Pacific Capital Bancorp (Nasdaq: PCBC), a community bank holding company and parent of Santa Barbara Bank & Trust, reported net income of $20.5 million, or $0.62 per diluted share, for the three months ended September 30, 2011, compared with $21.0 million, or $0.64 per diluted share, for the three months ended June 30, 2011. This brings total net income to $84.0 million, or $2.62 per diluted share, since the closing of the $500 million investment from a wholly-owned subsidiary of Ford Financial Fund, L.P. on August 31, 2010.

Third Quarter Highlights
  • Delivered the fourth consecutive quarter of strong profitable results, following the successful recapitalization on August 31, 2010;
  • Achieved a return on average assets of 1.39% and a return on average equity of 11.14% for the third quarter of 2011;
  • Increased regulatory capital ratios to 12.1% and 20.0% for Tier 1 Leverage and Total Risk-Based Capital ratios, respectively; and,
  • Continued to execute strategic plan to focus on core deposit growth, increase loan originations to commercial and private clients, and enhance technology and operational infrastructure.

“We’re pleased with what has been achieved in the first year since our recapitalization of this great community bank,” said Carl B. Webb, Chief Executive Officer of Pacific Capital Bancorp. “We’ve achieved strong earnings performance, effectively managed credit issues from the Company’s legacy loan portfolio, reintroduced lending products within our footprint, and continue to grow our core deposit base. At the same time, our capital levels have continued to grow stronger each quarter, and today, our capital significantly exceeds the regulatory levels to be considered a well capitalized financial institution.

“Our strong performance has allowed us to make important investments in the Bank’s systems and operational infrastructure,” said Mr. Webb. “These upgrades will enhance our clients’ banking experience in the years ahead, provide a substantial platform for future growth initiatives, and allow us to operate more efficiently in the future.”

Net interest income was $55.8 million, or 4.08% of average interest earning assets for the third quarter of 2011, compared with $60.2 million, or 4.42%, for the previous quarter. The decline in net interest income is primarily the result of lower loan accretion related to purchased credit impaired loans in the third quarter as compared with the prior quarter. This was offset by lower interest expense due to the maturity of longer-term debt and the decline in interest expense of deposits due primarily to the maturity of broker deposits.

Provision for loan losses declined to $0.8 million for the third quarter of 2011 compared with $1.8 million for the previous quarter. The decline is primarily the result of lower new loan originations and purchases when compared with the second quarter. The Company expects that loan originations and purchases will increase as its lending activities continue to be reintroduced throughout its footprint.

Total noninterest income was $13.0 million in the third quarter of 2011, compared with $12.5 million in the second quarter of 2011. The increase in noninterest income is primarily the result of a gain on sale of low income housing tax investments and corresponding lower operating costs associated with these investments.

Noninterest expense decreased to $48.1 million for the third quarter of 2011, compared with $50.2 million in the prior quarter. The decrease was primarily the result of lower regulatory assessment costs and professional fees, offset by higher salaries and benefits expense associated with the continued investment in personnel needed to enhance the Company’s technology and operational infrastructure. The Company expects noninterest expense to continue to increase during 2011 and 2012, as it makes further investments in its technology and personnel.

Pacific Capital Bancorp and its wholly-owned banking subsidiary, Santa Barbara Bank & Trust, N.A. (the “Bank” or “SBB&T”), exceed the ratios required to be considered, ”well capitalized” as well as capital levels that the Bank is required to meet under its agreement with the Office of the Comptroller of the Currency. Regulatory capital ratios for the Bank and the Company were 10.9% and 18.1%, and 12.1% and 20.0% at September 30, 2011, for Tier 1 leverage capital and total risk-based capital ratios, respectively.

Quarterly Report on Form 10-Q

The Company intends to file with the Securities and Exchange Commission its Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, on or before November 14, 2011. This report can be accessed at the Securities and Exchange Commission’s website, www.sec.gov. Shortly after filing, it is also available free of charge at the Company’s website, www.pcbancorp.com or by contacting the Company’s Investor Relations Department.

About Pacific Capital Bancorp

Pacific Capital Bancorp, with $5.8 billion in assets, is the parent company of Santa Barbara Bank & Trust, N.A., a nationally chartered bank headquartered in Santa Barbara which operates 47 branches in eight California counties on the Central Coast of California. The Bank provides a full line-up of community banking, commercial banking, and trust and wealth management products and services. The Company’s website, including investor relations information, can be found at www.pcbancorp.com; the Bank’s website, including products and services information and branch locations, can be found at www.sbbt.com.

Forward Looking Statements

This press release contains “forward‐looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward‐looking statements to be covered by the safe harbor provisions for forward‐looking statements. All statements other than statements of historical fact are “forward- looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business prospects, strategic alternatives, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, acquisition and divestiture opportunities, plans and objectives of management for future operations, and other similar forecasts and statements of expectation and statements of assumptions underlying any of the foregoing. Words such as “will likely result,” “aims,” “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of these words and similar expressions are intended to identify these forward‐looking statements.

Forward‐looking statements are based on the Company’s current expectations and assumptions regarding its business, the regulatory environment, the economy and other future conditions. The Company’s actual results may differ materially from those contemplated by the forward‐looking statements. The Company cautions you against relying on any of these forward‐looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward‐looking statements are detailed in reports filed by the Company with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed by the Company with the Securities and Exchange Commission on March 25, 2011. Forward‐looking statements speak only as of the date they are made, and the Company does not undertake to update forward‐looking statements to reflect circumstances or events that occur after the date the forward‐looking statements are made, whether as a result of new information, future developments or otherwise, except as may be required by law.

       
 

Pacific Capital Bancorp
Consolidated Balance Sheets (unaudited)
(dollars and shares in thousands, except per share amounts)
 
September 30, 2011 June 30, 2011
ASSETS
Cash and due from banks $ 41,907 $ 40,820
Interest bearing demand deposits in other financial institutions   263,739     215,281  
Cash and cash equivalents 305,646 256,101
Investment securities available for sale 1,447,246 1,401,116
Loans held for sale 3,727 1,598
Loans held for investment 3,620,463 3,689,751
Allowance for loan and lease losses   (4,288 )   (3,577 )
Net loans held for investment 3,616,175 3,686,174
Premises and equipment, net 74,589 76,082
FHLB stock and other investments 79,009 81,660
Goodwill and other intangible assets 91,403 91,290
Other assets   225,300     241,750  
TOTAL ASSETS $ 5,843,095   $ 5,835,771  
LIABILITIES
Deposits
Noninterest bearing $ 1,122,350 $ 1,045,475
Interest bearing   3,469,034     3,557,027  
Total deposits 4,591,384 4,602,502
Securities sold under agreements to repurchase 316,741 317,560
Other borrowings 100,117 121,465
Other liabilities   89,874     89,784  
TOTAL LIABILITIES 5,098,116 5,131,311
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY

Common stock ($0.001 par value; 50,000 authorized; 32,905 and 32,904 sharesissued and outstanding at September 30, 2011, and June 30, 2011, respectively)
33 33
Paid in capital 650,582 650,052
Retained earnings 83,951 63,478
Accumulated other comprehensive income/(loss)   10,413     (9,103 )
TOTAL SHAREHOLDERS' EQUITY   744,979     704,460  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,843,095   $ 5,835,771  
 
 

       
 

Pacific Capital Bancorp
Consolidated Statements of Operations (unaudited)
(dollars and shares in thousands, except per share amounts)
Three Months Three Months
Ended Ended
September 30, June 30,
2011 2011
Interest income
Loans $ 58,271 $ 64,401
Investment securities 7,229 7,012
Other   548     526  
TOTAL INTEREST INCOME 66,048 71,939
Interest expense
Deposits 6,149 6,390
Securities sold under agreements to repurchase 2,502 2,484
Other borrowings   1,549     2,902  
TOTAL INTEREST EXPENSE   10,200     11,776  
NET INTEREST INCOME 55,848 60,163
Provision for loan losses   787     1,799  

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
55,061 58,364
Noninterest income
Service charges and fees 5,879 5,879
Trust and investment advisory fees 5,266 5,319
Loss on securities, net (35 ) (212 )
Other   1,883     1,545  
TOTAL NONINTEREST INCOME 12,993 12,531
Noninterest expense
Salaries and employee benefits 25,867 23,046
Net occupancy expense 6,042 5,678
Other   16,187     21,463  
TOTAL NONINTEREST EXPENSE   48,096     50,187  
INCOME BEFORE INCOME TAX BENEFIT 19,958 20,708
Income tax benefit   (515 )   (266 )
NET INCOME $ 20,473   $ 20,974  
 
Earnings per share:
Basic $ 0.62 $ 0.64
Diluted $ 0.62 $ 0.64
Weighted average number of common shares outstanding:
Basic 32,905 32,903
Diluted 32,958 32,916
 
 

             
 

Pacific Capital Bancorp
 
Consolidated Average Balances and Annualized Yields (unaudited)
For the Three Months Ended For the Three Months Ended
September 30, 2011 June 30, 2011
Average

Balance
Income (3) Rate (3) Average

Balance
Income (3) Rate (3)
(dollars in thousands)
Assets

Interest bearing demand deposits in other financial institutions
$ 315,811 $ 182 0.23 % $ 264,524 $ 147 0.22 %
Securities:
Investment securities available for sale:
Taxable 1,176,991 5,080 1.71 % 1,159,595 4,848 1.68 %
Non taxable   203,248     2,149   4.23 %     203,426     2,164   4.26 %
Total securities 1,380,239 7,229 2.08 % 1,363,021 7,012 2.07 %
Loans: (1)
Commercial 228,770 4,803 8.33 % 254,555 7,074 11.15 %
Real estate - commercial (2) 2,181,785 37,475 6.87 % 2,275,139 43,885 7.72 %
Real estate - residential 1 to 4 family 1,176,892 14,606 4.96 % 1,158,924 12,088 4.17 %
Consumer loans   60,694     1,387   9.07 %     58,591     1,354   9.27 %
Total loans, gross 3,648,141 58,271 6.38 % 3,747,209 64,401 6.88 %
Other interest earning assets   80,306     366   1.81 %     82,918     379   1.83 %
Total interest earning assets 5,424,497 66,048 4.86 % 5,457,672 71,939 5.28 %
Noninterest earning assets   429,771     435,783  
Total assets $ 5,854,268   $ 5,893,455  
 
Liabilities and shareholders' equity
Interest bearing deposits:

Savings and interest bearing transaction accounts
$ 1,763,765 1,297 0.29 % $ 1,748,268 1,302 0.30 %
Time certificates of deposit   1,758,278     4,852   1.09 %     1,865,294     5,088   1.09 %
Total interest bearing deposits 3,522,043 6,149 0.69 % 3,613,562 6,390 0.71 %
Borrowed funds:
Securities sold under agreements to repurchase 317,501 2,502 3.13 % 320,849 2,484 3.11 %
Other borrowings   103,482     1,549   5.94 %     120,961     2,902   9.62 %
Total borrowed funds   420,983     4,051   3.82 %     441,810   5,386   4.89 %
Total interest bearing liabilities 3,943,026 10,200 1.02 % 4,055,372 11,776 1.17 %
Noninterest bearing demand deposits 1,097,874 1,066,205
Other noninterest bearing liabilities 84,127 86,167
Shareholders' equity   729,241     685,711  
Total liabilities and shareholders' equity $ 5,854,268   $ 5,893,455  
     
Net interest spread 3.84 % 4.11 %
             
Net interest income/margin $ 55,848   4.08 %   $ 60,163   4.42 %
 
(1) Nonaccrual loans are included in loan balances. Interest income includes related net deferred fee income.
(2) Commercial real estate loans include multifamily residential real estate loans.
(3) Includes impact of accretion or amortization of discounts and premiums.
 
 

       
 

Pacific Capital Bancorp
 
Key Financial Ratios (unaudited)
 
Three Months Three Months
Ended Ended
September 30, June 30,
(in thousands, except per share amounts) 2011 2011
 
Financial Ratios, Consolidated:
Return on average equity 11.14 % 12.27 %
Return on average assets 1.39 % 1.43 %
 
Financial Ratios, SBB&T:
Return on average equity 11.76 % 13.54 %
Return on average assets 1.42 % 1.53 %
 
September 30, June 30,
2011 2011
 
Capital Ratios, Consolidated:
Tier 1 leverage ratio 12.1 % 11.6 %
Tier 1 risk-based capital ratio 19.1 % 17.9 %
Total risk-based capital ratio 20.0 % 18.3 %
 
Capital Ratios, SBB&T:
Tier 1 leverage ratio 10.9 % 10.4 %
Tier 1 risk-based capital ratio 17.2 % 16.1 %
Total risk-based capital ratio 18.1 % 16.5 %
 
Book value per share of common stock:
Shares of common stock outstanding 32,905 32,904
Book value per share of common stock $ 22.64 $ 21.41
 
 

           
 

Pacific Capital Bancorp
 
Key Financial Information (unaudited)
(dollars in thousands)
 
Loan Aging Table – Based on Individual Loan Basis
 
September 30, 2011
Current

30-89 Days Past Due

90+ Days Past Due - Still Accruing
Nonaccrual Total
Loans originated and purchased after Transaction Date $ 380,361 $ 850 $ $ $ 381,211
 
PCI Revolving Pools 462,172 11,263 26,752 500,187
 
PCI Term Pools 2,543,360 42,121 153,584 2,739,065
         
Total Loans $ 3,385,893 $ 54,234 $ 153,584 $ 26,752 $ 3,620,463
 
June 30, 2011
Current

30-89 Days Past Due

90+ Days Past Due - Still Accruing
Nonaccrual Total
Loans originated and purchased after Transaction Date $ 310,577 $ 243 $ $ $ 310,820
 
PCI Revolving Pools 494,794 17,529 21,704 534,027
 
PCI Term Pools 2,633,498 47,836 163,570 2,844,904
         
Total Loans $ 3,438,869 $ 65,608 $ 163,570 $ 21,704 $ 3,689,751
 

Copyright Business Wire 2010

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