Pacific Capital Bancorp Reports Third 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 $33.2 million, or $1.01 per diluted share, for the three months ended September 30, 2012 compared with $20.5 million, or $0.62 per diluted share, for the three months ended September 30, 2011. Net income for the third quarter of 2012 was the highest reported quarterly result since the Ford Financial Group’s investment in Pacific Capital Bancorp in August 2010.

For the nine months ended September 30, 2012, Pacific Capital Bancorp earned $73.9 million, or $2.24 per diluted share, compared with $58.2 million, or $1.77 per diluted share, for the same respective period a year ago. Merger related costs included in net income were $1.8 million and $4.2 million for the respective three and nine months ended September 30, 2012.

Third Quarter Highlights
  • Achieved a return on average assets of 2.2% and 1.7%, and a return on average equity of 15.7% and 12.2% for the three and nine months ended September 30, 2012, respectively;
  • Improved net interest margins to 4.38% and 4.41% for the three and nine months ended September 30, 2012; and
  • Increased regulatory capital ratios to 13.6% and 23.5% for Tier 1 Leverage and Total Risk-Based Capital, respectively at September 30, 2012.

Net interest income was $61.2 million, or 4.38% of average interest earning assets, for the three months ended September 30, 2012 compared with $55.8 million, or 4.08%, for the same period a year ago. Net interest income for the nine months ended September 30, 2012 was $180.1 million, or 4.41% of average interest earning assets, compared with $170.3 million, or 4.17%, for the same respective period a year ago. The increase in net interest income is primarily the result of continued strong performance of purchase credit impaired loans, a decline in the cost of funds, and an increase in loan growth.

Provision for loan losses was $860,000 for the three months ended September 30, 2012 compared with $787,000 for the same period a year earlier. Provision for loan losses was $2.0 million for the nine months ended September 30, 2012 compared with $4.3 million for the same respective period a year ago. Provision for loan losses increased for the comparative three month periods as a result of higher loan originations and purchases. Provision for loan losses decreased for the comparative nine month periods from lower historical loss rates used when calculating the allowance for loan losses.

Noninterest income was $20.1 million for the three months ended September 30, 2012 compared with $13.0 million for the same period a year ago. Noninterest income was $49.6 million for the nine months ended September 30, 2012 compared with $38.4 million for the same respective period a year earlier. Noninterest income increased for the comparative periods primarily as a result of increased gains on sales of other real estate owned, loans, and investment securities.

Noninterest expense was $47.1 million for the three months ended September 30, 2012 compared with $48.1 million for the same period of 2011. Noninterest expense was $152.5 million for the nine months ended September 30, 2012 compared with $146.5 million for the same respective period a year ago. Noninterest expense decreased for the comparative three month periods primarily from a decline in the number of employees resulting from attrition due to the merger announcement with UnionBanCal. Noninterest expense for the comparable nine month periods increased as a result of an increase in the estimated earnout liability related to the Company’s registered investment advisor subsidiaries and costs associated with the merger with UnionBanCal.

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. At September 30, 2012, regulatory capital ratios for Pacific Capital Bancorp and SBB&T were 13.6% and 12.5%, respectively, for Tier 1 leverage capital, and 23.5% and 21.6%, respectively, for total risk-based capital ratios.

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, 2012 on or before November 9, 2012. This report can be accessed, free of charge, on the Securities and Exchange Commission’s website at www.sec.gov, on the Company’s website at www.pcbancorp.com, or by contacting the Company’s Investor Relations Department.

About Pacific Capital Bancorp

Pacific Capital Bancorp, with $6.0 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. Products and services offered, 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) September 30, December 31,
(unaudited) 2012 2011
ASSETS
Cash and due from banks $ 46,512 $ 49,324
Interest bearing demand deposits in other financial institutions   520,272     173,408  
Cash and cash equivalents 566,784 222,732
Investment securities available for sale 1,244,120 1,503,425
Loans held for sale 18,071 3,072
Loans held for investment 3,743,898 3,660,961
Allowance for loan and lease losses   (7,168 )   (5,528 )
Net loans held for investment 3,736,730 3,655,433
Premises and equipment, net 82,119 75,749
FHLB stock and other investments 68,861 76,356
Goodwill and other intangible assets 84,106 89,255
Other assets   190,494     224,000  
TOTAL ASSETS $ 5,991,285   $ 5,850,022  
LIABILITIES
Deposits
Noninterest bearing $ 1,157,173 $ 1,175,532
Interest bearing   3,500,608     3,441,508  
Total deposits 4,657,781 4,617,040
Securities sold under agreements to repurchase 313,434 315,919
Other borrowings 72,766 66,524
Other liabilities   91,457     88,569  
TOTAL LIABILITIES 5,135,438 5,088,052
 
SHAREHOLDERS' EQUITY

Common stock ($0.001 par value; 50,000 authorized; 32,922 and 32,905 shares issued and outstanding at September 30, 2012, and December 31, 2011, respectively)
33 33
Paid in capital 652,697 651,066
Retained earnings 170,211 96,266
Accumulated other comprehensive income   32,906     14,605  
TOTAL SHAREHOLDERS' EQUITY   855,847     761,970  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,991,285   $ 5,850,022  
 
 

         
 

Pacific Capital Bancorp
Consolidated Statements of Operations
 
(dollars and shares in thousands, except per share amounts)

Three Months Ended

September 30,
Nine Months Ended

September 30,
(unaudited) 2012 2011 2012 2011
Interest income
Loans $ 62,517 $ 58,271 $ 182,618 $ 182,435
Investment securities 6,791 7,229 21,677 20,337
Other   639   548     1,875   1,711  
TOTAL INTEREST INCOME 69,947 66,048 206,170 204,483
Interest expense
Deposits 5,422 6,149 16,168 19,645
Securities sold under agreements to repurchase 2,478 2,502 7,399 7,088
Other borrowings   849   1,549     2,521   7,427  
TOTAL INTEREST EXPENSE   8,749   10,200     26,088   34,160  
NET INTEREST INCOME 61,198 55,848 180,082 170,323
Provision for loan losses   860   787     2,012   4,253  
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 60,338 55,061 178,070 166,070
Noninterest income
Service charges and fees 5,284 5,879 16,372 17,509
Trust and investment advisory fees 5,390 5,266 16,359 15,920
Gain/(loss) on securities, net 995 (35 ) 1,144 (251 )
Other   8,397   1,883     15,728   5,196  
TOTAL NONINTEREST INCOME 20,066 12,993 49,603 38,374
Noninterest expense
Salaries and employee benefits 22,139 25,867 71,734 71,860
Net occupancy expense 5,792 6,042 17,782 17,396
Other   19,134   16,187     62,944   57,290  
TOTAL NONINTEREST EXPENSE   47,065   48,096     152,460   146,546  
INCOME BEFORE INCOME TAX EXPENSE/(BENEFIT) 33,339 19,958 75,213 57,898
Income tax expense/(benefit)   135   (515 )   1,268   (309 )
NET INCOME $ 33,204 $ 20,473   $ 73,945 $ 58,207  
 
Earnings per share:
Basic $ 1.01 $ 0.62 $ 2.25 $ 1.77
Diluted $ 1.01 $ 0.62 $ 2.24 $ 1.77
Weighted average number of common shares outstanding:
Basic 32,921 32,905 32,912 32,904
Diluted 32,982 32,958 32,967 32,928
 
 

               
 

Pacific Capital Bancorp
Consolidated Average Balances and Annualized Yields
 
Three Months Ended Three Months Ended
September 30, 2012 September 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
$ 421,631 $ 251 0.24 % $ 315,811 $ 182 0.23 %
Securities:
Investment securities available for sale:
Taxable 1,114,171 4,860 1.74 % 1,176,991 5,080 1.71 %
Non taxable   206,169   1,931 3.75 %   203,248   2,149 4.23 %
Total securities 1,320,340 6,791 2.05 % 1,380,239 7,229 2.08 %
Loans: (1)
Commercial loans 178,707 7,518 16.74 % 228,770 4,803 8.33 %
Real estate - commercial (2) 2,104,236 36,253 6.89 % 2,181,785 37,475 6.87 %
Real estate - residential 1 to 4 family 1,421,858 17,392 4.89 % 1,176,892 14,606 4.96 %
Consumer loans   44,441   1,354 12.11 %   60,694   1,387 9.07 %
Total loans, gross 3,749,242 62,517 6.66 % 3,648,141 58,271 6.38 %
Other interest earning assets   70,074   388 2.20 %   80,306   366 1.81 %
Total interest earning assets 5,561,287 69,947 5.02 % 5,424,497 66,048 4.86 %
Noninterest earning assets   401,504   429,771
Total assets $ 5,962,791 $ 5,854,268
Liabilities and shareholders' equity
Interest bearing deposits:
Savings and interest bearing transaction accounts $ 2,097,421 1,427 0.27 % $ 1,763,765 1,297 0.29 %
Time certificates of deposit   1,422,907   3,995 1.12 %   1,758,278   4,852 1.09 %
Total interest bearing deposits 3,520,328 5,422 0.61 % 3,522,043 6,149 0.69 %
Borrowed funds:
Securities sold under agreements to repurchase 313,985 2,478 3.14 % 317,501 2,502 3.13 %
Other borrowings   72,702   849 4.65 %   103,482   1,549 5.94 %
Total borrowed funds   386,687   3,327 3.42 %   420,983   4,051 3.82 %
Total interest bearing liabilities 3,907,015 8,749 0.89 % 3,943,026 10,200 1.02 %
Noninterest bearing demand deposits 1,131,875 1,097,874
Other noninterest bearing liabilities 82,868 84,127
Shareholders' equity   841,033   729,241
Total liabilities and shareholders' equity $ 5,962,791   $ 5,854,268  
Net interest spread   4.13 %   3.84 %
Net interest income/margin $ 61,198 4.38 % $ 55,848 4.08 %
 
 
(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
 
Nine Months Ended Nine Months Ended
September 30, 2012 September 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
$ 271,441 $ 680 0.33 % $ 347,092 $ 600 0.23 %
Securities:
Investment securities available for sale:
Taxable 1,189,765 15,688 1.76 % 1,131,754 13,864 1.64 %
Non taxable   211,002   5,989 3.78 %   202,932   6,473 4.25 %
Total securities 1,400,767 21,677 2.06 % 1,334,686 20,337 2.04 %
Loans: (1)
Commercial loans 186,152 18,634 13.37 % 251,737 19,580 10.40 %
Real estate - commercial (2) 2,109,547 109,528 6.92 % 2,218,531 115,099 6.92 %
Real estate - residential 1 to 4 family 1,369,106 50,429 4.91 % 1,170,595 43,174 4.92 %
Consumer loans   48,143   4,027 11.17 %   59,353   4,582 10.32 %
Total loans, gross 3,712,948 182,618 6.56 % 3,700,216 182,435 6.58 %
Other interest earning assets   72,819   1,195 2.19 %   83,096   1,111 1.79 %
Total interest earning assets 5,457,975 206,170 5.04 % 5,465,090 204,483 5.00 %
Noninterest earning assets   413,214   443,551
Total assets $ 5,871,189 $ 5,908,641
Liabilities and shareholders' equity
Interest bearing deposits:
Savings and interest bearing transaction accounts $ 2,013,620 3,986 0.26 % $ 1,737,869 3,813 0.29 %
Time certificates of deposit   1,465,146   12,182 1.11 %   1,883,362   15,832 1.12 %
Total interest bearing deposits 3,478,766 16,168 0.62 % 3,621,231 19,645 0.72 %
Borrowed funds:
Securities sold under agreements to repurchase 314,810 7,399 3.14 % 319,959 7,088 2.96 %
Other borrowings   70,459   2,521 4.78 %   113,229   7,427 8.77 %
Total borrowed funds   385,269   9,920 3.44 %   433,188   14,515 4.48 %
Total interest bearing liabilities 3,864,035 26,088 0.90 % 4,054,419 34,160 1.12 %
Noninterest bearing demand deposits 1,114,985 1,075,914
Other noninterest bearing liabilities 81,634 88,215
Shareholders' equity   810,535   690,093
Total liabilities and shareholders' equity $ 5,871,189   $ 5,908,641  
Net interest spread   4.14 %   3.88 %
Net interest income/margin $ 180,082 4.41 % $ 170,323 4.17 %
 
 
(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 Nine Months Ended
September 30, September 30,
(dollars and shares in thousands, except per share amounts) 2012 2011 2012 2011
(unaudited)
Financial Ratios, Consolidated:
Return on average equity 15.71 % 11.14 % 12.19 % 11.28 %
Return on average assets 2.22 % 1.39 % 1.68 % 1.32 %
 
Financial Ratios, SBB&T:
Return on average equity 16.41 % 11.76 % 13.04 % 12.17 %
Return on average assets 2.27 % 1.42 % 1.76 % 1.38 %
 
September 30, December 31,
2012 2011
Capital Ratios
Capital Ratios, Consolidated:
Tier 1 leverage ratio 13.6 % 12.4 %
Tier 1 risk-based capital ratio 22.9 % 19.6 %
Total risk-based capital ratio 23.5 % 20.2 %
 
Capital Ratios, SBB&T:
Tier 1 leverage ratio 12.5 % 11.2 %
Tier 1 risk-based capital ratio 21.0 % 17.7 %
Total risk-based capital ratio 21.6 % 18.3 %
 
Book value per share of common stock:
Shares of common stock outstanding 32,922 32,905
Book value per share of common stock $ 26.00 $ 23.16
 
 

           
 

Pacific Capital Bancorp
Key Financial Information
Loan Aging Table – Based on Individual Loan Basis
 
September 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) $ 1,143,741 $ 85 $ $ 988 $ 1,144,814
PCI Revolving Pools 378,428 6,747 15,479 400,654
PCI Term Pools   2,137,937   19,046   41,447     2,198,430
Total loans held for investment $ 3,660,106 $ 25,878 $ 41,447 $ 16,467 $ 3,743,898
 
 
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 Fund that occurred on August 31, 2010.
 

Copyright Business Wire 2010

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX