Pacific Capital loses $20 million, may close branches

By RAY ESTRADA

Santa Barbara Bank & Trust’s parent company, Pacific Capital Bancorp, said it was considering sale of some of its branches today as it reported a narrower fourth-quarter loss – $20 million – which was aided by lower expenses prompted by job and expense cuts.

The Santa Barbara-based company’s loss for the quarter was 43 cents a share, compared with a loss of $42.9 million, or 92 cents a share, for the same period in 2008. The company has lost some $400 million in the past year, mostly because of sour real estate loans.

“Although the economic environment remains challenging, we are seeing continuing stability in our core operations driven by our emphasis on increasing our capital and liquidity positions,” said George Leis, Pacific Capital president and chief executive officer, in a written statement. “While previously identified problem loans continue to drive elevated levels of net charge-offs, we are encouraged that the inflow of new delinquent loans slowed considerably during the fourth quarter.”

The company’s tier 1 leverage ratio – which measures a bank’s ability to cover losses – and total risk-based capital ratio were not sufficient to meet the higher levels that the bank has agreed to maintain with regulators.

The company said it was looking to cut assets through loan sales, as part of its review of strategic alternatives. Pacific Capital said it would slash more costs to eliminate $25 million in annual operating expenses in 2010 and another $25 million in 2011.

"We are suspending matching contribution in the 401K program, effective Mar. 1, 2010," Leis said in a conference call with analysts.

Pacific Capital delayed its quarterly report – which was scheduled for Thursday – until Monday because it said it needed more time to deal with planned cuts in retiree benefits. The company has laid off some 315 employees in the past year.

“The call was moved out by two days to give the internal and external accountants more time to work through the accounting treatment of the changes, which is very complicated,” said company spokeswoman Debbie Whiteley. "In December, the compensation committee of the board of directors approved the discontinuance of the company's contribution toward the health-insurance premiums of retirees eligible for Medicare, the reduction of contributions for retirees not yet eligible for Medicare, and the elimination of the benefit for future retirees, all beginning March 1, 2010.”

Whiteley said the accounting treatment of these changes resulted in a $4.5 million reduction in “salaries and benefits expense” in the fourth quarter of 2009.  “It also added $11.5 million to ‘other comprehensive income,’ which will be amortized into net income over the next five years,” she said. “And finally, it provided a $9.3 million tax benefit in the fourth quarter of 2009.”

Consolidated interest expense for the quarter fell about 30 percent to $33.5 million. The company recorded $37.6 million in provision for loan losses in the core bank business for the quarter.

Company officials were mum about how many or which bank branches might be closed.

“(Pacific Capital) is continuing its efforts to reduce assets through a variety of actions, including the possible sale of certain branches,” Whiteley said. “We will not, however, be discussing any details of this strategy, including which branches might be under consideration, until we have something definitive to announce.”

Pacific Capital is the holding company for Pacific Capital Bank, N.A., the largest independent banking company headquartered on the Central Coast of California. With some $7 billion in assets, the company operates under other brand names such as First National Bank of Central California, South Valley National Bank, San Benito Bank, and First Bank of San Luis Obispo.

About six months ago, the bank holding company said it is looking into potential partners and new investors, but has reported no takers since then.

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ONE NEW STORY IN DAYS : 2/1/2010

HOW MANY DAYS DO WE HAVE TO WAIT FOR A NEW EDITION OF THE DAILY SOUND? SAME OLD STORIES RECYCLED. YOU GUYS NEED HELP OVER THERE OR JUST LOST INTEREST?

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