EXHIBIT 99.1
Heritage Oaks Bancorp Reports First Quarter 2013 Results; Termination of Memorandum of Understanding; Request to Approve Repurchase of Shares From the U.S. Treasury
PASO ROBLES, Calif., April 25, 2013 (GLOBE NEWSWIRE) -- Heritage Oaks Bancorp (the "Company") (Nasdaq:HEOP), a bank holding company and parent of Heritage Oaks Bank (the "Bank"), reported net income of $3.7 million for the three months ended March 31, 2013, compared with $1.6 million for the same period a year earlier. Income before taxes was $6.1 million for the three months ended March 31, 2013, a $4.9 million increase from $1.2 million for the same period a year ago.
The Company also announced that the Bank's Memorandum of Understanding, ("MOU") with the Federal Deposit Insurance Corporation, ("FDIC") and the California Department of Financial Institutions, ("DFI") was terminated effective April 24, 2013. In addition, the Company announced that it filed a request with its regulators to approve a dividend of $25 million from the Bank to the Company for the purpose of repurchasing the shares and warrants issued to the U.S. Department of Treasury as part of the Troubled Asset Relief Program—Capital Purchase Program ("TARP CPP").
Highlights
- Earnings before taxes and provision for loan losses improved $1.6 million, or 35.6%, to $6.1 million for the three months ended March 31, 2013, compared to $4.5 million for the three months ended March 31, 2012;
- The Company recorded a $3.6 million gain on the sale of $84.6 million of securities as it repositioned its investment securities portfolio to reduce the effective duration of its investment securities portfolio to offset an expected increase in the duration of its loan portfolio;
- Total gross loans increased $59.4 million, or 9.2%, to $704.9 million at March 31, 2013 from $645.5 million at March 31, 2012, resulting from strong growth in commercial, residential, and agriculture lending relationships. Total new loan production, including mortgage loans originated for sale, increased $18.1 million, or 28.9%, to $80.8 million during the three months ended March 31, 2013 compared to $62.7 million a year earlier;
- Total deposits grew $56.4 million, or 7.0%, to $862.8 million at March 31, 2013 from $806.4 million a year earlier with the majority of the growth coming from non-interest bearing deposits;
- Credit quality continued to improve in the first quarter of 2013, with non-performing assets to total assets declining 33.3% to 1.2% compared to the first quarter of 2012. Classified assets as a percent of Tier 1 capital plus ALLL improved to 32.2% compared to 45.8% a year earlier, and annualized net loan charge-offs declined to 0.22% of average loans outstanding, representing a significant reduction compared from 1.75% a year earlier. The Company had no real estate owned at March 31, 2013; and
- Regulatory capital ratios improved from 12.2% and 15.9% at March 31, 2012 to 12.7% and 17.8% for Tier 1 Leverage and Total Risk-Based Capital, respectively at March 31, 2013, and the allowance for loan losses as a percent of total loans was 2.52% at March 31, 2013.
"We are pleased with our strong financial performance for the first quarter of 2013," said Simone Lagomarsino, President and Chief Executive Officer of Heritage Oaks Bancorp. "During 2012 we restructured the organization, which reduced some of our back office and administrative expenses. We redeployed a portion of these savings to hire additional relationship lenders. These new team members are supporting our expansion into new geographic markets such as Ventura County, in addition to deepening our penetration in existing business lines, including agriculture, commercial, small business and mortgage lending. As a result, we have been able to generate strong quarter-over-quarter net loan growth in each of the last four quarters".
"We are also pleased to announce the termination of the Bank's MOU with the FDIC and DFI. We believe the termination of the MOU reflects the progress that we've made in improving our overall credit quality, operations, and financial profitability," said Ms. Lagomarsino. "We still have the MOU outstanding with the Federal Reserve Board ("FRB") and look forward to our onsite inspection by the FRB later this year. Following the termination of the MOU with the FDIC and DFI, we have submitted a request to the DFI to approve a $25.0 million dividend from the Bank to the Company. At the same time, we have submitted a request to the FRB to approve the repurchase of the 21,000 shares of Series A Preferred Stock that have an original issue price of $1,000 per share, and the repurchase of warrants to purchase 611,650 shares of the Company's Common Stock that have a strike price of $5.15 per share from the U.S. Department of Treasury."
Net Income Available to Common Shareholders
Net income available to common shareholders was $3.4 million, or $0.13 per diluted common share, for the three months ended March 31, 2013, compared with $1.2 million, or $0.05 per diluted common share, for the same three months ended a year earlier. The key components of the change in net income available to common shareholders for the three month period are discussed below.
Net Interest Income
Net interest income was $10.2 million, or 4.14% of average interest earning assets (net interest margin), for the three months ended March 31, 2013 compared with $10.7 million, or 4.72% of average earning assets, for the same period a year earlier. The decline in net interest margin reflects the continuing trend of margin compression, 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 net interest margin compression through our efforts to grow the loan portfolio, through reductions in non-performing loans, and through modest reductions in the cost of deposits and borrowings.
Provision for Loan Losses
No provision for loan losses was recorded for the three months ended March 31, 2013 compared with a $3.3 million provision for the same period a year earlier. The lack of a provision in the first quarter of 2013 was largely driven by continued improvements in the overall credit quality of the loan portfolio, as well as continued improvement in our loan credit loss experience. Net charge-offs declined $2.4 million, or 86.8%, to $0.4 million for the three months ended March 31, 2013 compared with net charge-offs of $2.8 million for the same period a year earlier. Net charge-offs as a percent of average loans declined to 0.22% for the three months ended March 31, 2013, compared with 1.75% for the same period a year earlier.
Non-Interest Income
Non-interest income was $5.7 million for the three months ended March 31, 2013, a $3.2 million or 124.5% increase, compared with $2.5 million for the same period a year earlier. The increase in non-interest income was primarily the result of higher gain on sale of investment securities as the Company reduced the effective duration of its investment securities portfolio to offset an expected increase in the duration of the loan portfolio.
Non-Interest Expense
Non-interest expense was $9.7 million for the three months ended March 31, 2013 compared with $8.7 million for the same period a year earlier. Non-interest expense for the first quarter of 2013 included $0.6 million in loss provisions for mortgage repurchases for mortgages sold in 2007; a $0.7 million increase in salaries and employee benefits due to the reintroduction of an annual management incentive plan for 2013 compared with no such plan in the first quarter of 2012 and increases in base salaries due to annual merit increases.
The Company's operating efficiency ratio increased to 78.1% for the three months ended March 31, 2013 compared with 65.7% for the same period a year ago. The Company's operating efficiency ratio for 2013 was negatively impacted by one-time expense items such as the loss provisions for potential mortgage repurchases and higher employee incentive costs, as well as net interest margin compression. Excluding the impacts of the provisions for mortgage repurchases and net interest margin compression as compared to the same quarter last year, operating efficiency would have been 65.8% for the quarter ended March 31, 2013, as compared to 64.8% for the comparable period in 2012. The ratio of operating expenses to average assets, which excludes the impacts of margin compression, was 3.66% for the quarter ended March 31, 2013, as compared to 3.58% for the comparable period last year.
Income Taxes
Income tax expense was $2.4 million for the three months ended March 31, 2013 compared with a $0.4 million tax benefit for the same period a year earlier, which prior period included a $0.8 million partial reversal of deferred tax valuation allowance. Excluding the impact of the valuation allowance reversal in 2012, the Company's effective tax rate for the first quarter of 2013 was 39.1% compared with 35.2% for the same period a year ago.
Balance Sheet
Total assets increased $55.9 million, or 5.5%, to $1.1 billion at March 31, 2013 compared with a year earlier. The increase in total assets was primarily the result of growth in the loan portfolio. Total stockholders' equity was $146.7 million at March 31, 2013, an increase of $14.1 million or 10.6%, compared with a year earlier.
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 32.5% at March 31, 2013 compared with 35.9% at March 31, 2012, which reflects the reduction in the level of securities during the quarter used to fund loan growth and to repay short-term FHLB borrowings.
The Company's and the Bank's regulatory capital ratios exceeded the ratios generally required to be considered a "well capitalized" financial institution for regulatory purposes. Tier I Leverage Ratio for the Company and the Bank were 12.7% and 12.4%, respectively at March 31, 2013 compared to the requirement of 5.0% to generally be considered a "well capitalized" financial institution for regulatory purposes. Total Risk-Based Capital Ratio for the Company and the Bank were 17.8% and 17.3%, respectively, at March 31, 2013 compared to the requirement of 10.0% to generally be considered a "well capitalized" financial institution for regulatory purposes. The Company remains current on all of its obligations, including its junior subordinated debentures, preferred stock issued under the U.S. Treasury's TARP CPP, and privately placed preferred stock.
After considering the effects of a $25.0 million dividend at the Bank and the subsequent repurchase of Series A Preferred Shares and related warrants at the holding company, the Company's proforma Tier 1 Leverage Ratios would be in excess of 10.0% at both the Bank and Company at March 31, 2013. However, no assurances can be given that we will receive regulatory approval or that the Bank's or Company's Tier 1 Leverage ratios regulatory capital ratios will be in excess of 10.0% at the time of repurchase.
Asset Quality
Classified loans decreased $12.4 million or 20.3% to $48.7 million at March 31, 2013 compared with $61.1 million at March 31, 2012. Non-accrual loans decreased $4.5 million to $12.2 million at March 31, 2013, of which $10.9 million were still paying per their contractual terms, compared with $16.7 million of non-accrual loans at March 31, 2012. Non-performing loans to gross loans decreased to 1.7% at March 31, 2013 from 2.6% at March 31, 2012. The Company held no Other Real Estate Owned at March 31, 2013, a decrease of $0.9 million from March 31, 2012. Total non-performing assets, inclusive of non-accrual loans, decreased $5.3 million to $12.3 million at March 31, 2013 compared with $17.6 million at March 31, 2012. The percentage of non-performing assets to total assets was 1.2% at March 31, 2013 compared with 1.7% at March 31, 2012.
Total troubled debt restructurings ("TDRs") outstanding were $10.0 million at March 31, 2013 compared with $3.0 million at March 31, 2012. The increase in the level of reported TDRs in the first quarter of 2013 was largely the result of a single large loan relationship that was modified in the second quarter of 2012. The allowance for loan losses was $17.7 million, or 2.5% of total loans at March 31, 2013, compared with $19.8 million, or 3.1% of total loans at March 31, 2012. The decrease in the ALLL to total loans ratio is due to continued improvement in the credit quality of the loan portfolio, the mix of loans in the portfolio, and declines in the historical loss experience of the loan portfolio.
Conference Call
The Company will host a conference call to discuss these first quarter results at 8:00 a.m. PDT on April 26, 2013. Media representatives, analysts and the public are invited to listen to this discussion by calling (877) 363-5052 and entering the conference ID 31247570, 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.
Quarterly Report on Form 10-Q
The Company intends to file with the U.S. Securities and Exchange Commission its Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, on or before May 9, 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. 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.
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 and 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 MOU issued by the FRB, 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, 2012, filed by the Company with the U.S. Securities and Exchange Commission on March 4, 2013. 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 except per share data) | 3/31/2013 | 12/31/2012 | 3/31/2012 |
| Assets | | | |
| Cash and due from banks | $ 20,560 | $ 23,425 | $ 17,899 |
| Interest bearing deposits in other banks | 17,957 | 10,691 | 8,803 |
| Total cash and cash equivalents | 38,517 | 34,116 | 26,702 |
| | | | |
| Investment securities available for sale | 247,890 | 287,682 | 266,996 |
| Federal Home Loan Bank stock | 4,575 | 4,575 | 4,685 |
| Loans held for sale | 9,138 | 22,549 | 13,811 |
| Gross loans | 704,880 | 689,608 | 645,468 |
| Net deferred loan fees | (1,035) | (937) | (1,025) |
| Allowance for loan losses | (17,743) | (18,118) | (19,801) |
| Net loans held for investment | 686,102 | 670,553 | 624,642 |
| Premises and equipment | 17,598 | 15,956 | 15,586 |
| Deferred tax assets, net | 18,959 | 21,933 | 18,038 |
| Bank owned life insurance | 15,472 | 15,349 | 14,966 |
| Goodwill and other intangible assets | 12,881 | 12,981 | 12,646 |
| Other real estate owned | -- | -- | 917 |
| Other assets | 13,552 | 11,838 | 9,791 |
| Total assets | $ 1,064,684 | $ 1,097,532 | $ 1,008,780 |
| | | | |
| Liabilities | | | |
| Deposits | | | |
| Non-interest bearing deposits | $ 270,357 | $ 273,242 | $ 227,380 |
| Interest bearing deposits | 592,458 | 597,628 | 578,980 |
| Total Deposits | 862,815 | 870,870 | 806,360 |
| Short term FHLB borrowing | -- | 33,000 | 23,500 |
| Long term FHLB borrowing | 36,500 | 33,500 | 29,000 |
| Junior subordinated debentures | 8,248 | 8,248 | 8,248 |
| Other liabilities | 10,382 | 6,385 | 9,049 |
| Total liabilities | 917,945 | 952,003 | 876,157 |
| | | | |
| 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 | 20,630 | 20,536 | 20,253 |
| 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: 25,331,541, 25,307,110, and 25,163,571 shares as of March 31, 2013, December 31, 2012, and March 31, 2012, respectively | 101,359 | 101,354 | 101,161 |
| Paid in capital | 7,471 | 7,337 | 7,045 |
| Retained earnings / (accumulated deficit) | 12,146 | 8,773 | (1,591) |
| Accumulated other comprehensive income | 1,529 | 3,925 | 2,151 |
| Total stockholders' equity | 146,739 | 145,529 | 132,623 |
| Total liabilities and stockholders' equity | $ 1,064,684 | $ 1,097,532 | $ 1,008,780 |
| Book value per common share | $ 4.82 | $ 4.78 | $ 4.29 |
| Tangible book value per common share | $ 4.31 | $ 4.27 | $ 3.79 |
| |
| Heritage Oaks Bancorp |
| Consolidated Statements of Income |
| (unaudited) |
| | | | |
| | Three Months Ended |
| (dollar amounts in thousands except per share data) | 3/31/2013 | 12/31/2012 | 3/31/2012 |
| Interest Income | | | |
| Loans | $ 9,597 | $ 9,989 | $ 9,927 |
| Investment securities | 1,433 | 1,585 | 1,798 |
| Other | 43 | 75 | 27 |
| Total interest income | 11,073 | 11,649 | 11,752 |
| Interest Expense | | | |
| Interest on deposits | 660 | 673 | 822 |
| Other borrowings | 205 | 213 | 181 |
| Total interest expense | 865 | 886 | 1,003 |
| Net interest income before provision for loan losses | 10,208 | 10,763 | 10,749 |
| Provision for loan losses | -- | -- | 3,331 |
| Net interest income after provision for loan losses | 10,208 | 10,763 | 7,418 |
| Non-Interest Income | | | |
| Fees and service charges | 1,015 | 1,080 | 1,093 |
| Mortgage gain on sale and origination fees | 774 | 1,192 | 855 |
| Gain on sale of investment securities | 3,586 | 923 | 303 |
| Gain on sale of other real estate owned | -- | 87 | -- |
| Other income | 286 | 266 | 271 |
| Total non-interest income | 5,661 | 3,548 | 2,522 |
| Non-Interest Expense | | | |
| Salaries and employee benefits | 5,192 | 4,782 | 4,536 |
| Occupancy | 782 | 745 | 1,017 |
| Information technology | 627 | 642 | 666 |
| Professional services | 662 | 1,143 | 503 |
| Regulatory | 369 | 358 | 551 |
| Equipment | 415 | 390 | 405 |
| Sales and marketing | 121 | 258 | 137 |
| Foreclosed asset costs and write-downs | 55 | 31 | 98 |
| Provision for mortgage loan repurchases | 570 | 210 | 118 |
| Amortization of intangible assets | 100 | 84 | 86 |
| Other expense | 855 | 831 | 612 |
| Total non-interest expense | 9,748 | 9,474 | 8,729 |
| Income before income tax expense / (benefit) | 6,121 | 4,837 | 1,211 |
| Income tax expense / (benefit) | 2,391 | 1,710 | (374) |
| Net income | 3,730 | 3,127 | 1,585 |
| Dividends and accretion on preferred stock | 358 | 357 | 381 |
| Net income available to common shareholders | $ 3,372 | $ 2,770 | $ 1,204 |
| | | | |
| Weighted Average Shares Outstanding | | | |
| Basic | 25,112,004 | 25,101,083 | 25,057,664 |
| Diluted | 26,527,477 | 26,485,728 | 26,290,370 |
| Earnings Per Common Share | | | |
| Basic | $ 0.13 | $ 0.11 | $ 0.05 |
| Diluted | $ 0.13 | $ 0.10 | $ 0.05 |
| |
| Heritage Oaks Bancorp |
| Key Ratios |
| | | | |
| | Three Months Ended |
| PROFITABILITY / PERFORMANCE RATIOS | 3/31/2013 | 12/31/2012 | 3/31/2012 |
| Net interest margin | 4.14% | 4.35% | 4.72% |
| Return on average equity | 10.30% | 8.59% | 4.82% |
| Return on average common equity | 11.18% | 9.16% | 4.49% |
| Return on average tangible common equity | 12.51% | 10.23% | 5.10% |
| Return on average assets | 1.40% | 1.17% | 0.65% |
| Non interest income to total net revenue | 35.67% | 24.79% | 19.00% |
| Yield on interest earning assets | 4.49% | 4.70% | 5.16% |
| Cost of interest bearing liabilities | 0.54% | 0.55% | 0.65% |
| Cost of funds | 0.38% | 0.39% | 0.48% |
| Operating efficiency ratio (1) | 78.10% | 70.36% | 65.70% |
| Non-interest expense to average assets, annualized | 3.66% | 3.55% | 3.58% |
| | | | |
| ASSET QUALITY RATIOS | | | |
| | | | |
| Non-performing loans to total gross loans | 1.73% | 2.51% | 2.58% |
| Non-performing loans to equity | 8.33% | 11.89% | 12.56% |
| Non-performing assets to total assets | 1.16% | 1.58% | 1.74% |
| Allowance for loan losses to total gross loans | 2.52% | 2.63% | 3.07% |
| Net charge-offs / (recoveries) to average loans outstanding, annualized | 0.22% | -0.07% | 1.75% |
| Classified assets to Tier I + ALLL | 32.17% | 35.40% | 45.83% |
| 30-89 Day Delinquency Rate | 0.24% | 0.12% | 0.09% |
| | | | |
| CAPITAL RATIOS | | | |
| | | | |
| Company | | | |
| Leverage ratio | 12.72% | 12.32% | 12.17% |
| Tier I Risk-Based Capital Ratio | 16.50% | 15.55% | 14.60% |
| Total Risk-Based Capital Ratio | 17.76% | 16.81% | 15.87% |
| | | | |
| Bank | | | |
| Leverage ratio | 12.36% | 11.93% | 11.99% |
| Tier I Risk-Based Capital Ratio | 15.99% | 15.02% | 14.35% |
| Total Risk-Based Capital Ratio | 17.26% | 16.28% | 15.62% |
| | | | |
| (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 |
| | 3/31/2013 | 12/31/2012 | 3/31/2012 |
| (dollar amounts in thousands) | Balance | Yield/Rate | Inc/Exp | Balance | Yield/Rate | Inc/Exp | Balance | Yield/Rate | Inc/Exp |
| Interest Earning Assets | | | | | | | | | |
| Interest bearing deposits in other banks | $ 22,232 | 0.20% | $ 11 | $ 16,006 | 0.20% | $ 8 | $ 16,707 | 0.19% | $ 8 |
| Investment securities taxable | 207,656 | 1.91% | 978 | 203,846 | 2.07% | 1,061 | 193,788 | 2.88% | 1,386 |
| Investment securities non taxable | 58,102 | 3.18% | 455 | 63,538 | 3.28% | 524 | 44,553 | 3.72% | 412 |
| Other investments | 6,478 | 2.00% | 32 | 6,479 | 4.11% | 67 | 6,588 | 1.16% | 19 |
| Loans (1) | 705,604 | 5.52% | 9,597 | 695,457 | 5.71% | 9,989 | 654,633 | 6.10% | 9,927 |
| Total earning assets | $ 1,000,072 | 4.49% | $11,073 | $ 985,326 | 4.70% | $ 11,649 | $ 916,269 | 5.16% | $ 11,752 |
| Allowance for loan losses | (18,046) | | | (18,998) | | | (19,415) | | |
| Other assets | 97,589 | | | 96,267 | | | 83,001 | | |
| Total assets | $ 1,079,615 | | | $1,062,595 | | | $ 979,855 | | |
| | | | | | | | | | |
| Interest Bearing Liabilities | | | | | | | | | |
| Interest bearing demand | $ 71,769 | 0.11% | $ 19 | $ 72,490 | 0.12% | $ 22 | $ 64,142 | 0.09% | $ 15 |
| Savings | 39,297 | 0.10% | 10 | 37,312 | 0.10% | 9 | 33,993 | 0.11% | 9 |
| Money market | 290,374 | 0.31% | 225 | 298,130 | 0.32% | 242 | 277,115 | 0.39% | 271 |
| Time deposits | 183,278 | 0.90% | 406 | 176,474 | 0.90% | 400 | 187,963 | 1.13% | 527 |
| Total interest bearing deposits | 584,718 | 0.46% | 660 | 584,406 | 0.46% | 673 | 563,213 | 0.59% | 822 |
| Federal Home Loan Bank borrowing | 58,823 | 1.13% | 164 | 50,266 | 1.35% | 171 | 49,875 | 1.07% | 133 |
| Junior subordinated debentures | 8,248 | 2.02% | 41 | 8,248 | 2.03% | 42 | 8,248 | 2.34% | 48 |
| Total borrowed funds | 67,071 | 1.24% | 205 | 58,514 | 1.45% | 213 | 58,123 | 1.25% | 181 |
| Total interest bearing liabilities | 651,789 | 0.54% | 865 | 642,920 | 0.55% | 886 | 621,336 | 0.65% | 1,003 |
| Non interest bearing demand | 263,127 | | | 266,284 | | | 214,886 | | |
| Total funding | 914,916 | 0.38% | 865 | 909,204 | 0.39% | 886 | 836,222 | 0.48% | 1,003 |
| Other liabilities | 17,797 | | | 8,548 | | | 11,249 | | |
| Total liabilities | $ 932,713 | | | $ 917,752 | | | $ 847,471 | | |
| | | | | | | | | | |
| Stockholders' Equity | | | | | | | | | |
| Total stockholders' equity | 146,902 | | | 144,843 | | | 132,384 | | |
| Total liabilities and stockholders' equity | $ 1,079,615 | | | $1,062,595 | | | $ 979,855 | | |
| | | | | | | | | | |
| Net interest margin | | 4.14% | | | 4.35% | | | 4.72% | |
| | | | | | | | | | |
| Interest Rate Spread | | 3.95% | $10,208 | | 4.15% | $ 10,763 | | 4.51% | $ 10,749 |
| | | | | | | | | | |
| (1) Non-accrual loans have been included in total loans. |
| |
| Heritage Oaks Bancorp |
| Loans and Deposits |
| | | | |
| (dollar amounts in thousands) | | | |
| Loans | 3/31/2013 | 12/31/2012 | 3/31/2012 |
| Real Estate Secured | | | |
| Multi-family residential | $ 19,747 | $ 21,467 | $ 16,549 |
| Residential 1 to 4 family | 46,894 | 41,444 | 21,436 |
| Home equity lines of credit | 32,852 | 31,863 | 31,333 |
| Commercial | 391,159 | 372,592 | 361,762 |
| Farmland | 25,936 | 25,642 | 9,582 |
| Total real estate secured | 516,588 | 493,008 | 440,662 |
| Commercial | | | |
| Commercial and industrial | 120,988 | 125,340 | 132,078 |
| Agriculture | 27,820 | 21,663 | 16,393 |
| Other | 55 | 61 | 79 |
| Total commercial | 148,863 | 147,064 | 148,550 |
| Construction | | | |
| Single family residential | 8,803 | 8,074 | 12,987 |
| Single family residential - Spec. | 847 | 535 | 278 |
| Multi-family | 767 | 778 | 1,650 |
| Commercial | 477 | 10,329 | 10,608 |
| Total construction | 10,894 | 19,716 | 25,523 |
| Land | 23,816 | 24,664 | 24,882 |
| Installment loans to individuals | 4,527 | 4,895 | 5,608 |
| All other loans (including overdrafts) | 192 | 261 | 243 |
| Total gross loans | 704,880 | 689,608 | 645,468 |
| Deferred loan fees | 1,035 | 937 | 1,025 |
| Allowance for loan losses | 17,743 | 18,118 | 19,801 |
| Total net loans | $ 686,102 | $ 670,553 | $ 624,642 |
| Loans held for sale | $ 9,138 | $ 22,549 | $ 13,811 |
| | | | |
| | |
| Deposits | 3/31/2013 | 12/31/2012 | 3/31/2012 |
| Non-interest bearing deposits | $ 270,357 | $ 273,242 | $ 227,380 |
| Interest bearing deposits: | | | |
| NOW accounts | 69,952 | 76,728 | 65,717 |
| Other savings deposits | 40,262 | 41,021 | 35,127 |
| Money market deposit accounts | 293,409 | 293,525 | 283,860 |
| Time deposits | 188,835 | 186,354 | 194,276 |
| Total deposits | $ 862,815 | $ 870,870 | $ 806,360 |
| |
| Heritage Oaks Bancorp |
| Allowance for Loan Losses, Non-Performing and Classified Assets |
| | | | |
| | Three Months Ended |
| Allowance for Loan Losses | 3/31/2013 | 12/31/2012 | 3/31/2012 |
| Balance, beginning of period | $ 18,118 | $ 17,987 | $ 19,314 |
| Provision for loan losses | -- | -- | 3,331 |
| Loans charge-off | | | |
| Residential 1 to 4 family | -- | 11 | -- |
| Commercial real estate | -- | -- | 7 |
| Farmland | -- | -- | 4 |
| Commercial and industrial | 339 | 717 | 1,692 |
| Agriculture | -- | 145 | 450 |
| Construction | 169 | 460 | -- |
| Land | 34 | -- | 785 |
| Installment loans to individuals | 118 | 155 | 11 |
| All other loans | -- | -- | 137 |
| Total charge-offs | 660 | 1,488 | 3,086 |
| Recoveries of loans previously charged-off | 285 | 1,619 | 242 |
| Balance, end of period | $ 17,743 | $ 18,118 | $ 19,801 |
| | | | |
| Net charge-offs / (recoveries) | $ 375 | $ (131) | $ 2,844 |
| | | | |
| | |
| Non-Performing Assets | 3/31/2013 | 12/31/2012 | 3/31/2012 |
| Loans on non-accrual status | | | |
| Residential 1-4 family | $ 240 | $ 835 | $ 609 |
| Home equity lines of credit | 57 | 58 | 387 |
| Commercial real estate | 703 | 928 | 877 |
| Farmland | -- | 1,077 | -- |
| Commercial and industrial | 3,655 | 4,657 | 6,503 |
| Agriculture | 831 | 907 | 2,306 |
| Construction | -- | 1,380 | -- |
| Land | 6,640 | 7,182 | 5,911 |
| Installment | 101 | 285 | 60 |
| Total non-accruing loans | $ 12,227 | $ 17,309 | $ 16,653 |
| Other real estate owned (OREO) | -- | -- | 917 |
| Other repossessed assets | 88 | -- | -- |
| Total non-performing assets | $ 12,315 | $ 17,309 | $ 17,570 |
| | | | |
| | | | |
| | |
| Classified assets | 3/31/2013 | 12/31/2012 | 3/31/2012 |
| Loans | $ 48,734 | $ 51,130 | $ 61,111 |
| Other real estate owned (OREO) | -- | -- | 917 |
| Other | 88 | 308 | 284 |
| Total classified assets | $ 48,822 | $ 51,438 | $ 62,312 |
| | | | |
| Classified assets to Tier I + ALLL | 32.17% | 35.40% | 45.83% |
| | | | |
| 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 | | Balance |
| | December 31, | | Net | to Foreclosed | Accrual | Net | March 31, |
| (dollar amounts in thousands) | 2012 | Additions | Paydowns | Collateral | Status | Charge-offs | 2013 |
| Real Estate Secured | | | | | | | |
| Residential 1 to 4 family | $ 835 | $ -- | $ (231) | $ -- | $ (364) | $ -- | $ 240 |
| Home equity line of credit | 58 | -- | (1) | -- | -- | -- | 57 |
| Commercial | 928 | -- | (33) | -- | (192) | -- | 703 |
| Farmland | 1,077 | -- | (1,077) | -- | -- | -- | -- |
| Commercial | | | | | | | |
| Commercial and industrial | 4,334 | 356 | (458) | -- | (238) | (339) | 3,655 |
| Agriculture | 907 | -- | (65) | -- | (11) | -- | 831 |
| Construction | | | | | | | |
| Commercial | 1,380 | -- | -- | (1,211) | -- | (169) | -- |
| Land | 7,505 | 49 | (126) | -- | (754) | (34) | 6,640 |
| Installment loans to individuals | 285 | 70 | (4) | (88) | (44) | (118) | 101 |
| | | | | | | | |
| Totals | $ 17,309 | $ 475 | $ (1,995) | $ (1,299) | $ (1,603) | $ (660) | $ 12,227 |
| | | | | | | | |
| Heritage Oaks Bancorp |
| Quarter to Date OREO Reconciliation |
| | | | | | |
| | Balance | | | | Balance |
| | December 31, | | | | March 31, |
| (dollar amounts in thousands) | 2012 | Additions | Sales | Writedowns | 2013 |
| Construction | | | | | |
| Commercial | $ -- | $ 1,211 | $ (1,211) | $ -- | $ -- |
| | | | | | |
| Totals | $ -- | $ 1,211 | $ (1,211) | $ -- | $ -- |
| |
| Heritage Oaks Bancorp |
| Reconciliation of GAAP to Non-GAAP Financial Measure |
| | | | | |
| | | Three Months Ended |
| (dollar amounts in thousands) | 3/31/2013 | 12/31/2012 | 3/31/2012 |
| GAAP net income | $ 3,730 | $ 3,127 | $ 1,585 |
| Adjusted for: | | ` | |
| Income tax expense / (benefit) | 2,391 | 1,710 | (374) |
| Provision for loan losses | -- | -- | 3,331 |
| | | | | |
| Non-GAAP earnings before income taxes and provision for loan losses | $ 6,121 | $ 4,837 | $ 4,542 |
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