Written Agreement



 EXHIBIT 10.4 

UNITED STATES OF AMERICA 

BEFORE THE 
 BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 
 WASHINGTON, D.C. 

 
  

					
	 	 		  	
	Written Agreement by and between	 		  	
	 	 		  	Docket No. 10-094-WA/RB-HC
	 		
	PACIFIC CAPITAL BANCORP	 		  	
	Santa Barbara, California	 		  	
	 		
	and	 		  	
	 		
	FEDERAL RESERVE BANK OF	 		  	
	 SAN FRANCISCO	 		  	
	San Francisco, California	 		  	
	 	 		  	

  
 WHEREAS, Pacific Capital
Bancorp (“PCB”), a registered bank holding company, owns and controls 
 Pacific Capital Bank, National Association, Santa Barbara,
California (the “Bank”), a national bank, and 
 various nonbank subsidiaries; 

WHEREAS, it is the common goal of PCB and the Federal Reserve Bank of San Francisco (the “Reserve 

Bank”) to maintain the financial soundness of PCB so that PCB may serve as a source of strength to the Bank; 

WHEREAS, PCB and the Reserve Bank have mutually agreed to enter into this Written Agreement (the 

“Agreement”); and 

WHEREAS, on May 7, 2010, the board of directors of PCB, at a duly constituted meeting, adopted 

a resolution authorizing and directing Edward E. Birch to enter into this Agreement on behalf of PCB, and 

consenting to compliance with each and every provision of this Agreement by PCB and its institution-affiliated 

parties, as defined in 







 sections 3(u) and 8(b)(3) of the Federal Deposit Insurance Act, as amended (the “FDI Act”)

 (12 U.S.C. §§ 1813(u) and 1818(b)(3)). 

NOW, THEREFORE, PCB and the Reserve Bank agree as follows: 

Source of Strength 

1.      The board of directors of PCB shall take appropriate steps to fully utilize PCB’s financial
and 
 managerial resources, pursuant to section 225.4(a) of Regulation Y of the Board of Governors of the Federal 

Reserve System (the “Board of Governors”) (12 C.F.R. § 225.4(a)), to serve as a source of strength to the Bank, 

including, but not limited to, taking steps to ensure that the Bank complies with the consent order entered into 

with the Office of the Comptroller of the Currency on May 11, 2010 and any other supervisory action 

taken by the Bank’s federal regulator. 

Dividends and Distributions 

2.      (a)    PCB shall not declare or pay any dividends without the prior written
approval of the Reserve 
 Bank and the Director of the Division of Banking Supervision and Regulation (the “Director”) of the Board
of 
 Governors of the Federal Reserve System (the “Board of Governors”). 

(b)    PCB shall not directly or indirectly take dividends or any other form of payment representing a 

reduction in capital from the Bank without the prior written approval of the Reserve Bank. 

(c)    PCB and its nonbank subsidiaries shall not make any distributions of interest, principal, or 

other sums on subordinated debentures or trust preferred securities without the prior written approval of the 

Reserve Bank and the Director.  
  

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 (d)    All requests for prior approval shall be received by the Reserve
Bank at least 30 days prior to 
 the proposed dividend declaration date, proposed distribution on subordinated debentures, and required notice

 of deferral on trust preferred securities. All requests shall contain, at a minimum, current and projected 

information on PCB’s capital, earnings, and cash flow; the Bank’s capital, asset quality, earnings, and 

allowance for loan and lease losses; and identification of the sources of funds for the proposed payment or 

distribution. For requests to declare or pay dividends, PCB must also demonstrate that the requested declaration 

or payment of dividends is consistent with the Board of Governors’ Policy Statement on the Payment of Cash 

Dividends by State Member Banks and Bank Holding Companies, dated November 14, 1985 (Federal Reserve 

Regulatory Service, 4-877 at page 4-323) . 

Debt and Stock Redemption 

3.      (a)    PCB and any nonbank subsidiary shall not, directly or indirectly, incur,
increase, or guarantee 
 any debt without the prior written approval of the Reserve Bank. All requests for prior written approval shall

 contain, but not be limited to, a statement regarding the purpose of the debt, the terms of the debt, and the 

planned source(s) for debt repayment, and an analysis of the cash flow resources available to meet such debt 

repayment. 

(b)    PCB shall not, directly or indirectly, purchase or redeem any shares of its stock without the 

prior written approval of the Reserve Bank. 

Capital Plan 

4.      Within 90 days of this Agreement, PCB shall submit to the Reserve Bank an acceptable written plan

 to maintain sufficient capital at PCB on a consolidated basis. The plan shall, at a minimum, address, consider, 

and include: 

(a)    The consolidated organization’s and the Bank’s current and future capital 

 

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 requirements, including compliance with the Capital Adequacy Guidelines for Bank Holding 

Companies: Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and D of Regulation Y 

of the Board of Governors (12 C.F.R. Part 225, App. A and D) and the applicable capital adequacy guidelines 

for the Bank issued by the Bank’s federal regulator; 

(b)    the adequacy of the Bank’s capital, taking into account the volume of classified credits, 

concentrations of credit, allowance for loan and lease losses, current and projected asset growth, and projected 

retained earnings; 

(c)    the source and timing of additional funds necessary to fulfill the consolidated organization’s

 and the Bank’s future capital requirements; 

(d)    supervisory requests for additional capital at the Bank or the requirements of any supervisory 

action imposed on the Bank by its federal regulators; and 

(e)    the requirements of section 225.4(a) of Regulation Y of the Board of Governors (12 C.F.R. § 

225.4(a)) that PCB serve as a source of strength to the Bank. 

5.      PCB shall notify the Reserve Bank, in writing, no more than 30 days after the end of any quarter in

 which any of PCB’s capital ratios fall below the approved plan’s minimum ratios. Together with the 

notification, PCB shall submit an acceptable written plan that details the steps that PCB will take to increase 

PCB’s capital ratios to or above the approved plan’s minimums. 

Cash Flow Projections 

6.      Within 60 days of this Agreement, PCB shall submit to the Reserve Bank a written statement of its

 planned sources and uses of cash for debt service, operating expenses, and other purposes (“Cash Flow 

Projection”) for the remainder of 2010. PCB shall submit to the 

 

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 Reserve Bank a Cash Flow Projection for each calendar year subsequent to 2010 at least one month prior to

 the beginning of that calendar year. 

Affiliate Transactions 

7.      (a)    PCB shall take all necessary action to ensure that the Bank complies
with sections 23A and 
 23B of the Federal Reserve Act (12 U.S.C. §§ 371c and 371c-1) and Regulation W of the Board of Governors

 (12 C.F.R. Part 223) in all transactions between the Bank and PCB. 

(b)    PCB shall not cause the Bank to violate any provision of sections 23A and 23B of the Federal 

Reserve Act or Regulation W of the Board of Governors. 

Compliance with Laws and Regulations 

8.      (a)    In appointing any new director or senior executive officer, or changing
the responsibilities of 
 any senior executive officer so that the officer would assume a different senior executive officer position, PCB

 shall comply with the notice provisions of section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of 

Regulation Y of the Board of Governors (12 C.F.R. §§ 225.71 et seq.). 

(b)    PCB shall comply with the restrictions on indemnification and severance payments of section 

18(k) of the FDI Act (12 U.S.C. § 1828(k)) and Part 359 of the Federal Deposit Insurance Corporation’s 

regulations (12 C.F.R. Part 359). 
 Progress
Reports 
 9.      Within 30 days after the end of each calendar quarter following the date of
this Agreement, the 
 board of directors shall submit to the Reserve Bank written progress reports detailing the form and manner of 

all actions taken to secure compliance with the provisions of 
  

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 this Agreement and the results thereof, and a parent company only balance sheet, income statement, and, as

 applicable, report of changes in stockholders’ equity. 

Approval and Implementation of Plans 

10.    (a)    PCB shall submit a written capital plan that is acceptable to the Reserve Bank
within the 
 applicable time period set forth in paragraph 4 of this Agreement. 

(b)    Within 10 days of approval by the Reserve Bank, PCB shall adopt the approved capital plan. 

Upon adoption, PCB shall promptly implement the approved plan, and thereafter fully comply with it. 

(c)    During the term of this Agreement, the approved capital plan shall not be amended or 

rescinded without the prior written approval of the Reserve Bank. 

Communications 

11.    All communications regarding this Agreement shall be sent to: 

(a)    Mr. Kevin Zerbe 

         Vice President 

         Banking Supervision and Regulation 

         Federal Reserve Bank of San Francisco 

         101 Market Street, Mail Stop 920 

         San Francisco, California 94105 

(b)    Mr. Edward E. Birch 

         Chairman of the Board 

         Pacific Capital Bancorp 

         1021 Anacapa Street 

         Santa Barbara, California 93102 

Miscellaneous 

12.    Notwithstanding any provision of this Agreement, the Reserve Bank may, in its sole discretion, 

grant written extensions of time to PCB to comply with any provision of this Agreement. 

 

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 13.    The provisions of this Agreement shall be binding upon PCB and
its institution-affiliated parties, in 
 their capacities as such, and their successors and assigns. 

14.    Each provision of this Agreement shall remain effective and enforceable until stayed, modified, 

terminated, or suspended in writing by the Reserve Bank. 

15.    The provisions of this Agreement shall not bar, estop, or otherwise prevent the Board of Governors,

 the Reserve Bank, or any other federal or state agency from taking any other action affecting PCB, the Bank, 

any nonbank subsidiary of PCB, or any of their current or former institution-affiliated parties and their 

successors and assigns. 

16.    Pursuant to section 50 of the FDI Act (12 U.S.C. § 1831aa), this Agreement is enforceable by the

 Board of Governors under section 8 of the FDI Act (12 U.S.C. § 1818). 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the
11th day of 

May, 2010. 
  

 

											
	PACIFIC CAPITAL BANCORP	 	 FEDERAL RESERVE BANK

 SAN FRANCISCO
	 	
		 		 	
		 		 	
						
	By:	 	 /s/ Edward E. Birch
	 		 	By:	 	 /s/ David E. Reiser
	 	
		 	    Edward E. Birch	 		 		 	    David E. Reiser	 	
		 	    Chairman of the Board	 		 		 	    Examining Officer	 	

  

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