The decline was primarily attributable to an increase of $825,000 in provision for loan losses, a $294,000 increase in non-interest expense, and a decline in net interest income of $234,000, partially offset by a $263,000 gain on the sale of securities.
For the year ended December 31, 2007, Pacific Mercantile Bancorp’s income from continuing operations and net income each totaled $5.8 million, or $0.53 per diluted share, as compared to income from continuing operations of $7.1 million, or $0.66 per diluted share and net income of $6.9 million, or $0.64 per diluted share, in the period of 2006.
The decline in income from continuing operations in the year ended December 31, 2007 was primarily attributable to a decline in net interest income of $941,000, or 2.9%, an increase of $920,000 in the provision for loan losses, and a $1 million, or 5%, increase in non-interest expense, which included a $443,000 charge for the accelerated recognition of debt issuance costs resulting from the redemption of $10.3 million of junior subordinated debentures during the third quarter of 2007.
Nancy Gray, executive vice president and CFO of Pacific Mercantile, said: Over the last four months of 2007, the Federal Reserve Board reduced the federal funds rate by one hundred basis points. This reduction affected our net interest margins in the short term since we have more assets that re-price immediately, while our liabilities re-price over a longer period of time.
