Vineyard bank in jeopardy
Vineyard National Bancorp said Monday that housing-related losses and depositors’ withdrawals have cast doubt on its future and it must raise substantial amounts of new capital to continue operations through this year.
A major community bank with $1.8 billion in loans and $1.9 billion in deposits, the Corona company 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 depositors 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 imposed 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 deposits that were cashed out.