(Reuters) – Loss-making lender Pacific Capital Bancorp (PCBC.O) signed a letter of intent to sell its tax division to a private equity fund, as the company seeks to improve its depressed capital levels.
The tax division, or the e-filing financial services division, offers refund anticipation loans and refund transfer tax products, the Santa Barbara, California-based company said in a statement.
Pacific Capital expects to sign a definitive agreement with the prospective buyer prior to the start of 2010 tax season in January.
The company did not disclose any details about the financial terms of the proposed deal.
The prospective buyer is working with a number of institutions to replace the parent company as the originating bank for the tax products, and has indicated that the entire management team of the tax division will be retained, Pacific Capital said.
Pacific Capital also said its regulator, the Office of the Comptroller of the Currency, notified it earlier this month that it would not receive regulatory approval to originate any refund anticipation loan in 2010.
Pacific Capital posted a $40.7 million quarterly loss last month, its sixth in a row, as like other California banks with heavy exposure to the housing market, it struggles to remain profitable amid declining real-estate prices and soaring defaults.
Pacific Capital shares closed at $1.05 Wednesday on Nasdaq. They had traded as high as $17.47 at the start of the year.
(Reporting by Anurag Kotoky in Bangalore; Editing by Unnikrishnan Nair)