Costa Mesa-based bank Pacific Mercantile Bancorp said it has declined to accept a $25.5 million government investment.
The funds, as part of the Treasury Department’s Troubled Asset Relief Program, were deemed too costly, according to the bank.
Banks taking part in the program that was set up to stimulate the economy with new loans are required to pay interest on the funds they receive.
Pacific Mercantile’s Chief Executive Raymond Dellerba also said there was a risk of the government changing the rules for banks receiving the funds.
“It could adversely affect the company in ways that are not foreseeable or measurable, creating uncertainties that make planning for the future more difficult,” he said.
A number of banks that already received government funds have been looking to return them, he said.
Pacific Mercantile is the county’s largest homegrown bank with $1.1 billion in assets as of the end of last year, according to government data.
It is considered a takeover target because of its size. The billion-dollar asset mark tends to bring local banks to the attention of acquirers.
The bank was approved to receive federal money in February. Dellerba said last fall that bank was well capitalized and did not need the funds.
