Correction: An earlier version of this story contained some outdated information. Heritage Oaks Bank was planning in April 2012 to consolidate three smaller branches into nearby branches and open its first location in Ventura County; it has since done so. Also, the bank currently has 12 branches, not 13, with a total of 255 employees.
Regulators have terminated an order that’s been in effect since March 2010 requiring Heritage Oaks Bank to improve overall credit quality, operations and financial profitability, the bank said.
In addition, the Paso Robles-based institution has reported net income of $3.7 million for the first quarter ended March 31, up from $1.6 million in the year-earlier period.
The Federal Deposit Insurance Corporation and the California Department of Financial Institutions last month ended the bank’s Memorandum of Understanding, an order that required the bank to improve performance and hire qualified management following plummeting losses during the recession and housing crisis.
Premium content for only $0.99
For the most comprehensive local coverage, subscribe today.
An MOU is an agreement to refrain from banking practices deemed unsound, and is not necessarily an admission of wrongdoing.
“We believe that the termination of the MOU reflects the progress that we’ve made in improving our overall credit quality, operations, and financial profitability,” said Simone Lagomarsino, president and chief executive officer of Heritage Oaks Bancorp, in a recent news release.
Both Lagomarsino and chief financial officer Mark Olson were not available to speak with The Tribune.
The bank still has an outstanding MOU with the Federal Reserve Board, which will inspect the bank later this year.
Heritage Oaks Bancorp, which owns the bank, has shown improved profitability since its year-end loss of $17.56 million in 2010, posting a net income of $13.04 million in 2012.
As of March 31, the bank’s total gross loans were $704.9 million, a 9.2 percent increase over the year-earlier period. Deposits also grew year-over-year, increasing 7 percent to $862.8 million.
Heritage Oaks Bancorp’s stock price closed Thursday at $5.56, compared to a low of $3.26 in November 2010 and a high of $21.81 in January 2006.
Following the MOU’s termination, the bank has agreed to continue to obtain regulatory approval for any dividend payments, as well as before purchasing bank branches.
As such, it has filed a request with regulators to buy back the $25 million worth of shares it issued in 2009 to the U.S. Treasury as part of the Troubled Asset Relief Program Capital Purchase Program.
In 2012, Heritage Oaks Bank restructured to reduce back-office and administrative expenses, redeploying some of those savings to hire five loan officers, according to a company news release in April 2012.
The bank currently has 12 branches from Paso Robles to Santa Barbara, and a total of 255 employees.