Pacific Capital Bancorp Reports Operating Results (10-Q)
Pacific Capital Bancorp has a market cap of $103.9 million; its shares were traded at around $2.2 with and P/S ratio of 0.2. PCBC is in the portfolios of Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations: Net loss for the first quarter of 2010 was $83.0 million or ($1.77) applicable per share to common shareholders, compared with net loss of $7.9 million, or ($0.17) applicable per share to common stockholders, reported for the first quarter of 2009. Net loss from continuing operations was $87.4 million in the first quarter of 2010 compared with a net loss of $37.6 million in the first quarter of 2009. For both years, the differences between the net loss applicable to common shareholders and the net loss from continuing operations is the operating results from the discontinued operations and the accrual of dividends for the preferred stock issued to the Treasury pursuant to the Troubled Asset Relief Program Capital Purchase Program and the accretion of cost of the warrants issued with the preferred stock.
On April 29, 2010, the Company and the Bank entered into the Investment Agreement with Ford, pursuant to which Ford will invest, subject to certain conditions, an aggregate of $500 million in cash in the Company through direct purchases of newly issued shares of common stock at a purchase price of $0.20 per share, and newly created shares of Convertible Preferred Stock at a purchase price of $1,000 per share. Pursuant to the terms of the Investment Agreement, at the Closing, the Company will issue: 225,000,000 shares of common stock and 455,000 shares of Convertible Preferred Stock. Each share of Convertible Preferred Stock will mandatorily convert into 5,000 shares of common stock (subject to customary anti-dilution adjustments) following shareholder approval, after the Closing, of an amendment to the Companys Articles of Incorporation to increase the number of authorized shares of common stock to permit the full issuance of all of the common stock in connection with that conversion.
The Closing is subject to a variety of closing conditions, including, among others, the receipt of certain required governmental and regulatory approvals and the Companys receipt of approval from the NASDAQ Stock Market to issue the Securities in reliance on the shareholder approval exemption set forth in NASDAQ Rule 5635(f). The Closing is also conditioned on completion by the Company and the Bank of the Recapitalization, which will involve: (i) the Companys $67,330,000 aggregate principal amount of Trust Preferred Securities; (ii) the Banks $121,000,000 aggregate principal amount of Bank Sub Debt; and (iii) the Series B Preferred Stock and related warrant to purchase shares of common stock, both issued to the Treasury. For this condition to be satisfied, (i) all Series B Preferred Stock and the related warrant must be exchanged for common equity in an amount equal to twenty percent (20%) of the aggregate face value of the Series B Preferred Stock and the amount of accrued but unpaid dividends on the Series B Preferred Stock, with common stock valued at $0.20 per share for this purpose, and (ii) an amount not less than seventy percent (70%) of the combined aggregate principal amount of all series of the Trust Preferred Securities and all series of the Bank Sub Debt must be exchanged for cash in an amount equal to twenty percent (20%) of the face value of the Trust Preferred Securities and thirty percent (30%) of the face value of the Bank Sub Debt, respectively.
Interest income on loans declined primarily due to the $666 million decrease in the average loan balance. The primary cause of this decrease in loan balances was due to loan sales as discussed in Note 5, Loan Sales and Transactions of the Consolidated Financial Statements of this Form 10-Q. An additional reason for the decrease in interest from loans is the growth in nonperforming assets which were $467.3 million at March 31, 2010 compared to $271.1 million at March 31, 2009. The Company is not accruing interest on these loans.
Interest income from securities decreased as a result of selling a majority of the trading securities during the third quarter of 2009 and from sales of securities from the AFS portfolio during the last two quarters. During the first quarter of 2010, $35.1 million of MBS securities and $9.1 million of other types of securities from the AFS securities portfolio were sold and $138.9 million of U.S. Agency AFS securities were called, reducing the balance of AFS securities held. A $4.5 million gain on sale of securities sold during the first quarter of 2010 was realized. At the same time, the interest rate for some of the adjustable rate securities has adjusted lower due to the decrease in long term interest rates.
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