In the latest news regarding financially embattled Pacific Capital Bancorp — the parent company of Santa Barbara Bank & Trust and four other Central Coast banks — the holding company has allegedly cancelled the health benefits of its retirees. A former bank administrator who claimed to have had access to the company’s innermost financial workings said on the condition of anonymity that the writing was on the wall spelling out the bank’s eventual demise as early as 2003. “I’d say it had been coming since they hired a consultant to install a whole new core system (a computer system regulating account transactions and so-called customer relationship management, or CRM). The system conversions were the beginning of a lot of mismanagement,” said the source, adding that the new system was installed without adequate testing. “[Pacific Capital Bancorp] has a history of hiring consultants and then not following through with their recommendations. It’s a huge expense for the company.”
Following a 300-person layoff in March, Pacific Capital reported more than $400 million in losses during the first nine months of 2009. The value of company stock, in which many retired employees had invested their retirement funds, plummeted from almost $20 per share last year to less than a dollar at the end of last year. The company attempted to revamp some of its losses with controversial Refund Anticipation Loans (RALs), typically targeted at poorer areas where recipients needed advances on income tax returns. The former bank administrator who spoke with The Independent said that aside from being viewed by many as a predatory action, it was a risky investment. The revocation of health insurance this month, said the source, was just icing on the cake. “They handled it by sending a FedEx letter. An insurance agent called an hour later to tell me that my last day of coverage is February 28.” The former employee has until February 12 to decide whether or not to continue the coverage, which will cost nearly twice as much.