Mechanics Bank 2012 Earnings Rise 30 PercentBoard declares increase in quarterly regular dividend
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WALNUT CREEK, CA, February 11, 2013 — Mechanics Bank today reported 2012 annual net income of $22.3 million, up $5.1 million or 30% from its 2011 earnings ($17.2 million), and the highest since 2007, before the current recession. The Bank is showing some strong earnings momentum coming into 2013, with 4th quarter 2012 net income of $7.3 million, 9% more than the 4th quarter of 2011.
The Bank also declared an increase in the regular quarterly dividend to $110 per share, payable on April 1 to shareholders of record on March 8, 2013. This represents an increase of $25 per share from the regular quarterly dividend that prevailed for the past several years.
“Our strong earnings were driven by reduced provisions to allowance for loan losses and gains in our investment portfolio,” said Dianne Daiss Felton, Chairman of the Board. “Improved credit quality allowed us to significantly reduce loan loss provisions in 2012. Management has done an admirable job managing the loan portfolio and we are confident that the allowance for loan and lease losses is adequate to cover credit losses inherent in the loan portfolio.”
For the 12 months ending December 31, net charge-offs dropped from $22.2 million in 2011 to $7.2 million for the same period in 2012. Non-performing loans as of December 31, 2012 totaled $54.8 million (3.25% of total loans) versus $73 million on December 31, 2011. The allowance for loan losses totaled $29.3 million on December 31, 2012. Most of the non-performing loans reported on December 31, 2012 are secured to some degree by real estate or other forms of collateral.
The Bank’s continued strong deposit growth added $157 million or 6.1%, bringing the total deposits to $2.731 billion on December 31, 2012. Total assets climbed to $3.182 billion, or 6.4% more than a year ago, when they were just short of $3 billion.
“The growth in deposits came primarily in checking and savings balances, representing both low cost deposits and loyal banking relationships,” said Ms. Felton. “Consumers have shown a significant preference for those banks that have proven their commitment to their local communities. They also prefer the personalized client experience that is a hallmark of community banking, and which our employees deliver so well. What further distinguishes Mechanics Bank, however, is our ongoing pursuit of technology-based efficiencies and services that position us for continued success in a competitive and dynamic financial services marketplace. Mechanics Bank offers ‘big bank’ services but will never be too big to care about our clients and communities.”
The Bank’s liquidity increased substantially due to increased deposits and weak quality loan demand. Total loans declined slightly (.16%). Liquid assets, consisting primarily of cash and investment securities, climbed to $1.359 billion on December 31, 2012, or 43% of total assets.
“Our extraordinary liquidity means we are well-positioned to take advantage of the improving California economy,” said Ms. Felton. “Loan growth is a major objective of Mechanics Bank in 2013.”
On December 31, 2012, total Shareholders’ Equity was $308.2 million and the Bank’s simple equity ratio was 9.69%. The Bank remained “well capitalized” by regulatory standards, with a Tier 1 Leverage Capital Ratio of 9.94%, a Tier 1 Risk Based Capital Ratio of 15.26%, and a Total Risk Based Capital Ratio of 16.52%.
“Mechanics Bank has been strong throughout the recession,” said Ms. Felton. “Our high capital levels and strong liquidity ensure we are well positioned to meet our clients’ needs.”
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