The regional bank holding company that owns Santa Barbara Bank & Trust is selling itself to Union Bank for $1.5 billion, according the federal documents released today, less than two years after a Texas billionaire bailed the parent company out.
On March 9, Santa Barbara-based Pacific Capital Bancorp entered in to a merger agreement with Delaware-based with UnionBanCal Corp., known as UBC. The agreement says a corporation, formed in Delaware as a wholly owned subsidiary of UBC, will merge with and into Pacific Capital.
Some details are yet to be worked out; however, it appears the big fish is swallowing the smaller Santa Barbara-based company in a deal that could be closed within the next nine months. Pacific Capital owns five other banks up and down the Central Coast.
According to a Security and Exchange Commission filing, each outstanding share of Pacific Capital’s common stock will be converted into the right to receive $46 per share in cash, without interest.
When the merger was announced, there were outstanding warrants to purchase 15,120 shares of Pacific Capital’s common stock held by the U.S. Treasury Department. That refers to the more than $180 million in TARP, or Troubled Asset Recovery Program, funds Pacific Capital took from the 2008 federal bank bailout.
When Texas billionaire banker Gerald Ford pumped in $500 million to further shore up Pacific Capital in 2010, the Treasury Department agreed to allow his company to pay back only about two-thirds of the federal bailout money.
Back in the dark days of 2008 when Pacific Capital reported multimillion-dollar losses, it laid off more than 325 of its 1,664 full-time employees and cut retiree benefits as loan losses mounted. The company has since hired back most of those workers.
Just last month, Pacific Capital reported net income of $12.3 million for the three-month period that ended December 31, compared with $20.5 million for the three-month period that ended September 30, 2011.
That brought the company’s total net income to $96.3 million since Ford bailed out the region’s largest bank holding company on August 31, 2010. Pacific Capital’s net income for the entire 2011 totaled $70.5 million.
The company is “operating from a position of strength and stability,” Webb said in a January 31 news release. Obviously, that made it a good buy for Union Bank.