Document:

exhibit10-1.htm

    Exhibit 10.1

    
      

    

    UNITED
      STATES OF AMERICA

    DEPARTMENT
      OF THE TREASURY

    COMPTROLLER
      OF THE CURRENCY

    

    

    
      	
              In
                the Matter of:

              Vineyard
                Bank, N.A.

              Corona,
                California

            	
              )

              )

              )

            	 

    

    

    

    CONSENT
      ORDER

    

    The
      Comptroller of the Currency of the United States of America (“Comptroller”),
      through his National Bank Examiner, has supervisory authority over Vineyard
      Bank, N.A., Corona, California (“Bank”).

    The
      Bank, by and through its duly elected and acting Board of Directors (“Board”),
      has executed a “Stipulation and Consent to the Issuance of a Consent Order,”
dated ___________, that is accepted by the Comptroller.  By this
      Stipulation and Consent, which is incorporated by reference, the Bank has
      consented to the issuance of this Consent Order (“Order”) by the
      Comptroller.

    Pursuant
      to the authority vested in him by the Federal Deposit Insurance Act, as amended,
      12 U.S.C. § 1818, the Comptroller hereby orders that:

    

    ARTICLE
      I  

                                  
      

    COMPLIANCE
      COMMITTEE

     

    (1) No
      later than August 31, 2008, the Board shall appoint a Compliance Committee
      of at
      least three (3) directors, of which no more than one (1) shall be an employee
      or
      controlling shareholder of the Bank or any of its affiliates (as the term
“affiliate” is defined in 12 U.S.C. § 371c(b)(1)), or a family member
      of any such person.  Upon appointment, the names of the members of the
      Compliance Committee and, in the event of a change of the membership, the name
      of any new member shall be submitted in writing to the Assistant Deputy
      Comptroller.  The Compliance Committee shall be responsible for
      monitoring and coordinating the Bank's adherence to the provisions of this
      Order.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (2) The
      Compliance Committee shall meet at least monthly.

    (3) No
      later than September 30, 2008, and on a monthly basis thereafter, the Compliance
      Committee shall submit a written progress report to the Board setting forth
      in
      detail:

    
      	
              (a)  

            	
              a
                description of the action needed to achieve full compliance with
                each
                Article of this Order;

            

    

    
      	
              (b)  

            	
              actions
                taken to comply with each Article of this Order;
                and

            

    

    
      	
              (c)  

            	
              the
                results and status of those
                actions.

            

    

    (4) The
      Board shall submit a copy of the Compliance Committee's report, with any
      additional comments by the Board, to the Comptroller within ten (10) days of
      receiving such report.  Such report and additional comments, as well
      as any other report or plan that the Bank or Board is required to submit
      pursuant to this Order, shall be forwarded to the:

    Assistant
      Deputy Comptroller

    Southern
      California—South Field Office

    1925
      Palomar Oaks Way, Suite 202

    Carlsbad,
      California 92008

    

    ARTICLE
      II

     

    BOARD
      TO ENSURE COMPETENT
      MANAGEMENT

    (1) No
      later than October 31, 2008, the Board shall identify experienced and competent
      individuals to serve on a permanent, full-time basis in its President/CEO and
      Chief Credit Officer positions.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (2) Prior
      to the appointment of any individual to the President/CEO or Chief Credit
      Officer positions, the Board shall submit to the Assistant Deputy Comptroller
      the following:

    
      	
              (a)  

            	
              the
                information sought in the “Changes in Directors and Senior Executive
                Officers” and “Background Investigations” booklets of the Comptroller’s Licensing
                Manual, together with a legible fingerprint card for the proposed
                officer;

            

    

    
      	
              (b)  

            	
              a
                written statement of the Board's reasons for selecting the proposed
                officer; and

            

    

    
      	
              (c)  

            	
              a
                written description of the proposed officer's duties and
                responsibilities.

            

    

    (3) The
      Assistant Deputy Comptroller shall have the power to disapprove the appointment
      of the proposed officer.  However, the lack of disapproval of such
      individual shall not constitute an approval or endorsement of the proposed
      officer.

    (4) The
      requirement to submit information and the prior disapproval provisions of this
      Article are based on the authority of 12 U.S.C. § 1818(b) and do not
      require the Comptroller or the Assistant Deputy Comptroller to complete his
      review and act on any such information or authority within ninety (90)
      days.

    

    ARTICLE
      III

     

    CAPITAL
      PLAN AND HIGHER
      MINIMUMS

     

    (1) The
      Bank shall maintain the following capital levels (as defined in 12 C.F.R.
      Part 3):

    
      	
              (a)  

            	
              Tier
                1 capital at least equal to nine percent (9%) of adjusted total assets;
                and

            

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      	 	 

    

    
      	
              (b)  

            	
              total
                risk-based capital at least equal to eleven percent (11%) of risk-weighted
                assets.

            

    

    (2) The
      requirement in this Order to meet and maintain a specific capital level means
      that the Bank may not be deemed to be “well capitalized” for purposes of
      12 U.S.C. § 1831o and 12 C.F.R. Part 6 pursuant to 12 C.F.R.
§ 6.4(b)(1)(iv).

    (3) No
      later than October 31, 2008, the Board shall develop, implement, and thereafter
      ensure Bank adherence to a three-year capital program.  The program
      shall include:

    
      	
              (a)  

            	
              specific
                plans for the maintenance of adequate capital that may in no event
                be less
                than the requirements of paragraph
                (1);

            

    

    
      	
              (b)  

            	
              projections
                for capital requirements based upon a detailed analysis of the Bank's
                assets, liabilities, earnings, fixed assets, and off-balance sheet
                activities;

            

    

    
      	
              (c)  

            	
              projections
                of the sources and timing of additional capital to meet the Bank's
                current
                and future needs;

            

    

    
      	
              (d)  

            	
              the
                primary source(s) from which the Bank will strengthen its capital
                structure to meet the Bank's needs;

            

    

    
      	
              (e)  

            	
              contingency
                plans that identify alternative methods should the primary source(s)
                under
                (d) above not be available; and

            

    

    
      	
              (f)  

            	
              a
                dividend policy that permits the declaration of a dividend
                only:

            

    

    
      	
              (i)  

            	
              when
                the Bank is in compliance with its approved capital
                program;

            

    

    
      	
              (ii)  

            	
              when
                the Bank is in compliance with 12 U.S.C. §§ 56 and 60;
                and

            

    

    
      	
              (iii)  

            	
              with
                the prior written determination of no supervisory objection by the
                Assistant Deputy Comptroller.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (4) Upon
      completion, the Bank's capital program shall be submitted to the Assistant
      Deputy Comptroller for review.  The Board shall review and update the
      Bank's capital program on an annual basis, or more frequently if
      necessary.  Copies of the reviews and updates shall be submitted to
      the Assistant Deputy Comptroller.

    (5) Effective
      immediately, the Board shall obtain the prior written determination of no
      supervisory objection from the Assistant Deputy Comptroller before the Bank
      may
      increase its annual loan growth by more than five percent (5%) of the preceding
      year’s total loans.

    

    ARTICLE
      IV

     

    ALLOWANCE
      FOR LOAN AND LEASE
      LOSSES

     

    (1) No
      later than October 31, 2008, the Board shall review the adequacy of the Bank’s
      Allowance for Loan and Lease Losses (“Allowance”) and shall establish a program
      for the maintenance of an appropriate Allowance.  This review and
      program shall be designed to meet Generally Accepted Accounting Principles
      and
      regulatory guidance set forth in FAS 5, FAS 114, OCC Bulletin 2001-37, OCC
      Bulletin 2006-47, and the “Allowance for Loan and Lease Losses” booklet of the
Comptroller’s Handbook,
      and shall focus particular attention on the following factors:

    
      	
              (a)  

            	
              suitable
                policies and procedures that communicate the Allowance process internally
                to all applicable personnel;

            

    

    
      	
              (b)  

            	
              clear
                explanations and documentation for the Allowance
                analysis;

            

    

    
      	
              (c)  

            	
              results
                of the Bank’s internal risk
                ratings;

            

    

    
      	
              (d)  

            	
              results
                of the Bank’s external loan review;

            

    

    
      	
              (e)  

            	
              an
                estimate of loss exposure on each impaired
                credit;

            

    

    
      	
              (f)  

            	
              loan
                loss experience;

            

    

    
      	
              (g)  

            	
              trends
                of delinquent and nonaccrual loans;

            

    

    
      	
              (h)  

            	
              concentrations
                of credit in the Bank; and

            

    

    
      	
              (i)  

            	
              present
                and prospective economic
                conditions.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (2) The
      program shall provide for a review of the Allowance by the Board at least once
      each calendar quarter.  Any deficiency identified in the Allowance
      shall be remedied prior to the filing of the Call Report for the quarter by
      additional provisions from earnings.  Written documentation shall be
      maintained indicating the factors considered and conclusions reached by the
      Board in determining the adequacy of the Allowance.

    

    ARTICLE
      V

     

    CONCENTRATIONS
      OF
      CREDIT

     

    (1) No
      later than September 30, 2008, the Board shall adopt, implement, and thereafter
      ensure Bank adherence to a written asset diversification program consistent
      with
      the “Concentrations of Credit” booklet of the Comptroller’s
      Handbook.  The program shall include, but not necessarily be
      limited to, the following:

    
      	
              (a)  

            	
              a
                review of current policies, processes and procedures to control and
                monitor concentrations of credit, with particular attention given
                to the
                impact of commitments;

            

    

    
      	
              (b)  

            	
              a
                review of the balance sheet to identify any additional concentrations
                of
                credit within those already identified, such as property types within
                commercial real estate mortgages or segmentation by geographic location
                or
                submarket;

            

    

    
      	
              (c)  

            	
              a
                written analysis of all concentrations of credit that fully assesses
                inherent credit, liquidity, and interest rate
                risk;

            

    

    
      	
              (d)  

            	
              establishment
                of safe and sound, formal risk limits for all concentrations of credit
                based on a percentage of capital;
                and

            

    

    
      	
              (e)  

            	
              an
                action plan approved by the Board to reduce the risk of any concentration
                of credit deemed imprudent in the above
                analysis.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (2) The
      Board shall ensure that future concentrations of credit are subjected to the
      analysis required by paragraph (1)(c), and the limits established by paragraph
      (1)(d), of this Article and that the analysis demonstrates that the
      concentration will not subject the Bank to undue credit, liquidity, or interest
      rate risk.

    (3) The
      Board shall forward a copy of the written asset diversification program,
      including any analyses of existing or potential concentrations of credit, and
      the establishment of formal limits for all concentrations of credit, to the
      Assistant Deputy Comptroller for prior determination of no supervisory
      objection.

    

    ARTICLE
      VI

     

    CREDIT
      UNDERWRITING

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (1) No
      later than September 30, 2008, the Board shall review, revise, and thereafter
      ensure Bank adherence to the Bank’s Loan Policy to include, at a minimum,
      revisions relating to:

    
      	
              (a)  

            	
              the
                establishment of underwriting standards for partial and non-recourse
                construction lending that conform to safe and sound banking practices
                and
                contain requirements that are more conservative than the Bank’s recourse
                guidelines, including at a minimum:

            

    

    
      	
              (i)  

            	
              higher
                debt service ratios;

            

    

    
      	
              (ii)  

            	
              lower
                loan-to-cost/loan-to-value ratios;

            

    

    
      	
              (iii)  

            	
              larger
                cash equity requirements; and

            

    

    
      	
              (iv)  

            	
              a
                financially capable sponsor(s) with incentive to support the
                debt.

            

    

    
      	
              (b)  

            	
              requiring
                complete financial analysis of the ability of principals and guarantors
                to
                support construction projects in the event that sales do not materialize
                as projected, both during the loan underwriting process and on an
                ongoing
                basis, including at a minimum:

            

    

    
      	
              (i)  

            	
              obtaining
                complete financial and income information from each borrower and
                guarantor
                on a loan; and

            

    

    
      	
              (ii)  

            	
              conducting
                a thorough analysis of the financial information, including contingent
                liabilities, in order to evaluate the global cash flow of each borrower
                and guarantor on a loan.

            

    

    
      	
              (c)  

            	
              conducting
                annual reviews of income properties to ensure that projects continue
                to
                provide debt service coverage, even where payment history is
                satisfactory.

            

    

    (2) The
      Board shall submit a copy of the Bank’s revised Loan Policy required by this
      Article to the Assistant Deputy Comptroller.

    (3) Quarterly
      thereafter, the Board shall submit a written assessment of the Bank’s progress
      in reaching compliance with the revised Loan Policy required by this Article
      to
      the Assistant Deputy Comptroller.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VII

     

    CREDIT
      RISK
      RATINGS

     

    (1) No
      later than September 30, 2008, the Board shall develop a program to ensure
      that
      the risks associated with the Bank’s loans and other assets are properly
      reflected and accounted for on the Bank’s books and records, and appropriately
      reported to the Board and management.  Such program shall include, at
      a minimum, provisions requiring that:

    
      	
              (a)  

            	
              the
                Bank’s loans and other assets are appropriately and timely risk rated
                by
                lending officers using a loan grading system that is based upon current
                facts, existing repayment terms and that is consistent with the guidelines
                set forth in the “Rating Credit Risk” booklet of the Comptroller’s
                Handbook;

            

    

    
      	
              (b)  

            	
              lending
                personnel are accountable for failing to appropriately and timely
                risk
                rate and/or place loans on nonaccrual;
                and

            

    

    
      	
              (c)  

            	
              the
                Bank’s Problem Loan Report is enhanced to provide specific reasons to
                support the loan grade, detailed action plans that include time frames
                and
                goals, and triggers for potential risk rating upgrades and
                downgrades.

            

    

    

    ARTICLE
      VIII

     

    LOAN
      REVIEW

     

    (1) No
      later than September 30, 2008, the Board shall establish an effective,
      independent and on-going loan review system to review, at least quarterly,
      the
      Bank's loan portfolio to assure the timely identification and categorization
      of
      problem credits.  The system shall provide for a written report to be
      filed with the Board after each review and shall use a loan grading system
      consistent with the guidelines set forth in the “Rating Credit Risk” and
“Allowance for Loan and Lease Losses” booklets of the Comptroller’s
      Handbook.  Such reports shall include, at a minimum,
      conclusions regarding:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (a)  

            	
              the
                overall quality of the loan
                portfolio;

            

    

    
      	
              (b)  

            	
              the
                identification, type, rating, and amount of problem
                loans;

            

    

    
      	
              (c)  

            	
              the
                identification and amount of delinquent
                loans;

            

    

    
      	
              (d)  

            	
              credit
                and collateral documentation
                exceptions;

            

    

    
      	
              (e)  

            	
              the
                identification and status of credit related violations of law, rule
                or
                regulation;

            

    

    
      	
              (f)  

            	
              the
                identity of the loan officer who originated each loan reported in
                accordance with subparagraphs (b) through (e) of the
                Article;

            

    

    
      	
              (g)  

            	
              concentrations
                of credit;

            

    

    
      	
              (h)  

            	
              loans
                and leases to executive officers, directors, principal shareholders
                (and
                their related interests) of the Bank;
                and

            

    

    
      	
              (i)  

            	
              loans
                not in conformance with the Bank's lending policies and exceptions
                to the
                Bank’s lending policies.

            

    

    (2) A
      written description of the program called for in this Article shall be forwarded
      to the Assistant Deputy Comptroller upon implementation.

    (3) The
      Board shall evaluate the loan review reports and shall ensure that immediate,
      adequate, and continuing remedial action, if appropriate, is taken upon all
      findings noted in the reports.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (4) A
      copy of the reports submitted to the Board, as well as documentation of the
      action taken by the Bank to collect or strengthen assets identified as problem
      credits, shall be preserved in the Bank.

    

    ARTICLE
      IX

     

    CRITICIZED
      ASSETS

     

    (1) The
      Bank shall take prompt and continuing action to protect its interest in those
      assets criticized by the Comptroller, by internal or external loan review,
      or in
      any list subsequently provided to management by the Comptroller during any
      review.

    (2) No
      later than September 30, 2008, the Board shall adopt, implement, and thereafter
      ensure Bank adherence to a written program designed to eliminate the basis
      of
      criticism of assets criticized by the Comptroller, or by any internal or
      external loan review, or in any list subsequently provided to management by
      the
      Comptroller during any review, as “doubtful,” “substandard,” or “special
      mention.”  This program shall include, at a minimum:

    
      	
              (a)  

            	
              an
                identification of the expected sources of
                repayment;

            

    

    
      	
              (b)  

            	
              the
                appraised value of supporting collateral and the position of the
                Bank's
                lien on such collateral where
                applicable;

            

    

    
      	
              (c)  

            	
              an
                analysis of current and satisfactory credit information, including
                cash
                flow analysis where loans are to be repaid from operations;
                and

            

    

    
      	
              (d)  

            	
              the
                proposed action to eliminate the basis of criticism and the time
                frame for
                its accomplishment.

            

    

    (3) The
      Board, or a designated committee, shall conduct a review, on at least a
      quarterly basis, to determine:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (a)  

            	
              the
                status of each criticized asset or criticized portion thereof that
                equals
                or exceeds five hundred thousand dollars
                ($500,000);

            

    

    
      	
              (b)  

            	
              management's
                adherence to the program adopted pursuant to this
                Article;

            

    

    
      	
              (c)  

            	
              the
                status and effectiveness of the written program;
                and

            

    

    
      	
              (d)  

            	
              the
                need to revise the program or take alternative
                action.

            

    

    (4) A
      copy of each review shall be forwarded to the Assistant Deputy
      Comptroller.

    (5) The
      Bank may extend credit, directly or indirectly, including renewals, extensions
      or capitalization of accrued interest, to a borrower whose loans or other
      extensions of credit are criticized by the Comptroller, in any internal or
      external loan review, or in any list subsequently provided to management by
      the
      Comptroller during any review, and whose aggregate loans or other extensions
      exceed five hundred thousand dollars ($500,000) only if each of the following
      conditions is met:

    
      	
              (a)  

            	
              the
                Board or designated committee finds that the extension of additional
                credit is necessary to promote the best interests of the Bank and
                that
                prior to renewing, extending or capitalizing any additional credit,
                a
                majority of the full Board (or designated committee) approves the
                credit
                extension and records, in writing, why such extension is necessary
                to
                promote the best interests of the Bank;
                and

            

    

    
      	
              (b)  

            	
              a
                comparison to the written program adopted pursuant to this Article
                shows
                that the Board's formal plan to collect or strengthen the criticized
                asset
                will not be compromised.

            

    

    (6) A
      copy of the approval of the Board or of the designated committee shall be
      maintained in the file of the affected borrower.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      X

     

    LIQUIDITY

     

    (1) The
      Board shall ensure that the Bank maintains liquidity at a level that is
      sufficient to sustain the Bank's current operations and to withstand any
      anticipated or extraordinary demand against its funding base.  Such
      actions may include, but are not necessarily limited to:

    (a)           
      selling assets;

    
      	
               

            	
              (b)

            	
              maintaining
                a line of credit at the Federal Home Loan Bank or the Federal Reserve
                Bank; 

            

    

    (c)           
      obtaining lines of credit from correspondent banks;

    (d)           
      recovering charged-off assets; and

    (e)           
      injecting additional equity capital.

    (2) The
      Board shall review the Bank's liquidity on a monthly basis.  Such
      reviews shall consider:

    
      	
              (a)  

            	
              a
                maturity schedule of certificates of deposit, including large uninsured
                deposits;

            

    

    
      	
              (b)  

            	
              the
                volatility of demand deposits, including escrow
                deposits;

            

    

    
      	
              (c)  

            	
              the
                amount and type of loan commitments
                outstanding;

            

    

    
      	
              (d)  

            	
              an
                analysis of the continuing availability and volatility of present
                funding
                sources;

            

    

    
      	
              (e)  

            	
              an
                analysis of the impact of cash flow from the Bank's loan portfolio
                resulting from delinquent and non-performing
                loans;

            

    

    
      	
              (f)  

            	
              an
                analysis of the impact of decreased cash flow from the sale of loans
                or
                loan participations; and

            

    

    
      	
              (g)  

            	
              the
                risk from brokered deposits.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (3) The
      Board shall take appropriate action to ensure adequate sources of liquidity
      in
      relation to the Bank's needs.  Monthly reports shall set forth
      liquidity requirements and sources and establish a contingency
      plan.  Copies of these reports shall be forwarded to the Assistant
      Deputy Comptroller.

    

    ARTICLE
      XI

     

    INFORMATION
      TECHNOLOGY

     

    (1) The
      Board shall promptly take all steps necessary to improve the management of
      the
      Bank’s Information Technology (“IT”) activities and to correct each deficiency
      cited by the Comptroller.

    (2) No
      later than October 31, 2008, the Board shall develop, implement, and thereafter
      adhere to a written, well-documented, risk-based, internal IT audit
      program.  At a minimum, the IT audit program shall be performed by an
      independent and qualified party, and shall include fundamental elements of
      a
      sound audit program as described in the “Audit” booklet of the FFIEC Information Technology
      Examination Handbook.

    (3) No
      later than October 31, 2008, the Board shall ensure adherence to a revised
      and
      comprehensive written information security program to ensure the safety and
      soundness of its operations and to support the Bank’s efforts to comply with 12
      C.F.R. Part 30, Appendix B, Safeguarding Customer Information.  The
      information security program shall include administrative, technical, and
      physical safeguards to protect the security, confidentiality, and integrity
      of
      customer information.  The information security program shall be
      consistent with the security process described in the “Information Security”
booklet of the FFIEC
      Information Technology Examination Handbook.  At a minimum, the
      revised information security program shall include:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (a)  

            	
              the
                identification of reasonably foreseeable internal and external threats
                that could result in unauthorized disclosure, misuse, alteration,
                or
                destruction of customer information or customer information
                systems;

            

    

    
      	
              (b)  

            	
              an
                assessment of the likelihood and potential damage of these threats,
                taking
                into consideration the sensitivity of customer
                information;

            

    

    
      	
              (c)  

            	
              a
                process to monitor and control the identified risks, commensurate
                with the
                sensitivity of the information as well as the complexity and scope
                of bank
                activities; and

            

    

    
      	
              (d)  

            	
              a
                test plan that provides for regular testing of key controls, systems
                and
                procedures of its information security program.  The frequency
                and nature of such tests shall be determined by the risk
                assessment.  Such tests shall be conducted or reviewed by
                independent third parties or staff independent of those who develop
                or
                maintain the information security
                program.

            

    

    (4) No
      later than October 31, 2008, the Board shall develop, implement, and thereafter
      adhere to, a written program to oversee and manage risks associated with
      outsourcing technology services to third party servicers, including technology
      service providers and vendors.  This third party management program
      shall be consistent with OCC Bulletin 2001-47, “Third Party Relationships,”
dated November 1, 2001, and OCC Advisory Letter 2000-12, “Risk Management of
      Outsourcing Technology Services” dated November 28, 2000.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (5) No
      later than October 31, 2008, the Board shall develop and implement a formal
      enterprise-wide business continuity process that complies with the requirements
      set forth in the “Business Continuity Planning” booklet of the FFIEC Information Technology
      Examination Handbook.  At a minimum, the business continuity
      process shall include:

    
      	
              (a)  

            	
              a
                business impact analysis that
                includes:

            

    

    
      	
              (i)  

            	
              the
                identification of the potential impact of uncontrolled, non-specific
                events on the institution’s business processes and its customers;
                and

            

    

    
      	
              (ii)  

            	
              an
                estimation of the maximum allowable downtime and acceptable levels
                of
                data, operations, and financial
                losses.

            

    

    
      	
              (b)  

            	
               a
                risk assessment process that
                includes:

            

    

    
      	
              (i)  

            	
              the
                prioritization of potential business disruptions based upon severity
                and
                likelihood of occurrence;

            

    

    
      	
              (ii)  

            	
              a
                gap analysis comparing the institution’s existing business resumption
                plans, if any, to what is necessary to achieve recovery time and
                point
                objectives; and

            

    

    
      	
              (iii)  

            	
              an
                analysis of threats based upon the impact on the institution, its
                customers, and the financial markets, not just the nature of the
                threat.

            

    

    
      	
              (c)  

            	
              a
                risk management process that includes the development of a written,
                enterprise-wide business continuity plan (BCP);
                and

            

    

    
      	
              (d)  

            	
              a
                risk monitoring process that
                includes:

            

    

    
      	
              (i)  

            	
              testing
                of the BCP on at least an annual
                basis;

            

    

    
      	
              (ii)  

            	
              independent
                audit and review of the BCP; and

            

    

    
      	
              (iii)  

            	
              updating
                the BCP based upon changes to personnel and the internal and external
                environments.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (6) The
      Board shall provide a quarterly written progress report on each of the
      requirements of this Article to the Assistant Deputy Comptroller.

    

    ARTICLE
      XII

     

    CLOSING

     

    (1) Although
      the Board is by this Order required to submit certain proposed actions and
      programs for the review or prior written determination of no supervisory
      objection of the Assistant Deputy Comptroller, the Board has the ultimate
      responsibility for proper and sound management of the Bank.

    (2) It
      is expressly and clearly understood that if, at any time, the Comptroller deems
      it appropriate in fulfilling the responsibilities placed upon it by the several
      laws of the United States of America to undertake any action affecting the
      Bank,
      nothing in this Order shall in any way inhibit, estop, bar or otherwise prevent
      the Comptroller from so doing.

    (3) Any
      time limitations imposed by this Order shall begin to run from the effective
      date of this Order.  Such time limitations may be extended in writing
      by the Assistant Deputy Comptroller for good cause upon written application
      by
      the Board.

    (4) The
      provisions of this Order are effective upon issuance of this Order by the
      Comptroller, through its authorized representative whose hand appears below,
      and
      shall remain effective and enforceable, except to the extent that, and until
      such time as, any provisions of this Order shall have been amended, suspended,
      waived, or terminated in writing by the Comptroller.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (5) This
      Order is intended to be, and shall be construed to be, a final order issued
      pursuant to 12 U.S.C. § 1818(b), and expressly does not form, and may not
      be construed to form, a contract binding on the Comptroller or the United
      States.

    (6) The
      terms of this Order, including this paragraph, are not subject to amendment
      or
      modification by any extraneous expression, prior agreements or prior
      arrangements between the parties, whether oral or written.

    (7) The
      Bank is a wholly-owned subsidiary of Vineyard National Bancorp.  The
      Annual Meeting of Shareholders of Vineyard National Bancorp to be held on August
      5, 2008, may result in a change of the directors of the Bank who shall be
      obligated to comply with this Order.

    

    IT
      IS SO ORDERED, this 22nd
day
      of July,
      2008.

    

    

    /s/
      Steven J. Vander Wal

    
      	
              Steven
                J. Vander Wal

              Assistant
                Deputy Comptroller

              Western
                Districtexhibit10-2.htm

    Exhibit 10.2

    
      

    

    UNITED
      STATES OF AMERICA

    DEPARTMENT
      OF THE TREASURY

    COMPTROLLER
      OF THE CURRENCY

    

    

    
      	
              In
                the Matter of:

              Vineyard
                Bank, N.A.

              Corona,
                California

            	
              )

              )

              )

            	 

    

    

    STIPULATION
      AND CONSENT TO THE ISSUANCE

    OF
      A CONSENT ORDER

    

    The
      Comptroller of the Currency of the United States of America (“Comptroller”)
      intends to initiate cease and desist proceedings against Vineyard Bank, N.A.,
      Corona, California (“Bank”) pursuant to 12 U.S.C. § 1818(b) for unsafe
      and unsound banking practices.

    The
      Bank, in the interest of compliance and cooperation, consents to the issuance
      of
      a Consent Order, dated July 22, 2008 (“Order”);

    In
      consideration of the above premises, the Comptroller, through its authorized
      representative, and the Bank, through its duly elected and acting Board of
      Directors, hereby stipulate and agree to the following:

    

    Article
      I

     

    Jurisdiction

     

    (1) The
      Bank is a national banking association chartered and examined by the Comptroller
      pursuant to the National Bank Act of 1864, as amended, 12 U.S.C. § 1
etseq.

    (2) The
      Comptroller is “the appropriate Federal banking agency” regarding the Bank
      pursuant to 12 U.S.C. §§ 1813(q) and 1818(b).

    (3) The
      Bank is an “insured depository institution” within the meaning of 12 U.S.C.
§ 1818(b)(1).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (4) This
      Order shall cause the Bank not to be designated as an “eligible bank” for
      purposes of 12 C.F.R. § 5.3(g), unless otherwise informed in writing
      by the Comptroller.

    

    Article
      II

     

    Agreement

     

    (1) The
      Bank, without admitting or denying any wrongdoing, hereby consents and agrees
      to
      the issuance of the Order by the Comptroller.

    (2) The
      Bank further agrees that said Order shall be deemed an “order issued with the
      consent of the depository institution” as defined in 12 U.S.C.
§ 1818(h)(2), and consents and agrees that said Order shall become
      effective upon its issuance and shall be fully enforceable by the Comptroller
      under the provisions of 12 U.S.C.
§ 1818(i).  Notwithstanding the absence of mutuality of
      obligation, or of consideration, or of a contract, the Comptroller may enforce
      any of the commitments or obligations herein undertaken by the Bank under its
      supervisory powers, including 12 U.S.C. § 1818(i), and not as a matter of
      contract law.  The Bank expressly acknowledges that neither the Bank
      nor the Comptroller has any intention to enter into a contract.

    (3) The
      Bank also expressly acknowledges that no officer or employee of the Comptroller
      has statutory or other authority to bind the United States, the U.S. Treasury
      Department, the Comptroller, or any other federal bank regulatory agency or
      entity, or any officer or employee of any of those entities to a contract
      affecting the Comptroller’s exercise of his supervisory
      responsibilities.

    (4) The
      Bank is a wholly-owned subsidiary of Vineyard National Bancorp.  The
      Annual Meeting of the Shareholders of Vineyard National Bancorp to be held
      on
      August 5, 2008, may result in a change of the directors of the Bank who shall
      be
      obligated to comply with this Order.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article
      III

     

    Waivers

     

    (1) The
      Bank, by signing this Stipulation and Consent, hereby waives:

    (a) the
      issuance of a Notice of Charges pursuant to 12 U.S.C.
§ 1818(b);

    (b) any
      and all procedural rights available in connection with the issuance
      of

    the
      Order;

    (c) all
      rights to a hearing and a final agency decision pursuant to 12
      U.S.C.

    § 1818(i),
      12 C.F.R. Part 19

    (d) all
      rights to seek any type of administrative or judicial review of the

    Order;
      and

    (e) any
      and all rights to challenge or contest the validity of the Order.

    

    Article
      IV

     

    Other
      Action

     

    (1) The
      Bank agrees that the provisions of this Stipulation and Consent shall not
      inhibit, estop, bar, or otherwise prevent the Comptroller from taking any other
      action affecting the Bank if, at any time, it deems it appropriate to do so
      to
      fulfill the responsibilities placed upon it by the several laws of the United
      States of America.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN
      TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller as its
      representative, has hereunto set his hand on behalf of the
      Comptroller.  

    

                                                                       

    
      	 /s/
              Steven J. Vander Wal 	 	 July
              22, 2008
	
              Steven
                J. Vander Wal

              Assistant
                Deputy Comptroller

              Western
                District

            	 	
              Date

            

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN
      TESTIMONY WHEREOF, the undersigned, as the duly elected and acting Board of
      Directors of the Bank, have hereunto set their hands on behalf of the
      Bank.

    

    

                                                                          

    
      	 /s/
              Frank S.
              Alvarez	 	 July
              22, 2008
	
              Frank
                S. Alvarez

               

              /s/
                David
                Buxbaum

            	 	
              Date

               

              July
                22, 2008 

            
	
              David
                Buxbaum

               

              /s/
                Charles L.
                Keagle

            	 	
              Date

               

              July
                22, 2008

            
	
              Charles
                L. Keagle

               

              /s/
                James G.
                LeSieur

            	 	
              Date

               

              July
                22, 2008

            
	
              James
                G. LeSieur

               

              /s/
                Robb
                Quincey

            	 	
              Date

               

              July
                22, 2008

            
	
              Robb
                Quincey

               

              /s/
                Joel H.
                Ravitz

            	 	
              Date

               

              July
                22, 2008

            

    

    Joel
      H.
      Ravitz                                                                                                                                          Date

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