The 1-for-100 split would convert each 100 shares of existing common stock to one share of common stock. It would take effect on Dec. 28, Pacific Capital said in filings with the U.S. Securities and Exchange Commission.
The split will not affect any shareholder’s percentage ownership of the banking company. But Pacific Capital said it will not issue fractional shares during the split — which means shareholders who own currently own a number of shares not divisible by 100 will receive cash payment in lieu of fractional shares. Shareholders with fewer than 100 shares will receive cash for their entire holdings.
The reverse split is intended to allow Pacific Capital to keep trading on the Nasdaq stock exchange. The company was warned in October that it would be delisted from the Nasdaq if it didn’t bring its share price back above $1 before April 6, 2011. The proposed reverse split is intended to bring the number of outstanding shares down and drive the per-share price back up above $1.
Pacific Capital’s shares have traded below $1 since Aug. 25 — down from above $15 in early 2009 and above $30 in 2007 — and closed at 29 cents on Nov. 24. The Nasdaq issues a delisting warning after a company’s shares have traded below the $1 minimum bid for more than 30 consecutive business days.
In addition to warding off a delisting, the reverse split would make Pacific Capital’s shares “more attractive to a broader range of investors,” the company said, as some institutional investors and brokerage houses have policies of avoiding low-priced stock.
Pacific Capital — the parent of Santa Barbara Bank & Trust and First Bank of San Luis Obispo and the largest independent banking firm in the Tri-Counties — closed a $500 million recapitalization deal with the Ford Financial Fund, a Texas private equity group, in August. The deal provided much-needed capital to the struggling banking firm, but also diluted existing shareholders, as the Ford group took ownership of 86 percent of the company.
The firm reported that it had “returned to profitability” earlier this month, noting that September, the first month under its new Texas ownership, generated a $5 million profit. Pacific Capital lost $142 million in the first half of the year and $27.9 million in July and August.