**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-Q**

**FOR      THE QUARTER**
**LY      PERIOD ENDED JUNE 30, 2006 **

**VINEYARD      NATIONAL BANCORP**

|                California(State                or other jurisdiction ofincorporation                or organization)     |   |                33-0309110(IRS                employeridentification                number)  |
|-------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------|
|                                                                                                                          |   |                                                                                                  |
| 1260                Corona Pointe CourtCorona,                CA(Address                of principal executive offices)  |   |  92879(Zip                Code)                                                             |

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**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**FORM      10-Q INDEX**

**FOR      THE PERIODS ENDED JUNE 30, 2006 AND 2005,**

**AND      DECEMBER 31, 2005**

|                    | **PART                I - FINANCIAL INFORMATION**                                                                                                                                |   |
|-------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                    |                                                                                                                                                                             |   |
| ITEM                1.  | Financial                Statements                                                                                                                                              |   |
|                    |                                                                                                                                                                             |   |
|                    | Consolidated                Statements of Financial Condition at June 30, 2006                and December 31, 2005                                                              | 3      |
|                    |                                                                                                                                                                             |   |
|                    | Consolidated                Statements of Income for the Three and Six Months                Ended June 30, 2006 and 2005                                                        | 4      |
|                    |                                                                                                                                                                             |   |
|                    | Consolidated                Statements of Changes in Stockholders' Equity and                Comprehensive Income for the Six Months Ended June 30, 2006 and                2005 | 5      |
|                    |                                                                                                                                                                             |   |
|                    | Consolidated                Statements of Cash Flows for the Six Months Ended                June 30, 2006 and 2005                                                              | 6      |
|                    |                                                                                                                                                                             |   |
|                    | Notes                to Consolidated Financial                Statements                                                                                                         | 8      |
|                    |                                                                                                                                                                             |   |
| ITEM                2.  | Management's                Discussion and Analysis of Financial Condition                and Results of Operations                                                              | 15     |
|                    |                                                                                                                                                                             |   |
| ITEM                3.  | Quantitative                and Qualitative Disclosures about Market                Risk                                                                                         | 35     |
|                    |                                                                                                                                                                             |   |
| ITEM                4.  | Controls                and Procedures                                                                                                                                           | 35     |
|                    |                                                                                                                                                                             |   |
|                    | **PART                II - OTHER INFORMATION**                                                                                                                                   |   |
|                    |                                                                                                                                                                             |   |
| ITEM                1.  | Legal                Proceedings                                                                                                                                                 | 36     |
|                    |                                                                                                                                                                             |   |
| ITEM                1A. | Risk                Factors                                                                                                                                                      | 36     |
|                    |                                                                                                                                                                             |   |
| ITEM                2.  | Unregistered                Sales of Equity Securities and Use of                Proceeds                                                                                        | 36     |
|                    |                                                                                                                                                                             |   |
| ITEM                3.  | Defaults                upon Senior Securities                                                                                                                                   | 36     |
|                    |                                                                                                                                                                             |   |
| ITEM                4.  | Submission                of Matters to a Vote of Security                Holders                                                                                                | 36     |
|                    |                                                                                                                                                                             |   |
| ITEM                5.  | Other                Information                                                                                                                                                 | 37     |
|                    |                                                                                                                                                                             |   |
| ITEM                6.  | Exhibits                                                                                                                                                                         | 37     |
|                    |                                                                                                                                                                             |   |
| Signatures              |                                                                                                                                                                             | 39     |
|                    |                                                                                                                                                                             |   |
| Exhibits                |                                                                                                                                                                             |   |
|                    |                                                                                                                                                                             |   |

----

*Table          of Contents*

**PART      I**

**ITEM      I. FINANCIAL STATEMENTS**

**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**CONSOLIDATED      STATEMENTS OF FINANCIAL CONDITION**

**AT      JUNE 30, 2006 AND DECEMBER 31, 2005**

| (Dollars                in Thousands)                                     |   | June                30, 2006 |      | December                31, 2005 |   |
|---------------------------------------------------------------------------|--------|------------------------------|-----------|----------------------------------|--------|
|                                                                      |   | (unaudited)                  |      | (audited)                        |   |
| **ASSETS**                                                                |   |                         |      |                             |   |
| Cash                and cash equivalents                                  |   | $                            | 25,097    |                             | $      | 28,630 |   |
| Loans                held for sale                                        |   |                         | 43,601    |                             |   | - |   |
| Investment                securities, available-for-sale                  |   |                         | 223,914   |                             |   | 248,694 |   |
| Loans,                net of unearned income                              |   |                         | 1,507,712 |                             |   | 1,373,099 |   |
| Less:                Allowance for probable loan losses                   |   |                         | (15,693   | )                                |   | (13,762 | ) |
| Net                Loans                                                  |   |                         | 1,492,019 |                             |   | 1,359,337 |   |
| Bank                premises and equipment, net                           |   |                         | 19,617    |                             |   | 19,192 |   |
| Accrued                interest                                           |   |                         | 9,254     |                             |   | 8,276 |   |
| Federal                Home Loan Bank ("FHLB") and other stock, at cost   |   |                         | 19,402    |                             |   | 19,155 |   |
| Deferred                income tax asset                                  |   |                         | 13,955    |                             |   | 11,646 |   |
| Other                assets                                               |   |                         | 17,103    |                             |   | 18,708 |   |
| **TOTAL                ASSETS**                                           |   | $                            | 1,863,962 |                             | $      | 1,713,638 |   |
|                                                                      |   |                         |      |                             |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                   |   |                         |      |                             |   |   |   |
| Liabilities                                                               |   |                         |      |                             |   |   |   |
| Deposits                                                                  |   |                         |      |                             |   |   |   |
| Non-interest                bearing                                       |   | $                            | 177,090   |                             | $      | 154,664 |   |
| Interest-bearing                                                          |   |                         | 1,348,466 |                             |   | 1,122,348 |   |
| Total                Deposits                                             |   |                         | 1,525,556 |                             |   | 1,277,012 |   |
|                                                                      |   |                         |      |                             |   |   |   |
| FHLB                advances and other borrowings                         |   |                         | 72,000    |                             |   | 224,000 |   |
| Subordinated                debentures                                    |   |                         | 5,000     |                             |   | 5,000 |   |
| Junior                subordinated debentures                             |   |                         | 115,470   |                             |   | 96,913 |   |
| Accrued                interest and other liabilities                     |   |                         | 17,039    |                             |   | 10,728 |   |
| **TOTAL                LIABILITIES**                                      |   |                         | 1,735,065 |                             |   | 1,613,653 |   |
|                                                                      |   |                         |      |                             |   |   |   |
| **COMMITMENTS                AND CONTINGENCIES (Note #8)**                |   |                         |      |                             |   |   |   |
|                                                                      |   |                         |      |                             |   |   |   |
| Stockholders'                Equity                                       |   |                         |      |                             |   |   |   |
| Contributed                capital                                        |   |                         |      |                             |   |   |   |
| Perpetual                preferred stock - authorized 10,000,000 shares   |   |                         |      |                             |   |   |   |
| Series                C - no par value, issued and outstanding 10,000     |   |                         |      |                             |   |   |   |
| shares                in 2006 and 2005, respectively                      |   |                         | 9,665     |                             |   | 9,665 |   |
| Common                stock - no par value, authorized 50,000,000 shares; |   |                         |      |                             |   |   |   |
| issued                and outstanding 10,589,239 and 9,427,690 shares     |   |                         |      |                             |   |   |   |
| in                2006 and 2005, respectively                             |   |                         | 89,069    |                             |   | 60,972 |   |
| Additional                paid-in capital                                 |   |                         | 841       |                             |   | 4,443 |   |
| Unallocated                ESOP shares                                    |   |                         | (6,033    | )                                |   | (6,304 | ) |
| Retained                earnings                                          |   |                         | 44,021    |                             |   | 36,454 |   |
| Accumulated                other comprehensive loss, net of taxes         |   |                         | (8,666    | )                                |   | (5,245 | ) |
| **TOTAL                STOCKHOLDERS' EQUITY**                             |   |                         | 128,897   |                             |   | 99,985 |   |
| **TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY**             |   | $                            | 1,863,962 |                             | $      | 1,713,638 |   |
|                                                                      |   |                         |      |                             |   |   |   |
| See                accompanying notes to financial statements.            |   |                         |      |                             |   |   |   |

----

*Table          of Contents*

**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**CONSOLIDATED      STATEMENTS OF INCOME**

**FOR      THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005**

| (Dollars                in Thousands, except per share amounts)               |   | Three                Months Ended June 30, |   | Six                Months Ended June 30, |   |
|-------------------------------------------------------------------------------|--------|--------------------------------------------|--------|------------------------------------------|--------|
|                                                                          |   | 2006                                       |   | 2005                                     |   | 2006 |   | 2005 |   |
| **Interest                Income**                                            |   |                                       |   |                                     |   |   |   |   |   |
| Interest                and fees on loans                                     |   | $                                          | 35,274 |                                     | $      | 22,703 |   | $ | 66,449 |   | $ | 42,419 |   |
| Interest                on investment securities                              |   |                                       | 3,020  |                                     |   | 3,355 |   |   | 6,092 |   |   | 6,333 |   |
| **TOTAL                INTEREST INCOME**                                      |   |                                       | 38,294 |                                     |   | 26,058 |   |   | 72,541 |   |   | 48,752 |   |
|                                                                          |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| **Interest                Expense**                                           |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| Interest                on savings deposits                (1)                |   |                                       | 4,615  |                                     |   | 2,778 |   |   | 8,404 |   |   | 5,481 |   |
| Interest                on time deposits in denominations of $100,000 or more |   |                                       | 4,920  |                                     |   | 2,104 |   |   | 8,700 |   |   | 3,578 |   |
| Interest                on other time deposits                                |   |                                       | 4,019  |                                     |   | 1,503 |   |   | 6,966 |   |   | 2,723 |   |
| Interest                on FHLB advances and other borrowings                 |   |                                       | 4,394  |                                     |   | 3,565 |   |   | 9,374 |   |   | 5,860 |   |
| **TOTAL                INTEREST EXPENSE**                                     |   |                                       | 17,948 |                                     |   | 9,950 |   |   | 33,444 |   |   | 17,642 |   |
| **NET                INTEREST INCOME**                                        |   |                                       | 20,346 |                                     |   | 16,108 |   |   | 39,097 |   |   | 31,110 |   |
|                                                                          |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| **Provision                for Probable Loan Losses**                         |   |                                       | (700   | )                                        |   | (705 | ) |   | (1,900 | ) |   | (705 | ) |
|                                                                          |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| **NET                INTEREST INCOME AFTER**                                  |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| **PROVISION                FOR PROBABLE**                                     |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| **LOAN                LOSSES**                                                |   |                                       | 19,646 |                                     |   | 15,403 |   |   | 37,197 |   |   | 30,405 |   |
|                                                                          |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| **Other                Income**                                               |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| Fees                and service charges                                       |   |                                       | 442    |                                     |   | 463 |   |   | 719 |   |   | 844 |   |
| Gain                on sale of SBA loans and broker fee income                |   |                                       | 853    |                                     |   | 770 |   |   | 1,397 |   |   | 1,427 |   |
| Gain                on sale of loans                                          |   |                                       | 386    |                                     |   | - |   |   | 386 |   |   | - |   |
| Other                income                                                   |   |                                       | 116    |                                     |   | 92 |   |   | 226 |   |   | 167 |   |
| **TOTAL                OTHER INCOME**                                         |   |                                       | 1,797  |                                     |   | 1,325 |   |   | 2,728 |   |   | 2,438 |   |
|                                                                          |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| **Other                Expense**                                              |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| Salaries                and employee benefits                                 |   |                                       | 6,672  |                                     |   | 4,487 |   |   | 13,173 |   |   | 9,411 |   |
| Occupancy                expense of premises                                  |   |                                       | 1,105  |                                     |   | 876 |   |   | 2,230 |   |   | 1,677 |   |
| Furniture                and equipment                                        |   |                                       | 1,029  |                                     |   | 762 |   |   | 2,022 |   |   | 1,500 |   |
| Other                                                                         |   |                                       | 3,340  |                                     |   | 2,426 |   |   | 6,070 |   |   | 4,484 |   |
| **TOTAL                OTHER EXPENSES**                                       |   |                                       | 12,146 |                                     |   | 8,551 |   |   | 23,495 |   |   | 17,072 |   |
| **INCOME                BEFORE INCOME TAXES**                                 |   |                                       | 9,297  |                                     |   | 8,177 |   |   | 16,430 |   |   | 15,771 |   |
| **INCOME                TAX PROVISION**                                       |   |                                       | 3,857  |                                     |   | 3,419 |   |   | 6,829 |   |   | 6,596 |   |
| **NET                INCOME**                                                 |   | $                                          | 5,440  |                                     | $      | 4,758 |   | $ | 9,601 |   | $ | 9,175 |   |
|                                                                          |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| **EARNINGS                PER SHARE**                                         |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| **BASIC**                                                                     |   | $                                          | 0.53   |                                     | $      | 0.50 |   | $ | 0.96 |   | $ | 0.97 |   |
| **DILUTED**                                                                   |   | $                                          | 0.52   |                                     | $      | 0.48 |   | $ | 0.94 |   | $ | 0.93 |   |
|                                                                          |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| **CASH                DIVIDENDS DECLARED PER SHARE**                          |   | $                                          | 0.08   |                                     | $      | 0.06 |   | $ | 0.16 |   | $ | 0.11 |   |
| **CASH                DIVIDENDS PAID PER SHARE**                              |   | $                                          | 0.08   |                                     | $      | 0.06 |   | $ | 0.16 |   | $ | 0.11 |   |
|                                                                          |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |
| See                accompanying notes to financial statements.                |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |

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

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*Table          of Contents*

**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**CONSOLIDATED      STATEMENTS OF CHANGES IN**

**STOCKHOLDERS'      EQUITY AND COMPREHENSIVE INCOME**

**FOR      THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005**

| (Dollars                in Thousands)                 |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   | Accumulated   |   |   |   |
|-------------------------------------------------------|--------|-----------|--------|-----------------------------|--------|------------|--------|---------|--------|---------------|--------|----------|--------|-------------|--------|---------------|--------|--------|--------|
|                                                  |   | Perpetual |   | Common                Stock |   | Additional |   |    |   |          |   |     |   | Other       |   |          |   |
|                                                  |   | Preferred |   | Number                of    |   |       |   | Paid-in |   | Comprehensive |   | Retained |   | Unallocated |   | Comprehensive |   |   |   |
|                                                  |   | Stock     |   | Shares                      |   | Amount     |   | Capital |   | Income        |   | Earnings |   | ESOP        |   | Loss          |   | Total  |   |
| **Balance                December 31, 2004**          |   | $         | -      |                        |   | 9,581,941  |   | $       | 70,536 |          | $      | 3,772    |   |        |   |          | $      | 20,513 |   | $ | (6,856 | ) | $ | (2,738 | ) | $ | 85,227 |   |
|                                                  |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of preferred stock            |   |      | 9,675  |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 9,675 |   |
| Stock                options exercised                |   |      |   |                        |   | 127,475    |   |    | 751    |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 751 |   |
| Warrants                exercised                     |   |      |   |                        |   | 50,350     |   |    | 343    |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 343 |   |
| Additional                investment rights exercised |   |      |   |                        |   | 120,775    |   |    | 3,534  |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 3,534 |   |
| Purchase                of treasury stock             |   |      |   |                        |   | (202,170   | )      |    | (6,003 | )             |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | (6,003 | ) |
| Release                of ESOP shares                 |   |      |   |                        |   |       |   |    |   |          |   | 86       |   |        |   |          |   |   |   |   | 280 |   |   |   |   |   | 366 |   |
| Cash                dividends declared on             |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   | (149   | )      |   |   |   |   |   |   |   | (149 | ) |
| preferred                stock                        |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                dividends declared on             |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| common                stock                           |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   | (1,049 | )      |   |   |   |   |   |   |   | (1,049 | ) |
| Comprehensive                income                   |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income                             |   |      |   |                        |   |       |   |    |   |          |   |     |   | $           | 9,175  |          |   | 9,175  |   |   |   |   |   |   |   |   | 9,175 |   |
| Unrealized                security holding            |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| gains                (net of $410                     |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| tax                provision)                         |   |      |   |                        |   |       |   |    |   |          |   |     |   |        | 566    |          |   |   |   |   |   |   |   | 566 |   |   | 566 |   |
| Total                comprehensive income             |   |      |   |                        |   |       |   |    |   |          |   |     |   | $           | 9,741  |          |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance,                June 30, 2005**             |   | $         | 9,675  |                        |   | 9,678,371  |   | $       | 69,161 |          | $      | 3,858    |   |        |   |          | $      | 28,490 |   | $ | (6,576 | ) | $ | (2,172 | ) | $ | 102,436 |   |
|                                                  |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                           |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   | Accumulated   |   |   |   |
|----------------------------------------------------------------|--------|-----------|--------|-----------------------------|--------|------------|--------|---------|--------|---------------|--------|----------|--------|-------------|--------|---------------|--------|--------|--------|
|                                                           |   | Perpetual |   | Common                Stock |   | Additional |   |    |   |          |   |     |   | Other       |   |          |   |
|                                                           |   | Preferred |   | Number                of    |   |       |   | Paid-in |   | Comprehensive |   | Retained |   | Unallocated |   | Comprehensive |   |   |   |
|                                                           |   | Stock     |   | Shares                      |   | Amount     |   | Capital |   | Income        |   | Earnings |   | ESOP        |   | Loss          |   | Total  |   |
| **Balance                December 31, 2005**                   |   | $         | 9,665  |                        |   | 9,427,690  |   | $       | 60,972 |          | $      | 4,443    |   |        |   |          | $      | 36,454 |   | $ | (6,304 | ) | $ | (5,245 | ) | $ | 99,985 |   |
|                                                           |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued                             |   |      |   |                        |   | 1,200,000  |   |    | 30,294 |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 30,294 |   |
| Stock                options exercised                         |   |      |   |                        |   | 47,549     |   |    | 183    |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 183 |   |
| Purchase                of treasury stock                      |   |      |   |                        |   | (86,000    | )      |    | (2,380 | )             |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   | (2,380 | ) |
| Purchase                of restricted stock                    |   |      |   |                        |   |       |   |    |   |          |   | (1,209   | )      |        |   |          |   |   |   |   |   |   |   |   |   |   | (1,209 | ) |
| Reclassification                of restricted stock awards     |   |      |   |                        |   |       |   |    |   |          |   | (3,134   | )      |        |   |          |   |   |   |   |   |   |   |   |   |   | (3,134 | ) |
| Amortization                of restricted stock                |   |      |   |                        |   |       |   |    |   |          |   | 656      |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 656 |   |
| Share-based                compensation expense                |   |      |   |                        |   |       |   |    |   |          |   | 13       |   |        |   |          |   |   |   |   |   |   |   |   |   |   | 13 |   |
| Release                of ESOP shares                          |   |      |   |                        |   |       |   |    |   |          |   | 72       |   |        |   |          |   |   |   |   | 271 |   |   |   |   |   | 343 |   |
| Cash                dividends declared on preferred            |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                                                          |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   | (430   | )      |   |   |   |   |   |   |   | (430 | ) |
| Cash                dividends declared on common               |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                                                          |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   | (1,604 | )      |   |   |   |   |   |   |   | (1,604 | ) |
| Comprehensive                income                            |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income                                      |   |      |   |                        |   |       |   |    |   |          |   |     |   | $           | 9,601  |          |   | 9,601  |   |   |   |   |   |   |   |   | 9,601 |   |
| Unrealized                security holding                     |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| losses                (net of $2,477                           |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| tax                benefit)                                    |   |      |   |                        |   |       |   |    |   |          |   |     |   |        | (3,421 | )             |   |   |   |   |   |   |   | (3,421 | ) |   | (3,421 | ) |
| Total                comprehensive income                      |   |      |   |                        |   |       |   |    |   |          |   |     |   | $           | 6,180  |          |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance,                June 30, 2006**                      |   | $         | 9,665  |                        |   | 10,589,239 |   | $       | 89,069 |          | $      | 841      |   |        |   |          | $      | 44,021 |   | $ | (6,033 | ) | $ | (8,666 | ) | $ | 128,897 |   |
|                                                           |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| See                accompanying notes to financial statements. |   |      |   |                        |   |       |   |    |   |          |   |     |   |        |   |          |   |   |   |   |   |   |   |   |

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*Table          of Contents*

**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**FOR      THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005**

| (Dollars                in Thousands)                                       |   | Six                Months Ended June 30, |     |
|-----------------------------------------------------------------------------|--------|------------------------------------------|----------|
|                                                                        |   | 2006                                     |     | 2005 |   |
| **Cash                Flows From Operating Activities**                     |   |                                     |     |   |   |
| Net                Income                                                   |   | $                                        | 9,601    |   | $ | 9,175 |   |
| Adjustments                to Reconcile Net Income                          |   |                                     |     |   |   |   |   |
| to                Net Cash Provided by Operating Activities                 |   |                                     |     |   |   |   |   |
|                                                                        |   |                                     |     |   |   |   |   |
| Depreciation                and amortization                                |   |                                     | 2,801    |   |   | 1,633 |   |
| Investment                securities accretion/amortization                 |   |                                     | 268      |   |   | 698 |   |
| Provision                for credit losses                                  |   |                                     | 1,900    |   |   | 850 |   |
| FHLB                stock dividends                                         |   |                                     | (412     | ) |   | (234 | ) |
| Share-based                compensation                                     |   |                                     | 13       |   |   | - |   |
| Release                of ESOP shares                                       |   |                                     | 343      |   |   | 366 |   |
| Decrease                in deferred tax assets                              |   |                                     | 168      |   |   | - |   |
| (Decrease)/increase                in taxes payable                         |   |                                     | (214     | ) |   | 1,218 |   |
| Increase                in other assets                                     |   |                                     | (1,365   | ) |   | (1,403 | ) |
| Gain                on sale of property, plant, and equipment               |   |                                     | (4       | ) |   | - |   |
| Gain                on sale of loans                                        |   |                                     | (925     | ) |   | (471 | ) |
| (Decrease)/increase                in unearned loan fees                    |   |                                     | (1,364   | ) |   | 672 |   |
| Increase                in interest receivable                              |   |                                     | (978     | ) |   | (1,373 | ) |
| Decrease                in interest payable                                 |   |                                     | (17      | ) |   | (89 | ) |
| Increase/(decrease)                in accrued expense and other liabilities |   |                                     | 6,521    |   |   | (307 | ) |
| Total                Adjustments                                            |   |                                     | 6,735    |   |   | 1,560 |   |
| **Net                Cash Provided By Operating Activities**                |   |                                     | 16,336   |   |   | 10,735 |   |
|                                                                        |   |                                     |     |   |   |   |   |
| **Cash                Flows From Investing Activities**                     |   |                                     |     |   |   |   |   |
| Proceeds                from principal reductions and maturities of         |   |                                     |     |   |   |   |   |
| mortgage-backed                securities available-for-sale                |   |                                     | 18,659   |   |   | 26,713 |   |
| Purchase                of mortgage-backed securities available-for-sale    |   |                                     | -        |   |   | (95,653 | ) |
| Purchase                of FHLB & other stock                           |   |                                     | (7,945   | ) |   | (7,721 | ) |
| Redemption                of FHLB stock                                     |   |                                     | 8,110    |   |   | 1,234 |   |
| Recoveries                on loans previously written off                   |   |                                     | 50       |   |   | 41 |   |
| Proceeds                from sale of loans                                  |   |                                     | 75,772   |   |   | 55,714 |   |
| Origination                and purchase of loans, net of principal payments |   |                                     | (251,716 | ) |   | (274,141 | ) |
| Proceeds                from sale of premise and equipment                  |   |                                     | 4        |   |   | - |   |
| Capital                expenditures                                         |   |                                     | (2,222   | ) |   | (5,410 | ) |
| **Net                Cash Used In Investing Activities**                    |   | $                                        | (159,288 | ) | $ | (299,223 | ) |

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*Table          of Contents*

**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**FOR      THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005**

**(continued)**

| (Dollars                in Thousands)                                          |   |   |     |   |   |
|--------------------------------------------------------------------------------|--------|--------|----------|--------|--------|
|                                                                           |   | 2006   |     | 2005   |   |
| **Cash                Flows From Financing Activities**                        |   |   |     |   |   |
| Net                increase/(decrease) in demand deposits, NOW accounts,       |   |   |     |   |   |
| savings                accounts, and money market deposits                     |   | $      | 89,286   |   | $      | (17,611 | ) |
| Net                increase in time deposits                                   |   |   | 159,258  |   |   | 86,191 |   |
| Net                change in FHLB advances                                     |   |   | (142,000 | )      |   | 211,000 |   |
| Net                change in other borrowings                                  |   |   | (10,000  | )      |   | - |   |
| Proceeds                from issuance of perpetual preferred stock             |   |   | -        |   |   | 9,675 |   |
| Proceeds                from issuance of common stock, net                     |   |   | 30,294   |   |   | - |   |
| Proceeds                from issuance of junior subordinated debentures        |   |   | 18,000   |   |   | 10,000 |   |
| Purchase                of treasury stock                                      |   |   | (2,380   | )      |   | (6,003 | ) |
| Purchase                of restricted stock                                    |   |   | (1,209   | )      |   | - |   |
| Dividends                paid on preferred stock                               |   |   | (409     | )      |   | - |   |
| Dividends                paid on common stock                                  |   |   | (1,604   | )      |   | (1,049 | ) |
| Proceeds                from exercise of warrants                              |   |   | -        |   |   | 343 |   |
| Proceeds                from exercise of additional investment rights          |   |   | -        |   |   | 3,534 |   |
| Proceeds                from exercise of stock options                         |   |   | 183      |   |   | 751 |   |
| **Net                Cash Provided By Financing Activities**                   |   |   | 139,419  |   |   | 296,831 |   |
|                                                                           |   |   |     |   |   |   |   |
| **Net                (Decrease)/Increase in Cash and Cash Equivalents**        |   |   | (3,533   | )      |   | 8,343 |   |
|                                                                           |   |   |     |   |   |   |   |
| **Cash                and Cash Equivalents**,                Beginning of year |   |   | 28,630   |   |   | 22,551 |   |
|                                                                           |   |   |     |   |   |   |   |
| **Cash                and Cash Equivalents**,                End of period     |   | $      | 25,097   |   | $      | 30,894 |   |
|                                                                           |   |   |     |   |   |   |   |
| **Supplemental                Information**                                    |   |   |     |   |   |   |   |
| Net                change in unrealized loss on investment securities          |   | $      | 5,898    |   | $      | (976 | ) |
| Interest                paid                                                   |   | $      | 33,461   |   | $      | 17,731 |   |
| Income                tax paid                                                 |   | $      | 5,420    |   | $      | 3,365 |   |
| Transfer                of loans to loans held-for-sale                        |   | $      | 43,601   |   | $      | - |   |
| Reclassification                of restricted stock awards                     |   | $      | 3,134    |   | $      | - |   |
|                                                                           |   |   |     |   |   |   |   |
| See                accompanying notes to financial statements.                 |   |   |     |   |   |   |   |

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*Table          of Contents*

**VINEYARD      NATIONAL BANCORP AND SUBSIDIARY**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note      #1 - Nature of Business and Summary of Significant Accounting      Policies**

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*Table          of Contents*

**Note      #2 - Recently Issued Accounting Pronouncements**

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

*"Accounting      Changes and Error Corrections"*

*Accounting      for Certain Hybrid Instruments*

*Accounting      for Servicing of Financial Assets — An Amendment of FASB Statement      No. 140*

**Note      #3 - Business Combination**

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*Table          of Contents*

**Note      #4 **
**-      **
**Share-Based      Compensation**

| (Dollars                in Thousands, except per share data)          |   | Three                Months Ended |      | Six                Months Ended |   |
|-----------------------------------------------------------------------|--------|-----------------------------------|-----------|---------------------------------|--------|
|                                                                  |   | June                30, 2005      |      |
|                                                                  |   |                              |      |                            |   |
| Net                income:                                            |   |                              |      |                            |   |
| As                reported                                            |   | $                                 | 4,758     |                            | $      | 9,175 |   |
| Less:                preferred stock dividends declared               |   |                              | (149      | )                               |   | (149 | ) |
| Stock-based                compensation that would have been reported |   |                              |      |                            |   |   |   |
| using                the fair value method of SFAS No.123             |   |                              | (14       | )                               |   | (67 | ) |
| Pro                forma net income - used in basic and diluted EPS   |   | $                                 | 4,595     |                            | $      | 8,959 |   |
|                                                                  |   |                              |      |                            |   |   |   |
| Weighted                average shares outstanding - basic            |   |                              | 9,280,639 |                            |   | 9,290,466 |   |
| Weighted                average shares outstanding - diluted          |   |                              | 9,696,407 |                            |   | 9,753,699 |   |
|                                                                  |   |                              |      |                            |   |   |   |
| Basic                EPS                                              |   |                              |      |                            |   |   |   |
| As                reported                                            |   | $                                 | 0.50      |                            | $      | 0.97 |   |
| Pro                forma                                              |   | $                                 | 0.50      |                            | $      | 0.96 |   |
|                                                                  |   |                              |      |                            |   |   |   |
| Diluted                EPS                                            |   |                              |      |                            |   |   |   |
| As                reported                                            |   | $                                 | 0.48      |                            | $      | 0.93 |   |
| Pro                forma                                              |   | $                                 | 0.47      |                            | $      | 0.92 |   |

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*Table          of Contents*

| (Dollars                in Thousands, except per share amounts) |   |       |    | **Weighted-** |   |            |   |
|-----------------------------------------------------------------|--------|------------|---------|---------------|--------|-----------------|--------|
|                                                            |   |       |    | **Weighted-** |   | **Average**     |   |   |   |
|                                                            |   |       |    | **Average**   |   | **Remaining**   |   | **Aggregate** |   |
|                                                            |   |       |    | **Exercise**  |   | **Contractual** |   | **Intrinsic** |   |
|                                                            |   | **Shares** |    | **Price**     |   | **Term**        |   | **Value** |   |
| Outstanding                at December 31, 2005                 |   |       | 427,155 |          | $      | 3.84            |   |   | 6.15                years |   |   |   |   |
| Granted                                                         |   |       | -       |          |   |            |   |   |   |   |   |   |   |
| Exercised                                                       |   |       | (47,549 | )             |   | 3.84            |   |   |   |   |   |   |   |
| Forfeited                or expired                             |   |       | -       |          |   |            |   |   |   |   |   |   |   |
| Outstanding                at June 30, 2006                     |   |       | 379,606 |          | $      | 3.84            |   |   | 5.65                years |   | $ | 8,754 |   |
| Exercisable                at June 30, 2006                     |   |       | 379,606 |          | $      | 3.84            |   |   | 5.65                years |   | $ | 8,754 |   |

| (Dollars                in Thousands, except per share amounts) |   |       |     | **Weighted-** |   |            |   |
|-----------------------------------------------------------------|--------|------------|----------|---------------|--------|-----------------|--------|
|                                                            |   |       |     | **Weighted-** |   | **Average**     |   |   |   |
|                                                            |   |       |     | **Average**   |   | **Remaining**   |   | **Aggregate** |   |
|                                                            |   |       |     | **Exercise**  |   | **Contractual** |   | **Intrinsic** |   |
|                                                            |   | **Shares** |     | **Price**     |   | **Term**        |   | **Value** |   |
| Outstanding                at December 31, 2004                 |   |       | 572,125  |          | $      | 4.25            |   |   | 7.22                years |   |   |   |   |
| Granted                                                         |   |       | -        |          |   |            |   |   |   |   |   |   |   |
| Exercised                                                       |   |       | (127,475 | )             |   | 5.89            |   |   |   |   |   |   |   |
| Forfeited                or expired                             |   |       | -        |          |   |            |   |   |   |   |   |   |   |
| Outstanding                at June 30, 2005                     |   |       | 444,650  |          | $      | 3.81            |   |   | 6.63                years |   | $ | 12,339 |   |
| Exercisable                at June 30, 2005                     |   |       | 418,803  |          | $      | 3.58            |   |   | 6.61                years |   | $ | 11,718 |   |

|                                          |   |           |   | **Weighted-**                 |   |
|-----------------------------------------------|--------|----------------|--------|-------------------------------|--------|
|                                          |   |           |   | **Average**                   |   |
|                                          |   | **Non-vested** |   | **Grant-Date**                |   |
|                                          |   | **Shares**     |   | **Fair                Value** |   |
| Nonvested                at December 31, 2005 |   |           | 7,997  |                          | $      | 1.62 |   |
| Granted                                       |   |           | -      |                          |   |   |   |
| Vested                                        |   |           | (7,997 | )                             |   | 1.62 |   |
| Forfeited                or expired           |   |           | -      |                          |   |   |   |
| Nonvested                at June 30, 2006     |   |           | -      |                          | $      | - |   |

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*Table          of Contents*

|                                          |   |           |    | **Weighted-**                 |   |
|-----------------------------------------------|--------|----------------|---------|-------------------------------|--------|
|                                          |   |           |    | **Average**                   |   |
|                                          |   | **Non-vested** |    | **Grant-Date**                |   |
|                                          |   | **Shares**     |    | **Fair                Value** |   |
| Nonvested                at December 31, 2004 |   |           | 93,749  |                          | $      | 2.15 |   |
| Granted                                       |   |           | -       |                          |   |   |   |
| Vested                                        |   |           | (67,902 | )                             |   | 1.71 |   |
| Forfeited                or expired           |   |           | -       |                          |   |   |   |
| Nonvested                at June 30, 2005     |   |           | 25,847  |                          | $      | 3.32 |   |

**Note      #5 - Sale of Capital Stock**

**Note      #6 - Debt Issuance**

**Note      #7 - Dividends **

**Note      #8 - Commitments and Contingencies**

*Financial      Instruments with Off-Balance Sheet Risk*

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*Table          of Contents*

| (Dollars                in thousands)       |   | As                of         |    |
|---------------------------------------------|--------|------------------------------|---------|
|                                        |   | June                30, 2006 |    | December                31, 2005 |   |
| Commitments                to extend credit |   | $                            | 638,411 |   | $ | 595,301 |   |
| Standby                letters of credit    |   | $                            | 4,645   |   | $ | 4,994 |   |
| Commercial                letters of credit |   | $                            | -       |   | $ | - |   |

*Legal      Proceedings*

**Note      #9 - Employee Stock Ownership Plan**

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*Table          of Contents*

**Note      #10 - Earnings per Share **

| (Dollars                in Thousands)                   |   | Three                Months Ended June 30, |   | Six                Months Ended June 30, |   |
|---------------------------------------------------------|--------|--------------------------------------------|--------|------------------------------------------|--------|
|                                                    |   | 2006                                       |   | 2005                                     |   | 2006 |   | 2005 |   |
|                                                    |   | Income                                     |   | Shares                                   |   | Income |   | Shares |   | Income |   | Shares |   | Income |   | Shares |   |
| Net                income as reported                   |   | $                                          | 5,440  |                                     |   |   |   | $ | 4,758 |   |   |   |   | $ | 9,601 |   |   |   |   | $ | 9,175 |   |   |   |   |
| Less:                preferred stock dividends declared |   |                                       | (222   | )                                        |   |   |   |   | (149 | ) |   |   |   |   | (430 | ) |   |   |   |   | (149 | ) |   |   |   |
| Shares                outstanding at end of period      |   |                                       |   |                                     |   | 10,589,239 |   |   |   |   |   | 9,678,371 |   |   |   |   |   | 10,589,239 |   |   |   |   |   | 9,678,371 |   |
| Unreleased                and unallocated ESOP shares   |   |                                       |   |                                     |   | (256,966 | ) |   |   |   |   | (280,083 | ) |   |   |   |   | (256,966 | ) |   |   |   |   | (280,083 | ) |
| Impact                of weighting shares               |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| issued                during the period                 |   |                                       |   |                                     |   | (437,546 | ) |   |   |   |   | (117,649 | ) |   |   |   |   | (795,106 | ) |   |   |   |   | (107,822 | ) |
| Used                in basic EPS                        |   | $                                          | 5,218  |                                     |   | 9,894,727 |   | $ | 4,609 |   |   | 9,280,639 |   | $ | 9,171 |   |   | 9,537,167 |   | $ | 9,026 |   |   | 9,290,466 |   |
| Dilutive                effect of outstanding           |   |                                       |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                options and warrants               |   |                                       |   |                                     |   | 218,679 |   |   |   |   |   | 415,768 |   |   |   |   |   | 233,268 |   |   |   |   |   | 463,233 |   |
| Used                in diluted EPS                      |   | $                                          | 5,218  |                                     |   | 10,113,406 |   | $ | 4,609 |   |   | 9,696,407 |   | $ | 9,171 |   |   | 9,770,435 |   | $ | 9,026 |   |   | 9,753,699 |   |

**Note      #11 - Subsequent Events**

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*Table          of Contents*

**ITEM      2. Management’s Discussion and Analysis of Financial Condition      and Results of Operations**

**Forward-looking      statements**

**General      Business and Organization**

*Vineyard      National Bancorp*

*Vineyard      Bank*

**Executive      Overview and Highlights**

*Merger      Agreement*

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*Table          of Contents*

| §   | Accretion                to our earnings per share; |
|--------------------|-----------------------------------------------------|

| §   | Reduction                of overall core funding costs, with Rancho Bank’s cost of funds of less                than 75 basis points for 2005; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Revenue                enhancement through the redeployment of Rancho Bank’s excess liquidity                into higher yielding loan products;                and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Cost                savings in excess of 30%, principally in redundant administrative                infrastructure. |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

*Registered      Direct Offering*

*Junior      Subordinated Debentures*

*Bank      Charter Conversion*

**Critical      Accounting Policies**

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*Table          of Contents*

*Allowance      for Credit Losses*

*Mortgage      and Non-mortgage Servicing Rights*

*Income      Taxes*

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*Table          of Contents*

**Our      Strategic Plan**

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

| §   | Organic                Deposit and Lending Growth:* *We                believe that we can achieve a consistent growth in our deposit and                lending                base through the expansion and retention of community banking                relationships. We will also expand our presence in existing markets                and                enter new geographic markets through the hiring of individuals or                teams                who will acquire and manage new business. We target certain markets                due to                our experience in and knowledge of these markets, as well as our                expectation of continued growth and potential future development                in these                areas. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

| (v)                  | the                coastal communities of Marin and Monterey Counties;                and |
|-------------------------------------|-------------------------------------------------------------------------------------------|

| (vi)                 | the                coastal communities of Ventura                County. |
|--------------------------------|--------------------------------------------------------------------------|

| *§  * | Strategic                Acquisitions:                In                alignment with our strategic plan, we may consider making strategic                acquisitions of financial institutions including whole banks or individual                branches. We will consider making acquisitions that are complements                to our                existing products and services, complements to our current geographic                and                demographic footprints, and are accretive to earnings. Our acquisition                of                Rancho Bank is consistently aligned with this strategic plan, as                its                banking center locations and low-cost deposit base are complementary                to                our existing locations and growth                needs. |
|----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *§  * | Capital                Strategy:                Our strategic plan includes various methods of generating capital.                We may                offer and sell securities in order to raise additional capital. To                that                end, we filed a shelf registration statement with the SEC in August                2005,                which provided us with the flexibility to publicly issue up to $125                million in debt and/or equity securities. We may also raise capital                through private transactions or through the issuance of trust preferred                securities. Our objective with our capital strategy is to maintain                consistent capital ratios while having a minimal dilutive impact                to                shareholders. Our issuance of $31.8 million in common stock registered                through our shelf registration statement and our private issuance                of $18.0                million of trust preferred securities in May 2006 are consistent                with our                capital strategy. |
|----------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Specialty      Product Offering *

| ·   | Coastal                Construction Lending* *                We                originate high-end single-family residential coastal construction                loans                within Los Angeles’ “south bay” coastal communities (primarily Manhattan                Beach, Hermosa Beach and Redondo Beach, as well as the Palos Verdes                Peninsula area), Los Angeles’ upper end “west side” (including Beverly                Hills, Brentwood and Malibu) and Orange County coastal regions where                we                believe we have a competitive advantage based on established builder                and                customer relationships and expertise in the construction market.  The                demand for new luxury construction in many of these communities continues                to be strong. These types of construction loans typically range from                $1.0                million to $5.0 million. During the three and six months ended June                30,                2006, gross commitments generated for this loan product amounted                to $115.1                million and $253.4 million, respectively. Our single-family residential                coastal construction loans outstanding amounted to $438.8 million and                $392.2 million at June 30, 2006 and December 31, 2005, respectively,                net                of participations sold of $126.1 million and $114.7 million,                respectively. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table          of Contents*

| ·   | Tract                Construction Lending                We                originate single-family residential tract construction loans, primarily                secured by newly-constructed, entry to mid-level detached and attached                homes.  While these loans are predominantly originated within the                Inland Empire of Southern California, we have financed projects throughout                California.  The builders we currently lend to operate within                approximately twenty communities where demand for new affordable                housing                is consistently exceeding new production supply. The Inland Empire’s                resale and new home markets continue to be supported by a growing                labor                base. These types of construction loans typically range from                $3.0 million to $10.0 million. During the three and six months                ended June 30, 2006, gross commitments generated for this loan product                amounted to $33.7 million and $114.2 million, respectively. Our                single-family residential tract construction loans outstanding amounted                to                $125.8 million and $129.7 million at June 30, 2006 and December 31,                2005,                respectively, net of participations sold of $19.2 million and $11.6                million, respectively. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | SBA                Lending                We                offer SBA 7(a) and 504 loans to small businesses throughout our market                area. SBA loans are a complement to our focus on strengthening and                supporting local communities. We had $22.4 million and $12.8 million                of outstanding SBA loans at June 30, 2006 and December 31, 2005,                respectively, net of participations sold of $45.1 million and $42.0                million, respectively. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Non-Profit                Services Group                We                originate loan and deposit services to non-profit organizations,                including                churches and private schools throughout our market area. These activities                are also a complement to our focus on strengthening and supporting                local                communities. Loans to non-profit organizations amounted to $35.2                million                and $30.3 million at June 30, 2006 and December 31, 2005,                respectively. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Income                Property Lending                We                have an income property lending division to service the growing markets                for commercial real estate and multifamily/apartments in Southern                California. The commercial real estate portfolio includes office                buildings, retail outlets and industrial properties, the majority                of which                are located in the Inland Empire region, and Los Angeles and Orange                counties. Our multifamily/apartment loan portfolio is centered in                Los                Angeles and Orange counties, with some lending in the Inland Empire                region. Given the relatively high home prices in Southern California,                the                apartment market has experienced solid rental performance. As a result,                vacancy rates remain relatively low. Commercial real estate loans                generated from this division typically range from $2.0 million to                $10.0                million, while apartment loans typically range from $0.5 million                to $5.0                million. At June 30, 2006 and December 31, 2005, the balance of income                property loans generated from this division amounted to $290.5 million                and                $210.1 million, respectively, for commercial real estate loans and                $232.4                million and $230.0 million, respectively, for apartment loans. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Community                Banking Group                In                order to expand our deposits, our Community Banking Group has focused                on                offering competitive interest rate products and providing value-added                services by introducing additional products and services. Our deposit                base                has been built around a community banking philosophy, which resulted                in                deposit growth of 19.5% for the six months ended June 30, 2006. The                Community Banking Group also focuses on commercial and business banking                and the origination of commercial business                loans. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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*Table          of Contents*

*Loan      and Deposit Product Concentration *

*Relationship      Banking Facilities*

**Results      of Operations**

----

*Table          of Contents*

*Net      Interest Income*

----

*Table          of Contents*

*Net      Interest Margin*

----

*Table          of Contents*

| (Dollars                in Thousands)                     |   | For                the three months ended June 30, |      |
|-----------------------------------------------------------|--------|----------------------------------------------------|-----------|
|                                                      |   | 2006                                               |      | 2005 |   |
|                                                      |   | Average                                            |      |   |   | Average |   | Average |   |   |   | Average |   |
|                                                      |   | Balance                                            |      | Interest |   | Yield/Cost |   | Balance |   | Interest |   | Yield/Cost |   |
| Assets                                                    |   |                                               |      |   |   |   |   |   |   |   |   |   |   |
| Loans                (1)                                  |   | $                                                  | 1,568,103 |   | $ | 35,274 |   |   | 9.02 | % | $ | 1,158,526 |   | $ | 22,703 |   |   | 7.86 | % |
| Investment                securities (2)                  |   |                                               | 244,262   |   |   | 2,767 |   |   | 4.54 | % |   | 303,456 |   |   | 3,190 |   |   | 4.22 | % |
| Federal                funds sold                         |   |                                               | 1,538     |   |   | 19 |   |   | 5.01 | % |   | - |   |   | - |   |   | 0.00 | % |
| Other                investments                          |   |                                               | 17,742    |   |   | 234 |   |   | 5.29 | % |   | 15,071 |   |   | 165 |   |   | 4.39 | % |
| Total                interest-earning assets              |   |                                               | 1,831,645 |   |   | 38,294 |   |   | 8.38 | % |   | 1,477,053 |   |   | 26,058 |   |   | 7.08 | % |
| Other                assets                               |   |                                               | 67,639    |   |   |   |   |   |   |   |   | 63,063 |   |   |   |   |   |   |   |
| Less:                allowance for probable loan losses   |   |                                               | (15,355   | ) |   |   |   |   |   |   |   | (13,392 | ) |   |   |   |   |   |   |
| Total                average assets                       |   | $                                                  | 1,883,929 |   |   |   |   |   |   |   | $ | 1,526,724 |   |   |   |   |   |   |   |
|                                                      |   |                                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                and Stockholders' Equity       |   |                                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                deposits                (3)        |   | $                                                  | 502,091   |   |   | 4,615 |   |   | 3.69 | % | $ | 424,020 |   |   | 2,778 |   |   | 2.63 | % |
| Time                deposits                              |   |                                               | 780,371   |   |   | 8,939 |   |   | 4.59 | % |   | 483,913 |   |   | 3,607 |   |   | 2.99 | % |
| FHLB                advances and other borrowings         |   |                                               | 184,397   |   |   | 2,239 |   |   | 4.87 | % |   | 299,169 |   |   | 2,262 |   |   | 3.03 | % |
| Subordinated                debt                          |   |                                               | 5,000     |   |   | 104 |   |   | 8.26 | % |   | 5,000 |   |   | 81 |   |   | 6.45 | % |
| Junior                subordinated debentures             |   |                                               | 106,293   |   |   | 2,051 |   |   | 7.64 | % |   | 79,636 |   |   | 1,222 |   |   | 6.15 | % |
| Total                interest-bearing liabilities         |   |                                               | 1,578,152 |   |   | 17,948 |   |   | 4.55 | % |   | 1,291,738 |   |   | 9,950 |   |   | 3.09 | % |
| Demand                deposits                            |   |                                               | 170,363   |   |   |   |   |   |   |   |   | 132,588 |   |   |   |   |   |   |   |
| Other                liabilities                          |   |                                               | 17,948    |   |   |   |   |   |   |   |   | 8,103 |   |   |   |   |   |   |   |
| Total                average liabilities                  |   |                                               | 1,766,463 |   |   |   |   |   |   |   |   | 1,432,429 |   |   |   |   |   |   |   |
| Preferred                stock equity                     |   |                                               | 9,665     |   |   |   |   |   |   |   |   | 7,973 |   |   |   |   |   |   |   |
| Common                stock equity                        |   |                                               | 107,801   |   |   |   |   |   |   |   |   | 86,322 |   |   |   |   |   |   |   |
| Total                average stockholders' equity         |   |                                               | 117,466   |   |   |   |   |   |   |   |   | 94,295 |   |   |   |   |   |   |   |
| Total                average liabilities and              |   |                                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stockholders'                equity                       |   | $                                                  | 1,883,929 |   |   |   |   |   |   |   | $ | 1,526,724 |   |   |   |   |   |   |   |
|                                                      |   |                                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest spread                (4)     |   |                                               |      |   |   |   |   |   | 3.83 | % |   |   |   |   |   |   |   | 3.99 | % |
| Net                interest income                        |   |                                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and                net interest margin                (5) |   |                                               |      |   | $ | 20,346 |   |   | 4.46 | % |   |   |   | $ | 16,108 |   |   | 4.37 | % |

----

*Table          of Contents*

| (Dollars                in Thousands)                     |   | For                the six months ended June 30, |      |
|-----------------------------------------------------------|--------|--------------------------------------------------|-----------|
|                                                      |   | 2006                                             |      | 2005 |   |
|                                                      |   | Average                                          |      |   |   | Average |   | Average |   |   |   | Average |   |
|                                                      |   | Balance                                          |      | Interest |   | Yield/Cost |   | Balance |   | Interest |   | Yield/Cost |   |
| Assets                                                    |   |                                             |      |   |   |   |   |   |   |   |   |   |   |
| Loans                (1)                                  |   | $                                                | 1,504,497 |   | $ | 66,449 |   |   | 8.91 | % | $ | 1,099,306 |   | $ | 42,419 |   |   | 7.78 | % |
| Investment                securities (2)                  |   |                                             | 249,112   |   |   | 5,639 |   |   | 4.56 | % |   | 286,476 |   |   | 6,060 |   |   | 4.17 | % |
| Federal                funds sold                         |   |                                             | 917       |   |   | 22 |   |   | 4.91 | % |   | 137 |   |   | 2 |   |   | 2.48 | % |
| Other                investments                          |   |                                             | 16,984    |   |   | 431 |   |   | 5.11 | % |   | 13,343 |   |   | 271 |   |   | 4.09 | % |
| Total                interest-earning assets              |   |                                             | 1,771,510 |   |   | 72,541 |   |   | 8.25 | % |   | 1,399,262 |   |   | 48,752 |   |   | 7.02 | % |
| Other                assets                               |   |                                             | 73,198    |   |   |   |   |   |   |   |   | 61,282 |   |   |   |   |   |   |   |
| Less:                allowance for probable loan losses   |   |                                             | (14,766   | ) |   |   |   |   |   |   |   | (13,201 | ) |   |   |   |   |   |   |
| Total                average assets                       |   | $                                                | 1,829,942 |   |   |   |   |   |   |   | $ | 1,447,343 |   |   |   |   |   |   |   |
|                                                      |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                and Stockholders' Equity       |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                deposits                (3)        |   | $                                                | 480,295   |   |   | 8,404 |   |   | 3.53 | % | $ | 441,381 |   |   | 5,481 |   |   | 2.50 | % |
| Time                deposits                              |   |                                             | 720,248   |   |   | 15,666 |   |   | 4.39 | % |   | 444,729 |   |   | 6,301 |   |   | 2.86 | % |
| FHLB                advances and other borrowings         |   |                                             | 230,622   |   |   | 5,380 |   |   | 4.70 | % |   | 253,209 |   |   | 3,484 |   |   | 2.77 | % |
| Subordinated                debt                          |   |                                             | 5,000     |   |   | 202 |   |   | 8.04 | % |   | 5,000 |   |   | 154 |   |   | 6.12 | % |
| Junior                subordinated debentures             |   |                                             | 101,629   |   |   | 3,792 |   |   | 7.42 | % |   | 75,411 |   |   | 2,222 |   |   | 5.86 | % |
| Total                interest-bearing liabilities         |   |                                             | 1,537,794 |   |   | 33,444 |   |   | 4.38 | % |   | 1,219,730 |   |   | 17,642 |   |   | 2.91 | % |
| Demand                deposits                            |   |                                             | 166,173   |   |   |   |   |   |   |   |   | 129,087 |   |   |   |   |   |   |   |
| Other                liabilities                          |   |                                             | 16,281    |   |   |   |   |   |   |   |   | 8,510 |   |   |   |   |   |   |   |
| Total                average liabilities                  |   |                                             | 1,720,248 |   |   |   |   |   |   |   |   | 1,357,327 |   |   |   |   |   |   |   |
| Preferred                stock equity                     |   |                                             | 9,665     |   |   |   |   |   |   |   |   | 4,009 |   |   |   |   |   |   |   |
| Common                stock equity                        |   |                                             | 100,029   |   |   |   |   |   |   |   |   | 86,007 |   |   |   |   |   |   |   |
| Total                average shareholders' equity         |   |                                             | 109,694   |   |   |   |   |   |   |   |   | 90,016 |   |   |   |   |   |   |   |
| Total                average liabilities and              |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stockholders'                equity                       |   | $                                                | 1,829,942 |   |   |   |   |   |   |   | $ | 1,447,343 |   |   |   |   |   |   |   |
|                                                      |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest spread                (4)     |   |                                             |      |   |   |   |   |   | 3.87 | % |   |   |   |   |   |   |   | 4.11 | % |
| Net                interest income                        |   |                                             |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and                net interest margin                (5) |   |                                             |      |   | $ | 39,097 |   |   | 4.45 | % |   |   |   | $ | 31,110 |   |   | 4.48 | % |

| (1) | Interest                  on loans includes loan fees, which totaled $3.3 million and $2.6                  million                  for the three months ended June 30, 2006 and 2005, respectively                  and $6.4                  million and $5.1 million for the six months ended June 30, 2006                  and 2005,                  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. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------|

*Provision      for Probable Loan Losses*

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*Table          of Contents*

*Non-Interest      Income*

*Non-Interest      Expense*

|   | (i) | Salaries                and employee benefits expense is the largest component of non-interest                expense. As we have continued to grow, personnel have been placed                in                business development capacities for commercial and community banking,                as                well as administrative functions. With the expansion of loan production                offices into full-service banking centers and the opening of new                loan                production offices, we have recruited seasoned banking professionals                to                contribute to the continued growth as well as provide the infrastructure                needed to support longer-term growth. These infrastructure changes                have                increased our salaries and employee benefits expense by $2.2 million                or                48.7% to $6.7 million for the three months ended June 30, 2006 as                compared                to the same period in 2005, and by $3.8 million or 40.0% to $13.2                million                for the six months ended June 30, 2006 as compared to the same period                in                2005. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | Occupancy                expense amounted to $1.1 million and $2.2 million for the three and                six                months ended June 30, 2006, respectively, in comparison to $0.9 million                and $1.7 million for the same periods in 2005, respectively. The                increase                in occupancy expense is primarily due to our expansion. In June 2005,                we                moved our administrative headquarters to a 45,000 square foot facility                in                Corona Pointe, increasing our occupancy costs. We also opened a loan                production office in Westlake Village and expanded the San Rafael                loan                production office into a full-service banking center during the first                quarter of 2006, contributing to the higher occupancy expense for                the                three and six months ended June 30, 2006 than for the same periods                in                2005. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | Furniture                and equipment expense, comprised mainly of depreciation and maintenance                expense, was $1.0 million and $2.0 million for the three and six                months                ended June 30, 2006, respectively, compared to $0.8 million and $1.5                million for the same periods in 2005, respectively. As the Company                opened                its Corona Pointe administrative facility, expanded its banking network                and redesigned its existing banking centers, expenses related to                furniture                and equipment increased. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | Other                non-interest expense was $3.3 million and $2.4 million for the three                months ended June 30, 2006 and 2005, respectively, and $6.1 million                and                $4.5 million for the six months ended June 30, 2006 and 2005,                respectively. The increase is due primarily to our implementation                of our                strategy to grow our business. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table          of Contents*

| (Dollars                in Thousands)                 |   | Three                Months Ended June 30, |   | Six                Months Ended June 30, |   |
|-------------------------------------------------------|--------|--------------------------------------------|--------|------------------------------------------|--------|
|                                                  |   | 2006                                       |   | 2005                                     |   | 2006 |   | 2005 |   |
| Other                non-interest expense:            |   |                                       |   |                                     |   |   |   |   |   |
| Data                processing                        |   | $                                          | 262    |                                     | $      | 212 |   | $ | 478 |   | $ | 406 |   |
| Marketing                                             |   |                                       | 484    |                                     |   | 272 |   |   | 700 |   |   | 425 |   |
| Professional                services                  |   |                                       | 854    |                                     |   | 351 |   |   | 1,279 |   |   | 644 |   |
| Office                supplies, postage and telephone |   |                                       | 454    |                                     |   | 366 |   |   | 890 |   |   | 716 |   |
| Insurance                and assessments              |   |                                       | 179    |                                     |   | 238 |   |   | 345 |   |   | 447 |   |
| Administrative                                        |   |                                       | 152    |                                     |   | 137 |   |   | 301 |   |   | 259 |   |
| Business                development                   |   |                                       | 513    |                                     |   | 432 |   |   | 1,095 |   |   | 816 |   |
| Other                                                 |   |                                       | 442    |                                     |   | 418 |   |   | 982 |   |   | 771 |   |
| Total                other non-interest expense       |   | $                                          | 3,340  |                                     | $      | 2,426 |   | $ | 6,070 |   | $ | 4,484 |   |

*Income      Taxes*

**Financial      Condition**

*Assets*

*Investments*

| (Dollars                in Thousands)     |   |      |    | Gross      |   | Gross      |   |                      |    |
|-------------------------------------------|--------|-----------|---------|------------|--------|------------|--------|---------------------------|---------|
|                                      |   | Amortized |    | Unrealized |   | Unrealized |   |                      |    |
|                                      |   | Cost      |    | Gains      |   | Losses     |   | Fair                Value |    |
| U.S.                agency securities     |   | $         | 12,125  |       | $      | -          |   | $                         | (661    | ) | $ | 11,464 |   |
| Mortgage-backed                securities |   |      | 224,485 |       |   | -          |   |                      | (14,103 | ) |   | 210,382 |   |
| Mutual                funds               |   |      | 2,166   |       |   | -          |   |                      | (98     | ) |   | 2,068 |   |
| Total                                     |   | $         | 238,776 |       | $      | -          |   | $                         | (14,862 | ) | $ | 223,914 |   |

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

----

*Table          of Contents*

| (Dollars                in Thousands)     |   | Less                than 12 months |   | 12                months or Longer |   | Total                     |   |
|-------------------------------------------|--------|------------------------------------|--------|------------------------------------|--------|---------------------------|--------|
|                                      |   |                               |   | Gross                              |   |                      |   | Gross |   |   |   | Gross |   |
|                                      |   |                               |   | Unrealized                         |   |                      |   | Unrealized |   |   |   | Unrealized |   |
|                                      |   |                               |   | Holding                            |   |                      |   | Holding |   |   |   | Holding |   |
|                                      |   | Fair                Value          |   | Losses                             |   | Fair                Value |   | Losses |   | Fair                Value |   | Losses |   |
|                                      |   |                               |   |                               |   |                      |   |   |   |   |   |   |   |
| U.S.                agency securities     |   | $                                  | -      |                               | $      | -                         |   | $ | 11,464 |   | $ | (661 | ) | $ | 11,464 |   | $ | (661 | ) |
| Mortgage-backed                securities |   |                               | -      |                               |   | -                         |   |   | 210,382 |   |   | (14,103 | ) |   | 210,382 |   |   | (14,103 | ) |
| Mutual                funds               |   |                               | 2,068  |                               |   | (98                       | )      |   | - |   |   | - |   |   | 2,068 |   |   | (98 | ) |
| Total                                     |   | $                                  | 2,068  |                               | $      | (98                       | )      | $ | 221,846 |   | $ | (14,764 | ) | $ | 223,914 |   | $ | (14,862 | ) |

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

| (Dollars                in Thousands)     |   | **Securities                Available-for-Sale** |   |
|-------------------------------------------|--------|--------------------------------------------------|--------|
|                                      |   | **Maturing                5-10 years**           |   | **Maturing                after 10 years** |   |
|                                      |   | **Amortized**                                    |   |   |   | **Amortized** |   |   |   |
|                                      |   | **Cost**                                         |   | **Fair                Value** |   | **Cost** |   | **Fair                Value** |   |
| U.S.                agency securities     |   | $                                                | -      |   | $ | - |   | $ | 12,125 |   | $ | 11,464 |   |
| Mortgage-backed                securities |   |                                             | 13,177 |   |   | 12,772 |   |   | 211,308 |   |   | 197,610 |   |
| Total                                     |   | $                                                | 13,177 |   | $ | 12,772 |   | $ | 223,433 |   | $ | 209,074 |   |

----

*Table          of Contents*

*Loans      *

| (Dollars                in Thousands)                 |   | As                of         |      |
|-------------------------------------------------------|--------|------------------------------|-----------|
|                                                  |   | June                30, 2006 |      | December                31, 2005 |   |
|                                                  |   |                         |      |   |   |
| Commercial                and industrial              |   | $                            | 71,774    |   | $ | 54,757 |   |
| Real                estate construction:              |   |                         |      |   |   |   |   |
| Single-family                coastal                  |   |                         | 438,788   |   |   | 392,183 |   |
| Single-family                tract                    |   |                         | 125,806   |   |   | 129,706 |   |
| Commercial                                            |   |                         | 79,389    |   |   | 61,392 |   |
| Real                estate mortgage:                  |   |                         |      |   |   |   |   |
| Commercial                                            |   |                         | 392,209   |   |   | 321,821 |   |
| Multi-family                residential               |   |                         | 195,406   |   |   | 246,597 |   |
| Land                                                  |   |                         | 107,666   |   |   | 91,035 |   |
| All                other residential                  |   |                         | 63,237    |   |   | 64,426 |   |
| Consumer                loans                         |   |                         | 36,136    |   |   | 15,205 |   |
| All                other loans (including overdrafts) |   |                         | 167       |   |   | 207 |   |
|                                                  |   |                         | 1,510,578 |   |   | 1,377,329 |   |
| Unearned                premium on loans              |   |                         | 1,073     |   |   | 484 |   |
| Deferred                loan fees                     |   |                         | (3,939    | ) |   | (4,714 | ) |
| Loans,                net of unearned income          |   | $                            | 1,507,712 |   | $ | 1,373,099 |   |
|                                                  |   |                         |      |   |   |   |   |
| Loans                held for sale                    |   | $                            | 43,601    |   | $ | - |   |

| (Dollars                in Thousands)       |   | Three                months ended June 30, |   | Six                months ended June 30, |   |
|---------------------------------------------|--------|--------------------------------------------|--------|------------------------------------------|--------|
|                                        |   | 2006                                       |   | 2005                                     |   | 2006 |   | 2005 |   |
| Servicing                rights capitalized |   | $                                          | 167    |                                     | $      | 74 |   | $ | 222 |   | $ | 180 |   |
| Servicing                rights amortized   |   | $                                          | 175    |                                     | $      | 121 |   | $ | 343 |   | $ | 326 |   |
| Valuation                allowances         |   | $                                          | -      |                                     | $      | - |   | $ | - |   | $ | - |   |

----

*Table          of Contents*

| (Dollars                in Thousands)                |   | Six                months ended June 30, |   |
|------------------------------------------------------|--------|------------------------------------------|--------|
|                                                 |   | 2006                                     |   | 2005 |   |
| Servicing                rights, beginning of year   |   | $                                        | 1,358  |   | $ | 1,705 |   |
| Servicing                rights added in period, net |   |                                     | 222    |   |   | 180 |   |
| Servicing                rights amortized            |   |                                     | (343   | ) |   | (326 | ) |
| Servicing                rights, end of period       |   | $                                        | 1,237  |   | $ | 1,559 |   |

*Allowance      for Credit Losses*

| (Dollars                in Thousands)                     |   | Six                months ended June 30, |   |
|-----------------------------------------------------------|--------|------------------------------------------|--------|
|                                                      |   | 2006                                     |   | 2005 |   |
| **Allowance                for Probable Loan Losses**     |   |                                     |   |   |   |
| Balance,                beginning of period               |   | $                                        | 13,762 |   | $ | 11,969 |   |
| Recoveries                on loans previously charged off |   |                                     | 50     |   |   | 41 |   |
| Loans                charged off                          |   |                                     | (19    | ) |   | (16 | ) |
| Provision                charged to operating expense     |   |                                     | 1,900  |   |   | 705 |   |
| Balance,                end of period                     |   | $                                        | 15,693 |   | $ | 12,699 |   |
|                                                      |   |                                     |   |   |   |  |   |
| **Reserve                for Unfunded Commitments**       |   |                                     |   |   |   |   |   |
| Balance,                beginning of period               |   | $                                        | 1,346  |   | $ | 1,032 |   |
| Net                increase charged to other expenses     |   |                                     | -      |   |   | 145 |   |
| Balance,                end of period                     |   | $                                        | 1,346  |   | $ | 1,177 |   |
|                                                      |   |                                     |   |   |   |   |   |
| **Allowance                for Credit Losses**            |   |                                     |   |   |   |   |   |
| Allowance                for probable loan losses         |   | $                                        | 15,693 |   | $ | 12,699 |   |
| Reserve                for unfunded commitments           |   |                                     | 1,346  |   |   | 1,177 |   |
| Allowance                for credit losses                |   | $                                        | 17,039 |   | $ | 13,876 |   |

*Nonperforming      Assets*

----

*Table          of Contents*

| (Dollars                in Thousands)                        |   | As                of         |         |
|--------------------------------------------------------------|--------|------------------------------|--------------|
|                                                         |   | June                30, 2006 |         | December                31, 2005 |   |
| **Accruing                Loans More than 90 Days Past Due** |   |                         |         |   |   |
| Aggregate                loan amounts                        |   |                         |         |   |   |
| Commercial                and industrial                     |   | $                            | -            |   | $ | - |   |
| Real                estate-mortgage                          |   |                         | 1,678        |   |   | - |   |
| Consumer                loans                                |   |                         | -            |   |   | - |   |
| Total                loans past due more than 90 days        |   | $                            | 1,678        |   | $ | - |   |
| and                still accruing                            |   |                         |         |   |   |   |   |
| **Renegotiated                loans**                   |   |                         | -            |   |   | - |   |
|                                                         |   |                         |         |   |   |   |   |
| **Non-accrual                loans**                         |   |                         |         |   |   |   |   |
| Aggregate                loan amounts                        |   |                         |         |   |   |   |   |
| Commercial                and industrial                     |   | $                            | 321          |   | $ | 477 |   |
| Real                estate-mortgage                          |   |                         | -            |   |   | 480 |   |
| Consumer                loans                                |   |                         | -            |   |   | 7 |   |
| Total                non-accrual loans                       |   | $                            | 321          |   | $ | 964 |   |
|                                                         |   |                         |    |   |   |        |   |
| Total                non-performing loans                    |   | $                            | 1,999        |   | $ | 964 |   |

| (Dollars                in Thousands)                                |   | As                of    |   |
|----------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                 |   | June                30, |   | December                31, |   |
|                                                                 |   | 2006                    |   | 2005 |   |
| Impaired                loans with a specific valuation allowance    |   | $                       | -      |   | $ | - |   |
| Impaired                loans without a specific valuation allowance |   |                    | 1,999  |   |   | 964 |   |
| Total                impaired loans                                  |   | $                       | 1,999  |   | $ | 964 |   |
|                                                                 |   |                    |   |   |   |   |   |
| Valuation                allowance related to impaired loans         |   | $                       | -      |   | $ | - |   |

| (Dollars                in Thousands)                            |   | Six                months ended |   | Year                ended        |   |
|------------------------------------------------------------------|--------|---------------------------------|--------|----------------------------------|--------|
|                                                             |   | June                30, 2006    |   | December                31, 2005 |   |
| Average                recorded investment in impaired loans     |   | $                               | 1,118  |                             | $      | 3,472 |   |
| Cash                receipts applied to reduce principal balance |   | $                               | 772    |                             | $      | 4,705 |   |
| Interest                income recognized for cash payments      |   | $                               | 71     |                             | $      | 338 |   |

*Liabilities      and Stockholders’ Equity*

*Deposits*

----

*Table          of Contents*

| (Dollars                in Thousands)           |   |   |    |
|-------------------------------------------------|--------|--------|---------|
|                                            |   |   |    |
| Three                months or less             |   | $      | 140,700 |   |
| Over                three through twelve months |   |   | 291,666 |   |
| Over                one through five years      |   |   | 13,262  |   |
|                                            |   | $      | 445,628 |   |

*Borrowings*

| (Dollars                in Thousands) |   | Weighted |   |   |   |
|---------------------------------------|--------|----------|--------|--------|--------|
|                                  |   | Average  |   |   |   |
| Maturity                              |   | Rate     |   | Amount |   |
| 2006                                  |   |     | 5.0    | %      | $      | 47,000 |   |
| 2007                                  |   |     | 4.8    | %      |   | 25,000 |   |
|                                  |   |     | 4.9    | %      | $      | 72,000 |   |

| (Dollars                in Thousands)        |   |                         |                                |                         |   | As                of June 30, 2006 |   |
|----------------------------------------------|--------|------------------------------|-------------------------------------|------------------------------|--------|------------------------------------|--------|
|                                         |   |                         |                                |                         |   | Minority                           |   | Effective |   |   |   |
|                                         |   | Interest                Rate |                                | Maturity                Date |   | Interest                           |   | Interest                Rate |   | Balance |   |
| Vineyard                Statutory Trust I    |   |                         | 3-month                LIBOR + 3.60 | %                            |   | December                18, 2031   |   | $ | 372 |   |   | 9.00 | % | $ | 12,372 |   |
| Vineyard                Statutory Trust II   |   |                         | 3-month                LIBOR + 3.35 | %                            |   | December                26, 2032   |   |   | 155 |   |   | 8.42 | % |   | 5,155 |   |
| Vineyard                Statutory Trust III  |   |                         | 3-month                LIBOR + 3.05 | %                            |   | October                8, 2033     |   |   | 310 |   |   | 8.12 | % |   | 10,310 |   |
| Vineyard                Statutory Trust IV   |   |                         | 3-month                LIBOR + 2.85 | %                            |   | January                23, 2034    |   |   | 310 |   |   | 8.00 | % |   | 10,310 |   |
| Vineyard                Statutory Trust V    |   |                         | 3-month                LIBOR + 2.85 | %                            |   | April                23, 2034      |   |   | 310 |   |   | 7.93 | % |   | 10,310 |   |
| Vineyard                Statutory Trust VI   |   |                         | 3-month                LIBOR + 2.85 | %                            |   | July                23, 2034       |   |   | 372 |   |   | 7.94 | % |   | 12,372 |   |
| Vineyard                Statutory Trust VII  |   |                         | 3-month                LIBOR + 2.00 | %                            |   | December                16, 2034   |   |   | 310 |   |   | 7.23 | % |   | 10,310 |   |
| Vineyard                Statutory Trust VIII |   |                         | 3-month                LIBOR + 2.25 | %                            |   | May                23, 2035        |   |   | 310 |   |   | 7.44 | % |   | 10,310 |   |
| Vineyard                Statutory Trust IX   |   |                         | 3-month                LIBOR + 1.70 | %                            |   | November                23, 2035   |   |   | 464 |   |   | 6.89 | % |   | 15,464 |   |
| Vineyard                Statutory Trust XI   |   |                         | 3-month                LIBOR + 1.60 | %                            |   | June                23, 2036       |   |   | 557 |   |   | 7.05 | % |   | 18,557 |   |
|                                         |   |                         |                                |                         |   |                               |   | $ | 3,470 |   |   | 7.70 | % | $ | 115,470 |   |

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*Table          of Contents*

*Stockholders’      Equity *

|                                                        |   | As                of         |       |
|-------------------------------------------------------------|--------|------------------------------|------------|
|                                                        |   | June                30, 2006 |       | December                31, 2005 |   |
|                                                        |   |                         |       |   |   |
| Period-end                shares outstanding                |   |                         | 10,589,239 |   |   | 9,427,690 |   |
| Unreleased                and unallocated ESOP shares  |   |                         | (256,966   | ) |   | (268,487 | ) |
| Used                in basic book value per common share    |   |                         | 10,332,273 |   |   | 9,159,203 |   |
| Warrants                (1)                                 |   |                         | 160,000    |   |   | 160,000 |   |
| Used                in book value per common share,         |   |                         |       |   |   |   |   |
| assuming                exercise of warrants                |   |                         | 10,492,273 |   |   | 9,319,203 |   |
|                                                        |   |                         |       |   |   |   |   |
| Book                value per common share, basic           |   | $                            | 11.54      |   | $ | 9.86 |   |
| Book                value per common share, assuming        |   |                         |       |   |   |   |   |
| exercise                of warrants                         |   | $                            | 11.75      |   | $ | 10.12 |   |

**Liquidity**

----

*Table          of Contents*

**Capital      Resources**

----

*Table          of Contents*

| (Dollars                in Thousands)                  |   |                             |    |                             |   | Capital                Needed    |   |
|--------------------------------------------------------|--------|----------------------------------|---------|----------------------------------|--------|----------------------------------|--------|
|                                                   |   |                             |    |                             |   |                             |   |   |   | To                Be Well |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   | Capitalized                Under |   |
|                                                   |   |                             |    |                             |   | For                Capital       |   | Prompt                Corrective |   |
|                                                   |   | Actual                Regulatory |    | Adequacy                Purposes |   | Action                Provisions |   |
|                                                   |   | Capital                          |    |                             |   | Capital                          |   |   |   | Capital |   |   |   |
|                                                   |   | Amount                           |    | Ratio                            |   | Amount                           |   | Ratio |   | Amount |   | Ratio |   |
| **As                of June 30, 2006**                 |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |
| Total                capital to risk-weighted assets:  |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 226,258 |                             |   | 12.5                             | %      | $ | 145,000 |   |   | 8.0 | % | $ | 181,300 |   |   | 10.0 | % |
| Consolidated                                           |   | $                                | 270,503 |                             |   | 14.9                             | %      | $ | 145,200 |   |   | 8.0 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to risk-weighted assets: |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 209,219 |                             |   | 11.5                             | %      | $ | 72,500 |   |   | 4.0 | % | $ | 108,800 |   |   | 6.0 | % |
| Consolidated                                           |   | $                                | 181,953 |                             |   | 10.0                             | %      | $ | 72,600 |   |   | 4.0 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to average assets:       |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 209,219 |                             |   | 11.1                             | %      | $ | 75,300 |   |   | 4.0 | % | $ | 94,100 |   |   | 5.0 | % |
| Consolidated                                           |   | $                                | 181,953 |                             |   | 9.6                              | %      | $ | 75,500 |   |   | 4.0 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **As                of December 31, 2005**             |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                capital to risk-weighted assets:  |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 211,871 |                             |   | 13.1                             | %      | $ | 129,100 |   |   | 8.0 | % | $ | 161,400 |   |   | 10.0 | % |
| Consolidated                                           |   | $                                | 218,894 |                             |   | 13.5                             | %      | $ | 129,500 |   |   | 8.0 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to risk-weighted assets: |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 196,762 |                             |   | 12.2                             | %      | $ | 64,500 |   |   | 4.0 | % | $ | 96,800 |   |   | 6.0 | % |
| Consolidated                                           |   | $                                | 139,715 |                             |   | 8.6                              | %      | $ | 64,800 |   |   | 4.0 | % |   | N/A |   |   | N/A |   |
|                                                   |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1 capital to average assets:       |   |                             |    |                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                                                   |   | $                                | 196,762 |                             |   | 11.7                             | %      | $ | 67,300 |   |   | 4.0 | % | $ | 84,100 |   |   | 5.0 | % |
| Consolidated                                           |   | $                                | 139,715 |                             |   | 8.3                              | %      | $ | 67,700 |   |   | 4.0 | % |   | N/A |   |   | N/A |   |

**Asset/Liability      Management and Interest Rate Sensitivity**

----

*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                                   |   | $                                           | (19,716 | )                                    |   | -6.8 | % | $ | 4,487 |   |   | 5.5 | % |
| 100                                   |   | $                                           | (10,853 | )                                    |   | -3.7 | % | $ | 2,243 |   |   | 2.7 | % |
| -100                                  |   | $                                           | 16,073  |                                 |   | 5.5 | % | $ | 6,249 |   |   | 7.6 | % |
| -200                                  |   | $                                           | 27,136  |                                 |   | 9.3 | % | $ | 12,364 |   |   | 15.1 | % |

**Off-Balance      Sheet Arrangements**

**ITEM      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

**ITEM      4. CONTROLS AND PROCEDURES**

----

*Table          of Contents*

**PART      II -- OTHER INFORMATION**

**ITEM      1. LEGAL PROCEEDINGS**

**ITEM      1A. RISK FACTORS**

**ITEM      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF      PROCEEDS**

**Unregistered      Sale of Equity Securities**

**Purchases      of Equity Securities**

| (Dollars                in Thousands except per share amounts) |   |                                                |   |                                            |   |                                                                                                                      |   |
|----------------------------------------------------------------|--------|-----------------------------------------------------|--------|-------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|
| **Period**                                                     |   | **Total                Number of Shares Purchased** |   | **Average                Price Paid Per Share** |   | **Total                Number of Shares Purchased as Part of Publicly Announced Plans or                Programs****(1)** |   | **Approximate                Dollar Value of Shares that May Yet Be Purchased Under the Plans                or                Programs** |   |
|                                                           |   |                                                |   |                                            |   |                                                                                                                      |   |   |   |
| April                1 - 30, 2006                              |   |                                                | 3,500  |                                            | $      | 29.35                                                                                                                     |   |   | 3,500 |   | $ | 12,385 |   |
| May                1 - 31, 2006                                |   |                                                | 37,000 |                                            | $      | 25.98                                                                                                                     |   |   | 37,000 |   | $ | 11,423 |   |
| June                1 - 30, 2006                               |   |                                                | 11,000 |                                            | $      | 24.74                                                                                                                     |   |   | 11,000 |   | $ | 11,151 |   |
| Total                                                          |   |                                                | 51,500 |                                            | $      | 25.94                                                                                                                     |   |   | 51,500 |   |   |   |   |

|   | (1) | In                July 2002, we adopted a stock repurchase program in the initial amount                of                $2.0 million. In December 2003, January 2005 and May 2005, we                approved                increases in our stock repurchase program of $5.0 million, and in                October                2005, we announced an additional increase of $20.0 million in our                stock                repurchase program for a total amount of $37.0 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**

**ITEM      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY      HOLDERS**

----

*Table          of Contents*

|                             |   | **Number                of Votes For** |      | **Number                of Votes Against** |   | **Number                of Votes Abstained** |   |
|----------------------------------|--------|----------------------------------------|-----------|--------------------------------------------|--------|----------------------------------------------|--------|
| Frank                S. Alvarez  |   |                                   | 8,282,652 |                                       |   | -                                            |   |   | 294,755 |   |
| David                A. Buxbaum  |   |                                   | 8,325,820 |                                       |   | -                                            |   |   | 251,587 |   |
| Charles                L. Keagle |   |                                   | 8,265,105 |                                       |   | -                                            |   |   | 312,302 |   |
| James                G. LeSieur  |   |                                   | 8,299,160 |                                       |   | -                                            |   |   | 278,247 |   |
| Norman                A. Morales |   |                                   | 8,365,059 |                                       |   | -                                            |   |   | 212,348 |   |
| Joel                H. Ravitz    |   |                                   | 8,308,358 |                                       |   | -                                            |   |   | 269,049 |   |

| **Number                of Votes For** |   | **Number                of Votes Against** |      | **Number                of Votes Abstained** |   | **Broker                Non-Vote** |   |
|----------------------------------------|--------|--------------------------------------------|-----------|----------------------------------------------|--------|------------------------------------|--------|
| 4,085,461                              |   |                                       | 1,705,603 |                                         |   | 75,522                             |   |   | 2,710,821 |   |

| **Number                of Votes For** |   | **Number                of Votes Against** |    | **Number                of Votes Abstained** |   |
|----------------------------------------|--------|--------------------------------------------|---------|----------------------------------------------|--------|
| 8,150,456                              |   |                                       | 344,628 |                                         |   | 82,323 |   |

**ITEM      5. OTHER INFORMATION**

**ITEM      6. EXHIBITS **

| EXHIBIT                NO. | DESCRIPTION |
|----------------------------|-------------|
| 2.1                        |        | Agreement                and Plan of Reorganization among Vineyard National Bancorp, Vineyard                Bank,                and Rancho Bank                (14)* |
| 3.1                        |        | Articles                of Incorporation of Vineyard National Bancorp, as amended (1) |
| 3.2                        |        | Bylaws                of Vineyard National Bancorp                (2) |
| 4                          |        | Specimen                Common Stock Certificate of Vineyard National Bancorp (3) |
| 4.1                        |        | Form                of Warrant to Purchase Shares of Common Stock (4) |
| 4.2                        |        | The                Registrant will furnish, upon request, to the Commission copies of                all                instruments defining the rights of holders of long-term debt instruments                of the Registrant and its consolidated subsidiary. |
| 4.3                        |        | Registration                Rights Agreement (5) |
| 4.4                        |        | Registration                Rights Agreement (9) |
| 10.1                       |        | Vineyard                National Bancorp Nonqualified Deferred Compensation Plan (1)* |
| 10.2                       |        | Vineyard                National Bancorp Directors’ Deferred Compensation Plan (1)* |
| 10.3                       |        | Vineyard                National Bancorp 1997 Incentive Stock Option Plan                (1)* |
| 10.4                       |        | Vineyard                National Bancorp 2002 Restricted Share Plan (1)* |
| 10.5                       |        | Form                of 2002 Restricted Share Award Agreement (7)* |
| 10.6                       |        | Vineyard                National Bancorp 2003 Restricted Share Plan (10)* |
| 10.7                       |        | Form                of 2003 Restricted Share Award Agreement (7)* |
| 10.8                       |        | Vineyard                National Bancorp 2004 Restricted Share Plan (8)* |
| 10.9                       |        | Form                of 2004 Restricted Share Award Agreement (7)* |
| 10.10                      |        | Vineyard                National Bancorp 2005 Restricted Share Plan (12)* |
| 10.11                      |        | Form                of 2005 Restricted Share Award Agreement (15)* |
| 10.12                      |        | Employment                Agreement between Vineyard National Bancorp, Vineyard Bank and Norman                A.                Morales (6)* |
| 10.13                      |        | Securities                Purchase Agreement (5) |

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*Table          of Contents*

| 10.14 |   | Securities                Purchase Agreement (11)                                                                                                                                          |
|-------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.15 |   | Form                of Change of Control Agreement (13)*                                                                                                                                   |
| 10.16 |   | Loan                agreement between Vineyard National Bancorp and First Tennessee Bank                National Association                                                               |
| 10.17 |   | Vineyard                National Bancorp 2006 Incentive Stock Option Plan                (16)*                                                                                             |
| 11    |   | Statement                regarding computation of per share earnings. See Note 10 to the                Consolidated Financial Statements included in Item 1                hereof         |
| 31.1  |   | Certification                of Chief Executive Officer under Section 302 of the Sarbanes-Oxley                Act of                2002                                                  |
| 31.2  |   | Certification                of Chief Financial Officer under Section 302 of the Sarbanes-Oxley                Act of                2002                                                  |
| 32    |   | Certification                of Chief Executive Officer and Chief Financial Officer pursuant to                Section                906 of the Sarbanes-Oxley Act 0f                2002 |

|   | (1)    | Incorporated                by reference from the Registrant’s Annual Report on Form 10-K for the year                ended December 31, 2002 filed with the Commission on March 28,                2003.                         |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                    |
|   | (2)    | Incorporated                by reference from the Registrant’s Registration Statement on Form S-8                (File No. 333-18217) filed with the Commission on December 19,                1996.                              |
|   |   |                                                                                                                                                                                                                                    |
|   | (3)    | Incorporated                by reference from the Registrant’s Annual Report on Form 10-K for the year                ended December 31, 1988 filed with the Commission.                                                          |
|   |   |                                                                                                                                                                                                                                    |
|   | (4)    | Incorporated                by reference from the Registrant’s Proxy Statement for a special meeting                held on December 18, 2002 filed with the Commission on November 25,                2002.                      |
|   |   |                                                                                                                                                                                                                                    |
|   | (5)    | Incorporated                by reference from the Registrant’s Form 8-K filed with the Commission on                June 21, 2004.                                                                                                |
|   |   |                                                                                                                                                                                                                                    |
|   | (6)    | Incorporated                by reference from the Registrant’s Annual Report on Form 10-K for the year                ended December 31, 2000 filed with the Commission on March 30,                2001.                         |
|   |   |                                                                                                                                                                                                                                    |
|   | (7)    | Incorporated                by reference from the Registrant’s Annual Report on Form 10-K for the year                ended December 31, 2004 filed with the Commission on March 10,                2005.                         |
|   |   |                                                                                                                                                                                                                                    |
|   | (8)    | Incorporated                by reference from the Registrant’s Proxy Statement for an annual meeting                held on May 22, 2003 filed with the Commission on April 14,                2003.                              |
|   |   |                                                                                                                                                                                                                                    |
|   | (9)    | Incorporated                by reference from the Registrant's Form 8-K filed with the SEC on                December                10, 2004.                                                                                          |
|   |   |                                                                                                                                                                                                                                    |
|   | (10)   | Incorporated                by reference from the Registrant’s Quarterly Report on Form 10-Q for the                three and nine months ended September 30, 2004 filed with the Commission                on November 10, 2004. |
|   |   |                                                                                                                                                                                                                                    |
|   | (11)   | Incorporated                by reference from the Registrant’s Form 8-K filed with the Commission on                April 19, 2005.                                                                                               |
|   |   |                                                                                                                                                                                                                                    |
|   | (12)   | Incorporated                by reference from the Registrant’s Proxy Statement for an annual meeting                held on May 25, 2005 filed with the Commission on April 18,                2005.                              |
|   |   |                                                                                                                                                                                                                                    |
|   | (13)   | Incorporated                by reference from the Registrant’s Form 8-K filed with the Commission on                April 17, 2006.                                                                                               |
|   |   |                                                                                                                                                                                                                                    |
|   | (14)   | Incorporated                by reference from the Registrant’s Form 8-K filed with the Commission on                April 20, 2006.                                                                                               |
|   |   |                                                                                                                                                                                                                                    |
|   | (15)   | Incorporated                by reference from the Registrant’s Quarterly Report on Form 10-Q for the                three and nine months ended September 30, 2005 filed with the Commission                on November 4, 2005.  |
|   | (16)   | Incorporated                by reference from the Registrant’s Proxy Statement for an annual meeting                held on May 24, 2006 filed with the Commission on April 17,                2006.                              |
|   |   |                                                                                                                                                                                                                                    |
|   | *      | Management                contract or compensatory plan or                arrangement.                                                                                                                                                  |

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*Table          of Contents*

**SIGNATURES**

|   |   |  **VINEYARD                  NATIONAL BANCORP**  By:                  */s/                  Norman A. Morales*____________________Norman                  MoralesPresident                  and Chief Executive Officer  By:                  */s/                  Gordon Fong*_________________________Gordon                  FongExecutive                  Vice President and Chief Financial Officer(Principal                  Financial Officer)   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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