Now that a group of dissidents has won control of Vineyard National Bancorp's board, the question on Wall Street's mind is whether the dissidents can raise additional capital where the previous board could not.

Late Thursday the $2.4 billion-asset Corona, Calif., company and Jon Salmanson, an investor working with the dissidents, jointly announced that shareholders voted at the annual meeting Tuesday to elect five directors from an alternative slate.

Glen Terry, one of the new directors, said in an interview Friday that the dissidents believe they can persuade investors to ante up more capital, even though the previous board tried and failed to do so in June.

"The biggest difference is the change in leadership and change in direction," Mr. Terry said.

The previous board's strategy was much too conservative, he said, and the new board will pursue more loan growth, though in a very measured way. "We've got a new board with new energies, new direction, and the experience to lead the bank, and I think that story will translate into an attractive story for potential investors."

Though the new board is "very confident" in its ability to raise capital, it will consider "all options," including selling Vineyard, Mr. Terry said. It has lost about $120 million in the last three quarters, mostly on bad loans to residential developers, though he said he does not believe Vineyard Bank is at risk of failing.

"We have a substantial amount of liquidity, our employees are very focused, and our customers have been very supportive," so failure is not "an imminent possibility," according to Mr. Terry, a longtime California banker who is currently the chief executive officer of the $97 million-asset Tri-Valley Bank in Sam Ramon.

Friedman, Billings, Ramsey & Co. Inc., which had been working with the previous board, will continue to help Vineyard raise capital. The dissidents also have hired Sandler O'Neill & Partners LP and Howe Barnes Hoefer & Arnett Inc. for the capital-raising effort

Raising capital is paramount for Vineyard, which regulators have deemed "troubled." Its capital ratios fell again after the company reported last week that it lost $62.5 million in the second quarter. It recorded a $20.3 million provision for its deferred tax asset and a $40.5 million provision for losses on residential construction loans.

At June 30, Vineyard Bank's Tier 1 capital ratio was 8.76%, and its leverage capital ratio was 8.28%. The holding company's Tier 1 capital ratio was 1.52%, and its leverage capital ratio was 1.43%.

But the company said in its earnings report that on balance, Vineyard Bank is considered "adequately capitalized," according to the terms of the consent order the Office of the Comptroller of the Currency put on the bank July 28.

Unable to raise capital through investors, Vineyard National boosted its liquidity July 24 with $126 million of Federal Home Loan bank advances.

On Aug. 1 the company entered an agreement with both the Federal Home Loan Bank and Federal Reserve Bank of San Francisco that enables Vineyard to borrow additional money from the Fed's discount window.

Aaron J. Deer, an analyst in San Francisco for Sandler O'Neill, said in an interview Friday that if Vineyard's new board can demonstrate to potential investors that the company is continuing to reduce its risk profile — by further shrinking its single-family tract home construction loan portfolio and implementing tighter underwriting standards — investors may be more willing to provide it with capital.

The dissident director slate was proposed by Norman Morales, who resigned as Vineyard's CEO in January, a week before the company reported a $41 million loss for the fourth quarter.

Mr. Morales began waging his fight to gain control of the board in February, but he withdrew his name from the slate last week after failing to obtain regulatory approval to be reinstated as a Vineyard director and its president and CEO.

The results of the election are preliminary and will become official when certified by an independent election inspector.

Douglas Kratz, one of the new directors, is also the chairman and CEO of the $1 billion-asset Opportunity Bancshares Inc. in Bettendorf, Iowa, which owns banks in Iowa and Texas.

Vineyard's shareholders also re-elected two directors who were on the management's slate, but not James Le Sieur, the company's chairman and interim CEO since Mr. Morales' departure.

The company said Mr. Le Sieur would continue to serve as the interim CEO until a successor is named.

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