Kit Menkin’s Leasing News Wednesday, January 23 ,2002

                 Tyco to Separate Into Four Independent, Publicly Traded Companies

                Leasing Association Membership Numbers

                   Classified Ad---Two Attorney/One Recruiter

                        Energy National Resource Organization of Nigeria

                           (Enron Chief Quits to Join ENRON)

                                 Advanta Business Cards Results Up 40% Year On Year

                                   ePlus to Speak National Association of Procurement Professionals

                                      Pacific Capital Bancorp Reports 4rth Qrtr/Full Yr 2001 Fin. Results

# Denotes Press Release

(Yes, we know about K-Mart filing BK. No story here as it was

  so well covered; no margins, won’t stay in business in this economy. Editor)


( The full press release---unabridged---)

Tyco to Separate Into Four Independent, Publicly Traded Companies

PEMBROKE, Bermuda, -- Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) yesterday announced a plan to unlock tens of
billions of dollars of shareholder value by separating Tyco into four
independent, publicly traded companies: Security and Electronics; Healthcare;
Fire Protection and Flow Control; and Financial Services.


Tyco believes these actions will lead to substantially greater total shareholder value by creating independent companies that will be more appropriately valued by the market. Each new public company created from these transactions will be a proven industry leader, and each will go forward with a global market position; a
strong and experienced management team; an entrepreneurial culture; an
independent Board of Directors and significant financial strength.


    Under the plan, unanimously approved by the company's Board of Directors,
Tyco's world-leading healthcare; fire protection & flow control; and financial
services businesses will be taken public through initial public offerings
("IPOs") and then distributed to Tyco shareholders. Tyco's security &
electronics businesses will be combined as a fourth independent, publicly
traded company. Tyco Plastics, one of the United States' largest manufacturers
of plastic film and other plastic products, will be sold.


    Tyco said it expects to complete the first of these IPOs -- Tyco Capital
-- in the second quarter of calendar 2002 and to complete all of the planned
transactions by the end of calendar 2002. Each IPO, distribution or sale of a
business will be subject to customary approvals. No tax approvals are
required for these transactions. The distributions to shareholders are
expected to be treated as returns of capital, which minimize the tax
consequences to most shareholders. Each company will remain based in Bermuda.


    In addition to creating substantial value for Tyco shareholders, these
transactions will have a positive effect on Tyco's balance sheet. Using
proceeds from the IPOs and the sale of its Plastics business, Tyco expects to
eliminate at least $11 billion of debt. Each company will have a strong
balance sheet going forward. A central goal of this plan is to achieve a
financial profile for each industrial company consistent with a solid single A
rating. There will be no material change in the capitalization structure of
Tyco Capital, which currently has a strong single A rating.


    Tyco said its intention is to offer to repurchase most of the public bonds
issued by Tyco International Group S.A. Those bonds not repurchased will
continue to be obligations of the current obligors and holders will be treated
under the terms of the respective indentures. Tyco intends to offer to
repurchase the convertible bonds. Those convertible bonds not repurchased
will continue to be obligations of Security & Electronics. Appropriate
provisions will be made under the terms of the indentures of the convertible
bonds not purchased, which may include having them become convertible into an
appropriate number of shares of each of the four public companies.


    "This is a bold, shareholder-value driven plan that we believe will create
extraordinary near- and long-term benefits for Tyco's shareholders and
bondholders, as well as for our employees and customers," said L. Dennis
Kozlowski, Chairman and Chief Executive Officer of Tyco. "Over the past
decade, Tyco's share price has increased ten-fold as we have used Tyco's size,
access to capital and operating philosophy to build world-class healthcare,
electronics, telecommunications, security, fire protection, flow control, and
financial services businesses. These businesses have now developed to a size
and stage where they can thrive on their own and perhaps be even more agile
than Tyco. The plan we are announcing today is the logical extension of the
same value creation strategy we have successfully pursued for nearly a


    "Furthermore, as independent, public companies, each of these businesses
will offer investors a 'pure-play' opportunity with excellent growth prospects
and greatly increased simplicity, clarity and transparency. As such, we
believe each will be valued substantially higher than the implied valuations
it has received in recent years as part of Tyco."


    Mr. Kozlowski continued, "I am extremely proud of Tyco's performance. We
have built a great portfolio of businesses and over the five years ended
September 30, 2001, we have delivered earnings per share growth at a
compounded annual rate of over 40% and industry-leading operating profit
margins in each of our businesses. During this same period, we have increased
annual free cash flow from $240 million in 1996 to $4.8 billion in fiscal
2001. Nonetheless, even with this performance, Tyco is trading at a 2002 P/E
multiple of 12.0x, a discount of almost 50% to the S&P 500.

    "The plan announced today is designed to close that gap -- the gap between
Tyco's market value in recent years and the value of our businesses. Our
objective has always been to deliver value to our shareholders. That is why
we are taking this action today, and why we are all very excited about the


    Business Unit Overview

    The pro forma results for the businesses described below are presented as
if the proposed structure was in place for the year ended September 30, 2001.
Pro forma operating profit and margins are earnings before non-recurring
charges and credits, interest, taxes and goodwill amortization. Results for
Tyco Capital's business are pre-tax profits, before goodwill amortization, as
reported for the four quarters ended September 30, 2001. Results before non-
recurring items are commonly used as a basis for operating performance, but
should not be considered an alternative to operating income determined in
accordance with generally accepted accounting principles.


    Security & Electronics
    Pro Forma 2001 Revenues          $17.6 billion
    Pro Forma 2001 Operating Profit    $4.2 billion
    Pro Forma 2001 Margin             23.7%


    With pro forma 2001 revenues of approximately $17.6 billion, Tyco's
Security & Electronics business would consist of the world's largest and most
respected residential and commercial security services company, and one of the
world's largest manufacturers of a broad range of high quality electronic
component products; multi-layer printed circuit boards; electrical and
electronic components; power systems; and fiber optic and wireless
interconnection solutions.


    Many of the components being utilized for the basic infrastructure of
security monitoring are the same products and systems being developed and sold
by Tyco's electronic manufacturing units for the computer, telecommunications
and other electrical and electronic markets. Bringing these units together as
one publicly traded company is the logical extension of the development of
both the security and electronics manufacturing units.


    Dennis Kozlowski will be Chairman and CEO, and Mark Swartz will be CFO, of the Security & Electronics company.


    The world's leading provider of electronic security services and event
monitoring, Tyco security services are provided worldwide under the ADT trade
name. Tyco recently completed acquisitions of Sensormatic, a supplier of
electronic security systems and the leader in integrated sourcing tagging for
consumer goods, and SecurityLink Protection Services, which expanded ADT's
capabilities in the market for personal emergency response systems. Tyco
monitors over seven million customer sites.


    Tyco Electronics' products have potential uses wherever an electronic,
electrical, computer or telecommunications system is used and are becoming
increasingly critical to the performance of these systems as signal speeds and
bandwidth increase to accommodate voice, data and video communications
convergence. This business combines the historical leadership in the
interconnect industry of AMP with forward-looking companies like ASG, Elcon,
Elo TouchSystems, HTS, M/A-Com, Raychem and Tyco Telecommunications (formerly

TyCom).   Tyco Electronics manufactures and sells more than 200,000 parts in
over 450 global product lines. Tyco Electronics serves over 200,000 customers
in more than 55 countries, and maintains a strong local presence in the
regions where it operates. Tyco Telecommunications provides global broadband
capacity through the TyCom Global Network, and designs, manufactures,
installs, operates and supports turn-key subsea optical networks for many of
the world's leading carriers.


    Pro Forma 2001 Revenues            $7.1 billion
    Pro Forma 2001 Operating Profit    $1.7 billion
    Pro Forma 2001 Margin             24.4%


    Healthcare is the second largest medical device provider in the world and
offers one of the broadest ranges of disposable medical products in the
industry. It holds world-leading positions in each of its four primary

businesses: Kendall Healthcare, U.S. Surgical, ValleyLab and Mallinckrodt.

    Kendall Healthcare manufactures and markets a broad range of wound care,
needles and syringes, vascular therapy, urological care, incontinence care,
sharps disposal and nursing care products under market-leading brand names,
including Kerlix(R) and Curity(R). U.S. Surgical provides innovative wound
closure products and laparoscopic instrumentation. ValleyLab designs,
develops and manufactures electro- and ultrasonic surgery systems, which are
continuing to raise the standards in patient care and safety in the operating
room.   Mallinckrodt is a global manufacturer of healthcare products for the
respiratory, alternate care, bulk pharmaceutical and diagnostic imaging

    Rich Meelia, who has served as President of Tyco Healthcare since 1995,
will be President and Chief Executive Officer. Chuck Dockendorff will
continue to serve as the company's Chief Financial Officer.


    In May 2001, Tyco announced an agreement to acquire C.R. Bard, Inc., a
leading multinational developer, manufacturer and marketer of healthcare
products used for vascular, urological and oncological diagnosis and
intervention, as well as surgical specialties. The acquisition is contingent
on regulatory clearance under U.S. anti-trust laws.


    Healthcare manufactures, markets and distributes its products directly to
hospitals and medical professionals, as well as through independent
distributors, around the world. Thirty-percent of its fiscal 2001 sales came
from international operations in 75 countries, primarily in Europe, Latin
America and the Asia-Pacific region.


    Fire Protection & Flow Control
    Pro Forma 2001 Revenues          $7.6 billion
    Pro Forma 2001 Operating Profit   $1.3 billion
    Pro Forma 2001 Margin             17.1%


    Tyco is the world's leading provider of fire detection, prevention and
suppression products, installation and services, and a top global manufacturer
of standard and highly specialized valve and control products. The two
businesses are being combined to take advantage of significant operating and
marketing synergies. The two groups serve a host of common customers and
market segments, and a substantial portion of Tyco's valve and flow control
products are used by the company's fire protection businesses. Fire
Protection & Flow Control will also include Allied Tube, the leading fire
protection pipe manufacturer in the United States, and Tyco Infrastructure
Services (formerly Earth Tech), a global leader in the water, environmental,
transportation, and construction marketplace.


    Tyco's fire protection units design, install and service automatic fire
sprinkler systems, fire alarm and detection systems, and special hazard
suppression systems. These businesses operate through a worldwide network of
sales offices under the trade names: Simplex/Grinnell, Wormald, Mather &
Platt, Total Walther, O'Donnell Griffin, Dong Bang, Ansul and Tyco. In May
2001, Tyco acquired Scott Technologies, expanding its line of fire protection
products to include respiratory systems and other life-saving devices for the
firefighting and aviation markets.


    Tyco's flow control operations manufacture valves in a wide variety of
configurations serving markets in the water distribution, power generation,
chemical, oil and gas, pulp and paper, commercial irrigation, mining and
industrial process, and plumbing industries, among others. Its valves and
related products are sold under several trade names such as: Keystone,
Grinnell, Hindle, KTM, Flow Control Technologies, among others.


    Fire Protection & Flow Control will be run by Chief Executive Officer
Jerry Boggess, who has led Tyco's Fire business since 1989. Jack Guarnieri, a
senior finance executive within the flow control business, will be its Chief
Financial Officer.


    Financial Services
    Pro Forma 2001 Revenue            $5.4 billion
    Pro Forma 2001 Pre-tax Earnings   $1.2 billion


    Tyco Capital is a leading, global source of financing and leasing capital
and an advisor for companies in more than 30 industries. Managing
approximately $50 billion in assets across a diversified portfolio, Tyco
Capital, formerly known as CIT, offers vendor, equipment, factoring, consumer,
and structured financing capabilities. Tyco Capital operates extensively in
the United States and Canada with strategic locations in Europe, Latin and
South America, and the Pacific Rim.


    Tyco Capital has established itself as the financing leader in a variety
of industries. It has a number one position in vendor financing, factoring,
construction equipment financing, and Small Business Administration loans. It
is also a leader in printing, machine tools, rail, corporate aircraft,
commercial aerospace, asset-based and credit-secured lending and
advisory-structured finance.


    Al Gamper will continue to serve as President and Chief Executive Officer
of Tyco Capital. Joe Leone will continue as Executive Vice President and
Chief Financial Officer.


    Since its acquisition by Tyco on June 1, 2001, Tyco Capital has divested
over $5 billion of non-core, less profitable assets and reduced annual
operating expenses by $150 million. In December 2001, Tyco Capital announced
an agreement to acquire McGrath RentCorp, a leading rental provider of modular
offices, classrooms and electronic test equipment. The transaction is subject
to customary regulatory review and approval by McGrath RentCorp shareholders.


### ################################# ######################


Leasing Association Membership Numbers


Membership figures:


Association for Governmental Leasing and Finance

Eastern Association of Equipment Lessors

Equipment Leasing Association

Mid- America Association of Equipment Lessor

National Association of Equipment Leasing Brokers

United Association of Equipment Leasing


                            AGLF    EAEL  ELA  MAEL  NAELB  UAEL


December 2000    250       240       850    135        475       589


June 2001             250        213      731    140        598       310


December,2001   343        228       873    140        415       379



  Meet the Leasing News Maker  Thursday, 1pm, California time


    Michael Meacher, President,

         National Association of Equipment Leasing Brokers


If you have questions about why the drop in membership, about the broker association, its future, its past, who belongs and why, and should your

company join, or if you have compliments or complaints---join us

this Thursday at 1pm, PDT





Classified Ad---Two Attorney/One Recruiter



Our first attorney ads:


 city: Los Angeles

 submit1: Submit Your Attorney Posting

 state: CA

 area covered: California - statewide

 type: ELA

 description: 5-attorney creditors rights lawfirm, in biz 25 yrs +, specialize all

 aspects of creditor representation. Primarily represent equipment lessors

&> funders, plus collection and creditor rep. in bankruptcy.





city: Hackensack

state: NJ

areacovered: NY Metro and National

type: ELA

description: Attorney specializing in equipment lease matters for at least

10 years with a 50-State operating network of attorneys experienced in

leasing matters.


Our second recruiter listing:


"Recruiters International, Inc., a boutique executive search firm, would

like the opportunity to formally introduce ourselves to any individuals

in the equipment leasing and commercial finance industries needing

assistance in securing new employment. 


The restructuring of the industry has left many unemployed or uncertain

of their future.  Please contact RII to see how we can assist you. 


Please forward our contact information to anyone you know who may be

interested in securing new employment currently or in the near future, I

am sure they would also appreciate the introduction.


To learn about RII, you may contact us via e-mail.  We look forward to

hearing from you!




Emily Fitzpatrick

ELA Member

(504) 571-1041

Fax: (504) 571-1040

Recruiters International, Inc."








  Asks For Your Confidential Assistances, Bank Accounts Numbers


  Mastermind Behind All Nigerian E-Mail for Money Transfers


Lagos, Nigeria ( — Saying he had finally found a venue worthy of his business model, Kenneth Lay resigned today as chairman of Enron to join the Energy National Resource Organization of Nigeria, which needs your confidential assistance in the transferring of offshore funds into a new company of Nigeria that will provide incredible profit on paper by the trading of energy contracts.


According to an email sent to undisclosed recipients by Lay, who now identifies himself as "name withheld “, he is interested to do business with  leasing companies because of credible reports that they will recognize this opportunity of great wealth and they are not too smart. All that is required, the letter stated, is your banking accounts number and your purchase of stock of this energy trading company that has no traceable losses or shell companies or indictable irregularities of any kind.


Dr. Tunde Momoh, director of the Nigerian National Petroleum Ministry, which is coordinating the E.N.R.O.N. initiative, said the addition of Lay to his staff has given a boost to all Nigerian government ministries, which traditionally earned revenues by asking you to provide your bank account number so as to make possible the transfer of $US50 million from a soon-to-be-exposed Ministry fund. For your assistance, you would receive 20 percent of these moneys.


"We are thrilled to have now someone of Mr. Lay's experiences," said Momoh a Bib Bee. "It is rare to find a non-Nigerian who is familiar with our methods and objectives, and his idea for the creating of the energy trading company E.N.R.O.N. is inspired."


"When I am first hearing of it, I admit it has the sound of crazy," Momah added, "but (Lay) is telling us that based on his experiences, this could work for years.

I can’t wait to start sending e-mails to leasing companies."


Contacted at his confidential fax number, Lay said he was excited by the change, and predicted he would adapt easily to Nigerian methods. "It's a new country and I've had to learn to muddle a bit my syntax, but the basic business approach is something we both have in common," he said. "I only wish I had started here first."


Lay added that, as he did at Enron, where he served as both chairman and chief executive officer, the new job will enable him to take part in several Nigerian businesses, including stints as Dr. Chukwuma Mbaduwa, an accountant in the Nigerian Transport Ministry, Abu Idomu, a top official of the federal government contract review panel, and the Lady Maryam Abacha, wife of late Gen. Sani Abacha, ex-military head of state of Nigeria, whose assets have been frozen except for $50 million she stuffed in a box labeled as photographic materials which she deposited in a security company where her brother-in- law works as general manager and she now needs your assistance in retrieving these moneys.


Be prepared for a personal e-mail from Mr. Lay asking you to help him remove

money from Nigeria to help his beleaguered company in the United States.



 ( courtesy of Patricia Galich  )




Advanta Business Cards Results Up 40% Year On Year



SPRING HOUSE, Pa--Advanta Corporation (NASDAQ:ADVNB; ADVNA) today announced fourth quarter net income for Advanta Business Cards of $11.4 million, up 48% from $7.7 million for the fourth quarter 2000. Advanta Business Cards net income for full year 2001 rose 40% to $39.1 million as compared to $27.9 million for 2000. Results for 2000 are based on an effective tax rate of 38.5% for comparative purposes.


Advanta Corp. reported consolidated net income for the quarter of $7.8 million or $0.30 per share for Class A and Class B shares combined on a diluted basis. Included in consolidated net income for the quarter is a $2 million pretax asset valuation charge associated with the Company's venture capital portfolio due to the continued weakness in the current venture capital market. For full year 2001, the Company reported a net loss of $70.5 million or $2.75 per share on a diluted basis for its Class A and Class B shares combined, reflecting results of discontinued operations, asset valuation and restructuring and other unusual charges recorded in prior periods.


Operating results from continuing business segments were $0.42 per share for the fourth quarter of 2001 and $1.41 per share for the full year 2001 for Class A and Class B shares combined on a diluted basis.


"We have met our 2001 earnings goal during an uncertain economy and unusual times. While we are proud of this accomplishment, we are now focused on seizing the tremendous opportunity afforded to Advanta and its shareholders by the small business market during 2002 and beyond," said Chairman and Chief Executive Officer Dennis Alter. "Our intent is to build an enduring, highly profitable and growing enterprise while maintaining 20% earnings growth and approximately a 2% return on managed receivables."


For the quarter, Advanta Business Cards earned an after tax return on average managed receivables of 2.3% on an annualized basis as compared to 2.2% for third quarter 2001 and 2.0% for fourth quarter 2000. The increased returns are principally due to increases in risk-adjusted margin, from 12.7% for the fourth quarter of 2000 to 12.9% for the third quarter of 2001 and 13.5% for the fourth quarter of 2001. The improvement in risk-adjusted margin during the quarter resulted from the favorable interest rate environment which more than compensated for an anticipated increase in charge-offs. Consistent with the forecasted seasoning of the business card portfolio and the current economic environment, over 30 day delinquencies were 6.7% at December 31, 2001 and charge-offs were 8.7% on an annualized basis for the quarter. Advanta Business Cards ended the year with managed receivables of $2.04 billion, as compared to $1.66 billion at year end 2000.


 ( for those who report not being able to contact Advanta Leasing for problems, payoff,

disputes, you might want to try these numbers included in the press release: )


Full Report and Statistical Supplement Available at -




Advanta Corp


David Weinstock


Vice President, Investor Relations


(215) 444-5335




Catherine Reid


Vice President, Communications


(215) 444-5073

### ################################### #####################



ePlus to Speak at the National Association of Procurement Professionals--NAPP--2002 Conference





ePlus Executive Addresses Improving Profitability and Reducing Capital


Expenditures by Integrating eProcurement with Critical Back-Office


Business Functionality


ePlus, Inc., (Nasdaq:PLUS), a leading provider of business solutions and services,  announces that Kley Parkhurst, Senior Vice President, will speak today at the Tenth Annual NAPP Conference being held in Marco Island, Florida. The theme of this year's conference is, "eProcurement in the New Economy: Transformation, Integration, Collaboration."


Mr. Parkhurst will deliver a presentation to conference attendees addressing the issues faced by companies continually striving to maximize profitability given fluctuating economic conditions and changing business models. Taking into account the collaborative nature of eCommerce, Mr. Parkhurst will address how the benefits of an eProcurement solution extend across the entire enterprise by integrating business processes and associated enterprise functionality.


"Analysts predict that in the next four years, eMarket activity will grow to at least $1.5 trillion in total online trade. Today's businesses need to capitalize on the growing technology market to bring more and more business processes online," said Mr. Parkhurst. "By streamlining purchasing cycles and addressing internal processes such as fulfillment, asset and back-end business and financial operations, a substantial ROI will boost the bottom line significantly."


With over 10 years of experience and sustained profitability, ePlus offers total business process automation through the seamless integration of products and services. ePlusSuite consistently helps clients achieve their goals by leveraging a combination of collaborative disciplines such as business and financial services, asset management, eProcurement, and IT Sales and Services.


Those interested in receiving a copy of Mr. Parkhurst's presentation, "Integrating Critical Back Office Business Processes to Improve Profitability" can do so by visiting the ePlus website at


About ePlus


A leading provider of Web-based e-procurement, asset management, financing, leasing, sourcing, and eContent technology and services, ePlus delivers comprehensive and high-value business solutions. The ePlusSuite of products and services, including Procure+, Manage+, Finance+, Service+, Content+, and ePlusMarket, helps businesses around the world dynamically streamline, improve and gain management control. ePlus solutions integrate and automate each aspect of the supply chain process: from requisition to approval, fulfillment, financing and asset management, delivering the highest return on investment.


ePlus(TM), ePlusSuite(TM), Procure+(TM), Manage+(TM), Service+(TM), B14ZR(TM), OneSource(TM), OneReq(TM), CLG(TM) and MarketBuilder(TM) are trademarks of ePlus Inc. Finance+(SM) is a registered service mark of ePlus inc. ePlus Jumpstart(SM), and ePlus Content Framework(SM), are service marks applied for of ePlus.


Founded in 1990, the company is headquartered in Herndon, VA and has more than 30 locations in the US. For more information, visit our website at, call 800/827-5711 or email to


"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release which are not historical facts may be deemed to be "forward-looking statements". Actual and anticipated future results may vary due to certain risks and uncertainties, including, without limitation, general economic conditions; the possibility of defects in our products or catalog content data; our ability to hire and retain sufficient personnel; our ability to protect our intellectual property; the creditworthiness of our customers; our ability to raise capital and obtain non-recourse financing for our transactions; our ability to realize our investment in leased equipment; our ability to reserve adequately for credit losses; fluctuations in our operating results; our reliance on our management team; and other risks or uncertainties detailed in our Securities and Exchange Commission filings.




ePlus, inc., Herndon


Lisa Savino, 631/775-1261


################# #####################################


Pacific Capital Bancorp Reports Fourth Quarter and Full Year 2001 Financial Results


 ( Parent of  Leasing Division  SANTA BARBARA BANK & TRUST)




SANTA BARBARA, Calif.--( --Pacific Capital Bancorp (Nasdaq:SABB), a multi-community bank holding company with $3.96 billion in assets, yesterday announced financial results for the quarter ended December 31 and the full year 2001.


For the fourth quarter of 2001, the Company reported earnings of $10.3 million, or $0.39 per diluted share. This compares with $12.3 million, or $0.46 per diluted share, reported for the fourth quarter of 2000. Reported earnings for the full year 2001 were $56.1 million, or $2.11 per diluted share, compared to $51.5 million, or $1.93 per diluted share, reported for 2000. Full year 2000 core earnings (reported earnings exclusive of merger-related expenses) were $56.8 million, or $2.13 per diluted share.


Based on reported earnings, the Company's return on average equity and return on average assets for the fourth quarter of 2001 were 12.48% and 1.07%, respectively, compared to 16.95% and 1.35%, respectively, for the fourth quarter of 2000. Full year 2001 return on average equity and return on average assets were 17.46% and 1.45%, respectively, compared to 18.06% and 1.40% for 2000. Based on core earnings for 2000, return on average equity and return on average assets were 19.93% and 1.55%, respectively.


"In almost all respects, we were able to meet or exceed the fourth quarter targets we set at the time of our last earnings announcement, which enabled us to come in at the high end of the range of our earnings per share expectations," said William S. Thomas, Jr., President & Chief Executive Officer. "We achieved this despite the impact of a 50 basis point reduction in the Federal Funds rate on our net interest margin, which was 25 basis points more than we had anticipated.


"In particular, the company is responding well to our mandate for tighter expense controls. This is illustrated by the improvement we achieved in our efficiency ratio for the fourth quarter -- 57.3% compared with 62.2% in the third quarter.


"The economic conditions of our Central Coast markets and the impact on our loan portfolio was close to what we had expected for the fourth quarter. The credits we had previously identified as presenting increased risk in the hospitality, tourism and commercial segments were reclassified into less favorable categories. Aside from those areas, our loan portfolio continues to demonstrate good stability and we are seeing quality lending opportunities in all areas of our markets.


"During the fourth quarter, we also seized the opportunity to grow our market share in the northern portion of our geographic footprint, and we will be able to do so without incurring the costs of adding new branches. Our First National Bank subsidiary signed an agreement to acquire the loan, deposit and safe deposit accounts of the Monterey and Watsonville branches of California Bank & Trust. These accounts will be combined with nearby First National branches in those communities in March 2002, and this transaction will be accretive to our earnings in 2002," said Thomas.


Financial Highlights


During the fourth quarter of 2001, total interest income was $61.7 million, compared with $71.9 million in the same period last year. This decrease occurred as the lower rates earned on loans offset the positive impact of higher loan balances.


Total interest expense for fourth quarter 2001 was $18.7 million, compared with $28.1 million for the fourth quarter of 2000, as rates on deposits also decreased.


Net interest margin for the fourth quarter 2001 was 5.01%, compared with 5.39% in the same quarter of 2000, and 5.16% in the third quarter of 2001.


"As the dramatic cuts in interest rates have subsided, the rates on our deposits are catching up to the rates on our loans, so we believe we have hit the low point with respect to our net interest margin," said Thomas, "assuming a relatively flat interest rate environment going forward."


Loan demand continued to be steady throughout the Company's network of community banks. Total loans increased $81.1 million, or 3.0%, during the fourth quarter, to $2.80 billion at December 31, 2001. This compares to $2.72 billion at the end of the prior quarter. In particular, the Company saw strong loan originations in the consumer, commercial and residential real estate segments of its portfolio.


The Company has begun the process of providing funds for its Refund Anticipation Loan (RAL) program. As a result, it has added $158 million in brokered CDs, with maturities of one and two months. Including the impact of the brokered CDs, total deposits increased 7.4%, to $3.37 billion during the fourth quarter, compared with $3.13 billion at the end of the third quarter of 2001. Excluding the brokered CDs, deposit totals increased by approximately $75 million during the fourth quarter of 2001.


Non-interest income for the fourth quarter 2001 increased $2.8 million, or 24.7%, to $14.2 million, compared with $11.4 million in the fourth quarter of 2000. Service charges on deposit accounts increased for the fourth quarter to $3.4 million, up 13.6% over the fourth quarter of last year. Income from other service charges, commissions and fees for the quarter ended December 31, 2001, increased $0.8 million, or 21.2%, over the same quarter of 2000.


During the fourth quarter of 2001, other operating income was $3.0 million. This included one major nonrecurring item: a gain on sale of the merchant bankcard portfolios of its subsidiaries First National Bank, and Los Robles Bank (recently integrated into Santa Barbara Bank


Trust). In the third quarter of 2001, First Data Corporation, which operates First Data Merchant Services, purchased the merchant bankcard portfolio of Santa Barbara Bank & Trust, the Company's principal subsidiary, and the same terms apply to the fourth quarter transaction. First Data will provide a dedicated sales force that will market merchant bankcard services under the names of the Company's community banks, and a shared revenue agreement is in place through 2011.


The Company's operating efficiency ratio for the fourth quarter 2001 was 57.3% compared with 63.1% for the same period of last year. This compares with an efficiency ratio of 62.2% in the third quarter of 2001.


"The reduction in expenses from the third quarter level is the result of a number of steps we have taken, including managing staffing levels and related costs," said Thomas. "We expect to make continued progress with our efficiency ratio as we reduce expenses in 2002 below 2001 levels, while continuing to increase our revenues."


Asset Quality and Capital Ratios


During the fourth quarter, the Company increased its allowance for credit losses, exclusive of RALs, by recording provisions for credit losses of $8.8 million, in line with its expectations.


For the quarter ended December, 31, 2001, the allowance for credit losses increased to $48.9 million, or 1.75% of total loans, compared to $43.9 million, or 1.61% of total loans, at September 30, 2001. This compares favorably with the industry average of 1.49% of total loans for the Company's peer group, based on data provided as of September 30, 2001.


Total nonperforming loans decreased $0.5 million in the fourth quarter to $20.1 million at December 31, 2001, representing 0.72% of total loans. This is below the industry average of 0.93% of total loans for the Company's peer group, based on data provided as of September 30, 2001. This results in a coverage ratio (allowance for non-RAL credit losses) of nonperforming loans of 243%.


Total non-performing assets at the end of the fourth quarter of 2001 represented 0.51% of total assets, down from 0.55% of total assets in the prior quarter. This is below the Company's peer group average of 0.66% of total assets, based on data provided as of September 30, 2001.


The Company has a strong and consistent track record of recovering a high percentage of its charged-off loans, ranging between 28%-44% over the past four years, exclusive of RALs. In the fourth quarter 2001, the Company had one very large recovery totaling $2.9 million that positively impacted net charge-offs. Net charge-offs (exclusive of RALs) for the three months ended December 31, 2001, were $3.3 million, compared with $1.0 million for the three months ended December 31, 2001.


For the full year 2001, net charge-offs to total average loans (both exclusive of RALs) were 0.33%, unchanged from 2000. This compares favorably to the Company's peer group average of 0.35%, based on data provided as of September 30, 2001.


The Company's capital ratios and those of its subsidiary banks continue to be above the well-capitalized guidelines established by bank regulatory agencies.


Share Repurchase Program Update


On June 25, 2001, Pacific Capital Bancorp announced that its board of directors had authorized the repurchase of up to $20 million of its common stock. Through December 31, 2001, the Company had purchased 520,346 shares of its common stock at an average per share price of $28.97, for a total price of $15.07 million. The Company expects to complete this share repurchase program during the first quarter of 2002.




Pacific Capital Bancorp reiterated that it expects 2002 fully diluted earnings per share to range between $2.30 and $2.36. This guidance is based on the assumption that interest rates will remain relatively flat in 2002. For the first quarter of 2002, fully diluted earnings per share are expected to range from $0.90 to $0.94.


In the first quarter of 2002, the Company expects its net interest margin, exclusive of RALs, to remain consistent with the fourth quarter level and then trend upward throughout the year as its CDs reprice. For the full year, including RALs, net interest margin is expected to range from 5.47% to 5.60%.


Provision for credit losses are expected to be higher in 2002 than the Company experienced in 2001. For the full year, provision for loan losses is expected to range from $33 million to $36 million, with a greater portion taken in the first half of the year. This range includes approximately $6.4 million associated with the RAL program that will be taken in the first half of the year.


"Our growth in 2002 will be driven by a continued stream of lending opportunities, and we are projecting loan growth of approximately 5% in 2002," said Thomas. "We are also expecting deposit growth of approximately 3%. Our niche businesses will again be strong contributors, and we expect that the RAL/RT programs will have another highly profitable year. We are also committed to reducing our 2002 expenses below 2001 levels. We have already made good progress in this respect and I am confident that we can achieve an efficiency ratio in the low 50s by the end of 2002, which would be one year ahead of our previously stated goal.


"We are very optimistic as we move into 2002. The national economic conditions that made 2001 so challenging appear to be abating somewhat, and we are well positioned to capitalize on the more favorable operating environment we expect as the year progresses. We look forward to resuming our solid track record of earnings growth in 2002 and delivering value for our shareholders," said Thomas.


Management stressed that its target earnings per share estimate for 2002 is based upon current economic conditions and contingent upon a number of factors not within its control, including but not limited to unanticipated changes in the interest rate environment; any significant deterioration in general economic conditions that would adversely affect the Company's markets, customers or businesses; additional events such as those of September 11 which might significantly impact the nation's banking system; and substantially increased energy costs in California that would adversely impact the state's consumers and businesses.


Pacific Capital Bancorp will host a conference call to discuss fourth quarter 2001 financial results and operational highlights at 8:00 a.m. Pacific Time on Tuesday, January 22, 2002. Members of the public are invited to listen to the Company's live quarterly conference call via the Internet. To hear the call, log on at the Shareholder Relations page of the Pacific Capital Bancorp web site at For those who cannot listen to the live broadcast, a replay of the conference call will be available shortly after the call at the same location.


Pacific Capital Bancorp is the parent company of Santa Barbara Bank & Trust, First National Bank of Central California and its affiliates South Valley National Bank and San Benito Bank. Pacific Capital Bancorp is a 41-branch community bank network serving customers in six Central Coast counties from Morgan Hill in the north to Westlake Village/Thousand Oaks in the south. In addition to traditional services, the Company's subsidiary banks offer a complete menu of trust and investment management services from the largest full-service trust division located between San Jose and Los Angeles.







Pacific Capital Bancorp


Deborah K. Lewis, 805/884-6680

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