Pacific Capital To Lay Off 300 Workers By July

PZF-AJC-BD

SANTA BARBARA, Calif. (AP) — Pacific Capital Bancorp will reduce its work force by 22 percent, or 300 jobs, by July in a cost-cutting move.

Late Wednesday, the community bank holding company said it will eliminate 80 positions by the end of this month, and the rest during the second quarter. The cuts will be made across all of its markets and business units.

The company said it expects to save about $20 million a year as a result of the cuts. One-time severance-related costs are expected to be between $3 million and $5 million.

"We continue to operate in a very challenging economy for financial services companies," said George S. Leis, president and chief executive. While eliminating positions was not the first choice, he said, the length and depth of the recession made the move necessary.

The cuts weren't enough for analyst Aaron Deer of Sandler O'Neill Partners, who lowered his price target and earnings estimates on the company after the announcement. Controlling back office expenses has been a focus for the company, Deer said, and he expects the reductions to provide some help in that area. But the need to set aside more money to cover bad loans, and other industry-wide issues give him a "less optimistic earnings outlook," he wrote in a note to clients.