Despite a $500 million recapitalization plan, Pacific Capital Bank in Santa Barbara, Calif., is being ordered to boost capital.
The $7.4 billion-asset bank unit of Pacific Capital Bancorp was one of 17 banks placed under consent orders by the Office of the Comptroller of the Currency in May; the regulator disclosed these orders last week. The May 11 order calls for Pacific Capital to boost its leverage ratio to 9% and its total risk-based capital ratio to 12% within 120 days. At March 31, those ratios were 4.58% and 10.15%.
The order also gives the bank 90 days to submit an acceptable strategic plan. If the OCC does not find the plan acceptable, it could call for Pacific Capital to submit a proposal to sell, merge or liquidate the bank.
In late April, Pacific Capital announced a $500 million recapitalization plan lead by an affiliate of Ford Financial Fund LP. However, Pacific Capital must persuade the holders of its trust-preferred securities to take a discount. Last week Pacific Capital boosted the offer from 20 cents to 40 cents on the dollar.