Pacific Mercantile Bancorp, the holding company for Pacific Mercantile Bank, has decided that it will not participate in the US Treasury Department’s capital purchase programme.
The company has earlier received preliminary approval to participate in the capital purchase programme (CPP) and obtain a capital investment of up to $25.5m from the US Treasury.
Raymond Dellerba, president and CEO of Pacific Mercantile Bancorp, said: In deciding not to participate in the troubled asset relief programme (TARP), our board of directors considered a number of factors, including the belief that the costs of capital obtainable under that programme are relatively high and concerns that the Treasury Department or Congress may impose new operational requirements or restrictions, retroactively, on TARP participants that could adversely affect the company in ways that are not foreseeable or measurable, creating uncertainties that make planning for the future more difficult.
For those reasons, a growing number of banking institutions that took TARP funds have announced that they now want to return those funds. Without acceptance of the TARP funds we continue to be a well-capitalised banking institution under federal regulatory guidelines.
The capital purchase programme is a voluntary programme designed to assist financial institutions in increasing the flow of financing to US businesses and consumers as a way of stimulating the US economy. The CPP is available to bank holding companies, financial holding companies, insured depository institutions and savings and loan holding companies that engage solely or predominately in activities that are permissible for financial holding companies under relevant law.
