COSTA MESA, Calif., Sept. 7, 2010 (GLOBE NEWSWIRE) -- Pacific Mercantile Bancorp (Nasdaq:PMBC) today reported that the Company and its wholly-owned banking subsidiary, Pacific Mercantile Bank (the "Bank"), have entered into a Written Agreement with the Federal Reserve Bank of San Francisco (the "FRB"), effective as of August 31, 2010. On that same date the board of directors of the Bank consented to the issuance of a Final Order by the California Department of Financial Institutions (the "DFI").
The Agreement with the FRB (the "FRB Agreement") and the Order issued by the DFI (the "DFI Order") require us to adopt and implement formal plans, as well as to continue to implement other measures that we previously adopted, to address the adverse consequences that the economic recession has had on the quality of our loan portfolio and our operating results, and to increase our capital to strengthen our ability to weather any further adverse conditions that could arise if the hoped-for improvement in the economy does not materialize.
The FRB Agreement and DFI Order contain substantially similar provisions. Among other things, they require the Boards of Directors of the Company and the Bank to prepare and submit written plans to the FRB and the DFI that address: (i) strengthening board oversight of the management and the operations of the Bank; (ii) improving the Bank's position with respect to its problem assets; (iii) maintaining adequate reserves for loan and lease losses in accordance with applicable supervisory guidelines; and (iv) strengthening the capital positions of the Bank and the Company. The Bank also may not pay dividends to the Company without the prior approval of the FRB and the DFI and, without the approval of the FRB, the Company may not declare or pay cash dividends, repurchase any of its shares, make payments on its trust preferred securities or incur or guarantee any debt.