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:
|
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|
|
|
|
|
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|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
(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
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