PREVIEW-Pacific Capital seen returning to profitability in Q1

* To report quarterly results on April 30

* Q1 net profit seen at $30.4 mln

* Provision to eat into profit

By Sweta Singh and Ramya Dilip

BANGALORE, April 29 (Reuters) - Pacific Capital Bancorp (PCBC.O) is expected to return to profitability in the first quarter, but the California-based lender will continue to feel the pinch of its residential construction portfolio.

"The results from the core bank may continue to show signs of stress similar to lot of other California banks," Keefe Bruyette & Woods analyst Julianna Balicka told Reuters.

The biggest drag on earnings will be provision expense, said Balicka, who expects the company to earn 44 cents a share for the first quarter, significantly below the average analysts' estimate of 57 cents polled by Reuters.

The company has been posting losses for last three quarters, taking a hit from its core banking operations, which analysts believe will continue to weigh on first-quarter results.

However, analysts expect the company's core banking unit to make a sequentially smaller provision for loan losses in the first quarter.

Balicka expects core banking to record a provision of $58 million, below the unit's fourth-quarter provision of $69.8 million.

Like all of California, the central coast of California is also facing some big challenges, and problem assets have obviously risen, Sandler O' Neill analyst Aaron James Deer said.

"My expectation is that the bank's going to be working as closely as it can with its customers to help see them through the downturn so that the bank and its customers can march healthy from the recession," Deer said.

California has been one of the worst hit from the housing downturn, and banks with heavy exposure in the region have been struggling to remain profitable amidst declining real-estate prices and soaring defaults. The state has seen at least three bank failures since January.

Pacific Capital's refund anticipation loan and refunds transfer business are expected to do well and help the company return to profitability.

Analysts also do not rule out a cut in the company's current dividend payout of 11 cents a share.

"Given the economic and credit challenges, many banks have made deep cuts to their dividends, sometimes to a penny or just suspending it altogether, and we could see Pacific Capital take similar steps, simply as a precautionary, capital-preservation effort," analyst Deer said in an e-mail to Reuters.