Jackson Hewitt Tax Service Inc., (JTX) disclosed in a regulatory filing on Thursday that Santa Barbara Bank & Trust or SBBT, a division of Pacific Capital Bank, N.A., informed company on December 20, 2009, that it will not be in a position to originate refund anticipation loans or RALs for the 2010 tax season.
Pacific Capital Bank, N.A. is a wholly-owned subsidiary of Santa Barbara, California-based Pacific Capital Bancorp (PCBC).
Jackson Hewitt said it had expected SBBT to provide approximately 75% of its overall program for financial products for the 2010 tax season, including both RALs and Assisted Refunds.
In a statement issued on Thursday morning, Pacific Capital Bancorp said it had received notification from the Office of the Comptroller of the Currency, that it would not receive regulatory approval to originate any RALs during 2010.
Pacific Capital said it has signed a non-binding letter of intent with a private equity firm to sell its Tax Division.
Jackson Hewitt specified that it is separately seeking alternative arrangements for additional financial products. However, the company said its business, financial condition and results of operations would have a material adverse effect, if no alternative sources are obtained or if SBBT's sales of business is not consummated.
Jackson Hewitt's stock tumbled 22.95% or $1.34 in Thursday's trading to close at $4.50. PCBC closed the day's session at $1.08.
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