Heritage Oaks Bancorp in Paso Robles, Calif., said it plans to raise $60 million through a private placement of preferred shares.
The proceeds are expected to be used to increase capital at the banking subsidiary to bring it into compliance with a regulatory order as well as for other corporate purposes and working capital.
Based on data at Dec. 31, the fresh capital would increase the $946 million-asset Heritage's capital ratios to above "well capitalized." On a pro forma basis, if Heritage would have had the capital at Dec. 31, it would have resulted in the following capital ratios: the total risk-based capital would have been 18.16%, the Tier 1 risk-based capital would have been 16.96% and the Tier 1 leverage would have been 14.58%.
On March 4, the Federal Deposit Insurance Corp. and the California Department of Financial Institutions issued a consent order requiring the subsidiary bank to increase its capital ratios, reduce its classified assets and increase board oversight of management.
About $48 million is expected to be added to the banking subsidiary.
Following the capital injection, the bank's leverage ratio would be 13.25% and the total risk-based ratio would be 16.61%.
At Dec. 31, the bank reported a total risk-based capital ratio of 10.55%, a Tier 1 leverage ratio of 9.29% and a leverage ratio of 8.06%. The capital-raising effort is expected to close Friday.