Costa Mesa-based bank operators Pacific Mercantile Bancorp and Pacific Premier Bancorp Inc. have announced plans to raise money through stock sales.
On Tuesday, Pacific Mercantile said it would raise $15.5 million in a private stock sale that it would use for lending, growth and strengthening reserves, the company said.
And on Wednesday, Pacific Premier announced a $20 million common stock offering.
Pacific Mercantile’s investors are being offered preferred shares that convert into common stock at a price of $7.65 each.
Pacific Mercantile’s shares closed up 4% on a market value of $34 million.
The price of Pacific Premier’s stock is to be set by the company and Chicago-based underwriter Howe Barnes Hoefer & Arnett Inc., which has an option to purchase an additional $3 million if more is sold than available.
Shares of Pacific Premier closed down 5.4%, giving it a market value of about $20 million.
Earlier in the year Pacific Mercantile took a pass on receiving government money that it said was too costly.
Pacific Mercantile is the county’s largest homegrown bank with $1.2 billion in assets at the end of June, according to government data.
For the second quarter it posted a loss of $4.5 million compared to a loss of $830,000 in the same period the previous year as bad loans ate into its business.
About $53 million worth of loans weren’t being paid on as of the end of the second quarter, up from nearly $12 million the same time the previous year, according to Pacific Mercantile.
As a result, the bank has set aside more than $20 million to cover itself from loan losses, up from more than $7 million a year ago.
As of the end of the second quarter the bank had a core capital ratio of 7.45%, according to government data.
Regulators typically like to see a ratio above 7% to cushion against potential bad loans.
Its total capital to risk-based assets ratio was 11.4%, which the company said was “well capitalized” by federal banking standards.
This year the bank began mortgage lending after cutting back on construction loans, which have been in a difficult market. Meanwhile, it continues to be active with commercial lending.
Pacific Premier, with assets of nearly $785 million as of the end of the second quarter, has also faced challenges in a difficult economy.
It posted a loss of $713,000 for the second quarter compared to a loss of $1.2 million in the second quarter of the previous year.
Its losses included $1.6 million in charges from bad loans and a $1.3 million loss from investments.
Loans late on payments at the end of the quarter totaled $12.2 million or 2.02% of total loans, and were deemed “very manageable” by the company.
The company had $2.4 million set aside for loan losses at the end of the quarter compared to $836,000 at the same time in the previous year.
The bank held a core capital ratio of 8.5% as of June 30. And its capital to risk-based assets ratio was 11.87%, according to government data.
