WALNUT CREEK, Calif.--(BUSINESS WIRE)--
Mechanics Bank announces strong second quarter 2014 earnings of $6.1
million. The current quarter earnings were well improved over the first
quarter earnings of $1.8 million, bringing year to date net income to
The second quarter earnings were achieved despite one time charges
related to the Voluntary Separation Incentive Program (VSIP) of $5.6
million and additional provisioning to the Bank’s allowance for loan and
lease loss (ALLL) of $4.4 million. Before the YTD one time VSIP expense,
the tax adjusted net income is $11.1 million. The remaining VSIP charges
during the second half of the year is estimated at $450,000.
Tremendous cost savings of $3.5 million (16%) YTD were achieved in the
occupancy, equipment and other categories. When projected through year
end, along with numerous personnel related cost savings, the expense
savings will place the Bank on track to improve its efficiency ratio of
82% to a run rate of approximately 72%. Enhanced scrutiny of monthly
expenditures will be on going, as will the evaluation of key business
lines for profitability.
Significant strides occurred in the second quarter to preserve Mechanics
Bank’s strong credit culture, resulting in an ALLL of $34 million (2.04%
of total loans) at June 30, 2014; Non-performing loans at $28.4 million
were reduced by $5.9 million YTD; Non-performing assets (including OREO)
were reduced by $10.1 million YTD; and Past Due loans were reduced by 8%
YTD and 27% year over year. The Bank will continue taking aggressive
actions to facilitate problem loan resolution.
Total gross loans increased $22 million or 1.3% YTD, even after
significant decreases to problem loans. This loan growth has resulted in
the improved quality of blended earning assets. Streamlining of the
Bank’s internal credit processes and the enhanced commercial and
consumer credit product offerings are expected to accelerate the Bank’s
loan growth through year end and beyond.
Net Interest Margin (NIM) compression precipitated by artificially low
interest rates continues to warrant enhanced scrutiny. Loan retention,
new loan volume, and additional fee generating products and services are
the key focus to top line revenue growth.
“I am pleased with the enhanced depth of expertise and industry
knowledge within the leadership team,” says Christa Steele, President
and Chief Executive Officer at Mechanics Bank. “This will allow the Bank
to position itself for growth organically or by acquisition as we
broaden our footprint.”
About Mechanics Bank
For more than a century, Mechanics Bank has been committed to helping
people build prosperous communities as a trusted financial partner,
forging lasting relationships through teamwork, respect and integrity.
The $3 billion independent bank, based in Northern California, offers
personal banking, business banking, trust, brokerage and wealth
management services. For more information, please visit www.mechanicsbank.com.
David Louis, 510-741-3328
Source: Mechanics Bank