PACIFIC CAPITAL BANCORP /CA/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 30, 2012

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Exhibit 99.1

Pacific Capital Bancorp Reports Strong Fourth Quarter 2011 Results

SANTA BARBARA, Calif.--(BUSINESS WIRE)--January 30, 2012--Pacific Capital Bancorp (Nasdaq:PCBC), a community bank holding company and parent of Santa Barbara Bank & Trust, reported net income of $12.3 million, or $0.37 per diluted share, for the three months ended December 31, 2011, compared with $20.5 million, or $0.62 per diluted share, for the three months ended September 30, 2011. Fourth quarter earnings results were impacted by a one-time, non-cash charge of $4.7 million related to the early redemption of $35.0 million in subordinated debt and a $3.9 million increase in the estimated earnout liability associated with final payments for the purchase of the Company’s two registered investment advisor subsidiaries.

This brings total net income to $96.3 million, or $2.99 per diluted share, since the closing of the $500 million investment from a wholly-owned subsidiary of Ford Financial Fund, L.P. on August 31, 2010. Net income for the year ended December 31, 2011, was $70.5 million, or $2.14 per diluted share.

Fourth Quarter Highlights

  • Completed the early redemption of $35.0 million of outstanding subordinated debentures, resulting in a $4.7 million fourth quarter charge to noninterest expense, which eliminated an obligation that no longer fully qualified as Tier 2 capital value and will reduce interest expense by approximately $1.1 million in 2012. Including the redemption of subordinated debt, the Company has eliminated over $1.2 billion in wholesale funding since the recapitalization transaction;
  • Ended the deferral of interest payments on Trust Preferred Securities and brought the obligations current;
  • Delivered the fifth consecutive quarter of profitability following the successful recapitalization on August 31, 2010;
  • Increased regulatory capital ratios to 12.4% and 20.2% for Tier 1 Leverage and Total Risk-Based Capital, respectively; and,
  • Continued to execute the strategic plan to focus on core deposit growth, loan origination to commercial and private clients, and technology and operational infrastructure enhancements.

“We are very pleased with our achievements in the fourth quarter,” said Carl B. Webb, Chief Executive Officer of Pacific Capital Bancorp. “Our success in returning this outstanding community bank to profitability allowed us to move forward with the early redemption of our subordinated debt and end the deferral of interest payments on our trust preferred securities, both important milestones in our many months of progress.

“PCB has now reported five consecutive quarters of strong profitability, and we are among the most well capitalized financial institutions in the country,” said Webb. “Today, we are operating from a position of strength and stability, which allows us to focus on lending to customers throughout our markets and building the relationships that will continue to grow our core deposit base.”

Net interest income was $57.0 million, or 4.16% of average interest earning assets for the fourth quarter of 2011, compared with $55.8 million, or 4.08%, for the previous quarter. The increase is primarily the result of continued favorable performance from the Company’s purchased credit impaired loan pools and an overall decline in the cost of deposits. Lower interest expense in the fourth quarter was also effected by the maturity and redemption of debt, the continued benefit from the maturity of higher rate broker deposits, and the low interest rate environment.

Total noninterest income was $12.4 million in the fourth quarter of 2011, compared with $13.0 million in the third quarter of 2011. The decline is primarily the result of lower recorded gains on sales of assets.

Noninterest expense increased to $56.0 million for the fourth quarter of 2011, compared with $48.1 million in the prior quarter. The increase was primarily the result of a fourth quarter non-cash charge of $4.7 million related to Santa Barbara Bank & Trust, N.A.’s (“SBB&T”) redemption of $35.0 million in subordinated debt and a $3.9 million increase in the estimated earnout liability related to the Company’s registered investment advisor subsidiaries. The Company expects noninterest expense to continue to increase during 2012, as it continues to invest in technology and personnel.

Pacific Capital Bancorp and its wholly-owned banking subsidiary, 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. Regulatory capital ratios for SBB&T and the Company were 11.2% and 18.3%, and 12.4% and 20.2% at December 31, 2011, for Tier 1 leverage capital and total risk-based capital ratios, respectively.

Annual Report on Form 10-K

The Company intends to file with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended December 31, 2011, on or before March 15, 2012. This report can be accessed at the Securities and Exchange Commission’s website, www.sec.gov. Shortly after filing, it is also available free of charge at the Company’s website, www.pcbancorp.com or by contacting the Company’s Investor Relations Department.

About Pacific Capital Bancorp

Pacific Capital Bancorp, with $5.9 billion in assets, is the parent company of Santa Barbara Bank & Trust, N.A., a nationally chartered bank headquartered in Santa Barbara which operates 47 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; SBB&T’s website, including products and services information and branch locations, can be found at www.sbbt.com.

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, 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, 2010, filed by the Company with the Securities and Exchange Commission on March 25, 2011.

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 (unaudited)
(dollars and shares in thousands, except per share amounts)
       
December 31, 2011 September 30, 2011
ASSETS
Cash and due from banks $ 49,324 $ 41,907
Interest bearing demand deposits in other financial institutions   173,408     263,739  
Cash and cash equivalents 222,732 305,646
Investment securities available for sale 1,503,425 1,447,246
Loans held for sale 3,072 3,727
Loans held for investment 3,660,961 3,620,463
Allowance for loan and lease losses   (5,528 )   (4,288 )
Net loans held for investment 3,655,433 3,616,175
Premises and equipment, net 75,749 74,589
FHLB stock and other investments 76,356 79,009
Goodwill and other intangible assets 89,255 91,403
Other assets   224,000     225,300  
TOTAL ASSETS $ 5,850,022   $ 5,843,095  
LIABILITIES
Deposits
Noninterest bearing $ 1,175,532 $ 1,122,350
Interest bearing   3,441,508     3,469,034  
Total deposits 4,617,040 4,591,384
Securities sold under agreements to repurchase 315,919 316,741
Other borrowings 66,524 100,117
Other liabilities   88,569     89,874  
TOTAL LIABILITIES 5,088,052 5,098,116
 
SHAREHOLDERS' EQUITY

Common stock ($0.001 par value; 50,000 authorized; 32,905 and 32,905 shares
issued and outstanding at December 30, 2011, and September 30, 2011, respectively)

33 33
Paid in capital 651,066 650,582
Retained earnings 96,266 83,951
Accumulated other comprehensive income   14,605     10,413  
TOTAL SHAREHOLDERS' EQUITY   761,970     744,979  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,850,022   $ 5,843,095  
 

Pacific Capital Bancorp

Consolidated Statements of Operations (unaudited)
(dollars and shares in thousands, except per share amounts)
 
    Three Months   Three Months
Ended Ended
December 31, September 30,
  2011     2011  
Interest income
Loans $ 58,618 $ 58,271
Investment securities 7,649 7,229
Other   544     548  
TOTAL INTEREST INCOME 66,811 66,048
Interest expense
Deposits 5,665 6,149
Securities sold under agreements to repurchase 2,497 2,502
Other borrowings   1,628     1,549  
TOTAL INTEREST EXPENSE   9,790     10,200  
NET INTEREST INCOME 57,021 55,848
Provision for loan losses   1,302     787  
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 55,719 55,061
Noninterest income
Service charges and fees 6,074 5,879
Trust and investment advisory fees 5,094 5,266
Loss on securities, net — (35 )
Other   1,276     1,883  
TOTAL NONINTEREST INCOME 12,444 12,993
Noninterest expense
Salaries and employee benefits 25,182 25,867
Net occupancy expense 5,615 6,042
Other   25,216     16,187  
TOTAL NONINTEREST EXPENSE   56,013     48,096  
INCOME BEFORE INCOME TAX BENEFIT 12,150 19,958
Income tax benefit   (165 )   (515 )
NET INCOME $ 12,315   $ 20,473  
 
Earnings per share:
Basic $ 0.37 $ 0.62
Diluted $ 0.37 $ 0.62
Weighted average number of common shares outstanding:
Basic 32,905 32,905
Diluted 32,918 32,958
 

Pacific Capital Bancorp

Consolidated Average Balances and Annualized Yields (unaudited)
 
        For the Three Months Ended   For the Three Months Ended
December 31, 2011 September 30, 2011
Average

Balance

 

Income /
Expense (3)

 

Yield /
Rate (3)

Average

Balance

 

Income /
Expense (3)

 

Yield /
Rate (3)

(dollars in thousands)
Assets

Interest bearing demand deposits in other
financial institutions

$ 250,836 $ 171 0.27 % $ 315,811 $ 182 0.23 %
Securities:
Investment securities available for sale:
Taxable 1,257,223 5,494 1.73 % 1,176,991 5,080 1.71 %
Non taxable   206,683   2,155 4.17 %   203,248   2,149 4.23 %
Total securities 1,463,906 7,649 2.07 % 1,380,239 7,229 2.08 %
Loans: (1)
Commercial 204,394 5,671 11.01 % 228,770 4,803 8.33 %
Real estate - commercial (2) 2,142,913 35,251 6.58 % 2,181,785 37,475 6.87 %
Real estate - residential 1 to 4 family 1,238,788 16,272 5.25 % 1,176,892 14,606 4.96 %
Consumer loans   54,392   1,424 10.39 %   60,694   1,387 9.07 %
Total loans, gross 3,640,487 58,618 6.43 % 3,648,141 58,271 6.38 %
Other interest earning assets   77,620   373 1.91 %   80,306   366 1.81 %
Total interest earning assets 5,432,849 66,811 4.91 % 5,424,497 66,048 4.86 %
Noninterest earning assets   427,083   429,771
Total assets $ 5,859,932 $ 5,854,268
 
Liabilities and shareholders' equity
Interest bearing deposits:
Savings and interest bearing transaction
accounts $ 1,825,319 1,246 0.27 % $ 1,763,765 1,297 0.29 %
Time certificates of deposit   1,602,400   4,419 1.09 %   1,758,278   4,852 1.09 %
Total interest bearing deposits 3,427,719 5,665 0.65 % 3,522,043 6,149 0.69 %
Borrowed funds:
Securities sold under agreements to repurchase 316,501 2,497 3.13 % 317,501 2,502 3.13 %
Other borrowings   95,811   1,628 6.74 %   103,482   1,549 5.94 %
Total borrowed funds   412,312   4,125 3.97 %   420,983   4,051 3.82 %
Total interest bearing liabilities 3,840,031 9,790 1.01 % 3,943,026 10,200 1.02 %
Noninterest bearing demand deposits 1,176,288 1,097,874
Other noninterest bearing liabilities 85,341 84,127
Shareholders' equity   758,272   729,241
Total liabilities and shareholders' equity $ 5,859,932 $ 5,854,268
   
Net interest spread 3.90 % 3.84 %
       
Net interest income/margin $ 57,021 4.16 % $ 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

Key Financial Ratios (unaudited)
 
Three Months Three Months
Ended Ended
December 31, September 30,
(in thousands, except per share amounts)   2011     2011  
 
Financial Ratios, Consolidated:
Return on average equity 6.44 % 11.14 %
Return on average assets 0.83 % 1.39 %
 
Financial Ratios, SBB&T:
Return on average equity 6.72 % 11.76 %
Return on average assets 0.85 % 1.42 %
 
December 31, September 30,
  2011     2011  
 
Capital Ratios, Consolidated:
Tier 1 leverage ratio 12.4 % 12.1 %
Tier 1 risk-based capital ratio 19.6 % 19.1 %
Total risk-based capital ratio 20.2 % 20.0 %
 
Capital Ratios, SBB&T:
Tier 1 leverage ratio 11.2 % 10.9 %
Tier 1 risk-based capital ratio 17.7 % 17.2 %
Total risk-based capital ratio 18.3 % 18.1 %
 
Book value per share of common stock:
Shares of common stock outstanding 32,905 32,905
Book value per share of common stock $ 23.16 $ 22.64
Tangible book value per share of common stock $ 20.44 $ 19.86
 

Pacific Capital Bancorp

Key Financial Information (unaudited)
(dollars in thousands)
                 
Loan Aging Table – Based on Individual Loan Basis
 
December 31, 2011
Current

30-89 Days Past
Due

90+ Days
Past Due -
Still
Accruing

Nonaccrual Total
Loans originated and purchased after Transaction Date $ 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 $ 3,445,899 $ 72,697 $ 124,933 $ 17,432 $ 3,660,961
 
September 30, 2011
Current

30-89 Days Past
Due

 

90+ Days
Past Due -
Still
Accruing

  Nonaccrual Total
Loans originated and purchased after Transaction Date $ 380,361 $ 850 $ — $ — $ 381,211
 
PCI Revolving Pools 462,172 11,263 — 26,752 500,187
 
PCI Term Pools 2,543,360 42,121 153,584 — 2,739,065
         
Total Loans $ 3,385,893 $ 54,234 $ 153,584 $ 26,752 $ 3,620,463
 

CONTACT:
Pacific Capital Bancorp
Debbie Whiteley, Public Affairs Director
805.884.6680
debbie.whiteley@sbbt.com
or
Mark Olson, Chief Financial Officer
805.884.8635
mark.olson@sbbt.com

PACIFIC CAPITAL BANCORP /CA/ Reports