EXHIBIT 99.1
Heritage Oaks Bancorp Reports Second Quarter Results
Declares Quarterly Dividend of $0.06 per Common Share
PASO ROBLES, Calif., Aug. 01, 2016 (GLOBE NEWSWIRE) -- Heritage Oaks Bancorp (“Heritage Oaks” or the “Company”) (NASDAQ:HEOP), a bank holding company and parent of Heritage Oaks Bank (the “Bank”), reported net income available to common shareholders of $4.2 million, or $0.12 per dilutive common share, for the second quarter of 2016 compared to net income available to common shareholders of $3.7 million, or $0.11 per dilutive common share, for the second quarter of 2015, and net income available to common shareholders of $4.0 million, or $0.12 per dilutive common share for the first quarter of 2016.
Second Quarter 2016 Highlights
- Gross loans increased by $142.6 million, or 12.0%, to $1.33 billion at June 30, 2016 compared to $1.19 billion at June 30, 2015, and by $42.4 million or 3.3% compared to $1.29 billion at March 31, 2016. New loan production totaled $109.2 million for the second quarter of 2016. Loan production decreased by 6.8% compared to the linked quarter.
- Total deposits increased by $95.5 million, or 6.3% to $1.61 billion at June 30, 2016 compared with $1.51 billion a year earlier, and by $24.5 million, or 1.5% during the second quarter of 2016. Non-interest bearing demand deposits grew by 5.8% during the last year and by 4.3% over the last quarter to $546.5 million, and represent 34.0% of total deposits at June 30, 2016.
- Credit quality remains strong with non-accrual loans representing 0.51% of total gross loans at June 30, 2016, down from 0.63% for the linked quarter and 0.97% a year ago. Net recoveries for the second quarter of 2016 were $0.9 million compared to $0.1 million for both the linked quarter and the second quarter of 2015. Loans delinquent 30 to 89 days as a percentage of gross loans increased to 0.04% from 0.00% in the linked quarter, and 0.03% at June 30, 2015. During the second quarter of 2016 a reversal of provision for loan and lease losses of $1.0 million was recorded.
- Regulatory capital ratios for the Bank at June 30, 2016 were 9.20% for Tier 1 Leverage Capital, 13.13% for Total Risk Based Capital, and 11.91% for Common Equity Tier One Capital to Total Risk Based Capital.
- On July 27th, 2016 the board of directors declared a dividend of $0.06 per common share for shareholders of record as of August 15th, 2016, which is payable to our common shareholders on August 31st, 2016.
“Loan growth remained strong during the second quarter, and our asset mix continued to improve. This helped us to maintain our net interest margin despite the continued decline in intermediate and long term interest rates. This quarter also marks the third consecutive quarter in which we have achieved quarterly loan growth of over three percent,” stated Simone Lagomarsino, President and Chief Executive Officer of Heritage Oaks Bancorp. Ms. Lagomarsino continued, “During the second quarter we also continued our successful loss recovery efforts, which yielded significant recoveries of loans previously charged-off. The continued improvement in the credit metrics of our loan portfolio resulted in a reversal of provision for loan and lease losses.”
Net Income Available to Common Shareholders
Net income available to common shareholders for the second quarter of 2016 was $4.2 million, or $0.12 per diluted common share, compared with $3.7 million, or $0.11 per diluted common share, for the second quarter of 2015. Net income available to common shareholders for the quarter ended March 31, 2016 was $4.0 million, or $0.12 per diluted common share. Compared to the linked-quarter, improvement in net interest income after the reversal of provision for loan and lease losses helped to offset a decline in non-interest income, and an increase in non-interest expense, resulting in a $0.2 million increase in second quarter earnings compared to the linked-quarter. Compared to the second quarter of 2015, net interest income after reversal of provision for loan and lease losses increased by $2.1 million, and non-interest income increased by $0.3 million, more than offsetting an increase in non-interest expense of $1.6 million, resulting in a $0.5 million increase in net income available to common shareholders.
Net income available to common shareholders for the six months ended June 30, 2016 was $8.2 million, or $0.24 per dilutive common share as compared to $7.8 million or $0.23 per dilutive common share for the six months ended June 30, 2015. Compared to the first six months of 2015, net interest income after reversal of provision for loan and lease losses increased by $2.2 million, and non-interest income increased by $0.7 million, which more than offset a $2.4 million increase in non-interest expense, and resulted in a $0.4 million increase in net income available to common shareholders.
Net Interest Income
Net interest income before reversal of provision for loan and lease losses was $16.3 million, or 3.63% of average earning assets (“net interest margin”), for the second quarter of 2016 compared with $15.2 million, or a 3.67% net interest margin, for the same period a year earlier, and $15.6 million, or a 3.56% net interest margin, for the quarter ended March 31, 2016. Net interest income before reversal of provision for loan and lease losses increased $1.1 million, compared to the same prior year period, as the increase in average balances more than offset the decline in yields on interest earning assets. Net interest income before reversal of provision for loan and lease losses increased for the quarter ended June 30, 2016 as compared to linked quarter by $0.7 million due primarily to an increase in loan interest income attributable to growth in average loans during the current quarter, as well as an increase in accelerated purchased loan discount accretion.
The net interest margin was 3.63% for the second quarter of 2016 compared to 3.67% for the same prior year period, and 3.56% for the linked quarter ended March 31, 2016. The year-over-year 4 basis point decline, in net interest margin is attributable to a decline in loan yields and yields on other investments, which were partially offset by an increase in the yield on investment securities. Compared to the linked quarter, the net interest margin increased by 7 basis points due primarily to an improvement in asset mix, as well as to an increase in purchased loan discount accretion.
Loan yields declined by 12 basis points to 4.70% for the second quarter of 2016 from 4.82% for the second quarter of 2015, and increased by 3 basis points compared to 4.67% for the first quarter of 2016. The decline in loan yields for the current quarter as compared to the second quarter of 2015, was due to the impact of originating new loans at lower yields than our average loan portfolio yield due to the historically low interest rate environment. Compared to the linked quarter, the impact of originating loans at lower yields than average existing portfolio yields was more than offset by accelerated loan discount accretion. Purchased loan discount accretion contributed 20 basis points to loan yields during the second quarter of 2016, compared to 12 basis points during the linked quarter, and 15 basis points during the second quarter of 2015.
The cost of deposits for the second quarter of 2016 declined by 2 basis points compared to the same prior year period to 0.23%, and was unchanged compared to the first quarter of 2016. The 2 basis point decline in the cost of deposits for the second quarter of 2016 as compared to the second quarter of 2015 was due to a decline in the average balance and cost of time deposits.
Provision for Loan and Lease Losses
During the second quarter of 2016 the Company recorded a reversal of provision for loan and lease losses of $1.0 million. The Company did not record a provision for loan and lease losses for the quarter ended June 30, 2015, or during the linked quarter. The reversal of provision for loan and lease losses recorded during the second quarter of 2016 was attributable to continued improvement in loan credit quality metrics.
Non-Interest Income
Non-interest income for the second quarter of 2016 was $2.6 million, compared to $3.4 million for the linked quarter, and $2.3 million for the same period a year earlier. Non-interest income increased by $0.3 million for the current quarter as compared to the same prior year period, due to increases in gains on the sale of investment securities, mortgage banking revenue, earnings on bank owned life insurance, and customer swap fee income, which is represented by gain on derivative instruments in non-interest income. Compared to the linked quarter, non-interest income decreased by $0.8 million, primarily due to decreases in customer swap fee income, and gains on the sale of investment securities, which were partially offset by an increase in mortgage banking revenue.
Non-Interest Expense
Non-interest expense increased by $1.6 million, or 14.3%, to $13.1 million for the quarter ended June 30, 2016 compared to $11.4 million for the quarter ended June 30, 2015. Non-interest expense for the second quarter of 2016 increased by $0.4 million, or 3.5% from $12.6 million for the linked quarter.
The increase in non-interest expense for the second quarter of 2016 as compared to the second quarter a year ago was due to an $0.8 million increase in salaries and benefits costs, a $0.6 million increase in other expense, and a $0.3 million increase in professional services expense. The increase in salaries and benefits costs was attributable to a variety of factors, and was primarily due to increases in incentive compensation plan expense, base salaries, and mortgage commissions. The increase in other expense is attributable to an increase in operating losses, as well as to a prior year reversal of provision for mortgage repurchases. Operating losses increased primarily due to a recent data breach that occurred at other companies, and impacted some of our debit card customers. Our own systems were not breached, however, pursuant to Regulation E, we were responsible for reimbursing our customers for these losses. The increase in professional services was due to increases in other professional services, and BSA/AML Program remediation efforts, which were partially offset by a decline in legal costs.
The following table illustrates the components of professional services costs for the periods indicated:
| | | | | | | | | | | | |
| | | For the Three Months Ended | | For the Six Months Ended | |
| | | 6/30/2016 | | 3/31/2016 | | 6/30/2015 | | 6/30/2016 | | 6/30/2015 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | (dollars in thousands) | |
| Professional Services | | | | | | | | | | | |
| BSA/AML related costs | | $ | 637 | | | $ | 639 | | | $ | 488 | | | $ | 1,276 | | | $ | 765 | | |
| Information technology services and consulting | | | 308 | | | | 324 | | | | 354 | | | | 632 | | | | 639 | | |
| Audit and tax costs | | | 327 | | | | 424 | | | | 259 | | | | 751 | | | | 522 | | |
| Legal costs | | | 79 | | | | - | | | | 224 | | | | 79 | | | | 419 | | |
| All other costs | | | 621 | | | | 499 | | | | 377 | | | | 1,120 | | | | 763 | | |
| Total professional services | | $ | 1,972 | | | $ | 1,886 | | | $ | 1,702 | | | $ | 3,858 | | | $ | 3,108 | | |
| | | | | | | | | | | | |
Non-interest expense increased on a linked-quarter basis due to increases in salaries and benefits costs, other expenses, and professional services, which were partially offset by a decline in write-downs on other real estate owned (“OREO”). The increase in salaries and benefits costs was attributable to reversals of previously accrued equity compensation expense during the prior quarter, as well as to an increase in mortgage commissions. The increase in other expense is due to an increase in operating losses, and the decline in write-downs on OREO is attributable to a write-down recorded during the prior quarter.
Operating Efficiency
The Company’s operating efficiency ratio increased to 68.01% for the second quarter of 2016 as compared to 64.04% for the second quarter of 2015, and increased from 65.71% for the linked quarter. Total non-interest expense as a percentage of average assets, another measure of the Company’s efficiency, was 2.71% for the second quarter of 2016 compared to 2.55% for second quarter of 2015, and 2.68% for the quarter ended March 31, 2016.
Income Taxes
Income tax expense was $2.6 million for the quarter ended June 30, 2016 compared with $2.3 million for the same period a year earlier. For the linked quarter ended March 31, 2016 income tax expense was $2.4 million. The Company’s effective tax rate for the second quarter of 2016 was 38.18% compared with 37.54% for the same period a year ago, and 37.77% for the quarter ended March 31, 2016.
Balance Sheet
Total assets increased by $133.2 million, or 7.3%, to $2.0 billion at June 30, 2016 compared to June 30, 2015, and by $48.4 million, or 2.5 %, compared to March 31, 2016. Cash and cash equivalents decreased by $73.0 million, or 56.6%, to $56.0 million at June 30, 2016 compared to June 30, 2015, and increased by $2.5 million, or 4.6%, compared to March 31, 2016. The decrease in the Company’s cash position over the last year is primarily the result of deployment of cash inflows from new deposits into the loan and investment securities portfolios.
Investment securities increased by $67.0 million or 17.7%, to $446.9 million at June 30, 2016 compared to $379.8 million at June 30, 2015, and by $5.2 million, or 1.2%, compared to $441.7 million at March 31, 2016. At June 30, 2016, the effective duration of the securities portfolio was 2.99 years. We currently target a 2.75 to 3.25 year effective duration for the entire securities portfolio.
Total gross loans increased by $142.6 million, or 12.0%, to $1.33 billion at June 30, 2016 compared to June 30, 2015, and by $42.4 million, or 3.3%, compared to March 31, 2016. New loan production for the held for investment portfolio (“portfolio loans”) was $67.3 million during the quarter ended June 30, 2016, down $20.5 million or 23% compared to the prior quarter. Utilization on lines of credit contributed $14.5 million to second quarter 2016 loan growth.
Total deposits increased by $95.5 million, or 6.3%, to $1.61 billion as of June 30, 2016 from $1.51 billion at June 30, 2015, and by $24.5 million, or 1.5%, from $1.58 billion at March 31, 2016. Non-interest bearing deposits increased by $22.5 million, or 4.3%, during the second quarter of 2016, and increased by $30.1 million, or 5.8%, since June 30, 2015. The majority of the growth achieved over the last year came from municipalities, public entities, and our commercial clients.
Total shareholders’ equity was $213.9 million at June 30, 2016, an increase of $11.8 million, or 5.8%, compared to June 30, 2015, and an increase of $5.6 million, or 2.7%, compared to March 31, 2016, due primarily to quarterly earnings, net of shareholder dividend payments and share repurchases, as well as to the change in the unrealized gain on the investment securities portfolio. The change in the unrealized gain in the securities portfolio led to an increase in equity of $3.2 million, and of $4.8 million during the past quarter, and year, respectively.
Classified assets at June 30, 2016 totaled $42.1 million, and decreased by $1.5 million, or 3.4%, compared to $43.6 million at March 31, 2016, and decreased by $7.4 million, or 14.9%, from $49.5 million at June 30, 2015. Non-performing assets were $6.9 million at June 30, 2016 compared to $8.3 million at March 31, 2016 representing a $1.4 million, or 16.3%, decrease since the prior quarter, and a $5.0 million, or 42.0% decline since June 30, 2015. Non-performing assets remain at the lowest level reached in the last several years, at 0.35% of total assets at June 30, 2016, down from 0.43% at March 31, 2016, and down from 0.65% at June 30, 2015.
Allowance for Loan and Lease Losses
The allowance for loan and lease losses (“ALLL”) as a percentage of gross loans declined from 1.43% at June 30, 2015 to 1.31% at June 30, 2016. The decline in the level of our ALLL as a percentage of gross loans over the last twelve months is due to the relatively stable credit profile of the Company, which is evidenced by its asset quality ratios, as well as a consistent trend of net loan recoveries during that time, and in particular the current quarter.
As of June 30, 2016, the portion of the ALLL allocated to loans acquired in the Mission Community Bancorp (“MISN”) merger was $0.3 million or 0.19% of the remaining acquired MISN loan portfolio. The remaining un-accreted fair market value discount on MISN loans was $4.6 million at June 30, 2016 and represents 2.9% of the remaining balance of acquired MISN loans.
Due to continued heightened concerns regarding the effects of the California drought upon our agribusiness loan customers and related businesses, the Bank has provided a $1.7 million qualitative allocation in its ALLL to address these concerns, which accounts for 9.5% of the total ALLL at June 30, 2016. Management will continue to monitor the drought as it relates to our agribusiness customers and the local economy.
Regulatory Capital
The Bank’s regulatory capital ratios exceeded the ratios generally required to be considered a “well capitalized” financial institution for regulatory purposes. The Tier I Leverage Ratios for the Company and the Bank were 9.80%, and 9.20%, respectively, at June 30, 2016 compared with the requirement of 5.00% to generally be considered a “well capitalized” financial institution for regulatory purposes. The Total Risk-Based Capital Ratios for the Company and the Bank were 13.91%, and 13.13%, respectively, at June 30, 2016 compared with the requirement of 10.00% to generally be considered a “well capitalized” financial institution for regulatory purposes. The Common Equity Tier 1 Capital Ratio for the Company and the Bank were 12.16%, and 11.91%, respectively, at June 30, 2016 compared with the requirement of 6.5% to generally be considered a "well capitalized" financial institution for regulatory purposes. The Company’s regulatory capital ratios declined as compared to the linked quarter due primarily to the impact of $2.1 million of quarterly shareholder dividend payments. The Bank’s regulatory capital ratios increased compared to the linked quarter, as regulatory capital growth outpaced risk-weighted and average asset growth.
BSA Consent Order
The Company continued to make progress addressing the issues identified in the BSA Consent Order that we entered into with our regulators in November 2014. We believe that the Company is close to completing the remediation efforts required to address the issues identified in the BSA Consent Order, and look forward to the full resolution of this regulatory matter.
Conference Call
The Company will host a conference call to discuss the second quarter 2016 results at 8:00 a.m. PDT on August 2, 2016. Media representatives, analysts and the public are invited to listen to this discussion by calling (877) 363-5052 (International Dial-In Number (914) 495-8600) and entering the conference ID 21799436, 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.
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 June 30, 2016 on or before August 15, 2016. Once filed, 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 Jason Castle, Chief Financial Officer. By including the foregoing website addresses, Heritage Oaks Bancorp does not intend to, and shall not be deemed to incorporate by reference any material contained therein.
About Heritage Oaks Bancorp and Heritage Oaks Bank
With $2.0 billion in assets, Heritage Oaks Bancorp is headquartered in Paso Robles, California and is the holding company for Heritage Oaks Bank. Heritage Oaks Bank operates two branch offices each in Paso Robles and San Luis Obispo; single branch offices in Atascadero, Templeton, Cambria, Morro Bay, Arroyo Grande, Santa Maria, Goleta and Santa Barbara; as well as a single loan production office in Ventura/Oxnard. Heritage Oaks Bank conducts commercial banking business in San Luis Obispo, Santa Barbara, and Ventura counties. Visit Heritage Oaks Bank on the Web at www.heritageoaksbank.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, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs, 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 help identify 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, which expectations and assumptions could prove wrong. 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: renewed softness in the overall economy, including the California real estate market; the effect of the current low interest rate environment or changes in interest rates on our net interest margin; changes in the Company’s business strategy or development plans; our ability to attract and retain qualified employees; a failure or breach of our operational security systems or infrastructure or those of our customers, our third party vendors or other service providers, including as a result of a cyber-attack; any compromise in the secured transmission of personal, financial and/or confidential information over public networks; environmental conditions, including the prolonged drought in California, natural disasters such as earthquakes, landslides, and wildfires that may disrupt business, impede operations, or negatively impact the ability of certain borrowers to repay their loans and/or the values of collateral securing loans; the possibility of an unfavorable ruling in a legal matter, and the potential impact that it may have on earnings, reputation, or the Bank’s operations; and the possibility that any expansionary activities will be impeded while the FDIC’s and CA DBO’s joint BSA Consent Order remains outstanding, and that we will be unable to comply with the requirements set forth in the BSA Consent Order, which could result in restrictions on our operations.
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, 2015, filed by the Company with the U.S. Securities and Exchange Commission on March 4, 2016.
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
The Company 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 non-GAAP measures used by management to assess operating results. Therefore, included at the end of the tables below is a schedule reconciling book value to tangible common book value per share. We believe that presentation of tangible common book value per share is a useful measure for investors because it is widely used in the financial services industry to compare the relative market value of one financial institution against another. In addition, we analyze our net income as a percentage of tangible common book value internally, because we feel that this return metric is more representative of the return to our shareholders relative to the their investment in our Company.
| |
| Heritage Oaks Bancorp |
| Consolidated Balance Sheets |
| (unaudited) |
| | | | | | | |
| | | 6/30/2016 | | 3/31/2016 | | 6/30/2015 |
| | | (dollars in thousands, except per share data) |
| Assets | | | | | | |
| Cash and due from banks | | $ | 15,768 | | | $ | 14,804 | | | $ | 16,085 | |
| Interest earning deposits in other banks | | | 40,274 | | | | 38,771 | | | | 112,928 | |
| Total cash and cash equivalents | | | 56,042 | | | | 53,575 | | | | 129,013 | |
| Investment securities available for sale, at fair value | | | 446,877 | | | | 441,705 | | | | 379,824 | |
| Loans held for sale, at lower of cost or fair value | | | 8,534 | | | | 6,560 | | | | 8,736 | |
| Gross loans held for investment | | | 1,333,719 | | | | 1,291,346 | | | | 1,191,153 | |
| Net deferred loan fees | | | (1,181 | ) | | | (1,160 | ) | | | (1,157 | ) |
| Allowance for loan and lease losses | | | (17,448 | ) | | | (17,565 | ) | | | (16,982 | ) |
| Net loans held for investment | | | 1,315,090 | | | | 1,272,621 | | | | 1,173,014 | |
| Premises and equipment, net | | | 36,613 | | | | 36,843 | | | | 37,996 | |
| Bank-owned life insurance | | | 33,284 | | | | 33,069 | | | | 25,032 | |
| Goodwill | | | 24,885 | | | | 24,885 | | | | 24,885 | |
| Deferred tax assets, net | | | 15,321 | | | | 18,715 | | | | 23,180 | |
| Federal Home Loan Bank stock | | | 7,853 | | | | 7,853 | | | | 7,853 | |
| Other intangible assets | | | 3,812 | | | | 4,055 | | | | 4,823 | |
| Premises held for sale | | | - | | | | - | | | | 1,840 | |
| Other assets | | | 13,221 | | | | 13,239 | | | | 12,183 | |
| Total assets | | $ | 1,961,532 | | | $ | 1,913,120 | | | $ | 1,828,379 | |
| | | | | | | |
| Liabilities | | | | | | |
| Deposits | | | | | | |
| Non-interest bearing deposits | | $ | 546,520 | | | $ | 524,025 | | | $ | 516,431 | |
| Interest bearing deposits | | | 1,060,569 | | | | 1,058,564 | | | | 995,208 | |
| Total deposits | | | 1,607,089 | | | | 1,582,589 | | | | 1,511,639 | |
| Short term FHLB borrowing | | | 49,500 | | | | 29,500 | | | | 10,500 | |
| Long term FHLB borrowing | | | 71,003 | | | | 73,512 | | | | 83,050 | |
| Junior subordinated debentures | | | 10,529 | | | | 10,485 | | | | 13,338 | |
| Other liabilities | | | 9,529 | | | | 8,704 | | | | 7,770 | |
| Total liabilities | | | 1,747,650 | | | | 1,704,790 | | | | 1,626,297 | |
| | | | | | | |
| Shareholders' Equity | | | | | | |
| Common stock, no par value; authorized: 100,000,000 shares; | | | | | | |
| issued and outstanding: 34,205,542, 34,129,425, and 34,314,242 shares as of | | | | | | |
| June 30, 2016, March 31, 2016, and June 30, 2015, respectively | | | 163,931 | | | | 163,923 | | | | 165,415 | |
| Additional paid in capital | | | 8,668 | | | | 8,460 | | | | 7,658 | |
| Retained earnings | | | 36,295 | | | | 34,134 | | | | 28,800 | |
| Accumulated other comprehensive income | | | 4,988 | | | | 1,813 | | | | 209 | |
| Total shareholders' equity | | | 213,882 | | | | 208,330 | | | | 202,082 | |
| Total liabilities and shareholders' equity | | $ | 1,961,532 | | | $ | 1,913,120 | | | $ | 1,828,379 | |
| | | | | | | |
| Book value per common share | | $ | 6.25 | | | $ | 6.10 | | | $ | 5.89 | |
| | | | | | | |
| Tangible book value per common share | | $ | 5.41 | | | $ | 5.26 | | | $ | 5.02 | |
| | | | | | | |
| Heritage Oaks Bancorp | | |
| Consolidated Statements of Income | | |
| (unaudited) | | |
| | | | | | | | | |
| | | For the Three Months Ended | | |
| | | 6/30/2016 | | 3/31/2016 | | 6/30/2015 | | |
| | | (dollars in thousands, except per share data) | | |
| Interest Income | | | | | | | | |
| Loans, including fees | | $ | 15,315 | | | $ | 14,615 | | | $ | 14,585 | | | |
| Investment securities | | | 2,189 | | | | 2,200 | | | | 1,662 | | | |
| Other interest-earning assets | | | 239 | | | | 200 | | | | 494 | | | |
| Total interest income | | | 17,743 | | | | 17,015 | | | | 16,741 | | | |
| Interest Expense | | | | | | | | |
| Deposits | | | 891 | | | | 879 | | | | 918 | | | |
| Other borrowings | | | 553 | | | | 518 | | | | 581 | | | |
| Total interest expense | | | 1,444 | | | | 1,397 | | | | 1,499 | | | |
| Net interest income before (reversal of) provision for loan and lease losses | | | 16,299 | | | | 15,618 | | | | 15,242 | | | |
| (Reversal of) provision for loan and lease losses | | | (1,000 | ) | | | - | | | | - | | | |
| Net interest income after (reversal of) provision for loan and lease losses | | | 17,299 | | | | 15,618 | | | | 15,242 | | | |
| Non-Interest Income | | | | | | | | |
| Fees and service charges | | | 1,194 | | | | 1,209 | | | | 1,213 | | | |
| Net gain on sale of mortgage loans | | | 530 | | | | 458 | | | | 484 | | | |
| Earnings on BOLI | | | 289 | | | | 287 | | | | 215 | | | |
| Other mortgage fee income | | | 148 | | | | 91 | | | | 118 | | | |
| Gain on sale of investment securities | | | 87 | | | | 551 | | | | - | | | |
| Gain on derivative instruments | | | 65 | | | | 532 | | | | - | | | |
| Other income | | | 270 | | | | 279 | | | | 241 | | | |
| Total non-interest income | | | 2,583 | | | | 3,407 | | | | 2,271 | | | |
| Non-Interest Expense | | | | | | | | |
| Salaries and employee benefits | | | 6,607 | | | | 6,318 | | | | 5,786 | | | |
| Professional services | | | 1,972 | | | | 1,886 | | | | 1,702 | | | |
| Occupancy and equipment | | | 1,649 | | | | 1,627 | | | | 1,748 | | | |
| Information technology | | | 630 | | | | 600 | | | | 541 | | | |
| Regulatory assessments | | | 315 | | | | 310 | | | | 300 | | | |
| Loan department expense | | | 259 | | | | 227 | | | | 260 | | | |
| Sales and marketing | | | 246 | | | | 244 | | | | 295 | | | |
| Amortization of intangible assets | | | 243 | | | | 243 | | | | 262 | | | |
| Communication costs | | | 125 | | | | 125 | | | | 144 | | | |
| OREO write-downs | | | - | | | | 217 | | | | - | | | |
| Other expense | | | 1,018 | | | | 824 | | | | 391 | | | |
| Total non-interest expense | | | 13,064 | | | | 12,621 | | | | 11,429 | | | |
| Income before income taxes | | | 6,818 | | | | 6,404 | | | | 6,084 | | | |
| Income tax expense | | | 2,603 | | | | 2,419 | | | | 2,284 | | | |
| Net income | | | 4,215 | | | | 3,985 | | | | 3,800 | | | |
| Accretion on preferred stock | | | - | | | | - | | | | 70 | | | |
| Net income available to common shareholders | | $ | 4,215 | | | $ | 3,985 | | | $ | 3,730 | | | |
| | | | | | | | | |
| Weighted Average Shares Outstanding | | | | | | | | |
| Basic | | | 33,998,644 | | | | 34,096,379 | | | | 34,105,192 | | | |
| Diluted | | | 34,140,986 | | | | 34,204,457 | | | | 34,249,591 | | | |
| Earnings Per Common Share | | | | | | | | |
| Basic | | $ | 0.12 | | | $ | 0.12 | | | $ | 0.11 | | | |
| Diluted | | $ | 0.12 | | | $ | 0.12 | | | $ | 0.11 | | | |
| Dividends Declared Per Common Share | | $ | 0.06 | | | $ | 0.06 | | | $ | 0.06 | | | |
| | | | | | | | | |
| Heritage Oaks Bancorp | |
| Consolidated Statements of Income | |
| (unaudited) | |
| | | | | | |
| | | For the Six Months Ended | |
| | | 6/30/2016 | | 6/30/2015 | |
| | | (dollars in thousands, except per share data) | |
| Interest Income | | | | | |
| Loans, including fees | | $ | 29,930 | | | $ | 29,673 | | |
| Investment securities | | | 4,389 | | | | 3,329 | | |
| Other interest-earning assets | | | 439 | | | | 667 | | |
| Total interest income | | | 34,758 | | | | 33,669 | | |
| Interest Expense | | | | | |
| Deposits | | | 1,770 | | | | 1,807 | | |
| Other borrowings | | | 1,071 | | | | 1,122 | | |
| Total interest expense | | | 2,841 | | | | 2,929 | | |
| Net interest income before (reversal of) provision for loan and lease losses | | | 31,917 | | | | 30,740 | | |
| (Reversal of) provision for loan and lease losses | | | (1,000 | ) | | | - | | |
| Net interest income after (reversal of) provision for loan and lease losses | | | 32,917 | | | | 30,740 | | |
| Non-Interest Income | | | | | |
| Fees and service charges | | | 2,403 | | | | 2,420 | | |
| Net gain on sale of mortgage loans | | | 988 | | | | 870 | | |
| Gain on sale of investment securities | | | 638 | | | | 505 | | |
| Gain on derivative instruments | | | 597 | | | | - | | |
| Earnings on BOLI | | | 576 | | | | 426 | | |
| Other mortgage fee income | | | 239 | | | | 256 | | |
| Other income | | | 549 | | | | 795 | | |
| Total non-interest income | | | 5,990 | | | | 5,272 | | |
| Non-Interest Expense | | | | | |
| Salaries and employee benefits | | | 12,925 | | | | 12,045 | | |
| Professional services | | | 3,858 | | | | 3,108 | | |
| Occupancy and equipment | | | 3,276 | | | | 3,335 | | |
| Information technology | | | 1,230 | | | | 1,142 | | |
| Regulatory assessments | | | 625 | | | | 597 | | |
| Sales and marketing | | | 490 | | | | 612 | | |
| Loan department expense | | | 486 | | | | 546 | | |
| Amortization of intangible assets | | | 486 | | | | 524 | | |
| Communication costs | | | 250 | | | | 285 | | |
| OREO write-downs | | | 217 | | | | - | | |
| Other expense | | | 1,842 | | | | 1,048 | | |
| Total non-interest expense | | | 25,685 | | | | 23,242 | | |
| Income before income taxes | | | 13,222 | | | | 12,770 | | |
| Income tax expense | | | 5,022 | | | | 4,901 | | |
| Net income | | | 8,200 | | | | 7,869 | | |
| Accretion on preferred stock | | | - | | | | 70 | | |
| Net income available to common shareholders | | $ | 8,200 | | | $ | 7,799 | | |
| | | | | | |
| Weighted Average Shares Outstanding | | | | | |
| Basic | | | 34,047,511 | | | | 34,086,786 | | |
| Diluted | | | 34,176,587 | | | | 34,236,895 | | |
| Earnings Per Common Share | | | | | |
| Basic | | $ | 0.24 | | | $ | 0.23 | | |
| Diluted | | $ | 0.24 | | | $ | 0.23 | | |
| Dividends Declared Per Common Share | | $ | 0.12 | | | $ | 0.11 | | |
| | | | | | |
| Heritage Oaks Bancorp |
| Key Ratios |
| | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Six Months Ended |
| | | 6/30/2016 | | 3/31/2016 | | 6/30/2015 | | | 6/30/2016 | | 6/30/2015 |
| Profitability / Performance Ratios | | | | | | | | | | | |
| Net interest margin | | | 3.63 | % | | | 3.56 | % | | | 3.67 | % | | | | 3.59 | % | | | 3.79 | % |
| Return on average equity | | | 8.06 | % | | | 7.66 | % | | | 7.53 | % | | | | 7.86 | % | | | 7.89 | % |
| Return on average common equity | | | 8.06 | % | | | 7.66 | % | | | 7.42 | % | | | | 7.86 | % | | | 7.85 | % |
| Return on average tangible common equity | | | 9.34 | % | | | 8.90 | % | | | 8.71 | % | | | | 9.12 | % | | | 9.24 | % |
| Return on average assets | | | 0.87 | % | | | 0.85 | % | | | 0.85 | % | | | | 0.86 | % | | | 0.90 | % |
| Non-interest income to total net revenue | | | 13.68 | % | | | 17.91 | % | | | 12.97 | % | | | | 15.80 | % | | | 14.64 | % |
| Yield on interest earning assets | | | 3.95 | % | | | 3.88 | % | | | 4.03 | % | | | | 3.91 | % | | | 4.15 | % |
| Cost of interest bearing liabilities | | | 0.49 | % | | | 0.48 | % | | | 0.55 | % | | | | 0.48 | % | | | 0.55 | % |
| Cost of funds | | | 0.34 | % | | | 0.34 | % | | | 0.38 | % | | | | 0.34 | % | | | 0.38 | % |
| Operating efficiency ratio (1) | | | 68.01 | % | | | 65.71 | % | | | 64.04 | % | | | | 66.87 | % | | | 64.09 | % |
| Non-interest expense to average assets, annualized | | | 2.71 | % | | | 2.68 | % | | | 2.55 | % | | | | 2.70 | % | | | 2.65 | % |
| Gross loans to total deposits | | | 82.99 | % | | | 81.60 | % | | | 78.80 | % | | | | | |
| | | | | | | | | | | | |
| Asset Quality Ratios | | | | | | | | | | | |
| Non-performing loans to total gross loans | | | 0.51 | % | | | 0.63 | % | | | 0.97 | % | | | | | |
| Non-performing loans to equity | | | 3.19 | % | | | 3.92 | % | | | 5.73 | % | | | | | |
| Non-performing assets to total assets | | | 0.35 | % | | | 0.43 | % | | | 0.65 | % | | | | | |
| Allowance for loan and lease losses to total gross loans | | | 1.31 | % | | | 1.36 | % | | | 1.43 | % | | | | | |
| Net recoveries to average loans outstanding, annualized | | | 0.27 | % | | | 0.04 | % | | | 0.02 | % | | | | 0.16 | % | | | 0.03 | % |
| Classified assets to Tier I + ALLL | | | 20.66 | % | | | 21.70 | % | | | 25.15 | % | | | | | |
| 30-89 day delinquency rate | | | 0.04 | % | | | 0.00 | % | | | 0.03 | % | | | | | |
| | | | | | | | | | | | |
| Capital Ratios | | | | | | | | | | | |
| Company | | | | | | | | | | | |
| Common Equity Tier I Capital Ratio | | | 12.16 | % | | | 12.23 | % | | | 12.96 | % | | | | | |
| Leverage ratio | | | 9.80 | % | | | 9.86 | % | | | 10.22 | % | | | | | |
| Tier I Risk-Based Capital Ratio | | | 12.69 | % | | | 12.74 | % | | | 13.55 | % | | | | | |
| Total Risk-Based Capital Ratio | | | 13.91 | % | | | 13.99 | % | | | 14.80 | % | | | | | |
| Bank | | | | | | | | | | | |
| Common Equity Tier I Capital Ratio | | | 11.91 | % | | | 11.80 | % | | | 12.48 | % | | | | | |
| Leverage ratio | | | 9.20 | % | | | 9.13 | % | | | 9.41 | % | | | | | |
| Tier I Risk-Based Capital Ratio | | | 11.91 | % | | | 11.80 | % | | | 12.48 | % | | | | | |
| Total Risk-Based Capital Ratio | | | 13.13 | % | | | 13.05 | % | | | 13.73 | % | | | | | |
| |
(1) The efficiency ratio is defined as total non-interest expense as a percentage of the combined: net interest income, non-interest income, excluding gains and losses on the sale of securities, gains and losses on the sale of other real estate owned (“OREO”), write-downs on OREO, OREO related costs, gains and losses on the sale of fixed assets, gains on extinguishment of debt, and amortization of intangible assets.
| | |
| Heritage Oaks Bancorp | |
| Average Balances | |
| | | | | | | | | | | | | | |
| | | For The Three Months Ended | |
| | | 6/30/2016 | | 3/31/2016 | | 6/30/2015 | |
| | | Balance | Yield /
Rate (4) | Income /
Expense | | Balance | Yield /
Rate (4) | Income /
Expense | | Balance | Yield /
Rate (4) | Income /
Expense | |
| | | (dollars in thousands) | |
| Interest Earning Assets | | | | | | | | | | | | | |
| Loans (1) (2) | | $ | 1,310,096 | | | 4.70 | % | $ | 15,315 | | | $ | 1,258,180 | | | 4.67 | % | $ | 14,615 | | | $ | 1,213,772 | | | 4.82 | % | $ | 14,585 | | |
| Investment securities | | | 443,522 | | | 1.99 | % | | 2,189 | | | | 448,723 | | | 1.97 | % | | 2,200 | | | | 369,468 | | | 1.80 | % | | 1,662 | | |
| Interest earning deposits in other banks | | | 44,809 | | | 0.33 | % | | 37 | | | | 46,342 | | | 0.31 | % | | 36 | | | | 71,993 | | | 0.18 | % | | 33 | | |
| Other investments | | | 9,739 | | | 8.34 | % | | 202 | | | | 9,739 | | | 6.77 | % | | 164 | | | | 9,739 | | | 18.99 | % | | 461 | | |
| Total earning assets | | | 1,808,166 | | | 3.95 | % | | 17,743 | | | | 1,762,984 | | | 3.88 | % | | 17,015 | | | | 1,664,972 | | | 4.03 | % | | 16,741 | | |
| Allowance for loan and lease losses | | | (17,807 | ) | | | | | (17,513 | ) | | | | | (17,037 | ) | | | |
| Other assets | | | 147,463 | | | | | | 149,211 | | | | | | 148,680 | | | | |
| Total assets | | $ | 1,937,822 | | | | | $ | 1,894,682 | | | | | $ | 1,796,615 | | | | |
| | | | | | | | | | | | | | |
| Interest Bearing Liabilities | | | | | | | | | | | | | |
| Money market | | $ | 583,822 | | | 0.28 | % | $ | 408 | | | $ | 568,497 | | | 0.28 | % | $ | 392 | | | $ | 506,651 | | | 0.28 | % | $ | 354 | | |
| Time deposits | | | 240,037 | | | 0.71 | % | | 421 | | | | 243,940 | | | 0.70 | % | | 426 | | | | 270,283 | | | 0.75 | % | | 507 | | |
| Interest bearing demand | | | 125,918 | | | 0.11 | % | | 34 | | | | 126,373 | | | 0.11 | % | | 34 | | | | 118,692 | | | 0.11 | % | | 33 | | |
| Savings | | | 109,748 | | | 0.10 | % | | 28 | | | | 110,244 | | | 0.10 | % | | 27 | | | | 95,875 | | | 0.10 | % | | 24 | | |
| Total interest bearing deposits | | | 1,059,525 | | | 0.34 | % | | 891 | | | | 1,049,054 | | | 0.34 | % | | 879 | | | | 991,501 | | | 0.37 | % | | 918 | | |
| Federal Home Loan Bank borrowing | | | 118,833 | | | 1.43 | % | | 422 | | | | 111,913 | | | 1.38 | % | | 384 | | | | 93,552 | | | 1.89 | % | | 440 | | |
| Junior subordinated debentures | | | 10,501 | | | 5.02 | % | | 131 | | | | 10,455 | | | 5.08 | % | | 132 | | | | 13,305 | | | 4.25 | % | | 141 | | |
| Other borrowed funds | | | - | | | 0.00 | % | | - | | | | 220 | | | 3.66 | % | | 2 | | | | - | | | 0.00 | % | | - | | |
| Total borrowed funds | | | 129,334 | | | 1.72 | % | | 553 | | | | 122,588 | | | 1.70 | % | | 518 | | | | 106,857 | | | 2.18 | % | | 581 | | |
| Total interest bearing liabilities | | | 1,188,859 | | | 0.49 | % | | 1,444 | | | | 1,171,642 | | | 0.48 | % | | 1,397 | | | | 1,098,358 | | | 0.55 | % | | 1,499 | | |
| Non interest bearing demand | | | 528,123 | | | | | | 503,953 | | | | | | 486,829 | | | | |
| Total funding | | | 1,716,982 | | | 0.34 | % | | 1,444 | | | | 1,675,595 | | | 0.34 | % | | 1,397 | | | | 1,585,187 | | | 0.38 | % | | 1,499 | | |
| Other liabilities | | | 10,392 | | | | | | 9,954 | | | | | | 8,947 | | | | |
| Total liabilities | | | 1,727,374 | | | | | | 1,685,549 | | | | | | 1,594,134 | | | | |
| | | | | | | | | | | | | | |
| Shareholders' Equity | | | | | | | | | | | | | |
| Total shareholders' equity | | | 210,448 | | | | | | 209,133 | | | | | | 202,481 | | | | |
| Total liabilities and shareholders' equity | | $ | 1,937,822 | | | | | $ | 1,894,682 | | | | | $ | 1,796,615 | | | | |
| | | | | | | | | | | | | | |
| Net interest margin (3) | | | | 3.63 | % | $ | 16,299 | | | | | 3.56 | % | $ | 15,618 | | | | | 3.67 | % | $ | 15,242 | | |
| | | | | | | | | | | | | | |
| Interest rate spread | | | | 3.46 | % | | | | | 3.40 | % | | | | | 3.48 | % | | |
| | | | | | | | | | | | | | |
| Cost of deposits | | | | 0.23 | % | | | | | 0.23 | % | | | | | 0.25 | % | | |
| | | | | | | | | | | | | | |
| (1) Non-accrual loans have been included in total loans. | |
| (2) Interest income includes fees on loans. | |
| (3) Net interest margin represents net interest income as a percentage of average interest earning assets. | |
| (4) Annualized using actual number of days during the period. | |
| | | | | | | | | | | | | | |
| Heritage Oaks Bancorp | | |
| Average Balances | | |
| | | | | | | | | | | |
| | | For The Six Months Ended | | |
| | | 6/30/2016 | | 6/30/2015 | | |
| | | Balance | Yield /
Rate (4) | Income /
Expense | | Balance | Yield /
Rate (4) | Income /
Expense | | |
| | | (dollars in thousands) | | |
| Interest Earning Assets | | | | | | | | | | |
| Loans (1) (2) | | $ | 1,284,138 | | | 4.69 | % | $ | 29,930 | | | $ | 1,204,569 | | | 4.97 | % | $ | 29,673 | | | |
| Investment securities | | | 446,122 | | | 1.98 | % | | 4,389 | | | | 361,290 | | | 1.86 | % | | 3,329 | | | |
| Interest earning deposits in other banks | | | 45,576 | | | 0.32 | % | | 73 | | | | 59,669 | | | 0.18 | % | | 54 | | | |
| Other investments | | | 9,739 | | | 7.56 | % | | 366 | | | | 9,839 | | | 12.56 | % | | 613 | | | |
| Total earning assets | | | 1,785,575 | | | 3.91 | % | | 34,758 | | | | 1,635,367 | | | 4.15 | % | | 33,669 | | | |
| Allowance for loan and lease losses | | | (17,660 | ) | | | | | (16,950 | ) | | | | |
| Other assets | | | 148,337 | | | | | | 150,288 | | | | | |
| Total assets | | $ | 1,916,252 | | | | | $ | 1,768,705 | | | | | |
| | | | | | | | | | | |
| Interest Bearing Liabilities | | | | | | | | | | |
| Money market | | $ | 576,160 | | | 0.28 | % | $ | 800 | | | $ | 485,481 | | | 0.28 | % | $ | 672 | | | |
| Time deposits | | | 241,988 | | | 0.70 | % | | 847 | | | | 274,441 | | | 0.75 | % | | 1,024 | | | |
| Interest bearing demand | | | 126,146 | | | 0.11 | % | | 68 | | | | 117,317 | | | 0.11 | % | | 64 | | | |
| Savings | | | 109,996 | | | 0.10 | % | | 55 | | | | 95,219 | | | 0.10 | % | | 47 | | | |
| Total interest bearing deposits | | | 1,054,290 | | | 0.34 | % | | 1,770 | | | | 972,458 | | | 0.37 | % | | 1,807 | | | |
| Federal Home Loan Bank borrowing | | | 115,373 | | | 1.40 | % | | 806 | | | | 96,775 | | | 1.75 | % | | 839 | | | |
| Junior subordinated debentures | | | 10,478 | | | 5.05 | % | | 263 | | | | 13,279 | | | 4.30 | % | | 283 | | | |
| Other borrowed funds | | | 110 | | | 3.66 | % | | 2 | | | | - | | | 0.00 | % | | - | | | |
| Total borrowed funds | | | 125,961 | | | 1.71 | % | | 1,071 | | | | 110,054 | | | 2.06 | % | | 1,122 | | | |
| Total interest bearing liabilities | | | 1,180,251 | | | 0.48 | % | | 2,841 | | | | 1,082,512 | | | 0.55 | % | | 2,929 | | | |
| Non interest bearing demand | | | 516,038 | | | | | | 475,704 | | | | | |
| Total funding | | | 1,696,289 | | | 0.34 | % | | 2,841 | | | | 1,558,216 | | | 0.38 | % | | 2,929 | | | |
| Other liabilities | | | 10,173 | | | | | | 9,337 | | | | | |
| Total liabilities | | | 1,706,462 | | | | | | 1,567,553 | | | | | |
| | | | | | | | | | | |
| Shareholders' Equity | | | | | | | | | | |
| Total shareholders' equity | | | 209,790 | | | | | | 201,152 | | | | | |
| Total liabilities and shareholders' equity | | $ | 1,916,252 | | | | | $ | 1,768,705 | | | | | |
| | | | | | | | | | | |
| Net interest margin (3) | | | | 3.59 | % | $ | 31,917 | | | | | 3.79 | % | $ | 30,740 | | | |
| | | | | | | | | | | |
| Interest rate spread | | | | 3.43 | % | | | | | 3.60 | % | | | |
| | | | | | | | | | | |
| Cost of deposits | | | | 0.23 | % | | | | | 0.25 | % | | | |
| | | | | | | | | | | |
| (1) Non-accrual loans have been included in total loans. | | |
| (2) Interest income includes fees on loans. | | |
| (3) Net interest margin represents net interest income as a percentage of average interest earning assets. | | |
| (4) Annualized using actual number of days during the period. | | |
| | | | | | | | | | | |
| Heritage Oaks Bancorp | |
| Loans and Deposits | |
| | | | | | | | |
| | | | | | | | |
| | | 6/30/2016 | | 3/31/2016 | | 6/30/2015 | |
| | | (dollars in thousands) | |
| Loans | | | | | | | |
| Real Estate Secured | | | | | | | |
| Commercial | | $ | 618,400 | | | $ | 605,242 | | | $ | 585,811 | | |
| Residential 1 to 4 family | | | 184,097 | | | | 171,035 | | | | 143,256 | | |
| Farmland | | | 131,574 | | | | 129,787 | | | | 104,613 | | |
| Multi-family residential | | | 85,254 | | | | 81,807 | | | | 76,903 | | |
| Construction and land | | | 36,753 | | | | 32,984 | | | | 41,057 | | |
| Home equity lines of credit | | | 27,991 | | | | 29,738 | | | | 32,759 | | |
| Total real estate secured | | | 1,084,069 | | | | 1,050,593 | | | | 984,399 | | |
| Commercial | | | | | | | |
| Commercial and industrial | | | 182,645 | | | | 169,366 | | | | 151,401 | | |
| Agriculture | | | 62,061 | | | | 65,946 | | | | 48,601 | | |
| Other | | | - | | | | - | | | | 1 | | |
| Total commercial | | | 244,706 | | | | 235,312 | | | | 200,003 | | |
| Consumer | | | 4,944 | | | | 5,441 | | | | 6,751 | | |
| Total loans held for investment | | | 1,333,719 | | | | 1,291,346 | | | | 1,191,153 | | |
| Deferred loan fees | | | (1,181 | ) | | | (1,160 | ) | | | (1,157 | ) | |
| Allowance for loan and lease losses | | | (17,448 | ) | | | (17,565 | ) | | | (16,982 | ) | |
| Total net loans held for investment | | $ | 1,315,090 | | | $ | 1,272,621 | | | $ | 1,173,014 | | |
| | | | | | | | |
| Loans held for sale | | | 8,534 | | | $ | 6,560 | | | $ | 8,736 | | |
| | | | | | | | |
| | | | |
| | | 6/30/2016 | | 3/31/2016 | | 6/30/2015 | |
| | | (dollars in thousands) | |
| Deposits | | | | | | | |
| Non-interest bearing deposits | | $ | 546,520 | | | $ | 524,025 | | | $ | 516,431 | | |
| Interest bearing deposits: | | | | | | | |
| Money market deposits | | | 584,732 | | | | 579,113 | | | | 503,132 | | |
| Time deposits | | | 240,433 | | | | 240,245 | | | | 264,851 | | |
| NOW accounts | | | 123,386 | | | | 127,731 | | | | 128,404 | | |
| Other savings deposits | | | 112,018 | | | | 111,475 | | | | 98,821 | | |
| Total deposits | | $ | 1,607,089 | | | $ | 1,582,589 | | | $ | 1,511,639 | | |
| | | | | | | | |
| Heritage Oaks Bancorp | |
| Allowance for Loan and Lease Losses, Non-Performing and Classified Assets | |
| | | | | | | | |
| | | For the Three Months Ended | |
| | | 6/30/2016 | | 3/31/2016 | | 6/30/2015 | |
| | | (dollars in thousands) | |
| Allowance for Loan and Lease Losses | | | | | | | |
| Balance, beginning of period | | $ | 17,565 | | | $ | 17,452 | | | $ | 16,913 | | |
| (Reversal of) provision for loan and lease losses | | | (1,000 | ) | | | - | | | | - | | |
| Charge-offs: | | | | | | | |
| Commercial and industrial | | | (4 | ) | | | (8 | ) | | | (142 | ) | |
| Consumer | | | (2 | ) | | | (2 | ) | | | (5 | ) | |
| Agriculture | | | - | | | | - | | | | (1 | ) | |
| Home equity lines of credit | | | - | | | | - | | | | (16 | ) | |
| Total charge-offs | | | (6 | ) | | | (10 | ) | | | (164 | ) | |
| Recoveries | | | 889 | | | | 123 | | | | 233 | | |
| Balance, end of period | | $ | 17,448 | | | $ | 17,565 | | | $ | 16,982 | | |
| | | | | | | | |
| Net recoveries | | $ | 883 | | | $ | 113 | | | $ | 69 | | |
| | | | | | | | |
| | | | | | | | |
| | | 6/30/2016 | | 3/31/2016 | | 6/30/2015 | |
| | | (dollars in thousands) | |
| Non-Performing Assets | | | | | | | |
| Loans on non-accrual status: | | | | | | | |
| Construction and land | | $ | 4,046 | | | $ | 4,264 | | | $ | 4,754 | | |
| Commercial and industrial | | | 1,866 | | | | 1,745 | | | | 3,207 | | |
| Agriculture | | | 363 | | | | 384 | | | | 626 | | |
| Commercial real estate | | | 264 | | | | 1,620 | | | | 2,158 | | |
| Consumer | | | 117 | | | | 31 | | | | 40 | | |
| Home equity lines of credit | | | 84 | | | | 46 | | | | 86 | | |
| Farmland | | | 77 | | | | 80 | | | | - | | |
| Residential 1 to 4 family | | | - | | | | - | | | | 707 | | |
| Total non-accruing loans | | | 6,817 | | | | 8,170 | | | | 11,578 | | |
| Other real estate owned (OREO) | | | 111 | | | | 111 | | | | 372 | | |
| Total non-performing assets | | $ | 6,928 | | | $ | 8,281 | | | $ | 11,950 | | |
| | | | | | | | |
| | | 6/30/2016 | | 3/31/2016 | | 6/30/2015 | |
| | | (dollars in thousands) | |
| Classified Assets | | | | | | | |
| Loans | | $ | 41,983 | | | $ | 43,444 | | | $ | 49,118 | | |
| Other real estate owned (OREO) | | | 111 | | | | 111 | | | | 372 | | |
| Total classified assets | | $ | 42,094 | | | $ | 43,555 | | | $ | 49,490 | | |
| | | | | | | | |
| Classified assets to Tier I + ALLL | | | 20.66 | % | | | 21.70 | % | | | 25.15 | % | |
| | | | | | | | |
| Note: Classified assets consist of substandard and non-performing loans and OREO assets. | |
| | | | | | | | |
| Heritage Oaks Bancorp | |
| Quarter to Date Non-Performing Loan Reconciliation | |
| | | | | | | | | | | | | | |
| | | Balance | | | | | | Returns to | | | | Balance | |
| | | March 31, | | | | Net | | Accrual | | | | June 30, | |
| | | | 2016 | | | Additions | | Paydowns | | Status | | Charge-offs | | | 2016 | | |
| | | (dollars in thousands) | |
| Real Estate Secured | | | | | | | | | | | | | |
| Construction and land | | $ | 4,264 | | | $ | - | | | $ | (218 | ) | | $ | - | | | $ | - | | | $ | 4,046 | | |
| Commercial | | | 1,620 | | | | - | | | | (1,356 | ) | | | - | | | | - | | | | 264 | | |
| Home equity lines of credit | | | 46 | | | | 38 | | | | - | | | | - | | | | - | | | | 84 | | |
| Farmland | | | 80 | | | | - | | | | (3 | ) | | | - | | | | - | | | | 77 | | |
| Commercial | | | | | | | | | | | | | |
| Commercial and industrial | | | 1,745 | | | | 503 | | | | (97 | ) | | | (281 | ) | | | (4 | ) | | | 1,866 | | |
| Agriculture | | | 384 | | | | - | | | | (21 | ) | | | - | | | | - | | | | 363 | | |
| Consumer | | | 31 | | | | 90 | | | | (2 | ) | | | - | | | | (2 | ) | | | 117 | | |
| Total | | $ | 8,170 | | | $ | 631 | | | $ | (1,697 | ) | | $ | (281 | ) | | $ | (6 | ) | | $ | 6,817 | | |
| | | | | | | | | | | | | | |
| Heritage Oaks Bancorp |
| Year to Date Non-Performing Loan Reconciliation |
| | | | | | | | | | | | | |
| | | Balance | | | | | | Returns to | | | | Balance |
| | | December 31, | | | | Net | | Accrual | | | | June 30, |
| | | | 2015 | | | Additions | | Paydowns | | Status | | Charge-offs | | | 2016 | |
| | | (dollars in thousands) |
| Real Estate Secured | | | | | | | | | | | | |
| Construction and land | | $ | 3,968 | | | $ | 349 | | | $ | (271 | ) | | $ | - | | | $ | - | | | $ | 4,046 | |
| Commercial | | | 1,940 | | | | - | | | | (1,386 | ) | | | (290 | ) | | | - | | | | 264 | |
| Home equity lines of credit | | | 84 | | | | 38 | | | | - | | | | (38 | ) | | | - | | | | 84 | |
| Farmland | | | 83 | | | | - | | | | (6 | ) | | | - | | | | - | | | | 77 | |
| Residential 1 to 4 family | | | 80 | | | | - | | | | (3 | ) | | | (77 | ) | | | - | | | | - | |
| Commercial | | | | | | | | | | | | |
| Commercial and industrial | | | 1,630 | | | | 1,751 | | | | (244 | ) | | | (1,259 | ) | | | (12 | ) | | | 1,866 | |
| Agriculture | | | - | | | | 400 | | | | (37 | ) | | | - | | | | - | | | | 363 | |
| Consumer | | | 33 | | | | 92 | | | | (4 | ) | | | - | | | | (4 | ) | | | 117 | |
| Total | | $ | 7,818 | | | $ | 2,630 | | | $ | (1,951 | ) | | $ | (1,664 | ) | | $ | (16 | ) | | $ | 6,817 | |
| | | | | | | | | | | | | |
| | |
| Heritage Oaks Bancorp | |
| Reconciliation of Tangible Common Equity and Tangible Common Book Value per Share | |
| | | | | | | | |
| | | 6/30/2016 | | 3/31/2016 | | 6/30/2015 | |
| | | (dollars in thousands, except per share data) | |
| Total shareholders' equity | $ | 213,882 | | | $ | 208,330 | | | $ | 202,082 | | |
| Less intangibles: | | | | | | |
| Goodwill | | | (24,885 | ) | | | (24,885 | ) | | | (24,885 | ) | |
| Other intangible assets | | (3,812 | ) | | | (4,055 | ) | | | (4,823 | ) | |
| Tangible common equity | $ | 185,185 | | | $ | 179,390 | | | $ | 172,374 | | |
| Shares of common stock issued and outstanding | | 34,205,542 | | | | 34,129,425 | | | | 34,314,242 | | |
| Tangible common book value per share | $ | 5.41 | | | $ | 5.26 | | | $ | 5.02 | | |
| | | | | | | | |
Contacts
Simone Lagomarsino, President & Chief Executive Officer
1222 Vine Street
Paso Robles, California 93446
805.369.5260
slagomarsino@heritageoaksbank.com
Jason Castle, Executive Vice President & Chief Financial Officer
1222 Vine Street
Paso Robles, California 93446
805.369.5294
jcastle@heritageoaksbank.com
