Pacific Capital Bancorp Reports Second Quarter 2012 Results

Pacific Capital Bancorp (Nasdaq: PCBC), a community bank holding company and parent of Santa Barbara Bank & Trust, N.A., reported net income of $24.1 million, or $0.73 per diluted share, for the three months ended June 30, 2012, compared with $21.0 million, or $0.64 per diluted share, for the three months ended June 30, 2011. Net income for the second quarter of 2012 was the highest reported for a quarter since the Ford Financial Group’s investment in Pacific Capital Bancorp in August 2010. Net income for the second quarter of 2012, included $1.4 million of merger related costs.

Second Quarter Highlights
  • The Written Agreement dated May 11, 2010, between Pacific Capital Bancorp and the Federal Reserve Bank of San Francisco was terminated effective as of May 23, 2012;
  • Achieved a return on average assets of 1.66% and a return on average equity of 12.02% for the three months ended June 30, 2012;
  • Improved net interest margins to 4.55% for the second quarter of 2012, compared with 4.42% for the second quarter of 2011;
  • Increased regulatory capital ratios to 13.3% and 22.1% for Tier 1 Leverage and Total Risk-Based Capital at June 30, 2012, respectively; and
  • Progress continues to be made to consummate the acquisition of PCBC by UnionBanCal Corporation that was announced on March 12, 2012. The acquisition requires approval from banking regulators and is subject to other customary closing conditions, and is expected to be completed in the fourth quarter of 2012.

“Our strong performance in the second quarter reflects our successful execution of bringing high quality banking and financial services to our customers,” said Carl B. Webb, Chief Executive Officer of Pacific Capital Bancorp. “This customer focus is shared by Union Bank and makes us confident that joining forces with such a strong, California-based financial services organization will position us to continue to provide this level of service to the communities we serve,” continued Mr. Webb.

Net interest income was $61.2 million, or 4.55% of average interest earning assets for the second quarter of 2012, compared with $60.2 million, or 4.42%, for the same period a year ago. The increase in net interest income is primarily the result of lower cost of funds due to the maturity of high rate certificates of deposit and the redemption of subordinated debentures.

The provision for loan losses was $317,000 for the second quarter of 2012, compared with $1.8 million for the second quarter of 2011. The decline in the provision for loan loss is attributed to lower historical loss rates, and better performance of purchased credit impaired loan portfolios than expected.

Total noninterest income was $15.6 million in the second quarter of 2012, compared with $12.5 million in the second quarter of 2011. The increase is primarily the result of increased gain on sales of other real estate owned, loans, and investment securities.

Noninterest expense increased to $52.3 million for the second quarter of 2012, compared with $50.2 million in same period of 2011. The increase was primarily the result of additional employees in 2012, when comparing to the same period a year ago, and increased accrued incentives for employees resulting from improved performance by the Company.

Pacific Capital Bancorp and its wholly-owned banking subsidiary, Santa Barbara Bank & Trust, N.A. (“SBB&T”), exceed the ratios required to be considered “well capitalized” as well as capital levels that SBB&T is required to meet under its Operating Agreement with the Office of the Comptroller of the Currency. Regulatory capital ratios for SBB&T and the Company were 12.1% and 20.2%, and 13.3% and 22.1% at June 30, 2012, 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 June 30, 2012, on or before August 9, 2012. 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 $5.9 billion in assets, is the parent company of Santa Barbara Bank & Trust, N.A., a nationally chartered bank headquartered in Santa Barbara which operates 45 branches in eight California counties on the Central Coast of California. SBB&T 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; SBB&T’s website, including products and services information and branch locations, can be found at www.sbbt.com.

Additional Information and Where To Find It

In connection with the proposed merger, the Company has filed a definitive information statement relating to the merger with the Securities and Exchange Commission (SEC). INVESTORS SHOULD READ THE DEFINITIVE INFORMATION STATEMENT BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER AND THE COMPANY. You can obtain the definitive information statement, as well as other filings containing information about the Company, free of charge, at the website maintained by the SEC at www.sec.gov. In addition, filings made by the Company with the SEC, other than preliminary materials, may be obtained free of charge by contacting the Company at 805-884-6680 or 1021 Anacapa Street, Santa Barbara, California 93101, Attention: Investor Relations.

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, consummation of the transaction with UnionBanCal Corporation 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, 2011, filed by the Company with the Securities and Exchange Commission on March 15, 2012.

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
   
(dollars and shares in thousands, except per share amounts) June 30, December 31,
(unaudited) 2012 2011
ASSETS
Cash and due from banks $ 43,544 $ 49,324
Interest bearing demand deposits in other financial institutions   311,734     173,408  

Cash and cash equivalents
355,278 222,732
Investment securities available for sale 1,363,573 1,503,425
Loans held for sale 12,128 3,072
Loans held for investment 3,705,423 3,660,961
Allowance for loan and lease losses   (6,549 )   (5,528 )
Net loans held for investment 3,698,874 3,655,433
Premises and equipment, net 83,434 75,749
FHLB stock and other investments 71,398 76,356
Goodwill and other intangible assets 85,693 89,255
Other assets   212,719     224,000  
TOTAL ASSETS $ 5,883,097   $ 5,850,022  
LIABILITIES
Deposits
Noninterest bearing $ 1,103,493 $ 1,175,532
Interest bearing   3,488,152     3,441,508  
Total deposits 4,591,645 4,617,040
Securities sold under agreements to repurchase 314,274 315,919
Other borrowings 72,342 66,524
Other liabilities   89,796     88,569  
TOTAL LIABILITIES 5,068,057 5,088,052
 
SHAREHOLDERS' EQUITY

Common stock ($0.001 par value; 50,000 authorized; 32,917 and 32,905 shares issued and outstanding at June 30, 2012, and December 31, 2011, respectively)
33 33
Paid in capital 651,965 651,066
Retained earnings 137,007 96,266
Accumulated other comprehensive income   26,035     14,605  
TOTAL SHAREHOLDERS' EQUITY   815,040     761,970  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,883,097   $ 5,850,022  
 

 

PACIFIC CAPITAL BANCORP
Consolidated Statements of Operations
 

(dollars and shares in thousands,
 

Three Months Ended
 

Six Months Ended

except per share amounts)

June 30,

June 30,
(unaudited) 2012   2011 2012   2011
Interest income
Loans $ 61,931 $ 64,401 $ 120,101 $ 124,164
Investment securities 7,164 7,012 14,886 13,108
Other   745   526     1,236   1,163  
TOTAL INTEREST INCOME 69,840 71,939 136,223 138,435
Interest expense
Deposits 5,328 6,390 10,746 13,496
Securities sold under agreements to repurchase 2,458 2,484 4,921 4,586
Other borrowings   838   2,902     1,672   5,878  
TOTAL INTEREST EXPENSE   8,624   11,776     17,339   23,960  
NET INTEREST INCOME 61,216 60,163 118,884 114,475
Provision for loan losses   317   1,799     1,152   3,466  

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
60,899 58,364 117,732 111,009
Noninterest income
Service charges and fees 5,452 5,879 11,088 11,630
Trust and investment advisory fees 5,658 5,319 10,969 10,654
Gain/(loss) on securities, net 162 (212 ) 149 (216 )
Other   4,330   1,545     7,331   3,313  
TOTAL NONINTEREST INCOME 15,602 12,531 29,537 25,381
Noninterest expense
Salaries and employee benefits 24,785 23,046 49,595 45,993
Net occupancy expense 5,732 5,678 11,990 11,354
Other   21,742   21,463     43,810   41,103  
TOTAL NONINTEREST EXPENSE   52,259   50,187     105,395   98,450  
INCOME BEFORE INCOME TAX EXPENSE 24,242 20,708 41,874 37,940
Income tax expense/(benefit)   139   (266 )   1,133   206  
NET INCOME $ 24,103 $ 20,974   $ 40,741 $ 37,734  
 
Earnings per share:
Basic $ 0.73 $ 0.64 $ 1.24 $ 1.15
Diluted $ 0.73 $ 0.64 $ 1.24 $ 1.15
Weighted average number of common shares outstanding:
Basic 32,912 32,903 32,908 32,903
Diluted 32,970 32,916 32,959 32,913
 

 

PACIFIC CAPITAL BANCORP
Consolidated Average Balances and Annualized Yields
 
  Three Months Ended   Three Months Ended
June 30, 2012 June 30, 2011
(dollars in thousands)

(unaudited)
Average

Balance
  Income / Expense (3)   Yield / Rate (3)   Average

Balance
  Income / Expense (3)   Yield / Rate (3)
Assets        

Interest bearing demand deposits in other financial institutions
$ 212,850 $ 335 0.63 % $ 264,524 $ 147 0.22 %
Securities:
Investment securities available for sale:
Taxable 1,193,780 5,260 1.77 % 1,159,595 4,848 1.68 %
Non taxable   210,527   1,904 3.62 %   203,426   2,164 4.26 %
Total securities 1,404,307 7,164 2.05 % 1,363,021 7,012 2.07 %
Loans: (1)
Commercial loans 184,596 5,794 12.62 % 254,555 7,074 11.15 %
Real estate - commercial (2) 2,115,473 37,775 7.14 % 2,275,139 43,885 7.72 %
Real estate - residential 1 to 4 family 1,367,912 16,947 4.96 % 1,158,924 12,088 4.17 %
Consumer loans   48,603   1,415 11.71 %   58,591   1,354 9.27 %
Total loans, gross 3,716,584 61,931 6.67 % 3,747,209 64,401 6.88 %
Other interest earning assets   72,514   410 2.27 %   82,918   379 1.83 %
Total interest earning assets 5,406,255 69,840 5.17 % 5,457,672 71,939 5.28 %
Noninterest earning assets   417,307   435,783
Total assets $ 5,823,562 $ 5,893,455
Liabilities and shareholders' equity
Interest bearing deposits:
Savings and interest bearing transaction accounts $ 2,006,799 1,321 0.26 % $ 1,748,268 1,302 0.30 %
Time certificates of deposit   1,450,073   4,007 1.11 %   1,865,294   5,088 1.09 %
Total interest bearing deposits 3,456,872 5,328 0.62 % 3,613,562 6,390 0.71 %
Borrowed funds:
Securities sold under agreements to repurchase 314,816 2,458 3.14 % 320,849 2,484 3.11 %
Other borrowings   71,994   838 4.68 %   120,961   2,902 9.62 %
Total borrowed funds   386,810   3,296 3.43 %   441,810   5,386 4.89 %
Total interest bearing liabilities 3,843,682 8,624 0.90 % 4,055,372 11,776 1.17 %
Noninterest bearing demand deposits 1,093,476 1,066,205
Other noninterest bearing liabilities 79,862 86,167
Shareholders' equity   806,542   685,711
Total liabilities and shareholders' equity $ 5,823,562   $ 5,893,455  
Net interest spread   4.27 %   4.11 %
Net interest income/margin $ 61,216 4.55 % $ 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
Consolidated Average Balances and Annualized Yields
 
  Six Months Ended   Six Months Ended
June 30, 2012 June 30, 2011
(dollars in thousands)

(unaudited)
Average

Balance
  Income / Expense (3)   Yield / Rate (3) Average

Balance
  Income / Expense (3)   Yield / Rate (3)
Assets        

Interest bearing demand deposits in other financial institutions
$ 195,520 $ 429 0.44 % $ 362,991 $ 417 0.23 %
Securities:
Investment securities available for sale:
Taxable 1,227,976 10,828 1.77 % 1,108,762 8,784 1.60 %
Non taxable   213,445   4,058 3.80 %   202,771   4,324 4.26 %
Total securities 1,441,421 14,886 2.07 % 1,311,533 13,108 2.01 %
Loans: (1)
Commercial loans 189,915 11,116 11.77 % 263,411 14,777 11.31 %
Real estate - commercial (2) 2,112,233 73,275 6.94 % 2,237,211 77,624 6.94 %
Real estate - residential 1 to 4 family 1,342,440 33,037 4.92 % 1,167,395 28,568 4.89 %
Consumer loans   50,014   2,673 10.75 %   58,671   3,195 10.98 %
Total loans, gross 3,694,602 120,101 6.51 % 3,726,688 124,164 6.67 %
Other interest earning assets   74,206   807 2.19 %   84,515   746 1.78 %
Total interest earning assets 5,405,749 136,223 5.05 % 5,485,727 138,435 5.05 %
Noninterest earning assets   419,134   450,553
Total assets $ 5,824,883 $ 5,936,280
Liabilities and shareholders' equity
Interest bearing deposits:
Savings and interest bearing transaction accounts $ 1,971,258 2,559 0.26 % $ 1,724,706 2,516 0.29 %
Time certificates of deposit   1,486,499   8,187 1.11 %   1,946,941   10,980 1.14 %
Total interest bearing deposits 3,457,757 10,746 0.62 % 3,671,647 13,496 0.74 %
Borrowed funds:
Securities sold under agreements to repurchase 315,226 4,921 3.14 % 321,209 4,586 2.88 %
Other borrowings   69,325   1,672 4.85 %   118,182   5,878 10.03 %
Total borrowed funds   384,551   6,593 3.45 %   439,391   10,464 4.80 %
Total interest bearing liabilities 3,842,308 17,339 0.90 % 4,111,038 23,960 1.17 %
Noninterest bearing demand deposits 1,106,447 1,064,750
Other noninterest bearing liabilities 81,010 90,291
Shareholders' equity   795,118   670,201
Total liabilities and shareholders' equity $ 5,824,883   $ 5,936,280  
Net interest spread   4.15 %   3.88 %
Net interest income/margin $ 118,884 4.42 % $ 114,475 4.21 %
 
(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
 
  Three Months Ended   Six Months Ended
June 30, June 30,
(dollars and shares in thousands, except per share amounts) 2012   2011 2012   2011
(unaudited)
Financial Ratios, Consolidated:
Return on average equity 12.02 % 12.27 % 10.30 % 11.35 %
Return on average assets 1.66 % 1.43 % 1.41 % 1.28 %
 
Financial Ratios, SBB&T:
Return on average equity 12.69 % 13.54 % 11.23 % 12.39 %
Return on average assets 1.72 % 1.53 % 1.50 % 1.36 %
 
June 30, December 31,
2012 2011
 
Capital Ratios
Capital Ratios, Consolidated:
Tier 1 leverage ratio 13.3 % 12.4 %
Tier 1 risk-based capital ratio 21.5 % 19.6 %
Total risk-based capital ratio 22.1 % 20.2 %
 
Capital Ratios, SBB&T:
Tier 1 leverage ratio 12.1 % 11.2 %
Tier 1 risk-based capital ratio 19.6 % 17.7 %
Total risk-based capital ratio 20.2 % 18.3 %
 
Book value per share of common stock:
Shares of common stock outstanding 32,917 32,905
Book value per share of common stock $ 24.76 $ 23.16
 

 

PACIFIC CAPITAL BANCORP
Key Financial Information
Loan Aging Table – Based on Individual Loan Basis

 
  June 30, 2012
(dollars in thousands)

(unaudited)
Current   30-89 Days Past Due   90+ Days Past Due - Still Accruing

 
Nonaccrual   Total
Loans originated or purchased since Transaction Date (1) $ 959,335 $ 543 $ $ 6,267 $ 966,145
PCI Revolving Pools 396,604 8,040 182 16,143 420,969
PCI Term Pools   2,242,562   17,944   57,803     2,318,309
Total loans held for investment $ 3,598,501 $ 26,527 $ 57,985 $ 22,410 $ 3,705,423
 
 

December 31, 2011
(dollars in thousands)

(audited)
Current 30-89 Days Past Due 90+ Days Past Due - Still Accruing Nonaccrual Total
Loans originated or purchased since Transaction Date (1) $ 587,522 $ 503 $ $ $ 588,025
PCI Revolving Pools 446,735 12,219 17,432 476,386
PCI Term Pools   2,411,642   59,975   124,933     2,596,550
Total loans held for investment $ 3,445,899 $ 72,697 $ 124,933 $ 17,432 $ 3,660,961
 
(1) Transaction Date is defined as the Investment Transaction with the Ford Financial Group that occurred on August 31, 2010.
 

Copyright Business Wire 2010

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