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4) | Riverside                & San Bernardino Counties - The Bank’s presence in these areas                includes primarily single family residential tract construction lending                as                the population of home buyers migrate towards this area. The Bank                will                seek opportunities to offer its other lending products including                high-end                single family construction, commercial income property and                SBA. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5) | Marin                County - The Bank has recently entered the northern California market                with                a de novo banking center. The San Rafael office was staffed and opened                in                September 2005 as a loan production office to expand and enhance                the                Bank’s existing lending products including commercial income property,                high-end single family construction, single family residential tract                construction and SBA lending. A full-service banking center operation                will                begin in March 2006 with the acquisition of a new local banking team                concentrating on new depository                relationships. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Single                Family Residential Coastal                Construction |
|--------|--------|------------------------------------------------------------------------------|

|   | · | Single                Family Residential Tract                Construction |
|--------|--------|----------------------------------------------------------------------------|

|   | · | SBA                Lending |
|--------|--------|----------------------------|

|   | · | Religious                Financial Services |
|--------|--------|---------------------------------------------|

|   | · | Income                Property (commercial and multifamily loan                products) |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | Community                Banking Group |
|--------|--------|----------------------------------------|

|   | o | Commercial                and Business Banking |
|--------|---|------------------------------------------------|

|   | o | Commercial                Business Lending |
|--------|---|--------------------------------------------|

**Item      IA. Risk Factors**

**The        Company is implementing a business strategy that may result in increased        volatility of earnings. **

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*Table          of Contents*

**The      Company’s growth may not be managed successfully.**

**Potential      acquisitions may disrupt the Company’s business, dilute shareholder value and      adversely affect its operating results.**

|   | · | potential                exposure to unknown or contingent liabilities of banks, businesses                or                branches the Company acquires; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | exposure                to potential asset quality issues of the acquired banks, businesses                or                branches; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | difficulty                and expense of integrating the operations and personnel of banks,                businesses or branches the Company                acquires; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | potential                disruption to the Company’s                business; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | potential                diversion of management’s time and                attention; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | the                possible loss of key employees and customers of the banks, businesses                or                branches the Company acquires; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | difficulty                in estimating the value of the banks, businesses or branches to be                acquired; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | potential                  changes in banking or tax laws or regulations that may affect the                  banks or                  businesses to be acquired. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table          of Contents*

**The      Company’s continued pace of growth may require it to raise additional capital in      the future, but that capital may not be available or may not be on terms      acceptable to the Company when it is needed. **

**The      Company’s business strategy relies upon its Chief Executive Officer and other      key employees.**

**The      Company’s business is subject to various lending risks which could adversely      impact its results of operations and financial condition.**

*Residential      Real Estate Construction Loans. *

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*Table          of Contents*

*Commercial      Real Estate Loans. *

*Multifamily      Residential Real Estate Loans.*

*Commercial      Business Loans. *

**The      Company’s allowance for loan losses may prove to be insufficient to absorb      probable losses inherent in its loan portfolio. **

|   | · | cash                flow of the borrower and/or the project being                financed; |
|--------|--------|--------------------------------------------------------------------------------------------|

|   | · | in                the case of a collateralized loan, the changes and uncertainties                as to the                future value of the collateral; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                credit history of a particular                borrower; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | changes                in economic and industry conditions;                and |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | the                duration of the loan. |
|--------|--------|------------------------------------------|

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*Table          of Contents*

**The      Company’s business is subject to general economic risks that could adversely      impact its results of operations and financial condition.**

*Changes      in economic conditions, particularly an economic slowdown in California, could      hurt the Company’s business. *

|   | · | loan                delinquencies may increase; |
|--------|--------|-------------------------------------------------|

|   | · | problem                assets and foreclosures may                increase; |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | demand                for the Company’s products and services may decline;                and |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | collateral                for loans made by the Company, especially real estate, may decline                in                value, in turn reducing a client’s borrowing power, and reducing the value                of assets and collateral associated with its loans held for                investment. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*A      downturn in the California real estate market could hurt the Company’s      business.*

*The      Company may suffer losses in its loan portfolio despite its underwriting      practices*

**The      Company’s business is subject to interest rate risk and variations in interest      rates may negatively affect its financial performance.**

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*Table          of Contents*

|   | · | inflation; |
|--------|--------|------------|

|   | · | slow                or stagnant economic growth or                recession; |
|--------|--------|------------------------------------------------------------------------------|

|   | · | unemployment; |
|--------|--------|---------------|

|   | · | money                supply and the monetary policies of the                FRB; |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | international                disorders; and |
|--------|--------|---------------------------------------------|

|   | · | instability                in domestic and foreign financial                markets. |
|--------|--------|--------------------------------------------------------------------------------------|

**The      Company’s ability to service its debt, pay dividends, and otherwise pay its      obligations as they come due is substantially dependent on capital distributions      from the Bank, and these distributions are subject to regulatory limits and      other restrictions.**

**The      Company faces strong competition from other financial institutions, financial      service companies and other organizations offering services similar to those      offered by the Company, which could hurt its business.**

**The        Company continually encounters technological change, and it may have fewer        resources than many of its competitors to continue to invest in technological        improvements.**

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*Table          of Contents*

**The      Company is subject to extensive regulation which could adversely affect its      business.**

**Distribution      of Assets, Liabilities, and Stockholders’ Equity; Interest Rates and Interest      Differential**

**Item      1B. Unresolved Staff Comments**

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*Table          of Contents*

**Loan      Portfolio**

| **(Dollars                in thousands)**             |   | **December                31,** |      |
|-------------------------------------------------------|--------|---------------------------------|-----------|
|                                                  |   | **2005**                        |      | **2004** |   | **2003** |   | **2002** |   | **2001** |   |
|                                                  |   | **Amount**                      |      | **Percent** |   | **Amount** |   | **Percent** |   | **Amount** |   | **Percent** |   | **Amount** |   | **Percent** |   | **Amount** |   | **Percent** |   |
| Commercial                and industrial              |   | $                               | 54,757    |   |   | 4.0 | % | $ | 36,095 |   |   | 3.5 | % | $ | 26,827 |   |   | 4.5 | % | $ | 19,232 |   |   | 7.6 | % | $ | 20,219 |   |   | 14.7 | % |
| Real                estate construction:              |   |                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Single-family                coastal                  |   |                            | 392,183   |   |   | 28.5 | % |   | 298,984 |   |   | 29.1 | % |   | 212,727 |   |   | 35.5 | % |   | 89,547 |   |   | 35.3 | % |   | 29,506 |   |   | 21.4 | % |
| Single-family                tract                    |   |                            | 129,706   |   |   | 9.4 | % |   | 129,900 |   |   | 12.6 | % |   | 104,511 |   |   | 17.4 | % |   | 14,171 |   |   | 5.6 | % |   | - |   |   | - |   |
| Commercial                                            |   |                            | 61,392    |   |   | 4.4 | % |   | 36,215 |   |   | 3.5 | % |   | 20,947 |   |   | 3.5 | % |   | 6,494 |   |   | 2.5 | % |   | 3,748 |   |   | 2.7 | % |
| Real                estate mortgage:                  |   |                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                            |   |                            | 321,821   |   |   | 23.4 | % |   | 216,609 |   |   | 21.0 | % |   | 153,632 |   |   | 25.6 | % |   | 93,122 |   |   | 36.7 | % |   | 52,458 |   |   | 38.0 | % |
| Multifamily                residential                |   |                            | 246,597   |   |   | 17.9 | % |   | 189,912 |   |   | 18.4 | % |   | 27,986 |   |   | 4.7 | % |   | 1,131 |   |   | 0.5 | % |   | 1,091 |   |   | 0.8 | % |
| Other                residential                      |   |                            | 155,461   |   |   | 11.3 | % |   | 118,962 |   |   | 11.6 | % |   | 47,886 |   |   | 8.0 | % |   | 22,349 |   |   | 8.8 | % |   | 17,972 |   |   | 13.0 | % |
| Consumer                loans                         |   |                            | 15,205    |   |   | 1.1 | % |   | 2,905 |   |   | 0.3 | % |   | 4,887 |   |   | 0.8 | % |   | 5,659 |   |   | 2.2 | % |   | 8,318 |   |   | 6.0 | % |
| Loans                held for sale                    |   |                            | -         |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 2,112 |   |   | 0.8 | % |   | 4,471 |   |   | 3.3 | % |
| All                other loans (including overdrafts) |   |                            | 207       |   |   | 0.0 | % |   | 137 |   |   | 0.0 | % |   | 29 |   |   | 0.0 | % |   | 60 |   |   | 0.0 | % |   | 184 |   |   | 0.1 | % |
|                                                  |   |                            | 1,377,329 |   |   | 100.0 | % |   | 1,029,719 |   |   | 100.0 | % |   | 599,432 |   |   | 100.0 | % |   | 253,877 |   |   | 100.0 | % |   | 137,967 |   |   | 100.0 | % |
| Less:                                                 |   |                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unearned                income and deferred loan fees |   |                            | (4,230    | ) |   |   |   |   | (2,682 | ) |   |   |   |   | (2,425 | ) |   |   |   |   | (626 | ) |   |   |   |   | (389 | ) |   |   |   |
| Allowance                for possible loan losses     |   |                            | (13,762   | ) |   |   |   |   | (11,969 | ) |   |   |   |   | (7,358 | ) |   |   |   |   | (2,937 | ) |   |   |   |   | (1,417 | ) |   |   |   |
| Total                Net Loans                        |   | $                               | 1,359,337 |   |   |   |   | $ | 1,015,068 |   |   |   |   | $ | 589,649 |   |   |   |   | $ | 250,314 |   |   |   |   | $ | 136,161 |   |   |   |   |

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*Table          of Contents*

**Maturities      and Sensitivities to Interest Rates**

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*Table          of Contents*

| (Dollars                    in Thousands)                           |   | **Maturing**                      |    |                               |   |
|---------------------------------------------------------------------|--------|-----------------------------------|---------|------------------------------------|--------|
|                                                                |   | **Within                    One** |    | **One                    to Five** |   | **After                    Five** |   |   |   |
|                                                                |   | **Year**                          |    | **Years**                          |   | **Years** |   | **Total** |   |
| Commercial                    and industrial                        |   | $                                 | 34,350  |                               | $      | 13,711 |   | $ | 6,696 |   | $ | 54,757 |   |
| Real                    estate construction:                        |   |                              |    |                               |   |   |   |   |   |   |   |   |   |
| Single-family                    coastal                            |   |                              | 328,374 |                               |   | 63,809 |   |   | - |   |   | 392,183 |   |
| Single-family                    tract                              |   |                              | 115,993 |                               |   | 13,713 |   |   | - |   |   | 129,706 |   |
| Commercial                                                          |   |                              | 51,863  |                               |   | 1,745 |   |   | 7,784 |   |   | 61,392 |   |
| Real                    estate mortgage:                            |   |                              |    |                               |   |   |   |   |   |   |   |   |   |
| Commercial                                                          |   |                              | 26,864  |                               |   | 43,413 |   |   | 251,544 |   |   | 321,821 |   |
| Residential                                                         |   |                              | 153,500 |                               |   | 15,472 |   |   | 233,086 |   |   | 402,058 |   |
| Consumer                    loans                                   |   |                              | 2,126   |                               |   | 710 |   |   | 12,369 |   |   | 15,205 |   |
| All                    other loans (including overdrafts)           |   |                              | 207     |                               |   | - |   |   | - |   |   | 207 |   |
| Total                                                               |   | $                                 | 713,277 |                               | $      | 152,573 |   | $ | 511,479 |   | $ | 1,377,329 |   |
|                                                                |   |                              |    |                               |   |   |   |   |   |   |   |   |   |
| Loans                    with predetermined interest rates          |   | $                                 | 12,080  |                               | $      | 40,779 |   | $ | 75,125 |   | $ | 127,984 |   |
| Loans                    with floating or adjustable interest rates |   |                              | 701,197 |                               |   | 111,794 |   |   | 436,354 |   |   | 1,249,345 |   |
| Total                                                               |   | $                                 | 713,277 |                               | $      | 152,573 |   | $ | 511,479 |   | $ | 1,377,329 |   |

**Investment      Portfolio**

| (Dollars                in Thousands)     |   | December                31,   |    |
|-------------------------------------------|--------|-------------------------------|---------|
|                                      |   | 2005                          |    | 2004 |   | 2003 |   |
|                                      |   | Amortized                Cost |    | Fair                Value |   | Amortized                Cost |   | Fair                Value |   | Amortized                Cost |   | Fair                Value |   |
| Available-for-sale:                       |   |                          |    |   |   |   |   |   |   |   |   |   |   |
| U.S.                agency securities     |   | $                             | 11,751  |   | $ | 11,625 |   | $ | 11,033 |   | $ | 10,501 |   | $ | 10,359 |   | $ | 9,905 |   |
| Mortgage-backed                securities |   |                          | 243,786 |   |   | 234,980 |   |   | 215,045 |   |   | 210,933 |   |   | 194,943 |   |   | 190,163 |   |
| Mutual                funds               |   |                          | 2,121   |   |   | 2,089 |   |   | 2,042 |   |   | 2,046 |   |   | 2,000 |   |   | 2,000 |   |
| Total                                     |   | $                             | 257,658 |   | $ | 248,694 |   | $ | 228,120 |   | $ | 223,480 |   | $ | 207,302 |   | $ | 202,068 |   |

| (Dollars                in Thousands)     |   | Maturing                         |   |         |   |
|-------------------------------------------|--------|----------------------------------|--------|--------------|--------|
|                                      |   | After                Five Years  |   | Weighted     |   | After |   | Weighted |   | Total                Balance as of |   |
|                                      |   | Through                Ten Years |   | AverageYield |   | Ten                Years |   | AverageYield |   | December                31, 2005 |   |
| U.S                agency securities      |   | $                                | -      |         |   | - |   | $ | 11,625 |   |   | 6.49 | % | $ | 11,625 |   |
| Mortgage-backed                securities |   |                             | 14,650 |         |   | 3.86 | % |   | 220,330 |   |   | 4.33 | % |   | 234,980 |   |
| Total                                     |   | $                                | 14,650 |         |   | 3.86 | % | $ | 231,955 |   |   | 4.44 | % | $ | 246,605 |   |

----

*Table          of Contents*

| (Dollars                in Thousands)     |   | Less                than 12 months |   | 12                months or Longer |   | Total                     |   |
|-------------------------------------------|--------|------------------------------------|--------|------------------------------------|--------|---------------------------|--------|
|                                      |   |                               |   | Gross                              |   |                      |   | Gross |   |   |   | Gross |   |
|                                      |   |                               |   | Unrealized                         |   |                      |   | Unrealized |   |   |   | Unrealized |   |
|                                      |   |                               |   | Holding                            |   |                      |   | Holding |   |   |   | Holding |   |
|                                      |   | Fair                Value          |   | Losses                             |   | Fair                Value |   | Losses |   | Fair                Value |   | Losses |   |
|                                      |   |                               |   |                               |   |                      |   |   |   |   |   |   |   |
| U.S.                agency securities     |   | $                                  | -      |                               | $      | -                         |   | $ | 11,625 |   | $ | (126 | ) | $ | 11,625 |   | $ | (126 | ) |
| Mortgage-backed                securities |   |                               | 81,636 |                               |   | (1,592                    | )      |   | 153,344 |   |   | (7,214 | ) |   | 234,980 |   |   | (8,806 | ) |
| Mutual                Funds               |   |                               | 2,089  |                               |   | (32                       | )      |   | - |   |   | - |   |   | 2,089 |   |   | (32 | ) |
| Total                                     |   | $                                  | 83,725 |                               | $      | (1,624                    | )      | $ | 164,969 |   | $ | (7,340 | ) | $ | 248,694 |   | $ | (8,964 | ) |

*Accounting      for Certain Investments in Debt and Equity Securities*

**Asset/Liability      Management**

----

*Table          of Contents*

| **(Dollars                  in Thousands)**                 |   |                              |    | **Over                  Three** |   |                              |   |                           |     |         |   |      |   |
|-------------------------------------------------------------|--------|-----------------------------------|---------|---------------------------------|--------|-----------------------------------|--------|--------------------------------|----------|--------------|--------|-----------|--------|
|                                                        |   |                              |    | **Through**                     |   | **Over                  One**     |   |                           |     | **Non-**     |   |      |   |
|                                                        |   | **Three                  Months** |    | **Twelve**                      |   | **Through                  Five** |   | **Over                  Five** |     | **interest** |   |      |   |
|                                                        |   | **or                  Less**      |    | **Months**                      |   | **Years**                         |   | **Years**                      |     | **Bearing**  |   | **Total** |   |
| Assets                                                      |   |                              |    |                            |   |                              |   |                           |     |         |   |      |   |
| Investment                  securities                      |   | $                                 | 2,089   |                            |   |                              |   | $                              | 8,385    |         | $      | 238,220   |   |   |   |   | $ | 248,694 |   |
| Other                  investments                          |   |                              |    |                            |   |                              |   |                           |     |         |   | 19,155    |   |   |   |   |   | 19,155 |   |
| Gross                  loans                                |   |                              | 881,946 |                            | $      | 42,294                            |   |                           | 85,939   |         |   | 367,150   |   |   |   |   |   | 1,377,329 |   |
| Noninterest-earning                  assets                 |   |                              |    |                            |   |                              |   |                           |     |         |   |      |   | $ | 68,460 |   |   | 68,460 |   |
| Total                  assets                               |   | $                                 | 884,035 |                            | $      | 42,294                            |   | $                              | 94,324   |         | $      | 624,525   |   | $ | 68,460 |   | $ | 1,713,638 |   |
|                                                        |   |                              |    |                            |   |                              |   |                           |     |         |   |      |   |   |   |   |   |   |   |
| Liabilities                  and stockholders' equity       |   |                              |    |                            |   |                              |   |                           |     |         |   |      |   |   |   |   |   |   |   |
| Non                  interest-bearing deposits              |   |                              |    |                            |   |                              |   |                           |     |         |   |      |   | $ | 154,664 |   | $ | 154,664 |   |
| Interest-bearing                  deposits                  |   | $                                 | 674,713 |                            | $      | 431,109                           |   | $                              | 16,526   |         |   |      |   |   |   |   |   | 1,122,348 |   |
| FHLB                  advances and other borrowings         |   |                              | 134,000 |                            |   | 40,000                            |   |                           | 50,000   |         |   |      |   |   |   |   |   | 224,000 |   |
| Subordinated                  debt                          |   |                              | 5,000   |                            |   |                              |   |                           |     |         |   |      |   |   |   |   |   | 5,000 |   |
| Junior                  subordinated debentures             |   |                              | 96,913  |                            |   |                              |   |                           |     |         |   |      |   |   |   |   |   | 96,913 |   |
| Other                  liabilities                          |   |                              |    |                            |   |                              |   |                           |     |         |   |      |   |   | 10,728 |   |   | 10,728 |   |
| Stockholders'                  equity                       |   |                              |    |                            |   |                              |   |                           |     |         |   |      |   |   | 99,985 |   |   | 99,985 |   |
| Total                  liabilities and stockholders' equity |   | $                                 | 910,626 |                            | $      | 471,109                           |   | $                              | 66,526   |         | $      | -         |   | $ | 265,377 |   | $ | 1,713,638 |   |
| Interest                  rate sensitivity gap              |   | $                                 | (26,591 | )                               | $      | (428,815                          | )      | $                              | 27,798   |         | $      | 624,525   |   | $ | (196,917 | ) |   |   |   |
| Cumulative                  interest rate sensitivity gap   |   | $                                 | (26,591 | )                               | $      | (455,406                          | )      | $                              | (427,608 | )            | $      | 196,917   |   | $ | - |   |   |   |   |

----

*Table          of Contents*

| **(Dollars                      in Thousands)** |   |                                              |    |                                      |   |           |   |           |   |
|-------------------------------------------------|--------|---------------------------------------------------|---------|-------------------------------------------|--------|----------------|--------|----------------|--------|
|                                            |   | **Economic                      Value of Equity** |    | **Earnings                      at Risk** |   |
|                                            |   | **Cumulative**                                    |    | **Cumulative**                            |   | **Cumulative** |   | **Cumulative** |   |
|                                            |   | **Dollar**                                        |    | **Percentage**                            |   | **Dollar**     |   | **Percentage** |   |
| **Simulated                      Rate Changes** |   | **Change**                                        |    | **Change**                                |   | **Change**     |   | **Change**     |   |
| +200                      Basis Points          |   | $                                                 | (20,323 | )                                         |   | -7.9           | %      | $              | 5,189  |   |   | 6.6 | % |
| +100                      Basis Points          |   | $                                                 | (10,149 | )                                         |   | -4.0           | %      | $              | 2,555  |   |   | 3.2 | % |
| -100                      Basis Points          |   | $                                                 | 8,586   |                                      |   | 3.3            | %      | $              | 3,276  |   |   | 4.1 | % |
| -200                      Basis Points          |   | $                                                 | 10,675  |                                      |   | 4.2            | %      | $              | 8,186  |   |   | 10.3 | % |

**Potential      Problem Loans**

----

*Table          of Contents*

**Loan      Concentrations**

**Other      Interest-Earning Assets**

**Estimating      Loan Losses**

*Accounting      for Contingencies”*
*Accounting      by Creditors for Impairment of a Loan”*

|   | · | Trends                in past due and impaired loans. |
|--------|--------|-------------------------------------------------------|

|   | · | Trends                in charge-offs and recoveries. |
|--------|--------|------------------------------------------------------|

|   | · | Trends                in loan volume and loan terms. |
|--------|--------|------------------------------------------------------|

|   | · | Changes                in credit policies and                underwriting. |
|--------|--------|----------------------------------------------------------------------------|

|   | · | Experience                and ability of lending management and staff. |
|--------|--------|------------------------------------------------------------------------|

|   | · | External                factors including national and local economic trends and conditions,                duration of the current business cycle, competition, legal and regulatory                requirements, as well as reasonably foreseeable events that may affect                collectibility of loans. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Industry                conditions. |
|--------|--------|-------------------------------------|

|   | · | Concentration                of credit risk. |
|--------|--------|----------------------------------------------|

*.      *

----

*Table          of Contents*

| (Dollars                in Thousands)                                           |   | December                31, |   |
|---------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                            |   | 2005                        |   | 2004 |   | 2003 |   | 2002 |   | 2001 |   |
| Allowance                for possible loan losses balance, beginning of year    |   | $                           | 11,969 |   | $ | 7,358 |   | $ | 2,937 |   | $ | 1,417 |   | $ | 779 |   |
| Charge-offs                                                                     |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                and industrial                                        |   |                        | 123    |   |   | 67 |   |   | 123 |   |   | 117 |   |   | 69 |   |
| Real                estate-mortgage                                             |   |                        | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Consumer                loans                                                   |   |                        | 37     |   |   | 325 |   |   | 20 |   |   | 124 |   |   | 60 |   |
|                                                                            |   |                        | 160    |   |   | 392 |   |   | 143 |   |   | 241 |   |   | 129 |   |
| Recoveries                                                                      |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                and industrial                                        |   |                        | 56     |   |   | 95 |   |   | 44 |   |   | 78 |   |   | 3 |   |
| Real                estate-mortgage                                             |   |                        | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Consumer                loans                                                   |   |                        | 11     |   |   | 27 |   |   | 28 |   |   | 89 |   |   | 19 |   |
|                                                                            |   |                        | 67     |   |   | 122 |   |   | 72 |   |   | 167 |   |   | 22 |   |
| Net                charge-offs                                                  |   |                        | 93     |   |   | 270 |   |   | 71 |   |   | 74 |   |   | 107 |   |
| Provision                for possible loan losses                               |   |                        | 1,886  |   |   | 4,881 |   |   | 3,597 |   |   | 1,397 |   |   | 745 |   |
| Allowance                relating to acquired loan portfolio                    |   |                        | -      |   |   | - |   |   | 895 |   |   | 197 |   |   | - |   |
| Allowance                for possible loan losses, end of year                  |   | $                           | 13,762 |   | $ | 11,969 |   | $ | 7,358 |   | $ | 2,937 |   | $ | 1,417 |   |
|                                                                            |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio                of net charge-offs during the year to average              |   |                        | 0.0    | % |   | 0.0 | % |   | 0.0 | % |   | 0.0 | % |   | 0.1 | % |
| loans                outstanding during the year                                |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio                of allowance for possible loan losses to loans at year-end |   |                        | 1.0    | % |   | 1.2 | % |   | 1.2 | % |   | 1.2 | % |   | 1.0 | % |

**Non-Accrual,      Past Due and Restructured Loans and Other Real Estate      Owned**

----

*Table          of Contents*

| **(Dollars                in Thousands)**                    |   | **As                of December 31,** |   |
|--------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                         |   | **2005**                              |   | **2004** |   | **2003** |   | **2002** |   | **2001** |   |
| **Accruing                Loans More than 90 Days Past Due** |   |                                  |   |   |   |   |   |   |   |   |   |
| Aggregate                loan amounts                        |   |                                  |   |   |   |   |   |   |   |   |   |
| Commercial                and industrial                     |   | $                                     | -      |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   |
| Real                estate-mortgage                          |   |                                  | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Consumer                loans                                |   |                                  | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Total                loans past due more than 90 days        |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and                still accruing                            |   |                                  | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                         |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Renegotiated                loans**                   |   |                                  | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                         |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Non-accrual                loans**                         |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Aggregate                loan amounts                        |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                and industrial                     |   |                                  | 477    |   |   | - |   |   | 173 |   |   | - |   |   | - |   |
| Real                estate-mortgage                          |   |                                  | 480    |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Consumer                loans                                |   |                                  | 7      |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Total                non-accrual loans                       |   |                                  | 964    |   |   | - |   |   | 173 |   |   | - |   |   | - |   |
|                                                         |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                non-performing loans                    |   | $                                     | 964    |   | $ | - |   | $ | 173 |   | $ | - |   | $ | - |   |
|                                                         |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Other                Real Estate Owned**                   |   | $                                     | -      |   | $ | - |   | $ | 111 |   | $ | - |   | $ | - |   |

*Past      Due Loans*

*Non-accrual      Loans*

*Renegotiated      Loans*

----

*Table          of Contents*

**Allowance      for Possible Loan Loss by Category**

----

*Table          of Contents*

| **(Dollars                  in Thousands)** | **As                  of December 31,** |   |
|---------------------------------------------|----------------------------------------------|--------|
|                                        | **2005**                                     |   | **2004** |   | **2003** |   | **2002** |   | **2001** |   |
|                                        |                                         |   | **Percent                  of** |   |   |   | **Percent                  of** |   |   |   | **Percent                  of** |   |   |   | **Percent                  of** |   |   |   | **Percent                  of** |   |
|                                        |                                         |   | **Loans                  in** |   |   |   | **Loans                  in** |   |   |   | **Loans                  in** |   |   |   | **Loans                  in** |   |   |   | **Loans                  in** |   |
|                                        | **Allowance**                                |   | **Each** |   | **Allowance** |   | **Each** |   | **Allowance** |   | **Each** |   | **Allowance** |   | **Each** |   | **Allowance** |   | **Each** |   |
|                                        | **for                  Possible**            |   | **Category                  to** |   | **for                  Possible** |   | **Category                  to** |   | **for                  Possible** |   | **Category                  to** |   | **for                  Possible** |   | **Category                  to** |   | **for                  Possible** |   | **Category                  to** |   |
|                                        | **Loan                  Losses**             |   | **Total                  Loans** |   | **Loan                  Losses** |   | **Total                  Loans** |   | **Loan                  Losses** |   | **Total                  Loans** |   | **Loan                  Losses** |   | **Total                  Loans** |   | **Loan                  Losses** |   | **Total                  Loans** |   |
|                                        |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                  and industrial  | $                                            | 717    |   |   | 4.0 | % | $ | 919 |   |   | 3.5 | % | $ | 791 |   |   | 4.5 | % | $ | 506 |   |   | 8.4 | % | $ | 497 |   |   | 18.0 | % |
| Real                  estate construction:  |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Single-family                  coastal      |                                         | 5,190  |   |   | 28.5 | % |   | 4,079 |   |   | 29.1 | % |   | 2,479 |   |   | 35.5 | % |   | 1,053 |   |   | 35.3 | % |   | 298 |   |   | 21.4 | % |
| Single-family                  tract        |                                         | 1,656  |   |   | 9.4 | % |   | 1,838 |   |   | 12.6 | % |   | 1,407 |   |   | 17.4 | % |   | 245 |   |   | 5.6 | % |   | - |   |   | - |   |
| Commercial                                  |                                         | 497    |   |   | 4.4 | % |   | 367 |   |   | 3.5 | % |   | 255 |   |   | 3.5 | % |   | 74 |   |   | 2.5 | % |   | 38 |   |   | 2.7 | % |
| Real                  estate mortgage:      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                  |                                         | 1,987  |   |   | 23.4 | % |   | 1,275 |   |   | 21.0 | % |   | 964 |   |   | 25.6 | % |   | 602 |   |   | 36.7 | % |   | 372 |   |   | 38.0 | % |
| Residential                                 |                                         | 3,310  |   |   | 29.2 | % |   | 2,140 |   |   | 30.0 | % |   | 490 |   |   | 12.7 | % |   | 141 |   |   | 9.3 | % |   | 126 |   |   | 13.8 | % |
| Consumer                  and other loans   |                                         | 292    |   |   | 1.1 | % |   | 127 |   |   | 0.3 | % |   | 33 |   |   | 0.8 | % |   | 32 |   |   | 2.2 | % |   | 72 |   |   | 6.1 | % |
| Other                  risks                |                                         | 113    |   |   | - |   |   | 1,224 |   |   | - |   |   | 939 |   |   | - |   |   | 284 |   |   | - |   |   | 14 |   |   | - |   |
| Total                                       | $                                            | 13,762 |   |   | 100.0 | % | $ | 11,969 |   |   | 100.0 | % | $ | 7,358 |   |   | 100.0 | % | $ | 2,937 |   |   | 100.0 | % | $ | 1,417 |   |   | 100.0 | % |

----

*Table          of Contents*

**Sources      of Funds**

**      General**

**Deposits**

| **(Dollars                in Thousands)**           |   | **Years                Ended December 31,** |      |
|-----------------------------------------------------|--------|--------------------------------------------------|-----------|
|                                                |   | **2005**                                         |      | **2004** |   | **2003** |   |
|                                                |   | **Average**                                      |      | **Average** |   | **Average** |   | **Average** |   | **Average** |   | **Average** |   |
|                                                |   | **Balance**                                      |      | **Rate** |   | **Balance** |   | **Rate** |   | **Balance** |   | **Rate** |   |
| Non-interest                bearing demand deposits |   | $                                                | 141,380   |   |   | 0.0 | % | $ | 115,045 |   |   | 0.0 | % | $ | 75,370 |   |   | 0.0 | % |
| Savings                deposits (1)            |   |                                             | 447,424   |   |   | 2.7 | % |   | 385,001 |   |   | 2.0 | % |   | 201,528 |   |   | 1.9 | % |
| Time                deposits                        |   |                                             | 486,938   |   |   | 3.2 | % |   | 323,996 |   |   | 2.5 | % |   | 162,996 |   |   | 2.7 | % |
| Total                Deposits                       |   | $                                                | 1,075,742 |   |   | 2.6 | % | $ | 824,042 |   |   | 1.9 | % | $ | 439,894 |   |   | 1.9 | % |

| **(Dollars                in Thousands)**    |   | **As                of December 31, 2005** |    |
|----------------------------------------------|--------|--------------------------------------------|---------|
|                                         |   |                                       |    |
| Three                months or less          |   | $                                          | 118,136 |   |
| Over                three through six months |   |                                       | 93,616  |   |
| Over                six through 12 months    |   |                                       | 137,615 |   |
| Over                one through five years   |   |                                       | 14,823  |   |
|                                         |   | $                                          | 364,190 |   |

**Short-Term      Borrowings**

----

*Table          of Contents*

| **(Dollars                in Thousands)**  |   | **December                31,** |    |
|--------------------------------------------|--------|---------------------------------|---------|
|                                       |   | **2005**                        |    | **2004** |   | **2003** |   |
| Federal                funds purchased     |   | $                               | -       |   | $ | - |   | $ | - |   |
| FHLB                advances               |   |                            | 164,000 |   |   | 162,000 |   |   | 167,000 |   |
| Line                of credit              |   |                            | 10,000  |   |   | - |   |   | - |   |
| Total                Short-term Borrowings |   | $                               | 174,000 |   | $ | 162,000 |   | $ | 167,000 |   |

| **(Dollars                  in Thousands)**            |   | **For                  the year ended December 31,** |    |
|--------------------------------------------------------|--------|------------------------------------------------------|---------|
|                                                   |   | **2005**                                             |    | **2004** |   | **2003** |   |
| Average                  balance during the year       |   | $                                                    | 290,731 |   | $ | 201,419 |   | $ | 116,851 |   |
| Maximum                  balance outstanding           |   | $                                                    | 395,000 |   | $ | 237,000 |   | $ | 167,000 |   |
| Balance                  at December 31,               |   | $                                                    | 164,000 |   | $ | 162,000 |   | $ | 167,000 |   |
| Interest                  rate, end of year            |   |                                                 | 4.04    | % |   | 1.89 | % |   | 1.25 | % |
| Weighted                  average rate during the year |   |                                                 | 3.31    | % |   | 1.49 | % |   | 1.42 | % |

**Capital      Issuances**

**Return      on Equity and Assets**

----

*Table          of Contents*

|                                               |   | **2005** |   | **2004** |   | **2003** |   |
|----------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Return                on average assets            |   |     | 1.2    | %        |   | 1.2      | %      |   | 1.3 | % |
| Return                on average equity            |   |     | 19.6   | %        |   | 23.5     | %      |   | 28.1 | % |
| Cash                dividend payout ratio          |   |     | 13.2   | %        |   | 6.7      | %      |   | 2.1 | % |
| Stockholders'                equity to asset ratio |   |     | 6.2    | %        |   | 5.1      | %      |   | 4.6 | % |

**Competition**

**Effect      of Governmental Policies and Recent Legislation**

----

*Table          of Contents*

**Supervision      and Regulation**

**General**

**The      Company**

----

*Table          of Contents*

**The      Bank**

**Dividends      and Other Transfer of Funds**

----

*Table          of Contents*

**Capital      Requirements**

**Prompt      Corrective Action**

----

*Table          of Contents*

**Safety      and Soundness Standards**

**Premiums      for Deposit Insurance**

----

*Table          of Contents*

** **

**The      Community Reinvestment Act (“CRA”)**

**Financial      Services Modernization Legislation**

----

*Table          of Contents*

**Regulation      W**

|   | · | to                an amount equal to 10% of the bank’s capital and surplus, in the case of                covered transactions with any one affiliate; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | to                an amount equal to 20% of the bank’s capital and surplus, in the case of                covered transactions with all affiliates. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

**USA      Patriot Act of 2001**

**Sarbanes-Oxley      Act of 2002**

----

*Table          of Contents*

**Accounting      Changes**

*Share-Based      Payment*
*Accounting      for Stock-Based Compensation*
*Employers’      Accounting for Employee Stock Ownership Plans”*

*“Accounting      Changes and Error Corrections”*

----

*Table          of Contents*

*Classification      and Measurement of Freestanding Financial Instruments Originally Issued in      Exchange for Employee Services under FASB Statement      No. 123R*

*Practical      Accommodation to the Application of Grant Date as Defined in FASB Statement      No. 123R*

*Implicit      Variable Interests under FASB Interpretation No. 46 (FIN 46R —Revised December 2003), Consolidation of Variable Interest Entities      (“VIE”)*

*The      Meaning of Other-Than-Temporary Impairment and Its Application to Certain      Investments *
*The      Meaning of Other-Than-Temporary Impairment and Its Application to Certain      Investments*

**Employees**

**ITEM      2. Properties**

| **Office                  Location**                              |   | **Leased/Owned** |   | **Lease                  Expiration Date** |
|-------------------------------------------------------------------|--------|------------------|--------|--------------------------------------------|
|                                                              |   |             |   |                                       |
| 9590                  Foothill Boulevard (1)                  (2) |   | Owned            |   | N/A                                        |
| Rancho                  Cucamonga, California 91730               |   |             |   |                                       |
|                                                              |   |             |   |                                       |
| 5455                  Riverside Drive (1)                         |   | Owned            |   | N/A                                        |
| Chino,                  California 91710                          |   |             |   |                                       |
|                                                              |   |             |   |                                       |
| 23840                  Lake Drive                  (1)            |   | Owned            |   | N/A                                        |
| Crestline,                  California 92325                      |   |             |   |                                       |

----

*Table          of Contents*

| 701                  Palomar Airport Road Suite 37(3)                                                          |   | Leased |   | Month                  to Month |
|----------------------------------------------------------------------------------------------------------------|--------|--------|--------|---------------------------------|
| Carlsbad,                  California 92009                                                                    |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 4040                  Civic Center Drive, Suites 5 and 26                  (6)                                 |   | Leased |   | March                  2006     |
| San                  Rafael, California 94909                                                                  |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 7676                  Hazard Center Drive, Suites 31 a-c (6)                                                   |   | Leased |   | June                  2006      |
| San                  Diego, California 92108                                                                   |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 27177                  Highway 189, Suite G (7)                                                                |   | Leased |   | March                  2007     |
| Blue                  Jay, California 92317                                                                    |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 2100                  S. Foothill Boulevard (1)                                                                |   | Leased |   | October                  2009   |
| La                  Verne, California 91750                                                                    |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 16008-14                  Foothill Blvd. (1)                                                                   |   | Leased |   | December                  2009  |
| Irwindale,                  California 91706                                                                   |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 500                  North State College Blvd., Suite 530                  (3)                                 |   | Leased |   | February                  2010  |
| Orange,                  CA 92868                                                                              |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 8784                  Industrial Lane (5)                                                                      |   | Leased |   | March                  2010     |
| Rancho                  Cucamonga, California 91731                                                            |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 1200                  S. Diamond Bar Boulevard                  (1)                                            |   | Leased |   | April                  2010     |
| Diamond                  Bar, California 91765                                                                 |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 8105                  Irvine Center Drive, Suites 600 (4)                  and 650 (1)                         |   | Leased |   | April                  2010     |
| Irvine,                  California 92618                                                                      |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 28200                  Hwy 189, Suite K-100                  (1)                                               |   | Leased |   | July                  2013      |
| Lake                  Arrowhead, California 92352                                                              |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 1230                  Rosecrans Avenue, Suites 120 (1),                  600 (4),                  and 660 (4) |   | Leased |   | August                  2013    |
| Manhattan                  Beach, California 90265                                                             |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 1016                  Irwin Street (3)                                                                         |   | Leased |   | January                  2014   |
| San                  Rafael, California 94909                                                                  |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 1260                  Corona Pointe (6)                                                                        |   | Leased |   | September                  2014 |
| Corona,                  CA 92879                                                                              |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 7676                  Hazard Center Drive, Suites 200 (1)&                  201(3)                         |   | Leased |   | November                  2014  |
| San                  Diego, California 92108                                                                   |   |   |   |                            |
|                                                                                                           |   |   |   |                            |
| 200                  S. Main Street, Suites 150 (1)&                  320 (6)                              |   | Leased |   | December                  2018  |
| Corona,                  California 92878                                                                      |   |   |   |                            |

----

*Table          of Contents*

**ITEM      3. Legal Proceedings**

**ITEM      4. Submission of Matters to Vote of Security      Holders**

**PART      II**

**ITEM      5. Market for the Registrant’s Common Stock, Related Stockholder      Matters****,      and Issuer Purchases of Equity Securities**

|                          |   | **Sales                Prices of** |   |
|-------------------------------|--------|------------------------------------|--------|
|                          |   | **Common                Stock**    |   |
|                          |   | **High**                           |   | **Low** |   |
| 2005                          |   |                               |   |   |   |
| First                Quarter  |   | $                                  | 33.28  |   | $ | 26.60 |   |
| Second                Quarter |   | $                                  | 34.47  |   | $ | 26.78 |   |
| Third                Quarter  |   | $                                  | 34.27  |   | $ | 28.52 |   |
| Fourth                Quarter |   | $                                  | 31.82  |   | $ | 27.42 |   |
|                          |
| 2004                          |   |                               |   |   |   |   |   |
| First                Quarter  |   | $                                  | 22.18  |   | $ | 17.58 |   |
| Second                Quarter |   | $                                  | 24.00  |   | $ | 17.25 |   |
| Third                Quarter  |   | $                                  | 28.95  |   | $ | 20.58 |   |
| Fourth                Quarter |   | $                                  | 34.65  |   | $ | 28.11 |   |

----

*Table          of Contents*

| **Period**                           |   | **Total                Number of Shares Purchased** |    | **Average                Price Paid Per Share** |   | **Total                Number of Shares Purchased as Part of Publicly Announced Plans or                Programs                (1)** |   | **Approximate                Dollar Value of Shares that May Yet Be Purchased Under the Plans                or                Programs** |    |
|--------------------------------------|--------|-----------------------------------------------------|---------|-------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|---------|
|                                 |   |                                                |    |                                            |   |                                                                                                                                  |   |                                                                                                                                      |    |
| October                1 - 31, 2005  |   |                                                | 176,816 |                                            | $      | 28.31                                                                                                                                 |   |                                                                                                                                      | 176,816 |   | $ | 18,303,762 |   |
| November                1 - 30, 2005 |   |                                                | 22,000  |                                            |   | 29.78                                                                                                                                 |   |                                                                                                                                      | 22,000  |   | $ | 17,648,546 |   |
| December                1 - 31, 2005 |   |                                                | 94,000  |                                            |   | 30.94                                                                                                                                 |   |                                                                                                                                      | 94,000  |   | $ | 14,739,798 |   |
| Total                                |   |                                                | 292,816 |                                            | $      | 29.26                                                                                                                                 |   |                                                                                                                                      | 292,816 |   |   |   |   |

|   | (1) | In                July 2002, the Company adopted a stock repurchase program in the                initial                amount of $2.0 million. In December 2003, January 2005 and May 2005,                the                Company approved                increases in its stock repurchase program of $5.0 million, and in                October                2005, the Company announced an additional increase of $20.0 million                in its                stock repurchase program for a total amount of $37.0 million. Under                its                stock repurchase program, the Company has been acquiring its common                stock                shares in the open market from time to time. The Company’s stock                repurchase program does not have an expiration date. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Recent      Sales of Unregistered Securities**

**Common      Stock **

----

*Table          of Contents*

**Preferred      Stock**

**Junior      Subordinated Debentures**

**ITEM      6. Selected Financial Data**

----

*Table          of Contents*

| (Dollars                  in Thousands, except per share data) |   | **Years                  Ended December 31,** |      |
|----------------------------------------------------------------|--------|----------------------------------------------------|-----------|
|                                                           |   | **2005**                                           |      | **2004** |   | **2003** |   | **2002** |   | **2001** |   |
| **Income                  Statement Data**                     |   |                                               |      |   |   |   |   |   |   |   |   |
| Interest                  Income                               |   | $                                                  | 110,859   |   | $ | 75,056 |   | $ | 39,537 |   | $ | 19,170 |   | $ | 11,602 |   |
| Interest                  Expense                              |   | $                                                  | 43,345    |   | $ | 22,054 |   | $ | 11,383 |   | $ | 5,837 |   | $ | 3,586 |   |
| Net                  Interest Income                           |   | $                                                  | 67,514    |   | $ | 53,002 |   | $ | 28,154 |   | $ | 13,333 |   | $ | 8,016 |   |
| Provision                  for Possible Loan Losses            |   | $                                                  | (1,886    | ) | $ | (4,881 | ) | $ | (3,597 | ) | $ | (1,397 | ) | $ | (745 | ) |
| Other                  Income                                  |   | $                                                  | 5,305     |   | $ | 5,457 |   | $ | 5,828 |   | $ | 3,928 |   | $ | 2,191 |   |
| Other                  Expenses                                |   | $                                                  | 38,746    |   | $ | 29,922 |   | $ | 16,853 |   | $ | 10,775 |   | $ | 8,323 |   |
| Income                  Before Taxes                           |   | $                                                  | 32,187    |   | $ | 23,656 |   | $ | 13,532 |   | $ | 5,089 |   | $ | 1,139 |   |
| Income                  Tax (Provision)/Benefit                |   | $                                                  | (13,276   | ) | $ | (9,669 | ) | $ | (5,540 | ) | $ | (2,081 | ) | $ | 17 |   |
| Net                  Income                                    |   | $                                                  | 18,911    |   | $ | 13,987 |   | $ | 7,992 |   | $ | 3,008 |   | $ | 1,156 |   |
| Earnings                  Per Share of Common Stock (1)   |   |                                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                          |   | $                                                  | 1.97      |   | $ | 1.72 |   | $ | 1.21 |   | $ | 0.63 |   | $ | 0.28 |   |
| Diluted                                                        |   | $                                                  | 1.89      |   | $ | 1.55 |   | $ | 1.09 |   | $ | 0.52 |   | $ | 0.25 |   |
| Weighted                  Average Number of Shares (1)    |   |                                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                          |   |                                               | 9,311,252 |   |   | 7,692,057 |   |   | 6,097,036 |   |   | 4,779,253 |   |   | 4,119,506 |   |
| Diluted                                                        |   |                                               | 9,744,474 |   |   | 8,929,760 |   |   | 7,193,604 |   |   | 6,033,591 |   |   | 5,289,104 |   |
| Ratio                  of net charge-offs during the year to   |   |                                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| average                  loans outstanding during the year     |   |                                               | 0.0       | % |   | 0.0 | % |   | 0.0 | % |   | 0.0 | % |   | 0.1 | % |
| Return                  on average assets                      |   |                                               | 1.2       | % |   | 1.2 | % |   | 1.3 | % |   | 1.1 | % |   | 0.8 | % |
| Return                  on average equity                      |   |                                               | 19.6      | % |   | 23.5 | % |   | 28.1 | % |   | 22.2 | % |   | 11.7 | % |
| Cash                  dividend declared per common share (2)   |   | $                                                  | 0.26      |   | $ | 0.12 |   | $ | 0.03 |   | $ | - |   | $ | - |   |
| Stockholders’                  equity to asset ratio     |   |                                               | 6.2       | % |   | 5.1 | % |   | 4.6 | % |   | 5.0 | % |   | 6.8 | % |
|                                                           |   |                                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                  Sheet Data**                        |   |                                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets                                                         |   | $                                                  | 1,713,638 |   | $ | 1,312,529 |   | $ | 887,979 |   | $ | 385,918 |   | $ | 191,692 |   |
| Deposits                                                       |   | $                                                  | 1,277,012 |   | $ | 965,546 |   | $ | 603,326 |   | $ | 287,533 |   | $ | 159,381 |   |
| Net                  Loans                                     |   | $                                                  | 1,359,337 |   | $ | 1,015,068 |   | $ | 589,649 |   | $ | 250,314 |   | $ | 136,161 |   |
| Long                  Term Obligations                         |   | $                                                  | 151,913   |   | $ | 91,139 |   | $ | 58,147 |   | $ | 47,527 |   | $ | 12,372 |   |
| Redeemable                  Preferred Stock                    |   | $                                                  | 9,665     |   | $ | - |   | $ | 28,999 |   | $ | 2,450 |   | $ | - |   |
| Stockholders'                  Equity                          |   | $                                                  | 99,985    |   | $ | 85,227 |   | $ | 52,175 |   | $ | 19,958 |   | $ | 10,455 |   |
| Ratio                  of allowance for possible loan losses   |   |                                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to                  loans at year-end                          |   |                                               | 1.0       | % |   | 1.2 | % |   | 1.2 | % |   | 1.2 | % |   | 1.0 | % |

**___________________**

**ITEM      7. Management’s Discussion and Analysis of Financial Condition      and Results of Operations**

**Overview**

----

*Table          of Contents*

**Critical      Accounting Policies and Estimates**

**Investment      Securities**

*“Accounting      for Certain Investments in Debt and Equity Securities,” *

----

*Table          of Contents*

**Allowance        for Loan and Lease Losses**

**Income      Taxes**

**Results      of Operations**

----

*Table          of Contents*

**Net      Interest Income**

----

*Table          of Contents*

----

*Table          of Contents*

** **

----

|                                                      |   | For                the years ended December 31, |      |
|-----------------------------------------------------------|--------|-------------------------------------------------|-----------|
|                                                      |   | 2005                                            |      | 2004 |   |
| **(Dollars                in Thousands)**                 |   | Average                                         |      |   |   | Average |   | Average |   |   |   | Average |   |
|                                                      |   | Balance                                         |      | Interest |   | Yield/Cost |   | Balance |   | Interest |   | Yield/Cost |   |
| Assets                                                    |   |                                            |      |   |   |   |   |   |   |   |   |   |   |
| Loans                (1)                                  |   | $                                               | 1,210,673 |   | $ | 98,303 |   |   | 8.1 | % | $ | 908,829 |   | $ | 66,374 |   |   | 7.3 | % |
| Investment                securities                (2)   |   |                                            | 281,604   |   |   | 11,838 |   |   | 4.2 | % |   | 197,958 |   |   | 8,187 |   |   | 4.1 | % |
| Federal                funds sold                         |   |                                            | 144       |   |   | 4 |   |   | 2.8 | % |   | 5,428 |   |   | 53 |   |   | 1.0 | % |
| Other                investments                          |   |                                            | 16,547    |   |   | 714 |   |   | 4.3 | % |   | 11,667 |   |   | 442 |   |   | 3.8 | % |
| Total                Interest-earning assets              |   |                                            | 1,508,968 |   |   | 110,859 |   |   | 7.3 | % |   | 1,123,882 |   |   | 75,056 |   |   | 6.7 | % |
| Other                assets                               |   |                                            | 66,376    |   |   |   |   |   |   |   |   | 47,747 |   |   |   |   |   |   |   |
| Less:                allowance for possible loan losses   |   |                                            | (13,737   | ) |   |   |   |   |   |   |   | (10,472 | ) |   |   |   |   |   |   |
| Total                average assets                       |   | $                                               | 1,561,607 |   |   |   |   |   |   |   | $ | 1,161,157 |   |   |   |   |   |   |   |
|                                                      |   |                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                and Stockholders' Equity       |   |                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                deposits                (3)        |   | $                                               | 447,424   |   |   | 12,289 |   |   | 2.7 | % | $ | 385,001 |   |   | 7,789 |   |   | 2.0 | % |
| Time                deposits                              |   |                                            | 486,938   |   |   | 15,719 |   |   | 3.2 | % |   | 323,996 |   |   | 7,953 |   |   | 2.5 | % |
| Subordinated                debt                          |   |                                            | 5,000     |   |   | 333 |   |   | 6.7 | % |   | 5,000 |   |   | 241 |   |   | 4.8 | % |
| Junior                subordinated debentures             |   |                                            | 84,089    |   |   | 5,352 |   |   | 6.4 | % |   | 54,080 |   |   | 2,630 |   |   | 4.9 | % |
| FHLB                advances and other borrowings         |   |                                            | 291,178   |   |   | 9,652 |   |   | 3.3 | % |   | 211,690 |   |   | 3,441 |   |   | 1.6 | % |
| Total                interest-bearing liabilities         |   |                                            | 1,314,629 |   |   | 43,345 |   |   | 3.3 | % |   | 979,767 |   |   | 22,054 |   |   | 2.3 | % |
| Demand                deposits                            |   |                                            | 141,380   |   |   |   |   |   |   |   |   | 115,045 |   |   |   |   |   |   |   |
| Other                liabilities                          |   |                                            | 9,122     |   |   |   |   |   |   |   |   | 6,749 |   |   |   |   |   |   |   |
| Total                average liabilities                  |   |                                            | 1,465,131 |   |   |   |   |   |   |   |   | 1,101,561 |   |   |   |   |   |   |   |
| Stockholders'                equity                       |   |                                            | 96,476    |   |   |   |   |   |   |   |   | 59,596 |   |   |   |   |   |   |   |
| Total                liabilities and                      |   |                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stockholders'                equity                       |   | $                                               | 1,561,607 |   |   |   |   |   |   |   | $ | 1,161,157 |   |   |   |   |   |   |   |
|                                                      |   |                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest spread                (4)     |   |                                            |      |   |   |   |   |   | 4.0 | % |   |   |   |   |   |   |   | 4.4 | % |
| Net                interest income                        |   |                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and                net interest margin                (5) |   |                                            |      |   | $ | 67,514 |   |   | 4.5 | % |   |   |   | $ | 53,002 |   |   | 4.7 | % |

*(Footnotes      on the following page)*

----

*Table          of Contents*

|                                                      |   | For                the year ended December 31, |    |
|-----------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                      |   | 2003                                           |    |
| **(Dollars                in Thousands)**                 |   | Average                                        |    |   |   | Average |   |
|                                                      |   | Balance                                        |    | Interest |   | Yield/Cost |   |
| Assets                                                    |   |                                           |    |   |   |   |   |
| Loans                (1)                                  |   | $                                              | 405,973 |   | $ | 31,080 |   |   | 7.7 | % |
| Investment                securities                (2)   |   |                                           | 177,138 |   |   | 8,088 |   |   | 4.6 | % |
| Federal                funds sold                         |   |                                           | 9,324   |   |   | 98 |   |   | 1.1 | % |
| Other                investments                          |   |                                           | 5,995   |   |   | 271 |   |   | 4.5 | % |
| Total                Interest-earning assets              |   |                                           | 598,430 |   |   | 39,537 |   |   | 6.6 | % |
| Other                assets                               |   |                                           | 27,923  |   |   |   |   |   |   |   |
| Less:                allowance for possible loan losses   |   |                                           | (4,990  | ) |   |   |   |   |   |   |
| Total                average assets                       |   | $                                              | 621,363 |   |   |   |   |   |   |   |
|                                                      |   |                                           |    |   |   |   |   |   |   |   |
| Liabilities                and Stockholders’ Equity |   |                                           |    |   |   |   |   |   |   |   |
| Savings                deposits (3)                       |   | $                                              | 201,528 |   |   | 3,820 |   |   | 1.9 | % |
| Time                deposits                              |   |                                           | 162,996 |   |   | 4,461 |   |   | 2.7 | % |
| Subordinated                debt                          |   |                                           | 5,000   |   |   | 226 |   |   | 4.5 | % |
| Junior                subordinated debentures             |   |                                           | 20,634  |   |   | 1,000 |   |   | 4.8 | % |
| FHLB                advances and other borrowings         |   |                                           | 122,570 |   |   | 1,876 |   |   | 1.5 | % |
| Total                interest-bearing liabilities         |   |                                           | 512,728 |   |   | 11,383 |   |   | 2.2 | % |
| Demand                deposits                            |   |                                           | 75,370  |   |   |   |   |   |   |   |
| Other                liabilities                          |   |                                           | 4,784   |   |   |   |   |   |   |   |
| Total                average liabilities                  |   |                                           | 592,882 |   |   |   |   |   |   |   |
| Stockholders’                equity                 |   |                                           | 28,481  |   |   |   |   |   |   |   |
| Total                liabilities and                      |   |                                           |    |   |   |   |   |   |   |   |
| stockholders’                equity                 |   | $                                              | 621,363 |   |   |   |   |   |   |   |
|                                                      |   |                                           |    |   |   |   |   |   |   |   |
| Net                interest spread                (4)     |   |                                           |    |   |   |   |   |   | 4.4 | % |
| Net                interest income                        |   |                                           |    |   |   |   |   |   |   |   |
| and                net interest margin                (5) |   |                                           |    |   | $ | 28,154 |   |   | 4.7 | % |

| (1) | Interest                  on loans includes loan fees, which totaled $11.2 million, $9.6                  million and                  $4.8 million for the years ended December 31, 2005, 2004 and 2003,                  respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The yield for securities that are classified as                available-for-sale is based on historical amortized cost                balances. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Includes savings, NOW, and money market deposit                accounts.   |
|-----|--------------------------------------------------------------------------------------|

| (4) | Net                  interest spread represents the average yield earned on interest                  earning                  assets less the average rate paid on |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | interest bearing                liabilities. |
|--------|----------------------------------------------|

| (5)  | Net interest margin is computed by dividing net                interest                income by total average earning                assets.  |
|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Table          of Contents*

| **(Dollars                  in Thousands)**   |   | **2005-2004** |   | **2004-2003** |   |
|-----------------------------------------------|--------|---------------|--------|---------------|--------|
|                                          |   | **Volume**    |   | **Rate**      |   | **Total** |   | **Volume** |   | **Rate** |   | **Total** |   |
| Increase                  (Decrease) in:      |   |          |   |          |   |   |   |   |   |   |   |   |   |
| Interest                  income:             |   |          |   |          |   |   |   |   |   |   |   |   |   |
| Loans                  (1)                    |   | $             | 20,040 |          | $      | 11,889 |   | $ | 31,929 |   | $ | 37,454 |   | $ | (2,160 | ) | $ | 35,294 |   |
| Investment                  securities        |   |          | 3,375  |          |   | 276 |   |   | 3,651 |   |   | 890 |   |   | (797 | ) |   | 93 |   |
| Other                  investments            |   |          | 184    |          |   | 88 |   |   | 272 |   |   | 241 |   |   | (64 | ) |   | 177 |   |
| Federal                  funds sold           |   |          | (52    | )             |   | 3 |   |   | (49 | ) |   | (41 | ) |   | (4 | ) |   | (45 | ) |
|                                          |   |          | 23,547 |          |   | 12,256 |   |   | 35,803 |   |   | 38,544 |   |   | (3,025 | ) |   | 35,519 |   |
| Increase                  (Decrease) in:      |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense:            |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                  deposits (2)         |   |          | 1,316  |          |   | 3,184 |   |   | 4,500 |   |   | 3,985 |   |   | (16 | ) |   | 3,969 |   |
| Time                  deposits                |   |          | 3,999  |          |   | 3,767 |   |   | 7,766 |   |   | 4,409 |   |   | (917 | ) |   | 3,492 |   |
| Borrowings                                    |   |          | 906    |          |   | 5,305 |   |   | 6,211 |   |   | 1,493 |   |   | 72 |   |   | 1,565 |   |
| Subordinated                  debt and junior |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| subordinated                  debentures      |   |          | 1,460  |          |   | 1,354 |   |   | 2,814 |   |   | 1,635 |   |   | 10 |   |   | 1,645 |   |
|                                          |   |          | 7,681  |          |   | 13,610 |   |   | 21,291 |   |   | 11,522 |   |   | (851 | ) |   | 10,671 |   |
| Increase                  (Decrease)          |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| in                  Net interest income       |   | $             | 15,866 |          | $      | (1,354 | ) | $ | 14,512 |   | $ | 27,022 |   | $ | (2,174 | ) | $ | 24,848 |   |

| (1) | Interest                on loans includes loan fees, which totaled $11.2 million, $9.6 million                and                $4.8 million for the year ended December 31, 2005, 2004 and 2003,                respectively. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes                savings, NOW, and money market deposit                accounts. |
|-----|-----------------------------------------------------------------------------------------|

**Provision      for Possible Loan Losses**

**Non-Interest      Income**

----

*Table          of Contents*

**Non-Interest      Expenses**

----

*Table          of Contents*

**Income      Tax**

**Financial      Condition**

**Assets**

----

*Table          of Contents*

**Liabilities**

----

*Table          of Contents*

**Stockholders’      Equity **

**Liquidity**

----

*Table          of Contents*

| (Dollars                in Thousands)      |   | Payment                due by period |      |
|--------------------------------------------|--------|--------------------------------------|-----------|
|                                       |   |                                 |      |   |   |   |   |   |   |   |   |
| Contractual                Obligations     |   | Total                                |      | Less                than 1 year |   | 1-3                years |   | 3-5                years |   | More                than 5 years |   |
| Time                Deposits               |   | $                                    | 662,909   |   | $ | 630,335 |   | $ | 32,492 |   | $ | 82 |   | $ | - |   |
| Long-Term                Debt Obligations  |   |                                 | 315,913   |   |   | 164,000 |   |   | 50,000 |   |   | - |   |   | 101,913 |   |
| Capital                Lease Obligations   |   |                                 | -         |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Operating                Lease Obligations |   |                                 | 21,456    |   |   | 2,682 |   |   | 5,557 |   |   | 5,059 |   |   | 8,158 |   |
| Purchase                Obligations        |   |                                 | -         |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Total                                      |   | $                                    | 1,000,278 |   | $ | 797,017 |   | $ | 88,049 |   | $ | 5,141 |   | $ | 110,071 |   |

**Capital      Resources**

----

*Table          of Contents*

| (Dollars                in Thousands)                  |   |                             |    |                             |   | Capital                Needed    |   |
|--------------------------------------------------------|--------|----------------------------------|---------|----------------------------------|--------|----------------------------------|--------|
|                                                   |   |                             |    |                             |   |                             |   |   |   | To                Be Well |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   | Capitalized                Under |   |
|                                                   |   |                             |    |                             |   | For                Capital       |   | Prompt                Corrective |   |
|                                                   |   | Actual                Regulatory |    | Adequacy                Purposes |   | Action                Provisions |   |
|                                                   |   | Capital                          |    |                             |   | Capital                          |   |   |   | Capital |   |   |   |
|                                                   |   | Amount                           |    | Ratio                            |   | Amount                           |   | Ratio |   | Amount |   | Ratio |   |
| **As                of December 31, 2005**             |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |
| Total                capital to risk-weighted assets:  |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 211,871 |                             |   | 13.13                            | %      | $ | 129,100 |   |   | 8.00 | % | $ | 161,400 |   |   | 10.00 | % |
| Consolidated                                           |   | $                                | 218,894 |                             |   | 13.52                            | %      | $ | 129,500 |   |   | 8.00 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to risk-weighted assets: |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 196,762 |                             |   | 12.20                            | %      | $ | 64,500 |   |   | 4.00 | % | $ | 96,800 |   |   | 6.00 | % |
| Consolidated                                           |   | $                                | 139,715 |                             |   | 8.63                             | %      | $ | 64,800 |   |   | 4.00 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to average assets:       |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 196,762 |                             |   | 11.70                            | %      | $ | 67,300 |   |   | 4.00 | % | $ | 84,100 |   |   | 5.00 | % |
| Consolidated                                           |   | $                                | 139,715 |                             |   | 8.26                             | %      | $ | 67,700 |   |   | 4.00 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **As                of December 31, 2004**             |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                capital to risk-weighted assets:  |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 160,509 |                             |   | 13.49                            | %      | $ | 95,159 |   |   | 8.00 | % | $ | 118,949 |   |   | 10.00 | % |
| Consolidated                                           |   | $                                | 174,212 |                             |   | 14.60                            | %      | $ | 95,474 |   |   | 8.00 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to risk-weighted assets: |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 147,508 |                             |   | 12.40                            | %      | $ | 47,580 |   |   | 4.00 | % | $ | 71,369 |   |   | 6.00 | % |
| Consolidated                                           |   | $                                | 116,280 |                             |   | 9.74                             | %      | $ | 47,737 |   |   | 4.00 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to average assets:       |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 147,508 |                             |   | 11.33                            | %      | $ | 52,066 |   |   | 4.00 | % | $ | 65,083 |   |   | 5.00 | % |
| Consolidated                                           |   | $                                | 116,280 |                             |   | 8.90                             | %      | $ | 52,276 |   |   | 4.00 | % |   | N/A |   |   | N/A |   |

**Off-Balance      Sheet Arrangements**

**ITEM      7A. Quantitative and Qualitative Disclosures About Market      Risk**

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*Table          of Contents*

**ITEM      8.** **Financial      Statements and Supplementary Data**

**INDEX      TO CONSOLIDATED FINANCIAL STATEMENTS OF**

**VINEYARD      NATIONAL BANCORP**

|                                                                                          |   |
|-----------------------------------------------------------------------------------------------|--------|
| **Independent                Auditors’ Report**                                         | 57     |
|                                                                                          |   |
|                                                                                          |   |
| **Financial                Statements**                                                       |   |
|                                                                                          |   |
| Consolidated                Balance Sheets                                                    | 58     |
| December                31, 2005 and 2004             |   |
|                                                                                          |   |
| Consolidated                Statements of Income                                              | 59     |
| For                the Years Ended December 31, 2005, 2004 and 2003                           |   |
|                                                                                          |   |
| Consolidated                Statement of Changes in Stockholders’                Equity | 60     |
| For                the Years Ended December 31, 2005, 2004 and 2003                           |   |
|                                                                                          |   |
| Consolidated                Statements of Cash Flows                                          | 62     |
| For                the Years Ended December 31, 2005, 2004 and 2003                           |   |
|                                                                                          |   |
| **Notes                to Consolidated Financial                Statements**                  | 64     |

----

*Table          of Contents*

**Report          of Independent Registered Public Accounting Firm**

----

*Table          of Contents*

**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**CONSOLIDATED      BALANCE SHEETS**

**DECEMBER      31, 2005 AND 2004**

| (Dollars                in Thousands)                                     |   | December                31, |      |
|---------------------------------------------------------------------------|--------|-----------------------------|-----------|
|                                                                      |   | 2005                        |      | 2004 |   |
| **ASSETS**                                                                |   |                        |      |   |   |
| Cash                and due from banks                                    |   | $                           | 28,630    |   | $ | 20,551 |   |
| Federal                funds sold                                         |   |                        | -         |   |   | 2,000 |   |
| Total                Cash and Cash Equivalents                            |   |                        | 28,630    |   |   | 22,551 |   |
|                                                                      |   |                        |      |   |   |   |   |
| Investment                securities, available-for-sale                  |   |                        | 248,694   |   |   | 223,480 |   |
| Loans,                net of unearned income                              |   |                        | 1,373,099 |   |   | 1,027,037 |   |
| Less:                Allowance for loan losses                            |   |                        | (13,762   | ) |   | (11,969 | ) |
| Net                Loans                                                  |   |                        | 1,359,337 |   |   | 1,015,068 |   |
| Bank                premises and equipment, net                           |   |                        | 19,192    |   |   | 12,399 |   |
| Accrued                interest                                           |   |                        | 8,276     |   |   | 5,423 |   |
| FHLB                and other stock, at cost                              |   |                        | 19,155    |   |   | 12,235 |   |
| Deferred                income tax asset                                  |   |                        | 11,646    |   |   | 8,196 |   |
| Other                assets                                               |   |                        | 18,708    |   |   | 13,177 |   |
| **TOTAL                ASSETS**                                           |   | $                           | 1,713,638 |   | $ | 1,312,529 |   |
|                                                                      |   |                        |      |   |   |   |   |
| **LIABILITES                AND STOCKHOLDERS' EQUITY**                    |   |                        |      |   |   |   |   |
| Liabilities                                                               |   |                        |      |   |   |   |   |
| Deposits                                                                  |   |                        |      |   |   |   |   |
| Non-interest-bearing                                                      |   | $                           | 154,664   |   | $ | 127,466 |   |
| Interest-bearing                                                          |   |                        | 1,122,348 |   |   | 838,080 |   |
| Total                Deposits                                             |   |                        | 1,277,012 |   |   | 965,546 |   |
| FHLB                advances and other borrowings                         |   |                        | 224,000   |   |   | 177,000 |   |
| Subordinated                debentures                                    |   |                        | 5,000     |   |   | 5,000 |   |
| Junior                subordinated debentures                             |   |                        | 96,913    |   |   | 71,139 |   |
| Accrued                interest and other liabilities                     |   |                        | 10,728    |   |   | 8,617 |   |
| **TOTAL                LIABILITIES**                                      |   |                        | 1,613,653 |   |   | 1,227,302 |   |
|                                                                      |   |                        |      |   |   |   |   |
| **COMMITMENTS                AND CONTINGENCIES (Note #5 and #11)**        |   |                        |      |   |   |   |   |
|                                                                      |   |                        |      |   |   |   |   |
| Stockholders'                Equity                                       |   |                        |      |   |   |   |   |
| Contributed                capital                                        |   |                        |      |   |   |   |   |
| Perpetual                preferred stock - authorized 10,000,000 shares   |   |                        |      |   |   |   |   |
| Series                C - no par value, issued and outstanding 10,000     |   |                        |           |   |   |  |   |
| and                0 shares in 2005 and 2004, respectively                |   |                        | 9,665     |   |   | - |   |
| Common                stock - no par value, authorized 50,000,000 shares; |   |                        |      |   |   |   |   |
| issued                and outstanding 9,427,690 and 9,581,941 shares      |   |                        |      |   |   |   |   |
| in                2005 and 2004, respectively                             |   |                        | 60,972    |   |   | 70,536 |   |
| Additional                paid-in capital                                 |   |                        | 4,443     |   |   | 3,772 |   |
| Unallocated                ESOP shares                                    |   |                        | (6,304    | ) |   | (6,856 | ) |
| Retained                earnings                                          |   |                        | 36,454    |   |   | 20,513 |   |
| Accumulated                other comprehensive loss, net of income taxes  |   |                        | (5,245    | ) |   | (2,738 | ) |
| **TOTAL                STOCKHOLDERS' EQUITY**                             |   |                        | 99,985    |   |   | 85,227 |   |
| **TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY**             |   | $                           | 1,713,638 |   | $ | 1,312,529 |   |

----

*Table          of Contents*

**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**CONSOLIDATED      STATEMENTS OF INCOME**

**FOR      THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003**

| (Dollars                in thousands, except per share amounts)               |   | 2005   |    | 2004   |   | 2003   |   |
|-------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|
|                                                                          |   |   |    |
| **Interest                Income**                                            |   |   |    |   |   |   |   |
| Interest                and fees on loans                                     |   | $      | 98,303  |   | $      | 66,374 |   | $ | 31,080 |   |
| Interest                on investment securities - taxable                    |   |   | 12,552  |   |   | 8,629  |   |   | 8,354 |   |
| Interest                on federal funds sold                                 |   |   | 4       |   |   | 53     |   |   | 98 |   |
| Interest                on deposits in other financial institutions           |   |   | -       |   |   | -      |   |   | 5 |   |
| **TOTAL                INTEREST INCOME**                                      |   |   | 110,859 |   |   | 75,056 |   |   | 39,537 |   |
|                                                                          |   |   |    |   |   |   |   |   |   |   |
| **Interest                Expense**                                           |   |   |    |   |   |   |   |   |   |   |
| Interest                on savings deposits                                   |   |   | 12,289  |   |   | 7,789  |   |   | 3,820 |   |
| Interest                on time deposits in denominations of $100,000 or more |   |   | 6,766   |   |   | 4,246  |   |   | 2,282 |   |
| Interest                on other time deposits                                |   |   | 8,953   |   |   | 3,707  |   |   | 2,179 |   |
| Interest                on federal funds purchased and other borrowings       |   |   | 15,337  |   |   | 6,312  |   |   | 3,102 |   |
| **TOTAL                INTEREST EXPENSE**                                     |   |   | 43,345  |   |   | 22,054 |   |   | 11,383 |   |
| **NET                INTEREST INCOME**                                        |   |   | 67,514  |   |   | 53,002 |   |   | 28,154 |   |
|                                                                          |   |   |    |   |   |   |   |   |   |   |
| **Provision                for Loan and Lease Losses**                        |   |   | (1,886  | )      |   | (4,881 | )      |   | (3,597 | ) |
| **NET                INTEREST INCOME AFTER**                                  |   |   |    |   |   |   |   |   |   |   |
| **PROVISION                FOR LOAN**                                         |   |   |    |   |   |   |   |   |   |   |
| **AND                LEASE LOSSES**                                           |   |   | 65,628  |   |   | 48,121 |   |   | 24,557 |   |
|                                                                          |   |   |    |   |   |   |   |   |   |   |
| **Other                Income**                                               |   |   |    |   |   |   |   |   |   |   |
| Fees                and service charges                                       |   |   | 1,413   |   |   | 1,783  |   |   | 1,484 |   |
| Gain                on sale of SBA loans and SBA broker fee income            |   |   | 2,903   |   |   | 2,973  |   |   | 1,988 |   |
| Net                gain on sale of investment securities and non-SBA loans    |   |   | 660     |   |   | 388    |   |   | 2,266 |   |
| Other                income                                                   |   |   | 329     |   |   | 313    |   |   | 90 |   |
| **TOTAL                OTHER INCOME**                                         |   |   | 5,305   |   |   | 5,457  |   |   | 5,828 |   |
|                                                                          |   |   |    |   |   |   |   |   |   |   |
| **Other                Expenses**                                             |   |   |    |   |   |   |   |   |   |   |
| Salaries                and employee benefits                                 |   |   | 21,802  |   |   | 16,712 |   |   | 8,983 |   |
| Occupancy                expense of premises                                  |   |   | 3,875   |   |   | 2,419  |   |   | 1,477 |   |
| Furniture                and equipment expense                                |   |   | 3,391   |   |   | 2,391  |   |   | 1,189 |   |
| Other                expenses                                                 |   |   | 9,678   |   |   | 8,400  |   |   | 5,204 |   |
| **TOTAL                OTHER EXPENSES**                                       |   |   | 38,746  |   |   | 29,922 |   |   | 16,853 |   |
| **INCOME                BEFORE INCOME TAXES**                                 |   |   | 32,187  |   |   | 23,656 |   |   | 13,532 |   |
| **INCOME                TAX EXPENSE**                                         |   |   | 13,276  |   |   | 9,669  |   |   | 5,540 |   |
| **NET                INCOME**                                                 |   | $      | 18,911  |   | $      | 13,987 |   | $ | 7,992 |   |
|                                                                          |   |   |    |   |   |   |   |   |   |   |
| **EARNINGS                PER SHARE**                                         |   |   |    |   |   |   |   |   |   |   |
| **BASIC**                                                                     |   | $      | 1.97    |   | $      | 1.72   |   | $ | 1.21 |   |
| **DILUTED**                                                                   |   | $      | 1.89    |   | $      | 1.55   |   | $ | 1.09 |   |

----

*Table          of Contents*

**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**CONSOLIDATED      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**

**FOR      THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003**

| (Dollars                in Thousands)                     |   |      |    |                        |   |       |   |     |   | Stock                |   |          |   |     |   |        |   | Accumulated   |   |   |   |
|-----------------------------------------------------------|--------|-----------|---------|-----------------------------|--------|------------|--------|----------|--------|----------------------|--------|---------------|--------|----------|--------|-------------|--------|---------------|--------|--------|--------|
|                                                      |   | Perpetual |    | Common                Stock |   | Additional |   | Dividend |   |                 |   |          |   |     |   | Other       |   |          |   |
|                                                      |   | Preferred |    | Number                of    |   |       |   | Paid-in  |   | To                Be |   | Comprehensive |   | Retained |   | Unallocated |   | Comprehensive |   |   |   |
|                                                      |   | Stock     |    | Shares                      |   | Amount     |   | Capital  |   | Distributed          |   | Income        |   | Earnings |   | ESOP        |   | Income/(Loss) |   | Total  |   |
| **Balance                December 31, 2002**              |   | $         | 2,450   |                        |   | 5,983,450  |   | $        | 6,052  |                 | $      | 3,307         |   | $        | 2,026  |        |   |          |   | $      | 6,014  |   |   |   |   | $ | 109 |   | $ | 19,958 |   |
|                                                      |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of common stock                   |   |      |    |                        |   | 349,044    |   |     | 3,200  |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | 3,200 |   |
| Issuance                of Series B preferred stock       |   |      | 26,549  |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | 26,549 |   |
| Stock                options exercised                    |   |      |    |                        |   | 143,320    |   |     | 317    |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | 317 |   |
| Warrants                exercised                         |   |      |    |                        |   | 4,410      |   |     | 30     |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | 30 |   |
| Purchase                of treasury stock                 |   |      |    |                        |   | (188,794   | )      |     | (1,884 | )                    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | (1,884 | ) |
| Stock                dividends distributed                |   |      |    |                        |   |       |   |     | 2,024  |                 |   |          |   |     | (2,024 | )           |   |          |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Cash                paid for fractional shares for        |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                dividend distribution                |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     | (2     | )           |   |          |   |   |   |   |   |   |   |   |   |   |   | (2 | ) |
| Cash                paid for fractional shares            |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for                the Southland Bank purchase            |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   | (2     | ) |   |   |   |   |   |   |   | (2 | ) |
| Stock                dividend to be distributed           |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     | 4,981  |        |   |          |   |   | (4,981 | ) |   |   |   |   |   |   |   | - |   |
| Cash                dividends declared on common stock    |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        | (149   | )             |   |   |   |   |   |   |   | (149 | ) |
| Cash                dividends declared on preferred stock |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        | (637   | )             |   |   |   |   |   |   |   | (637 | ) |
| Comprehensive                income                       |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income                                 |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        | $      | 7,992         |   |   | 7,992  |   |   |   |   |   |   |   |   | 7,992 |   |
| Unrealized                security holding                |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| losses                (net of                             |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $1,345                tax benefit)                        |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   | (1,936        | )      |   |   |   |   |   |   |   | (1,936 | ) |   | (1,936 | ) |
| Less                reclassification adjustment           |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for                realized gains                         |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (net                of $876 tax provision)                |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   | (1,261        | )      |   |   |   |   |   |   |   | (1,261 | ) |   | (1,261 | ) |
| Total                comprehensive income                 |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        | $      | 4,795         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance,                December 31, 2003**             |   | $         | 28,999  |                        |   | 6,291,430  |   | $        | 9,739  |                 | $      | 3,307         |   | $        | 4,981  |        |   |          |   | $      | 8,237  |   | $ | - |   | $ | (3,088 | ) | $ | 52,175 |   |
|                                                      |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of common stock                   |   |      |    |                        |   | 1,283,100  |   |     | 29,200 |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | 29,200 |   |
| Stock                options exercised                    |   |      |    |                        |   | 214,329    |   |     | 745    |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | 745 |   |
| Warrants                exercised                         |   |      |    |                        |   | 148,100    |   |     | 1,007  |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | 1,007 |   |
| Tax                benefit from exercise of               |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| non-qualified                stock options                |   |      |    |                        |   |       |   |     |   |                 |   | 473           |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | 473 |   |
| Purchase                of treasury stock                 |   |      |    |                        |   | (82,200    | )      |     | (1,612 | )                    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | (1,612 | ) |
| Purchase                of common stock                   |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to                pre-fund ESOP                           |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   | $ | (6,997 | ) |   |   |   |   | (6,997 | ) |
| Allocation                of ESOP shares                  |   |      |    |                        |   |       |   |     |   |                 |   | (8            | )      |     |   |        |   |          |   |   |   |   |   | 141 |   |   |   |   |   | 133 |   |
| Redemption                of Series A                     |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| preferred                stock                            |   |      | (2,450  | )                           |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | (2,450 | ) |
| Redemption                and conversion of               |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Series                B preferred stock                   |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to                common stock                            |   |      | (26,547 | )                           |   | 1,727,182  |   |     | 26,491 |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | (56 | ) |
| Cash                paid for fractional shares for        |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Series                B stock conversion                  |   |      | (2      | )                           |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   | (2 | ) |
| Stock                dividends distributed                |   |      |    |                        |   |       |   |     | 4,966  |                 |   |          |   |     | (4,966 | )           |   |          |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Cash                paid for fractional shares for        |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                dividend distribution                |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     | (15    | )           |   |          |   |   |   |   |   |   |   |   |   |   |   | (15 | ) |
| Cash                paid in excess of cost to redeem      |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Series                A preferred stock                   |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   | (51    | ) |   |   |   |   |   |   |   | (51 | ) |
| Cash                paid in excess of cost to redeem      |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and                convert Series B preferred stock       |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   | (20    | ) |   |   |   |   |   |   |   | (20 | ) |
| Cash                dividends declared on common stock    |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        | (938   | )             |   |   |   |   |   |   |   | (938 | ) |
| Cash                dividends declared on preferred stock |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        | (702   | )             |   |   |   |   |   |   |   | (702 | ) |
| Comprehensive                income                       |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income                                 |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   | 13,987        |   |   | 13,987 |   |   |   |   |   |   |   |   | 13,987 |   |
| Unrealized                security holding gains          |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (net                of $85 tax provision)                 |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   | 121           |   |   |   |   |   |   |   |   | 121 |   |   | 121 |   |
| Less                reclassification adjustment           |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for                realized gains                         |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (net                of $159 tax provision)                |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        |   | 229           |   |   |   |   |   |   |   |   | 229 |   |   | 229 |   |
| Total                comprehensive income                 |   |      |    |                        |   |       |   |     |   |                 |   |          |   |     |   |        | $      | 14,337        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance,                December 31, 2004**             |   | $         | -       |                        |   | 9,581,941  |   | $        | 70,536 |                 | $      | 3,772         |   | $        | -      |        |   |          |   | $      | 20,513 |   | $ | (6,856 | ) | $ | (2,738 | ) | $ | 85,227 |   |

** **

----

*Table            of Contents*

**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**CONSOLIDATED      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**

**FOR      THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003**

**(continued)**

| (Dollars                in Thousands)                    |   |      |   |                        |   |       |   |    |    |          |   |     |   | Accumulated |   |          |   |
|----------------------------------------------------------|--------|-----------|--------|-----------------------------|--------|------------|--------|---------|---------|---------------|--------|----------|--------|-------------|--------|---------------|--------|
|                                                     |   | Perpetual |   | Common                Stock |   | Additional |   |    |    |          |   |     |   | Other       |   |          |   |
|                                                     |   | Preferred |   | Number                of    |   |       |   | Paid-in |    | Comprehensive |   | Retained |   | Unallocated |   | Comprehensive |   |   |   |
|                                                     |   | Stock     |   | Shares                      |   | Amount     |   | Capital |    | Income        |   | Earnings |   | ESOP        |   | Loss          |   | Total |   |
| **Balance                December 31, 2004**             |   |      |   |                        |   | 9,581,941  |   | $       | 70,536  |          | $      | 3,772    |   |        |   |          | $      | 20,513 |   | $ | (6,856 | ) | $ | (2,738 | ) | $ | 85,227 |   |
|                                                     |   |      |   |                        |   |       |   |    |    |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of Series C preferred stock, net |   | $         | 9,665  |                        |   |       |   |    |    |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 9,665 |   |
| Stock                options exercised                   |   |      |   |                        |   | 144,970    |   |    | 807     |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 807 |   |
| Warrants                exercised                        |   |      |   |                        |   | 67,990     |   |    | 463     |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 463 |   |
| Additional                investment rights exercised    |   |      |   |                        |   | 120,775    |   |    | 3,530   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 3,530 |   |
| Purchase                of treasury stock                |   |      |   |                        |   | (487,986   | )      |    | (14,364 | )             |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | (14,364 | ) |
| Tax                benefit from exercise of              |   |      |   |                        |   |       |   |    |    |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| non-qualified                stock options               |   |      |   |                        |   |       |   |    |    |          |   | 499      |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 499 |   |
| Release                of ESOP shares                    |   |      |   |                        |   |       |   |    |    |          |   | 172      |   |        |   |          |   |   |   |   | 552 |   |   |   |   |   | 724 |   |
| Cash                dividends declared on preferred      |   |      |   |                        |   |       |   |    |    |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                                                    |   |      |   |                        |   |       |   |    |    |          |   |     |   |        |   |          |   | (540 | ) |   |   |   |   |   |   |   | (540 | ) |
| Cash                dividends declared on common         |   |      |   |                        |   |       |   |    |    |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                                                    |   |      |   |                        |   |       |   |    |    |          |   |     |   |        |   |          |   | (2,430 | ) |   |   |   |   |   |   |   | (2,430 | ) |
| Comprehensive                income                      |   |      |   |                        |   |       |   |    |    |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income                                |   |      |   |                        |   |       |   |    |    |          |   |     |   | $           | 18,911 |          |   | 18,911 |   |   |   |   |   |   |   |   | 18,911 |   |
| Unrealized                security holding               |   |      |   |                        |   |       |   |    |    |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| losses                (net of $1,815                     |   |      |   |                        |   |       |   |    |    |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| tax                benefit)                              |   |      |   |                        |   |       |   |    |    |          |   |     |   |        | (2,507 | )             |   |   |   |   |   |   |   | (2,507 | ) |   | (2,507 | ) |
| Total                comprehensive income                |   |      |   |                        |   |       |   |    |    |          |   |     |   | $           | 16,404 |          |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance,                December 31, 2005**            |   | $         | 9,665  |                        |   | 9,427,690  |   | $       | 60,972  |          | $      | 4,443    |   |        |   |          | $      | 36,454 |   | $ | (6,304 | ) | $ | (5,245 | ) | $ | 99,985 |   |

----

*Table          of Contents*

**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**FOR      THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003**

| (Dollars                in Thousands)                                    |   | 2005   |     | 2004   |   | 2003     |   |
|--------------------------------------------------------------------------|--------|--------|----------|--------|--------|----------|--------|
|                                                                     |   |   |     |
| **Cash                Flows from Operating Activities**                  |   |   |     |   |   |     |   |
| Net                Income                                                |   | $      | 18,911   |   | $      | 13,987   |   | $ | 7,992 |   |
| Adjustments                to Reconcile Net Income to Net                |   |   |     |   |   |     |   |   |   |   |
| Cash                Provided By Operating Activities                     |   |   |     |   |   |     |   |   |   |   |
| Depreciation                                                             |   |   | 2,980    |   |   | 2,042    |   |   | 956 |   |
| Investment                securities accretion/amortization              |   |   | 1,479    |   |   | 781      |   |   | 576 |   |
| Amortization                of intangible assets                         |   |   | 11       |   |   | 11       |   |   | 4 |   |
| Amortization                of SBA servicing assets                      |   |   | 578      |   |   | 229      |   |   | 65 |   |
| Amortization                of SBA interest only strip                   |   |   | 93       |   |   | 40       |   |   | 17 |   |
| Allocation                of ESOP shares                                 |   |   | 724      |   |   | 133      |   |   | - |   |
| FHLB                dividends                                            |   |   | (607     | )      |   | (426     | )      |   | (186 | ) |
| Tax                benefit for exercise of non-qualified stock options   |   |   | 499      |   |   | 473      |   |   | - |   |
| Reinvestment                of mutual fund dividends                     |   |   | (78      | )      |   | (42      | )      |   | - |   |
| Provision                for possible loan losses                        |   |   | 1,886    |   |   | 4,881    |   |   | 3,597 |   |
| Provision                for unfunded commitments                        |   |   | 314      |   |   | 853      |   |   | 113 |   |
| Loss                on disposal of equipment                             |   |   | -        |   |   | -        |   |   | 27 |   |
| Increase                / (decrease) in taxes payable                    |   |   | (79      | )      |   | (2,273   | )      |   | (1,542 | ) |
| (Decrease)                / increase in deferred taxes                   |   |   | (1,635   | )      |   | 31       |   |   | (2,779 | ) |
| Increase                in other assets                                  |   |   | (5,437   | )      |   | (3,045   | )      |   | (3,632 | ) |
| (Increase)                / decrease in cash surrender                   |   |   |     |   |   |     |   |   |   |   |
| value                of life insurance policies                          |   |   | (2       | )      |   | 51       |   |   | 40 |   |
| Decrease                in loans held for sale                           |   |   | -        |   |   | -        |   |   | 2,112 |   |
| Increase                in unearned loan fees                            |   |   | 1,548    |   |   | 257      |   |   | 1,799 |   |
| Increase                in interest receivable                           |   |   | (2,853   | )      |   | (2,316   | )      |   | (1,548 | ) |
| Increase                / (decrease) in interest payable                 |   |   | 525      |   |   | (154     | )      |   | 790 |   |
| Increase                in accrued expense and other liabilities         |   |   | 1,151    |   |   | 1,320    |   |   | 1,766 |   |
| Gain                on sale of loans                                     |   |   | (2,141   | )      |   | (1,614   | )      |   | (1,136 | ) |
| Gain                on sale of other real estate owned                   |   |   | -        |   |   | (56      | )      |   | - |   |
| Gain                on sale of investment securities, net                |   |   | -        |   |   | (388     | )      |   | (2,137 | ) |
| Total                Adjustments                                         |   |   | (1,044   | )      |   | 788      |   |   | (1,098 | ) |
| **Net                Cash Provided By Operating Activities**             |   |   | 17,867   |   |   | 14,775   |   |   | 6,894 |   |
|                                                                     |   |   |     |   |   |     |   |   |   |   |
| **Cash                Flows From Investing Activities**                  |   |   |     |   |   |     |   |   |   |   |
| Proceeds                from maturities of investment securities,        |   |   |     |   |   |     |   |   |   |   |
| available-for-sale                                                       |   |   | -        |   |   | -        |   |   | 20,000 |   |
| Proceeds                from sales of mortgage-backed                    |   |   |     |   |   |     |   |   |   |   |
| securities                available-for-sale                             |   |   | -        |   |   | 60,843   |   |   | 232,231 |   |
| Purchase                of investment securities available-for-sale      |   |   | -        |   |   | -        |   |   | (2,000 | ) |
| Purchase                of mortgage-backed securities available-for-sale |   |   | (95,653  | )      |   | (112,458 | )      |   | (394,497 | ) |
| Proceeds                from principal reductions and maturities         |   |   |     |   |   |     |   |   |   |   |
| of                mortgage-backed securities available-for-sale          |   |   | 64,716   |   |   | 30,446   |   |   | 25,890 |   |
| Purchase                of FHLB and other stock, net                     |   |   | (8,755   | )      |   | (3,670   | )      |   | (6,739 | ) |
| Policy                additions to life insurance                        |   |   | -        |   |   | (230     | )      |   | (231 | ) |
| Redemption                of FHLB stock                                  |   |   | 2,442    |   |   | 1,056    |   |   | - |   |
| Net                cash provided from acquisition                        |   |   | -        |   |   | -        |   |   | 12,766 |   |
| Recoveries                on loans previously written off                |   |   | 67       |   |   | 122      |   |   | 72 |   |
| Net                loans made to customers and principal                 |   |   |     |   |   |     |   |   |   |   |
| collections                of loans                                      |   |   | (345,629 | )      |   | (429,065 | )      |   | (326,154 | ) |
| Capital                expenditures                                      |   |   | (9,773   | )      |   | (5,014   | )      |   | (4,271 | ) |
| Proceeds                from sale of other real estate owned             |   |   | -        |   |   | 167      |   |   | - |   |
| Proceeds                from sale of property, plant and equipment       |   |   | -        |   |   | 8        |   |   | - |   |
| **Net                Cash Used in Investing Activities**                 |   |   | (392,585 | )      |   | (457,795 | )      |   | (442,933 | ) |

** **

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*Table          of Contents*

**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**FOR      THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003**

**(continued)**

| (Dollars                in Thousands)                                                    |   | 2005   |    | 2004   |   | 2003    |   |
|------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|---------|--------|
|                                                                                     |   |   |    |   |   |    |   |
| **Cash                Flows From Financing Activities**                                  |   |   |    |   |   |    |   |
| Net                increase in demand deposits, NOW account,                             |   |   |    |   |   |    |   |
| savings                accounts, and money market deposits                               |   |   | 35,618  |   |   | 205,162 |   |   | 158,863 |   |
| Net                increase in certificates of deposits                                  |   |   | 275,848 |   |   | 157,058 |   |   | 125,834 |   |
| Proceeds                from issuance of preferred stock                                 |   |   | 9,665   |   |   | -       |   |   | 26,549 |   |
| Proceeds                from issuance of common stock                                    |   |   | -       |   |   | 29,200  |   |   | - |   |
| Proceeds                from issuance of junior subordinated debentures                  |   |   | 25,000  |   |   | 32,000  |   |   | 20,000 |   |
| Increase                / (decrease) in other borrowings                                 |   |   | 10,000  |   |   | -       |   |   | (5,000 | ) |
| Purchase                of common stock to pre-fund ESOP                                 |   |   | -       |   |   | (6,997  | )      |   | - |   |
| Purchase                of treasury stock                                                |   |   | (14,364 | )      |   | (1,612  | )      |   | (1,884 | ) |
| Net                change in FHLB advances                                               |   |   | 37,000  |   |   | (5,000  | )      |   | 137,000 |   |
| Proceeds                from exercise of Series A warrants                               |   |   | 463     |   |   | 1,007   |   |   | 30 |   |
| Redemption                of Series A preferred stock (including                         |   |   |    |   |   |    |   |   |   |   |
| cash                paid in excess of cost)                                              |   |   | -       |   |   | (2,501  | )      |   | - |   |
| Redemption                and conversion of Series B preferred stock                     |   |   |    |   |   |    |   |   |   |   |
| (including                cash paid in excess of cost)                                   |   |   | -       |   |   | (76     | )      |   | - |   |
| Cash                paid in lieu of fractional shares                                    |   |   |    |   |   |    |   |   |   |   |
| of                stock dividend                                                         |   |   | -       |   |   | (15     | )      |   | (4 | ) |
| Cash                paid in lieu of fractional shares                                    |   |   |    |   |   |    |   |   |   |   |
| of                Series B conversion                                                    |   |   | -       |   |   | (2      | )      |   | - |   |
| Dividends                paid on preferred stock                                         |   |   | (340    | )      |   | (702    | )      |   | (637 | ) |
| Dividends                paid on common stock                                            |   |   | (2,430  | )      |   | (938    | )      |   | (149 | ) |
| Proceeds                from exercise of additional investment rights                    |   |   | 3,530   |   |   | -       |   |   | - |   |
| Proceeds                from exercise of stock options                                   |   |   | 807     |   |   | 745     |   |   | 317 |   |
| **Net                Cash Provided by Financing Activities**                             |   |   | 380,797 |   |   | 407,329 |   |   | 460,919 |   |
|                                                                                     |   |   |    |   |   |    |   |   |   |   |
| **Net                Increase / (Decrease) in Cash and Cash                Equivalents** |   |   | 6,079   |   |   | (35,691 | )      |   | 24,880 |   |
|                                                                                     |   |   |    |   |   |    |   |   |   |   |
| **Cash                and Cash Equivalents**,                Beginning of Year           |   |   | 22,551  |   |   | 58,242  |   |   | 33,362 |   |
|                                                                                     |   |   |    |   |   |    |   |   |   |   |
| **Cash                and Cash Equivalents**,                End of Year                 |   | $      | 28,630  |   | $      | 22,551  |   | $ | 58,242 |   |
|                                                                                     |   |   |    |   |   |    |   |   |   |   |
|                                                                                     |   |   |    |   |   |    |   |   |   |   |
| **Supplementary                Information**                                             |   |   |    |   |   |    |   |   |   |   |
| Change                in valuation allowance                                             |   |   |    |   |   |    |   |   |   |   |
| for                investment securities                                                 |   | $      | 4,322   |   | $      | 594     |   | $ | (5,422 | ) |
| Conversion                of Series B preferred stock                                    |   | $      | -       |   | $      | 26,491  |   | $ | - |   |
| Income                taxes paid                                                         |   | $      | 13,075  |   | $      | 11,910  |   | $ | 9,716 |   |
| Interest                paid                                                             |   | $      | 42,620  |   | $      | 21,900  |   | $ | 10,519 |   |
| Transfer                of loans to other real estate owned                              |   | $      | -       |   | $      | -       |   | $ | 111 |   |

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*Table          of Contents*

**VINEYARD        NATIONAL BANCORP AND SUBSIDIARY**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note      #1****-      Summary of Significant Accounting Policies**

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*Table          of Contents*

*“Accounting      for Certain Investments in Debt and Equity Securities,” *

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*Table          of Contents*

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*Table          of Contents*

*Disclosures        About Fair Value of Financial Instruments*

*“Accounting      for Income Taxes.”*

*“Accounting      for Stock Issued to Employees,”*
* *

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*Table          of Contents*

*Share-Based      Payment*
*Accounting      for Stock-Based Compensation*
*Employers’      Accounting for Employee Stock Ownership Plans*

| (Dollars                  in Thousands)                                 |   | Years                  Ended December 31, |      |
|-------------------------------------------------------------------------|--------|-------------------------------------------|-----------|
|                                                                    |   | 2005                                      |      | 2004 |   | 2003 |   |
| Net                  income:                                            |   |                                      |      |   |   |   |   |
| As                  reported                                            |   | $                                         | 18,911    |   | $ | 13,987 |   | $ | 7,992 |   |
| Stock-based                  compensation that would have been reported |   |                                      |      |   |   |   |
| using                  the fair value method of SFAS No. 123            |   |                                      | (110      | ) |   | (339 | ) |   | (189 | ) |
| Pro                  forma net income                                   |   | $                                         | 18,801    |   | $ | 13,648 |   | $ | 7,803 |   |
|                                                                    |   |                                      |      |   |   |   |   |   |   |   |
| Basic                  Shares                                           |   |                                      | 9,311,252 |   |   | 7,692,057 |   |   | 6,097,036 |   |
| Diluted                  Shares                                         |   |                                      | 9,744,474 |   |   | 8,929,760 |   |   | 7,193,604 |   |
|                                                                    |   |                                      |      |   |   |   |   |   |   |   |
| Basic                  earnings per share:                              |   |                                      |      |   |   |   |   |   |   |   |
| As                  reported                                            |   | $                                         | 1.97      |   | $ | 1.72 |   | $ | 1.21 |   |
| Pro                  forma                                              |   | $                                         | 1.96      |   | $ | 1.67 |   | $ | 1.18 |   |
|                                                                    |   |                                      |      |   |   |   |   |   |   |   |
| Diluted                  earnings per share:                            |   |                                      |      |   |   |   |   |   |   |   |
| As                  reported                                            |   | $                                         | 1.89      |   | $ | 1.55 |   | $ | 1.09 |   |
| Pro                  forma                                              |   | $                                         | 1.87      |   | $ | 1.52 |   | $ | 1.06 |   |

*“Reporting      Comprehensive Income,*

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*Table          of Contents*

*Employers’        Accounting for Employee Stock Ownership Plans”*

*“Accounting      Changes and Error Corrections”*

*Classification      and Measurement of Freestanding Financial Instruments Originally Issued in      Exchange for Employee Services under FASB Statement      No. 123R*

*Practical      Accommodation to the Application of Grant Date as Defined in FASB Statement      No. 123I*

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*Table          of Contents*

*Implicit      Variable Interests under FASB Interpretation No. 46 (FIN 46R —Revised December 2003), Consolidation of Variable Interest Entities      (“VIE”)*

*The      Meaning of Other-Than-Temporary Impairment and Its Application to Certain      Investments *
*The      Meaning of Other-Than-Temporary Impairment and Its Application to Certain      Investments*

**Note      #2 - Investment Securities**

| (Dollars                in Thousands)     |   |      |    | Gross      |   | Gross      |   |                      |   |
|-------------------------------------------|--------|-----------|---------|------------|--------|------------|--------|---------------------------|--------|
|                                      |   | Amortized |    | Unrealized |   | Unrealized |   |                      |   |
|                                      |   | Cost      |    | Gains      |   | Losses     |   | Fair                Value |   |
| U.S.                agency securities     |   | $         | 11,751  |       | $      | -          |   | $                         | (126   | ) | $ | 11,625 |   |
| Mortgage                backed securities |   |      | 243,786 |       |   | -          |   |                      | (8,806 | ) |   | 234,980 |   |
| Mutual                funds               |   |      | 2,121   |       |   | -          |   |                      | (32    | ) |   | 2,089 |   |
| Total                                     |   | $         | 257,658 |       | $      | -          |   | $                         | (8,964 | ) | $ | 248,694 |   |

| (Dollars                in Thousands)     |   |      |    | Gross      |   | Gross      |   |                      |   |
|-------------------------------------------|--------|-----------|---------|------------|--------|------------|--------|---------------------------|--------|
|                                      |   | Amortized |    | Unrealized |   | Unrealized |   |                      |   |
|                                      |   | Cost      |    | Gains      |   | Losses     |   | Fair                Value |   |
| U.S.                agency securities     |   | $         | 11,033  |       | $      | -          |   | $                         | (532   | ) | $ | 10,501 |   |
| Mortgage                backed securities |   |      | 215,045 |       |   | 116        |   |                      | (4,228 | ) |   | 210,933 |   |
| Mutual                funds               |   |      | 2,042   |       |   | 4          |   |                      | -      |   |   | 2,046 |   |
| Total                                     |   | $         | 228,120 |       | $      | 120        |   | $                         | (4,760 | ) | $ | 223,480 |   |

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*Table          of Contents*

| (Dollars                  in Thousands)     |   | Securities                  Available-for-Sale |   |
|---------------------------------------------|--------|------------------------------------------------|--------|
|                                        |   | Maturing                  5-10 years           |   | Maturing                  after 10 years |   |
|                                        |   | Amortized                                      |   |   |   | Amortized |   |   |   |
|                                        |   | Cost                                           |   | Fair                  Value |   | Cost |   | Fair                  Value |   |
| Mortgage-backed                  securities |   | $                                              | 14,888 |   | $ | 14,650 |   | $ | 228,898 |   | $ | 220,330 |   |
| U.S.                  agency securities     |   |                                           | -      |   |   | - |   |   | 11,751 |   |   | 11,625 |   |
|  Total                                 |   | $                                              | 14,888 |   | $ | 14,650 |   | $ | 240,649 |   | $ | 231,955 |   |

| (Dollars                in Thousands)     |   | Less                than 12 months |   | 12                months or Longer |   | Total                     |   |
|-------------------------------------------|--------|------------------------------------|--------|------------------------------------|--------|---------------------------|--------|
|                                      |   |                               |   | Gross                              |   |                      |   | Gross |   |   |   | Gross |   |
|                                      |   |                               |   | Unrealized                         |   |                      |   | Unrealized |   |   |   | Unrealized |   |
|                                      |   |                               |   | Holding                            |   |                      |   | Holding |   |   |   | Holding |   |
|                                      |   | Fair                Value          |   | Losses                             |   | Fair                Value |   | Losses |   | Fair                Value |   | Losses |   |
|                                      |   |                               |   |                               |   |                      |   |   |   |   |   |   |   |
| U.S.                agency securities     |   | $                                  | -      |                               | $      | -                         |   | $ | 11,625 |   | $ | (126 | ) | $ | 11,625 |   | $ | (126 | ) |
| Mortgage                backed securities |   |                               | 81,636 |                               |   | (1,592                    | )      |   | 153,344 |   |   | (7,214 | ) |   | 234,980 |   |   | (8,806 | ) |
| Mutual                funds               |   |                               | 2,089  |                               |   | (32                       | )      |   | - |   |   | - |   |   | 2,089 |   |   | (32 | ) |
| Total                                     |   | $                                  | 83,725 |                               | $      | (1,624                    | )      | $ | 164,969 |   | $ | (7,340 | ) | $ | 248,694 |   | $ | (8,964 | ) |

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*Table            of Contents*

| (Dollars                  in Thousands)     |   | Less                  than 12 months |   | 12                  months or Longer |   | Total                       |   |
|---------------------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|-----------------------------|--------|
|                                        |   |                                 |   | Gross                                |   |                        |   | Gross |   |   |   | Gross |   |
|                                        |   |                                 |   | Unrealized                           |   |                        |   | Unrealized |   |   |   | Unrealized |   |
|                                        |   |                                 |   | Holding                              |   |                        |   | Holding |   |   |   | Holding |   |
|                                        |   | Fair                  Value          |   | Losses                               |   | Fair                  Value |   | Losses |   | Fair                  Value |   | Losses |   |
|                                        |   |                                 |   |                                 |   |                        |   |   |   |   |   |   |   |
| U.S.                  agency securities     |   | $                                    | -      |                                 | $      | -                           |   | $ | 10,501 |   | $ | (532 | ) | $ | 10,501 |   | $ | (532 | ) |
| Mortgage-backed                  securities |   |                                 | 56,497 |                                 |   | (225                        | )      |   | 139,523 |   |   | (4,003 | ) |   | 196,020 |   |   | (4,228 | ) |
| Mutual                  funds               |   |                                 | -      |                                 |   | -                           |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Total                                       |   | $                                    | 56,497 |                                 | $      | (225                        | )      | $ | 150,024 |   | $ | (4,535 | ) | $ | 206,521 |   | $ | (4,760 | ) |

**Note      #3 **
**-      Loans**

| (Dollars                in Thousands)                 |   | As                of             |      |
|-------------------------------------------------------|--------|----------------------------------|-----------|
|                                                  |   | December                31, 2005 |      | December                31, 2004 |   |
|                                                  |   |                             |      |   |   |
| Commercial                and industrial              |   | $                                | 54,757    |   | $ | 36,095 |   |
| Real                estate construction:              |   |                             |      |   |   |   |   |
| Singe-family                coastal                   |   |                             | 392,183   |   |   | 298,984 |   |
| Singe-family                tract                     |   |                             | 129,706   |   |   | 129,900 |   |
| Commercial                                            |   |                             | 61,392    |   |   | 36,215 |   |
| Real                estate mortgage:                  |   |                             |      |   |   |   |   |
| Commercial                                            |   |                             | 321,821   |   |   | 216,609 |   |
| Multi-family                residential               |   |                             | 246,597   |   |   | 189,912 |   |
| Land                                                  |   |                             | 91,035    |   |   | 61,979 |   |
| All                other residential                  |   |                             | 64,426    |   |   | 56,983 |   |
| Consumer                loans                         |   |                             | 15,205    |   |   | 2,905 |   |
| All                other loans (including overdrafts) |   |                             | 207       |   |   | 137 |   |
|                                                  |   |                             | 1,377,329 |   |   | 1,029,719 |   |
| Unearned                premium on loans              |   |                             | 484       |   |   | 541 |   |
| Deferred                loan fees                     |   |                             | (4,714    | ) |   | (3,223 | ) |
| Loans,                Net of Unearned Income          |   | $                                | 1,373,099 |   | $ | 1,027,037 |   |

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*Table          of Contents*

| (Dollars                in Thousands)                        |   | At                December 31, |   |
|--------------------------------------------------------------|--------|--------------------------------|--------|
|                                                         |   | 2005                           |   | 2004 |   | 2003 |   |
| Impaired                loans with a valuation allowance     |   | $                              | -      |   | $ | - |   | $ | - |   |
| Impaired                loans without a valuation allowance  |   |                           | 964    |   |   | - |   |   | 173 |   |
| Total                impaired loans                          |   | $                              | 964    |   | $ | - |   | $ | 173 |   |
|                                                         |   |                           |   |   |   |   |   |   |   |   |
| Valuation                allowance related to impaired loans |   | $                              | -      |   | $ | - |   | $ | - |   |

| (Dollars                in Thousands)                            |   | Years                Ended December 31, |   |
|------------------------------------------------------------------|--------|-----------------------------------------|--------|
|                                                             |   | 2005                                    |   | 2004 |   | 2003 |   |
| Average                recorded investment in impaired loans     |   | $                                       | 3,472  |   | $ | 238 |   | $ | 97 |   |
| Cash                receipts applied to reduce principal balance |   | $                                       | 4,705  |   | $ | 671 |   | $ | - |   |
| Interest                income recognized for cash payments      |   | $                                       | 338    |   | $ | 21 |   | $ | - |   |

| (Dollars                    in Thousands)              |   | Years                    Ended December 31, |   |
|--------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                   |   | 2005                                        |   | 2004 |   | 2003 |   |
| Servicing                    rights, beginning of year |   | $                                           | 1,705  |   | $ | 831 |   | $ | 192 |   |
| Servicing                    rights added in year, net |   |                                        | 324    |   |   | 1,143 |   |   | 721 |   |
| Servicing                    rights amortized          |   |                                        | (671   | ) |   | (269 | ) |   | (82 | ) |
| Servicing                    rights, end of year       |   | $                                           | 1,358  |   | $ | 1,705 |   | $ | 831 |   |

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*Table          of Contents*

| Assumption                            |   | Range                          |
|---------------------------------------|--------|--------------------------------|
| Discount                Rate          |   | 7.75%                to 10.75% |
| Prepayment                Speed (CPR) |   | 5.5                to 26.92    |

| (Dollars                in Thousands)                |   | Years                Ended December 31, |   |
|------------------------------------------------------|--------|-----------------------------------------|--------|
|                                                 |   | 2005                                    |   | 2004 |   | 2003 |   |
| Mortgage                servicing rights capitalized |   | $                                       | 316    |   | $ | 1,143 |   | $ | 721 |   |
| Mortgage                servicing rights amortized   |   | $                                  | 671    |   | $ | 269 |   | $ | 82 |   |
| Valuation                allowances                  |   | $                                       | -      |   | $ | - |   | $ | - |   |

**Note      #4 **
**-      Allowance for Loan and Lease Losses**

| (Dollars                in Thousands)                             |   | 2005   |   | 2004   |   | 2003   |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                              |   |   |   |   |   |   |   |
| Balance,                Beginning of year                         |   | $      | 11,969 |   | $      | 7,358  |   | $ | 2,937 |   |
| Credit                from acquisition of Southland Business Bank |   |   | -      |   |   | -      |   |   | 895 |   |
| Recoveries                on loans previously charged off         |   |   | 67     |   |   | 122    |   |   | 72 |   |
| Loans                charged off                                  |   |   | (160   | )      |   | (392   | )      |   | (143 | ) |
| Provision                charged to operating expense             |   |   | 1,886  |   |   | 4,881  |   |   | 3,597 |   |
| Balance,                End of year                               |   | $      | 13,762 |   | $      | 11,969 |   | $ | 7,358 |   |

**Note      #5 **
**-      Related Party Transactions**

| (Dollars                in thousands)             |   | As                of December 31, |   |
|---------------------------------------------------|--------|-----------------------------------|--------|
|                                              |   | 2005                              |   | 2004 |   |
| Balance,                Beginning of year         |   | $                                 | 347    |   | $ | 466 |   |
| Credit                granted, including renewals |   |                              | 356    |   |   | 656 |   |
| Repayments                                        |   |                              | (245   | ) |   | (775 | ) |
| Balance,                End of year               |   | $                                 | 458    |   | $ | 347 |   |

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*Table          of Contents*

**Note      #6 **
**-      Premises and Equipment**

| (Dollars                in Thousands)                          |   | December                31, |    |
|----------------------------------------------------------------|--------|-----------------------------|---------|
|                                                           |   | 2005                        |    | 2004 |   |
| Buildings                                                      |   | $                           | 4,971   |   | $ | 4,255 |   |
| Furniture                and equipment                         |   |                        | 14,541  |   |   | 10,284 |   |
| Leasehold                improvements                          |   |                        | 7,990   |   |   | 3,392 |   |
| Bank                owned autos                                |   |                        | 786     |   |   | 812 |   |
|                                                           |   |                        | 28,288  |   |   | 18,743 |   |
| Less:                Accumulated depreciation and amortization |   |                        | (10,998 | ) |   | (8,116 | ) |
| Construction                in progress                        |   |                        | 617     |   |   | 487 |   |
| Land                                                           |   |                        | 1,285   |   |   | 1,285 |   |
| Total                                                          |   | $                           | 19,192  |   | $ | 12,399 |   |

| (Dollars                in Thousands) |   |   |   |
|---------------------------------------|--------|--------|--------|
|                                  |   |   |   |
| Year                Ending            |   |   |   |
| December                31,           |   |   |   |
| 2006                                  |   | $      | 2,682  |   |
| 2007                                  |   |   | 2,748  |   |
| 2008                                  |   |   | 2,809  |   |
| 2009                                  |   |   | 2,858  |   |
| 2010                                  |   |   | 2,201  |   |
| Thereafter                            |   |   | 8,158  |   |
| Total                                 |   | $      | 21,456 |   |

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*Table          of Contents*

**Note      #7 - Time Deposit Liabilities**

| Maturity |   |   |    |
|----------|--------|--------|---------|
| 2006     |   | $      | 630,335 |   |
| 2007     |   |   | 31,630  |   |
| 2008     |   |   | 862     |   |
| 2009     |   |   | 82      |   |
|     |   | $      | 662,909 |   |

**Note      #8 **
**-      Borrowings**

| (Dollars                in Thousands) |   | Weighted |   |   |   |
|---------------------------------------|--------|----------|--------|--------|--------|
|                                  |   | Average  |   |   |   |
| Maturity                              |   | Rate     |   | Amount |   |
| 2006                                  |   |     | 4.04   | %      | $      | 164,000 |   |
| 2007                                  |   |     | 4.76   | %      |   | 25,000 |   |
| 2008                                  |   |     | 4.79   | %      |   | 25,000 |   |
|                                  |   |     | 4.21   | %      | $      | 214,000 |   |

**Note      #9 - Junior Subordinated Debentures**

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*Table          of Contents*

| (Dollars                in Thousands)        |   |                             |                                 |                        |   |                                 |   | **As                of December 31, 2005** |   |
|----------------------------------------------|--------|----------------------------------|--------------------------------------|-----------------------------|--------|--------------------------------------|--------|--------------------------------------------|--------|
|                                         |   | **Interest                Rate** |                                 | **Due                Date** |   | **Minority                Interest** |   | **Effective                Interest Rate** |   | **Balance** |   |
| Vineyard                Statutory Trust I    |   |                             | 3-month                LIBOR + 3.60% |                        |   | December                18, 2031     |   | $                                          | 372    |   |   | 8.10 | % | $ | 12,372 |   |
| Vineyard                Statutory Trust II   |   |                             | 3-month                LIBOR + 3.35% |                        |   | December                26, 2032     |   |                                       | 155    |   |   | 7.50 | % |   | 5,155 |   |
| Vineyard                Statutory Trust III  |   |                             | 3-month                LIBOR + 3.05% |                        |   | October                8, 2033       |   |                                       | 310    |   |   | 7.20 | % |   | 10,310 |   |
| Vineyard                Statutory Trust IV   |   |                             | 3-month                LIBOR + 2.85% |                        |   | January                23, 2034      |   |                                       | 310    |   |   | 7.09 | % |   | 10,310 |   |
| Vineyard                Statutory Trust V    |   |                             | 3-month                LIBOR + 2.85% |                        |   | April                23, 2034        |   |                                       | 310    |   |   | 7.00 | % |   | 10,310 |   |
| Vineyard                Statutory Trust VI   |   |                             | 3-month                LIBOR + 2.85% |                        |   | July                23, 2034         |   |                                       | 372    |   |   | 7.04 | % |   | 12,372 |   |
| Vineyard                Statutory Trust VII  |   |                             | 3-month                LIBOR + 2.00% |                        |   | December                16, 2034     |   |                                       | 310    |   |   | 6.41 | % |   | 10,310 |   |
| Vineyard                Statutory Trust VIII |   |                             | 3-month                LIBOR + 2.25% |                        |   | May                23, 2035          |   |                                       | 310    |   |   | 6.63 | % |   | 10,310 |   |
| Vineyard                Statutory Trust IX   |   |                             | 3-month                LIBOR + 1.70% |                        |   | November                23, 2035     |   |                                       | 464    |   |   | 6.08 | % |   | 15,464 |   |
|                                         |   |                             |                                 |                        |   |                                 |   | $                                          | 2,913  |   |   |   |   | $ | 96,913 |   |

**Note      #10 - Income Taxes**

| (Dollars                in Thousands)        |   | Year                Ended December 31, |   |
|----------------------------------------------|--------|----------------------------------------|--------|
|                                         |   | 2005                                   |   | 2004 |   | 2003 |   |
| Federal                Income Tax            |   |                                   |   |   |   |   |   |
| Current                                      |   | $                                      | 11,239 |   | $ | 6,889 |   | $ | 6,013 |   |
| Deferred                / (credit)           |   |                                   | (1,353 | ) |   | 25 |   |   | (1,863 | ) |
| Total                Federal Income Tax      |   |                                   | 9,886  |   |   | 6,914 |   |   | 4,150 |   |
|                                         |   |                                   |   |   |   |   |   |   |   |   |
| State                Franchise Tax           |   |                                   |   |   |   |   |   |   |   |   |
| Current                                      |   |                                   | 3,672  |   |   | 2,748 |   |   | 2,132 |   |
| Deferred                / (credit)           |   |                                   | (282   | ) |   | 7 |   |   | (742 | ) |
| Total                State Franchise Tax     |   |                                   | 3,390  |   |   | 2,755 |   |   | 1,390 |   |
|                                         |   |                                   |   |   |   |   |   |   |   |   |
| Change                in valuation allowance |   |                                   | -      |   |   | - |   |   | - |   |
| Total                Income Taxes            |   | $                                      | 13,276 |   | $ | 9,669 |   | $ | 5,540 |   |

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*Table          of Contents*

| (Dollars                in Thousands)          |   | 2005   |   | 2004                     |   | 2003   |   |
|------------------------------------------------|--------|--------|--------|--------------------------|--------|--------|--------|
|                                           |   |   |   | Percent                  |   |   |   | Percent |   |   |   | Percent |   |
|                                           |   |   |   | of                Pretax |   |   |   | of                Pretax |   |   |   | of                Pretax |   |
|                                           |   | Amount |   | Income                   |   | Amount |   | Income |   | Amount |   | Income |   |
| Federal                rate                    |   | $      | 11,265 |                     |   | 35.0   | %      | $ | 8,280 |   |   | 35.0 | % | $ | 4,601 |   |   | 34.0 | % |
| Changes                due to state income     |   |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| tax,                net of federal tax benefit |   |   | 2,268  |                     |   | 7.0    | %      |   | 1,680 |   |   | 7.1 | % |   | 961 |   |   | 7.1 | % |
| Change                in valuation allowance   |   |   | -      |                     |   | 0.0    | %      |   | - |   |   | 0.0 | % |   | - |   |   | 0.0 | % |
| Other                                          |   |   | (257   | )                        |   | -0.8   | %      |   | (291 | ) |   | -1.2 | % |   | (22 | ) |   | -0.2 | % |
| Total                                          |   | $      | 13,276 |                     |   | 41.2   | %      | $ | 9,669 |   |   | 40.9 | % | $ | 5,540 |   |   | 40.9 | % |

| (Dollars                in Thousands)              |   | December                31, |   |
|----------------------------------------------------|--------|-----------------------------|--------|
|                                               |   | 2005                        |   | 2004 |   |
| Deferred                Tax Assets                 |   |                        |   |   |   |
| Reserve                for loan losses             |   | $                           | 5,730  |   | $ | 4,933 |   |
| Deferred                compensation               |   |                        | 1,468  |   |   | 955 |   |
| Non-deductible                reserves             |   |                        | 1,307  |   |   | 1,187 |   |
| Net                operating loss                  |   |                        | 838    |   |   | 897 |   |
| Other                assets and liabilities        |   |                        | 1,505  |   |   | 934 |   |
| Other                unrealized loss on securities |   |                        | 3,718  |   |   | 1,903 |   |
|                                               |   |                        | 14,566 |   |   | 10,809 |   |
| Deferred                Tax Liabilities            |   |                        |   |   |   |   |   |
| Other                assets and liabilities        |   |                        | (829   | ) |   | (520 | ) |
| Deferred                costs                      |   |                        | (1,706 | ) |   | (1,371 | ) |
| Fixed                assets                        |   |                        | (385   | ) |   | (722 | ) |
|                                               |   |                        | (2,920 | ) |   | (2,613 | ) |
| Net                Deferred Tax Assets             |   | $                           | 11,646 |   | $ | 8,196 |   |

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*Table          of Contents*

**Note      #11      -      Commitments and Contingencies**

**Note      #12 - Employee Stock Ownership Plan**

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*Table          of Contents*

*Employers’      Accounting for Employee Stock Ownership Plans*

**Note      #13 - Perpetual Preferred Stock**

**Note      #14 - Dividends and Stock Splits**

**Note      #15 - Sale of Capital Stock in Private Placement**

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*Table          of Contents*

**Note      #1**
**6      - Registration Statements**

**Note      #17 - Regulatory Matters**

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*Table          of Contents*

| (Dollars                in Thousands)                  |   |                             |    |                             |   | Capital                Needed    |   |
|--------------------------------------------------------|--------|----------------------------------|---------|----------------------------------|--------|----------------------------------|--------|
|                                                   |   |                             |    |                             |   |                             |   |   |   | To                Be Well |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   | Capitalized                Under |   |
|                                                   |   |                             |    |                             |   | For                Capital       |   | Prompt                Corrective |   |
|                                                   |   | Actual                Regulatory |    | Adequacy                Purposes |   | Action                Provisions |   |
|                                                   |   | Capital                          |    |                             |   | Capital                          |   |   |   | Capital |   |   |   |
|                                                   |   | Amount                           |    | Ratio                            |   | Amount                           |   | Ratio |   | Amount |   | Ratio |   |
| **As                of December 31, 2005**             |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |
| Total                capital to risk-weighted assets:  |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 211,871 |                             |   | 13.13                            | %      | $ | 129,100 |   |   | 8.00 | % | $ | 161,400 |   |   | 10.00 | % |
| Consolidated                                           |   | $                                | 218,894 |                             |   | 13.52                            | %      | $ | 129,500 |   |   | 8.00 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to risk-weighted assets: |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 196,762 |                             |   | 12.20                            | %      | $ | 64,500 |   |   | 4.00 | % | $ | 96,800 |   |   | 6.00 | % |
| Consolidated                                           |   | $                                | 139,715 |                             |   | 8.63                             | %      | $ | 64,800 |   |   | 4.00 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to average assets:       |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 196,762 |                             |   | 11.70                            | %      | $ | 67,300 |   |   | 4.00 | % | $ | 84,100 |   |   | 5.00 | % |
| Consolidated                                           |   | $                                | 139,715 |                             |   | 8.26                             | %      | $ | 67,700 |   |   | 4.00 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **As                of December 31, 2004**             |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                capital to risk-weighted assets:  |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 160,509 |                             |   | 13.49                            | %      | $ | 95,159 |   |   | 8.00 | % | $ | 118,949 |   |   | 10.00 | % |
| Consolidated                                           |   | $                                | 174,212 |                             |   | 14.60                            | %      | $ | 95,474 |   |   | 8.00 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to risk-weighted assets: |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 147,508 |                             |   | 12.40                            | %      | $ | 47,580 |   |   | 4.00 | % | $ | 71,369 |   |   | 6.00 | % |
| Consolidated                                           |   | $                                | 116,280 |                             |   | 9.74                             | %      | $ | 47,737 |   |   | 4.00 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to average assets:       |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 147,508 |                             |   | 11.33                            | %      | $ | 52,066 |   |   | 4.00 | % | $ | 65,083 |   |   | 5.00 | % |
| Consolidated                                           |   | $                                | 116,280 |                             |   | 8.90                             | %      | $ | 52,276 |   |   | 4.00 | % |   | N/A |   |   | N/A |   |

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*Table          of Contents*

**Note      #18 - Employee and Director Benefit Plans**

**A.**
**Deferred      Compensation Plan**

**B.**
**Defined      Contribution Plan**

**C.**
**Directors’      Deferred Compensation Plan**

**D.**
**Supplemental      Executive Retirement Plan**

**E.**
**Restricted      Stock Plan**
**s**

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*Table          of Contents*

**Note      # 19 - Stock Repurchase Program**

**Note      #20 - Incentive Stock Option Plan**

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*Table          of Contents*

|                                            |   | 2005                            |   | 2004        |   |
|-------------------------------------------------|--------|---------------------------------|--------|-------------|--------|
|                                            |   | Number                of Shares |   | Weighted-   |   | Number                of Shares |   | Weighted- |   |
|                                            |   | Available                       |   |        |   | Average |   | Available |   |   |   | Average |   |
|                                            |   | For                             |   |        |   | Exercise |   | For |   |   |   | Exercise |   |
|                                            |   | Granting                        |   | Outstanding |   | Price |   | Granting |   | Outstanding |   | Price |   |
| Outstanding                at beginning of year |   |                            | 7,572  |        |   | 572,125 |   | $ | 4.25 |   |   | 7,572 |   |   | 786,454 |   | $ | 4.06 |   |
| Exercised                                       |   |                            | -      |        |   | (144,970 | ) | $ | 5.57 |   |   | - |   |   | (214,329 | ) | $ | 3.48 |   |
| Cancelled                                       |   |                            | -      |        |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Granted                                         |   |                            | -      |        |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Outstanding                at end of year       |   |                            | 7,572  |        |   | 427,155 |   | $ | 3.84 |   |   | 7,572 |   |   | 572,125 |   | $ | 4.25 |   |
|                                            |   |                            |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options                exercisable at year-end  |   |                            |   |        |   | 419,158 |   | $ | 3.84 |   |   |   |   |   | 478,376 |   | $ | 4.23 |   |
| Weighted-average                fair value of   |   |                            |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| options                granted during the year  |   |                            |   |        | $      | - |   |   |   |   |   |   |   | $ | - |   |   |   |   |

|                                            |   | 2003                            |     |
|-------------------------------------------------|--------|---------------------------------|----------|
|                                            |   | Number                of Shares |     | Weighted- |   |
|                                            |   | Available                       |     |   |   | Average |   |
|                                            |   | For                             |     |   |   | Exercise |   |
|                                            |   | Granting                        |     | Outstanding |   | Price |   |
| Outstanding                at beginning of year |   |                            | 92,464   |   |   | 844,882 |   | $ | 3.15 |   |
| Exercised                                       |   |                            | -        |   |   | (143,320 | ) | $ | 2.22 |   |
| Cancelled                                       |   |                            | 25,358   |   |   | (25,358 | ) | $ | 4.26 |   |
| Granted                                         |   |                            | (110,250 | ) |   | 110,250 |   | $ | 8.69 |   |
| Outstanding                at end of year       |   |                            | 7,572    |   |   | 786,454 |   | $ | 4.06 |   |
|                                            |   |                            |     |   |   |   |   |   |   |   |
| Options                exercisable at year-end  |   |                            |     |   |   | 398,748 |   | $ | 3.27 |   |
| Weighted-average                fair value of   |   |                            |     |   |   |   |   |   |   |   |
| options                granted during the year  |   |                            |     |   | $ | 3.82 |   |   |   |   |

| Options                Outstanding |   | Options                Exercisable |    |
|------------------------------------|--------|------------------------------------|---------|
|                               |   |                               |    | Weighted- |   | Weighted- |   |   |   | Weighted- |   |
|                               |   |                               |    | Average |   | Average |   |   |   | Average |   |
| Exercise                           |   | Number                             |    | Remaining |   | Exercise |   | Number |   | Exercise |   |
| Price                              |   | Outstanding                        |    | Contractual                Life |   | Price |   | Exercisable |   | Price |   |
|                               |   |                               |    |   |   |   |   |   |   |   |   |
| $1.36                - $2.27       |   |                               | 91,929  |   |   | 5.06                Years |   | $ | 1.75 |   |   | 85,682 |   | $ | 1.72 |   |
| $2.95                - $4.06       |   |                               | 308,976 |   |   | 6.35                Years |   | $ | 3.75 |   |   | 308,976 |   | $ | 3.75 |   |
| $7.62                - $13.33      |   |                               | 26,250  |   |   | 7.56                Years |   | $ | 12.19 |   |   | 24,500 |   | $ | 11.52 |   |
|                               |   |                               | 427,155 |   |   | 6.15                Years |   | $ | 3.84 |   |   | 419,158 |   | $ | 3.84 |   |

**Note      #21 - Restriction on Subsidiary Transactions**

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*Table          of Contents*

**Note      #22 - Other Expenses**

| (Dollars                in Thousands)                        |   | 2005   |   | 2004   |   | 2003   |   |
|--------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Other                non-interest expense:                   |   |   |   |   |   |   |   |
| Data                processing                               |   | $      | 819    |   | $      | 740    |   | $ | 670 |   |
| Marketing                                                    |   |   | 1,103  |   |   | 855    |   |   | 518 |   |
| Professional                services                         |   |   | 1,342  |   |   | 1,309  |   |   | 870 |   |
| Office                supplies, postage and telephone        |   |   | 1,577  |   |   | 1,423  |   |   | 985 |   |
| Insurance                and assessments                     |   |   | 793    |   |   | 558    |   |   | 320 |   |
| Administrative                                               |   |   | 535    |   |   | 507    |   |   | 279 |   |
| Business                development                          |   |   | 1,785  |   |   | 1,103  |   |   | 866 |   |
| Other                                                        |   |   | 1,410  |   |   | 1,052  |   |   | 583 |   |
| Provision                for off-balance sheet credit losses |   |   | 314    |   |   | 853    |   |   | 113 |   |
| Total                other non-interest expense              |   | $      | 9,678  |   | $      | 8,400  |   | $ | 5,204 |   |

**Note      #23 - Income per Common and Common Equivalent Share**

| (Dollars                in Thousands)                     |   | 2005   |   | 2004   |   | 2003      |   |
|-----------------------------------------------------------|--------|--------|--------|--------|--------|-----------|--------|
|                                                      |   | Income |   | Shares |   | Income    |   | Shares |   | Income |   | Shares |   |
| Net                income as reported                     |   | $      | 18,911 |   |   |      |   | $ | 13,987 |   |   |   |   | $ | 7,992 |   |   |   |   |
| Less                preferred stock dividends declared    |   |   | (540   | )      |   |      |   |   | (702 | ) |   |   |   |   | (637 | ) |   |   |   |
| Less                excess cost to redeem preferred stock |   |   | -      |   |   |      |   |   | (71 | ) |   |   |   |   | - |   |   |   |   |
| Shares                outstanding at year-end             |   |   |   |   |   | 9,427,690 |   |   |   |   |   | 9,581,941 |   |   |   |   |   | 6,291,430 |   |
| Unreleased                and unallocated ESOP shares     |   |   |   |   |   | (268,487  | )      |   |   |   |   | (291,994 | ) |   |   |   |   | - |   |
| Impact                of weighting shares                 |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| issued                during the year                     |   |   |   |   |   | 152,049   |   |   |   |   |   | (1,597,890 | ) |   |   |   |   | (194,394 | ) |
| Used                in basic EPS                          |   |   | 18,371 |   |   | 9,311,252 |   |   | 13,214 |   |   | 7,692,057 |   |   | 7,355 |   |   | 6,097,036 |   |
| Add:                Anti-dilutive effects of Series B     |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| convertible                preferred stock dividends      |   |   | -      |   |   |      |   |   | 634 |   |   |   |   |   | 456 |   |   |   |   |
| Dilutive                effect of outstanding             |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                options and warrants                 |   |   |   |   |   | 433,222   |   |   |   |   |   | 1,237,703 |   |   |   |   |   | 1,096,568 |   |
| Add:                Anti-dilutive effects of Series B     |   |   | -      |   |   |      |   |   | 20 |   |   |   |   |   | - |   |   |   |   |
| convertible                preferred stock redemption     |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Used                in diluted EPS                        |   | $      | 18,371 |   |   | 9,744,474 |   | $ | 13,868 |   |   | 8,929,760 |   | $ | 7,811 |   |   | 7,193,604 |   |

**Note      #24 - Fair Value of Financial Instruments**

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*Table          of Contents*

* *

| (Dollars                in Thousands)             |   | December                31, 2005 |           | December                31, 2004 |   |
|---------------------------------------------------|--------|----------------------------------|----------------|----------------------------------|--------|
|                                              |   | Carrying                         |           |                             |   | Carrying |   |   |   |
|                                              |   | Amount                           |           | Fair                Value        |   | Amount |   | Fair                Value |   |
| Assets                                            |   |                             |           |                             |   |   |   |   |   |
| Cash                and cash equivalents          |   | $                                | 28,630         |                             | $      | 28,630 |   | $ | 22,551 |   | $ | 22,551 |   |
| Investment                securities              |   |                             | 248,694        |                             |   | 248,694 |   |   | 223,480 |   |   | 223,480 |   |
| Loans,                net of unearned income      |   |                             | 1,373,099      |                             |   | 1,368,773 |   |   | 1,027,037 |   |   | 1,025,366 |   |
| Accrued                interest receivable        |   |                             | 8,276          |                             |   | 8,276 |   |   | 5,423 |   |   | 5,423 |   |
|                                              |   |                             |           |                             |   |   |   |   |   |   |   |   |   |
| Liabilities                                       |   |                             |           |                             |   |   |   |   |   |   |   |   |   |
| Non-interest                bearing deposits      |   | $                                | 154,664        |                             | $      | 107,909 |   | $ | 127,466 |   | $ | 127,466 |   |
| Interest                bearing deposits          |   |                             | 1,122,348      |                             |   | 1,103,199 |   |   | 838,080 |   |   | 837,198 |   |
| FHLB                advances and other borrowings |   |                             | 224,000        |                             |   | 214,792 |   |   | 177,000 |   |   | 176,896 |   |
| Subordinated                debentures            |   |                             | 5,000          |                             |   | 5,075 |   |   | 5,000 |   |   | 5,000 |   |
| Junior                subordinated debentures     |   |                             | 96,913         |                             |   | 98,350 |   |   | 71,139 |   |   | 71,139 |   |
| Accrued                interest payable           |   |                             | 2,662          |                             |   | 2,662 |   |   | 1,937 |   |   | 1,937 |   |
|                                              |   |                             |           |                             |   |   |   |   |   |   |   |   |   |
|                                              |   |                             | Notional  |                             |   | Cost                to Cede |   |   | Notional |   |   | Cost                to Cede |   |
|                                              |   |                             | Amount    |                             |   | or                Assume |   |   | Amount |   |   | or                Assume |   |
| Off-Balance                Sheet Instruments      |   |                             |           |                             |   |   |   |   |   |   |   |   |   |
| Commitments                to extend credit and   |   |                             |           |                             |   |   |   |   |   |   |   |   |   |
| standby                letters of credit          |   | $                                | 600,295        |                             | $      | 6,003 |   | $ | 441,087 |   | $ | 4,411 |   |

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*Table          of Contents*

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*Table          of Contents*

**Note      #25 - Condensed Financial Information of Vineyard National Bancorp (Parent      Company)**

| **Condensed                Balance Sheets**                   |   |
|---------------------------------------------------------------|--------|
| (Dollars                in thousands)                         |   | December                31, |   |
|                                                          |   | 2005 |   | 2004 |   | 2003 |   |
| **Assets**                                                    |   |   |   |   |   |   |   |
| Cash                and cash equivalents                      |   | $ | 12,716 |   | $ | 11,072 |   | $ | 9,745 |   |
| Investment                in subsidiary                       |   |   | 191,961 |   |   | 145,524 |   |   | 83,194 |   |
| Prepaid                expenses                               |   |   | 2,360 |   |   | 2,287 |   |   | 1,431 |   |
| Other                assets                                   |   |   | 7,526 |   |   | 3,997 |   |   | 1,958 |   |
| **Total                Assets**                               |   | $ | 214,563 |   | $ | 162,880 |   | $ | 96,328 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |
| **Liabilities**                                               |   |   |   |   |   |   |   |   |   |   |
| Accrued                interest and other liabilities         |   | $ | 2,665 |   | $ | 1,514 |   | $ | 1,006 |   |
| Debt                payable                                   |   |   | 10,000 |   |   | - |   |   | - |   |
| Subordinated                debentures                        |   |   | 5,000 |   |   | 5,000 |   |   | 5,000 |   |
| Junior                subordinated debentures                 |   |   | 96,913 |   |   | 71,139 |   |   | 38,147 |   |
| **Total                Liabilities**                          |   |   | 114,578 |   |   | 77,653 |   |   | 44,153 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |
| **Stockholders'                Equity**                       |   |   |   |   |   |   |   |   |   |   |
| Preferred                stock                                |   |   | 9,665 |   |   | - |   |   | 28,999 |   |
| Common                stock                                   |   |   | 60,972 |   |   | 70,536 |   |   | 9,739 |   |
| Stock                dividends to be distributed              |   |   | - |   |   | - |   |   | 4,981 |   |
| Additional                paid-in capital                     |   |   | 4,443 |   |   | 3,772 |   |   | 3,307 |   |
| Unallocated                ESOP shares                        |   |   | (6,304 | ) |   | (6,856 | ) |   | - |   |
| Retained                earnings                              |   |   | 31,209 |   |   | 17,775 |   |   | 5,149 |   |
| **Total                Stockholders' Equity**                 |   |   | 99,985 |   |   | 85,227 |   |   | 52,175 |   |
| **Total                Liabilities and Stockholders' Equity** |   | $ | 214,563 |   | $ | 162,880 |   | $ | 96,328 |   |

| **Condensed                Statements of Income**               |
|-----------------------------------------------------------------|
|                                                            |   |   |   |   |   |   |   |   |   |   |
| (Dollars                in thousands)                           |   | For                the years ended December 31, |
|                                                            |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
| **Income**                                                      |   |   |   |   |   |   |   |   |   |   |
| Other                income                                     |   | $ | 159 |   | $ | 76 |   | $ | 30 |   |
| **Total                Income**                                 |   |   | 159 |   |   | 76 |   |   | 30 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |
| **Expenses**                                                    |   |   |   |   |   |   |   |   |   |   |
| Interest                expense                                 |   |   | 5,709 |   |   | 3,304 |   |   | 1,414 |   |
| Salaries                and benefits                            |   |   | 2,111 |   |   | 706 |   |   | 277 |   |
| Other                                                           |   |   | 1,132 |   |   | 1,189 |   |   | 541 |   |
| Allocated                income tax benefit                     |   |   | (3,760 | ) |   | (2,131 | ) |   | (911 | ) |
| **Total                Expenses**                               |   |   | 5,192 |   |   | 3,068 |   |   | 1,321 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |
| **Loss                Before Equity in Undistributed**          |   |   |   |   |   |   |   |   |   |   |
| **Income                of Subsidiary**                         |   |   | (5,033 | ) |   | (2,992 | ) |   | (1,291 | ) |
|                                                            |   |   |   |   |   |   |   |   |   |   |
| **Equity                in Undistributed Income of Subsidiary** |   |   | 23,944 |   |   | 16,979 |   |   | 9,283 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |
| **Net                Income**                                   |   | $ | 18,911 |   | $ | 13,987 |   | $ | 7,992 |   |

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*Table          of Contents*

| **Condensed                  Statements of Cash Flows**                   |   |
|---------------------------------------------------------------------------|--------|
| (Dollars                  in thousands)                                   |   | For                  the years ended December 31, |   |
|                                                                      |   | 2005 |   | 2004 |   | 2003 |   |
|                                                                      |   |   |   |   |   |   |   |
| **Cash                  Flows From Operating Activities**                 |   |   |   |   |   |   |   |
| Net                  Income                                               |   | $ | 18,911 |   | $ | 13,987 |   | $ | 7,992 |   |
| Adjustments                  to Reconcile Net Income                      |   |   |   |   |   |   |   |   |   |   |
| to                  Net Cash Used In Operating Activities                 |   |   |   |   |   |   |   |   |   |   |
| Increase                  in other assets                                 |   |   | (2,828 | ) |   | (1,903 | ) |   | (931 | ) |
| Allocation                  of ESOP shares                                |   |   | 724 |   |   | 133 |   |   | - |   |
| Undistributed                  earnings of subsidiary                     |   |   | (23,944 | ) |   | (16,979 | ) |   | (9,283 | ) |
| Increase                  in other liabilities                            |   |   | 951 |   |   | 507 |   |   | 212 |   |
| Net                  Cash Used In Operating Activities                    |   |   | (6,186 | ) |   | (4,255 | ) |   | (2,010 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| **Cash                  Flows From Investing Activities**                 |   |   |   |   |   |   |   |   |   |   |
| Investment                  in subsidiary                                 |   |   | (36,000 | ) |   | (49,000 | ) |   | (35,000 | ) |
| Dividends                  received from subsidiary                       |   |   | 11,000 |   |   | 4,000 |   |   | - |   |
| Net                  Cash Used In Investing Activities                    |   |   | (25,000 | ) |   | (45,000 | ) |   | (35,000 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| **Cash                  Flows From Financing Activities**                 |   |   |   |   |   |   |   |   |   |   |
| Proceeds                  from issuance of junior subordinated debentures |   |   | 25,000 |   |   | 32,000 |   |   | 20,000 |   |
| Proceeds                  from issuance of common stock                   |   |   | - |   |   | 29,200 |   |   | - |   |
| Increase/(decrease)                  in other borrowings                  |   |   | 10,000 |   |   | - |   |   | (5,000 | ) |
| Redemption                  and conversion of preferred stock             |   |   | - |   |   | (2,579 | ) |   | - |   |
| Purchase                  of common stock to pre-fund ESOP                |   |   | - |   |   | (6,997 | ) |   | - |   |
| Proceeds                  from issuance of preferred stock                |   |   | 9,665 |   |   | - |   |   | 26,549 |   |
| Stock                  repurchased                                        |   |   | (14,364 | ) |   | (1,612 | ) |   | (1,884 | ) |
| Cash                  dividends paid                                      |   |   | (2,770 | ) |   | (1,640 | ) |   | (786 | ) |
| Cash                  paid in lieu of fractional shares                   |   |   | - |   |   | (15 | ) |   | (4 | ) |
| Proceeds                  from exercise of additional investment rights   |   |   | 3,530 |   |   | - |   |   | - |   |
| Proceeds                  from exercise of warrants                       |   |   | 463 |   |   | 1,007 |   |   | 30 |   |
| Proceeds                  from exercise of stock options                  |   |   | 1,306 |   |   | 1,218 |   |   | 317 |   |
| Net                  Cash Provided By Financing Activities                |   |   | 32,830 |   |   | 50,582 |   |   | 39,222 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |

|                                                                               |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| **Net                  Increase in Cash and Cash Equivalents**                     |   |   | 1,644  |   |   | 1,327  |   |   | 2,212  |   |
|                                                                               |   |   |   |   |   |   |   |   |   |   |
| **Cash                  and Cash Equivalents**,                  Beginning of Year |   |   | 11,072 |   |   | 9,745  |   |   | 7,533  |   |
|                                                                               |   |   |   |   |   |   |   |   |        |   |
| **Cash                  and Cash Equivalents**,                  End of Year       |   | $      | 12,716 |   | $      | 11,072 |   | $      | 9,745  |   |
|                                                                               |   |   |   |   |   |   |   |   |   |   |
| **Supplemental                  Information**                                      |   |   |   |   |   |   |   |   |   |   |
| Conversion                  of Series B preferred stock                            |   | $      | -      |   | $      | 26,491 |   | $      | -      |   |
| Tax                  benefit from exercise of non-qualified stock options          |   | $      | 499    |   | $      | 473    |   | $      | -      |   |

**Note      #26 - Subsequent Events**

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*Table            of Contents*

**SELECTED      QUARTERLY FINANCIAL DATA**

|                                                             |   | **For                      the Year Ended December 31, 2005** |   |
|------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|
| **(Dollars                      in thousands, except per share** |   | **First**                                                     |   | **Second** |   | **Third** |   | **Fourth** |   |   |   |
| **amounts)**                                                     |   | **Quarter**                                                   |   | **Quarter** |   | **Quarter** |   | **Quarter** |   | **Annual** |   |
|                                                             |   |                                                          |   |   |   |   |   |   |   |   |   |
| Interest                      income                             |   | $                                                             | 22,694 |   | $ | 26,058 |   | $ | 29,806 |   | $ | 32,301 |   | $ | 110,859 |   |
| Interest                      expense                            |   |                                                          | 7,692  |   |   | 9,950 |   |   | 12,170 |   |   | 13,533 |   |   | 43,345 |   |
| Net                      interest income                         |   |                                                          | 15,002 |   |   | 16,108 |   |   | 17,636 |   |   | 18,768 |   |   | 67,514 |   |
| Provision                      for possible loan losses          |   |                                                          | -      |   |   | (850 | ) |   | (500 | ) |   | (536 | ) |   | (1,886 | ) |
| Net                      interest income after provision for     |   |                                                          |        |   |   |  |   |   |  |   |   |  |   |   |  |   |
| possible                      loan losses                        |   |                                                          | 15,002 |   |   | 15,258 |   |   | 17,136 |   |   | 18,232 |   |   | 65,628 |   |
| Non-interest                      income                         |   |                                                          | 1,113  |   |   | 1,325 |   |   | 1,744 |   |   | 1,123 |   |   | 5,305 |   |
| Non-interest                      expense                        |   |                                                          | 8,521  |   |   | 8,406 |   |   | 9,807 |   |   | 12,012 |   |   | 38,746 |   |
| Income                      before income taxes                  |   |                                                          | 7,594  |   |   | 8,177 |   |   | 9,073 |   |   | 7,343 |   |   | 32,187 |   |
| Income                      tax provision                        |   |                                                          | 3,177  |   |   | 3,419 |   |   | 3,794 |   |   | 2,886 |   |   | 13,276 |   |
| Net                      income                                  |   | $                                                             | 4,417  |   | $ | 4,758 |   | $ | 5,279 |   | $ | 4,457 |   | $ | 18,911 |   |
| Net                      income per common share:                |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                            |   | $                                                             | 0.47   |   | $ | 0.50 |   | $ | 0.54 |   | $ | 0.46 |   | $ | 1.97 |   |
| Fully                      diluted                               |   | $                                                             | 0.45   |   | $ | 0.48 |   | $ | 0.52 |   | $ | 0.44 |   | $ | 1.89 |   |

|                                                         |   | **For                  the Year Ended December 31, 2004** |   |
|--------------------------------------------------------------|--------|-----------------------------------------------------------|--------|
| **(Dollars                  in thousands, except per share** |   | **First**                                                 |   | **Second** |   | **Third** |   | **Fourth** |   |   |   |
| **amounts)**                                                 |   | **Quarter**                                               |   | **Quarter** |   | **Quarter** |   | **Quarter** |   | **Annual** |   |
|                                                         |   |                                                      |   |   |   |   |   |   |   |   |   |
| Interest                  income                             |   | $                                                         | 15,182 |   | $ | 18,056 |   | $ | 20,313 |   | $ | 21,505 |   | $ | 75,056 |   |
| Interest                  expense                            |   |                                                      | 4,068  |   |   | 5,077 |   |   | 6,161 |   |   | 6,748 |   |   | 22,054 |   |
| Net                  interest income                         |   |                                                      | 11,114 |   |   | 12,979 |   |   | 14,152 |   |   | 14,757 |   |   | 53,002 |   |
| Provision                  for possible loan losses          |   |                                                      | (1,769 | ) |   | (1,033 | ) |   | (1,348 | ) |   | (731 | ) |   | (4,881 | ) |
| Net                  interest income after provision for     |   |                                                      |        |   |   |   |   |   |   |   |   |   |   |   |  |   |
| possible                  loan losses                        |   |                                                      | 9,345  |   |   | 11,946 |   |   | 12,804 |   |   | 14,026 |   |   | 48,121 |   |
| Non-interest                  income                         |   |                                                      | 1,639  |   |   | 890 |   |   | 1,526 |   |   | 1,402 |   |   | 5,457 |   |
| Non-interest                  expense                        |   |                                                      | 5,961  |   |   | 7,281 |   |   | 8,125 |   |   | 8,555 |   |   | 29,922 |   |
| Income                  before income taxes                  |   |                                                      | 5,023  |   |   | 5,555 |   |   | 6,205 |   |   | 6,873 |   |   | 23,656 |   |
| Income                  tax provision                        |   |                                                      | 2,054  |   |   | 2,270 |   |   | 2,535 |   |   | 2,810 |   |   | 9,669 |   |
| Net                  income                                  |   | $                                                         | 2,969  |   | $ | 3,285 |   | $ | 3,670 |   | $ | 4,063 |   | $ | 13,987 |   |
| Net                  income per common share: (1)            |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                        |   | $                                                         | 0.40   |   | $ | 0.42 |   | $ | 0.43 |   | $ | 0.46 |   | $ | 1.72 |   |
| Fully                  diluted                               |   | $                                                         | 0.34   |   | $ | 0.37 |   | $ | 0.40 |   | $ | 0.43 |   | $ | 1.55 |   |

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*Table          of Contents*

**ITEM      9. Changes in and Disagreements with Accountants on      Accounting and Financial Disclosure**

**ITEM      9A.** **Controls      and Procedures**

**Management’s      Report on Internal Control Over Financial Reporting**

----

*Table          of Contents*

**Report          of Independent Registered Public Accounting Firm**

----

*Table            of Contents*

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*Table            of Contents*

**ITEM      9B. Other Information**

**PART**
**      III**

**ITEM      10. Directors and Executive****Officer of the Registrant**

**ITEM      11. Executive Compensation**

**ITEM****12. Security Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters**

**ITEM      13. Certain Relationships and Related      Transactions**

**ITEM      14.****Principal Accountant Fees and Services**

**PART      IV**

**ITEM      15.****Exhibits      and Financial Statement Schedules**

----

*Table          of Contents*

| EXHIBIT                NO. | DESCRIPTION |
|----------------------------|-------------|
| 3.1                        |        | Articles                of Incorporation of Vineyard National Bancorp, as amended (6) |
| 3.2                        |        | Bylaws                of Vineyard National Bancorp (1) |
| 4                          |        | Specimen                Common Stock Certificate of Vineyard National Bancorp (2) |
| 4.1                        |        | Registration                Rights Agreement (8) |
| 4.2                        |        | Form                of Warrant to Purchase Shares of Common Stock (3) |
| 4.3                        |        | Debenture                Subscription Agreement, dated as of December 19, 2002, between Vineyard                National Bancorp and Vineyard Statutory Trust II (6) |
| 4.4                        |        | Additional                Investment Right (12) |
| 4.5                        |        | Registration                Rights Agreement                (12) |
| 10.1                       |        | Vineyard                National Bancorp Nonqualified Deferred Compensation Plan (6)* |
| 10.2                       |        | Vineyard                National Bancorp Directors’ Deferred Compensation Plan (6)* |
| 10.3                       |        | Vineyard                National Bancorp 1997 Incentive Stock Option Plan (6)* |
| 10.4                       |        | Form                of Vineyard National Bancorp 1997 Incentive Stock Option Plan Notice                of                Stock Option Grant (13)* |
| 10.5                       |        | Vineyard                National Bancorp 2002 Restricted Share Plan (6)* |
| 10.6                       |        | Form                of 2002 Restricted Share Award Agreement (13)* |
| 10.7                       |        | Vineyard                National Bancorp 2003 Restricted Share Plan (11)* |
| 10.8                       |        | Form                of 2003 Restricted Share Award Agreement (13)* |
| 10.9                       |        | Vineyard                National Bancorp 2004 Restricted Share Plan (9)* |
| 10.10                      |        | Form                of 2004 Restricted Share Award Agreement (13)* |
| 10.11                      |        | Vineyard                National Bancorp 2005 Restricted Share Plan (14)* |
| 10.12                      |        | Form                of 2005 Restricted Share Award Agreement (15)* |
| 10.13                      |        | Employment                Agreement between Vineyard National Bancorp, Vineyard Bank and Norman                A.                Morales (5)* |
| 10.14                      |        | Indenture,                dated as of December 19, 2002, between Vineyard National Bancorp,                as                Issuer, and Wilmington Trust Company, as Trustee, relating to the                floating                rate junior subordinated debt securities due 2033 (6) |
| 10.15                      |        | Amended                and Restated Declaration of Trust by and among State Street Bank                and Trust                Company of Connecticut, National Association, as Institutional Trustee                and                Vineyard National Bancorp, as Sponsor, dated as of December 18, 2001                (6) |
| 10.16                      |        | Guarantee                Agreement by and between Vineyard National Bancorp and State Street                Bank                and Trust Company of Connecticut and National Association, dated                as of                December 18, 2001 (6) |

----

*Table          of Contents*

| 10.17 |   | Amended                and Restated Declaration of Trust, dated as of December 19, 2002,                of                Vineyard Statutory Trust II (6)                                                                                                                                                                             |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.18 |   | Guarantee                Agreement, dated as of December 19, 2002 (6)                                                                                                                                                                                                                                                                 |
| 10.19 |   | Indenture                dated as of December 19, 2002, between Vineyard National Bancorp,                as                Issuer, and State Street Bank and Trust Company of Connecticut, National                Association, as Trustee, relating to the floating rate junior subordinated                debentures due 2017 (6) |
| 10.20 |   | Indenture                dated as of September 25, 2003, between Vineyard National Bancorp,                as                Issuer, and Wilmington Trust Company, as Trustee, relating to the                floating                rate junior subordinated debentures due 2033 (4)                                                |
| 10.21 |   | Amended                and Restated Declaration of Trust, dated as of September 25, 2003,                of                Vineyard Statutory Trust III (4)                                                                                                                                                                           |
| 10.22 |   | Guarantee                Agreement, dated as of September 25, 2003 (4)                                                                                                                                                                                                                                                                |
| 10.23 |   | Indenture                dated as of December 19, 2003, between Vineyard National Bancorp,                as                Issuer, and Wilmington Trust Company, as Trustee, relating to the                floating                rate junior subordinated debentures due 2034                (10)                                 |
| 10.24 |   | Amended                and Restated Declaration of Trust, dated as of December 19, 2003,                of                Vineyard Statutory Trust IV (10)                                                                                                                                                                            |
| 10.25 |   | Guarantee                Agreement, dated as of December 19, 2003 (10)                                                                                                                                                                                                                                                                |
| 10.26 |   | Indenture                dated as of March 25, 2004, between Vineyard National Bancorp, as                Issuer,                and Wilmington Trust Company, as Trustee, relating to the floating                rate                junior subordinated debentures due 2034 (13)                                                   |
| 10.27 |   | Amended                and Restated Declaration of Trust, dated as of March 25, 2004, of                Vineyard                Statutory Trust V (13)                                                                                                                                                                                |
| 10.28 |   | Guarantee                Agreement, dated as of March 25, 2004 (13)                                                                                                                                                                                                                                                                   |
| 10.29 |   | Indenture                dated as of May 18, 2004, between Vineyard National Bancorp, as Issuer,                and Wilmington Trust Company, as Trustee, relating to the floating                rate                junior subordinated debentures due 2034 (13)                                                                    |
| 10.30 |   | Amended                and Restated Declaration of Trust, dated as of May 18, 2004, of Vineyard                Statutory Trust VI                (13)                                                                                                                                                                                 |
| 10.31 |   | Guarantee                Agreement, dated as of May 18, 2004                (13)                                                                                                                                                                                                                                                      |
| 10.32 |   | Indenture                dated as of December 22, 2004, between Vineyard National Bancorp,                as                Issuer, and Wilmington Trust Company, as Trustee, relating to the                floating                rate junior subordinated debentures due 2034 (13)                                                |
| 10.33 |   | Amended                and Restated Declaration of Trust, dated as of December 22, 2004,                of                Vineyard Statutory Trust VII (13)                                                                                                                                                                           |
| 10.34 |   | Guarantee                Agreement, dated as of December 22, 2004                (13)                                                                                                                                                                                                                                                 |
| 10.35 |   | Indenture                dated as of April 15, 2005, between Vineyard National Bancorp, as                Issuer,                and Wilmington Trust Company, as Trustee, relating to the floating                rate                junior subordinated debentures due 2035                                                        |
| 10.36 |   | Amended                and Restated Declaration of Trust, dated as of April 15, 2005, of                Vineyard                Statutory Trust VIII                                                                                                                                                                                  |
| 10.37 |   | Guarantee                Agreement, dated as of April 15, 2005                                                                                                                                                                                                                                                                        |
| 10.38 |   | Indenture                dated as of August 19, 2005, between Vineyard National Bancorp, as                Issuer,                and Wilmington Trust Company, as Trustee, relating to the floating                rate                junior subordinated debentures due 2035                                                       |
| 10.39 |   | Amended                and Restated Declaration of Trust, dated as of August 19, 2005, of                Vineyard Statutory Trust IX                                                                                                                                                                                                  |
| 10.40 |   | Guarantee                Agreement, dated as of August 19, 2005                                                                                                                                                                                                                                                                       |
| 11    |   | Statement                regarding computation of per share earnings. See Note 23 to the                Consolidated Financial Statements included in Item 8                hereof                                                                                                                                                    |
| 14    |   | Code                of Ethics                (10)                                                                                                                                                                                                                                                                                     |
| 21    |   | Subsidiary                of the Registrant (See “Business” in Item 1 hereof for the required                information)                                                                                                                                                                                                 |
| 23.1  |   | Consent                of Vavrinek, Trine, Day & Co., LLP                                                                                                                                                                                                                                                                         |
| 31.1  |   | Certification                of Chief Executive Officer under Section 302 of the Sarbanes-Oxley                Act of                2002                                                                                                                                                                                             |
| 31.2  |   | Certification                of Chief Financial Officer under Section 302 of the Sarbanes-Oxley                Act of                2002                                                                                                                                                                                             |
| 32    |   | Certification                of Chief Executive Officer and Chief Financial Officer pursuant to                Section                906 of the Sarbanes-Oxley Act 0f                2002                                                                                                                                            |

| (1) | Incorporated                by reference from the Registrant’s Registration Statement on Form S-8                (File No. 333-18217) filed by the Registrant with the SEC on December                19,                1996. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated                by reference from the Registrant’s Annual Report on Form 10-K for the year                ended December 31, 1988 filed by the Registrant with the                SEC. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated                by reference from the Registrant’s Proxy Statement for a special meeting                held on December 18, 2002 filed by the Registrant with the SEC on                November                25, 2002. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table          of Contents*

| (4) | Incorporated                by reference from the Registrant’s Quarterly Report on Form 10-Q for the                quarter ended September 30, 2003 filed by the Registrant with the                SEC on                November 7, 2003. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Incorporated                by reference from the Registrant’s Annual Report on Form 10-K for the year                ended December 31, 2000 filed by the Registrant with the SEC on March                30,                2001. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Incorporated                by reference from the Registrant’s Annual Report on Form 10-K for the year                ended December 31, 2002 filed by the Registrant with the SEC on March                28,                2003. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Incorporated                by reference from the Registrant’s Registration Statement on Form S-2                (File No. 333-107493) filed by the Registrant with the SEC on July                30,                2003. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Incorporated                by reference from the Registrant’s Form 8-K filed with the SEC on June 21,                2004. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| (9) | Incorporated                by reference from the Registrant’s Proxy Statement for an annual meeting                held on May 22, 2003 filed with the SEC on April 14,                2003. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | Incorporated                by reference from the Registrant’s Annual Report on Form 10-K for the year                ended December 31, 2003 filed by the Registrant with the SEC on March                22,                2004. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (11) | Incorporated                by reference from the Registrant’s Quarterly Report on Form 10-Q for the                quarter ended September 30, 2004 filed by the Registrant with the                SEC on                November 10, 2004. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (12) | Incorporated                by reference from the Registrant’s Form 8-K filed with the SEC on December                10, 2004. |
|------|---------------------------------------------------------------------------------------------------------------------------------------|

| (13) | Incorporated                by reference from the Registrant’s Annual Report on Form 10-K for the year                ended December 31, 2004 filed by the Registrant with the SEC on March                10,                2005. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (14) | Incorporated                by reference from the Registrant’s Proxy Statement for an annual meeting                held on May 25, 2005 filed with the SEC on April 18,                2005. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (15) | Incorporated                by reference from the Registrant’s Quarterly Report on Form 10-Q for the                quarter ended September 30, 2005 filed by the Registrant with the                SEC on                November 4, 2005. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| * | Management                contract or compensatory plan or                arrangement. |
|---|----------------------------------------------------------------------------------------|

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*Table          of Contents*

**SIGNATURES**

|   | **VINEYARD                NATIONAL BANCORP** |
|--------|----------------------------------------------|
|   |                                         |
|   |                                         |
|   | By:                                          | */s/                Norman A. Morales* |
|   |                                         | Norman                A. Morales |
|   |                                         | President                and Chief Executive Officer |
|   |                                         |
|   |                                         |
|   | By:                                          | */s/                Gordon Fong* |
|   |                                         | Gordon                Fong |
|   |                                         | Executive                Vice President and Chief Financial Officer |
|   |                                         |   |

| **NAME**                                  |   | **TITLE**                                                                                                                                         | **DATE**                                        |
|-------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------|
|                                      |   |                                                                                                                                              |                                            |
| */s/                Norman A. Morales*    |   |                                                                                                                                              |  March 14,                2006        |
| Norman                A. Morales          |   | President,                Chief Executive Officer and Director (Principal Executive                Officer)                                       |
|                                      |   |                                                                                                                                              |                                            |
|                                      |   |                                                                                                                                              |                                            |
| */s/                Frank S. Alvarez*     |   |                                                                                                                                              |  March                14, 2006             |
| Frank                S. Alvarez           |   | Chairman                of the Board                                                                                                              |
|                                      |   |                                                                                                                                              |                                            |
|                                      |   |                                                                                                                                              |                                            |
| */s/                Charles L. Keagle*    |   |                                                                                                                                              |  March                14, 2006             |
| Charles                L. Keagle          |   | Director                                                                                                                                          |
|                                      |   |                                                                                                                                              |                                            |
|                                      |   |                                                                                                                                              |                                            |
| */s/                Joel H. Ravitz*       |   |                                                                                                                                              |
| Joel                H. Ravitz             |   | Director                                                                                                                                          | March                14, 2006                   |
|                                      |   |                                                                                                                                              |                                            |
|                                      |   |                                                                                                                                              |                                            |
| */s/                James G. LeSieur III* |   |                                                                                                                                              |                                            |
| James                G. LeSieur III       |   | Director                                                                                                                                          | March                14, 2006                   |
|                                      |   |                                                                                                                                              |    March                14, 2006 |
|                                      |   |                                                                                                                                              |
| */s/                David A. Buxbaum*     |   |                                                                                                                                              |
| David                A. Buxbaum           |   | Director                                                                                                                                          |
|                                      |   |                                                                                                                                              |                                            |
|                                      |   |                                                                                                                                              |
| */s/                Gordon Fong*          |   |                                                                                                                                              |
| Gordon                Fong                |   | Executive                Vice President and Chief Financial Officer (Principal Financial Officer                and Principal Accounting Officer) | March                14, 2006                   |

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