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Heritage Oaks obtains preliminary approval to take part in Treasury’s CPP

The Treasury intends to invest approximately $21 million in senior preferred stock of Heritage Oaks Bancorp and related warrants

Heritage Oaks Bancorp, parent company of Heritage Oaks Bank, has received preliminary approval to participate in the US Department of the Treasury’s voluntary capital purchase programme.

 

Heritage Oaks’ received notice that the Treasury intends to invest approximately $21 million in senior preferred stock of Heritage Oaks Bancorp and related warrants subject to the standard terms and conditions of the capital purchase programme (CPP). The preferred stock will carry a 5% coupon for five years, and 9% thereafter.

 

In addition, the Treasury Department will receive a warrant to purchase shares of Heritage Oaks common stock in an aggregate amount of approximately $3 million at an exercise price equal to the average closing price for the company’s common stock over the 20-trading day period ending the day before the 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 Treasury has announced plans to purchase up to $250 billion of senior preferred shares on a voluntary basis issued by healthy US financial institutions, as part of its efforts to provide a firmer capital foundation for banks and to increase credit availability to businesses and consumers.

 

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