Pacific Capital Bancorp in Santa Barbara, Calif., managed to turn a third-quarter profit despite heavy losses in its portfolio of tax-refund anticipation loans.
The $7.3 billion-asset company announced Thursday that it earned $3.9 million, or 8 cents a share, in the quarter. On Monday it disclosed that it recorded a $22.4 million provision to cover fraud-related losses from refund-anticipation loans, which it said reduced earnings by 27 cents a share.
In last year's third quarter Pacific Capital earned $16.8 million, or 36 cents a share. It attributed this year's third-quarter profit to loan growth and improved asset quality at its core bank. Commercial lending overall rose 12.9% from a year earlier, to $1.1 billion, and construction lending rose nearly 22%, to $655 million.
The core bank's loss provision was $2 million, down nearly 68% from last year's third quarter. Pacific Capital attributed the improvement to the sale of its indirect automobile and equipment leasing businesses earlier this year.
"The core bank continues to trend positively and deliver significant year-over-year improvement," president and chief executive George Leis said in a news release. "Our loan growth and asset quality have helped us to offset compression in our net interest margin resulting from a difficult environment for gathering deposits."
Pacific Capital also announced Thursday that it has a deal to acquire R.E. Wacker Associates Inc., a registered investment adviser in San Luis Obispo, Calif. It said it would make an initial payment of $6.9 million in cash for R.E. Wacker and a second payment that would be based on the acquired company's performance. The deal is expected to close in January.
In late trading Thursday, Pacific Capital's shares were down 8.2%, to $19.03. The shares fell 17.7% Tuesday after the company disclosed the losses in the refund-anticipation loan business.
