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Heritage Oaks Bancorp: Shareholders Back Incorporation Change to Participate in Treasury Program

Heritage Oaks Bancorp (NASDAQ: HEOP), parent company of Heritage Oaks Bank and Business First Bank, has received shareholder approval to amend its Articles of Incorporation.

The amendment, which authorizes the company to issue up to 5 million shares of preferred stock, was approved by the shareholders through a written consent solicitation that terminated Feb. 27. The amendment permits the board of directors to authorize the issuance of preferred stock without additional shareholder approval, with such relative rights and preferences as may be established by resolution of the board. No class of preferred stock was previously authorized by the company’s Articles of Incorporation. A proposal for the amendment was disclosed in solicitation materials previously filed with the Securities and Exchange Commission and mailed to shareholders.

The authorization to issue preferred stock will enable the company to participate in the Treasury Department’s voluntary Capital Purchase Program. The company received notice on Jan. 7 that the Treasury intends to invest approximately $21 million in senior preferred stock of the company and related warrants subject to the standard terms and conditions of the program. The preferred stock will carry a 5 percent coupon for five years, and 9 percent thereafter. In addition, the Treasury Department will receive a warrant to purchase shares of the company’s common stock in an aggregate amount of approximately $3 million at an exercise price equal to the average closing price for the common stock over the 20-trading day period ending the day before the company’s preliminary approval. The warrants will expire in 10 years. Receipt of the funding is subject to execution of definitive agreements and satisfaction of closing conditions.

The company plans to close the program transaction on March 20, at which time it will acquire an additional $21 million of Tier I equity capital.

“Participation in the Capital Purchase Program affirms the company’s position as a strong and healthy financial institution,” said Lawrence P. Ward, president and CEO of Heritage Oaks Bancorp. “While this new equity will help us to preserve capital, it also affords us opportunities for future growth as solid lending opportunities become available.”

As of Dec. 31, 2008, the company had more than $78 million in Total Risk-Based Capital and remains “well-capitalized” by regulatory standards with a Risk Adjusted capital ratio of 10.56 percent and a Tier 1 capital ratio of 8.84 percent.

Click here for more information on Heritage Oaks Bancorp, click here for more information on Heritage Oaks Bank, or click here for more information on Business First Bank.

Faye Fraser is marketing coordinator at Heritage Oaks Bank in Paso Robles.

 
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