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Mechanics Bank 4th Quarter 2010 Earnings Rebound

Profits increase 48% over 2009 Q4 and show a 69% quarter-to-quarter increase

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Richmond, CA, February 7, 2011 -- Mechanics Bank’s 2010 4th quarter earnings were up $1.4 million--or 48%--compared to the same period in 2009. The bank’s $4.3 million of net income in the quarter contributed to a total profit of $11.0 million for the year. Earnings for the 4th quarter were up 69% compared to the 3rd quarter of 2010.

Deposits grew by 2.03% in 2010, to $2.44 billion. Total assets were at $2.89 billion as of December 31, 2010, $53 million less than year-ago levels. The year-to-year decrease in the balance sheet was primarily due to a 2.67% decline of the loan portfolio.

“As has been the story throughout this recession, many qualified borrowers have chosen to sit this one out,” said Steve Buster, Mechanics Bank CEO. “However, we are seeing a gradual rise in demand, and believe that there will be considerable loan growth in 2011.”

Despite 2010 net income of $11.0 million, which was $4.2 million less than 2009 full year profits of $15.2 million, the Bank’s earnings have been steadily improving during the past year and surged through the 4th quarter.

“We believe this positive earnings trend will continue, with an improved earnings outlook for 2011, given signs of improvement and measured growth of the economy,” said Steve Buster, Mechanics Bank CEO.

As has been the case throughout the past two years, Mechanics Bank’s full year profits were affected by increased provisions for loan losses, with $35 million of expense in 2010, compared to $32 million of expense in 2009. At year-end, the bank’s $35.2 million allowance for loan losses was 1.97% of total loans. Its $45.0 million in non-performing loans represented 2.52% of loans outstanding, but most were secured to some degree by real estate or other forms of collateral.

As of December 31, 2010, Mechanics Bank also carried on its balance sheet OREO properties at residual market value totaling $20.1 million, which are being marketed toward eventual sale or liquidation. The total of non-performing loans and OREOs was $65.1 million, which represents 2.25% of total assets at year-end.

“After the past two years of increases in loan loss provisions that took a heavy toll on the bank’s profitability, loan loss provisions have eventually subsided in the last half of 2010,” said Mr. Buster. “In the 4th quarter Mechanics Bank substantially reduced the amount contributed, to $5.0 million compared to $9.0 million in the 3rd quarter and $10.5 million for each of the first two quarters of 2010. We believe we are entering 2011 with a strengthened balance sheet and reserves that are more than adequate to protect our shareholders and preserve our strong credit culture.”

Mechanics Bank’s strong liquidity, consisting of cash, federal funds and investment securities totaled $975 million at December 31, 2010, which was 34% of total assets.

“The good news is that we have plenty of cash to lend, and are thus well positioned for a recovery,” said Mr. Buster.

With shareholders’ equity at $284.6 million at December 31, 2010, the bank’s simple equity ratio was 9.84% of total assets on that report date. The bank’s Tier 1 capital was $287.3 million and the Tier 1 Leverage Capital Ratio of 9.90% and Total Risk Based Capital Ratio of 15.30% placed it significantly above the “well capitalized” regulatory standards.

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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, headquartered in Richmond, California, offers personal banking, business banking, trust, brokerage and wealth management services through 33 offices across Northern California. For more information, please visit

Press Contacts

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Mr. David Louis