Shares of Paso Robles-based Heritage Oaks Bancorp were up 3.33 percent in after-hours trading after third-quarter profits hit analyst expectations and several key metrics painted a rosy picture as the bank spearheads its expansion into Ventura County.
Profits actually declined to $2.8 million for the third quarter, down from $6.4 million. But the decline stemmed from accounting technicalities with deferred tax assets, and the resulting earnings of 10 cents per diluted share is what analysts surveyed by Thomson Financial Network were looking for.
The real story came from income before taxes, a measure that factors out the tax accounting issues. Income before taxes was up nearly 25 percent to $4.4 million for the third quarter of 2013 up 133 percent to $14.9 million for the first nine months of the year.
Heritage is set to become the region’s largest bank with a proposed $56 million merger with Mission Community Bank.
Heritage said its strong performance was due to the fact that it had did not have to record any provision for loan losses in 2013 as loan quality improved.
The bank’s regulatory capital ratio declined – its so-called tier-one leverage ratio declined to 10.6 percent from 12.2 percent. However, Heritage said the decrease was driven by the use of $21.2 million to exit the Treasury Department’s Troubled Asset Relief Program, or TARP.
Hertiage also said several organic growth measures in loans and deposits were up. CEO Simone Lagomarsino said that sets the stage for a push southward.
“We believe our strong performance, in particular our loan and deposit growth, is reflective of our strategic decision to restructure our organization in 2012 by reducing back office costs and redeploying a portion of these cost savings to hire additional relationship bankers,” Lagomarsino said in a statement. “These new team members are facilitating our expansion into new geographic markets in Ventura County, deepening our penetration in existing markets and supporting the expansion of our product lines including agribusiness and mortgage lending.”