Montecito Bank & Trust reported Tuesday that it continues to be exceptionally well capitalized with a total risk-based capital ratio at year’s end of 12.57 percent, well above the 10 percent regulatory minimum needed to be considered well-capitalized.

During the year, net interest income grew by more than 12 percent, and income before taxes and provisions for loan losses grew by 38 percent, according to Janet Garufis, president and chief executive officer of Montecito Bank & Trust. Excluding securities gains, income growth for 2010 was up 48 percent over 2009.

Equally important, the bank’s deposits grew 2 percent through ongoing business development efforts, including impressive growth in demand deposits of 18 percent over the last 12 months.

“The bank’s strong core earnings positioned us well to proactively address problems in our loan portfolio and to reduce debt by $30 million, a decrease of over 50 percent,” Garufis said.

Total capital at year-end was $92.7 million, reflecting a 1.4 percent increase from the prior year. Year over year, total assets were $940.5 million, down 2 percent from $955 million, and total deposits were $812.9 million, up 2 percent from $798.8 million. Total gross loans were $523.3 million, down 7 percent, a reflection of continued sluggish loan demand.

Net income for the year was $3.1 million. The bank’s overall performance allowed it to continue its tradition of giving by hosting its eighth annual Community Dividends® event, gifting $1 million to an expanded list of more than 150 nonprofits throughout the communities it serves.

“We are one of the few banks in this area which neither asked for or needed TARP funding,” Garufis said. “While the aggressive management of the loan portfolio and our disciplined focus on deleveraging the bank’s balance sheet had a near-term impact on net earnings year over year, the bank continues to remain profitable, extremely well-capitalized and uniquely poised to serve the financial needs of the community.”

Montecito Bank & Trust has branch offices in Santa Barbara, Goleta, Solvang, Montecito, Carpinteria, Ventura and Westlake Village.

— Carolyn Tulloh is director of marketing for Montecito Bank & Trust.