Pacific Mercantile Bancorp (PMBC) has completed a deal that should help the Costa Mesa, Calif., company in an effort to shed troubled loans.
The $1 billion-asset company said Wednesday that it had raised $14.8 million by selling 2.2 million shares of common stock to Carpenter Funds, a private equity firm.
Pacific Mercantile is contributing $11 million from the sale to a newly formed asset management unit that is buying nonperforming and foreclosed real estate from the company's Pacific Mercantile Bank. The new unit, which will try to sell the loans and real estate, will try and use the rest of the proceeds to underwrite the cost of managing the assets and to buy more of the bank's troubled loans.
Though proceeds from the stock sale will boost Pacific Mercantile's capital, the company said in a press release that the nonperforming assets remain on its balance sheet and that any expenses or losses they produce will influence financial results.
The assets earmarked for sale "have proven to be the most difficult to sell or resolve due to the poor condition of the properties or the financial difficulties of the borrowers," Raymond Dellerba, Pacific Mercantile's chief executive, said in the release.
The deal lifts Carpenter's ownership in Pacific Mercantile to 34% from 28%. The firm invested $26.3 million in Pacific Mercantile last year.
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