FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _____________________.
Commission File Number 0-13528
Pacific Capital Bancorp
(Exact name of registrant as specified in its charter)
California 77-0003875
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1001 S. Main Street, Salinas, California 93901
(Address of principal executive offices)
(Zip Code)
(408) 757-4900
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class April 25, 1996
Common stock, no par value 2,600,863 Shares
This report contains a total of 18 pages.
PART I - FINANCIAL INFORMATION
ITEM 1 PAGE
PACIFIC CAPITAL BANCORP AND
SUBSIDIARIES FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 3
CONSOLIDATED STATEMENTS OF INCOME 4
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8 - 16
PART II - OTHER INFORMATION
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K 17
SIGNATURES 18
PART I - FINANCIAL INFORMATION
PACIFIC CAPITAL BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
March 31, December
31,
Assets 1996 1995
Cash and due from banks $20,819 $24,891
Federal funds sold and other short term 24,800 17,007
investments
Total cash and equivalents 45,619 41,898
Investment securities:
Available-for-sale securities, at fair value 75,834 75,896
Held-to-maturity securities, at amortized cost
(fair value of $8,133 and $8,662, 8,108 8,596
respectively)
Loans available for sale at cost, which 4,131 3,876
approximates market
Loans:
Commercial 49,962 49,862
Consumer 12,428 12,108
Real estate - mortgage 131,814 126,048
Real estate - construction 17,005 17,071
Bankers' acceptances & commercial paper 220 -
Other 8,668 6,501
Less deferred loan fees (275) (246)
Total loans 219,822 211,344
Less allowance for possible loan losses (2,375) (2,397)
Net loans 217,447 208,947
Premises and equipment, net 8,368 7,523
Accrued interest receivable and other, net 7,399 6,843
Total assets $366,906 $353,579
Liabilities and shareholders' equity
Deposits:
Demand, non-interest bearing $65,083 $71,988
Demand, interest bearing 53,803 56,527
Savings and money market 104,503 97,087
Time certificates 97,228 82,217
Total deposits 320,617 307,819
Accrued interest payable and other liabilities 2,893 2,784
Total liabilities 323,510 310,603
Shareholders' equity:
Preferred stock; 20,000,000 shares authorized - -
and unissued
Common stock, no par value; 20,000,000 shares
authorized;
2,600,863 and 2,603,839 shares issued and
outstanding at March 31, 1996 and December 31,
1995, respectively 31,179 31,235
Retained earnings 12,388 11,435
Net unrealized (losses) gains on available-for- (171) 306
sale securities
Total shareholders' equity 43,396 42,976
Total liabilities and shareholders' equity $366,906 $353,579
See accompanying notes to consolidated financial statements
PACIFIC CAPITAL BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Three months Three months
ended ended
March 31, March 31,
1996 1995
Interest income:
Interest and fees on loans $5,313 $5,020
Interest on investment securities 1,178 927
Interest on federal funds sold 369 175
Total interest income 6,860 6,122
Interest expense:
Demand, interest bearing 137 138
Savings 680 707
Time certificates 1,262 616
Total interest expense 2,079 1,461
Net interest income 4,781 4,661
Provision for possible loan losses - -
Net interest income after provision for 4,781 4,661
possible loan losses
Other income:
Service charges 342 352
Gain on sale of loans 9 3
Mortgage banking fees 47 19
Net gain (loss) on securities transactions 12 (11)
Other 98 88
Total other income 508 451
Other expenses:
Salaries and benefits 1,792 1,604
Occupancy 364 319
Equipment 255 240
Advertising and promotion 111 98
Stationary and supplies 72 77
Legal and professional fees 129 135
Regulatory assessments 22 188
Other operating 343 368
Total other expenses 3,088 3,029
Earnings before income taxes 2,201 2,083
Income taxes 857 799
Net income $1,344 $1,284
Net income per share $0.49 $0.49
Weighted average shares outstanding 2,726,863 2,646,436
See accompanying notes to consolidated financial statements
PACIFIC CAPITAL BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 and March 31, 1995
(UNAUDITED)
(IN THOUSANDS)
March 31, March 31,
1996 1995
Cash flows from operating activities:
Net income $1,344 $1,284
Adjustments to reconcile net income to net
cash provided by
operating activities:
Depreciation and amortization 275 161
Provision for possible loan losses - -
Loss (gain) on sale of investment (12) 11
securities, net
Net originations of loans held for sale (255) (259)
Gain on sale of loans (9) (3)
Deferral of loan origination fees 2 4
Change in accrued interest receivable and (1,033) 400
other assets
Change in accrued interest payable and 118 375
other liabilities
Net cash provided by operating activities 430 1,973
Investing activities:
Net change in loans (8,502) 3,045
Maturities of investment securities 703 3,373
Purchases of investment securities (14,854) -
Proceeds from sale of available-for-sale 14,646 10,880
securities
Capital expenditures, net (1,053) (149)
Net cash (used in) provided by investing (9,060) 17,149
activities
Financing activities:
Net increase (decrease) in deposits 12,798 (25,154)
Cash paid for retirement of stock (60) -
Proceeds from exercise of options 4 141
Cash paid for dividends (391) (310)
Net cash provided by (used in) financing 12,351 (25,323)
activities
Net increase (decrease) in cash and 3,721 (6,201)
equivalents
Cash and equivalents beginning of period 41,898 42,262
Cash and equivalents at end of period $45,619 $36,061
Supplemental disclosures of cash flow
information:
Cash paid during the period
Interest 2,993 1,549
Income taxes 282 350
See accompanying notes to consolidated financial statements
PACIFIC CAPITAL BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Basis of Presentation
In the opinion of the Company, the unaudited consolidated financial statements,
prepared on the accrual basis of accounting, contain all adjustments
(consisting of only normal recurring adjustments) which are necessary
to present fairly the financial position of the Company and
subsidiaries at March 31, 1996 and December 31, 1995, the results of
its operations and the statements of cash flows for the periods ended
March 31, 1996 and 1995.
Certain information and footnote disclosures normally presented in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. The results of operations for the
period ended March 31, 1996 are not necessarily indicative of the
operating results for the full year ending December 31, 1996.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-
Based Compensation. SFAS No. 123 establishes financial accounting and
reporting standards for stock-based employee compensation plans. Those
plans include all arrangements by which employees receive shares of
stock or other equity instruments of the employer or the employer
incurs liabilities to employees in amounts based on the price of the
employer's stock. Examples are stock options, restricted stock, and
stock appreciation rights. This statement defines a fair value based
method of accounting for an employee stock option or similar equity
instrument. Under this method, compensation costs are measured at the
grant date based on the value of the award and are recognized over the
service period, which is the vesting period. SFAS No. 123 encourages
but does not require employers to adopt the new method in place of the
provisions of Accounting Principles Board Opinion (APB) No. 25,
Accounting for Stock Issued to Employees. This statement applies to
fiscal years beginning after December 15, 1995. On January 1, 1996,
the Company adopted SFAS No. 123 and has elected to use the method
prescribed in APB No. 25. The Company and does not anticipate that the
required disclosures will have a material impact on the financial
condition or results of operations of the Company.
Note 2 - Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, First National Bank of
Central California, (the "Bank"), and Pacific Capital Services
Corporation, an inactive subsidiary. All material intercompany
accounts and transactions have been eliminated in consolidation.
Note 3 - Loans to Directors
In the ordinary course of business, the Company has made loans to directors of
the Company which at March 31, 1996 amounted to approximately
$4,308,000.
Note 4 - Commitments
The Company had outstanding standby letters of credit of approximately
$1,371,000 at March 31, 1996.
Note 5 - Net Income Per Share and Dividends
Net income per share is computed using the weighted average number of shares of
common and common equivalent shares outstanding (as adjusted
retroactively to reflect the 5% stock dividend paid on December 1,
1995). On January 23, 1996, the Company declared a $ 0.15 per share
cash dividend to shareholders of record on March 15, 1996, payable
March 29, 1996.
Note 6 - Taxes
As of March 31, 1996, the Company has a deferred tax asset of approximately
$1,909,000. The asset results primarily from the provisions for
possible loan losses and depreciation of premises and equipment, which
are recognized in the financial statements but are not yet deductible
for income tax reporting purposes. Management of the Company believes
that the net deferred tax asset is fully realizable through sufficient
taxable income within carryback periods and current year taxable
income.
PACIFIC CAPITAL BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview of Changes in the Financial Statements
Net income for the three months ended March 31, 1996 was $1,344,000 or
$0.49 per share compared to $1,284,000 or $0.49 per share during the same period
in 1995. This 4.7% increase in net income is due mainly to a $120,000 increase
in net interest income combined with a $166,000 decrease in the Company's FDIC
Assessment. These items were partially offset by a $188,000 increase in salaries
and benefits. The increase in net interest income is due to growth in average
total deposits of $31,844,000 and growth in average total loans of $14,932,000
as compared to the same 1995 period. The Company's FDIC Premium has been reduced
to an annual amount of $2,000 due to the recapitalization of the Bank Insurance
Fund which occurred in May of 1995.
Outstanding loans were $219,822,000 at March 31, 1996 compared to
$211,344,000 at December 31, 1995, a $8,478,000 or 4.0% increase. The increase
in outstanding loans from December 31, 1995 to March 31, 1996 resulted primarily
from an increase in real estate mortgage loans of $5,766,000 and an increase in
tax-exempt municipal leases of $2,664,000.
Federal Funds Sold and Investment Securities at March 31, 1996 were
$108,742,000, a $7,243,000 or 7.1% increase from December 31, 1995. This was
primarily due to the increase in total deposits which resulted in an increase in
cash invested in Federal Funds and investment securities.
The Company's total deposits at March 31, 1996 were $320,617,000 compared
to $307,819,000 at December 31, 1995, a $12,798,000 or 4.2% increase. Non-
interest bearing demand deposits decreased $6,905,000, interest bearing demand
deposits decreased $2,724,000 and savings and money market deposit accounts
increased $7,416,000 in the first three months of 1996. Certificates of deposit
increased by $15,011,000 or 18.3% during the first three months of 1996.
Management believes that the growth in deposits is a result of the recent
strength in the tourism and agribusiness industries within the local economies
in which the Company operates. The loan to deposit ratio at March 31, 1996 was
68.6% and is the same as the ratio at December 31, 1995. The Company's total
assets as of March 31, 1996 increased 3.8% compared to year end 1995.
Loans
Outstanding total loans averaged $216,551,000 for the period ended March
31, 1996 compared to $201,619,000 for the period ended March 31, 1995, an
increase of $14,932,000, or 7.4%. This increase in loans is due to increased
loan demand from qualified borrowers and is reflective of the relatively strong
economy in most of the primary markets which the Company serves. The Company
lends primarily to small and medium sized businesses within its markets, which
are comprised principally of the Salinas, Watsonville, Monterey and Carmel
areas. A majority of the Company's loan portfolio consists of loans secured by
commercial, industrial and residential real estate.
Quality of Loans
The Company follows the policy of discontinuing the accrual of interest
income and reversing any accrued and unpaid interest when the payment of
principal or interest is 90 days past due unless the loan is both well-secured
and in the process of collection.
The composition of non-performing loans as of March 31, 1996, December 31,
1995, and March 31, 1995 is summarized in the following table.
Nonperforming Loans
(Dollars in Thousands)
March 31, December 31, March 31,
1996 1995 1995
Accruing loans
past due 90 days
or more
Commercial $ 3 $ 0 $ 0
Consumer 0 1 0
Real Estate 397 140 0
Total $400 $141 $ 0
Nonaccrual loans
Commercial 259 110 484
Consumer 118 136 155
Real Estate 561 747 1,037
Total $938 $993 $1,676
Total Nonperforming
Loans $1,338 $1,134 $1,676
Nonperforming Loans
To Total Loans 0.61% 0.54% 0.85%
Allowance For Possible
Loan Losses To Total
Non Performing Loans 177.50% 211.38% 138.78%
The Company does not expect to sustain losses from any of the Non-
Performing Loans in excess of that specifically provided for in the allowance
for possible loan losses.
In addition to the above, the Company holds four Other Real Estate Owned
(OREO) properties, which aggregate $797,000. In all cases, the amount recorded
represented the lesser of the loan balance or current fair value obtained from a
current appraisal less anticipated selling costs; therefore, any identified loss
has already been recognized.
Inherent in the lending function is the fact that loan losses will be
experienced and that the risk of loss will vary with the type of loan extended
and the creditworthiness of the borrower. To reflect the estimated risks of
loss associated with its loan portfolio, additions are made to the Company's
allowance for possible loan losses. As an integral part of this process, the
allowance for possible loan losses is subject to review and possible adjustment
as a result of management's assessment of risk or regulatory examinations
conducted by governmental agencies. The Company's entire allowance is a
valuation allocation created by direct charges against operations through the
provision for possible loan losses.
The provision for possible loan losses charged against operations is based
upon the actual net loan losses incurred plus an amount for other factors which,
in management's judgment, deserve recognition in estimating possible loan
losses. The Company evaluates the adequacy of its allowance for possible loan
losses on a quarterly basis. For the last several years, the Company has also
contracted with an independent loan review consulting firm to evaluate overall
credit quality and the adequacy of the allowance for possible loan losses. Both
internal and external evaluations take into account the following: specific
loan conditions as determined by management; the historical relationship between
charge-offs and the level of the allowance; the estimated future loss in all
significant loans; known deterioration in concentrations of credit, certain
classes of loans or pledged collateral; historical loss experience based on
volume and types of loans; the results of any independent review or evaluation
of the loan portfolio quality conducted by or at the direction of Company
management or by bank regulatory agencies; trends in portfolio volume, maturity
and composition; off-balance sheet credit risk; volume and trends in
delinquencies and nonaccruals; lending policies and procedures including those
for charge-off, collection and recovery; national and local economic conditions
and their affects on specific local industries; and the experience, ability and
depth of lending management and staff. These factors are essentially judgmental
and may not be reduced to a mathematical formula.
The Company closely monitors the local markets in which it conducts its
lending activities. The overall increase in loan demand from qualified
borrowers during the past year is indicative of a stabilizing economic climate.
The following table sets forth the actual loan losses and provision for
possible losses for the periods ended March 31, 1996, December 31, 1995, and
March 31, 1995.
Charge-Off/Recovery Activity
(Dollars in Thousands)
Three months Year Three months
Ended Ended Ended
March 31, 1996 December 31,1995 March 31, 1995
Total Loans Outstanding $219,822 $211,344 $197,619
Average Net Loans $216,551 $201,360 $201,619
Allowance Balance
Beginning Of Period 2,397 2,438 2,438
Charge-Offs By Loan Category
Commercial 0 129 18
Consumer 51 61 30
Real Estate 0 131 97
Other 0 0 0
Total $ 51 $ 321 $ 145
Recoveries By Loan Category
Commercial 0 58 14
Consumer 17 38 12
Real Estate 12 49 7
Other 0 0 0
Total $ 29 $ 145 $ 33
Net Charge-Offs $ 22 $ 176 $ 112
Provision Charged
To Expense $0 $135 $0
Allowance Balance
End Of Period $ 2,375 $ 2,397 $ 2,326
Allowance For Possible
Loan Losses
To Total Loans 1.08% 1.13% 1.18%
Annualized Net Charge-
Offs To Average Loans 0.04% 0.09% 0.22%
The Company did not provide an additional provision to the allowance for
possible loan losses for the three months ended March 31, 1996, or March 31,
1995, primarily due to the Company's recognition of a stabilization of the local
economy, resulting in a lower level of classified loans and the reduced
potential of future charge-offs.
The provision for possible loan losses charged against earnings is based
upon an analysis of the actual migration of loans to losses plus an amount for
other factors which, in management's judgment, deserve recognition in estimating
possible loan losses. While these factors cannot be reduced to a mathematical
formula, it is management's view that the allowance for possible loan losses of
$2,375,000 or 1.08% of total loans was adequate as of March 31, 1996.
Results of Operations
Three months Ended March 31, 1996
Compared with
Three months Ended March 31, 1995
Net income of $1,344,000 for the three months ended March 31, 1996
increased by $60,000 or 4.7% as compared to the same 1995 period. The increase
in net income for the period was due primarily to an increase in net interest
income of $120,000 as well as a decrease in FDIC assessments of $166,000 offset
by an increase in salaries and benefits of $188,000. The increase in net
interest income is due to growth in average total deposits of $31,844,000 and
growth in average total loans of $14,932,000 as compared to the same 1995
period.
The average balance of interest earning assets during the three months
ended March 31, 1996 was $327,168,000, a $36,821,000 or 12.7% increase over the
comparable 1995 period. The Company's average yield on earning assets for the
three months ended March 31, 1996 decreased to 8.5% compared to 8.6% during the
comparable period in 1995. Total interest income increased $738,000 or 12.1% for
the three months ended March 31, 1996 compared to the same 1995 period due to an
increase in average interest earning assets of $36,821,000.
Average deposits for the Company for the three months ended March 31, 1996
were $316,004,000, a $31,844,000 or 11.2% increase compared to the period ended
March 31, 1995. The Company's average cost of funds for the three months ended
March 31, 1996 was 3.4% which yielded a net interest margin of 5.9%. This
compares to an average cost of funds of 2.7% and a net interest margin of 6.5%
for the comparable 1995 period. Interest expense of $2,079,000 for the three
months ended March 31, 1996 was $618,000 or 42.3% over the comparable 1995
period due to an increase in average interest bearing deposits of $28,692,000
and an increase in the average rate paid on deposits of 0.7%. Net interest
income for the three months ended March 31, 1996 increased $120,000 or 2.6% and
resulted from the increase of $738,000 in total interest income and an increase
of $618,000 in total interest expense.
The Company did not make any additional provisions to the allowance for
possible loan loss for the three months ended March 31, 1996 or for the same
period in 1995. The analysis of the loan portfolio completed by the Company
indicates that the current allowance for loan losses is adequate based on the
Company's calculated provision requirements.
Total loans charged-off net of recoveries for the three months ended March
31, 1996 amounted to $22,000 compared to $112,000 net of recoveries for the same
period in 1995. Annualized net loan charge-offs as a percentage of average
loans for the three months ended March 31, 1996 was 0.04% compared to 0.22% for
the three months ended March 31, 1995 and .09% for the year ended December 31,
1995.
Total other income was $508,000 for the three months ended March 31, 1996,
a $57,000 or 12.6% increase compared to the same period of 1995. Mortgage
banking fees increased $28,000 from the three months ended March 31, 1995 due to
higher levels of mortgage refinancings compared to 1995. Net gains on securities
transactions was $12,000 compared to a net loss of $11,000 for the three months
ended March 31, 1995. Other variances include service charges which decreased by
$10,000 from the first quarter of 1995 and other income which increased by
$10,000 over 1995.
Salaries and benefits expense for the three months ended March 31, 1996 was
$1,792,000, a $188,000 or 11.7% increase over the comparable 1995 period. This
variance resulted primarily from normal salary increases, an increase in health
insurance premiums, and an increase in the Company's contributions to the Bonus
and Employee Stock Ownership Program. The Company employed 164 full time
equivalent employees at March 31, 1996 compared to 165 full time equivalent
employees at December 31, 1995 and 159 full time equivalent employees at March
31, 1995.
Total other expenses, excluding salaries and benefits, for the three months
ended March 31, 1996, was $1,296,000, a $129,000 or 9.1% decrease from the
comparable 1995 period. This decrease was primarily the result of the decrease
in the Company's FDIC Assessment of $166,000 from the first quarter of 1996
compared to the same period in 1995. In addition, occupancy expense increased by
$45,000 due to normal rental rate increases and the use of temporary facilities
for the Company's Salinas branch while remodeling takes place on the Salinas
Main Branch. Other variances include equipment expense which increased $15,000
and other expense which decreased by $25,000.
Applicable income taxes of $857,000 for the three months ended March 31,
1996 were $58,000, or 7.3% more than the comparable 1995 period. The Company's
effective tax rate for the three months ended March 31, 1996 was 38.9% compared
to 38.4% for the same period in 1995.
Liquidity Management
Liquidity represents the ability of the Company to meet the requirements of
customer borrowing needs as well as fluctuations in deposit flows.
Core deposits, which include demand, savings and interest bearing demand
accounts, money market accounts and time deposits of less than $100,000, provide
a relatively stable funding base. Core deposits averaged $165,346,000 or 45.6%
of average total assets during the three months ended March 31, 1996, as
compared to $158,213,000 or 46.6% of average total assets for the fiscal year
ended December 31, 1995. At March 31, 1996 core deposits were $168,143,000 or
45.8% of total assets, compared to $164,574,000 or 46.5% of total assets at year
end 1995.
The Company's principal sources of asset liquidity are cash and cash due
from banks, time deposits with other financial institutions, Federal Funds sold,
short term investments, and available-for-sale investment securities. At March
31, 1996 these sources represented $121,453,000 or 37.9% of total deposits
compared to $117,794,000 or 38.3% at year end 1995. This increase in liquidity
for the three months ended March 31, 1996 resulted primarily from an increase in
Federal Funds sold and short term investments.
In the opinion of management, there are sufficient resources to meet the
liquidity needs of the Company at present and projected future levels.
Capital Resources
Capital management is a continuous process of providing adequate capital
for current needs and anticipated future growth. Capital serves as a source of
funds for the acquisition of fixed and other assets and protects depositors
against potential losses. As the Company's assets increase, so do its capital
requirements.
The Company and the Bank are subject to Federal Reserve Board guidelines
and regulations of the Comptroller of the Currency ("Comptroller"),
respectively, governing capital adequacy. The Federal Reserve Board has
established final risk-based and leverage capital guidelines for bank holding
companies which are the same as the Comptroller's capital regulations for
national banks.
The Federal Reserve Board capital guidelines for bank holding companies and
the Comptroller's regulations for national banks set total capital requirements
and define capital in terms of "core capital elements" (comprising Tier 1
capital) and "supplemental capital elements" (comprising Tier 2 capital). Tier
1 capital is generally defined as the sum of the core capital elements less
goodwill. The following items are defined as core capital elements: common
stockholders' equity, qualifying noncumulative perpetual preferred stock, and
minority interests in the equity accounts of consolidated subsidiaries.
Supplementary capital elements include: allowance for loan and lease losses
(which cannot exceed 1.25% of an institution's risk weighted assets), perpetual
preferred stock not qualifying as core capital, hybrid capital instruments and
mandatory convertible debt instruments, and term subordinated debt and
intermediate-term preferred stock. The maximum amount of supplemental capital
elements which qualifies as Tier 2 capital is limited to 100% of Tier 1 capital,
net of goodwill.
Risk-based capital ratios are calculated with reference to risk-weighted
assets, including both on and off-balance sheet exposures, which are multiplied
by certain risk weights assigned by the Federal Reserve Board to those assets.
Both bank holding companies and national banks are required to maintain a
minimum ratio of qualifying total capital to risk-weighted assets of 8%, at
least one-half of which must be in the form of Tier 1 capital. There are
presently four risk-weight categories: 0% for cash and unconditionally
guaranteed government securities; 20% for conditionally guaranteed government
securities; 50% for performing residential real estate loans secured by first
liens; and 100% for commercial loans.
The Federal Reserve Board and the Comptroller also have established a
minimum leverage ratio of 3% Tier I capital to total assets for bank holding
companies and national banks that have received the highest composite regulatory
rating and are not anticipating or experiencing any significant growth. All
other institutions will be required to maintain a leverage ratio of at least 100
to 200 basis points above the 3% minimum.
The following tables show the Company's and the Bank's risk-based and
leverage capital ratios as of March 31, 1996 and December 31, 1995. As
indicated in these tables, the Company's and the Bank's capital ratios
significantly exceeded the minimum capital levels required by current federal
regulations. Management believes that the Company and the Bank will continue to
meet their respective minimum capital requirements in the foreseeable future.
Risk Based Capital Ratio
(Dollars in Thousands)
(Unaudited)
Pacific Capital Bancorp
March 31, 1996 December 31, 1995
Amount Ratio Amount Ratio
Tier 1 Capital $43,396 16.97% $42,976 17.60%
Tier 1 Capital Minimum
Requirement 10,229 4.00% 9,765 4.00%
Excess $33,167 12.97% $33,211
13.60%
Total Capital $45,771 17.90% $45,373 18.59%
Total Capital Minimum
Requirement 20,458 8.00% 19,529 8.00%
Excess $25,313 9.90% $25,844
10.59%
Risk Adjusted Assets $255,722 $244,114
First National Bank of Central California
March 31, 1996 December 31, 1995
Amount Ratio Amount Ratio
Tier 1 Capital $40,022 15.85% $40,532 16.78%
Tier 1 Capital Minimum
Requirement 10,097 4.00% 9,662 4.00%
Excess $29,925 11.85% $30,870
12.78%
Total Capital $42,397 16.80% $42,929 17.77%
Total Capital Minimum
Requirement 20,195 8.00% 19,325 8.00%
Excess $22,202 8.80% $23,604 9.77%
Risk Adjusted Assets $252,433 $241,561
Leverage Ratio
(Dollars in Thousands)
(Unaudited)
Pacific Capital Bancorp
March 31, 1996 December 31, 1995
Amount Ratio Amount Ratio
Tier 1 Capital to Average
Total Assets $43,396 11.96% $42,976 12.00%
Minimum Leverage $10,889 to 3.00% to $10,747 to 3.00% to
Requirement $18,148 5.00% $17,912 5.00%
Excess $25,248 to 6.96% to $25,064 to 7.00% to
$32,507 8.96% $32,229 9.00%
Average Total Assets $362,954 $358,232
First National Bank of Central California
March 31, 1996 December 31, 1995
Amount Ratio Amount Ratio
Tier 1 Capital to Average
Total Assets $40,022 11.10% $40,532 11.38%
Minimum Leverage $10,813 to 3.00% to $10,685 to 3.00% to
Requirement $18,022 5.00% $17,809 5.00%
Excess $22,000 to 6.10% to $22,723 to 6.38% to
$29,209 8.10% $29,847 8.38%
Average Total Assets $360,444 $356,173
Federal banking laws impose restrictions upon the amount of dividends the
Bank may declare to the Company. Federal laws also impose restrictions upon the
amount of loans or advances that the Bank may extend to the Company. In
management's opinion, these do not affect the ability of the Company to meet its
cash obligations.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date __ May 6, 1996_____ /S/ D. Vernon Horton
D. Vernon Horton
Chief Executive Officer
Date __ May 6, 1996_______ /S/ Dennis A. DeCius
Dennis A. DeCius
Executive Vice President
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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