Richmond’s 109-year-old Mechanics Bank announced in a statement last week that it has entered into an agreement to be acquired by Ford Financial Fund II, of which Dallas billionaire Gerald J. Ford is a managing partner.
Ford Financial agreed to a tender offer to own at least a 51-percent interest in the locally-owned bank, which has 33 locations in Northern California and more than $2.7 billion in assets.
Mechanics Bank shareholders will greatly benefit from the deal, as their stock would be worth “62-percent more than the closing price the day the offer was made,” according to San Francisco Chronicle columnist Andrew Ross.
“Ford intends to ‘roll up’ — as it is known in the private-equity business — community and regional banks like Mechanics, to be sold off as a larger package down the road at a handsome profit,” Ross wrote.
Christa Steele, president and CEO of Mechanics Bank, lauded the deal in a joint statement with Ford Financial on Sept. 25.
“The board strongly believes this transaction represents exceptional value for our shareholders and is in the best interest of our clients and employees,” Steele said. “Ford Financial is a highly successful bank investor with a proven 35-year track record of partnering with financial institutions to facilitate growth.”
Some Mechanics Bank customers are unhappy with the sale announcement and are considering moving their accounts. A main complaint is some customers joined Mechanics expressly because it is a community bank and not one of the financial behemoths, according to Richmond Confidential and social media chatter.
Mechanics Bank got its start when founder E.M. Downer, at one point a railroad station agent in Pinole, began cashing paychecks for fellow railroad workers who trusted him to return with their gold. In 1905, he opened the Bank of Pinole, and in the 1920s what had become Mechanics Bank pioneered personal loans, which the company says is why Mechanics survived the Great Depression while thousands of other banks failed.
In the 1940s, Mechanics Bank served the Henry Kaiser shipyard builders, even after they had lost their jobs after the war ended. During the 1990s, Mechanics expanded beyond West Contra Costa County, opening locations in Walnut Creek, Oakland, Marin, the Napa Valley, San Francisco and the Sacramento region.
The company said it reached nearly $3 billion in assets in 2011 despite the Great Recession.