<PAGE>   1
x                                  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, 1998         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 June 30 , 1998.

                                                                    Page 1 of 17

<PAGE>   2
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                       JUNE 30, 1998 AND DECEMBER 31, 1997
<TABLE>

                                TABLE OF CONTENTS


                                     PART I

FINANCIAL STATEMENTS

<S>                                                                          <C>
    Consolidated Balance Sheets
    June 30, 1998 and December 31,1997.........................................3

    Consolidated Statements of Income
    For the Six Months and Three Months Ended June 30, 1998 and 1997...........4

    Consolidated Statements of Changes in Stockholders' Equity
    For the Six Months Ended June 30, 1998 and 1997............................5

    Consolidated Statements of Cash Flows
    For the Six Months Ended June 30, 1998 and 1997............................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
<TABLE>
<CAPTION>
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)
                      JUNE 30, 1998 AND DECEMBER 31, 1997

                                    ASSETS
                                                                                 June 30,           December 31,
                                                                                    1998               1997
                                                                              --------------      --------------
<S>                                                                           <C>                 <C>          
Cash and due from banks                                                       $   6,033,602       $   6,404,346
Federal funds sold                                                                3,110,000           2,950,000
                                                                              -------------       -------------
                    Total Cash and Cash Equivalents                               9,143,602           9,354,346
                                                                              -------------       -------------
Interest-bearing deposits in other financial institutions                           495,000
Investment securities
      Available-for-sale                                                          6,735,101           4,701,490
Loans, net of unearned income                                                    85,691,700          88,675,135
Loans held for sale                                                                 759,271             424,950
Direct lease financing                                                               14,354              14,354
      Less:  Reserve for probable loan and lease losses                            (662,190)           (694,880)
                                                                              -------------       -------------
                                                                                 85,803,135          88,419,559
Other real estate owned                                                             287,354             492,492
Bank premises and equipment                                                       6,555,803           6,741,300
Accrued interest                                                                    541,305             445,033
Cash surrender value of life insurance                                            1,655,873             981,467
Other assets                                                                        433,303             375,125
                                                                              -------------       -------------
                    Total Assets                                              $ 111,650,476       $ 111,510,812
                                                                              =============       =============

                                    LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
      Deposits
          Demand deposits                                                        30,153,573          29,455,497
          Savings and NOW deposits                                               25,967,745          25,562,601
          Money market deposits                                                  10,680,614          12,168,373
          Time deposits in denominations
           of $100,000 or more                                                    8,019,836           7,522,574
          Other time deposits                                                    27,078,372          27,032,311
                                                                              -------------       -------------
                                                                                101,900,140         101,741,356
          Accrued employee salary benefits                                          412,262             781,712
          Accrued interest and other liabilities                                    864,035             721,241
                                                                              -------------       -------------
                  Total Liabilities                                             103,176,437         103,244,309
                                                                              -------------       -------------
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 1998 and 1997
          Additional paid-in capital                                              3,306,684           3,306,684
          Retained earnings                                                       3,040,134           2,837,599
          Accumulated other comprehensive income                                     20,963              15,962
                                                                              -------------       -------------
                  Total Stockholders' Equity                                      8,474,039           8,266,503
                                                                              -------------       -------------
                  Total Liabilities and Stockholders' Equity                  $ 111,650,476         111,510,812
                                                                              =============       =============
</TABLE>

See accompanying notes to financial statements.
                                                                    Page 3 of 17
<PAGE>   4
<TABLE>
<CAPTION>
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                                  (UNAUDITED)
                 FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997



                                                                Six Months Ended June 30,           Three Months Ended June 30,
                                                               ----------------------------         -----------------------------
                                                                 1998              1997               1998               1997
                                                               ----------        ----------         ----------         ----------
<S>                                                          <C>               <C>               <C>               <C>        
INTEREST INCOME
      Interest and fees on loans                             $ 4,398,284       $ 4,426,956       $ 2,258,307       $ 2,205,520
      Interest on Investment Securities
          Obligations of U.S. Government Agencies
            and Corporations                                     141,435           167,017            78,222           106,668
          Interest on other securities                             4,944             4,913             2,478             2,460
      Interest on deposits                                         5,170            12,721             4,128             7,288
      Interest on Federal funds sold                             158,774            97,566            88,141            65,252
      Direct lease financing income                                  445             4,085               224             1,688
                                                             -----------       -----------       -----------       -----------
                    Total Interest Income                      4,709,052         4,713,258         2,431,500         2,388,876
                                                             -----------       -----------       -----------       -----------
INTEREST EXPENSE
      Interest on savings deposits                               103,544           107,514            53,153            54,896
      Interest on NOW and money market deposits                  225,952           233,848           113,413           122,073
      Interest on time deposits in denominations
        of $100,000 or more                                      203,889           185,013           101,924            94,042
      Interest on other time deposits                            732,093         1,029,505           369,565           522,781
      Interest on Federal funds purchased
        and other interest                                                           5,459                                   0
                                                             -----------       -----------       -----------       -----------
                    Total Interest Expense                     1,265,478         1,561,339           638,055           793,792
                                                             -----------       -----------       -----------       -----------
                    Net Interest Income                        3,443,574         3,151,919         1,793,445         1,595,084
PROVISION FOR LOAN AND LEASE LOSSES                             (123,982)          (47,782)          (64,982)                0
                                                             -----------       -----------       -----------       -----------
                    Net Interest Income After Provision                                                                      .
                     for Loan and Lease Losses                 3,319,592         3,104,137         1,728,463         1,595,084
                                                             -----------       -----------       -----------       -----------
OTHER INCOME
      Fees and service charges and gain
        on sale of loans                                         722,822           809,024           353,669           419,894
      Net gain/(loss) on sale of
        investment securities                                      3,281            (1,057)                0                 0
      Other Income                                                12,046             8,010             5,912             4,560
                                                             -----------       -----------       -----------       -----------
                    Total Other Income                           738,149           815,977           359,581           424,454
                                                             -----------       -----------       -----------       -----------
OTHER EXPENSES
      Salaries and employee benefits                           1,771,320         1,748,184           885,110           846,105
      Occupancy expense of premises                              301,175           313,211           148,959           155,040
      Furniture and equipment expenses                           308,383           244,951           156,654           118,055
      Other expenses (Note #2)                                 1,334,328         1,272,634           652,031           648,111
                                                             -----------       -----------       -----------       -----------
                    Total Other Expenses                       3,715,206         3,578,980         1,842,754         1,767,311
                                                             -----------       -----------       -----------       -----------
INCOME BEFORE INCOME TAXES                                       342,535           341,134           245,290           252,227
INCOME TAXES                                                    (140,000)         (139,000)         (101,000)         (103,000)
                                                             -----------       -----------       -----------       -----------
NET INCOME                                                   $   202,535       $   202,134       $   144,290       $   149,227
                                                             ===========       ===========       ===========       ===========
BASIC AND DILUTED EARNINGS PER SHARE                         $      0.11       $      0.11       $      0.08       $      0.08
                                                             ===========       ===========       ===========       ===========

See accompanying notes to financial statements.
                                                                    Page 4 of 17
</TABLE>

<PAGE>   5
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                  (UNAUDITED)
                     SIX MONTHS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
                                                                                                     Accumulated
                                             Number of                    Additional                   other
                                              Shares       Common          Paid-in     Retained      comprehensive
                                            Outstanding     Stock          Capital     Earnings        income        Total
                                            ---------    -----------    -----------   -----------   -----------   -----------
<S>                                         <C>          <C>            <C>           <C>           <C>           <C>        
BALANCE, January 1, 1997                    1,862,643    $ 2,106,258    $ 3,306,684   $ 2,433,463   $     5,007   $77,851,412
                                            ---------    -----------    -----------   -----------   -----------   -----------
 Comprehensive income
      Net Income                                                                          202,134                     202,134
      Unrealized security holding gains                                                                   3,474         3,474
      less reclassification
         adjustments for losses                                                                            (614)         (614)
      Total other comprehensive income                                                                                  2,860
                                            ---------    -----------    -----------   -----------   -----------   -----------
 Total Comprehensive income                                                                                           204,994
                                            ---------    -----------    -----------   -----------   -----------   -----------

BALANCE, June 30,1997                       1,862,643    $ 2,106,258    $ 3,306,684    $2,635,597   $     7,867   $78,056,406
                                            =========    ===========    ===========    ==========   ===========   ===========
</TABLE>
<TABLE>
<CAPTION>

Grossup of change in unrealized gain or loss
                                                              Gross           Taxes            Net
                                                             --------        --------        -------
<S>                                                          <C>             <C>             <C>    
Net unrealized appreciation, January 1, 1997                 $  8,636        $ (3,629)       $ 5,007

Unrealized gains arising during the period                      5,984          (2,510)         3,474

Realized losses                                                (1,057)            443           (614)
                                                             --------        --------        -------

Ending Balance, June 30, 1997                                $ 13,563        $ (5,696)       $ 7,867
                                                             ========        ========        =======
</TABLE>


<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                 Number of                   Additional                     other
                                                  Shares         Common        Paid-in       Retained    comprehensive
                                                Outstanding       Stock        Capital       Earnings        income        Total 
                                                -----------    -----------    -----------   -----------   -----------  -----------
<S>                                              <C>          <C>            <C>           <C>           <C>           <C>        
BALANCE, January 1, 1998                         1,862,643    $ 2,106,258    $ 3,306,684   $ 2,837,599   $    15,962   $ 8,266,503
                                                 ---------    -----------    -----------   -----------   -----------   -----------

      Comprehensive income
           Net Income                                                                          202,535                     202,535
           Unrealized security holding gains                                                                   6,904         6,904
           less reclassification adjustments
              for gains                                                                                       (1,903)       (1,903)
           Total other comprehensive income                                                                                  5,001
                                                 ---------    -----------    -----------   -----------   -----------   -----------
      Total Comprehensive income                                                                                           107,536
                                                 ---------    -----------    -----------   -----------   -----------   -----------
BALANCE, June 30,1998                            1,862,643    $ 2,106,258    $ 3,306,684   $ 3,040,134   $    20,963   $ 8,474,039
                                                 =========    ===========    ===========   ===========   ===========   ===========

</TABLE>

Grossup of change in unrealized gain or loss
<TABLE>
<CAPTION>

                                                              Gross           Taxes           Net
                                                             --------       ---------       --------
<S>                                                          <C>            <C>             <C>     
Net unrealized appreciation, January 1, 1998                 $ 27,523       $ (11,561)      $ 15,962

Unrealized gains arising during the period                     11,902          (4,998)         6,904

Realized gains                                                 (3,281)          1,378         (1,903)
                                                             --------       ---------       --------

Ending Balance, June 30, 1998                                $ 36,144       $ (15,181)      $ 20,963
                                                             ========       =========       ========
</TABLE>

See accompanying notes to financial statements.
                                                                    Page 5 of 17
<PAGE>   6
<TABLE>
<CAPTION>

                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                   FOR THE SIX MONTHS ENDED JUNE 30, 1998 1997

INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                        1998             1997
                                                                    ------------     ------------
<S>                                                                 <C>              <C>         
    CASH FLOWS FROM OPERATING ACTIVITIES
        Interest and fees received                                  $  3,731,915     $  3,830,417
        Service fees and other income received                           734,868          816,456
        Financing revenue received under leases                              445            4,085
        Interest paid                                                 (1,256,704)      (1,551,950)
        Cash paid to suppliers and employees                          (4,365,516)      (3,256,090)
        Income taxes paid                                               (122,096)          (1,600)
                                                                    ------------     ------------
                Net Cash Used by Operating Activities                 (1,277,088)        (158,682)
                                                                    ------------     ------------

    CASH FLOWS FROM INVESTING ACTIVITIES
        Proceeds from maturities of investment securities
         available-for-sale                                            2,500,000        1,350,000
        Proceeds from sales of investment securities
         available-for-sale                                              503,365        2,386,296
        Purchase of investment securities available-for-sale          (5,011,532)      (5,980,652)
        Net increase in deposits in other financial institutions        (495,000)        (198,000)
        Net loans made to customers and principal collections
         of loans                                                      3,325,685        4,233,962
        Net decrease in leases to customers                               98,897
        Net decrease in other real estate owned                          173,582          210,547
        Recoveries on loans previously written off                        33,637          114,235
        Capital expenditures                                            (160,703)        (385,789)
        Proceeds from sale of property, plant and equipment               38,526
                                                                    ------------     ------------
                Net Cash Provided by Investing Activities                907,560        1,829,496
                                                                    ------------     ------------

    CASH FLOWS FROM FINANCING ACTIVITIES
        Net increase/(decrease) in demand deposits, NOW
         accounts savings accounts, and money market deposits           (384,539)       3,833,126
        Net increase in certificates of deposit                          543,323        1,850,764
        Decrease in Federal funds purchased                                            (3,700,000)
                                                                    ------------     ------------
                    Net Cash Provided by Financing Activities            158,784        1,983,890
                                                                    ------------     ------------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                    (210,744)       3,654,704
CASH AND CASH EQUIVALENTS, Beginning of year                           9,354,346        7,619,307
                                                                    ------------     ------------
CASH AND CASH EQUIVALENTS, End of quarter                           $  9,143,602     $ 11,274,011
                                                                    ============     ============
</TABLE>



See accompanying notes to financial statements.
                                                                   Page 6 of 17

<PAGE>   7
<TABLE>
<CAPTION>
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                   FOR THE SIX MONTHS ENDED JUNE 30, 1998 1997

                                                                            1998             1997
                                                                        ------------     ------------
<S>                                                                   <C>              <C>         
RECONCILIATION OF NET INCOME/(LOSS) TO
 NET CASH USED IN OPERATING ACTIVITIES
    Net Income                                                          $   202,535     $   202,134
                                                                        -----------     -----------
    Adjustments to Reconcile Net Income to
     Net Cash Provided/(Used) by Operating Activities
        Depreciation and amortization                                       294,134         228,511
        Provision for probable credit losses                                123,982          47,782
        Loss on sale of other real estate owned                              31,556           7,166
        Increase in taxes payable                                            17,904         137,400
        Increase in other assets                                           (732,584)        (24,380)
        Decrease in unearned loan fees                                     (866,880)       (770,027)
        Increase in interest receivable                                     (96,272)        (80,461)
        Increase in interest payable                                          8,774           9,389
        Increase/(Decrease) in accrued expense and other liabilities       (256,956)         82,747
        (Gain)/Loss on sale of investments                                   (3,281)          1,057
                                                                        -----------     -----------
                Total Adjustments                                        (1,479,623)       (360,816)
                                                                        -----------     -----------
                Net Cash Used by Operating Activities                   $(1,277,088)    $  (158,682)
                                                                        ===========     ===========

SUPPLEMENTARY INFORMATION
      Change in valuation allowance for investment securities           $     5,001     $     2,860
                                                                        ===========     ===========
</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.


                                              .                     Page 7 of 17

<PAGE>   8

                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                             JUNE 30, 1998 AND 1997



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, 1997. The results of
operations for the six month period ended June 30, 1998, 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.

Effective for years beginning after December 31, 1997, the Company was required
to implement SFAS No. 130 "Reporting Comprehensive Income." This statement
establishes standards of disclosure and financial statement display for
reporting comprehensive income and its components.

NOTE #2 - OTHER EXPENSES

The following is a breakdown of other expenses for each of the six month periods
ended June 30, 1998 and 1997:

<TABLE>
<CAPTION>
                                          Six Months Ended           Three Months Ended
                                              June 30,                   June 30,
                                       -----------------------     ---------------------- 
                                          1998        1997           1998         1997
                                       ----------   ----------     ---------    ---------
<S>                                    <C>          <C>            <C>          <C>      
Data processing                        $  321,735   $  344,563     $ 161,533    $ 172,954
Marketing expenses                        169,431      192,218        74,060       87,875
Office supplies, postage
 and telephone                            190,825      117,014        95,871       52,754
Professional expenses                     323,514      222,185       156,949      119,148
Bank insurance and assessments             79,966      111,088        44,798       50,540
Other                                     248,857      285,566       118,820      164,840
                                       ----------   ----------     ---------    ---------
          Total Other Expenses         $1,334,328   $1,272,634     $ 652,031    $ 648,111
                                       ==========   ==========     =========    =========
</TABLE>


                                                                   Page 8 of 17
<PAGE>   9
                    VINEYARD NATIONAL BANCORP AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                             JUNE 30, 1998 AND 1997



NOTE #3 - EARNINGS PER COMMON EQUIVALENT SHARE

Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted-average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity.

                                                                   Page 9 of 17

<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 $202,535 for the six months ended June
30, 1998, as compared to $202,134 for the same period in 1997.

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 approximately $292,000 or
9.3% in the six month period ended June 30, 1998, as compared to the same period
in 1997. The increase was due primarily to approximately a $4,000 decrease in
interest income and approximately a $296,000 decrease in interest expense. The
net change was substantially a result of decreases in loan volume and other time
deposits from June 1998 to June 1997.

         Outstanding loans and leases decreased during the six month period
ended June 30, 1998, by approximately $2,584,000. During this period total
deposits increased by approximately $159,000. The deposit mix changed as demand
deposits increased by approximately $698,000, savings and NOW accounts increased
by approximately $405,000, money market accounts decreased approximately
$1,488,000, time deposits in excess of $100,000 increased approximately
$497,000, and other time deposits increased approximately $46,000. The net
interest margin (net interest income expressed as a percentage of interest
income) was 73 percent for the six month period ended June 30, 1998, as compared
to 67 percent for the same period in 1997.

PROVISION FOR PROBABLE LOAN AND LEASES 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, 1998, a provision of
approximately $124,000 was made as compared to approximately $48,000 for the
same period in 1997. The net charge-offs on previously granted loans were
approximately $156,000 for the six months ended June 30, 1998, as compared to
$26,000 for the same period in 1997.

                   During the three month period ended June 30, 1998, a
provision of approximately $65,000 was made as compared to no provision for the
same period in 1997. The net charge-offs on previously granted loans were
approximately $64,000 for the three months ended June 30, 1998, as compared to
$26,000 for the same period in 1997.
                                                                   Page 10 of 17

<PAGE>   11

OTHER INCOME

         The decrease of approximately $78,000 in other income in the six month
period ended June 30, 1998, as compared to 1997, was due primarily to the
decrease in fees and service charges. The decrease of approximately $65,000 in
other income in the three month period ended June 30, 1998, was due primarily to
the decrease in fees and service charges as well.

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, increased by approximately $136,000 or 3.8%, during the six month
period ended June 30, 1998, as compared to the same period in 1997. The increase
in other expenses was primarily a result of increases in equipment and
professional 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, increased by approximately $75,000 or 4.3%, during the six month period
ended June 30, 1998, as compared to the same period in 1997. The increase in
other expenses was primarily a result of increases in equipment and salaries and
employee benefits expense.

FINANCIAL CONDITION AND LIQUIDITY

         During the six months ended June 30, 1998, the Company's assets
increased by approximately $140,000 or .13%, compared to December 31, 1997. The
Company continued to have adequate cash resources with approximately $6,034,000
of cash held on deposit at other financial institutions, approximately
$6,735,000 of investment securities, and $3,110,000 in Federal Funds Sold at
June 30, 1998. Liquidity was up and resulted in the increase in liquid assets of
approximately $2,318,000. The increased liquidity resulted primarily from the
decrease in total non-liquid assets and increases in Federal Funds Sold and
Investment Securities. The Bank's investment portfolio contains $36,000 of
unrealized gains on estimated fair values when compared to book values at June
30, 1998. The total loans placed on non-accrual status (not generating income
currently) amounted to approximately $121,000 at June 30, 1998. All loans on
non-accrual status are considered to be impaired.

         Total shareholders' equity increased from approximately $8,267,000 at
December 31, 1997, to $8,474,000 at June 30, 1998, 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, 1998, the Company
had a ratio of capital to risk-weighted assets of 9.58%, a ratio of Tier 1
capital to risk-weighted assets of 8.88%, and a leverage capital ratio of 7.40%.
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 17

<PAGE>   12
NON-PERFORMING LOANS

         The following table sets forth information regarding the Bank's
non-performing loans at June 30, 1998, and December 31, 1997.

<TABLE>
<CAPTION>

            (dollars in thousands)                      June 30,        December 31,
                                                         1998              1997
                                                     --------------   --------------
<S>                                                  <C>                <C>
Accruing Loans More Than 90 Days Past Due(1)
      Aggregate loan amounts
          Commercial, financial and agricultural
          Real estate                                                     $109
          Installment loans to individuals              $  1               107
                                                        ----              ----
        Total Loans Past Due More Than 90 Days             1               216
                                                        ----              ----
Renegotiated loans(2)
Non-accrual loans(3)
      Aggregate loan amounts
          Commercial, financial and agricultural          54                28
          Real estate                                     67               201
                                                        ----              ----
        Total Non-Accrual Loans                         $121              $229
                                                        ====              ====

        Total Non-Performing Loans                      $122              $445
                                                        ====              ====
</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
1998 and 1997.

(3) There were two loans on non-accrual status totaling approximately $121,000
at June 30, 1998, and four loans totaling approximately $229,000 at December 31,
1997.

         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, 1998, the Bank's classified loans consisted of
approximately $1,756,000 of loans classified as substandard. The Bank's
$1,756,000 of loans classified as substandard consisted of approximately
$1,634,000 of performing loans and approximately $122,000 of non-accrual loans
and loans delinquent 90 days or more but still accruing.

                                                                   Page 12 of 17
<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 June 30, 1998,
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, 1997.

         The reserve for probable loan and lease losses at June 30, 1998, was
approximately $662,000 or .77% of total loans and leases, as compared to
$695,000 or .78% of total credits at December 31, 1997. 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>

(dollars in thousands)                                            June 30,      December 31,
                                                                   1998             1997
                                                                -----------      ---------
<S>                                                            <C>              <C> 
Loans and Lease Loss Reserve Balance,
  Beginning of Period                                              $695             $728
                                                                   ----             ----
     Charge-offs
         Domestic
             Commercial, financial &  agricultural                   37               34
             Real estate - mortgage                                                   14
             Consumer loans                                         154              309
                                                                   ----             ----
                                                                    191              357
                                                                   ----             ----
     Recoveries
         Domestic
             Commercial, financial &  agricultural                    2               18
             Real estate - mortgage                                                    6
             Consumer loans                                          32              156
                                                                   ----             ----
                                                                     34              180
                                                                   ----             ----
Net charge-offs/(recoveries)                                        157              177
Additions/(Reductions) charged to operations                        124              144
                                                                   ----             ----

Loan and Lease Loss Reserve Balance, End of Year                   $662             $695
                                                                   ====             ====

Ratio of Net Charge-offs/(Recoveries) During the Year
to Average Loans and Leases Outstanding During the Year            0.18%            0.19%
                                                                   ====             ====

Ratio of Reserve for Loan Losses to Loans at Period End            0.77%            0.78%
                                                                   ====             ====
</TABLE>
(1) Loans, net of unearned income

                                                                   Page 13 of 17
<PAGE>   14





         In accordance with SFAS No. 114 (as amended by SFAS No. 118),
"Accounting by Creditors for Impairment of a Loan," loans identified as
"impaired" are 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 8th day of August 1998.


                                          VINEYARD NATIONAL BANK



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