COSTA MESA, Calif., Aug. 18, 2010 (GLOBE NEWSWIRE) -- Pacific Mercantile Bancorp (Nasdaq:PMBC) today reported its results of operations for the second quarter and six months ended June 30, 2010.
During the three and six months ended June 30, 2010 our banking operations generated improvements in net interest income and non-interest expense and we also were able to reduce the provisions we made for loan losses, as compared to the same interim periods of 2009. Moreover, although those improvements were more than offset by increases in non-interest expense, we were able to reduce our pre-tax losses in the three and six months ended June 30, 2010 to $3.0 million and $2.8 million, respectively, from $9.4 million and $11.7 million in the same three and six months of 2009.However, management, the Audit Committee and the Board of Directors determined that we should recognize a $9.0 million non-cash charge in the second quarter of 2010 to provide an additional valuation allowance against the Company's deferred tax asset, which increased our net losses to $12.0 million for the quarter and six months ended June 30, 2010. Since a valuation allowance is established by means of a non-cash charge, this additional valuation allowance will not affect the Company's cash or liquidity in any way. In addition, notwithstanding the net losses, the Company and the Bank continue to qualify as well-capitalized institutions under applicable bank regulatory guidelines. The deferred tax asset represents timing differences in the recognition of certain tax benefits for accounting and tax purposes, including the expected value of its future income tax savings that will be available to the Company to offset its expected future taxable income with the carry forward of its net operating losses. The Company decided to establish the valuation allowance against the deferred tax asset in part because it is uncertain when it will realize such tax savings. In the future, the Company may be able to reduce some or all of the valuation allowance upon a determination that it has become more likely, than not, that it will be able to realize such tax savings. In that event, we would be able to reduce our future tax liability to the extent of those savings.