February 1, 2010 / 1:55 PM / 9 years ago

RPT-UPDATE 2-Pacific Capital shares jump as Q4 loss narrows

(Repeats for wider distribution)

* Q4 loss $0.43/shr vs loss $0.92/shr last year * Consolidated interest expense down 30 pct

* Net charge offs down 35 percent

* Says to reduce assets through loan sales

* To suspend matching contribution in 401K program: CEO

* Shares up 15 percent (Adds details, conference call comments, updates share movement)

Feb 1 (Reuters) - Bank holding company Pacific Capital Bancorp PCBC.O posted a narrower fourth-quarter loss, helped by lower expenses, and said it was considering sale of certain branches.

Investors cheered the company’s narrower loss and efforts to boost capital levels, sending its shares up more than 15 percent to $1.36 on Nasdaq.

“While previously identified problem loans continue to drive elevated levels of net charge-offs, we are encouraged that the inflow of new delinquent loans slowed considerably during the fourth quarter,” Chief Executive George Leis said in a statement.

Loans that are two to three payments past due declined to $79 million in the quarter, from $116 million sequentially, the company said.

The company, which has cut jobs and tried to rein in overheads, said interest expense fell about 30 percent to $33.5 million in the quarter.

The company’s loss for the quarter was $20 million, or 43 cents a share, compared with a loss of $42.9 million, or 92 cents a share, a year ago.

Allowance of loan losses almost doubled to $273 million in the quarter and non-performing assets soared to $437 million from $241.5 million last year.

However, net charge-offs fell 35 percent to $33.2 million, the company said.

LIQUIDITY WOES PERSIST

Pacific Capital, which has been posting losses since second-quarter 2008, has been struggling to keep up with its Tier 1 leverage ratio for the past three quarters.

Tier 1 leverage ratio — which measures a bank’s ability to cover losses — and total risk-based capital ratio were not sufficient to meet the higher levels that the bank has agreed with regulators to maintain, the company said.

As at Dec. 31, the company’s unit had a Tier 1 leverage ratio of 5.5 percent, which was not sufficient to meet the minimum 9 percent that it had agreed to maintain as of Sept 30.

The company, however, said the ratio exceeds the levels to be considered “well capitalized” under generally applicable regulatory guidelines.

Total risk-based capital ratio of 10.7 percent in the quarter also fell short of the 12 percent as of Sept 30, the company said.

Pacific Capital, which has been experiencing high credit losses, said it was looking to reduce assets through loan sales and sale of branches, as part of its review of strategic alternatives.

The company also said it would cut more costs to eliminate $25 million in annual operating expenses in 2010 and another $25 million in 2011.

“We are suspending matching contribution in the 401K program, effective Mar. 1, 2010,” CEO Leis said in a conference call with analysts.

Shares of the Santa Barbara, California-based bank were up 6 percent at $1.24 in midday trade Monday on Nasdaq. They touched a high of $1.36 earlier in the day. (Reporting by Archana Shankar and Gowri Jayakumar in Bangalore; Editing by Vinu Pilakkott and Unnikrishnan Nair)

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