A Texas billionaire acquired the controlling share in San Benito
Bank’s parent company April 29, following a commitment to invest
$500 million in the company.
A Texas billionaire acquired the controlling share in San Benito Bank’s parent company April 29, following a commitment to invest $500 million in the company.
Ford Financial Fund, a private equity firm operated by Gerald J. Ford, acquired 91 percent of the common stock of Santa Barbara-based Pacific Capital Bancorp and two seats on the board. However, bank officials said the move should have no impact on local branches other than providing additional capital.
“All in all, I think it’s a positive thing,” said Brigitte Nicholls, vice president and branch manager of the South Valley National Bank branch in Gilroy.
Pacific Capital Bancorp has 48 branches – with $7.4 billion in assets – throughout the Central Coast, according to its website. Those include the South Valley National Bank branch in Gilroy and two branches in Morgan Hill. The bank also operates two San Benito Bank branches in Hollister and one in San Juan Bautista.
The company’s stock plummeted from $4.11 on April 29 to $1.41 per share at the end of the day Monday. However, stocks began to rebound this week, climbing to $2.05 per share as of 5:59 p.m. Eastern time Thursday.
Ford’s investment comes after a couple of years of struggle for Pacific Capital Bancorp. The bank announced last week that it recorded a net loss to its shareholders of $79.9 million during the first three months of this year compared to a loss of $7.9 million during the same period last year. Although deposits remained rather steady, the company had loan losses of $96.8 million during the first quarter of the year.
Pacific Capital Bancorp had to lay off 80 employees in various bank branches in early 2009 as a result of those financial struggles.
“The credit issues that have continued to face the company have been very challenging,” said Debbie Whiteley, executive vice president of Pacific Capital Bancorp.
As a result of the bank’s challenges, the U.S. Treasury Department invested $181 million in Pacific Capital from its Troubled Asset Relief Program funds. Under the new agreement, the U.S. Treasury will own 7 percent of the company’s common stock, while the company’s current shareholders will own about 2 percent of the stock. The rest is owned by Ford Financial Fund.
Current shareholders will be given a right to buy Pacific Capital Stock at 20 cents per share.
Ford expressed optimism about the company’s prospects in a prepared statement released April 29.
“We look forward to helping strengthen this institution for the benefit of all its stakeholders, so that it can continue serving its loyal customers and supporting its community partners, as it has done now for more than 50 years,” he said.
Pacific Capital Bancorp officials share similar aspirations.
“With the close of this transaction, we will be in a much stronger capital position,” Whiteley said. “We think it is the best alternative available to ensure our company’s future.”
Pacific Capital Bancorp merged with Santa Barbara Bancorp in 1998. At that time, the company moved its headquarters to Santa Barbara but kept the Pacific Capital name.
