Union Trust Bancorp., the holding company that owns Union Trust Co. of Maryland and Landmark Financial Services is laying off 77 employees in an effort to offset soaring loan losses and to lower operating expenses.

Notification of the layoffs, which amount to 4 per cent of the company's 1,800 employees began Friday and will continue unti1 year-end, and a bank official said.

Union Trust recently doubled its provision for loan losses, raising that charge from $2.4 million to $4.8 million.

The company's profits of $5.2 million for the first nine months of the year were 5.6 per cent below the same period a year ago although its assets increased 16 per cent.

J. Stevenson Peck, chairman of the holding company said the staff reduction is part of "an overall plan to stem the rapid growth of overhead expense which in recent years has accelerated at a rate faster than that of income growth."

he blamed much of the earnings decline on loan losses but said the resumption of earnings growth depends on streamlining operations.

Peck said Union Trust's plans for 1978 call for "stablizing non-interest expenses in ways that will not reduce services.

Because personnel costs are "a major portion of the cost of doing business" the 4 per cent cut in payroll "will result in a substantial decrease in total expenses" Peck said. Bank of showed operating income increased about $8 million - from $52 million to $60 million - but operating expenses increased more than $10 million - from $45 million to $55 million.

Assets for the first three quarters grew from $968 million to $1,125 billion and loans increased from $566 million to $719 million. Doubling the company's loan loss provision raised the write off rate from 42 per cent of loans to 66 per cent of loans.

A Union Trust source said the uncollectable loans were "typical of what happened to other banks in recent year" - - primarily bad real estate loans.

In addition t 79 Union Trust bank offices in Maryland the company operates 58 branches of Landmark Financial Services a small loan subsidiary plus Union Tidewater Finance Co., an equipment leading company and Union Home Loan Corp., a second mortage lender.

The layofts were made throughout the operations, but did not include any top management personnel,the company spokesman said.