Pacific Capital defers interest on trust preferreds, suspends dividends on preferred, common stock

By Angela McDaniels

Tacoma, Wash., June 22 - Pacific Capital Bancorp has deferred interest payments on its $69.4 million of outstanding junior subordinated notes relating to its trust preferred securities, according to a company news release.

The respective trusts will likewise suspend dividends on the trust preferreds.

Because the company cannot pay cash dividends on or repurchase its stock while the interest is deferred, dividends on its preferred stock and common stock have been suspended.

Pacific Capital is allowed to defer interest payments on the notes for up to 20 consecutive quarters without default or penalty.

The company believes that the deferral of interest and the suspension of dividends will preserve about $8 million per quarter and bolster its capital ratios.

Pacific Capital Bank, NA must maintain a minimum tier 1 leverage ratio of 8.5% as of June 30 and 9% as of Sept. 30 and a minimum total risk-based capital ratio of 11% as of June 30 and 12% as of Sept. 30.

"We believe the actions we have announced today are the most prudent course of action and will improve our flexibility to consider other actions that may need to be taken in order to achieve our targeted capital ratios," George Leis, president and chief executive officer of Pacific Capital Bancorp, said in the release. "We would expect to resume paying dividends when such payments would be consistent with our overall financial performance and capital requirements."

Santa Barbara, Calif.-based Pacific Capital Bancorp is the parent company of Pacific Capital Bank.

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