Pacific Mercantile Bancorp said Tuesday that it has entered into agreements with its regulators to improve credit quality and boost capital.
The $1.1 billion-asset company in Costa Mesa, Calif., said it has signed a written agreement with the Federal Reserve Bank of San Francisco and consented to a final order from the California Department of Financial Institutions.
The orders, which took effect Aug. 31, require Pacific Mercantile to submit formal plans to strengthen board oversight of the bank's management and operations, reduce problem assets, maintain adequate loan-loss reserves and strengthen capital.
Though Pacific Mercantile had a total risk-based capital ratio of 10.6% as of June 30 — which made it well-capitalized under regulatory guidelines — the state's order required the bank to boost its tangible common equity ratio to 9% by Jan. 31, through raising additional capital, generating earnings or reducing tangible assets.
"The company and the bank have already made progress with respect to several of these requirements," said Raymond E. Dellerba, Pacific Mercantile's chief executive.
He said the bank's financial condition remains strong as it has substantial liquidity.
14-Day Free Trial
Corrected September 8, 2010 at 2:07PM: An earlier version of this story misidentified the company involved. It is Pacific Mercantile Bancorp of Costa Mesa, Calif., not Pacific Capital Bancorp, which is based in Santa Barbara, Calif.