June 22, 2009 / 1:28 PM / 10 years ago

UPDATE 1-Pacific Capital says defers interest payment on notes

* Says deferred interest payments on $69.4 million of notes

* Suspends cash dividend on common & preferred stock

* Sees actions preserving about $8 mln per quarter

June 22 (Reuters) - Bank holding company Pacific Capital Bancorp PCBC.O said it deferred interest payments on its trust preferred securities and suspended dividends in an effort to boost capital levels.

“Maintaining strong capital ratios is essential for ensuring the health of the bank during these difficult economic times and is in the best long-term interest of all of our shareholders,” Chief Executive George Leis said. The company is allowed to defer interest payments on its outstanding $69.4 million of junior subordinated notes, for up to 20 consecutive quarterly periods without default or penalty.

During the deferral period, the company said it may not pay cash dividends or repurchase its common stock or preferred stock. The bank may also not make any payment on outstanding debt obligations that rank equally with or junior to the junior subordinated notes, it said in a news release.

The parent company of Pacific Capital Bank, expects the move to bolster its capital ratios by preserving about $8.0 million per quarter.

Pacific Capital Bank said it must maintain a minimum Tier 1 leverage ratio of 8.5 percent as of June 30 and 9.0 percent as of Sept. 30.

“We would expect to resume paying dividends when such payments would be consistent with our overall financial performance and capital requirements,” Leis added.

Pacific Capital shares closed at $3.63 on Nasdaq Friday. (Reporting by Archana Shankar in Bangalore, Editing by Dinesh Nair)

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