|  California(State                  or other jurisdiction of incorporation or organization)                 |  33-0309110(IRS                  employer identification number)  |
|----------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|
| 1260                  Corona Pointe Court, Corona, CA(Address                  of principal executive offices)  | 92879(Zip                  Code)                                       |

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|                    | PART                I – FINANCIAL INFORMATION                                                                                                                                                       |   |
|-------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                    |                                                                                                                                                                                                      |   |
| ITEM                1.  | Financial                Statements                                                                                                                                                                       |   |
|                    |                                                                                                                                                                                                      |   |
|                    | Consolidated                Balance Sheets at March 31, 2008 and December                31, 2007                                                                                                         | 4      |
|                    |                                                                                                                                                                                                      |   |
|                    | Consolidated                Statements of Operations for the Three                Months Ended March 31, 2008 and 2007                                                                                    | 5      |
|                    |                                                                                                                                                                                                      |   |
|                    | Consolidated                Statements of Changes in Stockholders' Equity and                Comprehensive Income/(Loss) for the Three Months Ended March 31,                2008 and                2007 | 6      |
|                    |                                                                                                                                                                                                      |   |
|                    | Consolidated                Statements of Cash Flows for the Three                Months Ended March 31, 2008 and 2007                                                                                    | 8      |
|                    |                                                                                                                                                                                                      |   |
|                    | Notes                to Consolidated Financial                Statements                                                                                                                                  | 10     |
|                    |                                                                                                                                                                                                      |   |
| ITEM                2.  | Management's                Discussion and Analysis of Financial Condition                and Results of Operations                                                                                       | 20     |
|                    |                                                                                                                                                                                                      |   |
| ITEM                3.  | Quantitative                and Qualitative Disclosures about Market                Risk                                                                                                                  | 44     |
|                    |                                                                                                                                                                                                      |   |
| ITEM                4.  | Controls                and Procedures                                                                                                                                                                    | 45     |
|                    |                                                                                                                                                                                                      |   |
|                    | PART                II – OTHER INFORMATION                                                                                                                                                          |   |
|                    |                                                                                                                                                                                                      |   |
| ITEM                1.  | Legal                Proceedings                                                                                                                                                                          | 45     |
|                    |                                                                                                                                                                                                      |   |
| ITEM                1A. | Risk                Factors                                                                                                                                                                               | 46     |
|                    |                                                                                                                                                                                                      |   |
| ITEM                2.  | Unregistered                Sales of Equity Securities and Use of                Proceeds                                                                                                                 | 46     |
|                    |                                                                                                                                                                                                      |   |
| ITEM                3.  | Defaults                Upon Senior Securities                                                                                                                                                            | 46     |
|                    |                                                                                                                                                                                                      |   |
| ITEM                4.  | Submission                of Matters to a Vote of Security                Holders                                                                                                                         | 46     |
|                    |                                                                                                                                                                                                      |   |
| ITEM                5.  | Other                Information                                                                                                                                                                          | 47     |
|                    |                                                                                                                                                                                                      |   |
| ITEM                6.  | Exhibits                                                                                                                                                                                                  | 47     |
|                    |                                                                                                                                                                                                      |   |
| Signatures              |                                                                                                                                                                                                      | 48     |
|                    |                                                                                                                                                                                                      |   |
| Exhibits                |                                                                                                                                                                                                      |   |
|                    |                                                                                                                                                                                                      |   |

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Table          of Contents

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Table          of Contents

Financial      Statements

| (Dollars                in thousands)                                       |   | March                31, 2008 |      |   | December                31, 2007 |   |
|-----------------------------------------------------------------------------|--------|-------------------------------|-----------|--------|----------------------------------|--------|
|                                                                        |   |                          |      |   |                             |   |
| ASSETS                                                                      |   |                          |      |   |                             |   |
| Cash                and cash equivalents                                    |   | $                             | 35,452    |   |                             | $      | 83,537 |   |
| Investment                securities                                        |   |                          | 138,572   |   |                             |   | 177,321 |   |
| Loans                held-for-sale                                          |   |                          | 103,061   |   |                             |   | 119,427 |   |
| Loans,                net of unearned income                                |   |                          | 1,978,524 |   |                             |   | 2,008,071 |   |
| Less:  Allowance                for loan losses                   |   |                          | (48,222   | )      |                             |   | (48,849 | ) |
| Net                Loans                                                    |   |                          | 1,930,302 |   |                             |   | 1,959,222 |   |
| Bank                premises and equipment, net                             |   |                          | 17,950    |   |                             |   | 18,326 |   |
| Accrued                interest                                             |   |                          | 11,077    |   |                             |   | 11,834 |   |
| Other                real estate owned                                      |   |                          | 12,642    |   |                             |   | 17,375 |   |
| Federal                Home Loan Bank ("FHLB") and other stock, at cost     |   |                          | 19,846    |   |                             |   | 25,066 |   |
| Deferred                income tax asset                                    |   |                          | 27,346    |   |                             |   | 28,357 |   |
| Goodwill                and other intangibles                               |   |                          | 4,501     |   |                             |   | 4,637 |   |
| Other                assets                                                 |   |                          | 57,197    |   |                             |   | 38,177 |   |
| TOTAL                ASSETS                                                 |   | $                             | 2,357,946 |   |                             | $      | 2,483,279 |   |
|                                                                        |   |                          |      |   |                             |   |   |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY                         |   |                          |      |   |                             |   |   |   |
| Liabilities                                                                 |   |                          |      |   |                             |   |   |   |
| Deposits                                                                    |   |                          |      |   |                             |   |   |   |
| Non-interest                bearing                                         |   | $                             | 302,886   |   |                             | $      | 316,905 |   |
| Interest-bearing                                                            |   |                          | 1,495,972 |   |                             |   | 1,618,747 |   |
| Total                Deposits                                               |   |                          | 1,798,858 |   |                             |   | 1,935,652 |   |
|                                                                        |   |                          |      |   |                             |   |   |   |
| Exchange                balances                                            |   |                          | 18,135    |   |                             |   | 47,515 |   |
| FHLB                advances                                                |   |                          | 227,000   |   |                             |   | 175,000 |   |
| Other                borrowings                                             |   |                          | 54,300    |   |                             |   | 45,250 |   |
| Subordinated                debentures                                      |   |                          | 5,000     |   |                             |   | 5,000 |   |
| Junior                subordinated debentures                               |   |                          | 115,470   |   |                             |   | 115,470 |   |
| Accrued                interest and other liabilities                       |   |                          | 42,942    |   |                             |   | 46,367 |   |
| TOTAL                LIABILITIES                                            |   |                          | 2,261,705 |   |                             |   | 2,370,254 |   |
|                                                                        |   |                          |      |   |                             |   |   |   |
| COMMITMENTS                AND CONTINGENCIES                                |   |                          |      |   |                             |   |   |   |
|                                                                        |   |                          |      |   |                             |   |   |   |
| Stockholders'                Equity                                         |   |                          |      |   |                             |   |   |   |
| Contributed                capital                                          |   |                          |      |   |                             |   |   |   |
| Perpetual                preferred stock - authorized 10,000,000 shares     |   |                          |      |   |                             |   |   |   |
| Series                C - no par value, issued and outstanding 10,000       |   |                          |      |   |                             |   |   |   |
| shares                in 2008 and 2007                                      |   |                          | 9,665     |   |                             |   | 9,665 |   |
| Series                D - no par value, issued and outstanding 2,300,000    |   |                          |      |   |                             |   |   |   |
| shares                in 2008 and 2007                                      |   |                          | 21,950    |   |                             |   | 21,950 |   |
| Common                stock - no par value, authorized 50,000,000 shares;   |   |                          |      |   |                             |   |   |   |
| issued                and outstanding 9,884,441 and 10,285,775 shares       |   |                          |      |   |                             |   |   |   |
| in                2008 and 2007, respectively                               |   |                          | 89,474    |   |                             |   | 92,772 |   |
| Additional                paid-in capital                                   |   |                          | 1,399     |   |                             |   | 1,727 |   |
| Accumulated                deficit                                          |   |                          | (20,085   | )      |                             |   | (5,372 | ) |
| Unallocated                Employee Stock Ownership Plan ("ESOP") shares    |   |                          | (5,009    | )      |                             |   | (5,168 | ) |
| Accumulated                other comprehensive loss, net of income taxes    |   |                          | (1,153    | )      |                             |   | (2,549 | ) |
| TOTAL                STOCKHOLDERS' EQUITY                                   |   |                          | 96,241    |   |                             |   | 113,025 |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY                   |   | $                             | 2,357,946 |   |                             | $      | 2,483,279 |   |
|                                                                        |   |                          |      |   |                             |   |   |   |
| See                accompanying notes to consolidated financial statements. |   |                          |      |   |                             |   |   |   |

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Table          of Contents

CONSOLIDATED      STATEMENTS OF OPERATIONS

| (Dollars                in thousands, except per share amounts)               |   | Three                Months Ended March 31, |    |
|-------------------------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                                          |   | 2008                                        |    |   | 2007 |   |
| Interest                Income                                                |   |                                        |    |   |   |   |
| Interest                and fees on loans                                     |   | $                                           | 40,473  |   |   | $ | 42,211 |   |
| Interest                on investment securities                              |   |                                        | 1,679   |   |   |   | 2,938 |   |
| TOTAL                INTEREST INCOME                                          |   |                                        | 42,152  |   |   |   | 45,149 |   |
|                                                                          |   |                                        |    |   |   |   |   |   |
| Interest                Expense                                               |   |                                        |    |   |   |   |   |   |
| Interest                on savings deposits                (1)                |   |                                        | 5,594   |   |   |   | 6,539 |   |
| Interest                on time deposits in denominations of $100,000 or more |   |                                        | 7,170   |   |   |   | 6,393 |   |
| Interest                on other time deposits                                |   |                                        | 4,343   |   |   |   | 4,141 |   |
| Interest                on FHLB advances and other borrowings                 |   |                                        | 5,163   |   |   |   | 5,583 |   |
| TOTAL                INTEREST EXPENSE                                         |   |                                        | 22,270  |   |   |   | 22,656 |   |
| NET                INTEREST INCOME                                            |   |                                        | 19,882  |   |   |   | 22,493 |   |
|                                                                          |   |                                        |    |   |   |   |   |   |
| Provision                for Loan Losses                                      |   |                                        | (26,900 | ) |   |   | (1,200 | ) |
|                                                                          |   |                                        |    |   |   |   |   |   |
| NET                INTEREST (LOSS)/INCOME AFTER                               |   |                                        |    |   |   |   |   |   |
| PROVISION                FOR LOAN LOSSES                                      |   |                                        | (7,018  | ) |   |   | 21,293 |   |
|                                                                          |   |                                        |    |   |   |   |   |   |
| Other                Income                                                   |   |                                        |    |   |   |   |   |   |
| Fees                and service charges                                       |   |                                        | 348     |   |   |   | 483 |   |
| Gain                on sale of SBA loans and SBA broker fee income            |   |                                        | 170     |   |   |   | 600 |   |
| Loss                on sale of securities and other loans                     |   |                                        | (131    | ) |   |   | - |   |
| Other                income                                                   |   |                                        | 74      |   |   |   | 119 |   |
| TOTAL                OTHER INCOME                                             |   |                                        | 461     |   |   |   | 1,202 |   |
|                                                                          |   |                                        |    |   |   |   |   |   |
| Other                Expense                                                  |   |                                        |    |   |   |   |   |   |
| Salaries                and employee benefits                                 |   |                                        | 8,389   |   |   |   | 7,594 |   |
| Occupancy                expense of premises                                  |   |                                        | 1,501   |   |   |   | 1,379 |   |
| Furniture                and equipment                                        |   |                                        | 1,203   |   |   |   | 1,079 |   |
| Professional                services                                          |   |                                        | 3,040   |   |   |   | 647 |   |
| Office                supplies, postage and telephone                         |   |                                        | 541     |   |   |   | 627 |   |
| Business                development                                           |   |                                        | 583     |   |   |   | 566 |   |
| Loan                related                                                   |   |                                        | 582     |   |   |   | 213 |   |
| Write                down of assets                                           |   |                                        | 3,868   |   |   |   | - |   |
| Other                                                                         |   |                                        | 1,468   |   |   |   | 1,022 |   |
| TOTAL                OTHER EXPENSES                                           |   |                                        | 21,175  |   |   |   | 13,127 |   |
| (LOSS)/INCOME                BEFORE INCOME TAXES                              |   |                                        | (27,732 | ) |   |   | 9,368 |   |
| INCOME                TAX (BENEFIT)/PROVISION                                 |   |                                        | (14,480 | ) |   |   | 3,859 |   |
| NET                (LOSS)/INCOME                                              |   | $                                           | (13,252 | ) |   | $ | 5,509 |   |
|                                                                          |   |                                        |    |   |   |   |   |   |
| (LOSS)/EARNINGS                PER SHARE (2)                                  |   |                                        |    |   |   |   |   |   |
| BASIC                                                                         |   | $                                           | (1.43   | ) |   | $ | 0.49 |   |
| DILUTED                (3)                                                    |   | $                                           | (1.43   | ) |   | $ | 0.48 |   |
|                                                                          |   |                                        |    |   |   |   |   |   |
| CASH                DIVIDENDS DECLARED PER SHARE (2)                          |   | $                                           | 0.08    |   |   | $ | 0.08 |   |
| CASH                DIVIDENDS PAID PER SHARE (2)                              |   | $                                           | 0.08    |   |   | $ | 0.08 |   |
|                                                                          |   |                                        |    |   |   |   |   |   |
| See                accompanying notes to consolidated financial statements.   |   |                                        |    |   |   |   |   |   |

| (1)   | Includes                savings, NOW, and money market deposit                accounts. |
|-----------------|-----------------------------------------------------------------------------------------|

| (2)   | Per                share amounts have been retroactively adjusted to reflect the 5%                stock                dividend issued in June 2007. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

STOCKHOLDERS'      EQUITY AND COMPREHENSIVE INCOME / (LOSS)

| (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                at December 31, 2006                                     |   | $         | 9,665  |   |                        |   | 10,939,310 |       |   | $      | 88,819  |   |   | $             | 2,149  |   |     |   |   |        | $      | 52,105 |          |   | $      | (5,765 | )      |   | $ | (3,913 | ) |   | $ | 143,060 |   |
|                                                                            |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted                shares surrendered to Vineyard                        |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
|     National                Bancorp (“Company”) |   |      |   |   |                        |   | (3,446     | )          |   |   | (83     | )      |   |          |   |   |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   | (83 | ) |
| Transfer                of unissued common stock to                             |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| restricted                stock                                                 |   |      |   |   |                        |   |       |       |   |   | 1,326   |   |   |          | (1,326 | )      |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   | - |   |
| Purchase                of restricted stock                                     |   |      |   |   |                        |   | (36,750    | )          |   |   |    |   |   |          | (858   | )      |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   | (858 | ) |
| Vesting                of restricted stock                                      |   |      |   |   |                        |   | 17,944     |       |   |   |    |   |   |          |   |   |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   | - |   |
| Amortization                of restricted stock                                 |   |      |   |   |                        |   |       |       |   |   |    |   |   |          | 171    |   |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   | 171 |   |
| Share-based                compensation expense                                 |   |      |   |   |                        |   |       |       |   |   |    |   |   |          | 24     |   |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   | 24 |   |
| Release                of ESOP shares                                           |   |      |   |   |                        |   |       |       |   |   |    |   |   |          | (5     | )      |     |   |   |        |   |   |          |   |   | 136    |   |   |   |   |   |   |   | 131 |   |
| Cash                dividends declared on                                       |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| preferred                stock                                                  |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     |   |   |        |   | (229   | )             |   |   |   |   |   |   |   |   |   |   | (229 | ) |
| Cash                dividends declared on                                       |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| common                stock                                                     |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     |   |   |        |   | (851   | )             |   |   |   |   |   |   |   |   |   |   | (851 | ) |
| Comprehensive                income                                             |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income                                                       |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     | $      | 5,509  |        |   |   | 5,509         |   |   |   |   |   |   |   |   |   |   |   | 5,509 |   |
| Unrealized                security holding                                      |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| gain                (net of $314                                                |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     |   |   |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| tax                provision)                                                   |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     |   | 433    |        |   |   |          |   |   |   |   |   |   |   | 433 |   |   |   | 433 |   |
| Total                comprehensive income                                       |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |     | $      | 5,942  |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at March 31, 2007                                        |   | $         | 9,665  |   |                        |   | 10,917,058 |       |   | $      | 90,062  |   |   | $             | 155    |   |     |   |   |        |   | $      | 56,534        |   |   | $      | (5,629 | ) |   | $ | (3,480 | ) |   | $ | 147,307 |   |

----

Table          of Contents

| (Dollars                in thousands)                                       |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        |   |    |        |   |   | Accumulated   |   |   |   |   |
|-----------------------------------------------------------------------------|--------|-----------|--------|--------|-----------------------------|--------|------------|------------|--------|--------|---------|--------|--------|---------------|--------|--------|-------------|--------|---------|-------------|--------|--------|---------------|--------|--------|--------|--------|
|                                                                        |   | Perpetual |   |   | Common                Stock |   |       | Additional |   |   |    |   |   |          |   |   |        |   |    | Other       |   |   |          |   |
|                                                                        |   | Preferred |   |   | Number                of    |   |       |       |   |   | Paid-in |   |   | Comprehensive |   |   | Accumulated |   |    | Unallocated |   |   | Comprehensive |   |   |   |   |
|                                                                        |   | Stock     |   |   | Shares                      |   |       | Amount     |   |   | Capital |   |   | Loss          |   |   | Deficit     |   |    | ESOP        |   |   | Loss          |   |   | Total  |   |
| Balance                at December 31, 2007                                 |   | $         | 31,615 |   |                        |   | 10,285,775 |       |   | $      | 92,772  |   |   | $             | 1,727  |   |        |   |    |        | $      | (5,372 | )             |   | $      | (5,168 | )      |   | $ | (2,549 | ) |   | $ | 113,025 |   |
|                                                                        |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise                of stock options                                    |   |      |   |   |                        |   | 26,763     |       |   |   | 104     |   |   |          |   |   |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   | 104 |   |
| Restricted                shares surrendered to the Company                 |   |      |   |   |                        |   | (7,039     | )          |   |   | (63     | )      |   |          |   |   |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   | (63 | ) |
| Purchase                of common stock                                     |   |      |   |   |                        |   | (383,500   | )          |   |   | (3,339  | )      |   |          |   |   |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   | (3,339 | ) |
| Purchase                of restricted stock                                 |   |      |   |   |                        |   | (59,292    | )          |   |   |    |   |   |          | (458   | )      |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   | (458 | ) |
| Vesting                of restricted stock                                  |   |      |   |   |                        |   | 21,734     |       |   |   |    |   |   |          |   |   |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   | - |   |
| Amortization                of restricted stock                             |   |      |   |   |                        |   |       |       |   |   |    |   |   |          | 387    |   |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   | 387 |   |
| Reversal                of share-based compensation expense                 |   |      |   |   |                        |   |       |       |   |   |    |   |   |          | (176   | )      |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   | (176 | ) |
| Release                of ESOP shares                                       |   |      |   |   |                        |   |       |       |   |   |    |   |   |          | (81    | )      |        |   |    |        |   |   |          |   |   | 159    |   |   |   |   |   |   |   | 78 |   |
| Cash                dividends declared on preferred                         |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                                                                       |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        |   |    |        |   | (644   | )             |   |   |   |   |   |   |   |   |   |   | (644 | ) |
| Cash                dividends declared on common                            |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                                                                       |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        |   |    |        |   | (817   | )             |   |   |   |   |   |   |   |   |   |   | (817 | ) |
| Comprehensive                loss                                           |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Loss                                                     |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        | $      | (13,252 | )           |   |   | (13,252       | )      |   |   |   |   |   |   |   |   |   |   | (13,252 | ) |
| Unrealized                security holding                                  |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| losses                (net of $1,012                                        |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| tax                provision)                                               |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        |   | 1,396   |        |   |   |          |   |   |   |   |   |   |   | 1,396 |   |   |   | 1,396 |   |
| Total                comprehensive loss                                     |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        | $      | (11,856 | )           |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at March 31, 2008                                    |   | $         | 31,615 |   |                        |   | 9,884,441  |       |   | $      | 89,474  |   |   | $             | 1,399  |   |        |   |    |        |   | $      | (20,085       | )      |   | $      | (5,009 | ) |   | $ | (1,153 | ) |   | $ | 96,241 |   |
|                                                                        |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        |   |    |        |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                accompanying notes to consolidated financial statements. |   |      |   |   |                        |   |       |       |   |   |    |   |   |          |   |   |        |   |    |        |   |   |          |   |   |   |   |   |   |

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CONSOLIDATED      STATEMENTS OF CASH FLOWS

| (Dollars                in thousands)                                         |   | Three                Months Ended March 31, |    |
|-------------------------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                                          |   | 2008                                        |    |   | 2007 |   |
| Cash                Flows From Operating Activities                           |   |                                        |    |   |   |   |
| Net                (Loss) / Income                                            |   | $                                           | (13,252 | ) |   | $ | 5,509 |   |
| Adjustments                to Reconcile Net (Loss) / Income                   |   |                                        |    |   |   |   |   |   |
| to                Net Cash (Used in) / Provided by Operating Activities       |   |                                        |    |   |   |   |   |   |
|                                                                          |   |                                        |    |   |   |   |   |   |
| Depreciation                and amortization                                  |   |                                        | 1,432   |   |   |   | 1,479 |   |
| FHLB                stock dividends                                           |   |                                        | (227    | ) |   |   | (116 | ) |
| (Reversal)                / recognition of share-based compensation           |   |                                        | (239    | ) |   |   | 24 |   |
| Provision                for credit losses                                    |   |                                        | 26,676  |   |   |   | 800 |   |
| Release                of ESOP shares                                         |   |                                        | 78      |   |   |   | 131 |   |
| (Increase)                / decrease in deferred tax assets                   |   |                                        | (1      | ) |   |   | 102 |   |
| Gain                on sale of loans                                          |   |                                        | (27     | ) |   |   | (139 | ) |
| Gain                on sale of investments                                    |   |                                        | (12     | ) |   |   | - |   |
| Write-down                of assets                                           |   |                                        | 3,868   |   |   |   | - |   |
| Changes                in assets and liabilities                              |   |                                        |    |   |   |   |   |   |
| Increase                in other assets                                       |   |                                        | (4,047  | ) |   |   | (647 | ) |
| (Increase)                / decrease in net taxes payable                     |   |                                        | (14,311 | ) |   |   | 3,859 |   |
| Increase                in unearned loan fees                                 |   |                                        | (550    | ) |   |   | (482 | ) |
| Decrease                / (increase) in interest receivable                   |   |                                        | 757     |   |   |   | (185 | ) |
| (Decrease)                / increase in interest payable                      |   |                                        | (346    | ) |   |   | 145 |   |
| (Decrease)                / increase in accrued expense and other liabilities |   |                                        | (2,840  | ) |   |   | 1,367 |   |
| Origination                and purchase of held-for-sale loans,               |   |                                        |    |   |   |   |   |   |
| net                of principal payments                                      |   |                                        | -       |   |   |   | (7,183 | ) |
| Total                Adjustment                                               |   |                                        | 10,211  |   |   |   | (845 | ) |
| Net                Cash (Used In) / Provided By Operating Activities          |   |                                        | (3,041  | ) |   |   | 4,664 |   |
|                                                                          |   |                                        |    |   |   |   |   |   |
| Cash                Flows From Investing Activities                           |   |                                        |    |   |   |   |   |   |
| Proceeds                from sales of mortgage-backed                         |   |                                        |    |   |   |   |   |   |
| securities                available-for-sale                                  |   |                                        | 36,528  |   |   |   | - |   |
| Proceeds                from principal reductions and maturities of           |   |                                        |    |   |   |   |   |   |
| mortgage-backed                securities available-for-sale                  |   |                                        | 3,993   |   |   |   | 6,464 |   |
| Purchase                of FHLB and other stock                               |   |                                        | (1,366  | ) |   |   | (4,257 | ) |
| Redemption                of FHLB stock                                       |   |                                        | 6,813   |   |   |   | - |   |
| Origination                and purchase of loans, net of principal payments   |   |                                        | (3,061  | ) |   |   | (95,229 | ) |
| Proceeds                from sale of loans                                    |   |                                        | 22,889  |   |   |   | 8,455 |   |
| Proceeds                from sale of property, plant, and equipment           |   |                                        | 16      |   |   |   | - |   |
| Capital                expenditures                                           |   |                                        | (563    | ) |   |   | (195 | ) |
| Net                Cash Provided By / (Used In) Investing Activities          |   | $                                           | 65,249  |   |   | $ | (84,762 | ) |

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| (Dollars                in thousands)                                       |   |   |     |   |   |   |
|-----------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                                        |   | 2008   |     |   | 2007   |   |
| Cash                Flows From Financing Activities                         |   |   |     |   |   |   |
| Net                decrease in non-interest bearing deposits                |   | $      | (14,019  | )      |   | $      | (5,051 | ) |
| Net                decrease in interest-bearing deposits                    |   |   | (122,775 | )      |   |   | (33,630 | ) |
| Decrease                in exchange balances                                |   |   | (29,380  | )      |   |   | - |   |
| Net                increase in FHLB advances                                |   |   | 52,000   |   |   |   | 118,000 |   |
| Increase                in other borrowings                                 |   |   | 9,050    |   |   |   | 5,400 |   |
| Purchase                of common stock                                     |   |   | (3,339   | )      |   |   | (83 | ) |
| Purchase                of restricted stock                                 |   |   | (458     | )      |   |   | (858 | ) |
| Dividends                paid on preferred stock                            |   |   | (664     | )      |   |   | (234 | ) |
| Dividends                paid on common stock                               |   |   | (812     | )      |   |   | (851 | ) |
| Proceeds                from exercise of stock options                      |   |   | 104      |   |   |   | - |   |
| Net                Cash (Used In) / Provided By Financing Activities        |   |   | (110,293 | )      |   |   | 82,693 |   |
|                                                                        |   |   |     |   |   |   |   |   |
| Net                (Decrease) / Increase in Cash and Cash Equivalents       |   |   | (48,085  | )      |   |   | 2,595 |   |
|                                                                        |   |   |     |   |   |   |   |   |
| Cash                and Cash                Equivalents, Beginning of year  |   |   | 83,537   |   |   |   | 35,129 |   |
|                                                                        |   |   |     |   |   |   |   |   |
| Cash                and Cash                Equivalents, End of period      |   | $      | 35,452   |   |   | $      | 37,724 |   |
|                                                                        |   |   |     |   |   |   |   |   |
| Supplementary                Information                                    |   |   |     |   |   |   |   |   |
| Cash                paid during period for:                                 |   |   |     |   |   |   |   |   |
| Interest                                                                    |   | $      | 22,616   |   |   | $      | 22,511 |   |
| Other                non-cash items:                                        |   |   |     |   |   |   |   |   |
| Charge-offs                in loan portfolio                                |   | $      | 27,838   |   |   | $      | 77 |   |
| Net                change in unrealized loss on investment securities       |   | $      | (2,408   | )      |   | $      | (747 | ) |
|                                                                        |   |   |     |   |   |   |   |   |
| See                accompanying notes to consolidated financial statements. |   |   |     |   |   |   |   |   |

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NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS

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|                                                          |   | Three                months ended |   |
|---------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                          |   | March                31, 2007     |   |
| Dividend                yield                                 |   |                              | 1.42   | % |
| Expected                life (in years)                       |   |                              | 3.25   |   |
| Expected                volatility                            |   |                              | 27.14  | % |
| Risk-free                rate                                 |   |                              | 4.48   | % |
| Weighted                average fair value of options granted |   | $                                 | 4.79   |   |

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| (Dollars                in thousands, except per share) |   |   |     |   |      |   |   | Weighted-   |   |                      |      |   |
|---------------------------------------------------------|--------|--------|----------|--------|-----------|--------|--------|-------------|--------|---------------------------|-----------|--------|
|                                                    |   |   |     |   | Weighted- |   |   | Average     |   |                      |      |   |
|                                                    |   |   |     |   | Average   |   |   | Remaining   |   |                      | Aggregate |   |
|                                                    |   |   |     |   | Exercise  |   |   | Contractual |   |                      | Intrinsic |   |
|                                                    |   | Shares |     |   | Price     |   |   | Term        |   |                      | Value     |   |
| Outstanding                at December 31, 2007         |   |   | 390,850  |   |      | $      | 8.60   |        |   | 3.89                years |      |   | $ | - |   |
| Granted                                                 |   |   | -        |   |      |   | -      |        |   |                      | -         |   |   |   | - |   |
| Exercised                                               |   |   | (26,763  | )      |      |   | 3.89   |        |   |                      | -         |   |   |   | - |   |
| Forfeited                or expired                     |   |   | (105,000 | )      |      |   | 21.25  |        |   |                      | -         |   |   |   | - |   |
| Outstanding                at March 31, 2008            |   |   | 259,087  |   |      | $      | 3.97   |        |   | 3.92                years |      |   | $ | 1,075 |   |
| Exercisable                at March 31, 2008            |   |   | 259,087  |   |      | $      | 3.97   |        |   | 3.92                years |      |   | $ | 1,075 |   |

| (Dollars                in thousands, except per share) |   |   |    |   |      |   |   | Weighted-   |   |                      |      |   |
|---------------------------------------------------------|--------|--------|---------|--------|-----------|--------|--------|-------------|--------|---------------------------|-----------|--------|
|                                                    |   |   |    |   | Weighted- |   |   | Average     |   |                      |      |   |
|                                                    |   |   |    |   | Average   |   |   | Remaining   |   |                      | Aggregate |   |
|                                                    |   |   |    |   | Exercise  |   |   | Contractual |   |                      | Intrinsic |   |
|                                                    |   | Shares |    |   | Price     |   |   | Term        |   |                      | Value     |   |
| Outstanding                at December 31, 2006         |   |   | 388,579 |   |      | $      | 6.19   |        |   | 5.03                years |      |   | $ | - |   |
| Granted                                                 |   |   | 52,500  |   |      |   | 21.44  |        |   |                      | -         |   |   |   | - |   |
| Exercised                                               |   |   | -       |   |      |   | -      |        |   |                      | -         |   |   |   | - |   |
| Forfeited                or expired                     |   |   | -       |   |      |   | -      |        |   |                      | -         |   |   |   | - |   |
| Outstanding                at March 31, 2007            |   |   | 441,079 |   |      | $      | 8.01   |        |   | 4.68                years |      |   | $ | 6,146 |   |
| Exercisable                at March 31, 2007            |   |   | 336,079 |   |      | $      | 3.87   |        |   | 4.96                years |      |   | $ | 6,075 |   |

|                                          |   |       |     |   | Weighted-                 |   |
|-----------------------------------------------|--------|------------|----------|--------|---------------------------|--------|
|                                          |   |       |     |   | Average                   |   |
|                                          |   | Non-vested |     |   | Grant-Date                |   |
|                                          |   | Shares     |     |   | Fair                Value |   |
| Nonvested                at December 31, 2007 |   |       | 105,000  |   |                      | $      | 4.78 |   |
| Granted                                       |   |       | -        |   |                      |   | - |   |
| Vested                                        |   |       | -        |   |                      |   | - |   |
| Forfeited                or expired           |   |       | (105,000 | )      |                      |   | 4.78 |   |
| Nonvested                at March 31, 2008    |   |       | -        |   |                      | $      | - |   |

|                                          |   |       |    |   | Weighted-                 |   |
|-----------------------------------------------|--------|------------|---------|--------|---------------------------|--------|
|                                          |   |       |    |   | Average                   |   |
|                                          |   | Non-vested |    |   | Grant-Date                |   |
|                                          |   | Shares     |    |   | Fair                Value |   |
| Nonvested                at December 31, 2006 |   |       | 52,500  |   |                      | $      | 4.76 |   |
| Granted                                       |   |       | 52,500  |   |                      |   | 4.79 |   |
| Vested                                        |   |       | -       |   |                      |   | - |   |
| Forfeited                or expired           |   |       | -       |   |                      |   | - |   |
| Nonvested                at March 31, 2007    |   |       | 105,000 |   |                      | $      | 4.78 |   |

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|                                            |   |                             |    |   | Weighted-                Average |   |
|-------------------------------------------------|--------|----------------------------------|---------|--------|----------------------------------|--------|
|                                            |   | Restricted                Shares |    |   | Fair                Value        |   |
| Outstanding                at December 31, 2007 |   |                             | 298,466 |   |                             | $      | 23.72 |   |
| Granted                                         |   |                             | 66,925  |   |                             |   | 7.27 |   |
| Forfeited                                       |   |                             | (7,633  | )      |                             |   | 9.19 |   |
| Vested                                          |   |                             | (21,734 | )      |                             |   | 21.40 |   |
| Outstanding                at March 31, 2008    |   |                             | 336,024 |   |                             | $      | 20.93 |   |

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| (Dollars                in thousands)       |   | As                of          |    |
|---------------------------------------------|--------|-------------------------------|---------|
|                                        |   | March                31, 2008 |    |   | December                31, 2007 |   |
| Commitments                to extend credit |   | $                             | 519,477 |   |   | $ | 618,336 |   |
| Commitments                to extend credit |   |                          |    |   |   |   |   |   |
| to                directors and officers    |   | $                             | 391     |   |   | $ | 365 |   |
| Standby                letters of credit    |   | $                             | 8,909   |   |   | $ | 7,425 |   |
| Commercial                letters of credit |   | $                             | -       |   |   | $ | - |   |

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| (Dollars                in thousands)                   |   | Three                Months Ended March 31, |    |
|---------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                    |   | 2008                                        |    |   | 2007 |   |
|                                                    |   | Income                                      |    |   | Shares |   |   | Income |   |   | Shares |   |
| Net                (loss) / income as reported          |   | $                                           | (13,252 | ) |   |   |   |   | $ | 5,509 |   |   |   |   |
| Less:                Preferred stock dividends declared |   |                                        | (644    | ) |   |   |   |   |   | (229 | ) |   |   |   |
| Shares                outstanding at end of period      |   |                                        |    |   |   |   | 9,884,441 |   |   |   |   |   |   |   | 10,917,058 |   |
| Unreleased                and unallocated ESOP shares   |   |                                        |    |   |   |   | (225,009 | ) |   |   |   |   |   |   | (251,731 | ) |
| Impact                of weighting shares               |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| issued                during the period                 |   |                                        |    |   |   |   | 70,600 |   |   |   |   |   |   |   | 18,139 |   |
| Used                in basic EPS                        |   | $                                           | (13,896 | ) |   |   | 9,730,032 |   |   | $ | 5,280 |   |   |   | 10,683,466 |   |
| Dilutive                effect of outstanding           |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                options and warrants               |   |                                        |    |   |   |   | - |   |   |   |   |   |   |   | 243,648 |   |
| Used                in diluted EPS (1)                  |   | $                                           | (13,896 | ) |   |   | 9,730,032 |   |   | $ | 5,280 |   |   |   | 10,927,114 |   |

| (1)   | In                accordance with SFAS No. 128 “Earnings per Share”,                due to the net loss for the three months ended March 31, 2008, the                impact                of securities convertible to common                stock is not included as its effect would be                anti-dilutive. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (Dollars                in Thousands)        |   | At                March 31, 2008 |    |
|----------------------------------------------|--------|----------------------------------|---------|
|                                         |   | Total                            |    |   | (Level                1) |   |   | (Level                2) |   |   | (Level                3) |   |
|                                         |   |                             |    |   |   |   |   |   |   |   |   |   |
| Trading                securities            |   | $                                | 5,007   |   |   | $ | 5,007 |   |   | $ | - |   |   | $ | - |   |
| Available-for-sale                securities |   |                             | 133,565 |   |   |   | - |   |   |   | 133,565 |   |   |   | - |   |
| Total                                        |   | $                                | 138,572 |   |   | $ | 5,007 |   |   | $ | 133,565 |   |   | $ | - |   |

|                                  |   |                             |    |   |                          |   |   |                     |   |   |                     |   |   | Quarter                ended     |    |
|---------------------------------------|--------|----------------------------------|---------|--------|-------------------------------|--------|--------|--------------------------|--------|--------|--------------------------|--------|--------|----------------------------------|---------|
| (Dollars                in Thousands) |   | At                March 31, 2008 |    |   | March                31, 2008 |   |
|                                  |   | Total                            |    |   | (Level                1)      |   |   | (Level                2) |   |   | (Level                3) |   |   | Fair                Value Losses |    |
| Loans                held-for-sale    |   | $                                | 103,061 |   |                          | $      | -      |                     |   | $      | -                        |   |   | $                                | 103,061 |   |   | $ | (195 | ) |
| Impaired                loans (1)     |   |                             | 162,439 |   |                          |   | -      |                     |   |   | -                        |   |   |                             | 162,439 |   |   |   | (3,406 | ) |
| OREO                (2)               |   |                             | 12,642  |   |                          |   | -      |                     |   |   | -                        |   |   |                             | 12,642  |   |   |   | (3,673 | ) |
| Total                                 |   | $                                | 278,142 |   |                          | $      | -      |                     |   | $      | -                        |   |   | $                                | 278,142 |   |   | $ | (7,274 | ) |

| (1)   | Represents                carrying value of impaired loans net of corresponding specific reserve                in                the ALL. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Represents                the carrying value and related losses of foreclosed real estate owned                that                were measured at fair value subsequent to their initial classification                as                foreclosed assets. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ITEM      2

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| 1)   | Reduce                our Overall Risk                Profile: This objective includes the significant reduction of                single family residential tract construction lending and related                land                development projects, enhanced borrower sponsorship requirements,                increased and expanded core deposit growth, expanded business and                commercial real estate lending in supportive sub-markets, and enhanced                balance sheet management; |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 2)   | Loan                Portfolio                Management: In order to produce a base of stabilized long-term                earnings, we will seek to proactively rebalance the existing loan                portfolio and pursue new and diversified business generation to reduce                our                risk profile, meet our targeted concentration ranges within sub-markets                and sub-portfolios, and maintain an overall portfolio yield consistent                with quality and sustainable                returns; |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                    3)   | Liquidity                Enhancement and                Funding Cost Reduction: We will seek to reduce our funding costs by                an intensified focus on lower cost core deposits, cash management                driven                business relationships, the effective repricing of our time deposit                portfolio in a decreasing interest rate environment, and reduction                of our                reliance on higher costing liabilities;                and |
|--------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4)   | Corporate                Reallocation and                Reorganization: To improve our operating efficiencies, we will                continually review our resource allocation to ensure the optimum                allocation of talent among functions. We seek to continue to deploy                and                redeploy resources, both personnel and other operating costs, toward                achievement of our objectives. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | the                coastal communities of Los Angeles, Orange and San Diego                counties; |
|-----------------|------------------------------------------------------------------------------------------------------|

| (ii)   | the                San Gabriel Valley and San Fernando Valley regions of Los Angeles                county; |
|------------------|-------------------------------------------------------------------------------------------------------------|

| (iii)   | the                Inland Empire region, which primarily includes San Bernardino and                Riverside counties; and |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------|

| (iv)   | the                northern communities of Marin, Monterey, and Santa Clara                counties. |
|------------------|------------------------------------------------------------------------------------------------------|

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| ·   | Luxury                Home Construction Lending: The                Bank                originates single family residential (“SFR”) luxury home construction                loans (consisting of attached and detached homes generally priced                at $2.0                million and above) primarily within Los Angeles’ “south bay” coastal                communities (including Manhattan Beach, Hermosa Beach, El Segundo,                Redondo                Beach, and the Palos Verdes Peninsula area), Los Angeles’ “west side”                (including Beverly Hills, Brentwood, Bel Air and Malibu) and Orange                County                regions where we believe the Bank has a competitive advantage based                on                established builder and customer relationships and expertise in the                construction market.  The Bank established its Santa Clara RFC in                February 2007 primarily to generate SFR luxury home construction                loans.  Although the general California real estate market has                slowed considerably, and the selling time for luxury homes has increased                as of year end 2007, we believe the median price of these homes has                not                deteriorated significantly.  Therefore, we continue to believe                there is relative strength in the demand for this loan product within                the                luxury housing market along the California coast and in other established                affluent regions of California.  However, we have moderated                production in this business line given the current softness and                uncertainties in the general real estate market. We believe the high                employment level, strong incomes, wealth accumulation and good schools                in                these luxury regions contribute to a continued confidence and stability                in                these markets.  These types of construction loans typically                range from $1.0 million to $5.0 million.  During                the three months ended March 31, 2008 and December 31, 2007, gross                commitments generated for this loan product amounted to $56.0 million                and                $59.2 million, respectively. The Bank’s SFR luxury home construction loans                outstanding amounted to $573.1 million and $583.0 million at March                31,                2008 and December 31, 2007, respectively, net of participations sold                of                $53.2 million and $65.9 million, respectively. As of March 31, 2008                and                December 31, 2007, the Bank had $208.8 million and $243.7 million,                respectively, in undisbursed SFR luxury home construction loan                commitments. |
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| ·   | Commercial                Construction Lending: The Bank originates commercial construction                loans, which primarily include loans for the construction of office                buildings, retail space, churches, and multifamily/apartment                projects.  The majority of commercial construction loans are                used for the construction of low-rise office buildings and medical                offices.  This product is mainly originated throughout Southern                California, with 28% of projects in the Inland Empire, followed by                24% and                22% of projects in Los Angeles and Orange counties of Southern California,                respectively.  Commercial construction loans generated from this                division typically range from $2.0 million to $25.0                million.  The Bank had a balance of $218.5 million and $198.2                million of commercial construction loans at March 31, 2008 and December                31, 2007, respectively, net of undisbursed commitments of $94.2 million                and $115.9 million for the same periods, respectively.  Due to                the current softness and uncertainties in the general real estate                market,                we have moderated production in this business                line. |
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| ·   | Tract                Construction Lending:  The Bank has SFR tract                construction loans, primarily secured by newly-constructed, entry                to                mid-level detached and attached homes.  The majority of these loans                were originated within the Inland Empire of Southern California,                and the                remainder were originated throughout California. This division has                experienced a significant slowdown in the last several quarters,                as home                sales decline, inventory levels increase, and housing prices in the                Inland                Empire region continue to soften. The majority of the Bank’s builder                clients continue to offer various buyer incentives to complete projects                and move inventory in the face of declining absorption                rates.  Although we cannot control many economic and market                driven factors impacting this business segment, we have completed                an                analysis of our tract construction portfolio and we believe we are                taking                proactive steps to address identified risk factors within our                control. These                types of construction loans typically range from $5.0 million to                $20.0 million.  During the three months ended March 31,                2008 and December 31, 2007, gross commitments generated for this                loan                product amounted to $2.3 million and $31.5 million, respectively                representing a decrease of 92.6%.  At March 31, 2008 and                December 31, 2007, the Bank’s SFR tract construction loans outstanding                amounted to $130.0 million and $146.6 million, respectively. This                represents a reduction of tract construction loans of $16.6 million                or                11.3%. While $21.3 million of the loan balance decrease resulted                from the                charge-off of tract construction loans, there were $7.1 million of                principal paydowns and payoffs associated with this portfolio during                the                first quarter of 2008. As of March 31, 2008 and December 31, 2007,                the                Bank had $32.4 million and $57.2 million, respectively in undisbursed                SFR                tract construction loan                commitments. |
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| ·   | Income                Property Lending:  The Bank has an income property                lending division to service the lending needs in growing markets                for                commercial real estate and multifamily/apartments in California and                neighboring states. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Commercial                Real Estate: The                Bank’s                commercial real estate loan portfolio includes loans secured by office                buildings, retail outlets and industrial properties, the majority                of which                are located in Los Angeles county, Orange county, and the Inland                Empire                region in Southern California.  Keeping in line with our risk                reduction efforts, we continue to focus on loans with strong sponsorship                and properties in established markets.  Commercial                real estate loans generated from this division typically range from                $2.0                million to $10.0 million.  The Bank had a balance of $526.2                million and $524.9 million of income property commercial real estate                loans                generated from this division at March 31, 2008 and December 31, 2007,                respectively.  The Bank also had $45.0 million in commercial                real estate loans held-for-sale at March 31, 2008 and $45.8 million                at                December 31, 2007. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Residential                Real Estate:  The Bank’s residential income property loan                portfolio consists primarily of multi-family/apartment                loans.  These loans are originated primarily in Los Angeles and                Orange counties, with some lending in the Inland Empire                region.  This portfolio is currently benefiting from low home                affordability as potential home buyers are choosing to remain in                rental                housing.  Multi-family/apartment                loans typically range from $0.5 million to $5.0 million.  The                Bank had a balance of $157.0 million and $149.9 million of residential                income property loans at March 31, 2008 and December 31, 2007,                respectively. Because multi-family/apartment loans generally command                a                lower yield relative to the Bank’s other lending products, it has                moderated the growth of this type of loan to optimize our overall                portfolio yield. The Bank had $58.1 million in multi-family/apartment                loans held-for-sale at March 31, 2008 and $73.6 million at December                31,                2007. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Branching                System:                 Several of the Bank’s full-service banking centers have recently been                redesigned to offer a high-tech, high-service                environment.  Along with the Bank’s traditional teller lines, it                has also incorporated client service desks that integrate both traditional                teller and new account operations with state-of-the-art cash                machines.  To further the reach of each of the Bank’s banking                centers, its RFCs operate exclusively to generate deposits and/or                loans.  The Bank also offers courier services, internet-based                banking, and ATMs and kiosks to make banking more convenient to our                customers. |
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| ·   | Cash                Management:                 To offer expedient banking with new and emerging technologies, the                Bank                offers various cash management services to its customers.  These                services facilitate business customers’ cash flow and aid in maximizing                their investment potential by aligning products and services to a                customer’s needs. The Bank’s cash management services include the                following: |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Remote                Item                Capture:  This technology, also known as “electronic                deposit”, allows clients to scan items for deposit and electronically send                images of the items securely to the Bank’s processor.  This                service also provides customers with the convenience to perform banking                activities from within their place of business and after traditional                banking hours. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Online                Banking: The Bank’s online banking includes services such as                automated wire processing, electronic tax payments, electronic transfers,                loan payments, bill payments, and account                reconciliation. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Lockbox                Processing: The Bank’s lockbox services aid customers in expediting                the processing of their deposits and increasing their float value                for                investment purposes.  This product also provides same-day                reporting of deposits. |
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| o   | Positive                Pay:  This service provides business customers with                increased efficiency and security by allowing them to review checks                presented against their accounts prior to disbursing funds while                helping                clients to identify potentially fraudulent activity in their                account. |
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| (Dollars                in thousands)                     |   | For                the three months ended March 31, |      |
|-----------------------------------------------------------|--------|-----------------------------------------------------|-----------|
|                                                      |   | 2008                                                |      |   | 2007 |   |
|                                                      |   | Average                                             |      |   |   |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
|                                                      |   | Balance                                             |      |   | Interest |   |   | Yield/Cost |   |   | Balance |   |   | Interest |   |   | Yield/Cost |   |
| Assets                                                    |   |                                                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                (1)                                  |   | $                                                   | 2,129,067 |   |   | $ | 40,473 |   |   |   | 7.65 | % |   | $ | 1,943,391 |   |   | $ | 42,211 |   |   |   | 8.81 | % |
| Investment                securities (2)                  |   |                                                | 151,147   |   |   |   | 1,298 |   |   |   | 3.43 | % |   |   | 221,743 |   |   |   | 2,668 |   |   |   | 4.81 | % |
| Federal                funds sold                         |   |                                                | 9,577     |   |   |   | 80 |   |   |   | 3.36 | % |   |   | 873 |   |   |   | 11 |   |   |   | 5.25 | % |
| Other                investments                          |   |                                                | 20,812    |   |   |   | 301 |   |   |   | 5.81 | % |   |   | 18,452 |   |   |   | 259 |   |   |   | 5.68 | % |
| Total                interest-earning assets              |   |                                                | 2,310,603 |   |   |   | 42,152 |   |   |   | 7.34 | % |   |   | 2,184,459 |   |   |   | 45,149 |   |   |   | 8.38 | % |
| Other                assets                               |   |                                                | 144,583   |   |   |   |   |   |   |   |   |   |   |   | 127,932 |   |   |   |   |   |   |   |   |   |
| Less:                allowance for loan losses            |   |                                                | (51,775   | ) |   |   |   |   |   |   |   |   |   |   | (19,913 | ) |   |   |   |   |   |   |   |   |
| Total                average assets                       |   | $                                                   | 2,403,411 |   |   |   |   |   |   |   |   |   |   | $ | 2,292,478 |   |   |   |   |   |   |   |   |   |
|                                                      |   |                                                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                and Stockholders' Equity       |   |                                                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                deposits                (3)        |   | $                                                   | 655,845   |   |   |   | 5,594 |   |   |   | 3.43 | % |   | $ | 659,408 |   |   |   | 6,539 |   |   |   | 4.02 | % |
| Time                deposits                              |   |                                                | 918,600   |   |   |   | 11,513 |   |   |   | 5.04 | % |   |   | 825,785 |   |   |   | 10,534 |   |   |   | 5.17 | % |
| FHLB                advances                              |   |                                                | 193,150   |   |   |   | 2,272 |   |   |   | 4.67 | % |   |   | 205,309 |   |   |   | 2,554 |   |   |   | 5.00 | % |
| Other                borrowings                           |   |                                                | 44,631    |   |   |   | 771 |   |   |   | 6.84 | % |   |   | 34,748 |   |   |   | 635 |   |   |   | 7.31 | % |
| Subordinated                debt                          |   |                                                | 5,000     |   |   |   | 101 |   |   |   | 7.98 | % |   |   | 5,000 |   |   |   | 109 |   |   |   | 8.73 | % |
| Junior                subordinated debentures             |   |                                                | 115,470   |   |   |   | 2,019 |   |   |   | 6.92 | % |   |   | 115,470 |   |   |   | 2,285 |   |   |   | 7.92 | % |
| Total                interest-bearing liabilities         |   |                                                | 1,932,696 |   |   |   | 22,270 |   |   |   | 4.62 | % |   |   | 1,845,720 |   |   |   | 22,656 |   |   |   | 4.96 | % |
| Demand                deposits                            |   |                                                | 288,669   |   |   |   |   |   |   |   |   |   |   |   | 277,860 |   |   |   |   |   |   |   |   |   |
| Exchange                balances                          |   |                                                | 33,679    |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |
| Other                liabilities                          |   |                                                | 42,978    |   |   |   |   |   |   |   |   |   |   |   | 24,370 |   |   |   |   |   |   |   |   |   |
| Total                average liabilities                  |   |                                                | 2,298,022 |   |   |   |   |   |   |   |   |   |   |   | 2,147,950 |   |   |   |   |   |   |   |   |   |
| Total                average shareholders' equity         |   |                                                | 105,389   |   |   |   |   |   |   |   |   |   |   |   | 144,528 |   |   |   |   |   |   |   |   |   |
| Total                average liabilities and              |   |                                                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stockholders'                equity                       |   | $                                                   | 2,403,411 |   |   |   |   |   |   |   |   |   |   | $ | 2,292,478 |   |   |   |   |   |   |   |   |   |
|                                                      |   |                                                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest spread                (4)     |   |                                                |      |   |   |   |   |   |   |   | 2.72 | % |   |   |   |   |   |   |   |   |   |   | 3.42 | % |
| Net                interest income                        |   |                                                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and                net interest margin                (5) |   |                                                |      |   |   | $ | 19,882 |   |   |   | 3.47 | % |   |   |   |   |   | $ | 22,493 |   |   |   | 4.18 | % |

|  (1) | Interest                on loans includes loan fees, which totaled $1.6 million and $2.4                million                for the three months ended March, 31 2008 and 2007,                respectively.  The average loan balance includes loans                held-for-sale and non-accrual                loans. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (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. |
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|   |                   (i) | Salaries                and employee benefits expense is the largest component of non-interest                expense. We believe that seasoned and experienced banking personnel                increase the likelihood of success and significant contributions                to our                operations, and our salary and benefit expense reflects the cost                of that                talent. In December 2007, we hired a Chief Information Officer to                develop                and implement information technology strategies and policies, as well                as manage merger transitions and core system conversions.  In                addition, the employment of our former President and Chief Executive                Officer was terminated on January 23, 2008.  In connection with                that termination of employment, our former President and Chief Executive                Officer received $1.0 million in compensation.  These, as well                as other changes, have increased our salaries and employee benefits                expense by $0.8 million or 10.5% to $8.4 million for the three months                ended March 31, 2008 as compared to $7.6 million for the same period                in                2007. |
|--------|---------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                        (ii)    | Occupancy                expense amounted to $1.5 million for the three months ended March                31, 2008                in comparison to $1.4 million for the same period in 2007.  The                slight increase in occupancy expense is primarily due to our new                office.                In March 2008, we established a new RFC in Sherman Oaks, California                located in Los Angeles County. |
|-----------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | Furniture                and equipment expense, which is mainly comprised of depreciation                and                maintenance expense, was $1.2 million for the three months ended                March 31,                2008, compared to $1.1 million for the same period in                2007. |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv)   | Professional                services increased from $0.6 million for the three months ended March                31,                2007 to $3.0 million for the three months ended March 31,                2008.  The significant increase of $2.4 million or 369.9%                related to additional audit and legal costs associated with the internal                control investigation and the Board of Director’s opposition to the                Consent Solicitation.  In addition, we paid $0.2 million of                consulting fees to our former Chief Executive Officer, in connection                with                his severance agreement, during the three months ended March 31,                2008. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (v)   | Write-down                of assets during the three months ended March 31, 2008 consisted                of $3.7                million of other real estate owned and $0.2 million of loans                held-for-sale.  These write-downs occurred, in part, as a result                of market forces impacting the financial sector and the severe declines                in                real estate values in Southern                California. |
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| (vi)   | Other                expenses totaled $3.2 million and $2.4 million for the three months                ended                March 31, 2008 and 2007, respectively, representing an increase of                $0.8                million or 23.5%.  The main increase in other expenses consisted                of foreclosure and appraisal expenses.  Almost all categories of                non-interest expense have increased from the three months ended March                31,                2007 to the same period in 2008.  The following is a breakdown                of other expenses for the three months ended March 31, 2008 and                2007: |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (Dollars                in thousands)                 |   | Three                Months Ended March 31, |   |
|-------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                  |   | 2008                                        |   |   | 2007 |   |
| Other                non-interest expense:            |   |                                        |   |   |   |   |
| Office                supplies, postage and telephone |   | $                                           | 541    |   |   | $ | 627 |   |
| Business                development                   |   |                                        | 583    |   |   |   | 566 |   |
| Loan                related                           |   |                                        | 582    |   |   |   | 213 |   |
| Data                processing                        |   |                                        | 401    |   |   |   | 345 |   |
| Marketing                                             |   |                                        | 200    |   |   |   | 196 |   |
| Insurance                and assessments              |   |                                        | 473    |   |   |   | 352 |   |
| Administrative                                        |   |                                        | 185    |   |   |   | 172 |   |
| Other                                                 |   |                                        | 209    |   |   |   | (43 | ) |
| Total                other non-interest expense       |   | $                                           | 3,174  |   |   | $ | 2,428 |   |

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| (Dollars                in thousands)              |   |      |    |   | Gross      |   |   | Gross      |   |   |                      |   |
|----------------------------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|---------------------------|--------|
|                                               |   | Amortized |    |   | Unrealized |   |   | Unrealized |   |   |                      |   |
|                                               |   | Cost      |    |   | Gains      |   |   | Losses     |   |   | Fair                Value |   |
| Trading                securities:                 |   | $         | 5,191   |   |       | $      | -      |       |   | $      | (184                      | )      |   | $ | 5,007 |   |
|                                               |   |      |    |   |       |   |   |       |   |   |                      |   |   |   |   |   |
| Available-for-sale                securities:      |   |      |    |   |       |   |   |       |   |   |                      |   |   |   |   |   |
| U.S.                agency securities              |   |      | 13,539  |   |       |   | 2      |       |   |   | -                         |   |   |   | 13,541 |   |
| Mortgage-backed                securities          |   |      | 119,598 |   |       |   | 127    |       |   |   | (2,031                    | )      |   |   | 117,694 |   |
| Mutual                funds                        |   |      | 2,335   |   |       |   | -      |       |   |   | (5                        | )      |   |   | 2,330 |   |
| Total                available-for-sale securities |   |      | 135,472 |   |       |   | 129    |       |   |   | (2,036                    | )      |   |   | 133,565 |   |
| Total                Investment Securities         |   | $         | 140,663 |   |       | $      | 129    |       |   | $      | (2,220                    | )      |   | $ | 138,572 |   |

| (Dollars                in thousands)              |   |      |    |   | Gross      |   |   | Gross      |   |   |                      |   |
|----------------------------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|---------------------------|--------|
|                                               |   | Amortized |    |   | Unrealized |   |   | Unrealized |   |   |                      |   |
|                                               |   | Cost      |    |   | Gains      |   |   | Losses     |   |   | Fair                Value |   |
| Trading                Securities                  |   | $         | 5,516   |   |       | $      | 268    |       |   | $      | -                         |   |   | $ | 5,784 |   |
|                                               |   |      |    |   |       |   |   |       |   |   |                      |   |   |   |   |   |
| Available-for-sale                securities:      |   |      |    |   |       |   |   |       |   |   |                      |   |   |   |   |   |
| U.S.                agency securities              |   |      | 13,328  |   |       |   | -      |       |   |   | (193                      | )      |   |   | 13,135 |   |
| Mortgage-backed                securities          |   |      | 160,214 |   |       |   | 9      |       |   |   | (4,111                    | )      |   |   | 156,112 |   |
| Mutual                funds                        |   |      | 2,310   |   |       |   | -      |       |   |   | (20                       | )      |   |   | 2,290 |   |
| Total                available-for-sale securities |   |      | 175,852 |   |       |   | 9      |       |   |   | (4,324                    | )      |   |   | 171,537 |   |
| Total                Investment Securities         |   | $         | 181,368 |   |       | $      | 277    |       |   | $      | (4,324                    | )      |   | $ | 177,321 |   |

| (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     |   | $                                  | -      |   |                               | $      | -      |                      |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Mortgage-backed                securities |   |                               | -      |   |                               |   | -      |                      |   |   | 86,436 |   |   |   | (2,031 | ) |   |   | 86,436 |   |   |   | (2,031 | ) |
| Mutual                funds               |   |                               | 2,230  |   |                               |   | (5     | )                         |   |   | - |   |   |   | - |   |   |   | 2,230 |   |   |   | (5 | ) |
| Total                                     |   | $                                  | 2,230  |   |                               | $      | (5     | )                         |   | $ | 86,436 |   |   | $ | (2,031 | ) |   | $ | 88,666 |   |   | $ | (2,036 | ) |

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| (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     |   | $                                  | 13,135 |   |                               | $      | (193   | )                         |   | $ | - |   |   | $ | - |   |   | $ | 13,135 |   |   | $ | (193 | ) |
| Mortgage-backed                securities |   |                               | 21,308 |   |                               |   | (241   | )                         |   |   | 129,955 |   |   |   | (3,870 | ) |   |   | 151,263 |   |   |   | (4,111 | ) |
| Mutual                funds               |   |                               | 2,290  |   |                               |   | (20    | )                         |   |   | - |   |   |   | - |   |   |   | 2,290 |   |   |   | (20 | ) |
| Total                                     |   | $                                  | 36,733 |   |                               | $      | (454   | )                         |   | $ | 129,955 |   |   | $ | (3,870 | ) |   | $ | 166,688 |   |   | $ | (4,324 | ) |

| (Dollars                in thousands)     |   |                                   |    |   |                      |   |
|-------------------------------------------|--------|----------------------------------------|---------|--------|---------------------------|--------|
|                                      |   | Maturing                after 10 years |    |
|                                      |   | Amortized                              |    |   |                      |   |
|                                      |   | Cost                                   |    |   | Fair                Value |   |
| U.S.                agency securities     |   | $                                      | 13,539  |   |                      | $      | 13,541 |   |
| Mortgage-backed                securities |   |                                   | 119,598 |   |                      |   | 117,694 |   |
| Total                                     |   | $                                      | 133,137 |   |                      | $      | 131,235 |   |

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| (Dollars                in thousands)                 |   | March                31, 2008 |      |   | December                31, 2007 |   |
|-------------------------------------------------------|--------|-------------------------------|-----------|--------|----------------------------------|--------|
|                                                  |   |                          |      |   |                             |   |   |   |   |   |   |   |
|                                                  |   | Balance                       |      |   | %                                |   |   | Balance |   |   | % |   |
| Commercial                and industrial              |   | $                             | 165,300   |   |                             |   | 8.4 | % |   | $ | 156,966 |   |   |   | 7.8 | % |
| Real                estate construction and land:     |   |                          |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Single-family                luxury                   |   |                          | 573,104   |   |                             |   | 29.0 | % |   |   | 582,962 |   |   |   | 29.0 | % |
| Single-family                tract                    |   |                          | 130,003   |   |                             |   | 6.6 | % |   |   | 146,627 |   |   |   | 7.3 | % |
| Commercial                                            |   |                          | 218,499   |   |                             |   | 11.0 | % |   |   | 198,186 |   |   |   | 9.9 | % |
| Land                                                  |   |                          |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Single-family                luxury                   |   |                          | 24,560    |   |                             |   | 1.2 | % |   |   | 22,931 |   |   |   | 1.2 | % |
| Single-family                tract                    |   |                          | 59,647    |   |                             |   | 3.0 | % |   |   | 64,405 |   |   |   | 3.2 | % |
| Commercial                                            |   |                          | 14,766    |   |                             |   | 0.7 | % |   |   | 15,439 |   |   |   | 0.8 | % |
| Other                                                 |   |                          | 906       |   |                             |   | 0.0 | % |   |   | 909 |   |   |   | 0.0 | % |
| Real                estate mortgage:                  |   |                          |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                            |   |                          | 525,198   |   |                             |   | 26.6 | % |   |   | 553,531 |   |   |   | 27.6 | % |
| Multi-family                residential               |   |                          | 88,370    |   |                             |   | 4.5 | % |   |   | 93,662 |   |   |   | 4.7 | % |
| Other                residential                      |   |                          | 68,584    |   |                             |   | 3.5 | % |   |   | 56,257 |   |   |   | 2.8 | % |
| Consumer                loans                         |   |                          | 108,736   |   |                             |   | 5.5 | % |   |   | 115,702 |   |   |   | 5.7 | % |
| All                other loans (including overdrafts) |   |                          | 71        |   |                             |   | 0.0 | % |   |   | 264 |   |   |   | 0.0 | % |
|                                                  |   |                          | 1,977,744 |   |                             |   | 100.0 | % |   |   | 2,007,841 |   |   |   | 100.0 | % |
| Less:                                                 |   |                          |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Unearned                premium  on loans   |   |                          | 2,863     |   |                             |   | 0.1 | % |   |   | 3,272 |   |   |   | 0.2 | % |
| Deferred                loan fees                     |   |                          | (2,083    | )      |                             |   | -0.1 | % |   |   | (3,042 | ) |   |   | -0.2 | % |
| Loans,                net of unearned income          |   | $                             | 1,978,524 |   |                             |   | 100.0 | % |   | $ | 2,008,071 |   |   |   | 100.0 | % |
| Loans                held-for-sale                    |   | $                             | 103,061   |   |                             |   |   |   |   | $ | 119,427 |   |   |   |   |   |

| (Dollars                in thousands)       |   | Three                months ended March 31, |   |
|---------------------------------------------|--------|---------------------------------------------|--------|
|                                        |   | 2008                                        |   |   | 2007 |   |
| Servicing                rights capitalized |   | $                                           | 32     |   |   | $ | 36 |   |
| Servicing                rights amortized   |   | $                                           | 90     |   |   | $ | 153 |   |
| Valuation                allowances         |   | $                                           | -      |   |   | $ | - |   |

| (Dollars                in thousands)                |   | Three                months ended March 31, |   |
|------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                 |   | 2008                                        |   |   | 2007 |   |
| Servicing                rights, beginning of year   |   | $                                           | 749    |   |   | $ | 933 |   |
| Servicing                rights added in period, net |   |                                        | 32     |   |   |   | 36 |   |
| Servicing                rights amortized            |   |                                        | (90    | ) |   |   | (153 | ) |
| Servicing                rights, end of period       |   | $                                           | 691    |   |   | $ | 816 |   |

----

Table          of Contents

| (Dollars                in thousands)                     |   | Three                months ended March 31, |    |
|-----------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                      |   | 2008                                        |    |   | 2007 |   |
| Allowance                for  Loan Losses       |   |                                        |    |   |   |   |
| Balance,                beginning of period               |   | $                                           | 48,849  |   |   | $ | 19,689 |   |
| Recoveries                on loans previously charged off |   |                                        | 311     |   |   |   | 15 |   |
| Loans                charged off                          |   |                                        | (27,838 | ) |   |   | (77 | ) |
| Provision                for loan losses                  |   |                                        | 26,900  |   |   |   | 1,200 |   |
| Balance,                end of period                     |   | $                                           | 48,222  |   |   | $ | 20,827 |   |
|                                                      |   |                                        |    |   |   |   |   |   |
| Reserve                for Unfunded Commitments           |   |                                        |    |   |   |   |   |   |
| Balance,                beginning of period               |   | $                                           | 966     |   |   | $ | 1,396 |   |
| Net                decrease charged to other expenses     |   |                                        | (224    | ) |   |   | (400 | ) |
| Balance,                end of period                     |   | $                                           | 742     |   |   | $ | 996 |   |
|                                                      |   |                                        |    |   |   |   |   |   |
| Allowance                for Credit Losses                |   |                                        |    |   |   |   |   |   |
| Allowance                for loan losses                  |   | $                                           | 48,222  |   |   | $ | 20,827 |   |
| Reserve                for unfunded commitments           |   |                                        | 742     |   |   |   | 996 |   |
| Allowance                for credit losses                |   | $                                           | 48,964  |   |   | $ | 21,823 |   |

----

Table          of Contents

| (Dollars                in thousands)                    |   | As                of          |    |
|----------------------------------------------------------|--------|-------------------------------|---------|
|                                                     |   | March                31, 2008 |    |   | December                31, 2007 |   |
|                                                     |   |                          |    |   |   |   |
| Accruing                Loans More than 90 Days Past Due |   |                          |    |   |   |   |
| Aggregate                loan amounts                    |   |                          |    |   |   |   |
| Commercial                and industrial                 |   | $                             | 72      |   |   | $ | 29 |   |
| Real                estate construction                  |   |                          | 2,335   |   |   |   | - |   |
| Real                estate-mortgage                      |   |                          | 367     |   |   |   | - |   |
| Consumer                loans                            |   |                          | -       |   |   |   | 25 |   |
| Total                loans past due more than 90 days    |   |                          |    |   |   |   |   |   |
| and                still accruing                        |   | $                             | 2,774   |   |   | $ | 54 |   |
|                                                     |   |                          |    |   |   |   |   |   |
| Renegotiated                loans                        |   | $                             | 13,934  |   |   | $ | - |   |
|                                                     |   |                          |    |   |   |   |   |   |
| Non-accrual                loans                         |   |                          |    |   |   |   |   |   |
| Aggregate                loan amounts                    |   |                          |    |   |   |   |   |   |
| Commercial                and industrial                 |   | $                             | 892     |   |   | $ | 892 |   |
| Real                estate-construction                  |   |                          | 97,770  |   |   |   | 70,975 |   |
| Real                estate-mortgage                      |   |                          | 5,825   |   |   |   | 3,355 |   |
| Consumer                loans                            |   |                          | 684     |   |   |   | 140 |   |
| Total                non-accrual loans                   |   | $                             | 105,171 |   |   | $ | 75,362 |   |
|                                                     |   |                          |    |   |   |   |   |   |
| Total                non-performing loans                |   | $                             | 121,879 |   |   | $ | 75,416 |   |
|                                                     |   |                          |    |   |   |   |   |   |
| Other                Real Estate Owned                   |   | $                             | 12,642  |   |   | $ | 17,375 |   |

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Table          of Contents

| (Dollars                in thousands)                                 |   | As                of     |    |
|-----------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                  |   | March                31, |    |   | December                31, |   |
|                                                                  |   | 2008                     |    |   | 2007 |   |
|                                                                  |   |                     |    |   |   |   |
| Impaired                loans with a specific valuation allowance     |   | $                        | 31,148  |   |   | $ | 103,732 |   |
| Impaired                loans without a specific valuation allowance  |   |                     | 131,291 |   |   |   | 36,156 |   |
| Total                impaired loans                                   |   | $                        | 162,439 |   |   | $ | 139,888 |   |
|                                                                  |   |                     |    |   |   |   |   |   |
| Specific                valuation allowance related to impaired loans |   | $                        | 3,406   |   |   | $ | 20,848 |   |

| (Dollars                in thousands)                            |   | Three                months ended March 31, |    |
|------------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                             |   | 2008                                        |    |   | 2007 |   |
| Average                recorded investment in impaired loans     |   | $                                           | 135,111 |   |   | $ | 16,553 |   |
| Cash                receipts applied to reduce principal balance |   | $                                           | 16,400  |   |   | $ | 5,062 |   |
| Interest                income recognized for cash payments      |   | $                                           | 200     |   |   | $ | 8 |   |

| (Dollars                in thousands)            |   | As                of          |      |
|--------------------------------------------------|--------|-------------------------------|-----------|
|                                             |   | March                31, 2008 |      |   | December                31, 2007 |   |
| Money                market deposits             |   | $                             | 444,989   |   |   | $ | 568,713 |   |
| Savings                and NOW deposits          |   |                          | 145,276   |   |   |   | 136,982 |   |
| Time                deposits under $100,000      |   |                          | 335,380   |   |   |   | 360,249 |   |
| Time                deposits of $100,000 or more |   |                          | 570,327   |   |   |   | 552,803 |   |
| Total                                            |   | $                             | 1,495,972 |   |   | $ | 1,618,747 |   |

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Table          of Contents

| (Dollars                in thousands)           |   |   |    |
|-------------------------------------------------|--------|--------|---------|
|                                            |   |   |    |
| Three                months or less             |   | $      | 198,407 |   |
| Over                three through twelve months |   |   | 301,887 |   |
| Over                one through five years      |   |   | 70,033  |   |
|                                            |   | $      | 570,327 |   |

| (Dollars                in thousands)         |   | March                31, |    |   | December                31, |   |
|-----------------------------------------------|--------|--------------------------|---------|--------|-----------------------------|--------|
|                                          |   | 2008                     |    |   | 2007                        |   |
| Short-term                borrowings:         |   |                     |    |   |                        |   |
| Federal                fund purchased         |   | $                        | 1,000   |   |                        | $      | - |   |
| FHLB                advances                  |   |                     | 142,000 |   |                        |   | 40,000 |   |
| Other                borrowings               |   |                     | 53,300  |   |                        |   | 45,250 |   |
| Total                Short-term borrowings    |   |                     | 196,300 |   |                        |   | 85,250 |   |
| Long-term                borrowings:          |   |                     |    |   |                        |   |   |   |
| FHLB                advances                  |   |                     | 85,000  |   |                        |   | 135,000 |   |
| Subordinated                debentures        |   |                     | 5,000   |   |                        |   | 5,000 |   |
| Junior                subordinated debentures |   |                     | 115,470 |   |                        |   | 115,470 |   |
| Total                Long-term borrowings     |   |                     | 205,470 |   |                        |   | 255,470 |   |
|                                          |   |                     |    |   |                        |   |   |   |
| Total                Borrowings               |   | $                        | 401,770 |   |                        | $      | 340,720 |   |

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Table          of Contents

| (Dollars                in thousands) |   | Weighted |   |   |     |   |    |    |   |
|---------------------------------------|--------|----------|--------|--------|----------|--------|---------|---------|--------|
|                                  |   | Average  |   |   | Maturity |   |    | Putable |   |
| Maturity                              |   | Rate     |   |   | Amount   |   |    | Amount  |   |
| 2008                                  |   |     | 3.64   | %      |     | $      | 92,000  |    |   | $ | 20,000 |   |
| 2009                                  |   |     | 4.87   | %      |     |   | 90,000  |    |   |   | 90,000 |   |
| 2010                                  |   |     | 4.64   | %      |     |   | 45,000  |    |   |   | 45,000 |   |
|                                  |   |     | 4.33   | %      |     | $      | 227,000 |    |   | $ | 155,000 |   |

| (Dollars                in thousands)        |                                 |                             |   | As                of March 31, 2008 |   |
|----------------------------------------------|--------------------------------------|----------------------------------|--------|-------------------------------------|--------|
|                                         |                                 |                             |   | Common                              |   |   | Effective |   |   |   |   |
|                                         | Interest                Rate         | Maturity                Date     |   | Stock                               |   |   | Interest                Rate |   |   | Balance |   |
| Vineyard                Statutory Trust I    | 3-month                LIBOR + 3.60% | December                18, 2031 |   | $                                   | 372    |   |   |   | 6.36 | % |   | $ | 12,372 |   |
| Vineyard                Statutory Trust II   | 3-month                LIBOR + 3.35% | December                26, 2032 |   |                                | 155    |   |   |   | 7.61 | % |   |   | 5,155 |   |
| Vineyard                Statutory Trust III  | 3-month                LIBOR + 3.05% | October                8, 2033   |   |                                | 310    |   |   |   | 7.31 | % |   |   | 10,310 |   |
| Vineyard                Statutory Trust IV   | 3-month                LIBOR + 2.85% | January                23, 2034  |   |                                | 310    |   |   |   | 6.10 | % |   |   | 10,310 |   |
| Vineyard                Statutory Trust V    | 3-month                LIBOR + 2.85% | April                23, 2034    |   |                                | 310    |   |   |   | 7.11 | % |   |   | 10,310 |   |
| Vineyard                Statutory Trust VI   | 3-month                LIBOR + 2.85% | July                23, 2034     |   |                                | 372    |   |   |   | 6.70 | % |   |   | 12,372 |   |
| Vineyard                Statutory Trust VII  | 3-month                LIBOR + 2.00% | December                16, 2034 |   |                                | 310    |   |   |   | 5.08 | % |   |   | 10,310 |   |
| Vineyard                Statutory Trust VIII | 3-month                LIBOR + 2.25% | May                23, 2035      |   |                                | 310    |   |   |   | 5.34 | % |   |   | 10,310 |   |
| Vineyard                Statutory Trust IX   | 3-month                LIBOR + 1.70% | November                23, 2035 |   |                                | 464    |   |   |   | 4.79 | % |   |   | 15,464 |   |
| Vineyard                Statutory Trust XI   | 3-month                LIBOR + 1.60% | June                23, 2036     |   |                                | 557    |   |   |   | 4.20 | % |   |   | 18,557 |   |
|                                         |                                 |                             |   | $                                   | 3,470  |   |   |   | 5.82 | % |   | $ | 115,470 |   |

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Table          of Contents

|                                                           |   | As                of          |      |
|----------------------------------------------------------------|--------|-------------------------------|-----------|
|                                                           |   | March                31, 2008 |      |   | December                31, 2007 |   |
|                                                           |   |                          |      |   |   |   |
| Period-end                shares outstanding                   |   |                          | 9,884,441 |   |   |   | 10,285,775 |   |
| Unreleased                and unallocated ESOP shares          |   |                          | (225,009  | ) |   |   | (231,781 | ) |
| Used                in basic book value per common share       |   |                          | 9,659,432 |   |   |   | 10,053,994 |   |
| Warrants                (1)                                    |   |                          | 168,000   |   |   |   | 168,000 |   |
| Used                in book value per common share,            |   |                          |      |   |   |   |   |   |
| assuming                exercise of warrants                   |   |                          | 9,827,432 |   |   |   | 10,221,994 |   |
|                                                           |   |                          |      |   |   |   |   |   |
| Book                value per common share, basic              |   | $                             | 6.69      |   |   | $ | 8.10 |   |
| Tangible                book value per common share, basic (2) |   | $                             | 6.22      |   |   | $ | 7.64 |   |
| Book                value per common share, assuming           |   |                          |      |   |   |   |   |   |
| exercise                of warrants                            |   | $                             | 6.98      |   |   | $ | 8.36 |   |

| (1)   | Warrants                were granted to institutional investors in June 2004 in conjunction                with a                private placement of common stock.  These warrants have an                exercise price of $23.81 per share, (as adjusted for the 5% stock                dividend                issued in June 2007) and will expire in June                2011. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Tangible                book value per common share is calculated by dividing common shareholders’                equity, less goodwill and other intangible assets, by common shares                outstanding. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

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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 March 31, 2008                    |   |                             |    |   |                             |   |   |                             |   |   |   |   |   |   |   |   |   |   |
| Total                capital to risk-weighted assets:  |   |                             |    |   |                             |   |   |                             |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 276,584 |   |                             |   | 11.80  | %                                |   | $ | 187,500 |   |   |   | 8.0 | % |   | $ | 234,400 |   |   |   | 10.0 | % |
| Consolidated                                           |   | $                                | 213,789 |   |                             |   | 9.04   | %                                |   | $ | 189,200 |   |   |   | 8.0 | % |   |   | N/A |   |   |   | N/A |   |
|                                                   |   |                             |    |   |                             |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to risk-weighted assets: |   |                             |    |   |                             |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 247,048 |   |                             |   | 10.54  | %                                |   | $ | 93,800 |   |   |   | 4.0 | % |   | $ | 140,600 |   |   |   | 6.0 | % |
| Consolidated                                           |   | $                                | 122,653 |   |                             |   | 5.18   | %                                |   | $ | 94,700 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
|                                                   |   |                             |    |   |                             |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to average assets:       |   |                             |    |   |                             |   | .      |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 247,048 |   |                             |   | 10.40  | %                                |   | $ | 95,000 |   |   |   | 4.0 | % |   | $ | 118,800 |   |   |   | 5.0 | % |
| Consolidated                                           |   | $                                | 122,653 |   |                             |   | 5.11   | %                                |   | $ | 96,000 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
|                                                   |   |                             |    |   |                             |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As                of December 31, 2007                 |   |                             |    |   |                             |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                capital to risk-weighted assets:  |   |                             |    |   |                             |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 287,392 |   |                             |   | 11.93  | %                                |   | $ | 192,700 |   |   |   | 8.0 | % |   | $ | 240,900 |   |   |   | 10.00 | % |
| Consolidated                                           |   | $                                | 252,528 |   |                             |   | 10.36  | %                                |   | $ | 195,000 |   |   |   | 8.0 | % |   |   | N/A |   |   |   | N/A |   |
|                                                   |   |                             |    |   |                             |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to risk-weighted assets: |   |                             |    |   |                             |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 257,032 |   |                             |   | 10.67  | %                                |   | $ | 96,400 |   |   |   | 4.0 | % |   | $ | 144,500 |   |   |   | 6.00 | % |
| Consolidated                                           |   | $                                | 147,886 |   |                             |   | 6.07   | %                                |   | $ | 97,500 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
|                                                   |   |                             |    |   |                             |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to average assets:       |   |                             |    |   |                             |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 257,032 |   |                             |   | 10.30  | %                                |   | $ | 99,800 |   |   |   | 4.0 | % |   | $ | 124,800 |   |   |   | 5.00 | % |
| Consolidated                                           |   | $                                | 147,886 |   |                             |   | 5.89   | %                                |   | $ | 100,400 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |

----

Table          of Contents

| (Dollars                in thousands) |   |   |                                    |   |    |                             |   |   |                         |   |   |                             |   |
|---------------------------------------|--------|--------|-----------------------------------------|--------|---------|----------------------------------|--------|--------|------------------------------|--------|--------|----------------------------------|--------|
|                                  |   |   | Economic                Value of Equity |   |    | Earnings                at Risk  |   |
| Simulated                             |   |   | Cumulative                              |   |    | Cumulative                       |   |   | Cumulative                   |   |   | Cumulative                       |   |
| Rate                Changes           |   |   | Dollar                Change            |   |    | Percentage                Change |   |   | Dollar                Change |   |   | Percentage                Change |   |
|                                  | 200    |   |                                    | $      | (10,505 | )                                |   |   | -7.2                         | %      |   | $                                | 1,320  |   |   |   | 1.6 | % |
|                                  | 100    |   |                                    | $      | (4,974  | )                                |   |   | -3.4                         | %      |   | $                                | 178    |   |   |   | 0.2 | % |
|                                  | -100   |   |                                    | $      | 3,374   |                             |   |   | 2.3                          | %      |   | $                                | 301    |   |   |   | 0.4 | % |
|                                  | -200   |   |                                    | $      | 4,785   |                             |   |   | 3.3                          | %      |   | $                                | 280    |   |   |   | 0.3 | % |

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT      MARKET RISK

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CONTROLS AND PROCEDURES

| ·   | Separated                the employment of senior officers who overrode the Company’s controls and                negatively impacted the control                environment. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Initiated                training regarding the identification and elevation of control environment                issues. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

| ·   | Modified                Chief Risk Officer and Information Security Officer reporting lines                to                enhance communication with the Audit                Committee. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Reorganized                the information technology department and related areas under the                direction of a Chief Information                Officer. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Commenced                enhancement of the information security monitoring procedures and                documentation including the implementation of changes to user access,                system logs and security policies. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

LEGAL PROCEEDINGS

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RISK FACTORS

UNREGISTERED SALES OF EQUITY SECURITIES      AND USE      OF PROCEEDS

| (Dollars                in thousands) |   |                     |    |   |                      |   |   |                               |   |   | Approximate                       |   |
|---------------------------------------|--------|--------------------------|---------|--------|---------------------------|--------|--------|------------------------------------|--------|--------|-----------------------------------|--------|
|                                  |   |                     |    |   |                      |   |   | Total                Number of     |   |   | Dollar                Value of    |   |
|                                  |   | Total                    |    |   |                      |   |   | Shares                Purchased    |   |   | Shares                that May    |   |
|                                  |   | Number                of |    |   | Average                   |   |   | as                Part of Publicly |   |   | Yet                be Purchased   |   |
|                                  |   | Shares                   |    |   | Price                Paid |   |   | Announced                Plans     |   |   | Under                the Plans or |   |
| Period                                |   | Purchased                |    |   | Per                Share  |   |   | or                Programs (1)     |   |   | Program                           |   |
|                                  |   |                     |    |   |                      |   |   |                               |   |   |                              |   |
| January                1-31, 2008     |   |                     | 383,500 |   |                      | $      | 8.71   |                               |   |   | 383,500                           |   |   | $ | 16,428 |   |
| February                1-29, 2008    |   |                     | 59,292  |   |                      |   | 7.72   |                               |   |   | 59,292                            |   |   | $ | 15,970 |   |
| March                1-31, 2008       |   |                     | -       |   |                      |   | -      |                               |   |   | -                                 |   |   | $ | 15,970 |   |
| Total                                 |   |                     | 442,792 |   |                      | $      | 8.57   |                               |   |   | 442,792                           |   |   |   |   |   |

| (1)   | In                July 2002, we                adopted a stock repurchase program in the initial amount of $2.0                million.  In each of December 2003, January 2005 and May 2005,                we announced increases in our stock repurchase program of $5.0                million, and in October 2005 and August 2007, we announced an additional                increase of $20.0 million in our stock repurchase program for a total                amount of $57.0 million.  Under our stock repurchase program, we                have been acquiring our common stock shares in the open market from                time                to time.  Our stock repurchase program does not have an                expiration date. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

ITEM      3.  DEFAULTS UPON SENIOR      SECURITIES

SUBMISSION OF MATTERS TO A VOTE OF SECURITY      HOLDERS

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OTHER INFORMATION

 EXHIBITS

| EXHIBIT                NO. |   | DESCRIPTION |
|----------------------------|--------|-------------|
|                       | 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 |

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SIGNATURES

|   |   |  VINEYARD                NATIONAL BANCORP  By:   /s/                James G. LeSieur____________________James                G. LeSieurInterim                Chief Executive Officer  By:   /s/                Gordon Fong_______________________Gordon                FongExecutive                Vice President and Chief Financial Officer(Principal                Financial Officer)  |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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