EXHIBIT 99.1
PASO ROBLES, Calif., Jan. 24, 2013 (GLOBE NEWSWIRE) -- Heritage Oaks Bancorp (the "Company") (Nasdaq:HEOP), a community bank holding company and parent of Heritage Oaks Bank (the "Bank"), reported net income of $3.1 million for the three months ended December 31, 2012, compared with $4.1 million for the same period a year earlier. The decline in net income is largely attributable to the reversal of a portion of our deferred tax asset valuation allowance in the fourth quarter of 2011, whereas, the fourth quarter 2012 reflected a fully normalized tax provision. Income before taxes was a record $4.8 million for the three months ended December 31, 2012, a $0.6 million or 15.0% increase, compared with $4.2 million for the same period a year ago. Net income for the twelve months ended December 31, 2012 increased $5.3 million or 68.8% to a record $13.0 million compared with $7.7 million for the year ended December 31, 2011.
Highlights
"We are very pleased with our achievements in the fourth quarter and for all of 2012," said Simone Lagomarsino, President and Chief Executive Officer of Heritage Oaks Bancorp. "We achieved record earnings for 2012, even as we made significant investments in our operations including the hiring of commercial, agri-business, and mortgage loan officers; the opening of a new loan production office in Oxnard; and the completion of the acquisition of the Morro Bay branch in December. In addition, we have made strides in improving our overall credit exposure as reflected in the improvement in the ratio of classified assets to Tier I capital plus ALLL. Today, we are operating from a position of strength and stability, which allows us to focus on our customers and to build new relationships throughout our markets."
Net Income Available to Common Shareholders
Net income available to common shareholders was $2.8 million, or $0.10 per diluted common share, for the three months ended December 31, 2012, compared with $3.9 million, or $0.15 per diluted common share, for the same three months ended a year earlier. Net income available to common shareholders for the year ended December 31, 2012 was $11.6 million, or $0.44 per diluted common share, compared with $6.4 million, or $0.24 per diluted common share for the year ended December 31, 2011. The key components of the change in net income available to common shareholders for the three and twelve month periods are discussed below.
Net Interest Income
Net interest income was $10.8 million, or 4.35% of average interest earning assets, for the three months ended December 31, 2012 compared with $10.9 million, or 4.67% of average earning assets, for the same comparable period a year earlier. For the twelve months ended December 31, 2012, net interest income was $42.5 million, or 4.46% of average interest earning assets, compared with $43.2 million, or 4.71% of average interest earning assets, for the same period a year ago. The decline in net interest margin reflects the continuing trend of margin compression that has taken place throughout 2012, as a result of the historically low interest rate environment.
We continue to anticipate net interest margin pressure due to the very low interest rate environment, a competitive environment for quality loan relationships, increased refinancing activity of existing loans at lower rates, and a change in the mix of our loan portfolio. We are working to mitigate the impact of the pressure on our net interest margin over the short term through efforts to grow the loan portfolio rather than investing in lower yielding investment securities, through reductions in non-accrual loan balances, and through modest reductions in the cost of deposits and borrowings.
Provision for Loan Losses
We recorded no provision for loan losses for the three months ended December 31, 2012 compared with $0.7 million for the same period a year earlier. The lack of a provision in the fourth quarter of 2012 was largely driven by recoveries in the fourth quarter exceeding charge-offs along with continued improvements in the credit quality of the loan portfolio. For the twelve months ended December 31, 2012, we recorded $7.7 million of provision for loan losses compared with $6.1 million for the same period a year ago. The increase in provision for loan losses in 2012 was largely driven by increased specific reserve requirements for a few large loans placed on non-accrual status in the first half of 2012 and to a lesser degree an increase in the overall loan portfolio, offset by improved historical net charge-offs. Net charge-offs declined $2.8 million, or 24% to $8.9 million for the twelve months ended December 31, 2012 compared with $11.7 million for the same period a year earlier. Net charge-offs as a percent of average loans declined to 1.32% for the twelve months ended December 31, 2012, compared with 1.75% for the same period a year earlier. The 2012 ratio of net charge-offs to average loans is the lowest annual level the Company has reported since 2008.
Non-Interest Income
Non-interest income was $3.5 million for the three months ended December 31, 2012, a $0.3 million or 10% increase, compared with $3.2 million for the same period a year earlier. For the twelve months ended December 31, 2012, non-interest income was $12.5 million, a $2.8 million or 29% increase, compared with $9.7 million for the same period a year ago. The increase in non-interest income was primarily the result of higher gain on sale of mortgage loans, investment securities, and Other Real Estate Owned ("OREO").
Non-Interest Expense
Non-interest expense was $9.5 million for the three months ended December 31, 2012 compared with $9.2 million for the same period a year earlier. For the twelve months ended December 31, 2012, non-interest expense was $36.1 million compared with $37.3 million for the same period a year earlier. Non-interest expense has been impacted by an increase in loss provisions for mortgage repurchases for mortgages sold in 2007; an increase in salaries and employee benefits due to higher commissions resulting from higher mortgage loan originations; and the re-establishment of a management incentive compensation plan in 2012. The Company's operating efficiency ratio slightly improved to 67.9% for the twelve months ended December 31, 2012 compared with 68.0% for the same period a year ago. The Company's operating efficiency ratio for 2012 was negatively impacted by one-time expense items, as well as net interest margin compression.
Income Taxes
The provision for income taxes was $1.7 million for the three months ended December 31, 2012 compared with $0.1 million for the same period a year earlier, which prior period included a $1.5 million partial reversal of our deferred tax valuation allowance. For the twelve months ended December 31, 2012, the Company recorded a benefit from income taxes of $1.8 million, which included a reversal of the remaining $5.6 million of deferred tax asset valuation allowance. The tax benefit in 2012 compared with a provision for income taxes of $1.8 million for the same period a year ago, which included the previously mentioned $1.5 million partial valuation allowance reversal. As the earnings outlook improved in late 2011 and into 2012, the Company reversed the valuation allowance based upon our change in expectation of future profitability and therefore our assessment of our ability to fully realize the deferred tax asset. Excluding the impact of the valuation allowance reversals in 2012, the Company's effective tax rate for all of 2012 was 33.9% compared with 34.8% for the same period a year ago.
Balance Sheet
Total assets increased $110.4 million, or 11.2%, to $1.1 billion at December 31, 2012 compared with $987.1 million at December 31, 2011. The increase in total assets was primarily the result of growth in total loans and investment securities. This asset growth was primarily funded by an $84.7 million, or 11%, increase in total deposits; with 66% of the deposit growth coming from non-interest bearing demand deposit accounts. Total stockholders' equity was $145.5 million at December 31, 2012, an increase of $15.9 million or 12.3%, compared with $129.6 million at December 31, 2011. The increase in stockholders' equity was primarily driven by earnings for the year.
The Company's liquidity ratio (total cash and cash equivalents plus unpledged marketable securities divided by the sum of total deposits and short-term liabilities less pledged securities) was 36.4% at December 31, 2012 compared with 35.1% at December 31, 2011.
The Company and the Bank exceeded the ratios generally required to be considered a "well capitalized" financial institution for regulatory purposes. The tier I leverage ratio for the Company and the Bank were 12.3% and 11.9%, respectively at December 31, 2012. The total risk-based Capital ratio for the Company and the Bank were 16.8% and 16.3%, respectively at December 31, 2012. The Company remains current on all obligations, including its junior subordinated debentures, and preferred stock issued under the U.S. Treasury's Capital Purchase Program and privately placed preferred stock.
Asset Quality
Classified loans decreased $2.8 million or 5.2% to $51.1 million at December 31, 2012 compared with $53.9 million at December 31, 2011. Classified assets as a percent of Tier I Capital plus the allowance for loan losses improved to 35.4% at December 31, 2012 compared with 44.3% at December 31, 2011.
Non-accrual loans increased $4.9 million to $17.3 million at December 31, 2012 compared with $12.4 million at December 31, 2011, of which $12.6 million were still paying per their contractual terms. Non-performing loans to gross loans increased to 2.5% at December 31, 2012 from 1.9% at December 31, 2011. The Company held no OREO at December 31, 2012, a decrease of $0.9 million from December 31, 2011. Total non-performing assets, inclusive of non-accrual loans, increased $4.0 million to $17.3 million at December 31, 2012 compared with $13.3 million at December 31, 2011. The percentage of non-performing assets to total assets was 1.6% at December 31, 2012 compared with 1.4% at December 31, 2011.
Total troubled debt restructurings ("TDRs") outstanding were $11.6 million at December 31, 2012 compared with $3.7 million at December 31, 2011. The increase in the level of reported TDRs in 2012 was largely the result of a single large loan relationship that was modified in the first quarter of 2012. The ALLL was $18.1 million, or 2.6% of total loans, compared with $19.3 million, or 3.0% of total loans at December 31, 2011. The decrease in the ALLL to total loans ratio is due to continued decreases in the historical loss experience of the loan portfolio.
Conference Call
The Company will host a conference call to discuss these fourth quarter results at 8:00 a.m. PST on January 25, 2013. Media representatives, analysts and the public are invited to listen to this discussion by calling (877) 363-5052 and entering the conference ID 88232944, or via on-demand webcast. A link to the webcast will be available on Heritage Oaks Bancorp's website at www.heritageoaksbancorp.com. A replay of the call will be available on Heritage Oaks Bancorp's website later that day and will remain on its site for up to 14 calendar days. By including the foregoing website address, Heritage Oaks Bancorp does not intend to and shall not be deemed to incorporate by reference any material contained therein. By including the foregoing website address, Heritage Oaks Bancorp does not intend to and shall not be deemed to incorporate by reference any material contained therein.
Annual Report on Form 10-K
The Company intends to file with the U.S. Securities and Exchange Commission its Annual Report on Form 10-K for the year ended December 31, 2012, on or before March 18, 2013. This report can be accessed at the U.S. Securities and Exchange Commission's website, www.sec.gov. Shortly after filing, it is also available free of charge at the Company's website, www.heritageoaksbancorp.com or by contacting the Company's Investor Relations Department. By including the foregoing website address, Heritage Oaks Bancorp does not intend to and shall not be deemed to incorporate by reference any material contained therein.
About Heritage Oaks Bancorp
With $1.1 billion in assets, Heritage Oaks Bancorp is the holding company for Heritage Oaks Bank which operates as Heritage Oaks Bank and Business First, a division of Heritage Oaks Bank. Heritage Oaks Bank has its headquarters and two branch offices in Paso Robles, two branch offices in San Luis Obispo and Santa Maria, single branch offices in Cambria, Arroyo Grande, Atascadero, Templeton, and Morro Bay, as well as a loan production office in Oxnard. Heritage Oaks Bank conducts commercial banking business in the counties of San Luis Obispo, Santa Barbara, and Ventura. The Business First division has one branch office in Santa Barbara. Visit Heritage Oaks Bancorp on the Web at www.heritageoaksbancorp.com.
The Heritage Oaks Bancorp logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7045
Forward Looking Statements
This press release contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward looking statements to be covered by the safe harbor provisions for forward looking statements. All statements other than statements of historical fact are "forward looking statements" for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business prospects, strategic alternatives, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, acquisition and divestiture opportunities, plans and objectives of management for future operations, and other similar forecasts and statements of expectation and statements of assumptions underlying any of the foregoing. Words such as "will likely result," "aims," "anticipates," "believes," "could," "estimates," "expects," "hopes," "intends," "may," "plans," "projects," "seeks," "should," "will," and variations of these words and similar expressions are intended to identify these forward‐looking statements.
Forward looking statements are based on the Company's current expectations and assumptions regarding its business, the regulatory environment, the economy and other future conditions. Forward looking statements are subject to a number of risks and uncertainties that could cause the Company's actual results to differ materially and adversely from those contemplated by the forward looking statements. The Company cautions you against relying on any of these forward looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward looking statements, include the following: the ongoing financial crisis in the United States, including the continuing softness in the California real estate market, and the response of federal and state government and our regulators thereto, general economic conditions in those areas in which the Company operates, competition, fluctuations in interest rates, changes in the Company's business strategy or development plans, changes in governmental regulation, changes in the credit quality of our loan portfolio, as well as economic, political and global changes arising from the war on terrorism, social unrest and other civil disturbances, the Company's ability to increase profitability, sustain growth, the Company's beliefs as to the adequacy of its existing and anticipated allowance for loan losses, beliefs and expectations about, and requirements to comply with the terms of the Memoranda of Understanding issued by regulatory authorities having oversight of the Company's and Bank's operations, and financial policies of the United States government.
Additional information on these risks and other factors that could affect operating results and financial condition are detailed in reports filed by the Company with the U.S. Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2011, filed by the Company with the U.S. Securities and Exchange Commission on February 28, 2012. Forward looking statements speak only as of the date they are made, and the Company does not undertake to update forward looking statements to reflect circumstances or events that occur after the date the forward looking statements are made, whether as a result of new information, future developments or otherwise, and specifically disclaims any obligation to revise or update such forward looking statements for any reason, except as may be required by law.
Use of Non-GAAP Financial Information
Heritage Oaks Bancorp provides all information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results and in particular, making comparisons to similar companies, may be enhanced by providing additional measures used by management to assess operating results. Earnings before income taxes and provision for loan losses, a non-GAAP financial measure, is presented because the Company believes adjusting its results to exclude tax and loan loss provisions provides stockholders with a useful metric for evaluating the core profitability of the Company. A schedule reconciling our GAAP net income to earnings before income taxes and provision for loan losses is provided at the end of the tables below.
| Heritage Oaks Bancorp | |||
| Consolidated Balance Sheets | |||
| (unaudited) | |||
| (dollar amounts in thousands) | 12/31/2012 | 9/30/2012 | 12/31/2011 |
| Assets | |||
| Cash and due from banks | $ 23,425 | $ 22,917 | $ 18,858 |
| Interest bearing due from banks | 10,691 | 21,259 | 16,034 |
| Total cash and cash equivalents | 34,116 | 44,176 | 34,892 |
| Securities available for sale, at fair value | 287,682 | 261,451 | 236,982 |
| Federal Home Loan Bank stock, at cost | 4,575 | 4,575 | 4,685 |
| Loans held for sale | 22,549 | 12,590 | 21,947 |
| Gross loans | 689,608 | 678,348 | 646,286 |
| Net deferred loan fees | (937) | (977) | (1,111) |
| Allowance for loan losses | (18,118) | (17,987) | (19,314) |
| Net loans | 670,553 | 659,384 | 625,861 |
| Property, premises and equipment | 15,956 | 15,238 | 5,528 |
| Deferred tax assets, net | 21,933 | 22,897 | 18,226 |
| Bank owned life insurance | 15,349 | 15,223 | 14,835 |
| Goodwill | 11,237 | 11,049 | 11,049 |
| Core deposit intangible | 1,744 | 1,424 | 1,682 |
| Other real estate owned | -- | 615 | 917 |
| Other assets | 11,838 | 10,057 | 10,534 |
| Total assets | $ 1,097,532 | $ 1,058,679 | $ 987,138 |
| Liabilities | |||
| Deposits | |||
| Demand, non-interest bearing | 273,242 | 267,199 | 217,245 |
| Savings, NOW, and money market | 411,274 | 410,147 | 376,252 |
| Time deposits under $100 | 89,249 | 88,738 | 102,628 |
| Time deposits of $100 or more | 97,105 | 88,948 | 90,083 |
| Total deposits | 870,870 | 855,032 | 786,208 |
| Short term FHLB borrowing | 33,000 | 9,500 | 29,500 |
| Long term FHLB borrowing | 33,500 | 36,500 | 22,000 |
| Junior subordinated debentures | 8,248 | 8,248 | 8,248 |
| Other liabilities | 6,385 | 7,114 | 11,628 |
| Total liabilities | 952,003 | 916,394 | 857,584 |
| Stockholders' equity | |||
| Preferred stock, 5,000,000 shares authorized: Series A senior preferred stock; $1,000 per share stated value issued and outstanding: 21,000 shares | 20,536 | 20,441 | 20,160 |
| Series C preferred stock, $3.25 per share stated value; issued and outstanding: 1,189,538 shares | 3,604 | 3,604 | 3,604 |
| Common stock, no par value; authorized: 100,000,000 shares; issued and outstanding: 25,307,110; 25,288,430; and 25,145,717 as of December 31, 2012; September 30, 2012; and December 31, 2011, respectively | 101,354 | 101,296 | 101,140 |
| Additional paid in capital | 7,337 | 7,240 | 7,006 |
| Retained earnings / (accumulated deficit) | 8,773 | 6,004 | (2,794) |
| Accumulated other comprehensive income | 3,925 | 3,700 | 438 |
| Total stockholders' equity | 145,529 | 142,285 | 129,554 |
| Total liabilities and stockholders' equity | $ 1,097,532 | $ 1,058,679 | $ 987,138 |
| Book value per common share | $ 4.78 | $ 4.65 | $ 4.17 |
| Tangible book value per common share | $ 4.27 | $ 4.16 | $ 3.67 |
| Heritage Oaks Bancorp | |||
| Consolidated Statements of Income | |||
| (unaudited) | |||
| Three Months Ended | |||
| (dollar amounts in thousands except per share data) | 12/31/2012 | 9/30/2012 | 12/31/2011 |
| Interest Income | |||
| Interest and fees on loans | $ 9,989 | $ 9,716 | $ 10,213 |
| Interest on investment securities | 1,585 | 1,783 | 1,779 |
| Other interest income | 75 | 20 | 20 |
| Total interest income | 11,649 | 11,519 | 12,012 |
| Interest Expense | |||
| Interest on savings, NOW and money market deposits | 273 | 288 | 336 |
| Interest on time deposits under $100 | 185 | 205 | 310 |
| Interest on time deposits in denominations of $100 or more | 215 | 226 | 314 |
| Other borrowings | 213 | 215 | 146 |
| Total interest expense | 886 | 934 | 1,106 |
| Net interest income before provision for loan losses | 10,763 | 10,585 | 10,906 |
| Provision for loan losses | -- | 1,286 | 693 |
| Net interest income after provision for loan losses | 10,763 | 9,299 | 10,213 |
| Non-Interest Income | |||
| Fees and service charges | 620 | 611 | 633 |
| Mortgage gain on sale and origination fees | 1,192 | 1,181 | 895 |
| Debit/credit card fee income | 460 | 460 | 421 |
| Earnings on bank owned life insurance | 150 | 148 | 152 |
| Gain on sale of investment securities | 923 | 329 | 796 |
| Gain on sale of other real estate owned | 87 | 102 | 44 |
| Other Income | 116 | 153 | 272 |
| Total non-interest income | 3,548 | 2,984 | 3,213 |
| Non-Interest Expense | |||
| Salaries and employee benefits | 4,782 | 4,532 | 4,258 |
| Equipment | 390 | 395 | 412 |
| Occupancy | 745 | 728 | 1,003 |
| Promotional | 258 | 171 | 177 |
| Data processing | 642 | 551 | 721 |
| OREO related costs | 31 | 54 | 115 |
| Write-downs of foreclosed assets | -- | 53 | 230 |
| Regulatory assessment costs | 358 | 371 | 527 |
| Audit and tax advisory costs | 206 | 146 | 265 |
| Director fees | 116 | 126 | 146 |
| Outside services | 821 | 730 | 490 |
| Provision for potential mortgage repurchases | 210 | 125 | (160) |
| Amortization of intangible assets | 84 | 86 | 89 |
| Other general operating costs | 831 | 727 | 948 |
| Total non-interest expense | 9,474 | 8,795 | 9,221 |
| Income before provision / (benefit from) for income taxes | 4,837 | 3,488 | 4,205 |
| Provision / (benefit) for income taxes | 1,710 | (2,940) | 75 |
| Net income | 3,127 | 6,428 | 4,130 |
| Dividends and accretion on preferred stock | 357 | 357 | 251 |
| Net income available to common shareholders | $ 2,770 | $ 6,071 | $ 3,879 |
| Weighted Average Shares Outstanding | |||
| Basic | 25,101,083 | 25,089,325 | 25,054,204 |
| Diluted | 26,485,728 | 26,430,717 | 26,261,179 |
| Earnings Per Common Share | |||
| Basic | $ 0.11 | $ 0.24 | $ 0.16 |
| Diluted | $ 0.10 | $ 0.23 | $ 0.15 |
| Heritage Oaks Bancorp | ||
| Consolidated Statements of Income | ||
| (unaudited) | ||
| Twelve Months Ended | ||
| (dollar amounts in thousands except per share data) | 12/31/2012 | 12/31/2011 |
| Interest Income | ||
| Interest and fees on loans | $ 39,278 | $ 41,345 |
| Interest on investment securities | 6,896 | 6,794 |
| Other interest income | 147 | 88 |
| Total interest income | 46,321 | 48,227 |
| Interest Expense | ||
| Interest on savings, NOW and money market deposits | 1,147 | 1,508 |
| Interest on time deposits under $100 | 892 | 1,448 |
| Interest on time deposits in denominations of $100 or more | 949 | 1,526 |
| Other borrowings | 830 | 541 |
| Total interest expense | 3,818 | 5,023 |
| Net interest income before provision for loan losses | 42,503 | 43,204 |
| Provision for loan losses | 7,681 | 6,063 |
| Net interest income after provision for loan losses | 34,822 | 37,141 |
| Non-Interest Income | ||
| Fees and service charges | 2,568 | 2,453 |
| Mortgage gain on sale and origination fees | 4,263 | 2,645 |
| Debit/credit card fee income | 1,782 | 1,632 |
| Earnings on bank owned life insurance | 602 | 596 |
| Gain on sale of investment securities | 2,619 | 1,983 |
| Gain / (loss) on sale of other real estate owned | 199 | (543) |
| Other income | 515 | 964 |
| Total non-interest income | 12,548 | 9,730 |
| Non-Interest Expense | ||
| Salaries and employee benefits | 18,304 | 17,630 |
| Equipment | 1,613 | 1,739 |
| Occupancy | 3,287 | 3,771 |
| Promotional | 690 | 668 |
| Data processing | 2,553 | 2,975 |
| OREO related costs | 248 | 670 |
| Write-downs of foreclosed assets | 86 | 1,198 |
| Regulatory assessment costs | 1,596 | 2,360 |
| Audit and tax advisory costs | 679 | 779 |
| Director fees | 474 | 483 |
| Outside services | 2,393 | 1,524 |
| Provision for potential mortgage repurchases | 1,192 | 169 |
| Amortization of intangible assets | 342 | 445 |
| Other general operating costs | 2,674 | 2,907 |
| Total non-interest expense | 36,131 | 37,318 |
| Income before (benefit from) / provision for income taxes | 11,239 | 9,553 |
| (Benefit from) / provision for income taxes | (1,798) | 1,828 |
| Net income | 13,037 | 7,725 |
| Dividends and accretion on preferred stock | 1,470 | 1,358 |
| Net income available to common shareholders | $ 11,567 | $ 6,367 |
| Weighted Average Shares Outstanding | ||
| Basic | 25,081,462 | 25,048,477 |
| Diluted | 26,401,871 | 26,254,745 |
| Earnings Per Common Share | ||
| Basic | $ 0.46 | $ 0.25 |
| Diluted | $ 0.44 | $ 0.24 |
| Heritage Oaks Bancorp | |||||
| Key Ratios | |||||
| Three Months Ended | Twelve Months Ended | ||||
| PROFITABILITY / PERFORMANCE RATIOS | 12/31/2012 | 9/30/2012 | 12/31/2011 | 12/31/2012 | 12/31/2011 |
| Net interest margin | 4.35% | 4.36% | 4.67% | 4.46% | 4.71% |
| Return on average equity | 8.59% | 18.60% | 12.87% | 9.49% | 6.19% |
| Return on average common equity | 9.16% | 21.40% | 14.98% | 10.26% | 6.35% |
| Return on average tangible common equity | 10.23% | 24.08% | 17.12% | 11.55% | 7.29% |
| Return on average assets | 1.17% | 2.46% | 1.66% | 1.27% | 0.79% |
| Non interest income to total net revenue | 24.79% | 21.99% | 22.76% | 22.79% | 18.38% |
| Yield on interest earning assets | 4.70% | 4.75% | 5.15% | 4.86% | 5.26% |
| Cost of interest bearing liabilities | 0.55% | 0.58% | 0.71% | 0.60% | 0.79% |
| Cost of funds | 0.39% | 0.42% | 0.52% | 0.43% | 0.60% |
| Operating efficiency ratio (1) | 70.36% | 65.47% | 66.17% | 67.88% | 67.98% |
| ASSET QUALITY RATIOS | |||||
| Non-performing loans to total gross loans | 2.51% | 3.02% | 1.91% | ||
| Non-performing loans to equity | 11.89% | 14.39% | 9.55% | ||
| Non-performing assets to total assets | 1.58% | 1.99% | 1.35% | ||
| Allowance for loan losses to total gross loans | 2.63% | 2.65% | 2.99% | ||
| Net charge-offs / (recoveries) to average loans outstanding, annualized | -0.07% | 0.85% | 1.08% | 1.32% | 1.75% |
| Classified assets to Tier I + ALLL | 35.40% | 41.58% | 44.31% | ||
| 30-89 Day Delinquency Rate | 0.12% | 0.19% | 0.12% | ||
| CAPITAL RATIOS | |||||
| Company | |||||
| Leverage ratio | 12.32% | 12.15% | 12.06% | ||
| Tier I Risk-Based Capital Ratio | 15.55% | 14.92% | 14.81% | ||
| Total Risk-Based Capital Ratio | 16.81% | 16.19% | 16.07% | ||
| Bank | |||||
| Leverage ratio | 11.93% | 11.75% | 11.85% | ||
| Tier I Risk-Based Capital Ratio | 15.02% | 14.40% | 14.51% | ||
| Total Risk-Based Capital Ratio | 16.28% | 15.66% | 15.77% | ||
| (1) The efficiency ratio is defined as total non interest expense as a percent of the combined net interest income plus non interest income, exclusive of gains and losses on securities sales, other than temporary impairment losses, gains and losses on sale of OREO and other OREO related costs and gains and losses on sale of fixed assets. | |||||
| Heritage Oaks Bancorp | |||||||||
| Average Balances | |||||||||
| Three Months Ended | |||||||||
| 12/31/2012 | 9/30/2012 | 12/31/2011 | |||||||
| (dollar amounts in thousands) | Balance | Yield/Rate | Inc/Exp | Balance | Yield/Rate | Inc/Exp | Balance | Yield/Rate | Inc/Exp |
| Interest Earning Assets | |||||||||
| Investments with other banks | $ -- | 0.00% | $ -- | $ -- | 0.00% | $ -- | $ -- | 0.00% | $ -- |
| Interest bearing due from banks | 16,006 | 0.20% | 8 | 13,042 | 0.15% | 5 | 16,362 | 0.15% | 6 |
| Investment securities taxable | 203,846 | 2.07% | 1,061 | 204,291 | 2.45% | 1,256 | 208,096 | 2.72% | 1,425 |
| Investment securities non taxable | 63,538 | 3.28% | 524 | 62,634 | 3.35% | 527 | 36,451 | 3.85% | 354 |
| Other investments | 6,479 | 4.11% | 67 | 6,478 | 0.92% | 15 | 6,588 | 0.84% | 14 |
| Loans (1) | 695,457 | 5.71% | 9,989 | 678,655 | 5.70% | 9,716 | 658,397 | 6.15% | 10,213 |
| Total earning assets | $ 985,326 | 4.70% | $11,649 | $ 965,100 | 4.75% | $ 11,519 | $ 925,894 | 5.15% | $ 12,012 |
| Allowance for loan losses | (18,998) | (18,207) | (20,500) | ||||||
| Other assets | 96,267 | 92,880 | 79,171 | ||||||
| Total assets | $ 1,062,595 | $1,039,773 | $ 984,565 | ||||||
| Interest Bearing Liabilities | |||||||||
| Interest bearing demand | $ 72,490 | 0.12% | $ 22 | $ 70,664 | 0.13% | $ 23 | $ 63,667 | 0.10% | $ 16 |
| Savings | 37,312 | 0.10% | 9 | 36,454 | 0.10% | 9 | 32,546 | 0.11% | 9 |
| Money market | 298,130 | 0.32% | 242 | 295,792 | 0.34% | 256 | 278,739 | 0.44% | 312 |
| Time deposits | 176,474 | 0.90% | 400 | 182,138 | 0.94% | 431 | 199,583 | 1.24% | 623 |
| Total interest bearing deposits | 584,406 | 0.46% | 673 | 585,048 | 0.49% | 719 | 574,535 | 0.66% | 960 |
| Other secured borrowing | -- | 0.00% | -- | -- | 0.00% | -- | 11 | 0.00% | -- |
| Federal Home Loan Bank borrowing | 50,266 | 1.35% | 171 | 45,527 | 1.48% | 169 | 37,766 | 1.07% | 102 |
| Junior subordinated debentures | 8,248 | 2.03% | 42 | 8,248 | 2.22% | 46 | 8,248 | 2.12% | 44 |
| Total borrowed funds | 58,514 | 1.45% | 213 | 53,775 | 1.59% | 215 | 46,025 | 1.26% | 146 |
| Total interest bearing liabilities | 642,920 | 0.55% | 886 | 638,823 | 0.58% | 934 | 620,560 | 0.71% | 1,106 |
| Non interest bearing demand | 266,284 | 255,241 | 225,592 | ||||||
| Total funding | 909,204 | 0.39% | 886 | 894,064 | 0.42% | 934 | 846,152 | 0.52% | 1,106 |
| Other liabilities | 8,548 | 8,252 | 11,098 | ||||||
| Total liabilities | $ 917,752 | $ 902,316 | $ 857,250 | ||||||
| Stockholders' Equity | |||||||||
| Total stockholders' equity | 144,843 | 137,457 | 127,315 | ||||||
| Total liabilities and stockholders' equity | $ 1,062,595 | $1,039,773 | $ 984,565 | ||||||
| Net interest margin | 4.35% | 4.36% | 4.67% | ||||||
| Interest Rate Spread | 4.15% | $10,763 | 4.17% | $ 10,585 | 4.44% | $ 10,906 | |||
| (1) Non-accrual loans have been included in total loans. | |||||||||
| Heritage Oaks Bancorp | ||||||
| Average Balances | ||||||
| Twelve Months Ended | ||||||
| 12/31/2012 | 12/31/2011 | |||||
| (dollar amounts in thousands) | Balance | Yield/Rate | Inc/Exp | Balance | Yield/Rate | Inc/Exp |
| Interest Earning Assets | ||||||
| Investments with other banks | $ -- | 0.00% | $ -- | $ 58 | 1.72% | $ 1 |
| Interest bearing due from banks | 15,193 | 0.17% | 26 | 16,343 | 0.18% | 30 |
| Investment securities taxable | 202,109 | 2.45% | 4,944 | 187,527 | 2.83% | 5,304 |
| Investment securities non taxable | 57,065 | 3.42% | 1,952 | 36,888 | 4.04% | 1,490 |
| Other investments | 6,519 | 1.86% | 121 | 7,934 | 0.72% | 57 |
| Loans (1) | 672,929 | 5.84% | 39,278 | 667,606 | 6.19% | 41,345 |
| Total interest earning assets | $ 953,815 | 4.86% | $ 46,321 | $ 916,356 | 5.26% | $48,227 |
| Allowance for loan losses | (19,169) | (22,895) | ||||
| Other assets | 90,315 | 83,527 | ||||
| Total assets | $ 1,024,961 | $ 976,988 | ||||
| Interest Bearing Liabilities | ||||||
| Interest bearing demand | $ 67,986 | 0.11% | $ 77 | $ 64,187 | 0.15% | $ 95 |
| Savings | 35,769 | 0.10% | 36 | 32,153 | 0.14% | 46 |
| Money market | 289,079 | 0.36% | 1,034 | 275,278 | 0.50% | 1,367 |
| Time deposits | 183,803 | 1.00% | 1,841 | 214,677 | 1.39% | 2,974 |
| Total interest bearing deposits | $ 576,637 | 0.52% | $ 2,988 | $ 586,295 | 0.76% | $ 4,482 |
| Other secured borrowing | -- | 0.00% | -- | 3 | 0.00% | -- |
| Federal Home Loan Bank borrowing | 50,153 | 1.27% | 638 | 38,527 | 0.97% | 372 |
| Junior subordinated debentures | 8,248 | 2.33% | 192 | 8,248 | 2.05% | 169 |
| Total borrowed funds | 58,401 | 1.42% | 830 | 46,778 | 1.16% | 541 |
| Total interest bearing liabilities | 635,038 | 0.60% | 3,818 | 633,073 | 0.79% | 5,023 |
| Non interest bearing demand | 243,304 | 208,646 | ||||
| Total funding | 878,342 | 0.43% | 3,818 | 841,719 | 0.60% | 5,023 |
| Other liabilities | 9,227 | 10,445 | ||||
| Total liabilities | $ 887,569 | $ 852,164 | ||||
| Stockholders' Equity | ||||||
| Total stockholders' equity | 137,392 | 124,824 | ||||
| Total liabilities and stockholders' equity | $ 1,024,961 | $ 976,988 | ||||
| Net interest margin | 4.46% | 4.71% | ||||
| Interest Rate Spread | 4.26% | $ 42,503 | 4.47% | $43,204 | ||
| (1) Non-accrual loans have been included in total loans. | ||||||
| Heritage Oaks Bancorp | |||
| Loans and Deposits | |||
| (dollar amounts in thousands) | |||
| Loans | 12/31/2012 | 9/30/2012 | 12/31/2011 |
| Real Estate Secured | |||
| Multi-family residential | $ 21,467 | $ 16,429 | $ 15,915 |
| Residential 1 to 4 family | 41,444 | 37,837 | 20,839 |
| Home equity lines of credit | 31,863 | 32,422 | 31,047 |
| Commercial | 372,592 | 374,799 | 357,499 |
| Farmland | 25,642 | 23,416 | 8,155 |
| Total real estate secured | 493,008 | 484,903 | 433,455 |
| Commercial | |||
| Commercial and industrial | 125,340 | 119,496 | 141,065 |
| Agriculture | 21,663 | 17,948 | 15,740 |
| Other | 61 | 66 | 89 |
| Total commercial | 147,064 | 137,510 | 156,894 |
| Construction | |||
| Single family residential | 8,074 | 11,267 | 13,039 |
| Single family residential - Spec. | 535 | 420 | 8 |
| Multi-family | 778 | 787 | 1,669 |
| Commercial | 10,329 | 14,401 | 8,015 |
| Total construction | 19,716 | 26,875 | 22,731 |
| Land | 24,664 | 23,633 | 26,454 |
| Installment loans to individuals | 4,895 | 5,146 | 6,479 |
| All other loans (including overdrafts) | 261 | 281 | 273 |
| Total gross loans | 689,608 | 678,348 | 646,286 |
| Deferred loan fees | 937 | 977 | 1,111 |
| Allowance for loan losses | 18,118 | 17,987 | 19,314 |
| Total net loans | $ 670,553 | $ 659,384 | $ 625,861 |
| Loans held for sale | $ 22,549 | $ 12,590 | $ 21,947 |
| Deposits | 12/31/2012 | 9/30/2012 | 12/31/2011 |
| Demand, non-interest bearing | $ 273,242 | $ 267,199 | $ 217,245 |
| Interest-bearing demand | 76,728 | 75,187 | 64,298 |
| Savings | 41,021 | 36,940 | 33,740 |
| Money market | 293,525 | 298,020 | 278,214 |
| Time deposits | 186,354 | 177,686 | 192,711 |
| Total deposits | $ 870,870 | $ 855,032 | $ 786,208 |
| Heritage Oaks Bancorp | |||
| Allowance for Loan Losses, Non-Performing and Classified Assets | |||
| Three Months Ended | |||
| Allowance for Loan Losses | 12/31/2012 | 9/30/2012 | 12/31/2011 |
| Balance, beginning of period | $ 17,987 | $ 18,149 | $ 20,409 |
| Provision for loan losses | -- | 1,286 | 693 |
| Loans charge-off | |||
| Residential 1 to 4 family | 11 | 106 | 30 |
| Commercial real estate | -- | -- | 161 |
| Commercial and industrial | 717 | 261 | 254 |
| Agriculture | 145 | 1,250 | 115 |
| Construction | 460 | 92 | -- |
| Installment loans to individuals | 155 | 9 | 5 |
| Total loan charge-offs | 1,488 | 1,718 | 565 |
| Recoveries of loans previously charged-off | 1,619 | 270 | 437 |
| Charge-offs related to loan sales | |||
| Commercial real estate | -- | -- | 1,268 |
| Farmland | -- | -- | 392 |
| Net charge-offs related to loan sales | -- | -- | 1,660 |
| Balance, end of period | $ 18,118 | $ 17,987 | $ 19,314 |
| Net charge-offs / (recoveries) | $ (131) | $ 1,448 | $ 1,788 |
| Non-Performing Assets | 12/31/2012 | 9/30/2012 | 12/31/2011 |
| Loans on non-accrual status | |||
| Residential 1-4 family | $ 835 | $ 907 | $ 622 |
| Home equity lines of credit | 58 | 381 | 359 |
| Commercial real estate | 928 | 4,428 | 4,551 |
| Farmland | 1,077 | 1,089 | -- |
| Commercial and industrial | 4,657 | 3,243 | 1,625 |
| Agriculture | 907 | 1,075 | 2,327 |
| Construction | 1,380 | 1,840 | 937 |
| Land | 7,182 | 7,300 | 1,886 |
| Installment | 285 | 206 | 61 |
| Total non-accruing loans | $ 17,309 | $ 20,469 | $ 12,368 |
| Total non-performing loans | 17,309 | 20,469 | 12,368 |
| Other real estate owned (OREO) | -- | 615 | 917 |
| Other repossessed assets | -- | -- | 42 |
| Total non-performing assets | $ 17,309 | $ 21,084 | $ 13,327 |
| Classified assets | 12/31/2012 | 9/30/2012 | 12/31/2011 |
| Loans | $ 51,130 | $ 57,553 | $ 53,953 |
| Other real estate owned (OREO) | -- | 615 | 917 |
| Other | 308 | 342 | 5,166 |
| Total classified assets | $ 51,438 | $ 58,510 | $ 60,036 |
| Classified assets to Tier I + ALLL | 35.40% | 41.58% | 44.31% |
| Note: Classified assets consists of substandard and non-performing loans, OREO, non-investment grade securities, other repossessed assets, loans held for sale that were substandard and substandard letters of credit. | |||
| Heritage Oaks Bancorp | |||||||||
| Quarter to Date Non-Performing Loan Reconciliation | |||||||||
| Balance | Transfers | Returns to | Transfers | Balance | |||||
| September 30, | Net | to Foreclosed | Accrual | Net | to Held | December 31, | |||
| (dollar amounts in thousands) | 2012 | Additions | Paydowns | Advances | Collateral | Status | Charge-offs | for Sale | 2012 |
| Real Estate Secured | |||||||||
| Residential 1 to 4 family | $ 907 | $ 100 | $ (161) | $ -- | $ -- | $ -- | $ (11) | $ -- | $ 835 |
| Home equity line of credit | 381 | -- | (323) | -- | -- | -- | -- | -- | 58 |
| Commercial | 4,428 | 389 | (3,889) | -- | -- | -- | -- | -- | 928 |
| Farmland | 1,089 | -- | (12) | -- | -- | -- | -- | -- | 1,077 |
| Commercial | |||||||||
| Commercial and industrial | 3,243 | 3,036 | (905) | -- | -- | -- | (717) | -- | 4,657 |
| Agriculture | 1,075 | -- | (23) | -- | -- | -- | (145) | -- | 907 |
| Other | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| Construction | |||||||||
| Commercial | 1,840 | -- | -- | -- | -- | -- | (460) | -- | 1,380 |
| Land | 7,300 | -- | (118) | -- | -- | -- | -- | -- | 7,182 |
| Installment loans to individuals | 206 | 271 | (37) | -- | -- | -- | (155) | -- | 285 |
| Totals | $ 20,469 | $ 3,796 | $ (5,468) | $ -- | $ -- | $ -- | $ (1,488) | $ -- | $ 17,309 |
| Heritage Oaks Bancorp | |||||||||
| Year to Date Non-Performing Loan Reconciliation | |||||||||
| Balance | Transfers | Returns to | Transfers | Balance | |||||
| December 31, | Net | to Foreclosed | Accrual | Net | to Held | December 31, | |||
| (dollar amounts in thousands) | 2011 | Additions | Paydowns | Advances | Collateral | Status | Charge-offs | for Sale | 2012 |
| Real Estate Secured | |||||||||
| Residential 1 to 4 family | $ 527 | $ 614 | $ (189) | $ -- | $ -- | $ -- | $ (117) | $ -- | $ 835 |
| Home equity line of credit | 359 | 65 | (366) | -- | -- | -- | -- | -- | 58 |
| Commercial | 4,551 | 6,981 | (4,694) | -- | -- | (3,556) | (2,354) | -- | 928 |
| Farmland | -- | 1,089 | (12) | -- | -- | -- | -- | -- | 1,077 |
| Commercial | -- | -- | -- | -- | -- | -- | -- | ||
| Commercial and industrial | 1,625 | 8,272 | (1,608) | -- | (344) | -- | (3,288) | -- | 4,657 |
| Agriculture | 2,327 | 484 | (59) | -- | -- | -- | (1,845) | -- | 907 |
| Construction | |||||||||
| Single family residential | 937 | -- | (937) | -- | -- | -- | -- | -- | -- |
| Commercial | -- | 2,508 | -- | -- | -- | -- | (1,128) | -- | 1,380 |
| Land | 1,981 | 9,217 | (1,700) | -- | (162) | -- | (2,154) | -- | 7,182 |
| Installment loans to individuals | 61 | 451 | (43) | -- | -- | -- | (184) | -- | 285 |
| Totals | $ 12,368 | $ 29,681 | $ (9,608) | $ -- | $ (506) | $ (3,556) | $ (11,070) | $ -- | $ 17,309 |
| Heritage Oaks Bancorp | |||||
| Quarter to Date OREO Reconciliation | |||||
| Balance | Balance | ||||
| September 30, | December 31, | ||||
| (dollar amounts in thousands) | 2012 | Additions | Sales | Writedowns | 2012 |
| Real Estate Secured | |||||
| Residential 1 to 4 family | $ 400 | $ -- | $ (400) | $ -- | $ -- |
| Commercial | 215 | -- | (215) | -- | -- |
| Totals | $ 615 | $ -- | $ (615) | $ -- | $ -- |
| Heritage Oaks Bancorp | |||||
| Year to Date OREO Reconciliation | |||||
| Balance | Balance | ||||
| December 31, | December 31, | ||||
| (dollar amounts in thousands) | 2011 | Additions | Sales | Writedowns | 2012 |
| Real Estate Secured | |||||
| Residential 1 to 4 family | $ -- | $ 607 | $ (576) | $ (31) | $ -- |
| Commercial | 215 | -- | (215) | -- | -- |
| Construction | |||||
| Single family residential - Spec. | 423 | -- | (397) | (26) | -- |
| Tract | 100 | -- | (100) | -- | -- |
| Land | 179 | 162 | (300) | (41) | -- |
| Totals | $ 917 | $ 769 | $ (1,588) | $ (98) | $ -- |
| Heritage Oaks Bancorp | |||||
| Reconciliation of GAAP to Non-GAAP Financial Measure | |||||
| Three Months Ended | Twelve Months Ended | ||||
| (dollar amounts in thousands) | 12/31/2012 | 9/30/2012 | 12/31/2011 | 12/31/2012 | 12/31/2011 |
| GAAP Net Income | $ 3,127 | $ 6,428 | $ 4,130 | $ 13,037 | $ 7,725 |
| Adjusted for: | |||||
| Provision / (benefit) for income taxes | 1,710 | (2,940) | 75 | (1,798) | 1,828 |
| Provision for loan losses | -- | 1,286 | 693 | 7,681 | 6,063 |
| Non-GAAP earnings before income taxes and provision for loan losses | $ 4,837 | $ 4,774 | $ 4,898 | $ 18,920 | $ 15,616 |
CONTACT: Simone Lagomarsino, President & Chief Executive Officer
1222 Vine Street
Paso Robles, California 93446
805.369.5260
slagomarsino@heritageoaksbank.com
Mark Olson, EVP & Chief Financial Officer
1222 Vine Street
Paso Robles, California 93446
805.369.5107
molson@heritageoaksbank.com