A Stern Glance

LAS VEGAS–(BUSINESS WIRE)–Vestin Realty Mortgage II, Inc. (Nasdaq: VRTB – News) reported a net loss for the third quarter ended September 30, 2009 of approximately $17.4 million, or ($1.27) per share, on revenues of approximately $1.3 million, compared with a net loss of approximately $40.1 million or ($2.72) per share on revenues of approximately $3.7 million in the comparable period in 2008. In addition, VRTB reported a net loss for the nine months ended September 30, 2009 of approximately $38.4 million, or ($2.78) per share, on revenues of approximately $5.8 million, compared with a net loss of approximately $65.5 million or ($4.41) per share on revenues of approximately $16.8 million in the comparable period in 2008. The Company’s operating results for the 2009 periods were impacted by the recognition of a gain on the repurchase at a discount of certain outstanding debt securities as discussed below. The Company recognized a gain in this regard of approximately $17.6 million and $27.2 million, respectively, for the three and nine months ended September 30, 2009.

The Company noted that the losses for the three and nine months ended September 30, 2009, were in significant part due to the level of non-performing loans and the increase in properties acquired through foreclosure. As of September 30, 2009, the Company had 28 loans outstanding with an aggregate principal amount approximating $143.0 million, of which 11 loans with an aggregate principal amount approximating $79.5 million were considered non-performing. As of September 30, 2008, the Company had 38 loans outstanding with an aggregate principal amount approximating $233.1 million, of which 18 loans with an aggregate principal amount approximating $144.9 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. In addition, as of September 30, 2009, the Company owned 16 properties, with a book value of approximately $21.0 million that we acquired through foreclosure, compared with 11 properties owned with a book value of approximately $42.0 million, as of September 30, 2008.

The Company recorded loan loss provisions and write downs on real estate held for sale of approximately $36.3 million and $19.5 million, respectively, during the nine months ended September 30, 2009. In addition, the Company incurred professional fees of approximately $5.9 million, primarily due to the legal fees relating to the legal actions that have been filed against us in connection with the REIT conversion. The loan loss provisions and write downs on real estate held for sale are non-cash items. Net cash flow used in operating activities was approximately $4.5 million.

As of September 30, 2009, there were no Junior Subordinated Notes outstanding. All of the Junior Subordinated Notes were acquired by us in exchange for replacement securities that we had purchased in the open market. Pursuant to the terms agreed with the representative of the Noteholders, we acquired $1.00 face amount of Junior Subordinated Notes in exchange for $0.50 of replacement securities. During the nine months ended September 30, 2009, we recognized a gain of approximately $27.2 million from such exchange.

As of September 30, 2009, shareholder equity was $6.72 per common share. The Company had on its balance sheet $1.0 million of cash, $77.6 million of investment in real estate loans, net of allowance of $65.4 million, $21.0 million in real estate held for sale and $18.5 million in total liabilities as of September 30, 2009.

About Vestin Realty Mortgage II, Inc.

Vestin Realty Mortgage II, Inc. is a real estate investment trust (“REIT”) that invests in commercial real estate loans. As of September 30, 2009, Vestin Realty Mortgage II, Inc. had assets of approximately $110.7 million. Vestin Realty Mortgage II, 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.

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