PACIFIC MERCANTILE BANCORP (Form: 8-K, Received: 02/01/2012 16:29:07)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 26, 2012

PACIFIC MERCANTILE BANCORP

(Exact name of registrant as specified in its charter)


California	0-30777	33-0898268
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

949 South Coast Drive, Costa Mesa, California		92626
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (714) 438-2500

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 260.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 3.03

Material Modification to Rights of Security Holders.

Amendment to the Company’s Articles of Incorporation . As described below under Item 5.07 of this Current Report, a special meeting of shareholders (the “Special Meeting”) of Pacific Mercantile Bancorp (the “Company”) was held on January 26, 2012. At that Meeting, the Company’s shareholders approved an amendment to the Company’s Articles of Incorporation which increased the authorized number of shares of the Company’s common stock from 20 million shares to 85 million shares (the “Charter Amendment”). The Charter Amendment, a copy of which is attached hereto as Exhibit 3.1, was filed with the California Secretary of State after the Special Meeting and became effective on January 26, 2012. A description of the reasons for this increase in the authorized number of shares of the Company’s common stock and its possible effects on the rights of the Company’s shareholders is contained in the section entitled “ Approval of Amendment to the Company’s Articles of Incorporation to Increase the Authorized Number of Shares of Common Stock to 85 million Shares ” in the definitive proxy statement (the “Proxy Statement”) filed by the Company with the Securities and Exchange Commission (the “SEC”) on December 20, 2011 for the Special Meeting. That description is incorporated by this reference into this Current Report on Form 8-K.

Amendment to the Rights, Preferences and Privileges of the Company’s Series A Preferred Shares . At the Special Meeting, the Company’s shareholders also approved an amendment to the Certificate of Determination of the Rights, Preferences and Privileges (the “Certificate of Determination”) of the Company’s Series A Convertible 10% Cumulative Preferred Stock (the “Series A Preferred Shares”) to permit dividends on the Series A Preferred Shares to be paid by the Company in shares of its common stock, as well as in cash (“the Series A Amendment”). At the time of the Special Meeting, 11,000 Series A Shares were outstanding, as the other 115,550 Series A Shares, which the Company sold in a private placement between November 2009 and August 2010, had previously been converted by the holders thereof into shares of common stock of the Company at a conversion price of $7.65 per share. The Series A Amendment, a copy of which is attached to this Current Report as Exhibit 3.2, was filed after the Special Meeting with the California Secretary of State and became effective on January 26, 2012.

Thereafter, on January 26, 2012, the Company’s Board of Directors declared a dividend in the amount of the accumulated, but undeclared, dividends on the outstanding Series A Preferred Shares, totaling $206,861, and authorized the issuance, on January 30, 2012, of a total of 37,272 shares of Common Stock to the holders of the outstanding Series A Preferred Shares in payment of those dividends. Pursuant to the applicable provisions of the Series A Certificate of Determination, as a consequence of the payment of those dividends, the 11,000 outstanding Series A Shares automatically converted, at a conversion price of $7.65 per share, into a total of 143,770 shares of the Company’s common stock. As a result, no Series A Preferred Shares remain outstanding and the former dividend and liquidation preferences of the Series A Preferred Shares are no longer in effect.

A description of the reasons for the Series A Amendment and the effects of that Amendment on the rights of the Company’s shareholders is contained in the section of the Proxy Statement entitled “ Approval of Amendment to Certificate of Determination of the Series A Preferred Stock to Permit Payment of Dividends in Shares of Common Stock ” and that description is, by this reference, incorporated into this Current Report on Form 8-K.

Item 5.07.

Submission of Matters to a Vote of Security Holders.

As described in Item 3.03 above, the Company held a Special Meeting of Shareholders on January 26, 2012. There were 12,273,003 shares of the Company’s common stock, 11,000 Series A Preferred Shares and 112,000 shares of the Company’s Series B Convertible 8.4% Preferred Stock (the “Series B Preferred Shares”) eligible to be voted at the Special Meeting. A total of 8,474,602 shares of common stock, 6,000 Series A Preferred Shares and all 112,000 Series B Preferred Shares were present, in person or by proxy, at the Special Meeting, which constituted a quorum at the Meeting. The following is a brief description of and the outcome of the voting on each Proposal presented for a vote of shareholders at the Special Meeting.

Proposal No. 1 . The Company’s shareholders approved, for purposes of satisfying NASDAQ Marketplace Rule 5635, the proposed sale by the Company of up to 2,919,020 shares of common stock, for a total purchase price of $15.5 million, to Carpenter Community Bancfund, LP and Carpenter Community Bancfund-A, LP (the “Carpenter Funds”) pursuant to a Common Stock Purchase Agreement entered into by the Carpenter Funds with the Company on August 26, 2011 (the “Common Stock Purchase Agreement”). Reference is hereby made to that Agreement, a copy of which

is attached as Exhibit 10.6 to the Company’s Current Report on Form 8-K dated August 26, 2011, filed with the SEC on August 30, 2011, which contains the terms and provisions of and the conditions on which such sale of shares is to be made.

The shareholders entitled to vote on approval of Proposal No. 1 were (a) the holders of the outstanding shares of common stock, and (b) the holders of the 11,000 Series A Preferred Shares outstanding and the holders of 75,000 of the Series B Preferred Shares, voting the respective numbers of shares of common stock into which their respective Preferred Shares were convertible (that is, on an “as-converted” basis), with the holders of those three classes of shares voting together as if they comprised a single class of shares. The Carpenter Funds, which own a total of 37,000 Series B Preferred Shares, were not entitled to vote on Proposal No. 1.

Approval of Proposal No. 1 required the affirmative vote of the holders of not less than a majority of the number of shares that (i) were entitled to vote and (ii) were voted on this Proposal at the Special Meeting. A total of 13,826,547 shares were entitled to vote on Proposal No. 1, comprised of 12,273,003 outstanding shares of common stock, and 1,553,544 shares of common stock which were the aggregate number of shares into which the Series A Preferred Shares and Series B Preferred Shares entitled to vote on Proposal No. 1 were convertible. A total of 9,962,796, constituting 72.06%, of those shares were voted on Proposal No. 1 at the Special Meeting. Set forth below are the results of the voting on this Proposal at the Special Meeting:


	FOR					AGAINST					ABSTAIN
	Number		Percent ⁽²⁾			Number		Percent ⁽²⁾			Number		Percent ⁽²⁾
Common and Preferred Shares ⁽¹⁾		9,596,336		96.32	%		294,167		2.95	%		72,273		0.73	%

(1)	Voting together as a single class, with the Preferred Shares voting on an “as-converted” basis.

(2)	As a percent of the 13,823,547 shares entitled to be voted on Proposal No. 1.

Proposal No. 2 . The Company’s shareholders approved the Charter Amendment increasing the authorized number of shares of the Company’s common stock to 85 million shares from 20 million shares. The shareholders entitled to vote on this Proposal No. 2 were (a) the holders of the outstanding shares of common stock voting as a separate class, and (b) the holders of the outstanding shares of common stock, and the holders of 11,000 Series A Preferred Shares and the holders of all 112,000 of the Series B Preferred Shares voting on an as-converted basis, with all of these three classes voting together as a single class of shares. Approval of Proposal No. 2 required the affirmative vote of the holders of not less than (i) a majority of the outstanding number of shares of common stock, and (ii) a majority of the sum of the outstanding shares of common stock and the shares into which the outstanding shares of Series A and Series B Preferred Stock were convertible, voting together as if they comprised a single class of shares. Set forth below are the results of the voting on this Proposal at the Special Meeting.


	FOR					AGAINST					ABSTAIN
	Number		Percent			Number		Percent			Number		Percent
Common Stock ⁽¹⁾		8,098,833		65.99%	⁽²⁾		304,696		2.48%	⁽²⁾		71,073		0.58%	⁽²⁾
Common and Preferred Shares ⁽³⁾		10,282,515		70.81%	⁽⁴⁾		304,696		2.10%	⁽⁴⁾		71,073		0.49%	⁽⁴⁾

(1)	Voting as a single class.

(2)	Percent of the 12,273,003 shares of common stock outstanding.

(3)	Voting together as a single class, with the Preferred Shares voting on an “as-converted” basis.

(4)	Percent of the 14,522,035 shares of voting stock eligible to be voted on Proposal No. 2 by the holders of the Common and Preferred Shares voting together as a single class.

Proposal No 3 . The Company’s shareholders approved an amendment to the Series A Certificate of Determination permitting dividends on the Series A Preferred Shares to be paid in shares of common stock, as well as in cash (the “Series A Amendment”). The shareholders entitled to vote on this Proposal were, and the vote required to approve the Series A Amendment was the affirmative vote of the holders of a majority of, (a) the holders of the 11,000 Series A Shares outstanding, voting as a separate class, and (b) the holders of the outstanding shares of common stock voting together with the holders of the outstanding Series A Preferred Shares and Series B Preferred Shares, voting on an as-converted basis, as if all three classes of those shares comprised a single class of shares. Set forth below are the results of the voting on Proposal No. 3 at the Special Meeting.


	FOR					AGAINST				ABSTAIN
	Number		Percent			Number		Percent		Number			Percent
Series A Preferred Shares ⁽¹⁾		6,000		54.5%	⁽²⁾		—		0.00%		—	⁽³⁾		0.00%	⁽³⁾
Common and Preferred Shares ⁽⁴⁾		10,275,115		70.76%	⁽⁵⁾		290,405		2.00%		92,764			0.64%	⁽⁵⁾

(1)	Voting as a single class.

(2)	As a percent of the 11,000 Series A Shares outstanding.

(3)	The holder of a total of 5,000 Series A Preferred Shares, representing 45.5% of the Series A Shares outstanding, did not vote.

(4)	Voting together as a single class, with the holders of the Preferred Shares voting on an as-converted basis.

(5)	Percent of the 14,522,035 shares of voting stock, which are the total of the number of shares entitled to be voted by the holders of the outstanding shares of common stock and the holders of the outstanding Series A and Series B Preferred Stock (voting on an as-converted basis) on Proposal No. 3.

Proposal No. 4 . The Company’s shareholders approved the proposal to grant discretionary authority to the proxy holders to adjourn the Special Meeting, if necessary to solicit additional proxies if the number of votes cast at the Special Meeting were not sufficient to approve any of Proposals 1, 2 or 3. The holders of the outstanding shares of common stock, and the holders of the Series A Preferred Stock and Series B Preferred Stock, voting on an “as-converted” basis, with all three of those classes of shares voting together as if they constituted a single class of shares, were entitled to vote on this proposal. A total of 10,658,264 of those shares were voted on Proposal 4. Approval of this Proposal required the affirmative vote of the holders of not less than a majority of the voting shares that (i) were entitled to vote and (ii) were voted on this Proposal at the Special Meeting. Set forth below are the results of the voting on this Proposal at the Special Meeting:


	FOR					AGAINST					ABSTAIN
	Number		Percent ⁽²⁾			Number		Percent ⁽²⁾			Number		Percent ⁽²⁾
Common and Preferred Shares ⁽¹⁾		10,122,744		94.98	%		457,467		4.29	%		78,073		0.73	%

(1)	Voting together as a single class, with the Preferred Shares voting on an “as-converted” basis.

(2)	Percent of voting shares voted on this Proposal.

Item 7.01

Regulation FD Disclosure

On January 31, 2012, the Company issued a press release announcing the results of the voting by shareholders at the Special Meeting and the payment of the accumulated dividends on and the conversion into common stock of the outstanding shares of the Series A Preferred Stock, as described in Item 3.03 above. The foregoing is qualified in its entirety by reference to the press release, a copy of which is attached hereto as Exhibit 99.1

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, and such information shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01.

Financial Statements and Exhibits.

(d)

Exhibits . The following exhibits are filed herewith.


Exhibit No.		Description

3.1		Certificate of Amendment of Articles of Incorporation (the “Charter Amendment”)

3.2		Certificate of Amendment of Certificate of Determination of the Rights, Preferences and Privileges of the Series A Preferred Stock (the “Series A Amendment”).

99.1		Press Release issued January 31, 2012, reporting on the results of the voting at the January 26, 2012 Special Meeting of Shareholders and the payment of the dividend on and the conversion into common stock of the Series A Preferred Shares.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	PACIFIC MERCANTILE BANCORP
Date: February 1, 2012
	By:	/s/ NANCY A. GRAY
		Nancy A. Gray, Senior Executive Vice President and Chief Financial Officer

S-1

INDEX TO EXHIBIT


Exhibit No.		Description

3.1		Certificate of Amendment of Articles of Incorporation (the “Charter Amendment”)

3.2		Certificate of Amendment of Certificate of Determination of the Rights, Preferences and Privileges of the Series A Preferred Stock (the “Series A Amendment”).

99.1		Press Release issued January 31, 2012, reporting on the results of the voting at the January 26, 2012 Special Meeting of Shareholders and the payment of the dividend on and the conversion into common stock of the Series A Preferred Shares

E-1

Exhibit 3.1

CERTIFICATE OF AMENDMENT

ARTICLES OF INCORPORATION

PACIFIC MERCANTILE BANCORP

Raymond E. Dellerba and Barbara Palermo hereby certify that:

1. They are the President and Secretary, respectively, of Pacific Mercantile Bancorp, a California corporation (the “Corporation”).

2. The first paragraph of Article III of the Articles of Incorporation of this Corporation is amended to read, in its entirety, as follows:

“The Corporation is authorized to issue two classes of stock to be designated “Common Stock” and “Preferred Stock,” respectively. The total number of shares that this Corporation is authorized to issue is eighty-seven million (87,000,000) shares; eighty-five million (85,000,000) shares shall be Common Stock, no par value per share, and two million (2,000,000) shares shall be Preferred Stock, no par value per share.”

3. The foregoing amendment of the Articles of Incorporation has been duly approved by the Board of Directors of the Corporation.

4. The foregoing amendment of the Articles of Incorporation has been duly approved by the required vote of the shareholders of the Corporation in accordance with Sections 902 and 903 of the California General Corporation Law. The total number of outstanding shares of stock of the Corporation entitled to be voted on the foregoing amendment was (i) 12,273,003 shares of Common Stock, and (ii) 123,000 shares of Preferred Stock, comprised of 11,000 outstanding shares of Series A Preferred Stock and 112,000 outstanding shares of Series B Preferred Stock. The number of shares voting in favor of the amendment exceeded the votes required. The percentage votes required were more than fifty percent (50%) of the outstanding shares of Common Stock, voting as a separate class, and more than fifty percent (50%) of the outstanding shares of Common Stock and Preferred Stock voting together.

Each of the undersigned declares under penalty of perjury that the matters set forth in this Certificate are true of his or her own knowledge.

IN WITNESS WHEREOF, the undersigned have executed this Certificate of Amendment of Articles of Incorporation in Costa Mesa, California on January 26, 2012.

/s/ RAYMOND E. DELLERBA

Raymond E. Dellerba, President

/s/ BARBARA PALERMO

Barbara Palermo, Secretary

Exhibit 3.2

CERTIFICATE OF AMENDMENT

CERTIFICATE OF DETERMINATION

RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS

SERIES A CONVERTIBLE 10% CUMULATIVE PREFERRED STOCK

PACIFIC MERCANTILE BANCORP

Raymond E. Dellerba and Nancy A. Gray hereby that:

1. They are the President and Chief Executive Officer and Senior Executive Vice President and Chief Financial Officer, respectively, of Pacific Mercantile Bancorp, a corporation organized and existing under the laws of California (hereinafter called the “ Corporation ”).

2. Section 4.1 of the Certificate of Determination of Rights, Preferences, Privileges and Restrictions of Series A Convertible 10% Cumulative Preferred Stock (the “Series A Preferred Stock”) of the Corporation is amended to read in its entirety as follows:

“4.1 Dividends on each outstanding share of Series A Preferred Stock shall be payable at a rate per annum of 10% of the Purchase Price Per Share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination, reclassification or similar recapitalization). Dividends shall be payable if, as and when declared by the Board of Directors, solely out of funds lawfully available for the payment of dividends and distributions on shares of its capital stock by the Corporation under applicable laws and regulations or, at the Corporation’s election, with shares of Common Stock, and until paid will be cumulative and will accrue on each share of Series A Preferred Stock from its Original Issue Date until paid in the manner set forth herein. No interest or sum of money or other consideration in lieu of interest will be payable or paid on any accrued but unpaid dividends on Series A Preferred Stock.”

3. Section 4.4 of the Certificate of Determination of Rights, Preferences, Privileges and Restrictions of Series A Convertible 10% Cumulative Preferred Stock of the Corporation is amended to read in its entirety as follows:

“4.4 Upon the conversion of any Series A Shares, whether at the option of the Holder thereof pursuant to Section 8.1 hereof (an “ Optional Conversion ”) or upon the Mandatory Conversion of the Series A Shares pursuant to Section 8.2 hereof, as the case may be, all accrued but unpaid dividends thereon shall be paid, in cash or, at the Corporation’s election, in shares of Common Stock by the Corporation to such Holder, provided, however , that the Corporation shall have first obtained any Required Approvals to pay such dividends and the payment of such dividends shall not constitute a Violation; and provided, further , that for any dividends paid in shares of Common Stock, the number of shares of Common Stock payable shall be calculated by dividing the amount of accumulated but unpaid dividends by the greater of: (i) the Book Value Per Share (as defined below) or (ii) the closing price per share of the Corporation’s Common Stock on the NASDAQ Stock Market (or the principal market on which the Corporation’s Common Stock is then trading, if other than the NASDAQ Stock Market) on the trading day next preceding the date on which such dividends are declared (provided that, in lieu of issuing any fractional shares, Corporation shall either (a) arrange for the disposition of any fractional shares by those entitled thereto or (b) pay in cash the fair value of the fractions of a share as of the time when those entitled to receive those fractions of a share are determined). “ Book Value Per Share ” means the Corporation’s common shareholders’ equity (inclusive of goodwill and other intangible assets of the Corporation), divided by the total number of shares of the Corporation’s Common Stock outstanding, as set forth in or determined from the Corporation’s Quarterly Report on Form 10-Q, Annual Report on Form 10-K or other report last filed by the Corporation with the Securities and Exchange Commission (the “SEC”) pursuant to the

Exchange Act prior to the date on which the dividends are declared (the “Last Filed Exchange Act Report”). In the event that the Corporation is not able to pay any such dividends, either in cash or shares of Common Stock on the Mandatory Conversion Date of the Series A Shares due to an inability to obtain any such Required Approvals or because such payment would constitute a Violation, then, notwithstanding anything to the contrary that may be contained in this Certificate of Determination, the Mandatory Conversion Date shall be extended to such later date as of which such Regulatory Approvals have been obtained or have ceased to be required, as the case may be, and no Violation will result from the payment in cash or shares of Common Stock of such dividends (the “ Extended Mandatory Conversion Date ”) and each outstanding Share of Series A Preferred Stock shall remain outstanding and shall continue to accrue dividends, at the rate specified in Section 4.1 hereof (as the same may have been or may be adjusted as provided herein), until the earlier of (i) such Extended Mandatory Conversion Date or (ii) the date as of which the Holder of such share of Series A Preferred Stock optionally elects, pursuant to Section 8.1 hereof, to convert such Series A Share into Common Stock, provided, however, that if, in such an event, any Holder of any Series A Share so elects to optionally convert such share of Series A Preferred Stock prior to the Extended Mandatory Conversion Date, then the Corporation shall not be required to pay and such Holder shall irrevocably forego completely and absolute, the right to receive any unpaid dividends that have accrued thereon to the date of such Optional Conversion. The inability of the Corporation to pay any accrued but unpaid dividends on any Series A Shares, whether upon any Mandatory Conversion Date or upon an Optional Conversion thereof, due to an inability to obtain any Required Approval or because the payment thereof by the Corporation would constitute a Violation, shall in no event and under no circumstance constitute an arrearage in the payment of such dividends or subject the Corporation to any liability of any kind or nature whatsoever.”

4. The foregoing amendment of the Certificate of Determination of Rights, Preferences, Privileges and Restrictions of Series A Preferred Stock of the Corporation has been duly approved by the Board of Directors.

5. The foregoing amendment of the Certificate of Determination of Rights, Preferences, Privileges and Restrictions of Series A Preferred Stock of the Corporation has been duly approved by the required vote of shareholders in accordance with Sections 902 and 903 of the California Corporations Code. The total number of outstanding shares of stock of the Corporation entitled to vote on the foregoing amendment was (a) 123,000 outstanding shares of Preferred Stock, comprised of 11,000 shares of Series A Preferred Stock and 112,000 shares of Series B Preferred Stock, and (b) 12,273,003 outstanding shares of Common Stock. The number of shares voting in favor of the amendment exceeded the votes required. The percentage votes required were (i) more than fifty percent (50%) of the outstanding shares of the Series A Preferred Stock voting as a separate class, and (ii) more than fifty percent (50%) of all of the outstanding shares of Common Stock and Preferred Stock voting together.

6. Raymond E. Dellerba and Nancy A. Gray declare under penalty of perjury under the laws of the State of California that they have read the foregoing certificate and know the contents thereof and that the same is true of their own knowledge.

Executed on January 26, 2012 at Costa Mesa, California.

/s/ RAYMOND E. DELLERBA

Raymond E. Dellerba

President and Chief Executive Officer

/s/ NANCY A. GRAY

Nancy A. Gray

Senior Executive Vice President and

Chief Financial Officer

Exhibit 99.1

LOGO

949 South Coast Drive, Third Floor

Costa Mesa, CA 92626


FOR IMMEDIATE RELEASE		Member FDIC
For More Information, Contact:		Equal Housing Lender
Nancy Gray, SEVP & CFO, 714-438-2500		Barbara Palermo, EVP & IR, 714-438-2500

Pacific Mercantile Bancorp’s Shareholders Approve the Company’s Proposals

at Its January 26, 2012 Special Meeting of Shareholders

COSTA MESA, Calif., Jan. 31, 2012 (GLOBE NEWSWIRE) — Pacific Mercantile Bancorp (Nasdaq:PMBC - News), the parent holding company of Pacific Mercantile Bank, announced today that its shareholders approved all of the Company’s proposals at its Special Shareholders Meeting held on January 26, 2012. Those proposals included the approval of:

•

The sale of $15.5 million of shares of the Company’s Common Stock to the Carpenter Funds, at a purchase price that will be equal to the book value per share of the Company’s Common Stock, currently $5.55 per share, as part of the second phase of the Company’s previously announced pending equity financing.

•

An increase in the authorized number of shares of the Company’s Common Stock to 85 million shares needed to enable the Company to complete the second phase of the pending equity financing and to provide shares for the resumption of the Company’s strategic growth initiatives; and

•

An amendment to the Certificate of Determination of the Rights, Preferences and Privileges of the Company’s Series A Preferred Stock permitting accumulated dividends on the 11,000 Series A Preferred Shares that remain outstanding to be paid in shares of Common Stock, which will result in the automatic conversion of those Series A Preferred Shares into Common Stock when those accumulated dividends are paid.

The Company also reported today that, with the approval of that amendment to the Series A Certificate of Determination at the Special Shareholders Meeting, the Company’s Board of Directors has declared a dividend on the outstanding shares of the Series A Preferred Stock, totaling $206,861, paid by the issuance, or the setting aside for issuance, of a total of 37,272 shares of Common Stock on January 30, 2012. As a result, all of the remaining Series A Preferred Stock automatically converted into a total of 143,790 shares of Common Stock on that date and no Series A Shares remain outstanding.

Raymond E. Dellerba, the Company’s President and CEO stated, “We are very appreciative of the support we have received from our common and preferred shareholders, which enables us to move forward with our efforts to raise additional capital for the Company and the Bank.”

Completion of the pending equity financing, which is comprised of the sale of the $15.5 million of shares of Common Stock and the sale of $10.8 million of additional shares of Series B Preferred Stock to the Carpenter Funds, remains subject to the satisfaction of certain conditions, including receipt of Federal Reserve Board approval by the Carpenter Funds and, as a result, there is no assurance that the financing can be completed.

About Pacific Mercantile Bancorp

Pacific Mercantile Bancorp is the parent holding company of Pacific Mercantile Bank, which opened for business March 1, 1999. The Bank, which is an FDIC insured, California state-chartered bank and a member of the Federal Reserve System, provides a wide range of commercial banking services to businesses, business professionals and individual clients through its combination of traditional banking financial centers and comprehensive, sophisticated electronic banking services. The Bank operates a total of seven financial centers in Southern California, four of which are located in Orange County, one of which is located in Los Angeles County, one of which is located in San Diego County and the other of which is located in the Inland Empire in San Bernardino County. The four Orange County financial centers are located, respectively, in the cities of Newport Beach, Costa Mesa (which is visible from the 405 and 73 Freeways), La Habra and San Juan Capistrano (which is our South County financial center that is visible from the Interstate 5 Freeway). Our financial center in Los Angeles County is located in the city of Beverly Hills. Our San Diego financial center is located in La Jolla and our Inland Empire financial center is located in the city of Ontario (visible from the Interstate 10 Freeway). In addition to the Bank’s physical locations, it offers comprehensive banking services over its Internet Bank, which is accessible 24/7 worldwide at www.pmbank.com.

Forward-Looking Statements

This news release contains statements regarding our expectations, beliefs and views about our future financial performance and our business, trends and expectations regarding the markets in which we operate, and our future plans. Those statements constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on current information available to us and our assumptions about future events over which we do not have control. Moreover, our business and our markets are subject to a number of risks and uncertainties which could cause our actual financial performance in the future, and the future performance of our markets (which can affect both our financial performance and the market prices of our shares), to differ, possibly significantly, from our current expectations.

These risks and uncertainties include, but are not limited to: The risk that the current economic recovery will continue to be weak and sluggish or that there will be a downturn in the economy, as a result of which we could incur additional credit losses that would adversely affect our results of operations and cause us to incur losses in the future; uncertainties and risks about the effects that the Federal Reserve Bank regulatory agreement and California DFI’s regulatory order may have on our business and results of operations, including the risk of potential future regulatory action against us or the Bank if we are unable to meet the requirements of that regulatory agreement or order; the risk that the second phase of our pending equity financing (discussed in this news release) will not be completed which, among other things, could lengthen the period during which we and the Bank will remain subject to that regulatory agreement and order and could require us to raise equity capital from other sources; the risks that any capital we may need from other sources will not be available on favorable terms or at all and the risk that raising such capital will significantly dilute our existing shareholders; the prospect that government regulation of banking and other financial services organizations will increase generally and more particularly as a result of the implementation of the Dodd-Frank Act, which could increase our costs of doing business and restrict our ability to take advantage of business and growth opportunities; and the risk that our re-entry in the wholesale mortgage banking business may cause us to incur additional operating expenses and may not prove to be profitable or may even cause us to incur losses.

Additional information regarding these and other risks and uncertainties to which our business is subject is contained in our Registration Statement on Form S-3 (SEC File No. 333-177208), which was filed with the SEC and became effective on October 20, 2011, under the Securities Act. Due to those risks and uncertainties, you are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of its date. The discussion of the risk factors contained in the S-3 Registration Statement updates and supersedes the risk factors that are contained in our Annual Report on Form 10-K for the year ended December 31, 2010.

We disclaim any obligation to update or revise any of the forward-looking statements contained in this news release as a result of new information, future events or otherwise, except as may be required by law or NASDAQ rules.