Paso Robles-based Heritage Oaks Bancorp reported a third-quarter loss applicable to common shareholders of $11.3 million on Nov. 9, compared to a $5.6 million loss in the same quarter last year.
The banking firm, the third largest based in the Tri-Counties, blamed the wider loss on a $10.5 million non-cash charge related to the valuation of its deferred tax assets and a $4.4 million loan-loss provision, but said it has managed to clean up its balance sheet significantly.
“When you look at the core bank, the provision for loan losses is way down,” CEO Larry Ward told the Business Times. “We’ve got a pretty good loan pipeline right now and we’re starting to see things become a bit more normalized.”
The company said in a news release that while its operating results were disappointing, its balance sheet is now healthier, with non-performing assets declining over the last two quarters. At Sept. 30, its non-performing assets totaled $35.9 million, a $4.2 million decline from the end of the second quarter and a $13.9 million decline from the first quarter of the year.
The firm’s overall balance sheet has declined by $20 million since the second quarter, a decline driven in part by a decline in loan balances and customers paying off their loans. But its total assets have increased $63.7 million compared to September last year, an increase the bank attributed to proceeds from a March capital raise and deposit growth.
Most of the proceeds have been invested in the bank’s securities portfolio. Year-to-date, Heritage Oaks’ securities portfolio has increased by about $81 million, or 66.9 percent.
Heritage Oaks completed a $60 million capital raise in March, after it was placed under a regulatory order to shore up its capital levels. At the end of the third quarter, it reported a tier-one leverage ratio of 11 percent and a total risk-based capital ratio of 15.9 percent, meeting the order’s minimums of 10 percent and 11.5 percent, respectively.