Costa Mesa-based Pacific Mercantile Bancorp reported a net loss of $30.5 million for its third quarter, which ended in September. The bank had a loss of $4.7 million in the second quarter and a $321,000 profit a year ago.
The bank charged off $7.7 million, primarily as a result of three loans that are unlikely to be repaid.
It also said that about $48 million in loans were downgraded because of credit and collateral shortfalls and set aside a $10.7 million loan-loss provision, a 23% increase from the prior quarter, for the charge-offs and downgraded loans.
“These loan losses are unacceptable. … We have taken and continue to take steps necessary to deliver improved performance that creates value for shareholders” said Tom Vertin, president & CEO of Pacific Mercantile Bancorp.
“Our new credit team has now reviewed all 679 of the bank’s commercial and commercial real estate credits, assisted by three independent loan review firms, and we have made a number of changes to strengthen our overall credit administration,” he said.
The bank said it had $124.3 million in new loan commitments, $73.9 million in loan fundings, and a $17.6 million increase in core deposits in the quarter.