Pacific Capital CEO Says It’s ‘Business As Usual’

With a federal deadline looming, parent company of Santa Barbara Bank & Trust fights off a week of bad news and speculation

By William M. Macfadyen, Noozhawk Publisher | Published on 06.26.2009

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Officials with Pacific Capital Bancorp (Nasdaq: PCBC), the publicly traded parent company of Santa Barbara Bank & Trust, dismissed speculation that the bank would be unable to meet Tuesday’s federal deadline to increase its capital position.

“Our bank is well-capitalized and has ample liquidity,” George Leis, the bank’s president and CEO told the Pacific Coast Business Times on Friday. “We’re the same bank that’s been around since 1960. We’re the same bank that’s been so involved in the community.

“(Federal regulators) may ask us to do additional things internally, but those additional internal things will have no effect on the day-to-day needs of our customers,” he told the newspaper, adding that it will be “business as usual” July 1.

It’s been a rough week for the bank. On Monday, officials announced the suspension of dividend payments. The next day, the bank’s stock price plummeted and DBRS Inc. and Moody’s Investors Service downgraded the bank’s credit ratings to junk grade.

Pacific Capital Bancorp received more than $180 million from the Treasury Department’s Troubled Asset Relief Program in November, and the company announced in April that its loss for the first quarter of 2009 was nearly $8 million. Its net income in the same period last year was $72.5 million.

Deferring interest payments on the $69.4 million of outstanding TARP debt will allow the company to save $8 million per quarter and boost capital ratios, officials said Tuesday. The bank also has suspended payments of cash dividends on outstanding common and preferred stock.

Pacific Capital Bancorp shares closed at $2.26 Friday, down 0.02 from Thursday. Its shares have slumped 84 percent this year, the steepest decline in the 486-member Nasdaq Bank Index.

— Noozhawk publisher Bill Macfadyen can be reached at .(JavaScript must be enabled to view this email address).

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» Ed Taylor on 06.26.09 @ 08:38 PM

Questioned i like to see asked… and answered:

1. Is CEO compensation following TARP rules?
2. What percentage pay cuts are top management taking for such dismal performance?
3. What percentage of compensation and retirement packages for SBB&T;‘s employee’s is SBB&T;,( Pacific Capital ) stock? And if stock is part of the package what are the restriction on its sale ? Further, if SBB&T;stock is part of a package how does SBB&T;hope to retain talent?
4. Is the Board willing to forgo stipends given it’s performance?
5. What assets are up foe sale?
6. Why has such a stellar institution taken such a dive in the last 3 years?
7. What are the plans for recovery?
8. Why would this be a company to invest in?
9. Who is trolling for this bank? In other words, what vultures a circling the carcass?
10. What are the litigation costs for such pitiful performance?
11.Is there a search on for new top management?
12. Are the stock & bond holders and the government asking for a new board and management?
13. Is this company going under?
Etc.etc. etc
My humble opinion, this company will not exist this time next year, Too bad, I’ve happily banked at SBB&T;for many years.

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» Bottom Line on 06.27.09 @ 03:26 AM

Ed, all good questions and comments. The bottom line is that Pacific Capital has to make an 8.5% tier 1 capital ratio test by June 30. Look at the financials for the answer. They made some poor commerical lending decisions and it represents a significant percentage of their balance sheet. They have been taking significant steps to make the ratio test as outlined in the article but we will know soon. If the FDIC should take them over, usually there is already an acquirer lined up and this typically happens on Friday afternoons. Just yesterday, 5 banks were siezed by the FDIC. Obviously, anyone’s money is safe up to $250K per account so there is no reason to do anything except wait and see.

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» pamela geremia on 06.27.09 @ 04:13 AM

As a retired employee…I am so saddened to hear this news…this was the best run company I have ever worked for…the top brass were so well connected to the real “community” and to the real business world….in the past 10 years I have been upset at how thie conservative bank has gone down hill….Anderson, Spainhour, etc….ran a solid, efficient, profitable, company…too bad this had to happen to an icon in the banking business.

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» SBNative on 06.27.09 @ 07:06 AM

Thank you Mr. Taylor for seeking to find answers to perfectly stated questions.  Having family own stock in SBBT,and having watched the value spiral to the bottom, I would also like to see a public review/report of Board Members’ purchase and sell records/history. How did some, by coincidence, buy just before the splits and know to sell (dump) just before the dive?  Check out those numbers,and Mr. Leis’banking experience pre SBBT.

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» Long time customer on 06.27.09 @ 01:08 PM

So they have $69.4 million in TARP debt and they have to pay $8 million a quarter in interest? That’s a 46% interest rate. Something’s wrong wih the numbers.

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» very sad on 06.27.09 @ 03:33 PM

SBBT was a great local bank for a long time.  A real friend of the community.

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» Unhappy long time shareholder on 06.28.09 @ 07:00 PM

I pray the bank will pull this out, Mr Taylor I would like to see answers to all of your questions. I hope you are wrong about your prediction for next year. Can they to “ride it out”?  Sadly it is a major part of my retirement.  That goes for a number of other former employees as well.  Will top management take some major cuts in pay so they don’t go completely under.  Can the board do so as well?

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» Customer/ Finance Professional on 06.29.09 @ 05:14 AM

These are tough times, and many companies have been hit hard by the economy. I feel it is time to give back to one of the banks that has supported this community for over 49 yrs. Rather than bad mouthing, and bad press, (NEWS PRESS) lets get behind this bank and help prop it up! Educate yourself about your FDIC insurance. I recommend visiting the link below for additional information.
http://www.fdic.gov/consumers/banking/index.html.

Pulling deposits is not going to help. Be smart.

Visit with your banker and discuss your options. The staff at SBBT have always been helpful. That has not changed.

$$$

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» Former EE on 07.01.09 @ 08:51 AM

to Long time customer
The Bank’s TARP was 180million, and 69.4million is outstanding.  The interest of $8million was deferred.  That’s why it seemed to you that the#‘s weren’t working out.
Hope that clears it up.
thx.

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» RSP on 07.03.09 @ 02:05 PM

I worked there for 2 years; it was like working for a textile factory in Malaysia. The moral there is bad and it has the good ole boys network going on there(like 85 year olds getting paid 200k a year to play golf). I am not surprised to see them possibly fail. I sure hope the people with more than 250k on deposit take it out before they loose their life savings. Good reddens SBB&T;!!

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