The Board of Directors of Mechanics Bank has finally approved the bank's participation in the U. S. Treasury's Capital Purchase Program (CPP.)

Under the program's terms, the bank will receive $60 million of additional capital in exchange for preferred stock paying a dividend rate of 5 percent per annum for the first five years of the program.

The CPP is part of the Troubled Assets Relief Program (TARP). It is intended to inject additional capital into the banking system to create more stability during these volatile times.

It may be noted that qualifying banks and only strong banks were invited to apply for up to 3% of risk-weighted assets in exchange for preferred stock.