The Mechanics Bank Turns 100: East Bay Bank Pioneered First Consumer Loans in California

Business Wire, Oct 25, 2005

RICHMOND, Calif. -- East Bay-based The Mechanics Bank, a $2.5 billion community bank still principally owned by the family that founded it, turns 100 on October 28, 2005. It's one of only a handful of California banks that have achieved centenarian status while still locally owned and controlled.

In its 100 years of operation, it has pioneered such innovations as the first personal automobile and appliance loans in the state to the first drive-through banking facility, and it also offered some of the first ATMs. Today, it is a thriving, 32-office organization that has more than doubled in size in less than ten years. Its founding family is still deeply involved with management issues and committed to maintaining the bank's independence.

Although chartered under The Mechanics Bank name in 1907, its roots go back to The Iverson Bank and Trust Company, founded in Richmond in 1905. Shortly after it was renamed as The Mechanics Bank in 1907, well-known local banker Edward M. Downer joined the organization, and by 1919, he had purchased a controlling interest. Three generations later, his grandson, Eddie Downer III, serves as chairman of the board. "Our family has always been proud of the stability and continuity we've brought to it," said Chairman Downer. "We have no plans to give up the bank's independence or our commitment to the communities we serve."

To insure this stability and the smooth transition to the next generation of family owners, Dianne Daiss Felton, a great-granddaughter of the founder and vice chairman of the bank's board, led efforts in creating a Family Council.

"We want every family member to feel connected and committed to our community banking mission," Felton said. "It's a challenge with such a large, diverse group of people, but there's real consensus that we don't want The Mechanics Bank to lose its unique identity. We want each family member to clearly understand the competitive advantage that we have in our ownership structure and work to enhance it."

Learning banking from the ground up

E. M. Downer, Sr. learned banking from the ground up -- literally. Before he joined The Mechanics Bank, friends and neighbors brought their money to be kept in a small floor safe in his office in Pinole. A notable public figure of his day, he published one of the East Bay's first weekly newspapers, acted as the local postmaster and telegrapher, served as chairman of the Pinole-Hercules school board for 25 years, and served as mayor of Pinole, a position he held until his death. It was the perfect education for a community banker.

The Mechanics Bank has always been headquartered in Richmond (which also turned 100 this year) and it grew up with the city. During the 1920s the city was recognized as a major West Coast industrial center, home to major facilities of Standard Oil (now Chevron), the Santa Fe Railroad and the Ford Motor Company. The bank provided financial services for the corporations and their employees. Its deep roots in the community served to ensure its survival during the Great Depression, when many other banks throughout the nation failed.

World War II and its aftermath brought unprecedented local prosperity. Responding to war-time demand, Kaiser Shipbuilding moved to Richmond, triggering an influx of 70,000 new residents. The Mechanics Bank, under the new leadership of E.M. Downer Jr., responded with a host of appealing new consumer banking products and services, and assets quadrupled from 1941 to 1945. It became a major financial force in the East Bay, and to this day retains the largest market share of any bank in west Contra Costa County.

The bank's steady growth stayed close to home in the years following the war. But in the past decade, it has widened its footprint to central Contra Costa, Oakland, San Francisco, Marin, Napa Valley and the Sacramento Area. At 100 years, it has become one of the largest community banks in Northern California.

A mission to serve the community

Though the population and business activity in its market has shifted, the bank's mission as a community bank has been rock solid. The Mechanics Bank strives to provide a broad range of products and services that meet the needs of the richly diverse businesses and individuals in the communities where it operates -- including many new innovations that have set it apart from competitors. In 2003, it formed The Mechanics Bank Community Development Corporation, a certified Community Development Entity that reaches out to businesses in historically underserved low and moderate income areas in Contra Costa, Alameda and San Francisco counties. More recently, it achieved Preferred Lender status for SBA Loan Programs, enabling it to provide significantly faster loan approvals for cash-starved small businesses.

Some 325 civic, charitable and cultural institutions that serve the communities in which the Bank operates benefit from the support of this family-owned institution. Many have received support for decades. "This centennial year, we have committed to ongoing donations of $1,000 per employee to organizations in the communities where we operate," said Downer. "While the total may seem small compared to some major corporations, its impact is magnified because every dime is spent locally."