Shareholders of Pacific Capital Bancorp — parent company of First Bank of San Luis Obispo — voted earlier this week to increase the number of shares of its stock and to authorize a reverse stock split — moves designed to strengthen its capital and bolster its stock price.
At a special meeting on Tuesday, the Santa Barbara-based company’s shareholders approved the increase in its shares to 500 million from 100 million, with the goal of making the company more attractive to investors and raising additional capital.
As well, shareholders gave the board the authority to carry out a reverse stock split of not more than one for 10 before Aug. 31.
For example, if a shareholder owns 10,000 shares of a company and it declares a one-for-10 reverse split, the shareholder would then own 1,000 shares.
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The ratio is yet to be determined by the company’s board. George Leis, president and chief executive officer, said it would evaluate when the right time would be to do that.
Companies use reverse stock splits — which reduce the number of shares and increase the share price proportionately — when their stock price is sinking.
Pacific Capital Bancorp (PCBC: Nasdaq), which has been trading below $2 a share, is considered well-capitalized according to federal regulatory standards.
But it has been under the scrutiny of regulators who have been working with the bank to achieve higher capital requirements.
The company had a Tier 1 leverage ratio of 5.7 percent and a total risk-based capital ratio of 11.2 percent as of the second quarter ending June 30. However, the Tier 1 leverage ratio — its cash as a percentage of its assets — was insufficient to meet the higher level the bank had agreed to with the federal Office of the Comptroller of the Currency.
The company had agreed to maintain a minimum Tier 1 leverage ratio of 8.5 percent as of June 30 and 9 percent as of Sept. 30.
In a memorandum of understanding with regulators — a milder form of supervisory action — the company agreed to develop a three-year strategic plan to maintain adequate capital and sustain earnings.
Weaknesses in the economy and the housing market collapse have had a significant effect on the company’s bottom line.
Pacific Capital Bancorp reported a net loss in the second quarter ended June 30 of $362 million, compared to a $5.9 million net loss in the same period a year ago.
The losses were attributed to an increase in the bank’s loan loss reserves as well as writing off nonperforming loans. Third-quarter earnings are expected to be released later this month.
In an effort to improve its financial health, the company has cut 300 employees — or about 22 percent of its full-time staff.
It also is identifying real estate secured loans to sell off and looking to reduce expenses to eliminate up to $55 million in annual costs by 2012.
— Julie Lynem
Tasting room to open at Old Edna
Vintners Craig and Nancy Stoller plan to open a wine tasting room in the 100-year-old tin building at the Old Edna townsite in November.
They are renting the space from Pattea Torrence, who had formerly operated Old Edna Deli and Zoey’s Antiques in the space.
The Stollers, who are based in Bakersfield, have three wine labels: Sextant, Windemere and 10 Knots. They also own vineyards in San Ardo, Templeton and, most recently, the vineyards next to Old Edna.
The Edna Valley vineyards, which they bought from Cathy MacGregor in 2007, specialize in pinot noir and chardonnay wines, according to Mindy Hamers, operations manager for Sextant.
The Stollers will continue operating the Sextant wine tasting room at 3536 S. Higuera St. in San Luis Obispo, Hamers said.
— Melanie Cleveland