Pacific Mercantile Bancorp in Costa Mesa, Calif., has restructured its planned stock sale to an institutional investor in a move that will save it almost $1 million and increase a key capital ratio.
The $1 billion-asset company said Wednesday that it will now sell the Carpenter Funds an additional $10.8 million in common stock instead of that same amount in preferred stock. The Carpenter Funds will now purchase $26.3 million in common stock, instead of the previously announced $15.5 million.
The bank said it expects to save $907,200 annually in preferred stock dividends and improve its Tier 1 capital ratio with the change.
Pacific Mercantile has been under a regulatory order with the California Department of Financial Institutions to maintain a tangible regulatory capital ratio above 9% since. After turning a profit of $11.2 million in 2011 — its first annual profit since 2007 — the company reported tangible capital ratio of 9.4%.
Pacific Mercantile also said Wednesday that Raymond E. Dellerba will remain president and chief executive of the company and its banking unit, Pacific Mercantile Bank. When Pacific Mercantile first announced the capital raise in August, it also said that it was searching for a CEO to run the day-to-day operations of its banking unit so that Dellerba could focus on larger strategic initiatives. Under that plan, Dellerba would have remained CEO of the holding company and become vice chairman of the bank.
Pacific Mercantile's shares were trading Wednesday afternoon at $4.06, down more than 5% from Tuesday's closing price.