Vestin Realty Mortgage I, Inc. Reports Third Quarter Financial Results

LAS VEGAS--(BUSINESS WIRE)--Vestin Realty Mortgage I, Inc. (Nasdaq: VRTA) reported on November 10, 2008 a net loss for the third quarter ended September 30, 2008 of approximately $6.4 million, or ($0.93) per share, on revenues of $0.4 million, compared with net income of $105,000 or $0.02 per share on revenues of $1.0 million in the comparable period in 2007.

For the nine months ended September 30, 2008, the Company reported a net loss of approximately $11.8 million or ($1.71) per share compared with net income of approximately $1.9 million, or $0.27 per share for the same period in 2007.

The Company noted that the losses for both the quarter and the nine months ended September 30, 2008 were in large part due to non-performing loans, and the Company’s recording of loan loss provisions of approximately $2.0 million and $5.6 million, respectively. In addition, the Company incurred write downs for real estate held for sale of approximately $2.0 million and $5.4 million, respectively, for the quarter and nine months ended September 30, 2008, respectively. Such loan loss provision and write downs for real estate held for sale are non-cash items.

As of September 30, 2008, the Company had 28 loans outstanding with an aggregate principal amount approximating $42.3 million, of which 14 loans with an aggregate principal amount approximating $30.7 million were considered non-performing. Loans are considered non-performing when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement or when the payment of interest is 90 days past due. Non-performing loans increased from June 30, 2008 when the Company reported 12 loans representing approximately $25.1 million as non-performing loans. The Company has commenced foreclosure proceedings with respect to the 14 non-performing loans. In addition, the Company is conducting workout discussions with certain non-performing borrowers, however, no assurance can be made as to whether these discussions will be successful. As of September 30, 2008, we owned seven properties that we acquired through foreclosure, compared with one property owned as of September 30, 2007.

As of September 30, 2008 shareholder equity was $7.01 per common share. The Company had on its balance sheet approximately $9.0 million of cash, $32.1 million of investment in real estate loans, net of allowance of $10.1 million, $6.0 million in real estate held for sale and $468,000 in total liabilities as of September 30, 2008. Net cash flow from operating activities was approximately $2.1 million.

Michael V. Shustek, Chairman and Chief Executive Officer, said, “Our disappointing results are largely attributable to the economic environment the country is experiencing. The severe downturn in the real estate market and the increased difficulties faced by our borrowers in obtaining take-out financing as a result of the disruptions in the credit markets, has caused a number of our loans to become non-performing or delinquent and has caused a decline in the appraised value of the collateral securing the Company’s loan portfolio. We are working aggressively to resolve our problem loans; however, this process will take time and our near term operating results are likely to suffer from the level of non-performing assets.”

About Vestin Realty Mortgage I, Inc.

Vestin Realty Mortgage I, Inc. is a real estate investment trust (“REIT”) that invests in commercial real estate loans. As of September 30, 2008, Vestin Realty Mortgage I, Inc. had assets of approximately $48.7 million. Vestin Realty Mortgage I, Inc. is managed by Vestin Mortgage, Inc., which is a subsidiary of Vestin Group, Inc., which is engaged in asset management, real estate lending and other financial services through its subsidiaries. Since 1995, Vestin Mortgage Inc. has facilitated more than $2.0 billion in lending transactions.

Forward-Looking Statements

Certain information discussed in this press release may constitute forward-looking statements within the Private Securities Litigation Reform Act of 1995 and the federal securities laws. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, it can give no assurance that its expectations will be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements are inherently subject to unpredictable and unanticipated risks, trends and uncertainties, such as the Company’s potential inability to accurately forecast its operating results; the Company’s potential inability to regain profitability or continue to generate positive cash flow from operations; constraints in the credit markets, the availability of take-out financing for our borrowers; defaults on outstanding loans; unexpected difficulties encountered in pursuing our remedies if a loan is in default; a decline in the value of collateral securing our loans, declining real estate values in the markets we serve and other risks associated with the Company’s business. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

VESTIN REALTY MORTGAGE I, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
			September 30, 2008			December 31, 2007
			(Unaudited)
Assets
Cash		$	9,013,000		$	6,556,000
Investment in marketable securities - related party			876,000			2,195,000
Interest and other receivables			539,000			1,019,000
Notes receivable, net of allowance of $605,000 at September 30, 2008 and $684,000 at December 31, 2007			--			--
Real estate held for sale			5,979,000			3,505,000
Investment in real estate loans, net of allowance for loan losses of $10,120,000 at September 30, 2008 and $6,014,000 at December 31, 2007			32,147,000			47,716,000
Due from related parties			--			121,000
Other assets			125,000			99,000
Total assets		$	48,679,000		$	61,211,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities		$	336,000		$	581,000
Due to related parties			56,000			--
Notes payable			76,000			--
Dividend payable			--			412,000
Total liabilities			468,000			993,000
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued			--			--
Common stock, $0.0001 par value; 25,000,000 shares authorized; 6,875,066 share issued and outstanding at September 30, 2008 and 6,873,416 shares issued and outstanding at December 31, 2007			1,000			1,000
Additional paid in capital			62,262,000			62,255,000
Accumulated deficit			(14,052,000)			(1,176,000)
Accumulated other comprehensive loss			--			(862,000)
Total stockholders' equity			48,211,000			60,218,000
Total liabilities and stockholders' equity		$	48,679,000		$	61,211,000

VESTIN REALTY MORTGAGE I, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
			For The Three Months Ended						For The Nine Months Ended
			9/30/2008			9/30/2007			9/30/2008			9/30/2007
Revenues
Interest income from investment in real estate loans		$	394,000		$	984,000		$	2,350,000		$	3,315,000
Recovery of allowance for doubtful notes receivable			41,000			23,000			43,000			281,000
Other income			1,000			13,000			405,000			186,000
Total revenues			436,000			1,020,000			2,798,000			3,782,000
Operating expenses
Management fees - related party			69,000			69,000			207,000			207,000
Provision for loan loss			2,014,000			183,000			5,644,000			183,000
Interest expense			2,000			2,000			3,000			15,000
Professional fees			332,000			431,000			623,000			775,000
Professional fees - related party			7,000			7,000			33,000			26,000
Provision for doubtful accounts related to receivable			--			86,000			--			86,000
Other			137,000			115,000			385,000			367,000
Total operating expenses			2,561,000			893,000			6,895,000			1,659,000
Income (loss) from operations			(2,125,000)			127,000			(4,097,000)			2,123,000
Non-operating income (loss)
Dividend income - related party			--			90,000			110,000			195,000
Interest income from banking institutions			35,000			55,000			85,000			94,000
Impairment of marketable securities - related party			(2,181,000)			--			(2,181,000)			--
Total other non-operating income (loss)			(2,146,000)			145,000			(1,986,000)			289,000
Income from real estate held for sale
Net loss on sale of real estate held for sale			(97,000)			--			(97,000)			--
Expenses related to real estate held for sale			(38,000)			(154,000)			(155,000)			(369,000)
Write down on real estate held for sale			(2,020,000)			(13,000)			(5,427,000)			(162,000)
Total loss from real estate held for sale			(2,155,000)			(167,000)			(5,679,000)			(531,000)
Income before provision for income taxes			(6,426,000)			105,000			(11,762,000)			1,881,000
Provision for income taxes			--			--			--			--
NET INCOME (LOSS)		$	(6,426,000)		$	105,000		$	(11,762,000)		$	1,881,000
Basic and diluted earnings per weighted average common share		$	(0.93)		$	0.02		$	(1.71)		$	0.27
Dividends declared per common share		$	--		$	0.14		$	0.16		$	0.43
Weighted average common shares			6,875,066			6,872,140			6,874,524			6,871,260