Paso Robles-based Heritage Oaks Bancorp’s profits jumped 24 percent to $4.2 million for the fourth quarter of 2014.
The increase was primarily due to the inclusion of Mission Community Bancorp’s operating results, which boosted pre-tax net income in the company’s fourth quarter financials. Heritage Oaks closed its $56 million acquisition of Mission on Feb. 28 of last year.
For the quarter, the region’s largest community bank recorded $400,000 in merger, restructure, and integration costs related to the deal. About $300,000 of those costs went to accruals for termination benefits paid to employees displaced as a result of the merger, and for the retention of key employees. Merger, restructure and integration costs for 2014 totaled $9.2 million.
For the year ended Dec. 31, 2014, the bank’s net income was $8.8 million, or $0.27 per share, compared to net income of $9.9 million, or $0.37 per share for the same period in 2013.
While the bank cut about $2 million in expenses during the fourth quarter, largely due to cutting more than 60 positions as result of the merger, operating expenses swelled nearly 50 percent for the year to $54.8 million.
With the layoffs and sales of three Mission bank properties, Heritage anticipates annual expenses to drop by $9 million.
Loans grew about 44 percent to $1.2 billion for the year, compared with $827.5 million in 2013. The bank said year-over-year loan growth was primarily due to almost $281 million of loans acquired in the Mission merger.
“During the fourth quarter, our team focused on relationship banking and achieved solid loan growth for the quarter similar to the levels we had experienced in 2013, before the close of the Mission Transaction,” Heritage Oaks Bancorp President and CEO Simone Lagomarsino said in a statement. “We closed the fourth quarter with a strong pipeline as well, and expect loan growth to continue to be strong into the first quarter of 2015,” she said.
In the fourth quarter, Heritage Oaks opened a new branch office in Goleta and added Rick Arredondo as Heritage Oaks Bank’s president and chief banking officer.
“This addition positions us well to continue to expand our banking franchise along the Central Coast of California,” Lagomarsino said.
The bank also made headway on strengthening its Bank Secrecy Act and Anti-Money Laundering program, she added.