Loss-battered Vineyard Bancorp's future uncertain

Vineyard National Bancorp of Corona said Monday that housing-related losses and depositors' withdrawal of funds have cast doubt on its future unless it can raise substantial amounts of new capital.

A major community bank with $1.8 billion in loans and $1.9 billion in deposits, Vineyard had specialized in financing home builders and issuing high-yielding certificates of deposit. Like specialists in risky mortgages, it has been hammered by losses resulting from the housing debacle, a fact that has spurred CD holders to act.

"Negative publicity relating to our financial results and the financial results of other financial institutions, together with the seizure of IndyMac Bank by federal regulators in July 2008, has caused a significant amount of customer deposit withdrawals," Vineyard said in its quarterly report to the Securities and Exchange Commission.

The result, the company said, is "affecting our liquidity and our ability to meet our obligations as they have come due." It said "significant additional sources" of funds are needed to "continue operations through 2008 and beyond."

The company would not offer assurances that its efforts would succeed, noting that regulators are "continually monitoring our liquidity and capital adequacy" and could take other action, including seizing the bank.

Vineyard lost $81.2 million during the first half of this year, compared with a profit of $11.5 million during the same period last year. As The Times reported last week, regulators have classified Vineyard and its operating subsidiary, Vineyard Bank, as troubled and have imposed a series of restrictions on its operations.

Those restrictions bar the company from accepting additional brokered deposits, the high-interest "hot money" brought in by third parties. During the second quarter, Vineyard obtained $266.3 million in brokered deposits to offset $226.9 million in savings and money market deposits that were cashed out.

scott.reckard@latimes.com