Pacific Capital Bancorp (PCBC)

[Enterprising Investor]

PCBC Reports Strong Fourth Quarter 2011 Results (1/30/12)

SANTA BARBARA, Calif.--(BUSINESS WIRE)--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.

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