Pacific Mercantile Bancorp (PMBC) in Costa Mesa, Calif., is raising capital and selling bad loans.
The $1 billion-asset company said Tuesday that it would sell $2.2 million shares of common stock to private equity firm Carpenter Funds for roughly $14.8 million.
Pacific Mercantile will contribute the proceeds to a newly formed asset management unit that will buy nonperforming loans and foreclosed real estate from the company's Pacific Mercantile Bank. The newly formed unit would try to sell the loans and real estate.
This is Carpenter's second investment in Pacific Mercantile. The firm invested $26.3 million in Pacific Mercantile last year. The new agreement would lift Carpenter's ownership in Pacific Mercantile to 34% from 28% of outstanding shares.
"Most of the nonperforming assets we will be purchasing from the bank are assets which 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 a press release.
Pacific Mercantile expects to complete its deal with Carpenter by April 15.