Heritage Oaks Bancorp Reports Q2 2010 Financial Results

PASO ROBLES, Calif., Aug. 4, 2010 (GLOBE NEWSWIRE) -- Heritage Oaks Bancorp (the "Company"), (Nasdaq:HEOP), the parent company of Heritage Oaks Bank (the "Bank"), today reported a net loss of $5.8 million compared to a net loss of $1.3 million for the first quarter of 2010 and to net income of $0.5 million in the second quarter a year ago. For the first six months of 2010, the Company reported a net loss of $7.2 million compared to net income of $1.6 million for the same period in 2009. The net loss for the second quarter of 2010 was primarily attributable to a $16.1 million provision for loan losses, recorded in conjunction with $12.5 million of quarterly net charge-offs, as the Company continued to work through its problem loans, and reduce its level of total non-performing assets.

The net loss applicable to common shareholders was $6.2 million or $0.55 per diluted common share and $1.7 million or $0.22 per diluted common share for the quarter ended June 30, 2010 and March 31, 2010, respectively. The net income applicable to common shareholders for the quarter ended June 30, 2009 was $0.3 million. For the six months ended June 30, 2010 the net loss applicable to common shareholders was $7.9 million or $0.83 per common diluted share compared to net income of $1.3 million or $0.17 per common diluted share for the same period in 2009. Income (loss) applicable to common shareholders is calculated by subtracting dividends accrued and discount accreted on preferred stock from net income (loss).

According to Lawrence P. Ward, President and Chief Executive Officer, "During the second quarter the Bank took an aggressive position with respect to reducing the level of non-performing assets. Asset quality metrics improved significantly, and the Bank increased its allowance for loan and lease losses ("ALLL") as a percentage of total gross loans by $3.6 million or 60 basis points to 3.17% of total gross loans, as compared to the 2.57% reported at the end of the first quarter of 2010. Total non-accruing loans decreased by 28.4%, and total non-performing assets decreased by 19.5% as compared to the first quarter of 2010. The Bank also ended the second quarter with only $1.2 million of loans past due 30 to 89 days; the lowest quarter end balance recorded in the last four consecutive quarters. This represents a decrease of $5.2 million or 80.7% and $1.1 million or 48.1% as compared to the fourth quarter of 2009 and the first quarter of 2010, respectively. The Bank also ended the second quarter with no loans past due 90 days or more and still accruing. Classified loans totaled approximately $66.4 million as of June 30, 2010, decreasing $18.7 million from $85.1 million reported as of March 31, 2010. The amount of classified loans as of June 30, 2010 is the lowest quarter end balance reported of the past four consecutive quarters. These trends are all indicative of the considerable effort that the Bank's management has made to systematically address the problem loans in its portfolio. While this process will take time and effort to manage through, the data present at the end of the second quarter is encouraging, and we are hopeful that these positive trends continue."