Heritage Oaks Bancorp Reports Fourth Quarter and Full Year 2012 Results
PASO ROBLES, Calif., Jan. 24, 2013 (GLOBE NEWSWIRE) -- Heritage Oaks Bancorp (the "Company") (Nasdaq:HEOP), a community bank holding company and parent of Heritage Oaks Bank (the "Bank"), reported net income of $3.1 million for the three months ended December 31, 2012, compared with $4.1 million for the same period a year earlier. The decline in net income is largely attributable to the reversal of a portion of our deferred tax asset valuation allowance in the fourth quarter of 2011, whereas, the fourth quarter 2012 reflected a fully normalized tax provision. Income before taxes was a record $4.8 million for the three months ended December 31, 2012, a $0.6 million or 15.0% increase, compared with $4.2 million for the same period a year ago. Net income for the twelve months ended December 31, 2012 increased $5.3 million or 68.8% to a record $13.0 million compared with $7.7 million for the year ended December 31, 2011.
Highlights
Improved earnings before taxes and provision for loan losses by $3.3 million, or 21.2%, to $18.9 million for the twelve months ended December 31, 2012 compared with $15.6 million for the same period a year ago;
Grew total deposits $84.7 million or 10.8% to $870.9 million at December 31, 2012 compared with $786.2 million at December 31, 2011. Non-interest bearing deposit accounts grew $56.0 million or 25.8% to $273.2 million at December 31, 2012 compared with $217.2 million at December 31, 2011;
Completed the acquisition of the Morro Bay branch of Coast National Bank, adding $27.2 million in deposits as of December 31, 2012, which expanded the Bank's presence in the markets we serve;
Increased total gross loans $43.3 million or 6.7% to $689.6 million at December 31, 2012 compared with $646.3 million at December 31, 2011. Total agriculture lending, inclusive of farmland, and residential mortgage loan portfolios each almost doubled in size from a year ago as the Company focused on expanding these product lines. Total new loan production was $196.1 million for the twelve months ended December 31, 2012 compared with $105.5 for the same period a year earlier;
Reduced classified assets as a percent of Tier I capital plus ALLL to 35.4% at December 31, 2012 compared with 44.3% at December 31, 2011; and
Increased regulatory capital ratios to 12.3% and 16.8% for Tier 1 Leverage and Total Risk-Based Capital, respectively at December 31, 2012, and maintained the allowance for loan losses as a percent of total loans at 2.6% at December 31, 2012.
"We are very pleased with our achievements in the fourth quarter and for all of 2012," said Simone Lagomarsino, President and Chief Executive Officer of Heritage Oaks Bancorp. "We achieved record earnings for 2012, even as we made significant investments in our operations including the hiring of commercial, agri-business, and mortgage loan officers; the opening of a new loan production office in Oxnard; and the completion of the acquisition of the Morro Bay branch in December. In addition, we have made strides in improving our overall credit exposure as reflected in the improvement in the ratio of classified assets to Tier I capital plus ALLL. Today, we are operating from a position of strength and stability, which allows us to focus on our customers and to build new relationships throughout our markets."
Net Income Available to Common Shareholders
Net income available to common shareholders was $2.8 million, or $0.10 per diluted common share, for the three months ended December 31, 2012, compared with $3.9 million, or $0.15 per diluted common share, for the same three months ended a year earlier. Net income available to common shareholders for the year ended December 31, 2012 was $11.6 million, or $0.44 per diluted common share, compared with $6.4 million, or $0.24 per diluted common share for the year ended December 31, 2011. The key components of the change in net income available to common shareholders for the three and twelve month periods are discussed below.
Net Interest Income
Net interest income was $10.8 million, or 4.35% of average interest earning assets, for the three months ended December 31, 2012 compared with $10.9 million, or 4.67% of average earning assets, for the same comparable period a year earlier. For the twelve months ended December 31, 2012, net interest income was $42.5 million, or 4.46% of average interest earning assets, compared with $43.2 million, or 4.71% of average interest earning assets, for the same period a year ago. The decline in net interest margin reflects the continuing trend of margin compression that has taken place throughout 2012, as a result of the historically low interest rate environment.
We continue to anticipate net interest margin pressure due to the very low interest rate environment, a competitive environment for quality loan relationships, increased refinancing activity of existing loans at lower rates, and a change in the mix of our loan portfolio. We are working to mitigate the impact of the pressure on our net interest margin over the short term through efforts to grow the loan portfolio rather than investing in lower yielding investment securities, through reductions in non-accrual loan balances, and through modest reductions in the cost of deposits and borrowings.
Provision for Loan Losses
We recorded no provision for loan losses for the three months ended December 31, 2012 compared with $0.7 million for the same period a year earlier. The lack of a provision in the fourth quarter of 2012 was largely driven by recoveries in the fourth quarter exceeding charge-offs along with continued improvements in the credit quality of the loan portfolio. For the twelve months ended December 31, 2012, we recorded $7.7 million of provision for loan losses compared with $6.1 million for the same period a year ago. The increase in provision for loan losses in 2012 was largely driven by increased specific reserve requirements for a few large loans placed on non-accrual status in the first half of 2012 and to a lesser degree an increase in the overall loan portfolio, offset by improved historical net charge-offs. Net charge-offs declined $2.8 million, or 24% to $8.9 million for the twelve months ended December 31, 2012 compared with $11.7 million for the same period a year earlier. Net charge-offs as a percent of average loans declined to 1.32% for the twelve months ended December 31, 2012, compared with 1.75% for the same period a year earlier. The 2012 ratio of net charge-offs to average loans is the lowest annual level the Company has reported since 2008.
Non-Interest Income
Non-interest income was $3.5 million for the three months ended December 31, 2012, a $0.3 million or 10% increase, compared with $3.2 million for the same period a year earlier. For the twelve months ended December 31, 2012, non-interest income was $12.5 million, a $2.8 million or 29% increase, compared with $9.7 million for the same period a year ago. The increase in non-interest income was primarily the result of higher gain on sale of mortgage loans, investment securities, and Other Real Estate Owned ("OREO").
Non-Interest Expense
Non-interest expense was $9.5 million for the three months ended December 31, 2012 compared with $9.2 million for the same period a year earlier. For the twelve months ended December 31, 2012, non-interest expense was $36.1 million compared with $37.3 million for the same period a year earlier. Non-interest expense has been impacted by an increase in loss provisions for mortgage repurchases for mortgages sold in 2007; an increase in salaries and employee benefits due to higher commissions resulting from higher mortgage loan originations; and the re-establishment of a management incentive compensation plan in 2012. The Company's operating efficiency ratio slightly improved to 67.9% for the twelve months ended December 31, 2012 compared with 68.0% for the same period a year ago. The Company's operating efficiency ratio for 2012 was negatively impacted by one-time expense items, as well as net interest margin compression.
Income Taxes
The provision for income taxes was $1.7 million for the three months ended December 31, 2012 compared with $0.1 million for the same period a year earlier, which prior period included a $1.5 million partial reversal of our deferred tax valuation allowance. For the twelve months ended December 31, 2012, the Company recorded a benefit from income taxes of $1.8 million, which included a reversal of the remaining $5.6 million of deferred tax asset valuation allowance. The tax benefit in 2012 compared with a provision for income taxes of $1.8 million for the same period a year ago, which included the previously mentioned $1.5 million partial valuation allowance reversal. As the earnings outlook improved in late 2011 and into 2012, the Company reversed the valuation allowance based upon our change in expectation of future profitability and therefore our assessment of our ability to fully realize the deferred tax asset. Excluding the impact of the valuation allowance reversals in 2012, the Company's effective tax rate for all of 2012 was 33.9% compared with 34.8% for the same period a year ago.
Balance Sheet
Total assets increased $110.4 million, or 11.2%, to $1.1 billion at December 31, 2012 compared with $987.1 million at December 31, 2011. The increase in total assets was primarily the result of growth in total loans and investment securities. This asset growth was primarily funded by an $84.7 million, or 11%, increase in total deposits; with 66% of the deposit growth coming from non-interest bearing demand deposit accounts. Total stockholders' equity was $145.5 million at December 31, 2012, an increase of $15.9 million or 12.3%, compared with $129.6 million at December 31, 2011. The increase in stockholders' equity was primarily driven by earnings for the year.
The Company's liquidity ratio (total cash and cash equivalents plus unpledged marketable securities divided by the sum of total deposits and short-term liabilities less pledged securities) was 36.4% at December 31, 2012 compared with 35.1% at December 31, 2011.
The Company and the Bank exceeded the ratios generally required to be considered a "well capitalized" financial institution for regulatory purposes. The tier I leverage ratio for the Company and the Bank were 12.3% and 11.9%, respectively at December 31, 2012. The total risk-based Capital ratio for the Company and the Bank were 16.8% and 16.3%, respectively at December 31, 2012. The Company remains current on all obligations, including its junior subordinated debentures, and preferred stock issued under the U.S. Treasury's Capital Purchase Program and privately placed preferred stock.
Asset Quality
Classified loans decreased $2.8 million or 5.2% to $51.1 million at December 31, 2012 compared with $53.9 million at December 31, 2011. Classified assets as a percent of Tier I Capital plus the allowance for loan losses improved to 35.4% at December 31, 2012 compared with 44.3% at December 31, 2011.
Non-accrual loans increased $4.9 million to $17.3 million at December 31, 2012 compared with $12.4 million at December 31, 2011, of which $12.6 million were still paying per their contractual terms. Non-performing loans to gross loans increased to 2.5% at December 31, 2012 from 1.9% at December 31, 2011. The Company held no OREO at December 31, 2012, a decrease of $0.9 million from December 31, 2011. Total non-performing assets, inclusive of non-accrual loans, increased $4.0 million to $17.3 million at December 31, 2012 compared with $13.3 million at December 31, 2011. The percentage of non-performing assets to total assets was 1.6% at December 31, 2012 compared with 1.4% at December 31, 2011.
Total troubled debt restructurings ("TDRs") outstanding were $11.6 million at December 31, 2012 compared with $3.7 million at December 31, 2011. The increase in the level of reported TDRs in 2012 was largely the result of a single large loan relationship that was modified in the first quarter of 2012. The ALLL was $18.1 million, or 2.6% of total loans, compared with $19.3 million, or 3.0% of total loans at December 31, 2011. The decrease in the ALLL to total loans ratio is due to continued decreases in the historical loss experience of the loan portfolio.
Conference Call
The Company will host a conference call to discuss these fourth quarter results at 8:00 a.m. PST on January 25, 2013. Media representatives, analysts and the public are invited to listen to this discussion by calling (877) 363-5052 and entering the conference ID 88232944, or via on-demand webcast. A link to the webcast will be available on Heritage Oaks Bancorp's website at www.heritageoaksbancorp.com. A replay of the call will be available on Heritage Oaks Bancorp's website later that day and will remain on its site for up to 14 calendar days. By including the foregoing website address, Heritage Oaks Bancorp does not intend to and shall not be deemed to incorporate by reference any material contained therein. By including the foregoing website address, Heritage Oaks Bancorp does not intend to and shall not be deemed to incorporate by reference any material contained therein.
Annual Report on Form 10-K
The Company intends to file with the U.S. Securities and Exchange Commission its Annual Report on Form 10-K for the year ended December 31, 2012, on or before March 18, 2013. This report can be accessed at the U.S. Securities and Exchange Commission's website, www.sec.gov. Shortly after filing, it is also available free of charge at the Company's website, www.heritageoaksbancorp.com or by contacting the Company's Investor Relations Department. By including the foregoing website address, Heritage Oaks Bancorp does not intend to and shall not be deemed to incorporate by reference any material contained therein.
About Heritage Oaks Bancorp
With $1.1 billion in assets, Heritage Oaks Bancorp is the holding company for Heritage Oaks Bank which operates as Heritage Oaks Bank and Business First, a division of Heritage Oaks Bank. Heritage Oaks Bank has its headquarters and two branch offices in Paso Robles, two branch offices in San Luis Obispo and Santa Maria, single branch offices in Cambria, Arroyo Grande, Atascadero, Templeton, and Morro Bay, as well as a loan production office in Oxnard. Heritage Oaks Bank conducts commercial banking business in the counties of San Luis Obispo, Santa Barbara, and Ventura. The Business First division has one branch office in Santa Barbara. Visit Heritage Oaks Bancorp on the Web at www.heritageoaksbancorp.com.
The Heritage Oaks Bancorp logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7045
Forward Looking Statements
This press release contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward looking statements to be covered by the safe harbor provisions for forward looking statements. All statements other than statements of historical fact are "forward looking statements" for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business prospects, strategic alternatives, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, acquisition and divestiture opportunities, plans and objectives of management for future operations, and other similar forecasts and statements of expectation and statements of assumptions underlying any of the foregoing. Words such as "will likely result," "aims," "anticipates," "believes," "could," "estimates," "expects," "hopes," "intends," "may," "plans," "projects," "seeks," "should," "will," and variations of these words and similar expressions are intended to identify these forward‐looking statements.
Forward looking statements are based on the Company's current expectations and assumptions regarding its business, the regulatory environment, the economy and other future conditions. Forward looking statements are subject to a number of risks and uncertainties that could cause the Company's actual results to differ materially and adversely from those contemplated by the forward looking statements. The Company cautions you against relying on any of these forward looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward looking statements, include the following: the ongoing financial crisis in the United States, including the continuing softness in the California real estate market, and the response of federal and state government and our regulators thereto, general economic conditions in those areas in which the Company operates, competition, fluctuations in interest rates, changes in the Company's business strategy or development plans, changes in governmental regulation, changes in the credit quality of our loan portfolio, as well as economic, political and global changes arising from the war on terrorism, social unrest and other civil disturbances, the Company's ability to increase profitability, sustain growth, the Company's beliefs as to the adequacy of its existing and anticipated allowance for loan losses, beliefs and expectations about, and requirements to comply with the terms of the Memoranda of Understanding issued by regulatory authorities having oversight of the Company's and Bank's operations, and financial policies of the United States government.
Additional information on these risks and other factors that could affect operating results and financial condition are detailed in reports filed by the Company with the U.S. Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2011, filed by the Company with the U.S. Securities and Exchange Commission on February 28, 2012. Forward looking statements speak only as of the date they are made, and the Company does not undertake to update forward looking statements to reflect circumstances or events that occur after the date the forward looking statements are made, whether as a result of new information, future developments or otherwise, and specifically disclaims any obligation to revise or update such forward looking statements for any reason, except as may be required by law.
Use of Non-GAAP Financial Information
Heritage Oaks Bancorp provides all information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results and in particular, making comparisons to similar companies, may be enhanced by providing additional measures used by management to assess operating results. Earnings before income taxes and provision for loan losses, a non-GAAP financial measure, is presented because the Company believes adjusting its results to exclude tax and loan loss provisions provides stockholders with a useful metric for evaluating the core profitability of the Company. A schedule reconciling our GAAP net income to earnings before income taxes and provision for loan losses is provided at the end of the tables below.
Heritage Oaks Bancorp
Consolidated Balance Sheets
(unaudited)
(dollar amounts in thousands)
12/31/2012
9/30/2012
12/31/2011
Assets
Cash and due from banks
$ 23,425
$ 22,917
$ 18,858
Interest bearing due from banks
10,691
21,259
16,034
Total cash and cash equivalents
34,116
44,176
34,892
Securities available for sale, at fair value
287,682
261,451
236,982
Federal Home Loan Bank stock, at cost
4,575
4,575
4,685
Loans held for sale
22,549
12,590
21,947
Gross loans
689,608
678,348
646,286
Net deferred loan fees
(937)
(977)
(1,111)
Allowance for loan losses
(18,118)
(17,987)
(19,314)
Net loans
670,553
659,384
625,861
Property, premises and equipment
15,956
15,238
5,528
Deferred tax assets, net
21,933
22,897
18,226
Bank owned life insurance
15,349
15,223
14,835
Goodwill
11,237
11,049
11,049
Core deposit intangible
1,744
1,424
1,682
Other real estate owned
--
615
917
Other assets
11,838
10,057
10,534
Total assets
$ 1,097,532
$ 1,058,679
$ 987,138
Liabilities
Deposits
Demand, non-interest bearing
273,242
267,199
217,245
Savings, NOW, and money market
411,274
410,147
376,252
Time deposits under $100
89,249
88,738
102,628
Time deposits of $100 or more
97,105
88,948
90,083
Total deposits
870,870
855,032
786,208
Short term FHLB borrowing
33,000
9,500
29,500
Long term FHLB borrowing
33,500
36,500
22,000
Junior subordinated debentures
8,248
8,248
8,248
Other liabilities
6,385
7,114
11,628
Total liabilities
952,003
916,394
857,584
Stockholders' equity
Preferred stock, 5,000,000 shares authorized: Series A senior preferred stock; $1,000 per share stated value issued and outstanding: 21,000 shares
20,536
20,441
20,160
Series C preferred stock, $3.25 per share stated value; issued and outstanding: 1,189,538 shares
3,604
3,604
3,604
Common stock, no par value; authorized: 100,000,000 shares; issued and outstanding: 25,307,110; 25,288,430; and 25,145,717 as of December 31, 2012; September 30, 2012; and December 31, 2011, respectively
101,354
101,296
101,140
Additional paid in capital
7,337
7,240
7,006
Retained earnings / (accumulated deficit)
8,773
6,004
(2,794)
Accumulated other comprehensive income
3,925
3,700
438
Total stockholders' equity
145,529
142,285
129,554
Total liabilities and stockholders' equity
$ 1,097,532
$ 1,058,679
$ 987,138
Book value per common share
$ 4.78
$ 4.65
$ 4.17
Tangible book value per common share
$ 4.27
$ 4.16
$ 3.67
Heritage Oaks Bancorp
Consolidated Statements of Income
(unaudited)
Three Months Ended
(dollar amounts in thousands except per share data)
12/31/2012
9/30/2012
12/31/2011
Interest Income
Interest and fees on loans
$ 9,989
$ 9,716
$ 10,213
Interest on investment securities
1,585
1,783
1,779
Other interest income
75
20
20
Total interest income
11,649
11,519
12,012
Interest Expense
Interest on savings, NOW and money market deposits
273
288
336
Interest on time deposits under $100
185
205
310
Interest on time deposits in denominations of $100 or more
215
226
314
Other borrowings
213
215
146
Total interest expense
886
934
1,106
Net interest income before provision for loan losses
10,763
10,585
10,906
Provision for loan losses
--
1,286
693
Net interest income after provision for loan losses
10,763
9,299
10,213
Non-Interest Income
Fees and service charges
620
611
633
Mortgage gain on sale and origination fees
1,192
1,181
895
Debit/credit card fee income
460
460
421
Earnings on bank owned life insurance
150
148
152
Gain on sale of investment securities
923
329
796
Gain on sale of other real estate owned
87
102
44
Other Income
116
153
272
Total non-interest income
3,548
2,984
3,213
Non-Interest Expense
Salaries and employee benefits
4,782
4,532
4,258
Equipment
390
395
412
Occupancy
745
728
1,003
Promotional
258
171
177
Data processing
642
551
721
OREO related costs
31
54
115
Write-downs of foreclosed assets
--
53
230
Regulatory assessment costs
358
371
527
Audit and tax advisory costs
206
146
265
Director fees
116
126
146
Outside services
821
730
490
Provision for potential mortgage repurchases
210
125
(160)
Amortization of intangible assets
84
86
89
Other general operating costs
831
727
948
Total non-interest expense
9,474
8,795
9,221
Income before provision / (benefit from) for income taxes
4,837
3,488
4,205
Provision / (benefit) for income taxes
1,710
(2,940)
75
Net income
3,127
6,428
4,130
Dividends and accretion on preferred stock
357
357
251
Net income available to common shareholders
$ 2,770
$ 6,071
$ 3,879
Weighted Average Shares Outstanding
Basic
25,101,083
25,089,325
25,054,204
Diluted
26,485,728
26,430,717
26,261,179
Earnings Per Common Share
Basic
$ 0.11
$ 0.24
$ 0.16
Diluted
$ 0.10
$ 0.23
$ 0.15
Heritage Oaks Bancorp
Consolidated Statements of Income
(unaudited)
Twelve Months Ended
(dollar amounts in thousands except per share data)
12/31/2012
12/31/2011
Interest Income
Interest and fees on loans
$ 39,278
$ 41,345
Interest on investment securities
6,896
6,794
Other interest income
147
88
Total interest income
46,321
48,227
Interest Expense
Interest on savings, NOW and money market deposits
1,147
1,508
Interest on time deposits under $100
892
1,448
Interest on time deposits in denominations of $100 or more
949
1,526
Other borrowings
830
541
Total interest expense
3,818
5,023
Net interest income before provision for loan losses
42,503
43,204
Provision for loan losses
7,681
6,063
Net interest income after provision for loan losses
34,822
37,141
Non-Interest Income
Fees and service charges
2,568
2,453
Mortgage gain on sale and origination fees
4,263
2,645
Debit/credit card fee income
1,782
1,632
Earnings on bank owned life insurance
602
596
Gain on sale of investment securities
2,619
1,983
Gain / (loss) on sale of other real estate owned
199
(543)
Other income
515
964
Total non-interest income
12,548
9,730
Non-Interest Expense
Salaries and employee benefits
18,304
17,630
Equipment
1,613
1,739
Occupancy
3,287
3,771
Promotional
690
668
Data processing
2,553
2,975
OREO related costs
248
670
Write-downs of foreclosed assets
86
1,198
Regulatory assessment costs
1,596
2,360
Audit and tax advisory costs
679
779
Director fees
474
483
Outside services
2,393
1,524
Provision for potential mortgage repurchases
1,192
169
Amortization of intangible assets
342
445
Other general operating costs
2,674
2,907
Total non-interest expense
36,131
37,318
Income before (benefit from) / provision for income taxes
11,239
9,553
(Benefit from) / provision for income taxes
(1,798)
1,828
Net income
13,037
7,725
Dividends and accretion on preferred stock
1,470
1,358
Net income available to common shareholders
$ 11,567
$ 6,367
Weighted Average Shares Outstanding
Basic
25,081,462
25,048,477
Diluted
26,401,871
26,254,745
Earnings Per Common Share
Basic
$ 0.46
$ 0.25
Diluted
$ 0.44
$ 0.24
Heritage Oaks Bancorp
Key Ratios
Three Months Ended
Twelve Months Ended
PROFITABILITY / PERFORMANCE RATIOS
12/31/2012
9/30/2012
12/31/2011
12/31/2012
12/31/2011
Net interest margin
4.35%
4.36%
4.67%
4.46%
4.71%
Return on average equity
8.59%
18.60%
12.87%
9.49%
6.19%
Return on average common equity
9.16%
21.40%
14.98%
10.26%
6.35%
Return on average tangible common equity
10.23%
24.08%
17.12%
11.55%
7.29%
Return on average assets
1.17%
2.46%
1.66%
1.27%
0.79%
Non interest income to total net revenue
24.79%
21.99%
22.76%
22.79%
18.38%
Yield on interest earning assets
4.70%
4.75%
5.15%
4.86%
5.26%
Cost of interest bearing liabilities
0.55%
0.58%
0.71%
0.60%
0.79%
Cost of funds
0.39%
0.42%
0.52%
0.43%
0.60%
Operating efficiency ratio (1)
70.36%
65.47%
66.17%
67.88%
67.98%
ASSET QUALITY RATIOS
Non-performing loans to total gross loans
2.51%
3.02%
1.91%
Non-performing loans to equity
11.89%
14.39%
9.55%
Non-performing assets to total assets
1.58%
1.99%
1.35%
Allowance for loan losses to total gross loans
2.63%
2.65%
2.99%
Net charge-offs / (recoveries) to average loans outstanding, annualized
-0.07%
0.85%
1.08%
1.32%
1.75%
Classified assets to Tier I + ALLL
35.40%
41.58%
44.31%
30-89 Day Delinquency Rate
0.12%
0.19%
0.12%
CAPITAL RATIOS
Company
Leverage ratio
12.32%
12.15%
12.06%
Tier I Risk-Based Capital Ratio
15.55%
14.92%
14.81%
Total Risk-Based Capital Ratio
16.81%
16.19%
16.07%
Bank
Leverage ratio
11.93%
11.75%
11.85%
Tier I Risk-Based Capital Ratio
15.02%
14.40%
14.51%
Total Risk-Based Capital Ratio
16.28%
15.66%
15.77%
(1) The efficiency ratio is defined as total non interest expense as a percent of the combined net interest income plus non interest income, exclusive of gains and losses on securities sales, other than temporary impairment losses, gains and losses on sale of OREO and other OREO related costs and gains and losses on sale of fixed assets.
Heritage Oaks Bancorp
Average Balances
Three Months Ended
12/31/2012
9/30/2012
12/31/2011
(dollar amounts in thousands)
Balance
Yield/Rate
Inc/Exp
Balance
Yield/Rate
Inc/Exp
Balance
Yield/Rate
Inc/Exp
Interest Earning Assets
Investments with other banks
$ --
0.00%
$ --
$ --
0.00%
$ --
$ --
0.00%
$ --
Interest bearing due from banks
16,006
0.20%
8
13,042
0.15%
5
16,362
0.15%
6
Investment securities taxable
203,846
2.07%
1,061
204,291
2.45%
1,256
208,096
2.72%
1,425
Investment securities non taxable
63,538
3.28%
524
62,634
3.35%
527
36,451
3.85%
354
Other investments
6,479
4.11%
67
6,478
0.92%
15
6,588
0.84%
14
Loans (1)
695,457
5.71%
9,989
678,655
5.70%
9,716
658,397
6.15%
10,213
Total earning assets
$ 985,326
4.70%
$11,649
$ 965,100
4.75%
$ 11,519
$ 925,894
5.15%
$ 12,012
Allowance for loan losses
(18,998)
(18,207)
(20,500)
Other assets
96,267
92,880
79,171
Total assets
$ 1,062,595
$1,039,773
$ 984,565
Interest Bearing Liabilities
Interest bearing demand
$ 72,490
0.12%
$ 22
$ 70,664
0.13%
$ 23
$ 63,667
0.10%
$ 16
Savings
37,312
0.10%
9
36,454
0.10%
9
32,546
0.11%
9
Money market
298,130
0.32%
242
295,792
0.34%
256
278,739
0.44%
312
Time deposits
176,474
0.90%
400
182,138
0.94%
431
199,583
1.24%
623
Total interest bearing deposits
584,406
0.46%
673
585,048
0.49%
719
574,535
0.66%
960
Other secured borrowing
--
0.00%
--
--
0.00%
--
11
0.00%
--
Federal Home Loan Bank borrowing
50,266
1.35%
171
45,527
1.48%
169
37,766
1.07%
102
Junior subordinated debentures
8,248
2.03%
42
8,248
2.22%
46
8,248
2.12%
44
Total borrowed funds
58,514
1.45%
213
53,775
1.59%
215
46,025
1.26%
146
Total interest bearing liabilities
642,920
0.55%
886
638,823
0.58%
934
620,560
0.71%
1,106
Non interest bearing demand
266,284
255,241
225,592
Total funding
909,204
0.39%
886
894,064
0.42%
934
846,152
0.52%
1,106
Other liabilities
8,548
8,252
11,098
Total liabilities
$ 917,752
$ 902,316
$ 857,250
Stockholders' Equity
Total stockholders' equity
144,843
137,457
127,315
Total liabilities and stockholders' equity
$ 1,062,595
$1,039,773
$ 984,565
Net interest margin
4.35%
4.36%
4.67%
Interest Rate Spread
4.15%
$10,763
4.17%
$ 10,585
4.44%
$ 10,906
(1) Non-accrual loans have been included in total loans.
Heritage Oaks Bancorp
Average Balances
Twelve Months Ended
12/31/2012
12/31/2011
(dollar amounts in thousands)
Balance
Yield/Rate
Inc/Exp
Balance
Yield/Rate
Inc/Exp
Interest Earning Assets
Investments with other banks
$ --
0.00%
$ --
$ 58
1.72%
$ 1
Interest bearing due from banks
15,193
0.17%
26
16,343
0.18%
30
Investment securities taxable
202,109
2.45%
4,944
187,527
2.83%
5,304
Investment securities non taxable
57,065
3.42%
1,952
36,888
4.04%
1,490
Other investments
6,519
1.86%
121
7,934
0.72%
57
Loans (1)
672,929
5.84%
39,278
667,606
6.19%
41,345
Total interest earning assets
$ 953,815
4.86%
$ 46,321
$ 916,356
5.26%
$48,227
Allowance for loan losses
(19,169)
(22,895)
Other assets
90,315
83,527
Total assets
$ 1,024,961
$ 976,988
Interest Bearing Liabilities
Interest bearing demand
$ 67,986
0.11%
$ 77
$ 64,187
0.15%
$ 95
Savings
35,769
0.10%
36
32,153
0.14%
46
Money market
289,079
0.36%
1,034
275,278
0.50%
1,367
Time deposits
183,803
1.00%
1,841
214,677
1.39%
2,974
Total interest bearing deposits
$ 576,637
0.52%
$ 2,988
$ 586,295
0.76%
$ 4,482
Other secured borrowing
--
0.00%
--
3
0.00%
--
Federal Home Loan Bank borrowing
50,153
1.27%
638
38,527
0.97%
372
Junior subordinated debentures
8,248
2.33%
192
8,248
2.05%
169
Total borrowed funds
58,401
1.42%
830
46,778
1.16%
541
Total interest bearing liabilities
635,038
0.60%
3,818
633,073
0.79%
5,023
Non interest bearing demand
243,304
208,646
Total funding
878,342
0.43%
3,818
841,719
0.60%
5,023
Other liabilities
9,227
10,445
Total liabilities
$ 887,569
$ 852,164
Stockholders' Equity
Total stockholders' equity
137,392
124,824
Total liabilities and stockholders' equity
$ 1,024,961
$ 976,988
Net interest margin
4.46%
4.71%
Interest Rate Spread
4.26%
$ 42,503
4.47%
$43,204
(1) Non-accrual loans have been included in total loans.
Heritage Oaks Bancorp
Loans and Deposits
(dollar amounts in thousands)
Loans
12/31/2012
9/30/2012
12/31/2011
Real Estate Secured
Multi-family residential
$ 21,467
$ 16,429
$ 15,915
Residential 1 to 4 family
41,444
37,837
20,839
Home equity lines of credit
31,863
32,422
31,047
Commercial
372,592
374,799
357,499
Farmland
25,642
23,416
8,155
Total real estate secured
493,008
484,903
433,455
Commercial
Commercial and industrial
125,340
119,496
141,065
Agriculture
21,663
17,948
15,740
Other
61
66
89
Total commercial
147,064
137,510
156,894
Construction
Single family residential
8,074
11,267
13,039
Single family residential - Spec.
535
420
8
Multi-family
778
787
1,669
Commercial
10,329
14,401
8,015
Total construction
19,716
26,875
22,731
Land
24,664
23,633
26,454
Installment loans to individuals
4,895
5,146
6,479
All other loans (including overdrafts)
261
281
273
Total gross loans
689,608
678,348
646,286
Deferred loan fees
937
977
1,111
Allowance for loan losses
18,118
17,987
19,314
Total net loans
$ 670,553
$ 659,384
$ 625,861
Loans held for sale
$ 22,549
$ 12,590
$ 21,947
Deposits
12/31/2012
9/30/2012
12/31/2011
Demand, non-interest bearing
$ 273,242
$ 267,199
$ 217,245
Interest-bearing demand
76,728
75,187
64,298
Savings
41,021
36,940
33,740
Money market
293,525
298,020
278,214
Time deposits
186,354
177,686
192,711
Total deposits
$ 870,870
$ 855,032
$ 786,208
Heritage Oaks Bancorp
Allowance for Loan Losses, Non-Performing and Classified Assets
Three Months Ended
Allowance for Loan Losses
12/31/2012
9/30/2012
12/31/2011
Balance, beginning of period
$ 17,987
$ 18,149
$ 20,409
Provision for loan losses
--
1,286
693
Loans charge-off
Residential 1 to 4 family
11
106
30
Commercial real estate
--
--
161
Commercial and industrial
717
261
254
Agriculture
145
1,250
115
Construction
460
92
--
Installment loans to individuals
155
9
5
Total loan charge-offs
1,488
1,718
565
Recoveries of loans previously charged-off
1,619
270
437
Charge-offs related to loan sales
Commercial real estate
--
--
1,268
Farmland
--
--
392
Net charge-offs related to loan sales
--
--
1,660
Balance, end of period
$ 18,118
$ 17,987
$ 19,314
Net charge-offs / (recoveries)
$ (131)
$ 1,448
$ 1,788
Non-Performing Assets
12/31/2012
9/30/2012
12/31/2011
Loans on non-accrual status
Residential 1-4 family
$ 835
$ 907
$ 622
Home equity lines of credit
58
381
359
Commercial real estate
928
4,428
4,551
Farmland
1,077
1,089
--
Commercial and industrial
4,657
3,243
1,625
Agriculture
907
1,075
2,327
Construction
1,380
1,840
937
Land
7,182
7,300
1,886
Installment
285
206
61
Total non-accruing loans
$ 17,309
$ 20,469
$ 12,368
Total non-performing loans
17,309
20,469
12,368
Other real estate owned (OREO)
--
615
917
Other repossessed assets
--
--
42
Total non-performing assets
$ 17,309
$ 21,084
$ 13,327
Classified assets
12/31/2012
9/30/2012
12/31/2011
Loans
$ 51,130
$ 57,553
$ 53,953
Other real estate owned (OREO)
--
615
917
Other
308
342
5,166
Total classified assets
$ 51,438
$ 58,510
$ 60,036
Classified assets to Tier I + ALLL
35.40%
41.58%
44.31%
Note: Classified assets consists of substandard and non-performing loans, OREO, non-investment grade securities, other repossessed assets, loans held for sale that were substandard and substandard letters of credit.
Heritage Oaks Bancorp
Quarter to Date Non-Performing Loan Reconciliation
Balance
Transfers
Returns to
Transfers
Balance
September 30,
Net
to Foreclosed
Accrual
Net
to Held
December 31,
(dollar amounts in thousands)
2012
Additions
Paydowns
Advances
Collateral
Status
Charge-offs
for Sale
2012
Real Estate Secured
Residential 1 to 4 family
$ 907
$ 100
$ (161)
$ --
$ --
$ --
$ (11)
$ --
$ 835
Home equity line of credit
381
--
(323)
--
--
--
--
--
58
Commercial
4,428
389
(3,889)
--
--
--
--
--
928
Farmland
1,089
--
(12)
--
--
--
--
--
1,077
Commercial
Commercial and industrial
3,243
3,036
(905)
--
--
--
(717)
--
4,657
Agriculture
1,075
--
(23)
--
--
--
(145)
--
907
Other
--
--
--
--
--
--
--
--
--
Construction
Commercial
1,840
--
--
--
--
--
(460)
--
1,380
Land
7,300
--
(118)
--
--
--
--
--
7,182
Installment loans to individuals
206
271
(37)
--
--
--
(155)
--
285
Totals
$ 20,469
$ 3,796
$ (5,468)
$ --
$ --
$ --
$ (1,488)
$ --
$ 17,309
Heritage Oaks Bancorp
Year to Date Non-Performing Loan Reconciliation
Balance
Transfers
Returns to
Transfers
Balance
December 31,
Net
to Foreclosed
Accrual
Net
to Held
December 31,
(dollar amounts in thousands)
2011
Additions
Paydowns
Advances
Collateral
Status
Charge-offs
for Sale
2012
Real Estate Secured
Residential 1 to 4 family
$ 527
$ 614
$ (189)
$ --
$ --
$ --
$ (117)
$ --
$ 835
Home equity line of credit
359
65
(366)
--
--
--
--
--
58
Commercial
4,551
6,981
(4,694)
--
--
(3,556)
(2,354)
--
928
Farmland
--
1,089
(12)
--
--
--
--
--
1,077
Commercial
--
--
--
--
--
--
--
Commercial and industrial
1,625
8,272
(1,608)
--
(344)
--
(3,288)
--
4,657
Agriculture
2,327
484
(59)
--
--
--
(1,845)
--
907
Construction
Single family residential
937
--
(937)
--
--
--
--
--
--
Commercial
--
2,508
--
--
--
--
(1,128)
--
1,380
Land
1,981
9,217
(1,700)
--
(162)
--
(2,154)
--
7,182
Installment loans to individuals
61
451
(43)
--
--
--
(184)
--
285
Totals
$ 12,368
$ 29,681
$ (9,608)
$ --
$ (506)
$ (3,556)
$ (11,070)
$ --
$ 17,309
Heritage Oaks Bancorp
Quarter to Date OREO Reconciliation
Balance
Balance
September 30,
December 31,
(dollar amounts in thousands)
2012
Additions
Sales
Writedowns
2012
Real Estate Secured
Residential 1 to 4 family
$ 400
$ --
$ (400)
$ --
$ --
Commercial
215
--
(215)
--
--
Totals
$ 615
$ --
$ (615)
$ --
$ --
Heritage Oaks Bancorp
Year to Date OREO Reconciliation
Balance
Balance
December 31,
December 31,
(dollar amounts in thousands)
2011
Additions
Sales
Writedowns
2012
Real Estate Secured
Residential 1 to 4 family
$ --
$ 607
$ (576)
$ (31)
$ --
Commercial
215
--
(215)
--
--
Construction
Single family residential - Spec.
423
--
(397)
(26)
--
Tract
100
--
(100)
--
--
Land
179
162
(300)
(41)
--
Totals
$ 917
$ 769
$ (1,588)
$ (98)
$ --
Heritage Oaks Bancorp
Reconciliation of GAAP to Non-GAAP Financial Measure
Three Months Ended
Twelve Months Ended
(dollar amounts in thousands)
12/31/2012
9/30/2012
12/31/2011
12/31/2012
12/31/2011
GAAP Net Income
$ 3,127
$ 6,428
$ 4,130
$ 13,037
$ 7,725
Adjusted for:
Provision / (benefit) for income taxes
1,710
(2,940)
75
(1,798)
1,828
Provision for loan losses
--
1,286
693
7,681
6,063
Non-GAAP earnings before income taxes and provision for loan losses
$ 4,837
$ 4,774
$ 4,898
$ 18,920
$ 15,616
CONTACT: Simone Lagomarsino, President & Chief Executive Officer
1222 Vine Street
Paso Robles, California 93446
805.369.5260
slagomarsino@heritageoaksbank.com
Mark Olson, EVP & Chief Financial Officer
1222 Vine Street
Paso Robles, California 93446
805.369.5107
molson@heritageoaksbank.com
Press Release $HEOP Heritage Oaks Bancorp
PASO ROBLES, Calif., Jan. 24, 2013 (GLOBE NEWSWIRE) -- Heritage Oaks Bancorp (the "Company") (Nasdaq:HEOP), a community bank holding company and parent of Heritage Oaks Bank (the "Bank"), reported net income of $3.1 million for the three months ended December 31, 2012, compared with $4.1 million for the same period a year earlier. The decline in net income is largely attributable to the reversal of a portion of our deferred tax asset valuation allowance in the fourth quarter of 2011, whereas, the fourth quarter 2012 reflected a fully normalized tax provision. Income before taxes was a record $4.8 million for the three months ended December 31, 2012, a $0.6 million or 15.0% increase, compared with $4.2 million for the same period a year ago. Net income for the twelve months ended December 31, 2012 increased $5.3 million or 68.8% to a record $13.0 million compared with $7.7 million for the year ended December 31, 2011.
Highlights
"We are very pleased with our achievements in the fourth quarter and for all of 2012," said Simone Lagomarsino, President and Chief Executive Officer of Heritage Oaks Bancorp. "We achieved record earnings for 2012, even as we made significant investments in our operations including the hiring of commercial, agri-business, and mortgage loan officers; the opening of a new loan production office in Oxnard; and the completion of the acquisition of the Morro Bay branch in December. In addition, we have made strides in improving our overall credit exposure as reflected in the improvement in the ratio of classified assets to Tier I capital plus ALLL. Today, we are operating from a position of strength and stability, which allows us to focus on our customers and to build new relationships throughout our markets."
Net Income Available to Common Shareholders
Net income available to common shareholders was $2.8 million, or $0.10 per diluted common share, for the three months ended December 31, 2012, compared with $3.9 million, or $0.15 per diluted common share, for the same three months ended a year earlier. Net income available to common shareholders for the year ended December 31, 2012 was $11.6 million, or $0.44 per diluted common share, compared with $6.4 million, or $0.24 per diluted common share for the year ended December 31, 2011. The key components of the change in net income available to common shareholders for the three and twelve month periods are discussed below.
Net Interest Income
Net interest income was $10.8 million, or 4.35% of average interest earning assets, for the three months ended December 31, 2012 compared with $10.9 million, or 4.67% of average earning assets, for the same comparable period a year earlier. For the twelve months ended December 31, 2012, net interest income was $42.5 million, or 4.46% of average interest earning assets, compared with $43.2 million, or 4.71% of average interest earning assets, for the same period a year ago. The decline in net interest margin reflects the continuing trend of margin compression that has taken place throughout 2012, as a result of the historically low interest rate environment.
We continue to anticipate net interest margin pressure due to the very low interest rate environment, a competitive environment for quality loan relationships, increased refinancing activity of existing loans at lower rates, and a change in the mix of our loan portfolio. We are working to mitigate the impact of the pressure on our net interest margin over the short term through efforts to grow the loan portfolio rather than investing in lower yielding investment securities, through reductions in non-accrual loan balances, and through modest reductions in the cost of deposits and borrowings.
Provision for Loan Losses
We recorded no provision for loan losses for the three months ended December 31, 2012 compared with $0.7 million for the same period a year earlier. The lack of a provision in the fourth quarter of 2012 was largely driven by recoveries in the fourth quarter exceeding charge-offs along with continued improvements in the credit quality of the loan portfolio. For the twelve months ended December 31, 2012, we recorded $7.7 million of provision for loan losses compared with $6.1 million for the same period a year ago. The increase in provision for loan losses in 2012 was largely driven by increased specific reserve requirements for a few large loans placed on non-accrual status in the first half of 2012 and to a lesser degree an increase in the overall loan portfolio, offset by improved historical net charge-offs. Net charge-offs declined $2.8 million, or 24% to $8.9 million for the twelve months ended December 31, 2012 compared with $11.7 million for the same period a year earlier. Net charge-offs as a percent of average loans declined to 1.32% for the twelve months ended December 31, 2012, compared with 1.75% for the same period a year earlier. The 2012 ratio of net charge-offs to average loans is the lowest annual level the Company has reported since 2008.
Non-Interest Income
Non-interest income was $3.5 million for the three months ended December 31, 2012, a $0.3 million or 10% increase, compared with $3.2 million for the same period a year earlier. For the twelve months ended December 31, 2012, non-interest income was $12.5 million, a $2.8 million or 29% increase, compared with $9.7 million for the same period a year ago. The increase in non-interest income was primarily the result of higher gain on sale of mortgage loans, investment securities, and Other Real Estate Owned ("OREO").
Non-Interest Expense
Non-interest expense was $9.5 million for the three months ended December 31, 2012 compared with $9.2 million for the same period a year earlier. For the twelve months ended December 31, 2012, non-interest expense was $36.1 million compared with $37.3 million for the same period a year earlier. Non-interest expense has been impacted by an increase in loss provisions for mortgage repurchases for mortgages sold in 2007; an increase in salaries and employee benefits due to higher commissions resulting from higher mortgage loan originations; and the re-establishment of a management incentive compensation plan in 2012. The Company's operating efficiency ratio slightly improved to 67.9% for the twelve months ended December 31, 2012 compared with 68.0% for the same period a year ago. The Company's operating efficiency ratio for 2012 was negatively impacted by one-time expense items, as well as net interest margin compression.
Income Taxes
The provision for income taxes was $1.7 million for the three months ended December 31, 2012 compared with $0.1 million for the same period a year earlier, which prior period included a $1.5 million partial reversal of our deferred tax valuation allowance. For the twelve months ended December 31, 2012, the Company recorded a benefit from income taxes of $1.8 million, which included a reversal of the remaining $5.6 million of deferred tax asset valuation allowance. The tax benefit in 2012 compared with a provision for income taxes of $1.8 million for the same period a year ago, which included the previously mentioned $1.5 million partial valuation allowance reversal. As the earnings outlook improved in late 2011 and into 2012, the Company reversed the valuation allowance based upon our change in expectation of future profitability and therefore our assessment of our ability to fully realize the deferred tax asset. Excluding the impact of the valuation allowance reversals in 2012, the Company's effective tax rate for all of 2012 was 33.9% compared with 34.8% for the same period a year ago.
Balance Sheet
Total assets increased $110.4 million, or 11.2%, to $1.1 billion at December 31, 2012 compared with $987.1 million at December 31, 2011. The increase in total assets was primarily the result of growth in total loans and investment securities. This asset growth was primarily funded by an $84.7 million, or 11%, increase in total deposits; with 66% of the deposit growth coming from non-interest bearing demand deposit accounts. Total stockholders' equity was $145.5 million at December 31, 2012, an increase of $15.9 million or 12.3%, compared with $129.6 million at December 31, 2011. The increase in stockholders' equity was primarily driven by earnings for the year.
The Company's liquidity ratio (total cash and cash equivalents plus unpledged marketable securities divided by the sum of total deposits and short-term liabilities less pledged securities) was 36.4% at December 31, 2012 compared with 35.1% at December 31, 2011.
The Company and the Bank exceeded the ratios generally required to be considered a "well capitalized" financial institution for regulatory purposes. The tier I leverage ratio for the Company and the Bank were 12.3% and 11.9%, respectively at December 31, 2012. The total risk-based Capital ratio for the Company and the Bank were 16.8% and 16.3%, respectively at December 31, 2012. The Company remains current on all obligations, including its junior subordinated debentures, and preferred stock issued under the U.S. Treasury's Capital Purchase Program and privately placed preferred stock.
Asset Quality
Classified loans decreased $2.8 million or 5.2% to $51.1 million at December 31, 2012 compared with $53.9 million at December 31, 2011. Classified assets as a percent of Tier I Capital plus the allowance for loan losses improved to 35.4% at December 31, 2012 compared with 44.3% at December 31, 2011.
Non-accrual loans increased $4.9 million to $17.3 million at December 31, 2012 compared with $12.4 million at December 31, 2011, of which $12.6 million were still paying per their contractual terms. Non-performing loans to gross loans increased to 2.5% at December 31, 2012 from 1.9% at December 31, 2011. The Company held no OREO at December 31, 2012, a decrease of $0.9 million from December 31, 2011. Total non-performing assets, inclusive of non-accrual loans, increased $4.0 million to $17.3 million at December 31, 2012 compared with $13.3 million at December 31, 2011. The percentage of non-performing assets to total assets was 1.6% at December 31, 2012 compared with 1.4% at December 31, 2011.
Total troubled debt restructurings ("TDRs") outstanding were $11.6 million at December 31, 2012 compared with $3.7 million at December 31, 2011. The increase in the level of reported TDRs in 2012 was largely the result of a single large loan relationship that was modified in the first quarter of 2012. The ALLL was $18.1 million, or 2.6% of total loans, compared with $19.3 million, or 3.0% of total loans at December 31, 2011. The decrease in the ALLL to total loans ratio is due to continued decreases in the historical loss experience of the loan portfolio.
Conference Call
The Company will host a conference call to discuss these fourth quarter results at 8:00 a.m. PST on January 25, 2013. Media representatives, analysts and the public are invited to listen to this discussion by calling (877) 363-5052 and entering the conference ID 88232944, or via on-demand webcast. A link to the webcast will be available on Heritage Oaks Bancorp's website at www.heritageoaksbancorp.com. A replay of the call will be available on Heritage Oaks Bancorp's website later that day and will remain on its site for up to 14 calendar days. By including the foregoing website address, Heritage Oaks Bancorp does not intend to and shall not be deemed to incorporate by reference any material contained therein. By including the foregoing website address, Heritage Oaks Bancorp does not intend to and shall not be deemed to incorporate by reference any material contained therein.
Annual Report on Form 10-K
The Company intends to file with the U.S. Securities and Exchange Commission its Annual Report on Form 10-K for the year ended December 31, 2012, on or before March 18, 2013. This report can be accessed at the U.S. Securities and Exchange Commission's website, www.sec.gov. Shortly after filing, it is also available free of charge at the Company's website, www.heritageoaksbancorp.com or by contacting the Company's Investor Relations Department. By including the foregoing website address, Heritage Oaks Bancorp does not intend to and shall not be deemed to incorporate by reference any material contained therein.
About Heritage Oaks Bancorp
With $1.1 billion in assets, Heritage Oaks Bancorp is the holding company for Heritage Oaks Bank which operates as Heritage Oaks Bank and Business First, a division of Heritage Oaks Bank. Heritage Oaks Bank has its headquarters and two branch offices in Paso Robles, two branch offices in San Luis Obispo and Santa Maria, single branch offices in Cambria, Arroyo Grande, Atascadero, Templeton, and Morro Bay, as well as a loan production office in Oxnard. Heritage Oaks Bank conducts commercial banking business in the counties of San Luis Obispo, Santa Barbara, and Ventura. The Business First division has one branch office in Santa Barbara. Visit Heritage Oaks Bancorp on the Web at www.heritageoaksbancorp.com.
The Heritage Oaks Bancorp logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7045
Forward Looking Statements
This press release contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward looking statements to be covered by the safe harbor provisions for forward looking statements. All statements other than statements of historical fact are "forward looking statements" for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business prospects, strategic alternatives, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, acquisition and divestiture opportunities, plans and objectives of management for future operations, and other similar forecasts and statements of expectation and statements of assumptions underlying any of the foregoing. Words such as "will likely result," "aims," "anticipates," "believes," "could," "estimates," "expects," "hopes," "intends," "may," "plans," "projects," "seeks," "should," "will," and variations of these words and similar expressions are intended to identify these forward‐looking statements.
Forward looking statements are based on the Company's current expectations and assumptions regarding its business, the regulatory environment, the economy and other future conditions. Forward looking statements are subject to a number of risks and uncertainties that could cause the Company's actual results to differ materially and adversely from those contemplated by the forward looking statements. The Company cautions you against relying on any of these forward looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward looking statements, include the following: the ongoing financial crisis in the United States, including the continuing softness in the California real estate market, and the response of federal and state government and our regulators thereto, general economic conditions in those areas in which the Company operates, competition, fluctuations in interest rates, changes in the Company's business strategy or development plans, changes in governmental regulation, changes in the credit quality of our loan portfolio, as well as economic, political and global changes arising from the war on terrorism, social unrest and other civil disturbances, the Company's ability to increase profitability, sustain growth, the Company's beliefs as to the adequacy of its existing and anticipated allowance for loan losses, beliefs and expectations about, and requirements to comply with the terms of the Memoranda of Understanding issued by regulatory authorities having oversight of the Company's and Bank's operations, and financial policies of the United States government.
Additional information on these risks and other factors that could affect operating results and financial condition are detailed in reports filed by the Company with the U.S. Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2011, filed by the Company with the U.S. Securities and Exchange Commission on February 28, 2012. Forward looking statements speak only as of the date they are made, and the Company does not undertake to update forward looking statements to reflect circumstances or events that occur after the date the forward looking statements are made, whether as a result of new information, future developments or otherwise, and specifically disclaims any obligation to revise or update such forward looking statements for any reason, except as may be required by law.
Use of Non-GAAP Financial Information
Heritage Oaks Bancorp provides all information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results and in particular, making comparisons to similar companies, may be enhanced by providing additional measures used by management to assess operating results. Earnings before income taxes and provision for loan losses, a non-GAAP financial measure, is presented because the Company believes adjusting its results to exclude tax and loan loss provisions provides stockholders with a useful metric for evaluating the core profitability of the Company. A schedule reconciling our GAAP net income to earnings before income taxes and provision for loan losses is provided at the end of the tables below.
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
Source: Heritage Oaks Bancorp