Mechanics Bank of Richmond (MCHB)

[Enterprising Investor]

Private equity firm to purchase control of Mechanics Bank (9/25/14)

Richmond-based Mechanics Bank said Thursday that its board has approved Ford Financial Fund's plan to acquire at least 51 percent of the bank.

Dallas-based Ford Financial will offer $26,832 per share, a 62 percent premium to the bank's closing share price of $16,575 on Wednesday. The bank's thinly traded stock (OTC BB: MCHB) did not trade during normal market hours Thursday, according to Yahoo Finance. The offer price values the majority stake in Mechanics at $265.2 million.

Ford Financial, with $755 million in capital commitments, plans to buy up to a 65 percent stake in Mechanics Bank. Ford Financial, which focuses on financial services, is led by co-managing members Gerald Ford and Carl Webb.

"We are impressed by the bank's focus on delivering superior client service, as well as its footprint in markets we know well from our extensive experience in California," Webb said. "We look forward to working with Mechanics Bank to further solidify its position as a leading banking institution."

The $3 billion bank sees the transaction as a move that "will allow the bank's existing shareholders the opportunity to obtain meaningful liquidity while maintaining an equity stake in the bank moving forward," the bank said.

President and CEO Christa Steele, who joined the bank last year, is expected to remain at the helm. The bank's board will be expanded to give Ford Financial three seats.

Earlier this year, Steele told the San Francisco Business Times that she was eager to boost commercial lending. The bank also teamed up with Alamo-based RPM Mortgage this year to enhance its residential-mortgage offerings, a key service for wealth management clients.

The private equity firm's investment may lead to an eventual sale of the entire bank.

For now the 109-year-old bank, currently controlled by the founding family, sees Ford's offer as an avenue for growth.

"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."

Ford Financial's prior investments in California include Pacific Capital Bancorp, which operated Santa Barbara Bank & Trust. Pacific Capital was purchased by Union Bank in 2012. Ford Financial also invested in Golden State Bancorp, which operated California Federal Bank. CalFed was acquired by Citigroup in 2002.

Mechanics Bank's stock has moved higher for much of the year, after finishing 2013 at $13,000 per share.

"We have used 2014 as a year of change in anticipation of a liquidity event to best prepare Mechanics Bank for significant planned growth in 2015 and beyond," Steele said. "I am very excited about Mechanics Bank's future. Our partnership with Ford Financial allows our shareholders a facility for liquidity at an exceptional price and better positions us to pursue value-enhancing initiatives that will ultimately strengthen our ability to better serve our clients and communities."

http://www.bizjournals.com/sanfrancisco/blog/2014/09/mechanics-bank-stake-private-equity-firm-ford-mchb.html?page=all