Feds lift Pacific Capital order
The parent of Santa Barbara Bank & Trust has walked away from a consent order place on it by regulators two years ago, it said June 4.
Pacific Capital Bancorp, the region’s largest bank, said that its agreement with the Federal Reserve Bank of San Francisco was terminated effective May 23. That frees the $5.8 billion bank from pressure to maintain higher capital levels that had curbed its ability to pay dividends or incur new debt, among other restrictions.
Pacific Capital, which teetered on the edge of failure before a $500 million recapitalization by Dallas-based Ford Financial Fund in late 2010, is once again in the midst of being sold. The Santa Barbara-based regional banking franchise is being purchased by San Francisco-based Union Bank in a $1.5 billion acquisition that is expected to close by the end of the year.
The deal is also expected to end the U.S. Treasury’s approximately $160 million investment in Pacific Capital. The department originally poured $180.1 million into the bank as part of its nationwide Troubled Asset Relief Program, or TARP, designed to stabilize struggling banks. When Pacific Capital was purchased in 2010 by the Ford fund, the Treasury exchanged its TARP stake for preferred shares in the company, an investment valued at about $164 million based on the company’s current share price.
Brighter outlook for banks, with exceptions
The removal of Pacific Capital’s regulatory order falls in line with a generally positive trend for the region’s banks. Paso Robles-based Heritage Oaks Bancorp and Ojai Community Bank each announced earlier this year that they had bucked regulatory orders. Tri-county banking stocks have outperformed the region’s stock index so far this year.
Running counter to the trend are Goleta-based Community West Bancshares, which in February revealed a consent order along with an $8.6 million fourth-quarter loss, and San Luis Obispo-based Coast Bancorp, parent of Coast National Bank, which remains under a March 2011 regulatory order.