Aug. 14--Vineyard National Bancorp's (Nasdaq: VNBC) newly elected board of directors is moving to return the bank to prominence, but faces a long road.

The board election was official following the completion of an independent tabulation by IVS Associates in Wilmington, Del., and the new board is now focused on identifying a permanent chief executive officer and chief credit officer.

As part of the consent order the bank signed with the Office of the Comptroller of the Currency, the bank has until Oct 31 to fill both positions.

The chief executive officer search may begin as early as next week while the chief credit officer search may be nearing completion, bank officials said.

"We haven't taken any steps on the CEO front yet," said Glenn Terry, vice chairman of the board. "But we're having discussions with an individual for the CCO position, a decision we hope to have this week."

The identity of the prospective chief credit officer was not disclosed.

The board has not ruled out using a search firm to aid in the search for a new chief executive officer.

"We're doing this search very aggressively with all due urgency," Terry said.

The bank holding company saw its share price fall 45%, to $1.08 the lowest point in almost eight years, on Aug. 12.

"The holding company's capital has been diminished by the loan loss that the bank has taken over the last several quarters," Terry said. "We are actively engaged in a process to raise a substantial amount of new capital, which will go into the holding company."

The bank is close to a final agreement to retain investment firms Friedman, Billings, Ramsey & Co. and Howe Barnes Hoefer & Arnett Inc., Terry said.

"The firms have indicated to us they can successfully raise the amount of capital we're looking for," he said.

Bank officials attributed the decline to the withdrawal of significant deposits, according to regulatory filings.

"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, has caused a significant amount of customer deposit withdrawals, thus affecting our liquidity," the bank said in its quarterly filing with the Securities and Exchange Commission.

The bank notified the Federal Reserve Bank of its election to terminate its financial holding company status on July 22.

There has not been a shareholder vote on the issue, but spokesman Jim Lucas said it's in the process.

The election would not result in an immediate termination of the holding company but instead would be in favor of or against the process.

If shareholders did ultimately elect to drop the holding company, the bank would continue its current banking operations, but would be unable to engage in businesses such as insurance, financial advisory services and other activities deemed to be financial in nature.

Vineyard officials do not feel it will have an adverse effect on current operations as the bank does not engage in activities that require it to be registered as a financial holding company.

In spite of the steep drop, the bank remains liquid, officials said.

"We have sufficient liquidity and capital," said Louie Couto, chief risk officer for Vineyard. "We have $300 million in cash and investment securities."

Vineyard National Bank has $186 million in capital, while its parent company is down to $29 million, according to Securities and Exchange Commission filings.

"Another form is unused borrowing capacity," Couto said. "In addition to the liquid assets we have, we also have borrowing capacity that we could tap if needed."

"We have not had to tap that as of yet; there's all sorts of liquidity," he said. "It's a dynamic environment."

Vineyard has remained steady in terms of deposits.

"Deposits have been fairly even," Couto said. "We've actually had a steady in and out flow."

The chief executive officer position became speculative after former president and chief executive officer Norman Morales' withdrew his name from the dissident slate he proposed.

Morales was unable to gain approval from federal regulators to serve on the bank's board.

Interim chief executive officer James LeSieur agreed to remain with the bank until a new chief executive officer is hired.

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