Mechanics Bancorp in Walnut Creek, Calif., posted lower profit after shedding indirect auto loans and restructuring its securities portfolio.
The $20.9 billion-asset company said in a press release that its third-quarter earnings fell by 33% from a year earlier, to $46 million.
Mechanics completed its previously announced sale of $417 million of performing indirect auto loans, resulting in a $10.3 million loss. It also recorded a $32.3 million loss from selling $308 million of low-yielding available-for-sale securities.
The proceeds from the securities sale were reinvested in mortgage-backed securities with higher rates.
The hits were partially offset by a $5.1 million gain on other equity investments that were tied to valuation updates.
“These actions further enhance our earnings profile and position us well for the future,” Nathan Duda, Mechanics’ chief financial officer, said in the release. “At the same time, our credit performance remained strong, supported by a reduction in delinquent loans, disciplined underwriting practices, and ongoing portfolio monitoring.”