EXHIBIT 99.1

Heritage Oaks Bancorp Announces Results for the Third Quarter of 2011

• Net income of $2.1 million; $1.2 million more than in the second quarter, marking the fourth consecutive quarter of profitability
• Improved asset quality, with non-performing assets down $11.6 million to $15.3 million
• Allowance for loan losses of $20.4 million, or 3.15% of gross loans, reflecting 156% coverage of non-performing loans, compared to 93% in second quarter
• Non-interest bearing DDA balances up 7% or $15.0 million over the second quarter, and $51.8 million more than September 30, 2010
• Net interest margin of 4.67%, down 13 basis points from the prior quarter
• Net income before loan loss provision expense and taxes was $4.4 million, up 21% over prior quarter
• Tier 1 Leverage ratio increased 9 basis points to 11.53% and Total Risk Based Capital ratio increased 43 basis points to 15.63%

PASO ROBLES, Calif., Oct. 27, 2011 (GLOBE NEWSWIRE) -- Heritage Oaks Bancorp (the "Company"), (Nasdaq:HEOP), the parent company of Heritage Oaks Bank (the "Bank"), today reported its fourth consecutive quarter of profitability with third quarter net income of $2.1 million, $1.2 million higher than second quarter's $954 thousand and $13.0 million above third quarter, 2010. After incorporating accrued dividends and accretion on preferred stock of $0.4 million, net income applicable to common shareholders for third quarter was $1.7 million. Net income per basic and diluted common share was $0.07 in the third quarter; $0.05 higher than second quarter. The Company earned $4.4 million in net income before taxes and loan loss provision expense in the third quarter of 2011, $0.8 million or 21% above second quarter. The increase in net income before taxes and loan loss provision expense on a linked quarter basis was largely driven by: $0.5 million increase in non-interest income associated with an increase in gains on sale of mortgages and fee revenues; $0.1 million improvement in net interest income and $0.1 million decrease in non-interest expenses.  The provision for loan losses in the third quarter was $1.1 million as compared to $2.3 million in the second quarter.  The majority of third quarter loan loss provision expense was recorded to cover $0.8 million of net charge-offs related to the sale of $4.8 million of non-performing loans.  Asset quality continued to improve in the third quarter, as non-performing assets declined $11.6 million, total classified assets declined $2.7 million and classified assets as a percent of Tier 1 Capital plus allowance for loan losses declined to 44.4% in third quarter, down from 47.4% in second quarter and 62.5% in first quarter of 2011.  Net income for the nine months ended September 30, 2011 was $3.6 million, an increase of $21.7 million over the same period a year earlier.

Ms. Simone Lagomarsino, newly appointed CEO and President of Heritage Oaks Bancorp stated, "I am very excited to be joining Heritage Oaks Bancorp at this time and am eager to lead the Company forward towards future growth and profitability. In the short time that I have been with the Company, I have been impressed with the strong loyalty of our customers as well as the dedication and commitment of our employees and directors.  I am also very encouraged by the progress that has been made to improve earnings, asset quality and profitability."  Ms. Lagomarsino further commented, "I share in the common vision of the Board of Directors and Management to not only continue down the path that has been set, but to raise the bar to focus on making Heritage Oaks Bank the best community bank for commercial and small business customers and retail consumers along California's Central Coast.  Furthermore, we aspire to be recognized among the very best performing community banks in California.  I am confident we can achieve these goals as we work to enhance the value and services we offer our customers, and by having the very best talent to support them."

"As asset quality continues to improve, we will place greater emphasis on improving our operating efficiency and core earnings.  While loan demand is still quite tepid along the Central Coast, we believe there are still many credit-worthy customers whose needs remain unfulfilled and who may be frustrated with their current banking relationships.  We intend to offer these customers a better alternative with the best people, an improved suite of products tailored to their needs, and with a value offering that makes good sense to both the customer and the Bank," concluded Ms. Lagomarsino.  

Third Quarter Results

Net Income before Taxes and Loan Loss Provision Expense:  During the third quarter, net income before taxes and loan loss provision expense grew 21% from $3.6 million in the second quarter to $4.4 million in the third quarter. The increase of $0.8 million on a linked quarter basis was driven by: higher non-interest income of $0.5 million; higher net interest income of $0.1 million propelled by higher securities holdings, which more than offset a decline in interest from loans due to a $16.1 million decline in gross loans; and $0.1 million less non-interest expenses. In the third quarter the Company temporarily increased FHLB borrowings by $7.5 million, drew down excess cash balances of $13.1 million, and with these additional cash inflows added $30.4 million to the securities portfolio. 

Net interest margin declined 13 basis points to 4.67% in third quarter due to the shift in earning asset mix resulting from the $16.1 million decline in loan balances and offsetting $30.4 million increase in the securities portfolio balance and non-repeat of loan prepayment fees that were recognized in the second quarter. This decline in net interest margin was partly offset by a 7 basis point decrease in the cost of funds.

Non-interest income totaled $2.6 million in third quarter, $0.5 million higher than second quarter. The increase was primarily due to $0.2 million of higher gains and fees on mortgage sales, $0.1 million of higher fee income, and $0.1 million of higher gain on sale of securities.  

Non-interest expense declined $0.1 million on a linked quarter basis. This decline included a $0.1 million write-down provision on an OREO property and $0.4 million of provisions for contingent liabilities that arose in the third quarter. Exclusive of these provisions, non-interest expenses would have been $8.6 million. The Company continues to evaluate opportunities for further expense reduction.  

The Company recorded a $1.2 million provision for income taxes based on its estimated 2011 effective annual tax rate of 32%, up from 29% in the prior quarter. No adjustments were required or have been made to the valuation allowance for deferred tax assets at this time.

Improved Asset Quality:  Overall classified assets decreased $2.7 million during the third quarter, to $58.3 million, reflecting a continued reduction after the second quarter's significant decrease in classified assets of $20.8 million.  OREO at September 30, 2011 was $2.2 million, $1.4 million less than the prior quarter.  Classified loans, which comprise the majority of classified assets, totaled $55.3 million of which $42.2 million or 76.3% were still accruing interest.  Non-performing assets declined $11.6 million or 43% to $15.3 million during the third quarter.  The decrease in non-performing assets during the third quarter was driven by: the sale of $4.8 million of non-accrual loans; $3.3 million in repayments on non-accrual loans; and the sale of $2.2 million of OREO.  During 2011, non-performing assets as a percent of total assets has declined from 3.43% in the first quarter to 2.77% in the second quarter to 1.56% at third quarter end.  Continued improvement was also noted in the level of special mention loans, which declined from $41.6 million in the first quarter to $31.4 million in the second quarter and are now $24.7 million at the end of the third quarter.  Loans delinquent 30-89 days have remained very low at $0.6 million or 0.09% of total gross loans in third quarter as compared to $0.8 million or 0.12% in second quarter.

Provision for loan losses decreased from $2.3 million for the second quarter to $1.1 million for the third quarter.  Excluding the provisioning required to cover the charge-offs related to the loan sales in the first, second and third quarters, the provision for loan losses were $0.4 million, $0.5 million and $0.3 million, respectively.  Third quarter gross charge-offs totaled $3.1 million of which $1.1 million was related to loans sold. Recoveries for the third quarter of 2011 were $0.6 million, up from $0.4 million in the prior quarter. Total net charge-offs (inclusive of loan sale charge-offs and recoveries) were $2.4 million for the third quarter representing 1.43% of total loans on an annualized basis.  

At September 30, 2011 the allowance for loan losses was $20.4 million or 3.15% of total loans.  The allowance for loan losses reflected 156% coverage over non-performing loans of $13.1 million, a substantial improvement compared to the prior quarter's 93% coverage.  Total classified assets as a percent of Tier 1 Capital plus allowance for loan losses was 44.4%, down from 47.4% in the prior quarter and down from 66.0% at year-end, 2010. 

A summary of key metrics related to asset quality follows (dollars in millions):
 

Core Business:  New loan fundings and commitments for the third quarter were $85.2 million, up $12.8 million from second quarter.  In third quarter $38.5 million 1 – 4 family residential mortgages were originated, which were largely sold to investors and resulted in fees and gains on sale of $0.7 million.  This compares to second quarter's 1 - 4 family originations of $26.4 million which resulted in fees and gains on sale of $0.5 million.  As classified loan sales diminish or end, we anticipate loan production should largely offset normal loan portfolio run-off due to amortization, pay-offs and charge-offs in future quarters.  The gross loan portfolio declined $16.1 million in the third quarter to $648.2 million primarily due to the $4.8 million classified loan sale, $1.4 million in charge-offs, $1.0 million in loans foreclosed on and transferred to foreclosed assets and $8.9 million in net loan pay-downs which outpaced new loan fundings made during the third quarter.

Residential mortgage production volumes continue to increase in the very low interest rate environment.  Also contributing to mortgage originations have been the recent mortgage sales force hires who are gaining traction.    Sales force recruiting for our SBA department is also currently underway.

Total deposit balances at September 30, 2011 were largely flat at $801.7 million in comparison to the balances at June 30, 2011 of $802.5 million.  However, non-interest bearing DDA increased $15.0 million or 7% in third quarter to $228.2 million and represented 28% of total deposits.  Year-over-year, non-interest bearing deposits increased $51.8 million or 29%. Offsetting the increase in non-interest bearing DDA were reductions in higher cost time deposits and savings accounts.

During the third quarter the Company revamped its retail checking account offerings.  The new, more simplified checking account product offering was consolidated from 14 products to 2 products.  Account pricing will vary from $0 up to $12 per month, depending upon each customer's combined deposit relationship, whether statements are produced in paper form or electronic form, and the number of debit card transactions in the statement period. It is anticipated that this simplification will reduce complexity for our customers, help front-line sales staff more easily explain our product offerings and reduce costs in the back office. 

Balance Sheet: Total assets as of September 30, 2011 were $983.1 million, $9.6 million higher than reported in the prior quarter. The increase in assets is primarily comprised of the $30.4 million increase in the securities portfolio, $9.4 million increase in mortgages held for sale, partially offset by a $16.1 million reduction in the loan portfolio, of which $4.8 million related to the sale of non-accrual loans, and a $13.1 million reduction in cash and equivalents. Total deposits as of quarter-end were $801.7 million, effectively flat to June 30, 2011. Total core deposits (non-interest bearing DDA, NOW, savings, money market, and CD's less than $100,000) totaled $704.6 million, up $5.9 million from the June 30, 2011 balance of $698.7 million. Core deposits comprised 88% of total deposit balances at the end of the third quarter.

Total gross loans were $648.2 million at September 30, 2011, a decrease of $16.1 million on a linked quarter basis. The linked quarter decrease is attributed to the sale of $4.8 million of non-accrual loans, $1.4 million in net charge-offs (other than those related to non-accrual loan sales), $1.0 million of loans transferred to foreclosed real estate and $8.9 million in net pay-downs of loans. 

Deferred Tax Assets:  The Company's net deferred tax assets increased $0.4 million in third quarter to $19.2 million. The Company has 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 September 30, 2011, Heritage Oaks Bancorp maintained its strong capital position with a Tier 1 Leverage ratio of 11.53%, representing an increase of 9 basis points over prior quarter. Tangible common equity as a percentage of tangible assets increased 9 basis points over the prior quarter to 9.13% at September 30, 2011. Total Risk-Based Capital ended the third quarter at 15.63%, an increase of 43 basis points from that reported in second quarter.

Heritage Oaks Bank reported a Tier 1 Leverage ratio of 11.28% and Total Risk-Based Capital ratio of 15.28% at September 30, 2011. Both of 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 strong at 34% at the end of third quarter, 3% higher than prior quarter. At the end of September the Bank had remaining borrowing capacity with the Federal Home Loan Bank ("FHLB") of approximately $161.2 million which increased by 29.7% since prior quarter-end. The Bank also has a collateralized borrowing facility with the Federal Reserve Bank of $8.7 million and had the ability to purchase federal funds under a correspondent bank line of credit in the aggregate amount of $15.0 million as of September 30, 2011. Additionally, $242 million of the Company's $249 million investment portfolio was unpledged and available as on-balance sheet liquidity as of September 30, 2011.

Conference Call

Heritage Oaks Bancorp will host a conference call to discuss these third quarter results at 8:00 a.m. PDT on October 28^th, 2011. Media representatives, analysts and the public are invited to listen to this discussion by calling (877) 363-5052 and entering the passcode 149545436, 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: Simone Lagomarsino, CEO
         805-369-5260

         Tom Tolda, CFO
         805-369-5107