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 diluted common share,
for the third quarter of 2016 compared to net income available to
common shareholders of $4.0 million, or $0.12 per diluted common
share, for the third quarter of 2015, and net income available to
common shareholders of $4.2 million, or $0.12 per diluted common
share for the second quarter of 2016.
Third Quarter 2016
Highlights
- Gross loans increased by $136.0 million, or 11.3%, to $1.34
billion at September 30, 2016 compared to $1.21 billion at
September 30, 2015, and increased by $9.0 million or 0.7% compared
to $1.33 billion at June 30, 2016. New loan production
totaled $113.1 million for the third quarter of 2016, an increase
of 3.6% compared to the linked quarter.
- Total deposits increased by $59.6 million, or 3.8% to $1.63
billion at September 30, 2016 compared with $1.57 billion a year
earlier, and increased by $24.3 million, or 1.5% during the third
quarter of 2016. Non-interest bearing demand deposits grew by
4.7% during the last year and by 4.3% over the last quarter to
$570.2 million, and represent 35.0% of total deposits at September
30, 2016.
- Credit quality remains strong with non-accrual loans
representing 0.36% of total gross loans at September 30, 2016 down
from 0.51% for the linked quarter and 0.83% a year ago. Net
recoveries for the third quarter of 2016 were $0.2 million compared
to $0.9 million for the linked quarter and $0.3 million for the
third quarter of 2015. Loans delinquent 30 to 89 days as a
percentage of gross loans decreased to 0.00% from 0.04% for the
linked quarter, and 0.07% at September 30, 2015.
- Regulatory capital ratios for the Bank at September 30, 2016
were 9.35% for Tier 1 Leverage Capital, 13.46% for Total Risk Based
Capital, and 12.23% for Common Equity Tier One Capital.
- On October 26th, 2016 the Company’s board of directors declared
a dividend of $0.06 per common share for shareholders of record as
of November 15th, 2016, which is payable to our common shareholders
on November 30th, 2016.
“Our earnings for the third quarter were
supported by an increase in non-interest income attributable to
strong levels of customer swap fee income, and mortgage banking
revenue, as our customers took advantage of the decline in
long-term interest rates,” stated Simone Lagomarsino, President and
Chief Executive Officer of Heritage Oaks Bancorp. Ms.
Lagomarsino continued, “We also continued to grow the deposit and
loan portfolios, although loan growth was subdued from the pay-off
of two large construction loans due to the early completion of
projects, and due to the seasonal decline in agribusiness line
utilization. Our loan pipeline remains strong going into the fourth
quarter, and we continue to anticipate long-term annual loan growth
in the low double digits.”
Net Income Available to Common Shareholders
Net income available to common shareholders for
the third quarter of 2016 was $4.2 million, or $0.12 per diluted
common share, compared with $4.0 million, or $0.12 per diluted
common share, for the third quarter of 2015. Net income
available to common shareholders for the quarter ended June 30,
2016 was $4.2 million, or $0.12 per diluted common share.
Compared to the linked quarter, a decline in net interest income
after a $1.0 million reversal of provision for loan and lease
losses that the Company recorded during the second quarter of 2016,
was offset by an increase in non-interest income, and a decrease in
non-interest expense, resulting in a nominal change to linked
quarter earnings. Compared to the third quarter of 2015, net
interest income after reversal of provision for loan and lease
losses increased by $0.8 million, and non-interest income increased
by $0.5 million, which more than offset an increase in non-interest
expense of $0.6 million, and resulted in a $0.8 million increase in
pre-tax net income.
Net income available to common shareholders for
the nine months ended September 30, 2016 was $12.4 million, or
$0.36 per diluted common share, as compared to $11.8 million or
$0.34 per diluted common share for the nine months ended September
30, 2015. Compared to the first nine months of 2015, net
interest income after reversal of provision for loan and lease
losses increased by $3.0 million, and non-interest income increased
by $1.3 million, which more than offset a $3.0 million increase in
non-interest expense, and resulted in a $0.6 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 $16.2 million, or 3.50% of average
interest earning assets (“net interest margin”), for the third
quarter of 2016 compared with $15.4 million, or a 3.58% net
interest margin, for the same period a year earlier, and $16.3
million, or a 3.63% net interest margin, for the quarter ended June
30, 2016. Net interest income increased $0.8 million,
compared to the same prior year period as the increase in average
interest earning balances more than offset the decline in yields on
interest earning assets. Net interest income declined
slightly compared to the linked quarter primarily due to a decline
in accelerated purchased loan discount accretion.
The net interest margin was 3.50% for the third
quarter of 2016 compared to 3.58% for the same prior year period,
and 3.63% for the linked quarter ended June 30, 2016. The
year-over-year 8 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 decreased by 13 basis points due
primarily to a decline in purchased loan discount accretion.
Loan yields declined by 40 basis points to 4.55%
for the third quarter of 2016 from 4.95% for the third quarter of
2015, and by 15 basis points compared to 4.70% for the second
quarter of 2016. The decline in loan yields for the current
quarter as compared to the third 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, as well as to a decline in purchased loan discount
accretion. Compared to the linked quarter, a decline in
accelerated loan discount accretion was the primary driver of the
decline in loan yields. Purchased loan discount accretion
contributed 10 basis points to loan yields during the third quarter
of 2016 compared to 20 basis points during the linked quarter, and
16 basis points during the third quarter of 2015.
The cost of deposits for the third quarter of
2016 declined by 2 basis points compared to the same prior year
period to 0.22%, and by 1 basis point compared to the second
quarter of 2016. The decline in the cost of deposits was due
to average non-interest bearing demand deposit growth of $40.3
million or 7.6% during the third quarter of 2016, which also led to
a 1 basis point linked quarter decline in the cost of funds to
0.33%.
Provision for Loan and Lease
Losses
No provisions for loan and lease losses were
recorded for the quarters ended September 30, 2016 or 2015.
The Company recorded a $1.0 million reversal of provision during
the quarter ended June 30, 2016. The reversal of provision
for loan and lease losses was attributable to continual improvement
in loan credit quality metrics.
Non-Interest Income
Non-interest income for the third quarter of
2016 was $3.3 million compared to $2.6 million for the linked
quarter, and $2.8 million for the same period a year earlier.
Non-interest income increased by $0.5 million for the current
quarter as compared to the same prior year period due to increases
in customer swap fee income, mortgage banking revenue, gains on the
sale of investment securities, and earnings on bank owned life
insurance, which more than offset the impact that the absence of
the non-recurring gain on extinguishment of debt recorded in the
third quarter of last year had on non-interest income.
Compared to the linked quarter, non-interest income increased by
$0.8 million, primarily due to increases in customer swap fee
income, mortgage banking revenue, and gains on the sale of
investment securities.
Non-Interest Expense
Non-interest expense increased by $0.6 million,
or 4.7%, to $12.7 million for the quarter ended September 30, 2016
compared to $12.2 million for the quarter ended September 30,
2015. Non-interest expense for the third quarter of 2016
decreased by $0.3 million, or 2.6% from $13.1 million for the
linked quarter.
The increase in non-interest expense for the
third quarter of 2016 as compared to the third quarter a year ago
was due to a $1.1 million increase in salaries and benefits costs,
which was offset by a $0.5 million decline 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 base salaries, and mortgage commissions.
The following table illustrates the components
of professional services costs for the periods indicated:
Heritage Oaks Bancorp |
Professional Services |
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
9/30/2016 |
|
6/30/2016 |
|
9/30/2015 |
|
9/30/2016 |
|
9/30/2015 |
|
(dollars in thousands) |
Professional
Services |
|
|
|
|
|
|
|
|
|
BSA/AML
related costs |
$ |
631 |
|
|
$ |
637 |
|
|
$ |
598 |
|
|
$ |
1,907 |
|
|
$ |
1,363 |
|
Audit and
tax costs |
|
321 |
|
|
|
327 |
|
|
|
367 |
|
|
|
1,072 |
|
|
|
889 |
|
Information technology services and consulting |
|
312 |
|
|
|
308 |
|
|
|
458 |
|
|
|
944 |
|
|
|
1,097 |
|
Legal
costs |
|
73 |
|
|
|
79 |
|
|
|
319 |
|
|
|
152 |
|
|
|
738 |
|
All other
costs |
|
439 |
|
|
|
621 |
|
|
|
492 |
|
|
|
1,559 |
|
|
|
1,255 |
|
Total
professional services |
$ |
1,776 |
|
|
$ |
1,972 |
|
|
$ |
2,234 |
|
|
$ |
5,634 |
|
|
$ |
5,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expense decreased on a linked-quarter basis due to
decreases in other expenses, professional services, and regulatory
assessments. The decrease in other expense is due to a
decrease in operating losses primarily related to prior quarter
losses attributable to data breaches that occurred at other
companies, and impacted some of our debit card customers. Pursuant
to Regulation E, we were responsible for reimbursing customers for
these losses. The decline in professional services fees is
attributable to a return to a more normalized quarterly expense
level for other professional services costs. Regulatory assessments
declined due to the revised deposit assessment for established
small banks, which was triggered upon the Federal Deposit Insurance
Corporation’s (“FDIC”) Deposit Insurance Fund reaching a reserve
ratio of at least 1.15% by June 30, 2016.
Operating Efficiency
The Company’s operating efficiency ratio
decreased to 64.44% for the third quarter of 2016 as compared to
67.81% for the third quarter of 2015, and 68.01% for the linked
quarter. Total non-interest expense as a percentage of
average assets, another measure of the Company’s efficiency, was
2.56% for the third quarter of 2016 compared to 2.61% for third
quarter of 2015, and 2.71% for the quarter ended June 30, 2016.
Income Taxes
Income tax expense was $2.7 million for the
quarter ended September 30, 2016 compared with $2.0 million for the
same period a year earlier. For the linked quarter ended June
30, 2016 income tax expense was $2.6 million. The Company’s
effective tax rate for the third quarter of 2016 was 38.9% compared
with 33.9% for the same period a year ago, and 38.2% for the
quarter ended June 30, 2016.
Balance Sheet
Total assets increased by $114.4 million, or
6.1%, to $2.0 billion at September 30, 2016 compared to September
30, 2015, and by $26.8 million, or 1.4%, compared to June 30,
2016. Cash and cash equivalents decreased by $47.0 million,
or 41.9%, to $65.2 million at September 30, 2016 compared to
September 30, 2015, and increased by $9.2 million, or 16.4%,
compared to June 30, 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 $23.7 million
or 5.5%, to $456.5 million at September 30, 2016 compared to $432.7
million at September 30, 2015, and by $9.6 million, or 2.1%,
compared to $446.9 million at June 30, 2016. At September 30,
2016, the effective duration of the securities portfolio was 2.86
years. We currently target a 2.75 to 3.25 year effective
duration for the securities portfolio.
Total gross loans increased by $136.0 million,
or 11.3%, to $1.34 billion at September 30, 2016 compared to
September 30, 2015, and by $9.0 million, or 0.7%, compared to June
30, 2016. Loan production increased on a linked-quarter
basis, however, the increase was concentrated in mortgage loans
held for sale, which accounted for $52.5 million of third quarter
production, an increase of $10.6 million, or 25.4%, compared to the
linked quarter. New loan production for the held for
investment portfolio (“portfolio loans”) was $60.6 million during
the quarter ended September 30, 2016, down $6.7 million, or 9.9%,
compared to the prior quarter.
Total deposits increased by $59.6 million, or
3.8%, to $1.63 billion as of September 30, 2016 from $1.57 billion
at September 30, 2015, and by $24.3 million, or 1.5%, from $1.61
billion at June 30, 2016. Non-interest bearing deposits
increased by $23.7 million, or 4.3%, during the third quarter of
2016, and increased by $25.4 million, or 4.7%, since September 30,
2015.
Total shareholders’ equity was $215.3 million at
September 30, 2016, an increase of $9.8 million, or 4.8%, compared
to September 30, 2015, and an increase of $1.4 million, or 0.7%,
compared to June 30, 2016, due primarily to quarterly earnings, net
of shareholder dividend payments, as well as to the change in the
unrealized gain on the investment securities portfolio. The
change in the unrealized gain in the investment securities
portfolio led to a decline in equity of $1.1 million, and an
increase of $2.6 million during the past quarter, and year,
respectively.
Classified assets at September 30, 2016 totaled
$45.4 million, an increase of $3.3 million, or 7.8%, compared to
$42.1 million at June 30, 2016, a decrease of $1.3 million, or
3.0%, from $44.0 million at September 30, 2015.
Non-performing assets were $5.1 million at September 30, 2016
declining by $1.9 million, or 26.9%, since the prior quarter, and
by $5.3 million, or 51.0%, decline since September 30, 2015.
Non-performing assets remain at the lowest level reached in the
last several years, at 0.25% of total assets at September 30, 2016,
down from 0.35% at June 30, 2016, and down from 0.55% at September
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 September 30,
2015 to 1.31% at September 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 continual improvement in the loan credit
quality profile of the Company, which is evidenced by the
consistent trend of net loan recoveries and improvement in the
asset quality ratios, in particular during the current
quarter.
As of September 30, 2016, the portion of the
ALLL allocated to loans acquired in the Mission Community Bancorp
(“MISN”) merger was $0.3 million or 0.17% of the remaining acquired
MISN loan portfolio. The remaining un-accreted fair market
value discount on MISN loans was $4.4 million at September 30, 2016
and represents 2.97% 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 $1.6
million qualitative allocation in its ALLL to address these
concerns, which accounts for 9.1% of the total ALLL at September
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 9.83%, and 9.35%,
respectively, at September 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 14.09%, and
13.46%, respectively, at September 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 12.30%, and 12.23%, respectively, at September 30, 2016
compared with the requirement of 6.5% to generally be considered a
"well capitalized" financial institution for regulatory
purposes. The Company’s and 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 believes it has 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 remediation efforts required to address the issues
identified in the BSA Consent Order are essentially complete at
this time, and we look forward to the full resolution of this
regulatory matter in the near future. However, compliance
with and resolution of the BSA Consent Order are determined by the
FDIC and California Department of Business Oversight (“DBO”) in
their sole discretion.
Conference Call
The Company will host a conference call to
discuss the third quarter 2016 results at 8:00 a.m. PT on October
28, 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 86200162, 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 September 30, 2016 on or before November
9, 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
tangible common book value per share is a useful measure because it
is widely used in the financial services industry to compare the
relative market value of one financial institution against another,
and 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) |
|
|
|
|
|
|
|
9/30/2016 |
|
6/30/2016 |
|
9/30/2015 |
|
(dollars in thousands, except per share data) |
Assets |
|
|
|
|
|
Cash and
due from banks |
$ |
23,893 |
|
|
$ |
15,768 |
|
|
$ |
22,469 |
|
Interest
earning deposits in other banks |
|
41,357 |
|
|
|
40,274 |
|
|
|
89,801 |
|
Total
cash and cash equivalents |
|
65,250 |
|
|
|
56,042 |
|
|
|
112,270 |
|
Investment securities available for sale, at fair value |
|
456,464 |
|
|
|
446,877 |
|
|
|
432,750 |
|
Loans
held for sale, at lower of cost or fair value |
|
7,975 |
|
|
|
8,534 |
|
|
|
5,366 |
|
Gross
loans held for investment |
|
1,342,701 |
|
|
|
1,333,719 |
|
|
|
1,206,740 |
|
Net
deferred loan fees |
|
(1,146 |
) |
|
|
(1,181 |
) |
|
|
(1,056 |
) |
Allowance
for loan and lease losses |
|
(17,643 |
) |
|
|
(17,448 |
) |
|
|
(17,296 |
) |
Net loans
held for investment |
|
1,323,912 |
|
|
|
1,315,090 |
|
|
|
1,188,388 |
|
Premises
and equipment, net |
|
36,360 |
|
|
|
36,613 |
|
|
|
37,686 |
|
Bank-owned life insurance |
|
33,500 |
|
|
|
33,284 |
|
|
|
25,191 |
|
Goodwill |
|
24,885 |
|
|
|
24,885 |
|
|
|
24,885 |
|
Deferred
tax assets, net |
|
15,663 |
|
|
|
15,321 |
|
|
|
21,422 |
|
Federal
Home Loan Bank stock |
|
7,853 |
|
|
|
7,853 |
|
|
|
7,853 |
|
Other
intangible assets |
|
3,568 |
|
|
|
3,812 |
|
|
|
4,560 |
|
Premises
held for sale |
|
- |
|
|
|
- |
|
|
|
1,910 |
|
Other
assets |
|
12,877 |
|
|
|
13,221 |
|
|
|
11,644 |
|
Total
assets |
$ |
1,988,307 |
|
|
$ |
1,961,532 |
|
|
$ |
1,873,925 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Deposits |
|
|
|
|
|
Non-interest bearing deposits |
$ |
570,243 |
|
|
$ |
546,520 |
|
|
$ |
544,782 |
|
Interest
bearing deposits |
|
1,061,105 |
|
|
|
1,060,569 |
|
|
|
1,026,988 |
|
Total
deposits |
|
1,631,348 |
|
|
|
1,607,089 |
|
|
|
1,571,770 |
|
Short
term FHLB borrowing |
|
49,000 |
|
|
|
49,500 |
|
|
|
13,500 |
|
Long term
FHLB borrowing |
|
71,000 |
|
|
|
71,003 |
|
|
|
65,046 |
|
Junior
subordinated debentures |
|
10,572 |
|
|
|
10,529 |
|
|
|
10,389 |
|
Other
liabilities |
|
11,104 |
|
|
|
9,529 |
|
|
|
7,762 |
|
Total
liabilities |
|
1,773,024 |
|
|
|
1,747,650 |
|
|
|
1,668,467 |
|
|
|
|
|
|
|
Shareholders'
Equity |
|
|
|
|
|
Common stock, no par
value; authorized: 100,000,000 shares; |
|
|
|
|
|
issued
and outstanding: 34,249,804, 34,205,542, and 34,352,445 shares as
of |
|
|
|
|
|
September
30, 2016, June 30, 2016, and September 30, 2015, respectively |
|
164,009 |
|
|
|
163,931 |
|
|
|
165,452 |
|
Additional paid in
capital |
|
8,971 |
|
|
|
8,668 |
|
|
|
7,964 |
|
Retained earnings |
|
38,424 |
|
|
|
36,295 |
|
|
|
30,774 |
|
Accumulated other
comprehensive income |
|
3,879 |
|
|
|
4,988 |
|
|
|
1,268 |
|
Total
shareholders' equity |
|
215,283 |
|
|
|
213,882 |
|
|
|
205,458 |
|
Total
liabilities and shareholders' equity |
$ |
1,988,307 |
|
|
$ |
1,961,532 |
|
|
$ |
1,873,925 |
|
|
|
|
|
|
|
Book value per common
share |
$ |
6.29 |
|
|
$ |
6.25 |
|
|
$ |
5.98 |
|
|
|
|
|
|
|
Tangible book value per
common share |
$ |
5.45 |
|
|
$ |
5.41 |
|
|
$ |
5.12 |
|
Heritage Oaks Bancorp |
Consolidated Statements of
Income |
(unaudited) |
|
For the Three Months Ended |
|
9/30/2016 |
|
6/30/2016 |
|
9/30/2015 |
|
(dollars in thousands, except per share data) |
Interest
Income |
|
|
|
|
|
Loans,
including fees |
$ |
15,222 |
|
|
$ |
15,315 |
|
|
$ |
14,781 |
|
Investment securities |
|
2,215 |
|
|
|
2,189 |
|
|
|
1,864 |
|
Other
interest-earning assets |
|
232 |
|
|
|
239 |
|
|
|
312 |
|
Total
interest income |
|
17,669 |
|
|
|
17,743 |
|
|
|
16,957 |
|
Interest
Expense |
|
|
|
|
|
Deposits |
|
898 |
|
|
|
891 |
|
|
|
941 |
|
Other
borrowings |
|
541 |
|
|
|
553 |
|
|
|
620 |
|
Total
interest expense |
|
1,439 |
|
|
|
1,444 |
|
|
|
1,561 |
|
Net interest income
before (reversal of) provision for loan and lease losses |
|
16,230 |
|
|
|
16,299 |
|
|
|
15,396 |
|
(Reversal
of) provision for loan and lease losses |
|
- |
|
|
|
(1,000 |
) |
|
|
- |
|
Net interest income
after (reversal of) provision for loan and lease losses |
|
16,230 |
|
|
|
17,299 |
|
|
|
15,396 |
|
Non-Interest
Income |
|
|
|
|
|
Fees and
service charges |
|
1,276 |
|
|
|
1,262 |
|
|
|
1,271 |
|
Net gain
on sale of mortgage loans |
|
708 |
|
|
|
530 |
|
|
|
407 |
|
Gain on
derivative instruments |
|
415 |
|
|
|
65 |
|
|
|
- |
|
Earnings
on BOLI |
|
289 |
|
|
|
289 |
|
|
|
214 |
|
Gain on
sale of investment securities |
|
271 |
|
|
|
87 |
|
|
|
136 |
|
Other
mortgage fee income |
|
199 |
|
|
|
148 |
|
|
|
92 |
|
Gain on
extinguishment of debt |
|
- |
|
|
|
- |
|
|
|
552 |
|
Other
income |
|
186 |
|
|
|
202 |
|
|
|
134 |
|
Total
non-interest income |
|
3,344 |
|
|
|
2,583 |
|
|
|
2,806 |
|
Non-Interest
Expense |
|
|
|
|
|
Salaries
and employee benefits |
|
6,686 |
|
|
|
6,607 |
|
|
|
5,598 |
|
Professional services |
|
1,776 |
|
|
|
1,972 |
|
|
|
2,234 |
|
Occupancy
and equipment |
|
1,657 |
|
|
|
1,649 |
|
|
|
1,688 |
|
Information technology |
|
591 |
|
|
|
630 |
|
|
|
611 |
|
Sales and
marketing |
|
317 |
|
|
|
246 |
|
|
|
240 |
|
Loan
department expense |
|
284 |
|
|
|
259 |
|
|
|
252 |
|
Amortization of intangible assets |
|
244 |
|
|
|
243 |
|
|
|
263 |
|
Regulatory assessments |
|
222 |
|
|
|
315 |
|
|
|
298 |
|
Communication costs |
|
122 |
|
|
|
125 |
|
|
|
150 |
|
Other
expense |
|
824 |
|
|
|
1,018 |
|
|
|
817 |
|
Total
non-interest expense |
|
12,723 |
|
|
|
13,064 |
|
|
|
12,151 |
|
Income before income
taxes |
|
6,851 |
|
|
|
6,818 |
|
|
|
6,051 |
|
Income
tax expense |
|
2,668 |
|
|
|
2,603 |
|
|
|
2,049 |
|
Net
income |
$ |
4,183 |
|
|
$ |
4,215 |
|
|
$ |
4,002 |
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding |
|
|
|
|
|
Basic |
|
34,037,252 |
|
|
|
33,998,644 |
|
|
|
34,158,081 |
|
Diluted |
|
34,183,200 |
|
|
|
34,140,986 |
|
|
|
34,282,367 |
|
Earnings Per Common
Share |
|
|
|
|
|
Basic |
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
0.12 |
|
Diluted |
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
0.12 |
|
Dividends Declared Per
Common Share |
$ |
0.06 |
|
|
$ |
0.06 |
|
|
$ |
0.06 |
|
Heritage Oaks Bancorp |
Consolidated Statements of Income |
(unaudited) |
|
For the Nine Months Ended |
|
9/30/2016 |
|
9/30/2015 |
|
(dollars in thousands, except per share data) |
Interest
Income |
|
|
|
Loans,
including fees |
$ |
45,152 |
|
|
$ |
44,454 |
|
Investment securities |
|
6,604 |
|
|
|
5,193 |
|
Other
interest-earning assets |
|
671 |
|
|
|
979 |
|
Total
interest income |
|
52,427 |
|
|
|
50,626 |
|
Interest
Expense |
|
|
|
Deposits |
|
2,668 |
|
|
|
2,748 |
|
Other
borrowings |
|
1,612 |
|
|
|
1,742 |
|
Total
interest expense |
|
4,280 |
|
|
|
4,490 |
|
Net interest income
before (reversal of) provision for loan and lease losses |
|
48,147 |
|
|
|
46,136 |
|
(Reversal
of) provision for loan and lease losses |
|
(1,000 |
) |
|
|
- |
|
Net interest income
after (reversal of) provision for loan and lease losses |
|
49,147 |
|
|
|
46,136 |
|
Non-Interest
Income |
|
|
|
Fees and
service charges |
|
3,820 |
|
|
|
3,840 |
|
Net gain
on sale of mortgage loans |
|
1,696 |
|
|
|
1,277 |
|
Gain on
derivative instruments |
|
1,012 |
|
|
|
- |
|
Gain on
sale of investment securities |
|
909 |
|
|
|
641 |
|
Earnings
on BOLI |
|
865 |
|
|
|
640 |
|
Other
mortgage fee income |
|
438 |
|
|
|
348 |
|
Gain on
extinguishment of debt |
|
- |
|
|
|
552 |
|
Other
income |
|
594 |
|
|
|
780 |
|
Total
non-interest income |
|
9,334 |
|
|
|
8,078 |
|
Non-Interest
Expense |
|
|
|
Salaries
and employee benefits |
|
19,611 |
|
|
|
17,643 |
|
Professional services |
|
5,634 |
|
|
|
5,342 |
|
Occupancy
and equipment |
|
4,933 |
|
|
|
5,023 |
|
Information technology |
|
1,821 |
|
|
|
1,753 |
|
Regulatory assessments |
|
847 |
|
|
|
895 |
|
Sales and
marketing |
|
807 |
|
|
|
852 |
|
Loan
department expense |
|
770 |
|
|
|
798 |
|
Amortization of intangible assets |
|
730 |
|
|
|
787 |
|
Communication costs |
|
372 |
|
|
|
435 |
|
OREO
write-downs |
|
217 |
|
|
|
- |
|
Other
expense |
|
2,666 |
|
|
|
1,865 |
|
Total
non-interest expense |
|
38,408 |
|
|
|
35,393 |
|
Income before income
taxes |
|
20,073 |
|
|
|
18,821 |
|
Income
tax expense |
|
7,690 |
|
|
|
6,950 |
|
Net
income |
|
12,383 |
|
|
|
11,871 |
|
Accretion
on preferred stock |
|
- |
|
|
|
70 |
|
Net income
available to common shareholders |
$ |
12,383 |
|
|
$ |
11,801 |
|
|
|
|
|
Weighted Average Shares
Outstanding |
|
|
|
Basic |
|
34,044,067 |
|
|
|
34,111,079 |
|
Diluted |
|
34,173,336 |
|
|
|
34,258,364 |
|
Earnings Per Common
Share |
|
|
|
Basic |
$ |
0.36 |
|
|
$ |
0.34 |
|
Diluted |
$ |
0.36 |
|
|
$ |
0.34 |
|
Dividends Declared Per
Common Share |
$ |
0.18 |
|
|
$ |
0.17 |
|
Heritage Oaks Bancorp |
Key Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
9/30/2016 |
|
6/30/2016 |
|
9/30/2015 |
|
|
9/30/2016 |
|
9/30/2015 |
Profitability /
Performance Ratios |
|
|
|
|
|
|
|
|
|
|
Net
interest margin |
|
3.50 |
% |
|
|
3.63 |
% |
|
|
3.58 |
% |
|
|
|
3.56 |
% |
|
|
3.72 |
% |
Return on
average equity |
|
7.74 |
% |
|
|
8.06 |
% |
|
|
7.78 |
% |
|
|
|
7.82 |
% |
|
|
7.85 |
% |
Return on
average common equity |
|
7.74 |
% |
|
|
8.06 |
% |
|
|
7.78 |
% |
|
|
|
7.82 |
% |
|
|
7.83 |
% |
Return on
average tangible common equity |
|
8.93 |
% |
|
|
9.34 |
% |
|
|
9.10 |
% |
|
|
|
9.05 |
% |
|
|
9.19 |
% |
Return on
average assets |
|
0.84 |
% |
|
|
0.87 |
% |
|
|
0.86 |
% |
|
|
|
0.85 |
% |
|
|
0.88 |
% |
Non-interest income to total net revenue |
|
17.08 |
% |
|
|
13.68 |
% |
|
|
15.42 |
% |
|
|
|
16.24 |
% |
|
|
14.90 |
% |
Yield on
interest earning assets |
|
3.81 |
% |
|
|
3.95 |
% |
|
|
3.94 |
% |
|
|
|
3.88 |
% |
|
|
4.08 |
% |
Cost of
interest bearing liabilities |
|
0.48 |
% |
|
|
0.49 |
% |
|
|
0.56 |
% |
|
|
|
0.48 |
% |
|
|
0.55 |
% |
Cost of
funds |
|
0.33 |
% |
|
|
0.34 |
% |
|
|
0.38 |
% |
|
|
|
0.33 |
% |
|
|
0.38 |
% |
Operating
efficiency ratio (1) |
|
64.44 |
% |
|
|
68.01 |
% |
|
|
67.81 |
% |
|
|
|
66.04 |
% |
|
|
65.32 |
% |
Non-interest expense to average assets, annualized |
|
2.56 |
% |
|
|
2.71 |
% |
|
|
2.61 |
% |
|
|
|
2.65 |
% |
|
|
2.64 |
% |
Gross
loans to total deposits |
|
82.31 |
% |
|
|
82.99 |
% |
|
|
76.78 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality
Ratios |
|
|
|
|
|
|
|
|
|
|
Non-performing loans to total gross loans |
|
0.36 |
% |
|
|
0.51 |
% |
|
|
0.83 |
% |
|
|
|
|
|
Non-performing loans to equity |
|
2.27 |
% |
|
|
3.19 |
% |
|
|
4.87 |
% |
|
|
|
|
|
Non-performing assets to total assets |
|
0.25 |
% |
|
|
0.35 |
% |
|
|
0.55 |
% |
|
|
|
|
|
Allowance
for loan and lease losses to total gross loans |
|
1.31 |
% |
|
|
1.31 |
% |
|
|
1.43 |
% |
|
|
|
|
|
Net
recoveries to average loans outstanding, annualized |
|
0.06 |
% |
|
|
0.27 |
% |
|
|
0.11 |
% |
|
|
|
0.12 |
% |
|
|
0.06 |
% |
Classified assets to Tier I + ALLL |
|
21.81 |
% |
|
|
20.66 |
% |
|
|
22.31 |
% |
|
|
|
|
|
30-89 day
delinquency rate |
|
0.00 |
% |
|
|
0.04 |
% |
|
|
0.07 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Ratios |
|
|
|
|
|
|
|
|
|
|
Company |
|
|
|
|
|
|
|
|
|
|
Common
Equity Tier I Capital Ratio |
|
12.30 |
% |
|
|
12.16 |
% |
|
|
12.81 |
% |
|
|
|
|
|
Leverage
ratio |
|
9.83 |
% |
|
|
9.80 |
% |
|
|
9.96 |
% |
|
|
|
|
|
Tier I
Risk-Based Capital Ratio |
|
12.87 |
% |
|
|
12.69 |
% |
|
|
13.20 |
% |
|
|
|
|
|
Total
Risk-Based Capital Ratio |
|
14.09 |
% |
|
|
13.91 |
% |
|
|
14.46 |
% |
|
|
|
|
|
Bank |
|
|
|
|
|
|
|
|
|
|
Common
Equity Tier I Capital Ratio |
|
12.23 |
% |
|
|
11.91 |
% |
|
|
12.52 |
% |
|
|
|
|
|
Leverage
ratio |
|
9.35 |
% |
|
|
9.20 |
% |
|
|
9.44 |
% |
|
|
|
|
|
Tier I
Risk-Based Capital Ratio |
|
12.23 |
% |
|
|
11.91 |
% |
|
|
12.52 |
% |
|
|
|
|
|
Total
Risk-Based Capital Ratio |
|
13.46 |
% |
|
|
13.13 |
% |
|
|
13.77 |
% |
|
|
|
|
|
|
(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 |
|
9/30/2016 |
|
6/30/2016 |
|
9/30/2015 |
|
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) |
$ |
1,330,224 |
|
|
4.55 |
% |
$ |
15,222 |
|
|
$ |
1,310,096 |
|
|
4.70 |
% |
$ |
15,315 |
|
|
$ |
1,184,229 |
|
|
4.95 |
% |
$ |
14,781 |
|
Investment securities |
|
456,175 |
|
|
1.93 |
% |
|
2,215 |
|
|
|
443,522 |
|
|
1.99 |
% |
|
2,189 |
|
|
|
414,519 |
|
|
1.78 |
% |
|
1,864 |
|
Interest
earning deposits in other banks |
|
47,007 |
|
|
0.29 |
% |
|
34 |
|
|
|
44,809 |
|
|
0.33 |
% |
|
37 |
|
|
|
99,812 |
|
|
0.23 |
% |
|
58 |
|
Other
investments |
|
9,739 |
|
|
8.09 |
% |
|
198 |
|
|
|
9,739 |
|
|
8.34 |
% |
|
202 |
|
|
|
9,838 |
|
|
10.24 |
% |
|
254 |
|
Total
earning assets |
|
1,843,145 |
|
|
3.81 |
% |
|
17,669 |
|
|
|
1,808,166 |
|
|
3.95 |
% |
|
17,743 |
|
|
|
1,708,398 |
|
|
3.94 |
% |
|
16,957 |
|
Allowance
for loan and lease losses |
|
(17,561 |
) |
|
|
|
|
(17,807 |
) |
|
|
|
|
(17,216 |
) |
|
|
Other
assets |
|
149,769 |
|
|
|
|
|
147,463 |
|
|
|
|
|
153,560 |
|
|
|
Total
assets |
$ |
1,975,353 |
|
|
|
|
$ |
1,937,822 |
|
|
|
|
$ |
1,844,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Bearing Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Money
market |
$ |
586,612 |
|
|
0.28 |
% |
$ |
409 |
|
|
$ |
583,822 |
|
|
0.28 |
% |
$ |
408 |
|
|
$ |
526,657 |
|
|
0.27 |
% |
$ |
355 |
|
Time
deposits |
|
241,942 |
|
|
0.70 |
% |
|
427 |
|
|
|
240,037 |
|
|
0.71 |
% |
|
421 |
|
|
|
256,554 |
|
|
0.82 |
% |
|
528 |
|
Interest
bearing demand |
|
128,073 |
|
|
0.11 |
% |
|
34 |
|
|
|
125,918 |
|
|
0.11 |
% |
|
34 |
|
|
|
118,441 |
|
|
0.11 |
% |
|
32 |
|
Savings |
|
114,068 |
|
|
0.10 |
% |
|
28 |
|
|
|
109,748 |
|
|
0.10 |
% |
|
28 |
|
|
|
103,891 |
|
|
0.10 |
% |
|
26 |
|
Total
interest bearing deposits |
|
1,070,695 |
|
|
0.33 |
% |
|
898 |
|
|
|
1,059,525 |
|
|
0.34 |
% |
|
891 |
|
|
|
1,005,543 |
|
|
0.37 |
% |
|
941 |
|
Federal
Home Loan Bank borrowing |
|
99,691 |
|
|
1.64 |
% |
|
410 |
|
|
|
118,833 |
|
|
1.43 |
% |
|
422 |
|
|
|
86,157 |
|
|
2.25 |
% |
|
489 |
|
Junior
subordinated debentures |
|
10,545 |
|
|
4.94 |
% |
|
131 |
|
|
|
10,501 |
|
|
5.02 |
% |
|
131 |
|
|
|
11,726 |
|
|
4.43 |
% |
|
131 |
|
Total
borrowed funds |
|
110,236 |
|
|
1.95 |
% |
|
541 |
|
|
|
129,334 |
|
|
1.72 |
% |
|
553 |
|
|
|
97,883 |
|
|
2.51 |
% |
|
620 |
|
Total interest bearing
liabilities |
|
1,180,931 |
|
|
0.48 |
% |
|
1,439 |
|
|
|
1,188,859 |
|
|
0.49 |
% |
|
1,444 |
|
|
|
1,103,426 |
|
|
0.56 |
% |
|
1,561 |
|
Non
interest bearing demand |
|
568,453 |
|
|
|
|
|
528,123 |
|
|
|
|
|
528,354 |
|
|
|
Total
funding |
|
1,749,384 |
|
|
0.33 |
% |
|
1,439 |
|
|
|
1,716,982 |
|
|
0.34 |
% |
|
1,444 |
|
|
|
1,631,780 |
|
|
0.38 |
% |
|
1,561 |
|
Other
liabilities |
|
10,930 |
|
|
|
|
|
10,392 |
|
|
|
|
|
8,899 |
|
|
|
Total
liabilities |
|
1,760,314 |
|
|
|
|
|
1,727,374 |
|
|
|
|
|
1,640,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity |
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders' equity |
|
215,039 |
|
|
|
|
|
210,448 |
|
|
|
|
|
204,063 |
|
|
|
Total
liabilities and shareholders' equity |
$ |
1,975,353 |
|
|
|
|
$ |
1,937,822 |
|
|
|
|
$ |
1,844,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest margin (3) |
|
|
3.50 |
% |
$ |
16,230 |
|
|
|
|
3.63 |
% |
$ |
16,299 |
|
|
|
|
3.58 |
% |
$ |
15,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate spread |
|
|
3.33 |
% |
|
|
|
|
3.46 |
% |
|
|
|
|
3.38 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
deposits |
|
|
0.22 |
% |
|
|
|
|
0.23 |
% |
|
|
|
|
0.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 Nine Months Ended |
|
9/30/2016 |
|
9/30/2015 |
|
Balance |
Yield / Rate (4) |
Income / Expense |
|
Balance |
Yield / Rate (4) |
Income / Expense |
|
(dollars in thousands) |
Interest
Earning Assets |
|
|
|
|
|
|
|
Loans (1)
(2) |
$ |
1,299,612 |
|
|
4.64 |
% |
$ |
45,152 |
|
|
$ |
1,197,715 |
|
|
4.96 |
% |
$ |
44,454 |
|
Investment securities |
|
449,498 |
|
|
1.96 |
% |
|
6,604 |
|
|
|
379,228 |
|
|
1.83 |
% |
|
5,193 |
|
Interest
earning deposits in other banks |
|
46,056 |
|
|
0.31 |
% |
|
107 |
|
|
|
73,197 |
|
|
0.20 |
% |
|
112 |
|
Other
investments |
|
9,739 |
|
|
7.74 |
% |
|
564 |
|
|
|
9,838 |
|
|
11.78 |
% |
|
867 |
|
Total
earning assets |
|
1,804,905 |
|
|
3.88 |
% |
|
52,427 |
|
|
|
1,659,978 |
|
|
4.08 |
% |
|
50,626 |
|
Allowance
for loan and lease losses |
|
(17,627 |
) |
|
|
|
|
(17,040 |
) |
|
|
Other
assets |
|
148,818 |
|
|
|
|
|
151,391 |
|
|
|
Total
assets |
$ |
1,936,096 |
|
|
|
|
$ |
1,794,329 |
|
|
|
|
|
|
|
|
|
|
|
Interest
Bearing Liabilities |
|
|
|
|
|
|
|
Money
market |
$ |
579,669 |
|
|
0.28 |
% |
$ |
1,209 |
|
|
$ |
499,357 |
|
|
0.27 |
% |
$ |
1,027 |
|
Time
deposits |
|
241,973 |
|
|
0.70 |
% |
|
1,274 |
|
|
|
268,413 |
|
|
0.77 |
% |
|
1,551 |
|
Interest
bearing demand |
|
126,793 |
|
|
0.11 |
% |
|
102 |
|
|
|
117,696 |
|
|
0.11 |
% |
|
97 |
|
Savings |
|
111,363 |
|
|
0.10 |
% |
|
83 |
|
|
|
98,142 |
|
|
0.10 |
% |
|
73 |
|
Total
interest bearing deposits |
|
1,059,798 |
|
|
0.34 |
% |
|
2,668 |
|
|
|
983,608 |
|
|
0.37 |
% |
|
2,748 |
|
Federal
Home Loan Bank borrowing |
|
110,107 |
|
|
1.48 |
% |
|
1,216 |
|
|
|
93,197 |
|
|
1.91 |
% |
|
1,328 |
|
Junior
subordinated debentures |
|
10,501 |
|
|
5.01 |
% |
|
394 |
|
|
|
12,756 |
|
|
4.34 |
% |
|
414 |
|
Other
borrowed funds |
|
73 |
|
|
3.66 |
% |
|
2 |
|
|
|
- |
|
|
0.00 |
% |
|
- |
|
Total
borrowed funds |
|
120,681 |
|
|
1.78 |
% |
|
1,612 |
|
|
|
105,953 |
|
|
2.20 |
% |
|
1,742 |
|
Total interest bearing
liabilities |
|
1,180,479 |
|
|
0.48 |
% |
|
4,280 |
|
|
|
1,089,561 |
|
|
0.55 |
% |
|
4,490 |
|
Non
interest bearing demand |
|
533,637 |
|
|
|
|
|
493,447 |
|
|
|
Total
funding |
|
1,714,116 |
|
|
0.33 |
% |
|
4,280 |
|
|
|
1,583,008 |
|
|
0.38 |
% |
|
4,490 |
|
Other
liabilities |
|
10,427 |
|
|
|
|
|
9,188 |
|
|
|
Total
liabilities |
|
1,724,543 |
|
|
|
|
|
1,592,196 |
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity |
|
|
|
|
|
|
|
Total
shareholders' equity |
|
211,553 |
|
|
|
|
|
202,133 |
|
|
|
Total
liabilities and shareholders' equity |
$ |
1,936,096 |
|
|
|
|
$ |
1,794,329 |
|
|
|
|
|
|
|
|
|
|
|
Net
interest margin (3) |
|
|
3.56 |
% |
$ |
48,147 |
|
|
|
|
3.72 |
% |
$ |
46,136 |
|
|
|
|
|
|
|
|
|
Interest
rate spread |
|
|
3.40 |
% |
|
|
|
|
3.53 |
% |
|
|
|
|
|
|
|
|
|
Cost of
deposits |
|
|
0.22 |
% |
|
|
|
|
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 |
|
|
|
|
|
|
|
9/30/2016 |
|
6/30/2016 |
|
9/30/2015 |
|
(dollars in thousands) |
Loans |
|
|
|
|
|
Real Estate Secured |
|
|
|
|
|
Commercial |
$ |
635,846 |
|
|
$ |
618,400 |
|
|
$ |
581,767 |
|
Residential 1 to 4 family |
|
195,453 |
|
|
|
184,097 |
|
|
|
154,895 |
|
Farmland |
|
132,723 |
|
|
|
131,574 |
|
|
|
107,376 |
|
Multi-family residential |
|
81,536 |
|
|
|
85,254 |
|
|
|
75,774 |
|
Construction and land |
|
26,836 |
|
|
|
36,753 |
|
|
|
42,571 |
|
Home
equity lines of credit |
|
24,910 |
|
|
|
27,991 |
|
|
|
31,609 |
|
Total
real estate secured |
|
1,097,304 |
|
|
|
1,084,069 |
|
|
|
993,992 |
|
Commercial |
|
|
|
|
|
Commercial and industrial |
|
185,199 |
|
|
|
182,645 |
|
|
|
159,012 |
|
Agriculture |
|
55,728 |
|
|
|
62,061 |
|
|
|
47,244 |
|
Total
commercial |
|
240,927 |
|
|
|
244,706 |
|
|
|
206,256 |
|
Consumer |
|
4,470 |
|
|
|
4,944 |
|
|
|
6,492 |
|
Total
loans held for investment |
|
1,342,701 |
|
|
|
1,333,719 |
|
|
|
1,206,740 |
|
Deferred
loan fees |
|
(1,146 |
) |
|
|
(1,181 |
) |
|
|
(1,056 |
) |
Allowance
for loan and lease losses |
|
(17,643 |
) |
|
|
(17,448 |
) |
|
|
(17,296 |
) |
Total net
loans held for investment |
$ |
1,323,912 |
|
|
$ |
1,315,090 |
|
|
$ |
1,188,388 |
|
|
|
|
|
|
|
Loans
held for sale |
$ |
7,975 |
|
|
$ |
8,534 |
|
|
$ |
5,366 |
|
Remaining
discount on acquired loans |
$ |
4,438 |
|
|
$ |
4,646 |
|
|
$ |
6,042 |
|
|
|
|
9/30/2016 |
|
6/30/2016 |
|
9/30/2015 |
|
(dollars in thousands) |
Deposits |
|
|
|
|
|
Non-interest bearing deposits |
$ |
570,243 |
|
|
$ |
546,520 |
|
|
$ |
544,782 |
|
Interest
bearing deposits: |
|
|
|
|
|
Money
market deposits |
|
571,357 |
|
|
|
584,732 |
|
|
|
551,815 |
|
Time
deposits |
|
241,580 |
|
|
|
240,433 |
|
|
|
250,777 |
|
NOW
accounts |
|
134,465 |
|
|
|
123,386 |
|
|
|
120,266 |
|
Other
savings deposits |
|
113,703 |
|
|
|
112,018 |
|
|
|
104,130 |
|
Total
deposits |
$ |
1,631,348 |
|
|
$ |
1,607,089 |
|
|
$ |
1,571,770 |
|
Heritage Oaks Bancorp |
Allowance for Loan and Lease Losses,
Non-Performing and Classified Assets |
|
|
|
|
|
|
|
For the Three Months Ended |
|
9/30/2016 |
|
6/30/2016 |
|
9/30/2015 |
|
(dollars in thousands) |
Allowance for
Loan and Lease Losses |
|
|
|
|
|
Balance,
beginning of period |
$ |
17,448 |
|
|
$ |
17,565 |
|
|
$ |
16,982 |
|
(Reversal
of) provision for loan and lease losses |
|
- |
|
|
|
(1,000 |
) |
|
|
- |
|
Charge-offs: |
|
|
|
|
|
Commercial and industrial |
|
(5 |
) |
|
|
(4 |
) |
|
|
(44 |
) |
Consumer |
|
(20 |
) |
|
|
(2 |
) |
|
|
(1 |
) |
Total
charge-offs |
|
(25 |
) |
|
|
(6 |
) |
|
|
(45 |
) |
Recoveries |
|
220 |
|
|
|
889 |
|
|
|
359 |
|
Balance,
end of period |
$ |
17,643 |
|
|
$ |
17,448 |
|
|
$ |
17,296 |
|
|
|
|
|
|
|
Net
recoveries |
$ |
195 |
|
|
$ |
883 |
|
|
$ |
314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/2016 |
|
6/30/2016 |
|
9/30/2015 |
|
(dollars in thousands) |
Non-Performing
Assets |
|
|
|
|
|
Loans on
non-accrual status: |
|
|
|
|
|
Construction and land |
$ |
3,443 |
|
|
$ |
4,046 |
|
|
$ |
4,046 |
|
Commercial and industrial |
|
970 |
|
|
|
1,866 |
|
|
|
3,549 |
|
Commercial real estate |
|
284 |
|
|
|
264 |
|
|
|
2,117 |
|
Home
equity lines of credit |
|
84 |
|
|
|
84 |
|
|
|
85 |
|
Farmland |
|
75 |
|
|
|
77 |
|
|
|
- |
|
Consumer |
|
28 |
|
|
|
117 |
|
|
|
48 |
|
Agriculture |
|
- |
|
|
|
363 |
|
|
|
- |
|
Residential 1 to 4 family |
|
- |
|
|
|
- |
|
|
|
171 |
|
Total
non-accruing loans |
|
4,884 |
|
|
|
6,817 |
|
|
|
10,016 |
|
Other
real estate owned (OREO) |
|
111 |
|
|
|
111 |
|
|
|
328 |
|
Other
repossessed assets |
|
70 |
|
|
|
- |
|
|
|
- |
|
Total
non-performing assets |
$ |
5,065 |
|
|
$ |
6,928 |
|
|
$ |
10,344 |
|
|
|
|
|
|
|
|
9/30/2016 |
|
6/30/2016 |
|
9/30/2015 |
|
(dollars in thousands) |
Classified
Assets |
|
|
|
|
|
Loans |
$ |
45,171 |
|
|
$ |
41,983 |
|
|
$ |
43,718 |
|
Other
real estate owned (OREO) |
|
111 |
|
|
|
111 |
|
|
|
328 |
|
Other
repossessed assets |
|
70 |
|
|
|
- |
|
|
|
- |
|
Total
classified assets |
$ |
45,352 |
|
|
$ |
42,094 |
|
|
$ |
44,046 |
|
|
|
|
|
|
|
Classified assets to
Tier I + ALLL |
|
21.81 |
% |
|
|
20.66 |
% |
|
|
22.31 |
% |
|
|
|
|
|
|
Note:
Classified assets consist of substandard and non-performing loans,
OREO assets and other repossessed assets. |
Heritage Oaks Bancorp |
Quarter to Date Non-Performing Loan
Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance |
|
|
|
|
|
Transfers |
|
Returns to |
|
|
|
Balance |
|
June 30, |
|
|
|
Net |
|
to Foreclosed |
|
Accrual |
|
|
|
September 30, |
|
|
2016 |
|
|
Additions |
|
Paydowns |
|
Collateral |
|
Status |
|
Charge-offs |
|
|
2016 |
|
|
(dollars in thousands) |
Real Estate
Secured |
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land |
$ |
4,046 |
|
|
$ |
- |
|
|
$ |
(603 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
3,443 |
|
Commercial |
|
264 |
|
|
|
49 |
|
|
|
(29 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
284 |
|
Home
equity lines of credit |
|
84 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
84 |
|
Farmland |
|
77 |
|
|
|
- |
|
|
|
(2 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
75 |
|
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
1,866 |
|
|
|
203 |
|
|
|
(82 |
) |
|
|
- |
|
|
|
(1,012 |
) |
|
|
(5 |
) |
|
|
970 |
|
Agriculture |
|
363 |
|
|
|
- |
|
|
|
(22 |
) |
|
|
- |
|
|
|
(341 |
) |
|
|
- |
|
|
|
- |
|
Consumer |
|
117 |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
(70 |
) |
|
|
- |
|
|
|
(20 |
) |
|
|
28 |
|
Total |
$ |
6,817 |
|
|
$ |
254 |
|
|
$ |
(739 |
) |
|
$ |
(70 |
) |
|
$ |
(1,353 |
) |
|
$ |
(25 |
) |
|
$ |
4,884 |
|
Heritage Oaks Bancorp |
Year to Date Non-Performing Loan
Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance |
|
|
|
|
|
Transfers |
|
Returns to |
|
|
|
Balance |
|
December 31, |
|
|
|
Net |
|
to Foreclosed |
|
Accrual |
|
|
|
September 30, |
|
|
2015 |
|
|
Additions |
|
Paydowns |
|
Collateral |
|
Status |
|
Charge-offs |
|
|
2016 |
|
|
(dollars in thousands) |
Real Estate
Secured |
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land |
$ |
3,968 |
|
|
$ |
349 |
|
|
$ |
(874 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
3,443 |
|
Commercial |
|
1,940 |
|
|
|
49 |
|
|
|
(1,415 |
) |
|
|
- |
|
|
|
(290 |
) |
|
|
- |
|
|
|
284 |
|
Home
equity lines of credit |
|
84 |
|
|
|
38 |
|
|
|
- |
|
|
|
- |
|
|
|
(38 |
) |
|
|
- |
|
|
|
84 |
|
Farmland |
|
83 |
|
|
|
- |
|
|
|
(8 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
75 |
|
Residential 1 to 4 family |
|
80 |
|
|
|
- |
|
|
|
(3 |
) |
|
|
- |
|
|
|
(77 |
) |
|
|
- |
|
|
|
- |
|
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
1,630 |
|
|
|
1,954 |
|
|
|
(326 |
) |
|
|
- |
|
|
|
(2,271 |
) |
|
|
(17 |
) |
|
|
970 |
|
Agriculture |
|
- |
|
|
|
400 |
|
|
|
(59 |
) |
|
|
- |
|
|
|
(341 |
) |
|
|
- |
|
|
|
- |
|
Consumer |
|
33 |
|
|
|
94 |
|
|
|
(5 |
) |
|
|
(70 |
) |
|
|
- |
|
|
|
(24 |
) |
|
|
28 |
|
Total |
$ |
7,818 |
|
|
$ |
2,884 |
|
|
$ |
(2,690 |
) |
|
$ |
(70 |
) |
|
$ |
(3,017 |
) |
|
$ |
(41 |
) |
|
$ |
4,884 |
|
Heritage Oaks Bancorp |
Reconciliation of Tangible Common Equity and
Tangible Common Book Value per Share |
|
|
|
|
|
|
|
|
|
|
|
9/30/2016 |
|
6/30/2016 |
|
9/30/2015 |
|
|
|
|
|
(dollars in thousands, except per share data) |
|
|
|
|
Period End
Balances: |
|
|
|
|
|
|
|
|
|
Total shareholders' equity |
$ |
215,283 |
|
|
$ |
213,882 |
|
|
$ |
205,458 |
|
|
|
|
|
Less intangibles: |
|
|
|
|
|
|
|
|
|
Goodwill |
|
(24,885 |
) |
|
|
(24,885 |
) |
|
|
(24,885 |
) |
|
|
|
|
Other intangible assets |
|
(3,568 |
) |
|
|
(3,812 |
) |
|
|
(4,560 |
) |
|
|
|
|
Tangible common equity (non-U.S.
GAAP) |
$ |
186,830 |
|
|
$ |
185,185 |
|
|
$ |
176,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding shares |
|
34,249,804 |
|
|
|
34,205,542 |
|
|
|
34,352,445 |
|
|
|
|
|
Tangible book value per
share (non-U.S. GAAP) |
$ |
5.45 |
|
|
$ |
5.41 |
|
|
$ |
5.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
For The Nine Months Ended |
|
9/30/2016 |
|
6/30/2016 |
|
9/30/2015 |
|
9/30/2016 |
|
9/30/2015 |
|
(dollars in thousands) |
Average
Balances: |
|
|
|
|
|
|
|
|
|
Total shareholders' equity |
$ |
215,039 |
|
|
$ |
210,448 |
|
|
$ |
204,063 |
|
|
$ |
211,553 |
|
|
$ |
202,133 |
|
Less preferred stock |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(596 |
) |
Less intangibles: |
|
|
|
|
|
|
|
|
|
Goodwill |
|
(24,885 |
) |
|
|
(24,885 |
) |
|
|
(24,885 |
) |
|
|
(24,885 |
) |
|
|
(24,885 |
) |
Other intangible assets |
|
(3,730 |
) |
|
|
(3,976 |
) |
|
|
(4,743 |
) |
|
|
(3,977 |
) |
|
|
(5,007 |
) |
Tangible common equity (non-U.S.
GAAP) |
$ |
186,424 |
|
|
$ |
181,587 |
|
|
$ |
174,435 |
|
|
$ |
182,691 |
|
|
$ |
171,645 |
|
|
|
|
|
|
|
|
|
|
|
Return on tangible
common equity (non-U.S. GAAP) |
|
8.93 |
% |
|
|
9.34 |
% |
|
|
9.10 |
% |
|
|
9.05 |
% |
|
|
9.19 |
% |
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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