<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                 ----------------------------------------------


                                    FORM 10-Q


             QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1997         Commission File No. 0-20862


                            VINEYARD NATIONAL BANCORP
             (Exact Name of Registrant as Specified in its Charter)


             California                                        33-0309110
  (State of other jurisdiction of                             (IRS employer
   incorporation or organization)                         identification number)

        9590 Foothill Boulevard
      Rancho Cucamonga, California                                 91730
(Address of principal executive offices)                         (Zip Code)

       Registrant's telephone number, including area code: (909) 987-0177

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]


                         APPLICABLE TO CORPORATE ISSUES

         Indicate the number of shares outstanding of the issuer's classes of
common stock on the latest practicable date. 1,862,643 shares of common stock as
of June 30, 1997.


                                                                    Page 1 of 17
<PAGE>   2
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                       JUNE 30, 1997 AND DECEMBER 31, 1996



                                TABLE OF CONTENTS


                                     PART I

FINANCIAL STATEMENTS

<TABLE>
    <S>                                                                          <C>
    Consolidated Balance Sheets
    June 30, 1997 and December 31,1996............................................3

    Consolidated Statements of Income
    For the Six Months and Three Months Ended June 30, 1997 and 1996..............4

    Consolidated Statements of Changes in Stockholders' Equity
    For the Six Months Ended June 30, 1997 and 1996...............................5

    Consolidated Statements of Cash Flows
    For the Six Months Ended June 30, 1997 and 1996...............................6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS........................................8

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................................10


                                     PART II

OTHER INFORMATION

    Item 6.  Exhibits and Reports on Form 8-K....................................15

    Exhibit 27.  Data Schedule...................................................16

SIGNATURES.......................................................................17
</TABLE>



                                                                    Page 2 of 17
<PAGE>   3
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                       JUNE 30, 1997 AND DECEMBER 31, 1996


                                          ASSETS
<TABLE>
<CAPTION>
                                                                      June 30,        December 31,
                                                                        1997              1996
                                                                    -------------     -------------
<S>                                                                 <C>               <C>
Cash and due from banks                                             $   6,304,011     $   7,619,307
Federal funds sold                                                      4,970,000
                                                                    -------------     -------------
                      Total Cash and Cash Equivalents                  11,274,011         7,619,307
                                                                    -------------     -------------
Interest-bearing deposits in other financial institutions                 594,000           396,000
Investment securities
      Available-for-sale                                                8,176,184         5,899,729
Loans, net of unearned income                                          93,630,149        97,276,964
Direct lease financing                                                     89,592           188,489
      Less:  Reserve for probable loan and lease losses                  (706,803)         (727,667)
                                                                    -------------     -------------
                                                                       93,012,938        96,737,786
Other real estate owned                                                   492,492           710,205
Bank premises and equipment                                             6,569,030         6,439,982
Accrued interest                                                          483,587           403,126
Cash surrender value of life insurance                                    845,556           845,556
Other assets                                                              496,375           471,995
                                                                    -------------     -------------
                      Total Assets                                  $ 121,944,173     $ 119,523,686
                                                                    =============     =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
      Deposits
          Demand deposits                                              28,466,506        25,946,157
          Savings and NOW deposits                                     24,584,265        24,269,489
          Money market deposits                                        14,817,262        13,819,261
          Time deposits in denominations of $100,000 or more            6,803,903         9,425,758
          Other time deposits                                          37,614,743        33,142,124
                                                                    -------------     -------------
                      Total Deposits                                  112,286,679       106,602,789
          Federal funds purchased                                                         3,700,000
          Accrued employee salary benefits                                463,838           466,226
          Accrued interest and other liabilities                        1,137,250           903,259
                                                                    -------------     -------------
                      Total Liabilities                               113,887,767       111,672,274
                                                                    -------------     -------------
STOCKHOLDERS' EQUITY
      Contributed Capital
          Common stock - authorized 15,000,000 shares,                  2,106,258         2,106,258
           no par value, issued and outstanding 1,862,643
           shares in 1997 and 1996
          Additional paid-in capital                                    3,306,684         3,306,684
          Retained earnings                                             2,635,597         2,433,463
          Valuation allowance for investments                               7,867             5,007
                                                                    -------------     -------------
                      Total Stockholders' Equity                        8,056,406         7,851,412
                                                                    -------------     -------------
                      Total Liabilities and Stockholders' Equity    $ 121,944,173     $ 119,523,686
                                                                    =============     =============
</TABLE>


See accompanying notes to financial statements.                     Page 3 of 17
<PAGE>   4
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
        FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 1997 AND 1996





<TABLE>
<CAPTION>
                                                   Six Months Ended June 30,   Three Months Ended June 30,
                                                   -------------------------   ---------------------------
                                                      1997          1996          1997          1996
                                                   ----------    -----------   ----------    -------------
<S>                                                <C>           <C>           <C>            <C>
INTEREST INCOME                                                                             
      Interest and fees on loans                   $4,426,956    $3,789,432    $2,213,568     $1,952,270
      Interest on Investment Securities                                                     
          Obligations of U.S. Government                                                    
           Agencies and Corporations                  167,017       353,576       106,668        190,314
          Interest on other securities                  4,913         4,895         2,460          2,449
      Interest on deposits                             12,721        19,332         7,288         11,715
      Interest on Federal funds sold                   97,566       110,741        65,252         67,705
      Direct lease financing income                     4,085        19,598         1,688          8,693
                                                   ----------    ----------    ----------     ----------
                      Total Interest Income         4,713,258     4,297,574     2,396,924      2,233,146
                                                   ----------    ----------    ----------     ----------
INTEREST EXPENSE                                                                            
      Interest on savings deposits                    107,514       110,482        54,896         55,409
      Interest on NOW and money                                                             
       market deposits                                233,848       245,130       122,073        117,446
      Interest on time deposits in                                                          
       denominations of $100,000 or more              185,013       172,469        94,042         82,456
      Interest on other time deposits               1,029,505       810,288       522,781        461,440
      Interest on Federal funds purchased                                                   
       and other interest                               5,459           247                          115   
                                                   ----------    ----------    ----------     ----------
                      Total Interest Expense        1,561,339     1,338,616       793,792        716,866
                                                   ----------    ----------    ----------     ----------
                      Net Interest Income           3,151,919     2,958,958     1,603,132      1,516,280
PROVISION FOR LOAN AND                                                                      
LEASE LOSSES                                           47,782       116,300                      116,300   
                                                   ----------    ----------    ----------     ----------
                      Net Interest Income After                                             
                       Provision for Loan and                                               
                       Lease Losses                 3,104,137     2,842,658     1,603,132      1,399,980
                                                   ----------    ----------    ----------     ----------
</TABLE>



See accompanying notes to financial statements.                     Page 4 of 17
<PAGE>   5
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
        FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 1997 AND 1996

<TABLE>
<CAPTION>
                                               Six Months Ended June 30,     Three Months Ended June 30,
                                              ---------------------------    ----------------------------
                                                  1997           1996            1997             1996
                                              -----------     -----------     -----------     -----------
<S>                                           <C>             <C>             <C>             <C>        
OTHER INCOME
      Fees and service charges                $   809,024     $   886,640     $   412,462     $   442,022
      Net loss on sale of investment
       securities                                  (1,057)
      Other Income                                  8,010           4,501           4,560           2,748
                                              -----------     -----------     -----------     -----------
                      Total Other Income          815,977         891,141         417,022         444,770
                                              -----------     -----------     -----------     -----------
OTHER EXPENSES
      Salaries and employee benefits            1,748,184       1,817,899         845,756         906,221
      Occupancy expense of premises               313,211         505,544         155,040         233,300
      Furniture and equipment expenses            244,951         263,455         118,055         141,943
      Other expenses (Note #2)                  1,272,634       1,363,059         649,076         685,911
                                              -----------     -----------     -----------     -----------
                      Total Other Expenses      3,578,980       3,949,957       1,767,927       1,967,375
                                              -----------     -----------     -----------     -----------
INCOME/(LOSS) BEFORE
 INCOME TAXES                                     341,134        (216,158)        252,227        (122,625)
INCOME TAXES                                     (139,000)         (1,600)       (103,000)         (1,600)
                                              -----------     -----------     -----------     -----------
NET INCOME/(LOSS)                             $   202,134     $  (217,758)    $   149,227     $  (124,225)
                                              ===========     ===========     ===========     ===========
EARNINGS/(LOSS) PER SHARE OF
 COMMON STOCK (Note #3)                       $      0.11     $     (0.12)    $      0.08     $     (0.07)
                                              ===========     ===========     ===========     ===========
</TABLE>




See accompanying notes to financial statements.                     Page 5 of 17
<PAGE>   6
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (UNAUDITED)
                 FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996


<TABLE>
<CAPTION>
                                   Number of                    Additional                  Allowance
                                    Shares         Common        Paid-in       Retained        for
                                  Outstanding       Stock        Capital       Earnings     Investments
                                  -----------     ----------    ----------    ----------    -----------
<S>                                <C>           <C>           <C>           <C>           <C> 
Balance, January 1, 1996           1,862,643     $2,106,258    $3,306,684    $2,327,885    $   11,887
      Change in net unrealized
       gain on investment
       securities available-
       for-sale                                                                               (26,913)
      Net loss for
       the six months                                                          (217,758)
                                  ----------     ----------    ----------    ----------    ----------
Balance, June 30, 1996             1,862,643     $2,106,258    $3,306,684    $2,110,127    $  (15,026)
                                  ==========     ==========    ==========    ==========    ==========

Balance, January 1, 1997           1,862,643      2,106,258     3,306,684     2,433,463         5,007
      Change in net unrealized
       gain on investment
       securities available-
       for-sale                                                                                 2,860
      Net income for
       the six months                                                           202,134
                                  ----------     ----------    ----------    ----------    ----------
Balance, June 30, 1997             1,862,643     $2,106,258    $3,306,684    $2,635,597    $    7,867
                                  ==========     ==========    ==========    ==========    ==========
</TABLE>


See accompanying notes to financial statements.                     Page 6 of 17
<PAGE>   7
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                 FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996



<TABLE>
<CAPTION>
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                                 1997             1996
                                                                             ------------     ------------
<S>                                                                          <C>              <C>         
    CASH FLOWS FROM OPERATING ACTIVITIES
        Interest and fees received                                           $  3,830,417     $  4,875,502
        Service fees and other income received                                    816,456          878,393
        Financing revenue received under leases                                     4,085           19,598
        Interest paid                                                          (1,551,950)      (1,352,553)
        Cash paid to suppliers and employees                                   (3,256,090)      (3,790,198)
        Income taxes paid                                                          (1,600)          (1,600)
                                                                             ------------     ------------
                      Net Cash Provided By/(Used In) Operating Activities        (158,682)         629,142
                                                                             ------------     ------------

    CASH FLOWS FROM INVESTING ACTIVITIES
        Proceeds from maturities of investment securities
         available-for-sale                                                     1,350,000
        Proceeds from sales of investment securities
         available-for-sale                                                     2,386,296        7,000,000
        Purchase of investment securities available-for-sale                   (5,980,652)      (7,756,729)
        Proceeds from maturities of deposits in other
         financial institutions                                                    99,000           99,000
        Purchase of deposits in other financial institutions                     (297,000)
        Net loans made to customers and principal collections
         of loans                                                               4,233,962       (9,669,145)
        Net decrease in leases to customers                                        98,897          185,217
        Net (increase)/decrease in other real estate owned                        210,547          (32,848)
        Recoveries on loans previously written off                                114,235           59,596
        Capital expenditures                                                     (385,789)      (3,193,391)
        Proceeds from sale of property, plant and equipment                                         69,403
                                                                             ------------     ------------
                      Net Cash Provided By/(Used In) Investing Activities       1,829,496      (13,238,897)
                                                                             ------------     ------------

    CASH FLOWS FROM FINANCING ACTIVITIES
        Net increase/(decrease) in demand deposits, NOW
         accounts savings accounts, and money market deposits                   3,833,126          (29,062)
        Net increase in certificates of deposit                                 1,850,764       10,741,435
        Decrease in Federal funds purchased                                    (3,700,000)
                                                                             ------------     ------------
                      Net Cash Provided By Financing Activities                 1,983,890       10,712,373
                                                                             ------------     ------------

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                            3,654,704       (1,897,382)
CASH AND CASH EQUIVALENTS, Beginning of year                                    7,619,307       10,018,749
                                                                             ------------     ------------
CASH AND CASH EQUIVALENTS, End of quarter                                    $ 11,274,011     $  8,121,367
                                                                             ============     ============
</TABLE>



See accompanying notes to financial statements.                     Page 7 of 17

<PAGE>   8
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                 FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996


<TABLE>
<CAPTION>
                                                                               1997          1996
                                                                             ---------     ---------
<S>                                                                          <C>           <C>       
RECONCILIATION OF NET INCOME/(LOSS) TO
 NET CASH USED IN OPERATING ACTIVITIES
    Net Income/(Loss)                                                        $ 202,134     $(217,758)
                                                                             ---------     ---------
    Adjustments to Reconcile Net Income to
     Net Cash Provided By/(Used In) Operating Activities
        Depreciation and amortization                                          228,511       241,599
        Provision for probable credit losses                                    47,782       116,300
        Loss on sale of equipment                                                              5,821
        Loss on sale of other real estate owned                                  7,166        25,617
        Increase/(decrease) in taxes payable                                   137,400       (11,424)
        (Increase)/decrease in other assets                                    (24,380)      111,751
        Increase/(decrease) in unearned loan fees                             (770,027)      653,932
        Increase in interest receivable                                        (80,461)      (62,596)
        Increase/(decrease) in interest payable                                  9,389       (13,937)
        Increase/(decrease) in accrued expense and other liabilities            82,747      (220,163)
        Loss on sale of investments                                              1,057
                                                                             ---------     ---------
                      Total Adjustments                                       (360,816)      846,900
                                                                             ---------     ---------
                      Net Cash Provided By/(Used In) Operating Activities    $(158,682)    $ 629,142
                                                                             =========     =========

SUPPLEMENTARY INFORMATION
      Change in valuation allowance for investment securities                $   2,860     $ (26,913)
                                                                             =========     =========
</TABLE>


DISCLOSURE OF ACCOUNTING POLICY

For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks and Federal funds sold. Generally, Federal funds
are purchased and sold for one-day periods.


See accompanying notes to financial statements.                     Page 8 of 17

<PAGE>   9
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                             JUNE 30, 1997 AND 1996


NOTE #1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of Management, all adjustments considered necessary for a fair
statement of the results for the interim period presented have been included and
are of a normal recurring nature. For further information, refer to the
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996. The results of
operations for the six month period ended June 30, 1997, are not necessarily
indicative of the results to be expected for the full year. Effective for years
beginning in 1996, the Company was required to implement SFAS No. 123, "Stock
Based Compensation", which changes the method disclosing the Company's
stock-based compensation. The Company applies APB Opinion No. 25 and related
interpretations in accounting for its plan and implemented SFAS No. 123 in its
footnote disclosures.

Effective for years beginning after December 31, 1996, the Company was required
to implement SFAS No. 125 "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities", as amended by SFAS No. 127 "Deferral
of the Effective Date of Certain Provisions of FASB Statement No. 125",
establishing accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities based on consistent
application of the financial-components approach. This approach requires the
recognition of financial assets when control is surrendered, and the
derecognition of liabilities when they are extinguished. Specific criteria are
established for determining when control has been surrendered in the transfer of
financial assets. Liabilities and derivatives incurred or obtained by
transferors in conjunction with the transfer of financial assets are required to
be measured at fair value, if practicable. Servicing assets and other retained
interests in transferred assets are required to be measured by allocating the
previous carrying amount between the assets sold, if any, and the interest that
is retained, if any based on the relative fair values of the assets on the date
of the transfer. Servicing assets retained are subsequently subject to
amortization and assessment for impairment.


NOTE #2 - OTHER EXPENSES

The following is a breakdown of other expenses for each of the six and three
month periods ended June 30, 1997 and 1996:

<TABLE>
<CAPTION>
                                                 Six Months Ended            Three Months Ended
                                                     June 30,                     June 30,
                                              ------------------------    ------------------------
                                                  1997         1996          1997          1996
                                              ----------    ----------    ----------    ----------
<S>                                           <C>           <C>           <C>           <C>       
Data processing                               $  344,563    $  391,111    $  172,954    $  191,327
Marketing expenses                               192,218       150,842        87,875        82,719
Office supplies, postage and telephone           117,014       139,101        52,754        71,618
Professional expenses                            222,185       218,262       119,148       132,766
Bank insurance and assessments                   111,088        85,197        50,540        43,622
Other                                            285,566       378,546       165,805       163,859
                                              ----------    ----------    ----------    ----------
                      Total Other Expenses    $1,272,634    $1,363,059    $  649,076    $  685,911
                                              ==========    ==========    ==========    ==========
</TABLE>



                                                                    Page 9 of 17

<PAGE>   10
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                             JUNE 30, 1997 AND 1996


NOTE #3 - EARNINGS/(LOSS) PER COMMON EQUIVALENT SHARE

Earnings/(loss) per share is based upon the weighted average number of shares
outstanding during each period. Stock options have been excluded from the
computation of earnings/(loss) per share, as their effect is immaterial.

The weighted average number of shares used to compute earnings/(loss) per common
share was 1,862,643 in 1997 and 1996.




                                                                   Page 10 of 17
<PAGE>   11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

           Vineyard National Bancorp (the "Company") is a one-bank holding
company. Its principal asset is the common stock of, and its principal
operations are conducted by, Vineyard National Bank, a National banking
association (the "Bank").

RESULTS OF OPERATIONS

           The Company incurred net income of $202,134 for the six months ended
June 30, 1997, as compared to a net loss of $(217,758) for the same period in
1996. For the three month period ended June 30, 1997, the Company posted net
income of $149,227 as compared to a net loss of $(124,225) for the same period
in 1996.

NET INTEREST INCOME

           The principal determinant of the Bank's net results of operations is
its net interest income. Net interest income is the difference or "margin"
between interest earned on interest-earning assets, such as loans and investment
securities, and interest paid on interest-bearing liabilities, principally
deposits. The Bank's net interest income increased $193,000 or 6.5% in the six
month period ended June 30, 1997, as compared to the same period in 1996. This
increase was due primarily to a $416,000 increase in interest income and a
$223,000 increase in interest expense. The Bank's net interest income increased
$87,000 for the three month period ended June 30, 1997, compared to the same
period for 1996. Interest income increased $163,000 and interest expense
increased $77,000.

           The increase in interest income was attributable primarily to an
increase in loan volume of commercial real estate loans. Outstanding loans and
leases increased from June 30, 1996, to the period ended June 30, 1997, by
$7,373,000 as a direct result of increased loan demand. During this period total
deposits increased by $3,160,000. The deposit categories mix changed as demand
deposits increased $311,000, savings and Now accounts decreased $1,910,000,
money market accounts increased $971,000, time deposits in excess of $100,000
increased $923,000, and other time deposits increased $2,865,000. The net
interest margin (net interest income expressed as a percentage of interest
income) was 67 percent as compared to 69 percent in 1996.


PROVISION FOR PROBABLE LOAN LOSSES

           The Bank follows the practice of maintaining a reserve for potential
losses on loan and leases (the "Loan Loss Reserve" or the "Reserve") at an
amount which, in Management's judgment, is adequate to absorb potential losses
on total loans and leases outstanding. Losses on loans or leases are charged
against the reserve and the reserve is adjusted periodically to reflect changes
in the volume of outstanding loans and leases and increases in the risk of
potential losses due to a deterioration in the condition of borrowers, in the
value of collateral securing loans or in general economic conditions. Additions
to the reserve are made through a charge against income referred to as the
"Provision for Loan and Lease Losses".

           During the six month period ended June 30, 1997, a provision was made
of $48,000 as compared to a provision of $116,000 for the same period in 1996.
The net charge-offs on previously granted loans was approximately $69,000 for
the six months ended June 30, 1997, as compared to net charge-offs of $240,000
for the same period in 1996.

           During the three month period ended June 30, 1997, no provision was
made as compared to a provision of $116,000 for the same period in 1996. The net
charge-offs on previously granted loans was approximately $43,000 for the three
months ended June 30, 1997, as compared to net charge-offs of $172,000 for the
three months ended June 30, 1996.



                                                                   Page 11 of 17
<PAGE>   12
OTHER INCOME

           The decrease of $75,000 or 8%, in other income in the six month
period ended June 30, 1997, as compared to 1996, was due primarily to the
decrease in various other income accounts. The decrease of $28,000 or 6%, in
other income in the three month period ended June 30, 1997, as compared to 1996,
was due to a decrease in various other income accounts.

OTHER EXPENSES

           Other expenses, consisting primarily of (i) salaries and other
employee expenses, (ii) occupancy expenses, (iii) furniture and equipment
expenses, and (iv) insurance, data processing, professional fees and other
non-interest expense, decreased by approximately $371,000 or 9%, during the six
month period ended June 30, 1997, as compared to the same period in 1996. The
decrease in other expenses was primarily a result of decreases in salary and
employee benefits, and data processing costs due to cost cutting measures taken
by the Bank. In addition, occupancy expenses decreased as a result of the Bank
purchasing the Main branch in 1996.

           The $199,000 or 10% decrease in other expenses during the three month
period ended June 30, 1997, was affected by decreases in salaries and benefits,
data processing, office supplies, postage, telephone and professional expenses
due to the cost cutting measures taken by the Bank. Occupancy expense decreased
as well due to the purchase of the Main branch.

FINANCIAL CONDITION AND LIQUIDITY

           During the six months ended June 30, 1997, the Company's assets
increased by approximately $2.4 million or 2%, compared to December 31, 1996.
The Company continued to have adequate cash resources with approximately
$6,304,000 of cash held on deposit at other financial institutions, $8,176,000
of investment securities, and $4,970,000 in Federal Funds Sold at June 30, 1997.
Liquidity was up and resulted in the increase in cash and cash equivalents of
$3,700,000. The increased liquidity resulted primarily from the decrease in
total non-liquid assets, an increase in total deposits, and an increase in
federal funds sold. The Bank's investment portfolio contains $14,000 of
unrealized losses on estimated fair values when compared to book values at June
30, 1997. Investment securities totaling $1,350,000 matured during the six month
period ended June 30, 1996. The total loans placed on non-accrual status (not
generating income currently) amounted to approximately $339,000 at June 30,
1997.
All loans on non-accrual status are considered to be impaired.

           During the six months ended June 30, 1996, the Company acquired the
corporate headquarters and main branch building. This resulted in an increase in
Bank Premises of approximately $2,471,000.

           During the six months ended June 30, 1997, the increase in capital
expenditures was mainly due to costs associated with a data processing
conversion which occurred in July 1997. Additional costs of approximately
$350,000 are anticipated in the third quarter of 1997 to complete the
conversion.

           Total shareholders' equity increased from approximately $7,851,000 at
December 31, 1996, to $8,056,000 at June 30, 1997, as a result of net income
generated for the six months then ended and an increase in the valuation
allowance for investment securities.

           The Company's and the Bank's primary regulators, the Federal Reserve
Board, and the Office of the Comptroller of the Currency, respectively, adopted
risk-based capital guidelines which require bank holding companies and banks to
maintain minimum total capital of 8% (of which 4% must consist of Tier 1
capital) of risk-weighted assets, respectively. Further, the Federal Reserve
Board and Comptroller generally require bank and bank holding companies to have
a minimum leverage ratio of at least 4% to be considered "adequately
capitalized" for federal regulatory purposes. As of June 30, 1997, the Company
had a ratio of capital to risk-weighted assets of 8.57%, a ratio of Tier 1
capital to risk-weighted assets of 7.87%, and a leverage capital ratio of 6.59%.
The Company's management believes that, under current regulations, the Bank will
continue to meet these minimum capital requirements in the foreseeable future.



                                                                   Page 12 of 17
<PAGE>   13
NON-PERFORMING LOANS

           The following table sets forth information regarding the Bank's
non-performing loans at June 30, 1997 and December 31, 1996.

<TABLE>
<CAPTION>
                                                              June 30,  December 31,
(Dollars in Thousands)                                          1997        1996
                                                              -------   -----------
<S>                                                           <C>        <C> 
Accruing Loans More Than 90 Days Past Due(1)
      Aggregate Loan Amounts
          Commercial, financial and agricultural
          Real estate
          Installment loans to individuals                      $111       $ 49
                                                                ----       ----
                      Total Loans Past Due More Than 90 Days     111         49
                                                                ----       ----
                                                                        
Renegotiated Loans(2)                                            --         --
                                                                ----       ----
                                                                        
Non-accrual Loans(3)                                                    
      Aggregate Loan Amounts                                            
          Commercial, financial and agricultural                              5    
          Real estate                                            339        429
          Installment loans to individuals                              
                                                                ----       ----
                      Total Non-accrual Loans                    339        434
                                                                ----       ----
                      Total Non-Performing Loans                $450       $483
                                                                ====       ====
</TABLE>
                                                                        
                                                                     
(1) Reflects loans for which there has been no payment of interest and/or
principal for 90 days or more. Ordinarily, loans are placed on non-accrual
status (accrual of interest is discounted) when the Bank has reason to believe
that continued payment of interest and principal is unlikely.

(2) Renegotiated loans are those which have been renegotiated to provide a
deferral of interest or principal. The Bank had no renegotiated loans during
1997 and 1996.

(3) There were three loans on non-accrual status totaling approximately $339,000
at June 30, 1997, and five loans totaling approximately $434,000 at December 31,
1996.

           The policy of the Company is to review each loan in the loan
portfolio to identify problem credits. In addition, as an integral part of its
review process of the Bank, the Comptroller also classifies problem credits.
There are three classifications for problem loans: "substandard", "doubtful" and
"loss". Substandard loans have one or more defined weaknesses and are
characterized by the distinct possibility that the Bank will sustain some loss
if the deficiencies are not corrected. Doubtful loans have the weaknesses of
substandard loans with the additional characteristic that the weaknesses make
collection or liquidation in full, on the basis of currently existing facts,
conditions and values, questionable. A loan classified as loss is considered
uncollectible and of such little value that the continuance as an asset of the
institution is not warranted. Another category designated "special mention" is
maintained for loans which do not currently expose the Bank to a significant
degree or risk to warrant classification in a substandard, doubtful or loss but
do possess credit deficiencies or potential weaknesses deserving management's
close attention.

           As of June 30, 1997, the Bank's classified loans consisted of
$3,267,000 of loans classified as substandard. The Bank's $3,267,000 of loans
classified as substandard consisted of $2,817,000 of performing loans and
$450,000 of non-accrual loans and loans delinquent 90 days or more but still
accruing.


                                                                   Page 13 of 17
<PAGE>   14
RESERVE FOR PROBABLE LOAN AND LEASE LOSSES

           The reserve for probable loan and lease losses is a general reserve
established by Management to absorb potential losses inherent in the entire
portfolio. The level of and ratio of additions to the reserve are based on a
continuous analysis of the loan and lease portfolio and, at June 30, 1997,
reflected an amount which, in management's judgment, was adequate to provide for
known and inherent loan losses. In evaluating the adequacy of the reserve,
management gives consideration to the composition of the loan portfolio, the
performance of loans in the portfolio, evaluations of loan collateral, prior
loss experience, current economic conditions and the prospects or worth of
respective borrowers or guarantors. In addition, the Comptroller, as an integral
part of its examination process, periodically reviews the Bank's allowance for
possible loan and lease losses. The Comptroller may require the Bank to
recognize additions to the allowance based upon its judgment of the information
available to it at the time of its examination. The Bank was most recently
examined by the Comptroller as of September 30, 1996.

           The reserve for probable loan and lease losses at June 30, 1997, was
$707,000 or .75% of total loans and leases, as compared to $728,000 or .75% of
total credits at December 31, 1996. Additions to the reserve are effected
through the provision for loan and lease losses which is an operating expense of
the Company.

           The following table provides certain information with respect to the
Company's allowance for loan losses as well as charge-off and recovery activity.


<TABLE>
<CAPTION>
                                                      June 30,  December 31,
(Dollars in Thousands)                                 1997        1996
                                                      -------   -----------
<S>                                                    <C>      <C> 
Allowance For Loan Losses
      Balance, Beginning of period                     $728         $783
                                                       ----         ----
      Charge-offs                                                
          Commercial, financial and agricultural                     101      
          Real estate mortgage                                       201      
          Consumer loans                                183          384
                                                       ----         ----
                      Total Charge-offs                 183          686
                                                       ----         ----
      Recoveries                                                 
          Commercial, financial and agricultural         16          102
          Real estate mortgage                            6      
          Consumer loans                                 92          112
                                                       ----         ----
                      Total Charge-offs                 114          214
                                                       ----         ----
Net Charge-offs                                          69          472
                                                       ----         ----
Provision Charged to Operations                          48          417
                                                       ----         ----
Balance, End of period                                 $707         $728
                                                       ====         ====
Net Charge-offs During the Period to Average Loans               
 Outstanding During the Period Ended                   0.03%        0.55%
                                                       ====         ====
Allowance For Loan Losses to Total Losses              0.75%        0.75%
                                                       ====         ====
</TABLE>
                                                              
           The Bank adopted SFAS No. 114 (as amended by SFAS No. 118),
"Accounting by Creditors for Impairment of a Loan" on January 1, 1995. The
statement generally requires those loans identified as "impaired" to be measured
on the present value of expected future cash flows discounted at the loan's
effective interest rate, except that as a practical expedient, a creditor may
measure impairment based on a loan's observable market price, or the fair value
of the collateral if the loan is collateral dependent. A loan is impaired when
it is probable the creditor will not be able to collect all contractual
principal and interest payments due in accordance with the terms of the loan
agreement. Loan impairment is evaluated on a loan-by-loan basis as part of
normal loan review procedures of the Bank.



                                                                   Page 14 of 17
<PAGE>   15
                                     PART II
                                OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


         a)    Exhibits:  Data Schedule


         b)    Reports on Form 8-K:  None




                                                                   Page 15 of 17
<PAGE>   16
                                   SIGNATURES


Pursuant to the requirements of the Security Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on this 1st day of August 1997.

                                       VINEYARD NATIONAL BANK



                                       By: /s/ Soule Sensenbach
                                          -------------------------------
                                          Soule Sensenbach
                                          Corporate Secretary


                                                                   Page 16 of 17