Pacific Capital Bancorp, a community bank holding company and parent of Santa Barbara Bank & Trust, N.A., reported net income of $21 million, or 64 cents per diluted share, for the three months ended June 30, compared with $16.8 million, or 51 cents per diluted share, for the three months ended March 31.

CEO Carl Webb

CEO Carl Webb

This brings total net income to $63.5 million, or $2 per diluted share, since the closing of the $500 million investment from a wholly owned subsidiary of Ford Financial Fund LP on Aug. 31, 2010.

Second Quarter Highlights

» Achieved a return on average assets of 1.43 percent and a return on equity of 12.27 percent for the second quarter of 2011, compared with 1.14 percent and 10.39 percent, respectively, for the first quarter of 2011.

» Improved net interest margins to 4.42 percent for the second quarter of 2011, compared with 3.99 percent for the first quarter of 2011.

» Grew regulatory capital ratios to 11.6 percent and 18.3 percent for Tier 1 Leverage and Total Risk‐Based Capital ratios, respectively.

» Completed initiative to consolidate all operations under the single brand name of Santa Barbara Bank & Trust; changed banking subsidiary name to Santa Barbara Bank & Trust, N.A. (from Pacific Capital Bank, N.A.)

“Pacific Capital Bancorp has delivered its third consecutive quarter of strong performance since our successful recapitalization last August,” CEO Carl Webb said. “We are very pleased with the progress we have made towards achieving our strategic goals in just 10 months. Our capital levels, which have continued to grow even stronger each quarter, significantly exceed the regulatory levels to be considered well capitalized. This has allowed us to undertake the important investments in the bank’s infrastructure that will ensure a quality banking experience for our customers, provide scalability for future growth and allow us to operate at a lower overall cost in the future.

“During the quarter, we completed the consolidation of our bank names into a single brand. Today, we are operating throughout our footprint and in all respects as one unified bank, guided by the basic banking principles that have long defined quality community banking. We are fully back in the business of banking in all areas, delivering a wide range of competitive lending, depository and wealth management products and services to businesses and individuals in communities throughout the Central Coast of California.”

Net interest income grew to $60.2 million, or 4.42 percent of average interest earning assets for the second quarter of 2011, compared with $54.3 million, or 3.99 percent, for the previous quarter. The improvement in net interest income is primarily the result of an increase in loan interest income due to higher loan accretion related to better than expected cash flows from the legacy loan portfolio; an increase in the average amount of investment securities held as the company continues to put to work its excess liquidity; and lower interest cost of deposits.

Provision for loan losses slightly increased to $1.8 million for the second quarter of 2011, compared with $1.7 million for the previous quarter, due primarily to new loan growth. The company expects that loan originations and purchases will continue to increase as its lending activities continue to be reintroduced throughout its footprint.

Total noninterest income was $12.5 million in the second quarter of 2011, compared with $12.9 million in the first quarter of 2011. The decline in noninterest income is primarily the result of the loss on sale of investment securities and lower gains on the sale of loans as the Company discontinued selling nonconforming residential real estate products into the secondary markets.

Noninterest expense increased to $50.2 million for the second quarter of 2011, compared with $48.3 million in the prior quarter. The increase was primarily the result of higher marketing costs associated with the company’s brand consolidation initiative and higher software expenses. The company expects noninterest expense to continue to increase during the rest of 2011 as it makes significant investments in technology and personnel in order to expand and improve its operations.

Pacific Capital Bancorp and its wholly‐owned banking subsidiary, Santa Barbara Bank & Trust, N.A., 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. Tier 1 leverage capital ratios were 10.4 percent and 11.6 percent, and total risk‐based capital ratios were 16.5 percent and 18.3 percent at June 30, for the bank and company, respectively.

— Debbie Whiteley is the public affairs director for Pacific Capital Bancorp.