First Bank of San Luis Obispo out of the woods?

November 19, 2009

First Bank of San Luis Obispo, a small local bank under the umbrella of Pacific Capital Bankcorp, has been having  a rough time lately, with federal regulators demanding they come up with sufficient capital or face a possible takeover.

Investors responded by authorizing a reverse stock split, expected to increase the value by up to 10 fold. On Nov. 18, shares increased by 35 percent. [Pacific Coast Business Times]

The core of the bank’s financial woes is linked to a $362 million dollar loss that occurred in the third quarter.

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Right, Roger, so where’d they get “third quarter”? PCBC had a $40M loss for Q3, announced a couple of weeks ago, right on PacCoastBizTimes.

It’s typical CCN sloppiness. The error is unlikely to trigger a sell-off, since there are probably few institutional investors reading CCN for financial coverage, which is probably a good thing for CCN.

mccdave… the full text of the linked article is as follows:


“Shares of Pacific Capital Bancorp soared 35 percent in unusually heavy trading on Nov. 18 as the stock closed at 91 cents. Volume was more than 2 million shares compared with the normal 1.3 million shares daily.

No news was announced, but as earlier reported, the region’s largest banking company has been seeking a buyer or capital infusion amid mounting losses that have put the company under an agreement with regulators to boost capital levels. The company is the parent of Santa Barbara Bank & Trust and First Bank of San Luis Obispo.

Pacific Capital’s stock has been struggling below the $1 mark since Nov. 6. Shareholders have authorized a reverse stock split which could boost the company’s share price as much as 10-fold. No further details about the reverse split have been disclosed.”


You are right in as much as reverse splits are a strategy to keep a falling stock alive and trading. If it drops below a certain point, no one will trade it.

CNN is doing a good job

If you’re going to synopsize other people’s articles, you might do it accurately:

— Pacific Capital’s $362M loss was in their second quarter, not their third.

— A 10-to-1 reverse stock split doesn’t really “increase the value by up to 10 fold.” One’s shares are nominally worth ten times more, but you have one-tenth as many shares. As PCBC’s share price has fallen into de-listing range, this is an accounting measure to buy time.

Have you thought of renaming CCN to the Atascadero Tribune?