by Kate Berry
Simone Lagomarsino has helped turn around a lot of banks, but she’d never seen one in such bad shape. When she took over as CEO of $1.1 billion-asset Heritage Oaks Bank (HEOP) in Paso Robles, Calif., two years ago, she was handed a lengthy to-do list in the form of a regulatory consent order.
“There were 21 or 22 items we had to address,” including cutting back on commercial lending and boosting loan loss provisions, Lagomarsino says.
Many banks in California’s Central Valley region had remained profitable after the financial crisis because they had a much lower concentration of problem real estate loans — but not Heritage Oaks.
Construction and land loans had swelled to 20 percent of its credit portfolio, whereas many rivals had limited their concentration to less than 6 percent.
Yet in a phenomenally short amount of time, Lagomarsino has righted the ship. Heritage Oaks, which lost a combined $30 million in 2009 and 2010, returned to profitability in 2011.