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.

“The removal of the order is testament to the hard work of the entire Heritage Oaks Bank team in addressing the requirements of the order. Our capital position has been strengthened, the bank’s profitability has improved, and we will continue to focus on improving credit quality and operating efficiency,” Heritage Oaks President and CEO Simone Lagomarsino said in a statement.

She took the helm at the Paso Robles-based lender in September 2011, after longtime executive Larry Ward retired.
Lagomarsino noted in that statement that Heritage Oaks has consolidated three of its smaller Central Coast branches into nearby branches as it prepares to open its first Ventura County location in Oxnard this June. “The size and opportunity in the Ventura County market is greater than the size and opportunity in Santa Barbara and San Luis Obispo Counties combined,” Lagomarsino said. She added that the bank has hired five new loan officers to grow its Small Business Administration-backed and agriculture portfolios.

The bank reported that it crossed the billion-dollar mark in the quarter, with assets climbing by $21.6 million. Deposits jumped $20.2 million in March, it said.