<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 March 31, 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                               91730
      Rancho Cucamonga, California                         (Zip Code)
  (Address of principal executive offices)

       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 March 31, 1997.









                                                                    Page 1 of 16
<PAGE>   2
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                      MARCH 31, 1997 AND DECEMBER 31, 1996



                               TABLE OF CONTENTS

<TABLE>
<S>                                                                                                          <C>    
                                                               PART I
FINANCIAL STATEMENTS

    Consolidated Balance Sheets
    March 31, 1997 and December 31,1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3

    Consolidated Statements of Income
    For the Three Months Ended March 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4

    Consolidated Statements of Changes in Stockholders' Equity
    For the Three Months Ended March 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5

    Consolidated Statements of Cash Flows
    For the Three Months Ended March 31, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14

  Exhibit 27.  Data Schedule  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15

SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
</TABLE>





                                                                    Page 2 of 16
<PAGE>   3
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)
                      MARCH 31, 1997 AND DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                     ASSETS
                                                                 March 31,      December 31,
                                                                   1997             1997
                                                                 ---------      ------------
<S>                                                             <C>             <C>
Cash and due from banks                                         $  7,634,685    $  7,619,307
Federal funds sold                                                 3,323,000              --
                                                                ------------    ------------
    Total Cash and Cash Equivalents                               10,957,685       7,619,307
Interest-bearing deposits in other financial institutions            396,000         396,000
Investment securities
  Available-for-sale                                               6,009,978       5,899,729
Loans, net of unearned income                                     94,497,719      97,276,964
Direct lease financing                                                89,592         188,489
  Less: Reserve for probable loan and lease losses                  (749,861)       (727,667)
                                                                ------------    ------------
                                                                  93,837,450      96,737,786
Bank premises and equipment                                        6,388,677       6,439,982
Accrued interest                                                     492,153         403,126
Cash surrender value of life insurance                               845,555         845,556
Other real estate owned                                              634,317         710,205
Other assets                                                         440,160         471,995
                                                                ------------    ------------
    Total Assets                                                $120,001,975    $119,523,686
                                                                ============    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
  Deposits
    Demand deposits                                               27,750,203      25,946,157
    Savings and NOW deposits                                      25,335,940      24,269,489
    Money market deposits                                         13,255,889      13,819,261
    Time deposits in denominations of $100,000 or more             6,111,675       9,425,758
    Other time deposits                                           38,307,478      33,142,124
                                                                ------------    ------------
                                                                 110,761,185     106,602,789
  Federal funds purchased                                                 --       3,700,000
  Accrued employee salary and benefits                               457,075         466,226
  Accrued interest and other liabilities                             882,071         903,259
                                                                ------------    ------------
    Total Liabilities                                            112,100,331     111,672,274
                                                                ------------    ------------
Stockholders' Equity
  Contributed capital                                           
    Common stock - authorized 15,000,000 shares, no par
     value, issued and outstanding 1,862,643 shares in
     1997 and 1996                                                 2,106,258       2,106,258
  Additional paid-in capital                                       3,306,684       3,306,684
  Retained earnings                                                2,486,370       2,433,463
  Valuation allowance for investments                                  2,332           5,007
                                                                ------------    ------------
    Total Stockholders' Equity                                     7,901,644       7,851,412
                                                                ------------    ------------
    Total Liabilities and Stockholders' Equity                  $120,001,975    $119,523,686
                                                                ============    ============
</TABLE>



See accompanying notes to financial statements.                    Page 3 of 16
<PAGE>   4
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                       CONSOLIDATED STATEMENTS OF INCOME
                                  (UNAUDITED)
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996


<TABLE>
<CAPTION>
                                                                         March 31,       March 31,
                                                                           1997            1996
                                                                        ----------      ----------
<S>                                                                     <C>             <C>
INTEREST INCOME
   Interest and fees on loans                                           $2,213,388      $1,864,428
   Interest on Investment Securities
        Obligations of U.S. Government Agencies and Corporations            60,349         163,262
   Interest on other securities                                              2,453           2,446
   Interest on deposits                                                      5,433           7,617
   Interest on Federal funds sold                                           32,314          43,036
   Direct lease financing income                                             2,397          10,905
                                                                        ----------      ----------
                Total Interest Income                                    2,316,334       2,091,694
                                                                        ==========      ==========
INTEREST EXPENSE
   Interest on savings deposits                                             52,618          55,073
   Interest on NOW and money market deposits                               111,775         127,684
   Interest on time deposits in denominations of $100,000 or more           90,971          90,013
   Interest on other time deposits                                         506,724         348,848
   Interest on Federal funds purchased and other interest                    5,459             132
                                                                        ----------      ----------
                Total Interest Expense                                     767,547         621,750
                                                                        ----------      ----------
                Net Interest Income                                      1,548,787       1,469,944
(PROVISION)/CREDIT FOR LOAN AND LEASE LOSSES                               (47,782)     
                                                                        ----------      ----------
                Net Interest Income After Provision
                   for Loan and Lease Losses                             1,501,005       1,469,944
                                                                        ----------      ----------
OTHER INCOME
   Fees and service charges                                                396,562         409,015
   Net loss on sale of investment securities                                (1,057)
   Other income                                                              3,450           1,753
                                                                        ----------      ----------
                Total Other Income                                         398,955         410,768
                                                                        ----------      ----------
OTHER EXPENSES
   Salaries and employee benefits                                          902,428         911,678
   Occupancy expense of premises                                           158,171         272,244
   Furniture and equipment expense                                         126,896         121,512
   Other expenses (Note #2)                                                623,558         668,811
                                                                        ----------      ----------
                                                                         1,811,053       1,974,245
                                                                        ----------      ----------
Income/(Loss) Before Income Taxes                                           88,907         (93,533)
Income Taxes                                                                36,000
                                                                        ----------      ----------
Net Income/(Loss)                                                       $   52,907      $  (93,533)
                                                                        ==========      ==========
Net Income/(Loss) Per Share                                             $     0.03      $    (0.05)
                                                                        ==========      ==========
</TABLE>



See accompanying notes to financial statements.                    Page 4 of 16
<PAGE>   5

                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                  (UNAUDITED)
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996



<TABLE>
<CAPTION>
                                                                                                               Valuation
                                                 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 unrealized gain on investment
  securities available-for-sale (net of tax)                                                                     (5,867)
  Net loss for the three months                                                                    (93,533)
                                                 ---------      ----------      ----------      ----------       -------
Balance, March 31, 1996                          1,862,643      $2,106,258      $3,306,684      $2,234,352       $ 6,000
                                                 =========      ==========      ==========      ==========       =======
Balance, January 1, 1997                         1,862,643      $2,106,258      $3,306,684      $2,433,463       $ 5,007
  Change in unrealized gain on investment
  securities avialable-for-sale (net of tax)                                                                      (2,675)
  Net income for the three months                                                                   52,907
                                                 ---------      ----------      ----------      ----------       -------
Balance, March 31, 1997                          1,862,643      $2,106,258      $3,306,684      $2,486,370       $ 2,332
                                                 =========      ==========      ==========      ==========       =======
</TABLE>



See accompanying notes to financial statements.                    Page 5 of 16
<PAGE>   6
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996



<TABLE>
<CAPTION>
                                                             March 31,       March 31,
                                                               1997            1996
                                                            -----------     -----------
<S>                                                          <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Interest and fees received                                $1,976,771      $2,194,922
   Service fees and other income received                       428,933         440,898
   Financing revenue received under leases                        2,397          10,905
   Interest paid                                               (811,512)       (587,374)
   Cash paid to suppliers and employees                      (1,669,553)     (2,230,483)
   Income taxed paid                                                            (11,424)
                                                            -----------     -----------
        Net Cash Used In Operating Activities                   (72,964)       (182,556)
                                                            -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from maturities of investment securities,
    available-for-sale
   Proceeds from sales of investment securities,
    available-for-sale                                        2,386,296       4,000,000
   Purchase of investment securities available-for-sale      (2,492,852)       (250,000)
   Recoveries on loans previously written off                    49,583          30,943
   Net loans made to customers and principal
    collections of loans                                      2,913,925      (2,862,473)
   Net decrease in leases to customers                           98,897         125,196
   Capital expenditures                                         (78,791)        (99,958)
   Proceeds from sale of property, plant and equipment                            5,473
   Net (increase)/decrease in other real estate owned            75,888        (286,911)
                                                            -----------     -----------
        Net Cash Provided By Investing Activities             2,952,946         662,270
                                                            -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in demand deposits, NOW accounts,
    savings accounts, and money market deposits               2,307,125         484,997
   Net increase in certificates of deposits                   1,851,271       4,020,708
   Net decrease in federal funds purchased                   (3,700,000)
                                                            -----------     -----------
        Net Cash Provided By Financing Activities               458,396       4,505,705
                                                            -----------     -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                     3,338,378       4,985,419

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                  7,619,307      10,018,749
                                                            -----------     -----------
CASH AND CASH EQUIVALENTS, END OF QUARTER                   $10,957,685     $15,004,168
                                                            ===========     ===========
</TABLE>


See accompanying notes to financial statements.                    Page 6 of 16
<PAGE>   7
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
               FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                 March 31,      March 31,
                                                                   1997           1996
                                                                ---------       ---------
<S>                                                             <C>             <C>
RECONCILIATION OF NET INCOME/(LOSS) TO                                                   
NET CASH PROVIDED BY OPERATING ACTIVITIES
   Net Income/(Loss)                                            $  52,907       $ (93,533)
                                                                ---------       ---------
   Adjustments to Reconcile Net Income/(Loss)
   to Net Cash Provided by Operating Activities
     Depreciation and amortization                                120,732         111,821
     Provision for probable credit losses                          47,782
     Gain on sale of equipment                                                     (5,473)
     Increase/(decrease) in taxes payable                          36,000         (11,424)
     (Increase)/decrease in other assets                           31,836         (71,197)
     Increase/(decrease) in unearned loan fees                   (209,852)        104,474
     (Increase)/decrease in interest receivable                   (89,027)         35,339
     Increase/(decrease) in interest payable                      (43,965)         34,376
     Decrease in accrued expense and other liabilities            (20,434)       (286,939)
     Loss on sale of investment securities                          1,057
                                                                ---------       ---------
            Total Adjustments                                    (125,871)        (89,023)
                                                                ---------       ---------
            Net Cash Provided By Operating Activities           $ (72,964)      $(182,556)
                                                                =========       =========

SUPPLEMENTARY INFORMATION
   Change in valuation allowance for investment securities      $  (2,675)      $  (5,887)
                                                                =========       =========
</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 7 of 16

<PAGE>   8

                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                             MARCH 31, 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 three month period ended March 31, 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 three month
periods ended March 31, 1997 and 1996:


<TABLE>
<CAPTION>

                                                March 31,       March 31,
                                                  1997            1996
                                                ---------       ---------
<S>                                             <C>             <C>
Data processing                                 $171,609        $199,784
Marketing expenses                               104,343          68,123
Office supplies, postage and telephone            64,260          67,483
Professional expenses                            103,037          85,496
Bank insurance and assessments                    60,548          41,575
Other                                            119,761         206,350
                                                --------        --------
        Total Other Expenses                    $623,558        $668,811
                                                ========        ========
</TABLE>

                                                                  Page 8 of 16
<PAGE>   9
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                            MARCH 31, 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 9 of 16
<PAGE>   10

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 had net income of $52,907 for the quarter ended March 31,
1997, as compared to a net loss of $93,533 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 $106,000 or
7.4% in the three month period ended March 31, 1997, as compared to the same
period in 1996.  This increase was due primarily to a $252,000 increase in
interest income and a $146,000 increase in interest expense.  The net change
was substantially a result of increases in loan volume from March 1996 to March
1997.

         Outstanding loans and leases decreased during the three month period
ended March 31, 1997, by $2,779,000.  During this period total deposits
increased by $4,161,000.  The deposit mix changed as demand deposits increased
by $1,804,000, savings and NOW accounts increased by $1,066,000, money market
accounts decreased $563,000, time deposits in excess of $100,000 decreased
$3,314,000, and other time deposits increased $5,165,000.  The net interest
margin (net interest income expressed as a percentage of interest income) was
67 percent for the three month period ended March 31, 1997, as compared to 70
percent for the same period 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 three month period ended March 31, 1997, a provision of
$47,782 was made as compared to zero for the same period in 1996.  The net
charge-offs on previously granted loans was approximately $26,000 for the three
months ended March 31, 1997, as compared to $68,000 for the same period in
1996.

OTHER INCOME

         The decrease of $11,813 in other income in the three month period
ended March 31, 1997, as compared to 1996, was due primarily to the decrease in
loan servicing income which resulted from the sale of the Bank's mortgage
servicing rights during 1996.





                                                                   Page 10 of 16
<PAGE>   11

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 $163,192 or 8%, during the
three month period ended March 31, 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.  In addition,
occupancy expenses decreased as a result of the Bank purchasing the Main Branch
in 1996.

FINANCIAL CONDITION AND LIQUIDITY

         During the three months ended March 31, 1997, the Company's assets
increased by approximately $478,000 or .4, compared to December 31, 1996.  The
Company continued to have adequate cash resources with approximately $7,635,000
of cash held on deposit at other financial institutions, $9,670,000 of
investment securities, and $3,323,000 in Federal Funds Sold at March 31, 1997.
Liquidity was up and resulted in the increase in cash and cash equivalents of
$3.0 million.  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 $2,000 of
unrealized gains on estimated fair values when compared to book values at March
31, 1997.  The total loans placed on non-accrual status (not generating income
currently) amounted to approximately $430,000 at March 31, 1997.  All loans on
non-accrual status are considered to be impaired.

         Total shareholders' equity increased from approximately $7,851,000 at
December 31, 1996 to $7,902,000 at March 31, 1997, as a result of net income
generated for the three months then ended and a decrease 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 March 31, 1997, the
Company had a ratio of capital to risk-weighted assets of 8.44%, a ratio of
Tier 1 capital to risk-weighted assets of 7.71%, and a leverage capital ratio
of 7.34%.  The Company's management believes that, under current regulations,
the Bank will continue to meet these  minimum capital requirements in the
foreseeable future.








                                                                   Page 11 of 16
<PAGE>   12

NON-PERFORMING LOANS

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

<TABLE>
<CAPTION>
                                                    March 31,   December 31,
                                                      1997          1996
                                                    ---------   ------------
<S>                                                   <C>          <C>
(Dollars in Thousands)
Accruing Loans More Than 90 Days Past Due(1)    
  Aggregate Loan Amounts
    Commercial, financial and agricultural             $  3
    Real estate
    Installment loans to individuals                     86        $ 49
                                                       ----        ----
      Total Loans Past Due More Than 90 Days             89          49
                                                       ----        ----
Renegotiated Loans(2)                                    --          --
                                                       ----        ----
Non-accrual Loans(3)
  Aggregate Loan Amounts
    Commercial, financial and agricultural                2           5
    Real estate                                         428         429
    Installment loans to individuals
                                                       ----         ----
      Total Non-accrual Loans                           430          434
                                                       ----         ----
      Total Non-Performing Loans                       $519         $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 four loans on non-accrual status totaling approximately $428,000
at March 31, 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 March 31, 1997, the Bank's classified loans consisted of
$2,536,000 of loans classified as substandard.  The Bank's $2,536,000 of loans
classified as substandard consisted of $2,108,000 of performing loans and
$428,000 of non-accrual loans and loans delinquent 90 days or more but still
accruing.





                                                                  Page 12 of 16
<PAGE>   13

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 March 31, 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 March 31, 1997, was
$750,000 or .79% 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>
                                                      March 31,     December 31,
                                                        1997            1997
                                                      ---------     ------------
<S>                                                     <C>             <C>
(Dollars in Thousands)
Allowance For Loan Losses
   Balance, Beginning of period                         $728            $783
                                                        ----            ----
   Charge-offs
        Commercial, financial and agricultural                           101
        Real estate construction
        Real estate mortgage                                             201
        Consumer loans                                    75             384
        Lease financing                                   
                                                        ----            ----
           Total Charge-offs                              75             686
                                                        ----            ----
   Recoveries
        Commercial, financial and agricultural             6             102
        Real estate construction
        Real estate mortgage                               6
        Consumer loans                                    37             112
        Lease financing
                                                        ----            ----
           Total Charge-offs                              49             214
                                                        ----            ----
        Net Charge-offs/(Recoveries)                      26             472
                                                        ----            ----
        Provision/(Credit) Charged to Operations          48             417
                                                        ----            ----
        Balance, End of period                          $750            $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       0.79%           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 13 of 16
<PAGE>   14





                                    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 14 of 16
<PAGE>   15



                                   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 7th day of May 1997.


                                             VINEYARD NATIONAL BANK



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





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