Feds set to OK $188M for Pacific Capital
Santa Barbara-based Pacific Capital Bancorp is expected to receive nearly $200 million from the federal government’s bank bailout fund, a move the region’s largest bank said will enable it to strengthen its balance sheet and make more loans in the Tri-Counties.
Pacific Capital said Nov. 6 that it has received preliminary approval for a $188 million investment from the U.S. Treasury Department as part of the $700 billion Emergency Economic Stabilization Act of 2008. On Nov. 12, Treasury Secretary Hank Paulson said that even more money could flow to bank balance sheets from the program.
Pacific Capital “will utilize this capital infusion to continue making loans to our clients and strengthening the economy along the Central Coast of California,” President and Chief Executive George Leis said in a conference call with investors and the media on Nov. 6.
The government funds would equal about 3 percent of the bank’s risk-weighted assets. It would improve the bank’s top-tier capital-to-risk-weighted-assets ratio to 12.1 percent and the total capital-to-risk-weighted-assets ratio to 14.9 percent.
An infusion of capital would help offset Pacific Capital’s recently announced third quarter loss of $47.5 million, or $1.03 per diluted share, a marked contrast to net income of $3.9 million, or 8 cents per diluted share, a year ago.
The results included a $22.1 million non-cash charge to reflect an impairment of goodwill related to the bank’s commercial banking segment and a provision for loan losses of $64 million increased the bank’s allowance for loan losses to 2.13 percent of total loans and 73 percent of non-performing loans.
“While our asset quality remained generally stable during the third quarter, the outlook for general economic conditions and the impact on our loan portfolio changed considerably,” Leis said. “While we are being very cautious with our use of capital in the current environment, we intend to be aggressive in exploring opportunities to invest our franchise that will ultimately create a strong return for our shareholders.”
The bank’s net interest income was $60.8 million, up slightly from $60 million in the same quarter of 2007.
Total deposits were $4.94 billion on Sept. 30, compared to $4.64 billion on June 30, and $4.85 billion at Sept. 30, 2007. The net interest margin was 3.57 percent, compared with 3.65 percent a year ago. The bank’s non-interest income was $16.7 million, down from $17.3 million last year. Non-interest expense was $82.2 million, compared with $52.2 million in 2007.
Pacific Capital has $7.7 billion in assets and is the parent bank of Santa Barbara Bank & Trust, South Valley National Bank, First National Bank of Central California, First Bank of San Luis Obispo and San Benito Bank.