This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

10 Bank Stocks Trading Below Book Value

Pacific Capital Bancorp (PCBC) of Santa Barbara, Calif. was trading for 0.6 times tangible book value at Thursday's closing price of $1.35. Shares were up 41% year-to-date, however, the stock has been quite volatile, peaking at $5.11 on April 23.

TARP Status: The company owes $180.6 million in TARP money and has missed four dividend payments on preferred shares held by the Treasury.

Capital: As of March 31, Pacific Capital's Tier 1 leverage ratio was 4.29% and its total risk-based capital ratio was 9.64%, putting it below the thresholds required for most banks to be considered well capitalized.

On April 29, the company announced an agreement with a subsidiary of Ford Financial Fund LP for a $500 million investment, with Pacific Capital selling Ford's SB Acquisition Company $45 million in common shares for 20 cents apiece and issuing preferred shares for the rest.

As part of its agreement with the investment group led by Gerald J. Ford, Pacific Capital offered to redeem $67 million in trust-preferred securities at a generous 18 cents on the dollar. It also offered to tender $121 million in subordinated debt for 27 cents on the dollar. This is a perfect illustration of how painful it can be for investors to have their company "saved."

When the Ford investment is closed, Pacific Capital will begin a rights offering, giving shareholders of record the previous day an opportunity to buy common shares at the 20 cent price.

Earnings: Pacific Capital reported a net loss to common shareholders of $80 million or $1.71 a share, following a loss of $431 million or $9.24 a share during 2009. Most of the losses reflected elevated provisions for loan loss reserves.

Asset Quality: The nonperforming assets ratio was 6.00% as of March 31. The net charge-off ratio for the first quarter was 6.62% and loan loss reserves covered 5.77% of total loans.

Prospects: The Ford investment is probably sufficient to save the company, but will leave current shareholders with a very small stake. This company provides a case-study in the steep price that must be paid by various classes of investors to save a bank that's on the brink. Then again, as far as the debt holders and trust-preferred investors are concerned, the Ford deal certainly beats a total loss.

The volatility of the shares leading up to the Ford deal should be enough to scare investors away.

4 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BPOP $33.54 0.00%
C $51.00 0.00%
HCBK $10.32 0.00%
SNV $27.67 0.00%
AAPL $123.25 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs