EXHIBIT 99.1

Heritage Oaks Bancorp Reports Second Quarter 2011 Net Income of $954 Thousand, 83% or $432 Thousand Above First Quarter; Asset Quality Significantly Improved as Classified Assets and Non-Performing Loans Decreased 25% and 14% Respectively; Allowance for Loan Loss 3.27% of Gross Loans; Net Interest Margin Grew 7bps to 4.80%

PASO ROBLES, Calif., July 28, 2011 (GLOBE NEWSWIRE) -- Heritage Oaks Bancorp (the "Company"), (Nasdaq:HEOP), the parent company of Heritage Oaks Bank (the "Bank"), today reported its third consecutive quarter of profitability with second quarter net income of $954 thousand, $432 thousand higher than first quarter's $522 thousand and $6.8 million above second quarter, 2010. The increase in pre-tax earnings on a linked quarter basis was largely driven by a $0.7 million decrease in non-interest expenses, $0.2 million increase in non-interest income, primarily from higher security gains, partly offset by a $0.3 million increase in the provision for loan losses. Most of current quarter credit provisioning expense was attributable to charge-offs recorded in conjunction with the sale of $9.1 million of classified loans. Asset quality was substantially improved this quarter as both loan workouts and the sale of classified loans and other real estate owned ("OREO") contributed toward a $20.8 million reduction in classified assets and a $3.9 million reduction in non-accrual loans. After incorporating accrued dividends and accretion on preferred stock of $0.4 million, net income applicable to common shareholders for second quarter, 2011 was $584 thousand. Net income per basic and diluted common share was $0.02 in the second quarter; $0.01 higher than first quarter, 2011. Net income for the six months ended June 30, 2011 is $1.5 million, representing an increase of $8.7 million as compared to the same period ended a year earlier. Pre-tax earnings improved $14.8 million on a year-to-date basis as compared to the same period in 2010 largely due to decreased credit provisioning expense, which declined by $17.1 million as compared to the six months ended June 30, 2010.

Second Quarter, 2011 Highlights

• Third consecutive quarter of profitability;
• Second consecutive quarter of declining classified assets;
• Second consecutive quarter of declining non-performing loans;
• Sold $9.1 million of classified loans, including $5.2 million of non-performing loans;
• Sold $3.4 million of OREO reducing total balances to $3.6 million;
• Allowance for loan losses at $21.7 million or 3.27% of loans and increased coverage over non-performing loans to 93%;
• Increased net interest margin 7 bps to 4.80%;
• Increased core deposits to record level as average, non-interest bearing DDA balances increased $14 million or 8% to $198 million in second quarter;
• Increased Tier 1 Leverage ratio to 11.4% and tangible common equity ratio to 9.0%, up 29 bps and 25 bps, respectively, above first quarter.

"I am encouraged by the overall progress Heritage Oaks Bank is making in resolving problem loans, increasing profitability and building franchise value through increases in core deposits. While it has been a long time since the economic winds were at our back, the progress we made and progress still to come this year in improving asset quality and earnings should position us very well for resolving all regulatory matters brought on by the downturn in credit quality at the start of this very challenging economic cycle," said Larry Ward, Chief Executive Officer of the Company. "During the second quarter, we completed our second problem loan sale this year and continued to work with our borrowers to cure problem loans and shore up collateral, thereby providing the path for continuing credit improvement. I am confident that as we continue to focus on credit quality, growing core deposits, maintaining healthy net interest margins and improving operating efficiency, the Company will be very well positioned to capitalize on this strength and return to building the franchise in the months and quarters ahead," continued Mr. Ward.

In second quarter classified loans were reduced $18.2 million and non-accrual loans declined $3.9 million. Our quarterly provision for loan losses was $2.3 million, $1.8 million of which was provisioned to cover charge-offs taken on the problem loan sale.

Excluding the provisioning required for the problem loan sale, the provision for loan losses was $0.5 million for the second quarter. The allowance for loan losses was 3.27% in the second quarter and now represents coverage of 93% of non-accrual loans, up from 76% at year-end 2010 and 63% at June 30, 2010.

"While credit quality is moving in the right direction, I am also pleased to report our third consecutive quarterly profit and large increase in core deposits. Where 2010 was a year of substantial provisioning for loan losses and the establishment of a deferred tax asset valuation allowance, both of which placed earnings under substantial stress, we are now beginning to see clear improvement in the overall credit profile of the Company, such that more of our core profitability can emerge in the quarters ahead," said Mr. Ward.

Net interest margin grew 7 basis points from 4.73% to 4.80% on a linked quarter basis. Non-interest income increased $0.2 million over first quarter primarily due to increases in securities gains. In addition, the Company reduced non-interest expenses 7% or $0.7 million during the second quarter largely due to less OREO expenses and lower compensation expense.

Mr. Ward concluded by saying, "This is likely my last earnings release for the Company before I retire as CEO. I would very much like to thank everyone who has helped make Heritage Oaks Bank what it is today -- the preeminent and one of the largest community banks headquartered on California's central coast serving commercial businesses and consumers. I would like to thank all of our customers, shareholders, and team members for all their loyalty, trust and dedication.  It has been a wonderful experience that I am very grateful for and it is one that has given me great joy and satisfaction over the last 18 years of my career.  While I will continue with the Company as CEO until my successor is announced shortly and remain on the Board of Directors of the Company into the future, I am confident the progress you are seeing will continue to build and that the Company will continue to stay true to its roots serving the central coastal communities of California."

Improved Asset Quality: Overall classified assets decreased $20.8 million in second quarter, largely due to the sale of $9.1 million of classified loans, of which $5.2 million were non-performing, reduction in OREO balances of $3.4 million and upgrade of loans where cash flows and collateral were strengthened.  OREO outstanding at June 30, 2011 was $3.6 million, 41% lower than first quarter 2011.  Non-performing assets as a percent of total assets declined from 3.43% in first quarter to 2.76% in second quarter.  Non-performing loans decreased 14% or $3.9 million on a linked quarter basis to $23.3 million.  Loans delinquent 30-89 days remained very low at $0.8 million or 0.1% of total gross loans.

Overall provision for loan losses increased $0.3 million to $2.3 million during the second quarter of 2011 as compared to $2.0 million reported in first quarter.  As noted previously, second quarter marked our second classified loan sale where the loss upon sale was taken as an increase to provision for loan loss and simultaneously charged-off.  Excluding the provisioning required to cover the charge-offs related to the loan sales in first and second quarters, the provision for loan losses were $0.4 million and $0.5 million, respectively.  Second quarter charge-offs totaled $5.3 million of which $2.2 million related to loans sold. Of the $3.1 million in non-loan sale related charge-offs, $2.6 million had been previously provisioned resulting in only $0.5 million of incremental provision requirement in the quarter to address these charge-offs. Recoveries for the second quarter of 2011 were $0.4 million, down from $1.0 million in the prior quarter. Total net charge-offs (inclusive of loan sale charge-offs) were $5.0 million for the second quarter, 2011, $2.4 million higher than the prior quarter.

At June 30, 2011 the allowance for loan losses was $21.7 million or 3.27% of total loans.  The allowance for loan losses reflected 93% coverage over non-performing loans of $23.3 million, substantially improved over year-end, 2010 where coverage was 76%.  Importantly, total classified assets as a percent of Tier 1 capital plus allowance for loan losses was 47.4%, down from 67.0% at year-end, 2010. A summary of key metrics related to asset quality follows:

Core Business: Second quarter loan originations increased 41% above first quarter to $72.4 million, of which $26.4 million was 1 – 4 family residential mortgages which were largely sold to investors for gains. This compares to first quarter's loan originations of $58.7 million, of which $31.5 million was 1 – 4 family residential mortgages. We anticipate commercial loan production will largely offset run-off and help grow the performing loan portfolio modestly in 2011, while mortgage production volumes are expected to tick up as recent hires gain traction and interest rates remain low.

Total deposit balances at June 30, 2011 increased $16.2 million in second quarter due to a $20.0 million increase in non-interest bearing DDA. While some of these deposits are transient, we expect to retain a significant portion. Since year-end, 2010 non-interest bearing DDA balances are up 16% or $30 million. In second quarter the Company drew down excess cash balances and, combined with increased deposits, proceeds from the loan sale, and other cash inflows, paid down $16 million in FHLB borrowings and added $15.2 million to the security portfolio.  

Core Earnings: In second quarter, core earnings (defined as earnings before taxes and loan loss provision expense) grew 33% from $2.7 million in first quarter to $3.6 million in second quarter.  These earnings were primarily driven by lower non-interest expenses and higher security gains.  Net interest income was $10.7 million in second quarter, flat to first quarter.  Net interest margin grew 7 basis points to 4.80% due to an increase in earning asset yields and a decrease in the cost of funds.  The yield on earning assets increased 3 basis points quarter to quarter as the securities portfolio yield increased by 17 basis points, more than covering the 7 basis point decline in yield on the loan portfolio. In addition to the improvement on asset yields, the Bank's cost of funds declined by 3 basis points on a linked-quarter basis driven by a 6 basis point decline in cost of total deposits. The cost of deposits are likely to decline modestly as higher interest rate CDs mature and roll into lower rate ones upon renewal and the increase in non-interest bearing DDAs in second quarter are largely retained. Gross loans declined $3.5 million in second quarter due to the $9.1 million loan sale. At this time the business is seeing the potential to increase CRE and small business loans; however the market continues to be strained with demand for new loans still modest and competitive pressures on loan pricing are still evident.    

Non-interest income totaled $2.1 million in second quarter, $0.2 million higher than first quarter. This increase was primarily driven by $0.4 million higher security gains, $0.1 million increase in deposit account fees and card transaction fees, partly offset by a $0.3 million loss on sale of a foreclosed property.  

Non-interest expense declined $0.7 million or 7% on a linked quarter basis from $9.9 million in first quarter to $9.2 million in second quarter.  The primary drivers for the decrease was $0.4 million less in OREO write-downs and their related costs, $0.2 million less in salaries and benefits due to reductions in certain payroll taxes (as annual wage limits on particular payroll tax components have now been reached for most employees) and to a one-time reduction in healthcare insurance costs due to an audit of billing rates which resulted in credits from the Bank's insurance providers.

The Company recorded $354 thousand of provision for income taxes based on its estimated 2011 effective annual tax rate of 29% and made no adjustments to the valuation allowance for deferred tax assets.

Deferred Tax Assets: The Company's net deferred tax assets decreased by $1.8 million during the second quarter, due to increases in the fair value of the investment portfolio and increases in operating profits. The Company maintained the same $7.1 million valuation allowance for deferred tax assets at quarter end that existed at December 31, 2010. The Company will continue to analyze its deferred tax assets, including those for which a valuation allowance has been established, on a quarterly basis, for changes affecting the ability to realize those assets and, as such, the valuation allowance may be adjusted in future periods. The Company will analyze changes in near-term market conditions and consider both positive and negative evidence as well as other factors which may impact future operating results in making any decision to adjust the valuation allowance in future periods.

Capital Position: As of June 30, 2011, Heritage Oaks Bancorp maintained its strong capital position with Tier 1 Capital increasing 29 basis points to 11.44%.  Tangible Common Equity as a percentage of Tangible Assets increased 25 basis points to 9.04%.  Total Risk-Based Capital ended at 15.20%, a decrease of 45 basis points from that reported in first quarter, which primarily resulted from purchase of higher risk weighted corporate bonds.

Heritage Oaks Bank reported a Tier 1 Leverage ratio of 11.15% and Total Risk-Based Capital ratio of 14.80% at June 30, 2011. Both these ratios exceed the minimum Tier 1 Leverage ratio of 10.0% and Total Risk Based Capital ratio of 11.5% set forth by the FDIC and DFI Consent Order dated March 4, 2010.

Liquidity: On balance sheet liquidity as measured by our Liquidity Ratio (total cash and equivalents plus unpledged marketable securities divided by the sum of total deposits and short-term liabilities less pledged securities) remained very strong at 31% at the end of second quarter, 2011, 1% higher than prior quarter. At end of June, the Bank had remaining borrowing capacity with the Federal Home Loan Bank ("FHLB") of approximately $124.8 million, has a collateralized borrowing facility with the Federal Reserve Bank of $6.2 million and had the ability to purchase federal funds under a correspondent bank line of credit in the aggregate amount of $15.0 million.  Additionally, $210.1 million of the Company's $218.4 million investment portfolio was unpledged and available as on-balance sheet liquidity as of June 30, 2011.

Balance Sheet: Total assets as of June 30, 2011 were $973.5 million, $2.6 million higher than reported in prior quarter.  Excluding the $9.1 million loan sale, total assets would have increased $11.7 million or just under 2%.  The increase in assets is primarily due to $15.2 million increase in the securities portfolio. This increase was largely funded through deposit increases, draw down of cash held in lower yielding money market funds, proceeds from the loan sale and loan prepayments.  Total deposits as of quarter-end were $802.5 million, $16.2 million higher on a linked quarter basis.  Total core deposits (non-interest bearing DDA, NOW, savings, money market, and CD's less than $100,000) totaled $698.6 million as of June 30, 2011, an increase of $22.6 million or 3.3% compared to March 31, 2011. Core deposits comprised 87% of total deposit balances. Some of the excess liquidity was also used to pay down $16 million in FHLB borrowings in second quarter which ended at $29 million.

Total gross loans were $664.3 million at June 30, 2011, a decrease of $3.5 million on a linked quarter basis.  The linked quarter decrease is attributed to the sale of $9.1 million of classified loans, $5.0 million in net charge-offs, and $1.0 million of loans transferred to foreclosed real estate.  Excluding the loan sale, loan balances increased $5.6 million.

Conference Call

Heritage Oaks Bancorp will host a conference call to discuss these first quarter results at 8:00 a.m. PDT on July 29^th, 2011.  Media representatives, analysts and the public are invited to listen to this discussion by calling (877) 312 - 8825 and entering the passcode 80485536, or via on-demand webcast.  A link to the webcast will be available on the Heritage Oaks Bancorp's website at www.heritageoaksbancorp.com.  A replay of the call will be available on Heritage Oaks Bancorp's website later that day and will remain on its site for up to 14 calendar days.

About the Company

Heritage Oaks Bancorp is the holding company for Heritage Oaks Bank which operates as Heritage Oaks Bank and Business First, a division of Heritage Oaks Bank. Heritage Oaks Bank is headquartered in Paso Robles and has two branches in Paso Robles and San Luis Obispo, single branch in Cambria, Arroyo Grande, Atascadero, Templeton, and Morro Bay and three branches in Santa Maria. Heritage Oaks Bank conducts commercial banking business in San Luis Obispo County and Northern Santa Barbara County. The Business First division has two branches in Santa Barbara. Visit Heritage Oaks Bancorp on the Web at www.heritageoaksbank.com.

The Heritage Oaks Bancorp logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7045

Forward Looking Statements

Statements concerning future performance, developments or events, expectations for growth, income forecasts, sales activity for collateral, credit quality and any other guidance on future periods constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to the ongoing financial crisis in the United States and the markets in which the Company operates, and the response of the federal and state government and our regulators thereto, the effects on our operations of the enforcement actions we are subject to, continued growth, the Bank's beliefs as to the adequacy of its existing and anticipated allowances for loan losses, beliefs and expectations regarding actions that may be taken by regulatory authorities having oversight of the Bank's operations, interest rates and financial policies of the United States government, continued weakness in the real estate markets within which we operate and general economic conditions. Additional information on these and other factors that could affect financial results are included in Heritage Oaks Bancorp's Securities and Exchange Commission filings. If any of these risks or uncertainties materialize or if any of the assumptions underlying such forward-looking statements proves to be incorrect, Heritage Oaks Bancorp's results could differ materially from those expressed in, implied or projected by such forward-looking statements. Heritage Oaks Bancorp assumes no obligation to update such forward-looking statements.

The following tables reconcile the quarter to date and year to date changes in the balance of loans on non-performing status during 2011:

The following tables reconcile the quarter to date and year to date changes in the balance of OREO during 2011:

CONTACT:  Lawrence P. Ward, CEO
          805-369-5200
          Tom Tolda, CFO
          805-369-5107