PASO ROBLES, Calif., Oct. 27, 2016 (GLOBE NEWSWIRE) -- Heritage Oaks Bancorp (“Heritage Oaks” or the “Company”) (NASDAQ:HEOP), a bank holding company and parent of Heritage Oaks Bank (the “Bank”), reported net income available to common shareholders of $4.2 million, or $0.12 per 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 | % | |||||||||