Pacific Capital Bancorp (PCBC) is about to face the music.  In the next several days, significant events may occur that shape the future of PCBC as a going concern.

Shareholders will vote on two questions at the bank’s meeting tomorrow.  First, they will have the chance to weigh in on these questions:

• raise the number of authorized shares from 100 million to 500 million.
• effect a stock split of at least three-to-one and as much as ten-to-one, with a reduction in shares by a complementary proportion

The reverse stock split might be nothing more than window dressing.  Some hold that a share price below $10 (more…)

It leaves open the possibility that the huge jump in insider lending at Pacific Capital might reflect a new extension of credit to just one executive.

Then again, that is not for certain and knowing more could be difficult to ascertain. Under 215.9 of Regulation O, executives are required to report loans that they receive from a bank to the board of directors.  However, the disclosure requirements end there.

Schedule RC-M, distributed by the Federal Financial Institutions Examination Council, does reveal some details.  It finds that the sum of extensions of credit to insiders (executive officers, directors, principal shareholders and related interests) jumped in the last three months of 2007.  On 9-30-07, PCBC reported approximately $7.7 million in such loans.  By the end of 2007, that sum had increased to $37.5 million.

RC-M does indicate the number of officers that have taken out loans of more than $500,000 with the bank.  That (more…)

Part of the beauty of blogging is its ability to generate constructive feedback. Some feedback yesterday led me to research the trail of insider lending at Pacific Capital.  I’m glad I did, because there’s more smoke out there and it points to CEO George Leis.

When I wrote yesterday about the incidence of high levels of credit extensions to insiders at Pacific Capital, it provoked some good responses.  One of those responses was this:

“Have you researched ‘when’ these loans were made? I would venture to guess over a long period of time, and not in the last few quarters.”

This is a very good question.  It takes the facts that I observed yesterday (lots of lending at a bank to its insiders), but by giving those decisions a time frame, it gives a better picture of the appropriateness of that decision-making.

Just for sake of definitions, insiders are considered to be “executive officers, directors, and prinicipal (more…)

Pacific Capital Bank, (PCBC) in spite of huge losses and a declining base of regulatory capital, continues to extend loads of credit to one favored group – its own executives.

In the most recent filing with the FFIEC (June 30th, 2009) PCBC reported that it had extended $39.03 million in loans to its executives.  That is roughly 8.2 percent of  tier one capital ($476.3 million).

Now, it is worth mentioning that these kinds of loans are legal.  I could not find a bank that didn’t have such loans on its books.  My point here is to say that this is probably not appropriate at this scale for PCBC, nor is it wise at a time when the bank is struggling to maintain its equity ratios.

Too friendly for their own good

Is $39 million a lot?  Well, by comparison to other banks, it is absolutely stratospheric.  It exceeds the rates at just about all of the banks that I (more…)

Twenty minutes ago, the FDIC announced its plans to take over the assets of Alabama’s Colonial Bank.  The FDIC will arrange a sale of those assets to BB&T.

Right away, people are asking if there are more “Colonials” out there.  I would suggest that a mid-sized community bank on the Central Coast of California might want to pay attention to this situation.

Pacific Capital Bancorp (PCBC) had a very bad quarter, with losses of $7.77 per share (including one-time items).  PCBC, the parent bank of Santa Barbara Bancorp, has been struggling.  They are putting off making payments on (more…)