Magazine article American Banker

Calif. Bank Weighs Options after It Loses $360M in 2Q

Magazine article American Banker

Calif. Bank Weighs Options after It Loses $360M in 2Q

Article excerpt

Byline: Marissa Fajt

After posting its fifth consecutive quarterly loss and falling out of compliance with a regulatory order, Pacific Capital Bancorp said Thursday that it is weighing "strategic alternatives" - which usually means a company is on the sales block.

In an interview, George Leis, the Santa Barbara, Calif., company's president and chief executive, would not say what alternatives it is considering. However, he noted that Pacific had hired Sandler O'Neill & Partners LP, an investment bank whose services include advice on mergers and acquisitions. "We are looking at all strategic initiatives," he said, "and that is why we brought in a company like Sandler O'Neill to help us."

The $7.3 billion-asset company said its net loss ballooned to $360 million in the second quarter, from $5.9 million a year earlier. The second-quarter loss was largely due to a $194 million loan-loss provision and a $129 million goodwill charge.

Despite being well capitalized by normal standards, the company's banking subsidiary did not meet capital ratio targets set by the Office of the Comptroller of Currency.

On April 16, Pacific signed a memorandum of understanding with the OCC, requiring it to have a Tier 1 leverage ratio of 8.5% and a total risk-based capital ratio of 11% by June 30.

At the end of June, its Tier 1 leverage ratio was 5.6% and total risk-based ratio, 11.1%.

Leis said in a press release that his board had sent the OCC a plan for strengthening the bank's capital position. …

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