Calif. Bank Needs Capital (Update)

Vineyard also discussed a secured credit with another bank, totaling $48.3 million as of June 30. While the lender modified the credit line several times and extended the due date, the loan might be called in on Aug. 29. Of course, because this is a secured credit, the bank might be able to pledge the collateral to another lender for additional liquidity.

Finally, under an agreement with the FHLB, the bank has pledged over $400 million in loans to collateralize possible advances from the Federal Reserve Bank of San Francisco, but the amount of borrowing potential on the pledged collateral had not been determined, and the FRB Discount Window was under no obligation to lend on the collateral.

Capital

The holding company announced in May a "strategic initiative" to raise additional capital. These efforts have been unsuccessful so far.

While the bank's capital ratios were much higher according to the preliminary call report, the holding company's capital ratios did not meet the minimum ratios that were set under the consent order. These included a leverage ratio of at least 4% and a risk-based capital ratio of at least 8%. For the holding company, these ratios were 1.2% and 2.5% as of June 30.

Director's Stock Sale

Prior to the holding company's Aug. 5 annual meeting, Vineyard National Bancorp nominated seven directors to be elected or re-elected to the board. Two of the holding company's shareholders, Norman A. Morales and Jon Salmanson, nominated an alternate slate of seven directors. One of the seven alternate nominees was Mr. Morales, who had resigned as a director on Jan. 23 when, according to the 10-Q filing, "his employment as President and Chief Executive Officer of VNB and the Bank was terminated."

Since he was unable to gain regulatory approval to rejoin the board and resume his previous post as president of the holding company, "Mr. Morales withdrew his application," according to the 10-Q. Even though another one of the seven shareholder-proposed nominees withdrew, the holding company announced yesterday that the remaining five nominees on the alternate slate were all elected to the board. Only two of the company's nominees were re-elected.

One of these was Charles L. Keagle, who sold 33,000 shares on Monday, Aug. 11 at prices ranging from $1.90 to $2.05 per share, before the company announced its 10-Q filing.

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