Heritage Oaks Bank, the wholly-owned bank subsidiary of Heritage Oaks Bancorp (Nasdaq: HEOP), today announced that it has entered into a definitive agreement to acquire the Morro Bay branch office of Coast National Bank and related deposits maintained at the branch.
The transaction will include the transfer to Heritage Oaks Bank of approximately $30 million of deposit accounts as of June 30, 2012, the purchase of the branch office at 898 Morro Bay Boulevard and other miscellaneous physical assets related to the branch. Heritage Oaks Bank will pay market value for the building and the physical assets, and a blended deposit premium of 2.2% for the deposits which includes approximately 35.5% non-interest bearing demand deposits. No loans will be transferred.
According to Simone Lagomarsino, President and CEO of Heritage Oaks Bancorp and Heritage Oaks Bank, the purchase of this branch from Coast National Bank should create a positive outcome for everyone involved. “When the purchase is completed, Heritage Oaks Bank will once again be able to serve the Morro Bay community with a full-service branch,” she said. “This is great for both banks and for the Morro Bay community.” Lagomarsino said that earlier this year, Heritage Oaks Bank reluctantly closed its former Morro Bay branch because its lease was about to expire, and the physical location and size of the branch were not optimal. The bank did not abandon its Morro Bay customers, continuing to serve them by consolidating their deposit accounts into the nearest branch in San Luis Obispo.
Lagomarsino said that when the opportunity to purchase Coast National Bank’s Morro Bay branch arose this summer, Heritage Oaks Bank took immediate action. “Our Morro Bay customers have been very loyal. More than 80% of their deposits remained with us since the branch consolidation earlier this year. By purchasing Coast National Bank’s Morro Bay branch and combining its deposits with our existing Morro Bay deposits, we can again have a financially robust, full-service presence in Morro Bay.” Lagomarsino also said that the branch office’s central location and the ability to own rather than lease the property were added benefits of the purchase to Heritage Oaks Bank.
Coast National Bank President and CEO Anita Robinson agreed that the branch sale creates a positive outcome for both banks. “We are competitors but we are also two banks fiercely committed to community banking,” said Robinson. “The sale of this branch will help Coast National Bank move ahead with its own growth plans and will also keep a community bank in Morro Bay. We are thrilled that our Morro Bay customers will continue to be served by a locally managed community bank.”
The transaction is subject to various customary conditions to closing, most notably regulatory approval by the bank regulatory agencies with authority over each of the banks. The transaction is expected to close before the end of 2012. If and when completed, the purchase will grow Heritage Oaks Bank to a total of 12 offices from Paso Robles to Ventura County.
For further information visit www.heritageoaksbank.com or call (805) 369-5200.
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