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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________________________
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report: December 7, 1998
MECH Financial, Inc.
Exact name of registrant as specified in its charter
State of Connecticut 000-23557 06-1500984
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State or other jurisdiction Commission File IRS Employer
of Incorporation Number Identification No.
100 Pearl Street
Hartford, CT 06103
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Address of principal executive offices (Zip Code)
Registrant's phone number: (860) 293-4000
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ITEM 5.
OTHER EVENTS
HARTFORD, CT, DECEMBER 7, 1998. Mechanics Savings Bank, a subsidiary of MECH
Financial, Inc. (NASDAQ: MECH), announced plans to form a passive investment
company called Mechanics Mortgage Company, to take advantage of recent changes
in the Connecticut tax statutes. Connecticut enacted a law which, effective
January 1, 1999, allows state-chartered banks and thrifts to transfer mortgages
into passive investment subsidiaries. Income of the subsidiaries and its
dividends to the parent are exempt from the Connecticut Corporation Business
Tax.
During the first nine months of 1998, Mechanics Savings Bank reported an expense
of $1,069,000 in state income taxes. Had this new legislation been in effect
for 1998, Mechanics would have recognized net income of $8,072,000, a $727,000
or 9.9 percent increase over reported earnings of $7,345,000. Basic earnings
per share would have improved $0.14 per share, from $1.41 per share to $1.55 per
share. Mechanics anticipates realizing similar benefits in future years because
of this reduction in taxes.
Because the Bank will have reduced income for Connecticut tax purposes,
Mechanics established a valuation allowance against its remaining state
deferred tax asset of approximately $1,250,000. This reduction to income will
be recorded during the fourth quarter of 1998.
Mechanics Savings Bank is a Connecticut chartered savings bank with total assets
of $960 million as of September 30, 1998.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused the report to be signed on its behalf by the undersigned
hereunto duly authorized.
MECH Financial, Inc.
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Registrant
Date: December 7, 1998 By: /s/ Thomas M. Wood
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Thomas M. Wood, Executive Vice President
and Treasurer
