Sand, sun, bailout bucks for Heritage Oaks Bank officials

March 12, 2009

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By DANIEL BLACKBURN

If members of Heritage Oaks Bank’s board of directors and high ranking officials must kill a little time waiting for the U.S. government to deliver their allotment of $21 million in taxpayer bailout money, they might as well do it on a Hawaiian beach. And that’s what a group of at least six, including bank CEO Larry Ward, is doing this week.

An employee of the bank described the event as “the board’s annual trip to the islands.” Prior to leaving, officials informed employees of impending pay cuts and lost bonuses, sources said.

Meanwhile, officials of the Paso Robles-based bank are awaiting their TARP (Troubled Asset Relief Program) money after learning in January that the institution will qualify for the Treasury Department’s “capital purchase program.”

The Treasury Department maintains the best way to rescue the nation’s economy is to dole out $700 billion in bailout money to financial institutions via a bill passed and signed in October.

Ward was said by a person who answered his office telephone to be “on vacation.” He did not respond to a voice-mail request for comment. Five directors also were “out of town” or “at some conference.” Three could not be reached. And one director who did not go on the trip, Kenneth L. Dewar, said he “won’t comment” on any aspect of the Hawaii junket.

A spokesman for the bank, Executive Vice President Mitch Massey, referred a CalCoastNews reporter to the Heritage Oaks Bank Web site for information, and then ignored subsequent telephone calls and detailed e-mail questions.

Ward, writing recently on the bank’s Web site about the current financial condition, opined that “when you hear talk about multi-million dollar bonuses or corporate jets, the discussion is directed towards the big guys. I am not aware of any community bank that owns a jet or pays multimillion dollar salaries and bonuses. It is unfortunate that the media paints community banks with the same broad brush that they paint the very large nationals and the investment banks with. In reality we are as different as night and day.”

These are the bank directors, with Ward, reported to be on the trip: Michael J. Morris, board chairman, a San Luis Obispo attorney; Donald H. Campbell, vice chairman, a petroleum executive; Dr. Michael Behrman, a Santa Barbara orthopedic surgeon; Michael E. Pfau, a Santa Barbara attorney; and Mark Fugate, a Nipomo farmer.

Stock at the community bank has fallen from $12.34 a share to $3.40 a share during the past year.

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3 Comments

  1. ccn_debate says:

    Member Opinions:
    By: Nameless on 3/15/09
    mccdave

    I beleive most board members are large share holders and or officers of the corporation. They are there to watch the chicken scoop before the fox gets in. I wonder if the fox is being chased or identified in this special meeting? Maybe they are discussing the large write off from Estate Financial and the two jailbirds.
    I think a hearing is coming up next week asking the DA to release their asets at the request of the Bank. I could be wrong, so please correct me.
    By: mccdave on 3/15/09
    That CNN article isn't precisely on point. The Heritage Oaks meeting is just a retreat for its board of directors and pure fluff, which you could argue is a bad idea at any time regardless of TARP funding. Boards of directors have clearly been shown to be corruptible, pliant back-scratching networks that too often don't do their ostensible jobs. Of course their real job is just making connections and rewarding cronies, which is the real purpose of trips like this. They're the ultimate elitist institution (and why isn't that word ever applied to corporate elitism?).

    But this CalCoastNews item doesn't make it clear: is this company-funded? What's the board doing there?
    By: Truthbeknown on 3/14/09
    Yet another one-sided knee-jerk reaction story. Read this for another perspective:

    http://money.cnn.com/2009/03/11/news/economy/lavi
    By: mccdave on 3/14/09
    If you're an investor in Heritage Oaks you're liable to be very disappointed that the board of your company is this dumb. To do this after all the bad press banks are getting — especially at a community bank that depends on local good will — suggests that they're not paying attention. And employees aren't loyal to management like this, which is probably how CalCoastNews got the tip. It whiffs of poor management and gets you wondering what else they're clueless about.

    Nosedatruth: I wouldn't knock this site about this item. The disgrace is that the Tribune would never print this. Maybe KSBY sports (Mitch Massey's old post) will cover it.
    By: DashRiprock on 3/13/09
    I am not going to name names but I was bellied up to an SLO bar around mid 2005 with a heritage oaks exec laughing about how he was raking it in, and who he was screwing…had a couple of his $11 an hr blonde bimbo's hanging on his every word…sure they despised him in reality…..time to pay the piper my friend….
    By: nosedatruth on 3/13/09
    Mccdave-

    There are very few companies in America that didn't lose money in 4Q 2008. If I was Heritage, I wouldn't comment to this site either. It is not "the press" – it is the online equivalent of the restroom wall. Grab a marker and say whatever you want!

    (1) 1 Total Votes - 1 up - 0 down
  2. ccn_debate says:

    By: Zuke on 3/13/09
    This is like those AIG luxury retreats, just scaled down proportionate to the size of Heritage Oaks.

    And people wonder why I'm firmly against Bush/Obama/Congress' entire bailout plan…
    By: lydiaolydia on 3/13/09
    Nice going, Heritage Oaks.
    Check out http://www.heritageoaksbank.com/pdfs/QA_w_Larry_p… for some "helpful" information from Ward, the bank president. Why are jobs and salaries being cut if the bank is getting a chunk of bailout $??

    If I banked with Heritage Oaks I'd yank my money out and put it somewhere else!
    By: Black_Copter_Pilot on 3/13/09
    If I don't bank there, tell me why I should care.

    This is news? More like gosip.
    By: JorgeEstrada on 3/13/09
    For questionable banks, I believe in keeping it simple, just take your business elsewhere.

    As for the business you can't take elsewhere, read what the regulators are really up to. $P00,P00,000.00
    http://www.santamariatimes.com/articles/2009/03/12/opini...
    By: MikeKnecht on 3/13/09
    I don’t think a few people taking a trip to Hawaii is a big deal. What is a big deal is the refusal of the bank to address questions regarding their lending history with Estate Financial. I wrote a letter to Mr. Ward asking for some assurance that the decision to loan millions of dollars of bank money to Estate Financial was not influenced by Dee Lacey being a member of the Heritage Oaks Bank Board of Directors. Dee Lacey and her husband John had a huge stake in Estate Financial and it was important to them that Estate Financial continued as a functioning entity. I also ask Mr. Ward if all of the banks own lending policies had been observed when they loaned the unsecured millions to Estate Financial and at what point the bank knew that Estate Financial was going to collapse.

    I think these are valid questions because if the money Heritage Oaks Bank loaned Karen Guth allowed her to forestall her Ponzi scheme from being exposed then Heritage Oaks Bank severely exacerbated the damage done to local residents by Estate Financial.

    Mr. Ward refused to answer questions just as Karen Guth refused to answer questions.

    Anyone wishing a copy of the letter I sent to Heritage Oaks Bank may contact me at mjk122085@aol.
    By: CitizenB on 3/13/09
    To me, the "killer" sentence is this one: "An employee of the bank described the event as “the board’s annual trip to the islands.” Prior to leaving, officials informed employees of impending pay cuts and lost bonuses, sources said." The bank loses money for their shareholders, employees are getting pay cuts, the the Board still gets their annual junket to Hawaii. This is precisely what is wrong with America today. The whole greedy attitude of "I got mine, Jack. Oh, you got taken to the cleaners by what I did? Too bad." No responsibility, no sense of community, no morality.

    (0) 0 Total Votes - 0 up - 0 down
  3. ccn_debate says:

    By: mccdave on 3/13/09
    Heritage Oaks lost $1.25M in Q4 2008. Their net income was $1.65M in 2008 and $6.92M in 2007. Their shares are down 83% from their 2006 peak.
    http://www.google.com/finance?client=news&q=h
    By: mccdave on 3/13/09
    Good stuff! If Heritage Oaks wasn't embarrassed by this, they'd comment to the press. Readers should be reminded that Heritage made very dumb loans to at least one local fraud.

    Simon Johnson, a well-regarded economist and commentator on the banking crisis, just wrote about the amazing lack of contrition shown by bankers:
    http://baselinescenario.com/2009/03/12/business-a

    xlswede: "This is hardly a "free-bee", the cost is relatively high."

    The TARP was widely criticized for being too easy on banks, particularly because the British capital injection program demands higher dividends from their banks. The Brits have also faced reality and nationalized the worst cases, and one of the advantages of nationalization is the ability to fire the failed management and cut crap like this. And one has to ask: since banks like Heritage Oaks are nowhere near TBTF (too big to fail), why aren't they left to faint into the arms of the FDIC, whose insurance fund is paid for by member banks?

    northcountyresident: These were directors, not employees. Boards of directors are pure back-scratching societies and were shown by this crisis and the corporate accounting scandals of 2001-2002 to be utterly useless.
    By: nosedatruth on 3/13/09
    Check the 10-K filed with the SEC. Heritage Oaks made a profit last year.
    By: InTheKnow on 3/13/09
    "Lawmakers from both political parties have criticized the government's lax control of how TARP recipients are spending the billions of dollars in aid meant to unfreeze the credit markets. Last week, Senator John Kerry, a Democrat, said he planned to offer legislation that would prohibit TARP recipients from hosting or paying for lavish conferences and events," from Reuters news.
    http://www.reuters.com/article/politicsNews/idUST

    To xlswede –
    It appears non-credible reporters from news sources all over the globe have failed to meet your high standards.
    By: xlswede on 3/13/09
    Banks have to qualify for TARP funds. This is hardly a "free-bee", the cost is relatively high, 5% for the first three years, 9% thereafter. With two year treasuries at 1% there is a 4% spiff to Uncle Sam! Additionally the goverment receives an ownership position in the institution which allows them to profit from an upward movement of the stock. Add a laundry list of limitations, requirements and conditions that can all be changed at the whim of the legislature and you can see why some local banks did not take TARP funds. Hardly money "doled" out like so much Halloween candy as you would have your readers believe.

    Hawaii – 2009 – Not good

    I enjoy reading your site, but if you want to be credible as a reporter you have to report the whole story, not just the "good stuff".
    By: northcountyresident on 3/12/09
    Six employees to Hawaii? This is hardly a junket by Washington standards. But it doesn't look good to shareholders when the bank lost money last year.

    (0) 0 Total Votes - 0 up - 0 down

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