Regulators give local bank a little leeway 

Heritage Oaks Bank has basically been grounded for the last year, but after doing its chores and turning a profit for six consecutive quarters, the Federal Deposit Insurance Corporation (FDIC) and California Department of Financial Institutions (DFI) have agreed to let the community bank out of its room and terminate the Joint Consent Order that had restricted its operations since March of 2010.

The housing crash hit Heritage Oaks hard in 2006, when the bank’s stocks began a sharp and steady descent from selling at roughly $20 a share to just $3.50 in February 2009. The feds then gave the bank $21 million in Troubled Asset Relief Program (TARP) funds. Stock value spiked but quickly crashed again.

Regulators stepped in, demanding that the bank improve credit quality, enhance oversight, and hire “qualified management.” Simone Lagomarsino was hired as the new CEO and president of Heritage Oaks in September 2011. That and other changes have satisfied the FDIC’s and DFI’s concerns.

“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," Lagomarsino said in a news release.

The bank’s board of directors executed a memorandum of understanding with the FDIC and DFI that states a commitment to obtain regulatory approval before paying stock dividends or opening new branch locations.