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Heritage Oaks Regulatory Order Removed
Posted: 04/23/2012 | Castle Creek

Paso Robles-based Heritage Oaks Bancorp has bucked a regulatory consent order placed on it two years ago. The news came on April 23, as the firm reported that it earned $1.6 million in the first quarter, a 204 percent increase over the same quarter a year earlier.

The parent company of Heritage Oaks Bank and its Business First Bank division in Santa Barbara said a drop in earnings compared to the fourth quarter of 2011 was the result of a $2.6 million increase in its provision for loan losses, a rise it pinned on a single, $10 million-plus loan relationship that had soured. The bank said it no longer expects to receive full repayment when the loan matures in the second quarter

Even so, Heritage Oaks noted that the latest earnings report marks its sixth consecutive quarter of profitability. On March 4, 2010, the Federal Deposit Insurance Corp. and the California Department of Financial Institutions had placed the banking company under a joint consent order. The agreement placed restrictions on the bank’s ability to pay dividends and open new branches. It also asked the lender to maintain a minimum tier-one leverage ratio of 10 percent as it worked to improve loan quality. That ratio stood at 12.17 percent at the end of the most recent quarter.

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