Pacific Capital Bancorp of Santa Barbara, Calif., said its tax refund anticipation loan business more than offset a drop in core banking earnings and helped first-quarter net income rise 43% from a year earlier, to $72.5 million.
The $7.4 billion-asset Pacific Capital said pretax income for its core bank operations, which exclude refund loans, fell 72%, to $8.3 million, because of a doubling of its provision, to $15.6 million, for losses on loans to home builders, particularly those operating in the San Joaquin Valley and Reno.
However, that decline was offset by a 92% increase in pretax income from the refund anticipation loan and refund transfer business, to $108 million.
Pacific Capital said the increase resulted from both an increased number of tax preparers offering its loans and enhanced risk management controls, which caused the loss rate to drop by half, to 1% of total refund anticipation loans.
