Mechanics Bancorp (MCHB)

CIK: 0001518715. SIC: 6022 State Commercial Banks. Latest 10-K as of: 2026-03-17.

SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6022 State Commercial Banks

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1518715. Latest filing source: 0001518715-26-000026.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-17. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001518715.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001518715.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001518715-26-000046.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-08. Report date: 2026-03-31.

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Annual Report on Form 10-K”) filed with the SEC. This Quarterly Report contains forward-looking statements that involve risks and uncertainties, including those described in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” There are a number of important risks and uncertainties that could cause our actual results to differ materially from those discussed in these forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in our other disclosures and filings.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including information incorporated by reference herein, contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, contained or incorporated by reference in this Quarterly Report, including statements regarding our plans, objectives, expectations, strategies, beliefs, or future performance or events, are forward-looking statements. Generally, forward-looking statements include the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “look,” “may,” “optimistic,” “plan,” “potential,” “projection,” “should,” “will,” and “would” and similar expressions (or the negative of these terms), although not all forward-looking statements contain these identifying words. Forward-looking statements involve known and unknown risks, uncertainties, assumptions, estimates, and other important factors that could cause actual results to differ materially from any results, performance or events expressed or implied by such forward-looking statements.

We caution readers that actual results may differ materially from those expressed in or implied by the Company’s forward-looking statements. Factors that could affect the Company’s future results from those expressed or implied in any forward-looking statements include, but are not limited to:

•substantial non-recurring and integration costs, which may be greater than anticipated due to unexpected events;

•failure to realize the anticipated benefits of the Merger;

•our ability to effectively manage our expanded operations;

•negative developments and events impacting the financial services industry;

•the soundness of other financial institutions;

•our ability to maintain sufficient liquidity, or an increase in the cost of liquidity;

•unpredictable economic, market and business conditions;

•interest rate risk, and fluctuations in interest rates;

•inflationary pressures and rising prices;

•adverse changes in real estate market values;

•the impact of climate change, including indirectly through impacts on our customers;

•the adequacy of our allowances for credit losses for loans and debt securities;

•incurring losses in our loan portfolio despite strict adherence to our underwriting practices;

•fluctuations in our mortgage origination business based upon seasonal and other factors;

•our geographic concentration, which may magnify the adverse effects and consequences of any regional or local economic downturn;

•the accuracy of independent appraisals to determine the value of the real estate that secures a substantial portion of our loans;

•the ability of our small- to medium-sized borrowers to weather adverse business developments;

•our ability to fully identify and mitigate exposure to the various risks that we face, including interest rate, credit, liquidity and market risk;

•our ability to mitigate our exposure to interest rate risk;

•negative publicity regarding us, or financial institutions in general;

•environmental liability risk associated with our lending activities;

•our ability to manage risks associated with new lines of business, products, product enhancements and services;

•our ability to adapt our services to changes in the marketplace related to mortgage servicing or origination, technology or in changes in the requirements of governmental authorities and customers;

•our ability to develop, implement and maintain an effective system of internal control over financial reporting;

•the potential that we may identify material weaknesses in our internal control over financial reporting in the future, which may result in material misstatements of our financial statements;

•the potential that we may write off goodwill and other intangible assets resulting from business combinations;

•dependence on our management team;

•exposure to fraudulent and negligent acts by our customers and the parties they do business with, as well as from employees, contractors and vendors;

•legal claims and litigation, including potential securities law liabilities;

•employee class action lawsuits or other legal proceedings;

•our ability to raise additional capital, if needed;

•competition from other financial institutions and financial service companies;

•regulatory restrictions that may delay, impede or prohibit our ability to consider certain acquisitions and opportunities;

•extensive supervision and regulation that could restrict our activities and impose financial requirements or limitations on the conduct of our business and limit our ability to generate income;

•our ability to comply with stringent capital requirements;

•the impact of federal and state regulators’ examination of our business;

•our ability to comply with the Bank Secrecy Act and other anti-money laundering statutes and regulations;

•our reliance on dividends from Mechanics Bank;

•our ability to raise debt or capital to pay off our debts upon maturity;

•our level of indebtedness following the completion of the Merger;

•increasing and continually evolving cybersecurity and other technological risks;

•our ability to adapt to rapid technological change;

•our ability to effectively implement new technological solutions or enhancements to existing systems or platforms;

•our ability to manage risks and challenges relating to the development and use of artificial intelligence;

•our dependence on our computer and communications systems;

•our ability to effectively manage and aggregate data;

•Ford Financial Funds and their controlled affiliates control approximately 77% of the voting power of Mechanics Bancorp, and have the ability to elect all of our directors and control most other matters submitted to our shareholders for approval;

•we are a “controlled company” within the meaning of the rules of Nasdaq and, as a result, we qualify for, and rely on, exemptions from certain corporate governance standards;

•future sales of shares by existing shareholders could cause our stock price to decline;

•our reliance on certain entities affiliated with the Ford Financial Funds for services;

•reduced disclosure requirements as a smaller reporting company; and

•certain of our shareholders have registration rights, the exercise of which could adversely affect the trading price of our common stock.

A discussion of the factors, risks and uncertainties that could affect our financial results, business goals and operational and financial objectives is also contained in Item 1A “Risk Factors” included in our 2025 Annual Report on Form 10-K, filed with the SEC. We strongly recommend readers review those disclosures in conjunction with the discussions herein. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, and should not be relied upon as a prediction of actual results or future events.

Forward-looking statements in this Quarterly Report are based on management’s expectations at the time such statements are made and speak only as of the date made. We do not assume any obligation or undertake to update any forward-looking statements after the date of this Quarterly Report as a result of new information, future events or developments, except as required by federal securities or other applicable laws, although we may do so from time to time.

All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and factors that we currently deem immaterial may become material, and it is impossible for us to predict these events or how they may affect us.

51

Overview

Mechanics Bancorp is a financial holding company and primarily operates through 121-year-old Mechanics Bank, a full-service community bank with 166 branches throughout California, Washington, Oregon and Hawaii. Following the strategic Merger of HomeStreet Bank with and into Mechanics Bank on September 2, 2025, with Mechanics Bank surviving the Merger as a wholly owned subsidiary of the Company, the assets, liabilities and operations of HomeStreet Bank became the assets, liabilities and operations of Mechanics Bank. Headquartered in Walnut Creek, California, Mechanics Bank provides a wide range of products and services in consumer and business banking, commercial lending, cash management services, private banking, and comprehensive wealth management and trust services.

General

The Company’s management’s discussion and analysis of results of operations and financial condition (“MD&A”) is intended to assist the reader in understanding and assessing significant changes and trends related to the results of operations and financial condition of the Company. This discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying footnotes in this Quarterly Report on Form 10-Q.

Recent Developments

Presentation of Results - HomeStreet Bank Merger

On September 2, 2025, we completed the Merger of HomeStreet Bank, the wholly-owned subsidiary of Mechanics Bancorp (formerly known as “HomeStreet, Inc.”) with and into Mechanics Bank, with Mechanics Bank as the surviving bank. Mechanics Bank is the accounting acquirer (“legal acquiree”), HomeStreet Bank is the accounting acquiree and Mechanics Bancorp is the legal acquirer. In this Quarterly Report on Form 10-Q, our financial results for all periods ended prior to September 2, 2025 reflect Mechanics Bank’s results on a standalone basis. In addition, our reported financial results reflect Mechanics Bank’s financial results on a standalone basis until the closing of the Merger on September 2, 2025 and results of the combined company beginning September 2, 2025. The number of shares issued and outstanding, earnings per share, and all references to share quantities or metrics of Mechanics Bancorp have been retrospectively restated to reflect the equivalent number of shares issued in the Merger since the Merger was accounted for as a reverse acquisition. As the accounting acquirer, Mechanics Bank remeasured the identifiable assets acquired and liabilities assumed in the Merger as of September 2, 2025 at their acquisition date fair values. The estimates of fair value were recor

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-03-17. Report date: 2025-12-31.

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with

our audited consolidated financial statements and related notes appearing elsewhere in this Annual Report. This Annual

Report contains forward-looking statements that involve risks and uncertainties, including those described in the section

entitled “Forward-Looking Statements.” There are a number of important risks and uncertainties that could cause our

actual results to differ materially from those discussed in these forward-looking statements. We may not actually achieve

the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance

on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and

expectations disclosed in the forward-looking statements we make. Factors that could cause or contribute to such

differences include, but are not limited to, those identified below and those discussed in the section entitled “Risk Factors”

under Part I, Item 1A. of this Annual Report, and those discussed in our other disclosures and filings.

Overview

Mechanics Bancorp is a financial holding company and primarily operates through 121-year-old Mechanics Bank, a full-

service community bank with 166 branches throughout California, Washington, Oregon and Hawaii. Following the

strategic Merger of HomeStreet Bank with and into Mechanics Bank on September 2, 2025, with Mechanics Bank

surviving the Merger as a wholly owned subsidiary of the Company, the assets, liabilities and operations of HomeStreet

Bank became the assets, liabilities and operations of Mechanics Bank. Headquartered in Walnut Creek, California,

Mechanics Bank provides a wide range of products and services in consumer and business banking, commercial lending,

cash management services, private banking, and comprehensive wealth management and trust services.

Other Recent Developments

Presentation of Results - HomeStreet Bank Merger

On September 2, 2025, we completed the Merger of HomeStreet Bank, the wholly-owned subsidiary of Mechanics

Bancorp (formerly known as “HomeStreet, Inc.”) with and into Mechanics Bank, with Mechanics Bank as the surviving

bank. Mechanics Bank is the accounting acquirer (“legal acquiree”), HomeStreet Bank is the accounting acquiree and

Mechanics Bancorp is the legal acquirer. In this Annual Report on Form 10-K, our financial results for all periods ended

prior to September 2, 2025 reflect Mechanics Bank’s historical financial results on a standalone basis. In addition, our

reported financial results for 2025 reflect Mechanics Bank’s financial results on a standalone basis until the closing of the

Merger on September 2, 2025 and results of the combined company from September 2, 2025 through December 31, 2025.

The number of shares issued and outstanding, earnings per share, and all references to share quantities or metrics of

Mechanics Bancorp have been retrospectively restated to reflect the equivalent number of shares issued in the Merger since

the Merger was accounted for as a reverse acquisition. As the accounting acquirer, Mechanics Bank remeasured the

identifiable assets acquired and liabilities assumed in the Merger as of September 2, 2025 at their acquisition date fair

values. The estimates of fair value were recorded based on initial valuations at the Merger date. These estimates are

considered preliminary as of December 31, 2025, are subject to change for up to one year after the Merger date, and any

changes could be material.

Unless we state otherwise or the content otherwise requires, references in this Annual Report on Form 10-K to

“Mechanics,” “we,” “our,” “us” or the “Company” refer collectively to Mechanics Bancorp, Mechanics Bank (the “Bank”)

and other direct and indirect subsidiaries of Mechanics Bancorp, following completion of the Merger. In some instances,

we refer to Mechanics Bank prior to the effective time of the Merger as “legacy Mechanics Bank,” HomeStreet Bank prior

to the effective time of the Merger as “legacy HomeStreet Bank,” and HomeStreet, Inc. prior to the effective time of the

Merger as “legacy HomeStreet, Inc.”

Asset Sale

On December 3, 2025, Mechanics Bank and Fifth Third Bank, National Association (“Fifth Third”), a wholly-owned,

indirect subsidiary of Fifth Third Bancorp, entered into an asset purchase agreement (the “Agreement”), pursuant to and

subject to the terms and conditions of which Mechanics Bank has agreed to sell, and Fifth Third has agreed to purchase,

Mechanics Bank’s Fannie Mae Delegated Underwriting and Servicing (“DUS”) business line (the “Transaction”), which

was acquired in the HomeStreet acquisition, for cash consideration. In connection with the Agreement, Fifth Third will

acquire the DUS servicing portfolio, including the DUS multifamily mortgage servicing rights. The aggregate purchase

46

price in the Transaction is approximately $130 million, subject to adjustment for changes in the fair value at closing of the

DUS multifamily mortgage servicing rights being transferred in connection with the Transaction.

The closing of the Transaction is subject to customary closing conditions, including (a) approval of the Transaction by

Fannie Mae and other regulatory approvals to the extent applicable, (b) the absence of any order, injunction, decree or law

making the Transaction illegal or otherwise preventing the consummation of the Transaction, (c) the accuracy of each

party’s representations and warranties as of the closing date, subject to materiality qualifications, and (d) each party’s

performance of its covenants under the Agreement in all material respects. The sale is expected to close in the first or

second quarter of 2026.

Critical Accounting Estimates

The following discussion and analysis of financial condition and results of operations are based upon our consolidated

financial statements and the notes thereto, which have been prepared in accordance with GAAP and accounting practices in

the banking industry. Certain of those accounting policies are considered critical accounting policies because they require

us to make estimates and assumptions regarding circumstances or trends that could materially affect the value of those

assets, such as economic conditions or trends that could impact our ability to fully collect our loans or ultimately realize the

carrying value of certain of our other assets. Those estimates and assumptions are made based on current information

available to us regarding those economic conditions or trends or other circumstances. If changes were to occur in the

events, trends or other circumstances on which our estimates or assumptions were based, these changes could have a

material adverse effect on the carrying value of assets and liabilities and on our results of operations. As a result of the

Merger, the Company updated critical accounting estimates. Management believes the ACL policy and estimate, the

valuation of single family MSRs and business combinations estimates are important to the portrayal of the Company’s

financial condition and results of operations and requires difficult, subjective, or complex judgments and, therefore,

management considers the following to be critical accounting estimates.

ACL

The Company utilizes a blend of economic forecast scenarios from Moody’s Analytics, specifically, the baseline, upside

(“S1”), and downside (“S3”) scenarios, as key inputs in estimating our ACL. These scenarios are refreshed quarterly and

provide forward-looking assumptions on key macroeconomic indicators such as Gross Domestic Product (“GDP”) growth,

unemployment rates, commercial real estate conditions, interest rates and other market risk factors. Within this framework,

our current expected credit loss models generate PD and LGD at the individual loan or pooled segment level. These

components are modeled using borrower characteristics, loan terms, and scenario-specific economic conditions. The

product of PD and LGD results in the expected credit loss for each instrument, which aggregates into the Bank’s total

ACL. In addition to model-driven outputs, we incorporate qualitative adjustments where management determines other

considerations may be warranted. These adjustments consider factors not fully captured in the models and are reassessed

regularly to ensure reserves remain appropriate. Changes in the Company’s assumptions and economic forecasts could

significantly affect its estimate of expected credit losses, which could potentially lead to significant changes in the estimate

from one reporting period to the next.

MSRs

MSRs are recognized as separate assets when servicing rights are acquired through the sale of loans or through purchases

of MSRs. For sales of mortgage loans, the fair value of the MSR is estimated and capitalized. Purchased MSRs are

capitalized at the cost to acquire. Initial and subsequent fair value measurements are determined using a discounted cash

flow model that is owned and operated by a third party valuation firm. To determine the fair value of the MSR, the present

value of expected net future cash flows is estimated. Assumptions used include market discount rates, anticipated

prepayment speeds, delinquency and foreclosure rates, and ancillary fee income net of servicing costs. The model

assumptions and the MSR fair value estimates are also compared to observable trades of similar portfolios as well as to

MSR broker valuations and industry surveys, as available. We also utilize a separate third-party valuation firm to value our

MSRs on a periodic basis, the results of which we use to evaluate the reasonableness of the modeled values. Actual market

conditions could vary significantly from current conditions which could result in the estimated life of the underlying loans

being different which would change the fair value of the MSR. We carry our single family residential MSRs at fair value

and report changes in fair value through earnings. MSRs for loans other than single family loans are adjusted to fair value

if the carrying value is higher than fair value and are amortized into noninterest income in proportion to, and over the

period of, the estimated future net servicing income of the underlying financial assets.

47

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting. Under this accounting

method, the acquired company’s assets and liabilities are recorded at fair value at the date of the acquisition, except as

provided for by the applicable accounting guidance, and the results of operations of the acquired company are combined

with the acquiree’s results from the date of the acquisition forward. The difference between the purchase price and the fair

value of the net assets acquired (including identifiable intangible assets) is recorded as goodwill or bargain purchase gain.

Management uses significant estimates and assumptions to value such items, including projected cash flows, repayment

rates, default rates and losses assuming default, discount rates, and realizable collateral values. The allowance for credit

losses for PCD loans and PSL is recognized within acquisition accounting. Fair value adjustments are amortized or

accreted into the statement of operations over the estimated life of the acquired assets or assumed liabilities. The purchase

date valuations and any subsequent adjustments determine the amount of goodwill or bargain purchase gain recognized in

connection with the acquisition. The use of different assumptions could produce significantly different valuation results,

which could have material positive or negative effects on our results of operations.

The determination of fair values is based on valuations using management’s assumptions of future growth rates, future

attrition, discount rates, multiples of earnings or other relevant factors. In addition, the Company engages third-party

specialists to assist in the development of fair values. Preliminary estimates of fair values may be adjusted for up to one

year after the date of acquisition, and any changes could be material. Additional information may be obtained during the

measurement period about facts and circumstances that existed as of the effective time of the acquisition that, if known,

would have affected the measurement of the amounts recognized as of that date.

Adjustments recorded during the measurement period are recognized in the reporting period they are identified.

Management uses various valuation methodologies to estimate the fair value of these assets and liabilities and often

involves a significant degree of judgment, particularly when liquid markets do not exist for the particular item being

valued.

Changes in these factors, as well as downturns in economic or business conditions, could have a significant adverse impact

on the carrying value of assets, including goodwill and liabilities, which could result in impairment losses affecting our

financial statements as a whole and our banking subsidiary in which the goodwill is recorded.

48

Summary Financial Data

Year Ended December 31,

(dollars in thousands, except per share amounts)

2025

2024

Select income statement data:

Net interest income

$585,718

$519,169

Provision (reversal of provision) for credit losses on loans

20,503

(1,559)

Provision (reversal of provision) for credit losses on unfunded lending commitments

(987)

52

Noninterest income (loss)

222,905

(139,120)

Noninterest expense

469,557

345,859

Net income before income tax expense

319,550

35,697

Net income

265,739

28,999

Basic earnings per share:

Class A common stock

$1.22

$0.14

Class B common stock

$12.03

$1.37

Diluted earnings per share:

Class A common stock

$1.22

$0.14

Class B common stock

$12.03

$1.37

Basic weighted-average shares outstanding:

Class A common stock

207,512,468

200,878,747

Class B common stock

1,114,448

1,114,448

Diluted weighted-average shares outstanding:

Class A common stock

207,617,154

200,938,167

Class B common stock

1,114,448

1,114,448

Select performance ratios:

Return on average equity

10.57%

1.29%

Return on average tangible equity (1)

17.37%

2.83%

Return on average assets

1.44%

0.17%

Efficiency ratio

58.1%

91.0%

Efficiency ratio (non-GAAP) (1)

55.9%

87.5%

Net interest margin

3.43%

3.31%

(1)Return on average tangible equity, efficiency ratio (excluding the impact of intangible amortization), tangible book value per share, and tangible

common equity ratio are non-GAAP financial measures. For a reconciliation of these measures to the comparable GAAP financial measure or the

computation of the measure, see “Non-GAAP Financial Measures and Reconciliations.”

49

December 31,

(dollars in thousands, except per share amounts)

2025

2024

Selected balance sheet data:

Loans held for sale

$5,967

$543

Loans held for investment

14,176,936

9,643,497

Allowance for credit losses on loans

(153,319)

(88,558)

Investment securities

5,379,535

4,505,745

Total assets

22,351,475

16,490,112

Total deposits

19,024,997

13,941,804

Total long-term debt

192,014

—

Total shareholders’ equity

2,862,375

2,301,868

Other data:

Book value per share

$12.93

$11.40

Tangible book value per share (1)

$7.81

$6.70

Common equity ratio

12.81%

13.96%

Tangible common equity ratio (1)

8.48%

9.10%

Loans to deposits ratio

74.52%

69.17%

Full time equivalent employees

1,921

1,439

Credit quality:

Nonaccrual loans

$42,863

$10,693

Nonperforming assets to total assets

0.23%

0.16%

ACL to total loans

1.08%

0.92%

ACL to nonaccrual loans 

357.70%

828.22%

Nonaccrual loans to total loans

0.30%

0.11%

Nonperforming assets

$51,796

$26,504

Regulatory capital ratios:(2)

Mechanics Bancorp:

Tier 1 leverage capital

8.65%

n/a

Common equity Tier 1 capital

14.09%

n/a

Tier 1 risk-based capital

14.09%

n/a

Total risk based capital

16.27%

n/a

Mechanics Bank:

Tier 1 leverage capital

9.58%

9.66%

Common equity Tier 1 capital

15.59%

16.14%

Tier 1 risk-based capital

15.59%

16.14%

Total risk based capital

16.81%

17.14%

(1)Return on average tangible equity, efficiency ratio (excluding the impact of intangible amortization), tangible book value per share, and tangible

common equity ratio are non-GAAP financial measures. For a reconciliation of these measures to the comparable GAAP financial measure or the

computation of the measure, see “Non-GAAP Financial Measures and Reconciliations.”

(2)On September 2, 2025, HomeStreet Bank merged with and into Mechanics Bank, with Mechanics Bank surviving the Merger and becoming a

wholly-owned subsidiary of Mechanics Bancorp. As a result, for December 31, 2024, regulatory capital ratios are only presented for Mechanics

Bank.

50

Management’s Overview of Financial Performance

2025 Compared to 2024

General: Our net income and income before taxes were $265.7 million and $319.6 million, respectively, for 2025 as

compared to a net income and net income before taxes of $29.0 million and $35.7 million, respectively, for 2024. The

$283.9 million increase in income before taxes compared to 2024 was primarily due to an increase in noninterest income

due to the bargain purchase gain of $145.5 million from the HomeStreet merger in 2025 and the $207.2 million loss on the

sale of lower yielding AFS investment securities as part of a balance sheet restructure in 2024. The increases were partially

offset by an increase in provision for credit losses and an increase in noninterest expense primarily due to acquisition and

integration related costs from the HomeStreet merger of $73.4 million.

Income Taxes: Our effective tax rate for 2025 was 16.8% as compared to 18.8% for 2024 and our federal statutory rate was

21.0%. The $145.5 million bargain purchase gain was the primary reason for the low effective tax rate in 2025.

Net Interest Income: The following table sets forth, for the periods indicated, information regarding (i) the total dollar

amount of interest income from interest-earning assets and the resultant average yields on those assets; (ii) the total dollar

amount of interest expense and the average rate of interest on our interest-bearing liabilities; (iii) net interest income; (iv)

net interest rate spread; and (v) net interest margin. The average yields and rates are based on annualized interest income or

expense for the periods presented.

Year Ended December 31,

2025

2024

(dollars in thousands)

Average

Balance

Interest

Average

Yield/Cost

Average

Balance

Interest

Average

Yield/Cost

Assets:

Interest-earning assets:

Cash and cash equivalents

$1,270,348

$51,975

4.09%

$1,377,338

$69,662

5.06%

Investment securities

4,615,697

179,393

3.89%

4,016,215

131,810

3.28%

Loans (1)

11,063,647

572,272

5.17%

10,177,692

528,514

5.19%

FHLB stock and other investments

118,599

8,124

6.85%

101,598

5,732

5.64%

Total interest-earning assets

17,068,291

811,764

4.76%

15,672,843

735,718

4.69%

Noninterest-earning assets

1,426,002

1,330,445

Total assets

$18,494,293

$17,003,288

Liabilities and shareholders’ equity:

Interest-bearing liabilities:

Interest-bearing deposits:

Demand deposits

$1,505,484

$6,354

0.42%

$1,474,428

$9,177

0.62%

Money market and savings

6,660,081

162,114

2.43%

5,835,061

151,689

2.60%

Certificates of deposit

1,693,105

51,150

3.02%

1,021,679

28,392

2.78%

Total

9,858,670

219,618

2.23%

8,331,168

189,258

2.27%

Borrowings:

Borrowings

2,760

124

4.48%

553,284

26,429

4.78%

Long-term debt

63,976

6,304

9.85%

15,809

862

5.45%

Total interest-bearing liabilities

9,925,406

226,046

2.28%

8,900,261

216,549

2.43%

Noninterest-bearing liabilities:

Demand deposits (2)

5,817,264

5,640,938

Other liabilities

236,997

206,823

Total liabilities

15,979,667

14,748,022

Shareholders’ equity

2,514,626

2,255,266

Total liabilities and shareholders’ equity

$18,494,293

$17,003,288

Net interest income

$585,718

$519,169

Net interest spread

2.48%

2.26%

Net interest margin

3.43%

3.31%

(1)Includes loans held for sale.

(2)Cost of deposits including noninterest-bearing deposits, was 1.40% and 1.35% for 2025 and 2024, respectively.

51

Rate and Volume Analysis

The following table presents the extent to which changes in interest rates and changes in the volume of our interest-earning

assets and interest-bearing liabilities have affected our interest income and interest expense. Information is provided in

each category with respect to: (1) changes attributable to changes in rate, (2) changes attributable to changes in volume and

(3) changes attributable to both rate and volume (which have been allocated proportionally between the rate and volume

variances).

2025 vs. 2024

Increase (Decrease) Due to

Total Change

(in thousands)

Rate

Volume

Assets:

Interest-earning assets:

Cash and cash equivalents

$(12,574)

$(5,113)

$(17,687)

Investment securities

26,286

21,297

47,583

Loans (1)

(2,077)

45,835

43,758

FHLB stock and other investments

1,344

1,048

2,392

Total interest-earning assets

12,979

63,067

76,046

Interest-bearing liabilities:

Deposits:

Demand deposits

(3,012)

189

(2,823)

Money market and savings

(10,081)

20,506

10,425

Certificates of deposit

2,664

20,094

22,758

Total interest-bearing deposits

(10,429)

40,789

30,360

Borrowings:

Borrowings

(1,539)

(24,766)

(26,305)

Long-term debt

1,140

4,302

5,442

Total interest-bearing liabilities

(10,828)

20,325

9,497

Total changes in net interest income

$23,807

$42,742

$66,549

(1)Includes loans held for sale.

Net interest income in 2025 increased $66.5 million as compared to 2024 due primarily to an increase in net interest margin

from 3.31% in 2024 to 3.43% in 2025, and as a result of the HomeStreet merger. The increase in net interest margin is

primarily due to a 15 basis point reduction in the rates paid on interest-bearing liabilities and a 7 basis point increase on

interest-earning asset yields. The decrease in rates paid on interest-bearing liabilities was primarily driven by the payoff of

the Company’s $750 million of BTFP borrowings in 2024 and the decrease in rates paid on deposits after the Federal

Reserve cut federal funds rates in 2025, partially offset by higher borrowing costs on acquired debt from the HomeStreet

merger. The increase in earning asset yields was primarily driven by investment securities and loans acquired in the

HomeStreet merger, as well as higher yields on investment securities purchases in 2025.

Provision for Credit Losses on Loans: The provision for credit losses for loans and unfunded commitments was $19.5

million in 2025, compared to a $1.5 million reversal of provision in 2024. The increase in provision for 2025 was primarily

driven by future economic scenario assumptions and increased concentration risk due to the acquisition of HomeStreet.

52

Noninterest income (loss) consisted of the following:   

Year Ended December 31,

(in thousands)

2025

2024

Noninterest income (loss)

Service charges on deposit accounts

$23,221

$23,650

Trust fees and commissions

13,017

12,319

ATM network fee income

13,490

12,158

Loan servicing income

2,898

968

Net gain (loss) on sales and calls of investment securities

4,568

(207,203)

Income from bank-owned life insurance

4,848

2,600

Bargain purchase gain

145,460

—

Other

15,403

16,388

Total noninterest income (loss)

$222,905

$(139,120)

Loan servicing income, a component of noninterest income, consisted of the following:

Year Ended December 31,

(in thousands)

2025

2024

Single family servicing income, net:

Servicing fees and other

$4,290

$968

Changes in fair value of single family MSRs - other (1)

(2,112)

—

Net

2,178

968

Risk management, single family MSRs:

Changes in fair value due to assumptions (2)

(388)

—

Net gain from economic hedging (3)

427

—

Subtotal

39

—

Single family servicing income

2,217

968

Commercial loan servicing income:

Servicing fees and other

3,309

—

Amortization of capitalized MSRs

(2,628)

—

Subtotal

681

—

Total loan servicing income

$2,898

$968

(1)Represents changes due to collection/realization of expected cash flows and curtailments.

(2)Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage

interest rates.

(3)Comprised of net gains on derivatives used as economic hedges of single family MSRs, and net gains on U.S. Treasury notes trading securities used

for hedging purposes.

Noninterest income for 2025 increased from 2024 primarily due to the bargain purchase gain of $145.5 million from the

HomeStreet merger in 2025 and the $207.2 million loss on the sale of lower yielding AFS investment securities as part of a

balance sheet restructure in 2024.

53

Noninterest Expense consisted of the following:

Year Ended December 31,

(in thousands)

2025

2024

Noninterest expense

Salaries and employee benefits

$219,319

$191,173

Occupancy

37,842

32,313

Equipment

29,271

23,414

Professional services

23,199

21,374

FDIC assessments and regulatory fees

8,999

14,625

Amortization of intangible assets

17,134

13,447

Data processing

11,741

8,901

Loan related

13,038

6,975

Marketing and advertising

3,131

3,269

Other real estate owned related

2,464

2,505

Acquisition and integration costs

73,365

—

Other

30,054

27,863

Total noninterest expense

$469,557

$345,859

Noninterest expense increased $123.7 million for 2025 compared to 2024 primarily due to acquisition and integration

related costs of $73.4 million, increases in salaries and employee benefits expense, and four months of legacy HomeStreet

operating expenses after the Merger.

Financial Condition-December 31, 2025 compared to December 31, 2024

During 2025, total assets increased $5.9 billion, total liabilities increased $5.3 billion and shareholders’ equity increased

$560.5 million.

Investment Securities

Trading securities totaled $49.5 million at December 31, 2025 and were acquired in the HomeStreet merger. Securities

held-to-maturity decreased by $103.9 million due to maturities and calls during 2025 and totaled $1.3 billion at

December 31, 2025. Securities available-for-sale increased by $928.1 million during 2025 to $4.0 billion at December 31,

2025. The net increase in investment securities was primarily due to the securities acquired in the HomeStreet merger,

offset by the sale of $925.8 million of securities in the second quarter of 2025 to generate liquidity for the Merger.

Loans

Total loans at December 31, 2025 were $14.2 billion, up $4.5 billion from $9.6 billion at December 31, 2024, due primarily

to the addition of $5.6 billion of legacy HomeStreet Bank loans recorded at fair value, offset by run-off in our auto loan

portfolio of $805.9 million.

Deposits

Total deposits increased by $5.1 billion during 2025 to $19.0 billion at December 31, 2025 from $13.9 billion at

December 31, 2024, due primarily to balances acquired in the Merger.

Noninterest-bearing accounts totaled $6.7 billion and represented 35% of total deposits at December 31, 2025, compared to

$5.6 billion, or 40% of total deposits, at December 31, 2024. Noninterest-bearing deposit balances increased in 2025

primarily due to balances acquired in the Merger.

Insured deposits of $12.2 billion represented 64% of total deposits at December 31, 2025, compared to insured deposits of

$7.8 billion, or 56% of total deposits at December 31, 2024.

54

Borrowings

Total borrowings were $192.0 million at December 31, 2025, representing subordinated notes, senior notes and trust

preferred debt acquired in the Merger. For additional discussion of these borrowings, refer to Note 11, “Borrowings and

Long-Term Debt” in the financial statements.

Equity

During 2025, total shareholders’ equity increased by $560.5 million to $2.9 billion and tangible common equity (1)

increased by $386.8 million to $1.8 billion at December 31, 2025. The increase in total shareholders’ equity for 2025

resulted from Mechanics Bancorp shares issued as Merger consideration, an increase in retained earnings, a decrease in the

unrealized losses on our AFS securities portfolio, partially offset by dividends paid to common shareholders.

At December 31, 2025, book value per common share increased to $12.93, compared to $11.40 at December 31, 2024. The

year-to-date change in book value per share reflects Mechanics Bancorp shares issued as Merger consideration and an

increase in retained earnings. Tangible book value per common share (1) increased to $7.81, compared to $6.70 at

December 31, 2024, mainly as a result of Mechanics Bancorp shares issued as Merger consideration and an increase in

retained earnings, offset by the additional $190.9 million of intangibles added as part of the Merger.

(1)Tangible common equity and tangible book value per share are non-GAAP financial measures. For a reconciliation of these measures to the

comparable GAAP financial measure or the computation of the measure, see “Non-GAAP Financial Measures and Reconciliations.”

Debt Securities

Debt securities AFS and HTM are as follows:

December 31, 2025

December 31, 2024

(in thousands)

Amortized Cost

Fair Value

Amortized Cost

Fair Value

Securities available-for-sale

Obligations of states and political subdivisions

$458,290

$471,159

$91,799

$91,299

Mortgage-backed securities - residential

2,871,733

2,884,289

2,694,745

2,643,688

Mortgage-backed securities - commercial

381,934

371,806

259,793

240,862

Collateralized loan obligations

188,500

188,316

50,000

50,000

Corporate bonds

51,828

49,915

43,968

39,402

U.S. Treasury securities

20,623

20,669

—

—

Agency debentures

7,243

7,231

—

—

Total securities available-for-sale

3,980,151

3,993,385

3,140,305

3,065,251

Securities held-to-maturity

Obligations of states and political subdivisions

12,902

13,441

14,193

14,672

Mortgage-backed securities - residential

1,012,716

877,722

1,115,389

918,440

Mortgage-backed securities - commercial

311,014

279,655

310,912

262,888

Total securities held-to-maturity

1,336,632

1,170,818

1,440,494

1,196,000

Total AFS and HTM debt securities

$5,316,783

$5,164,203

$4,580,799

$4,261,251

In addition to AFS and HTM securities, at December 31, 2025, the Company held $49.5 million of trading securities,

consisting of U.S. Treasury notes used as economic hedges of our single family mortgage servicing rights, which are

carried at fair value and reported as trading securities on the consolidated balance sheets. The trading securities were

acquired in the Merger and we had no trading securities at December 31, 2024. 

55

The fair value of available-for-sale securities and the amortized cost of held-to-maturity debt securities are shown by

contractual maturities and weighted average yields in the following table:

December 31, 2025

One Year Or Less

More than One to Five

Years

More than Five Years

to Ten Years

More than Ten Years

Total

(dollars in thousands)

Amount

Weighted

Average

Yield (1)

Amount

Weighted

Average

Yield (1)

Amount

Weighted

Average

Yield (1)

Amount

Weighted

Average

Yield (1)

Amount

Weighted

Average

Yield (1)

Securities available-for-sale

Obligations of states and

political subdivisions

$344

2.49%

$45,175

3.81%

$104,645

3.77%

$320,995

4.29%

$471,159

4.13%

Mortgage-backed securities

- residential

602

1.98%

14,463

2.12%

24,896

2.28%

2,844,328

5.01%

2,884,289

4.97%

Mortgage-backed securities

- commercial

2,543

6.25%

187,736

3.07%

162,269

4.42%

19,258

4.37%

371,806

3.74%

Collateralized loan

obligations

—

—%

—

—%

—

—%

188,316

5.21%

188,316

5.21%

Corporate bonds

—

—%

3,542

25.01%

46,373

4.48%

—

—%

49,915

6.04%

U.S. Treasury securities

—

—%

20,669

3.60%

—

—%

—

—%

20,669

3.60%

Agency debentures

—

—%

1,394

3.64%

3,652

4.33%

2,185

4.74%

7,231

4.32%

Total securities

available-for-sale

3,489

5.14%

272,979

3.46%

341,835

3.38%

3,375,082

5.19%

3,993,385

4.77%

Securities held-to-maturity

Obligations of states and

political subdivisions

3,500

0.73%

3,099

4.09%

4,664

4.35%

1,639

7.64%

12,902

3.72%

Mortgage-backed securities

- residential

—

—%

55

2.48%

—

—%

1,012,661

1.78%

1,012,716

1.78%

Mortgage-backed securities

- commercial

—

—%

170,449

1.75%

140,565

1.84%

—

—%

311,014

1.79%

Total securities held-to-

maturity

3,500

0.73%

173,603

0.92%

145,229

2.27%

1,014,300

1.79%

1,336,632

1.80%

Total AFS and HTM

debt securities

$6,989

2.94%

$446,582

2.88%

$487,064

3.42%

$4,389,382

4.22%

$5,330,017

4.02%

(1)Weighted-average yields are calculated based on the contractual coupon, including amortization of premiums and accretion of discounts, weighted

by amortized cost.

56

Loans

The composition of our LHFI portfolio is as follows:

(in thousands)

December 31,

2025

2024

Commercial and industrial

$482,170

$410,040

Commercial real estate

Multifamily

5,355,252

2,794,581

Non-owner occupied

1,740,277

1,657,597

Owner occupied

689,079

360,100

Construction and land development

493,992

104,430

Residential real estate

3,970,803

2,280,963

Auto

791,012

1,596,935

Other consumer

654,351

438,851

Total LHFI

14,176,936

9,643,497

ACL

(153,319)

(88,558)

Total LHFI less ACL

$14,023,617

$9,554,939

The following table shows the contractual maturity of our loan portfolio by loan type:

December 31, 2025

Loans due after one year

by rate characteristic

(in thousands)

Within one

year

Due after

one year

through

five years

Due after

five through

fifteen

years

Due after

fifteen

years

Total

Fixed-

rate

Adjustable-

rate

Commercial and industrial

$190,824

$156,066

$126,545

$8,735

$482,170

$152,126

$139,220

Commercial real estate

Multifamily

65,353

152,510

3,080,489

2,056,900

5,355,252

189,317

5,100,582

Non-owner occupied

480,088

615,288

644,901

—

1,740,277

832,194

427,995

Owner occupied

61,327

271,601

291,844

64,307

689,079

328,595

299,157

Construction and land

317,039

142,296

10,506

24,151

493,992

56,876

120,077

Residential real estate

9,526

23,743

189,484

3,748,050

3,970,803

2,058,353

1,902,924

Auto

55,526

735,449

37

—

791,012

735,486

—

Other consumer

607,098

14,136

19,825

13,292

654,351

44,822

2,431

Total LHFI

$1,786,781

$2,111,089

$4,363,631

$5,915,435

$14,176,936

$4,397,769

$7,992,386

The following table shows the activity in loan balances:

Year Ended December 31,

(in thousands)

2025

2024

Loans - beginning of period

$9,643,497

$10,777,756

Originations and advances

1,863,153

1,246,907

Purchases

46,164

142,597

Acquired loans

5,645,715

—

Loans sold

(39,283)

—

Payoffs, paydowns and other

(2,930,289)

(2,461,935)

Charge-offs

(52,021)

(59,546)

Transfers to other real estate owned

—

(2,282)

Loans - end of period

$14,176,936

$9,643,497

57

The following table shows loan originations and advances:

Year Ended December 31,

(in thousands)

2025

2024

Commercial and industrial

$353,133

$412,145

Commercial real estate

Multifamily

107,200

225,948

Non-owner occupied

17,114

37,515

Owner occupied

36,269

24,870

Construction and land development

240,536

65,806

Residential real estate

677,760

187,408

Other consumer

431,141

293,215

Total

$1,863,153

$1,246,907

Deposits

Deposit balances and weighted average rates were as follows for the periods indicated:

December 31, 2025

December 31, 2024

(dollars in thousands)

Amount

Weighted

Average Rate

Amount

Weighted

Average Rate

Deposits by product:

Noninterest-bearing demand deposits

$6,744,082

—%

$5,616,116

—%

Interest-bearing:

Interest-bearing demand deposits

1,878,468

0.75%

1,435,266

0.43%

Savings

1,367,475

0.03%

1,216,900

0.02%

Money market

6,250,364

2.41%

4,703,643

3.15%

Certificates of deposit

2,784,608

3.01%

969,879

2.55%

Total interest-bearing deposits

12,280,915

2.00%

8,325,688

2.15%

Total deposits

$19,024,997

1.29%

$13,941,804

1.29%

Uninsured deposits

$6,825,674

$6,153,395

The following table presents the schedule of maturities of certificates of deposit as of December 31, 2025:

(in thousands)

Three Months or

Less

Over Three

Months through

Six Months

Over Six Months

through Twelve

Months

Over Twelve

Months

Total

Time deposits of $250 thousand or less

$1,488,989

$535,617

$144,824

$49,306

$2,218,736

Time deposits greater than $250 thousand

391,379

108,928

58,382

7,183

565,872

Total

$1,880,368

$644,545

$203,206

$56,489

$2,784,608

58

Credit Risk Management: Delinquent Loans, Nonperforming Assets and Provision for Credit Losses

Asset Quality Information and Ratios

December 31,

(dollars in thousands)

2025

2024

Delinquent loans held for investment:

30-89 days past due

$58,459

$91,337

90+ days past due

34,686

6,082

Total delinquent loans

$93,145

$97,419

Total delinquent loans to loans held for investment

0.66%

1.01%

Nonperforming assets

Nonaccrual loans

$42,863

$10,693

90+ days past due and accruing

3,943

211

Total nonperforming loans

46,806

10,904

Foreclosed assets

4,990

15,600

Total nonperforming assets

$51,796

$26,504

Allowance for credit losses on loans

$153,319

$88,558

Allowance for credit losses on loans to total loans held for investment

1.08%

0.92%

Allowance for credit losses on loans to nonaccrual loans

357.70%

828.22%

Nonaccrual loans to total loans held for investment

0.30%

0.11%

Nonperforming assets to total assets

0.23%

0.16%

At December 31, 2025, total delinquent loans were $93.1 million, compared to $97.4 million at December 31, 2024. The

decrease was primarily due to decreases in the auto loan portfolio and loans that improved to current status during the year.

Total delinquent loans as a percentage of total loans declined to 0.66% at December 31, 2025, as compared to 1.01% at

December 31, 2024.

At December 31, 2025, nonperforming assets were $51.8 million, compared to $26.5 million at December 31, 2024. The

increase was mostly due to nonperforming loans acquired from legacy HomeStreet Bank. Nonperforming assets as a

percentage of total assets increased to 0.23% at December 31, 2025 as compared to 0.16% at December 31, 2024.

59

Delinquent, nonaccrual and current loans by loan type consisted of the following:

December 31, 2025

Past Due and Still Accruing

(dollars in thousands)

30-59 

days

60-89 

days

90 days or

more

Nonaccrual

Total past

due and

nonaccrual

Current

Total loans

Commercial and industrial

$3,276

$315

$—

$11,196

$14,787

$467,383

$482,170

Commercial real estate

Multifamily

—

—

—

3,387

3,387

5,351,865

5,355,252

Non-owner occupied

50

—

—

12,539

12,589

1,727,688

1,740,277

Owner occupied

—

176

—

1,870

2,046

687,033

689,079

Construction and land

development

—

—

—

2,962

2,962

491,030

493,992

Residential real estate

13,293

4,558

3,943

6,765

28,559

3,942,244

3,970,803

Auto

25,895

6,547

—

4,143

36,585

754,427

791,012

Other consumer

289

149

—

1

439

653,912

654,351

Total loans

$42,803

$11,745

$3,943

$42,863

$101,354

$14,075,582

$14,176,936

%

0.30%

0.08%

0.03%

0.30%

0.71%

99.29%

100.00%

December 31, 2024

Past Due and Still Accruing

(dollars in thousands)

30-59 

days

60-89 

days

90 days or

more

Nonaccrual

Total past

due and

nonaccrual

Current

Total loans

Commercial and industrial

$1,920

$72

$211

$1,145

$3,348

$406,692

$410,040

Commercial real estate

Multifamily

1,940

—

—

—

1,940

2,792,641

2,794,581

Non-owner occupied

512

—

—

—

512

1,657,085

1,657,597

Owner occupied

1,006

—

—

—

1,006

359,094

360,100

Construction and land

development

5,400

—

—

441

5,841

98,589

104,430

Residential real estate

13,020

406

—

2,854

16,280

2,264,683

2,280,963

Auto

53,073

11,781

—

6,252

71,106

1,525,829

1,596,935

Other consumer

361

214

—

1

576

438,275

438,851

Total loans

$77,232

$12,473

$211

$10,693

$100,609

$9,542,888

$9,643,497

%

0.80%

0.13%

0.00%

0.11%

1.04%

98.96%

100.00%

Management considers the current level of the allowance for credit losses on loans to be appropriate to cover estimated

lifetime losses within our LHFI portfolio. For additional information on the Company’s allowance for credit losses, refer to

Note 4, “Loans and Credit Quality.”

The following table presents the amount of allowance for credit losses on loans by product type, as well as the percentage

of each respective portfolio's loan balance to total loans:

December 31, 2025

December 31, 2024

(dollars in thousands)

Balance

Loan balance %

to total loans

Balance

Loan balance %

to total loans

Commercial and industrial

$8,417

3.4%

$4,869

4.2%

Commercial real estate

114,326

58.4%

35,097

51.0%

Residential real estate

13,294

28.0%

4,656

23.6%

Auto

15,003

5.6%

41,282

16.6%

Other consumer

2,279

4.6%

2,654

4.6%

Total ACL

$153,319

100.0%

$88,558

100.0%

60

As of December 31, 2025, the expected loss rates decreased when compared to December 31, 2024 due to product mix and

credit risk composition changes from the HomeStreet acquisition and runoff of the auto portfolio. During 2025, the

qualitative factors primarily increased due to commercial real estate concentration risk, and interest rate and maturity

repricing risks. 

The following table presents net charge-offs for the loan portfolio for the dates indicated:

Year Ended December 31,

2025

2024

(dollars in thousands)

Net loan

charge-offs

(recoveries)

Average

balance

%

Net loan

charge-offs

(recoveries)

Average

balance

%

Commercial and industrial

$8,034

$401,932

2.00%

$254

$478,124

0.05%

Commercial real estate

428

6,066,695

0.01%

—

4,992,690

0.00%

Residential real estate

105

2,901,902

0.00%

10

2,198,360

0.00%

Auto

29,160

1,160,033

2.51%

40,916

2,122,336

1.93%

Other consumer

1,761

533,085

0.33%

2,481

386,182

0.64%

Total

$39,488

$11,063,647

0.36%

$43,661

$10,177,692

0.43%

Liquidity and Sources of Funds

Liquidity risk management is primarily intended to ensure we are able to maintain sources of cash to adequately fund

operations and meet our obligations, including demands from depositors, draws on lines of credit and paying any creditors,

on a timely and cost-effective basis, in various market conditions. Our liquidity profile is influenced by changes in market

conditions, the composition of the balance sheet and risk tolerance levels. Mechanics has established liquidity guidelines

and operating plans that detail the sources and uses of cash and liquidity.

Mechanics’ primary sources of liquidity include deposits, loan repayments and investment securities payments, both

principal and interest, borrowings, and proceeds from the sale of loans and investment securities. Borrowings may include

advances from the FHLB, borrowings from the Federal Reserve, federal funds purchased and borrowings from other

financial institutions. While scheduled principal repayments on loans and investment securities are a relatively predictable

source of funds, deposit inflows and outflows and prepayments of loans and investment securities are greatly influenced by

interest rates, economic conditions and competition.

Mechanics’ contractual cash flow obligations include the maturity of certificates of deposit, short-term and long-term

borrowings, interest on certificates of deposit and borrowings, operating leases and fees for information technology-related

services and professional services. Obligations for certificates of deposit are typically satisfied through excess cash reserve

balances, the renewal of these instruments or the generation of new deposits. Interest payments and obligations related to

leases and services are typically met by cash generated from our operations.

At December 31, 2025, Mechanics had available borrowing capacity of $6.2 billion from the FHLB, $4.4 billion from the

Federal Reserve and $5.3 billion under borrowing lines established with other financial institutions. We believe that our

current unrestricted cash and cash equivalents, cash flows from operations and borrowing capacity will be sufficient to

meet our liquidity needs for at least the next 12 months. We are currently not aware of any other trends or demands,

commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or

decreasing in any material way that will impact our liquidity needs during or beyond the next 12 months.

Cash Flows

For 2025, cash and cash equivalents increased by $30.3 million compared to a decrease of $457.9 million during 2024. As

a banking institution, Mechanics has extensive access to liquidity. Mechanics manages its cash positions to conservative

minimum cash buffer levels and does not attempt to maximize the level of cash and cash equivalents. The following

discussion highlights the major activities and transactions that affected our cash flows during these periods.

61

Cash flows from operating activities

Mechanics’ operating assets and liabilities are used to support our lending activities, including the origination and sale of

mortgage loans. For 2025, net cash of $193.6 million was provided by operating activities from ongoing bank operations.

For 2024, net cash of $292.3 million was provided by operating activities primarily due to our net income for the year,

excluding the impact of the $207.2 million loss on sale of securities.

Cash flows from investing activities

Mechanics’ investing activities are primarily related to investment securities and LHFI. For 2025, net cash of $1.5 billion

was provided by investing activities primarily from AFS investment security sales, maturities and calls, net loan

originations and principal collections, and cash acquired in the Merger, partially offset by AFS investment security

purchases. For 2024, net cash of $476.2 million was provided by investing activities primarily from net loan originations

and principal collections partially offset by AFS investment security purchases, net of maturities and sales.

Cash flows from financing activities

Mechanics’ financing activities are primarily related to deposits, net proceeds from borrowings and equity transactions. For

2025, net cash of $1.7 billion was used by financing activities, due to repayment of FHLB advances acquired in the

Merger, a decrease in deposits and dividends paid. For 2024, net cash of $1.2 billion was used in financing activities

primarily due to a net decrease in bank term funding, decreases in deposits and cash dividends paid.

Off-Balance Sheet Arrangements

In the normal course of business, we are a party to financial instruments that carry off-balance sheet risk. These financial

instruments (which include commitments to originate loans and commitments to purchase loans) include potential credit

risk in excess of the amount recognized in the accompanying consolidated financial statements. These transactions are

designed to (1) meet the financial needs of our customers, (2) manage our credit, market or liquidity risks, (3) diversify our

funding sources and/or (4) optimize capital.

These commitments include the following:

December 31,

(in thousands)

2025

2024

Unused consumer portfolio lines

$835,480

$224,812

Commercial portfolio lines (1)

1,355,452

906,123

Commitments to fund loans

11,830

2,765

Total

$2,202,762

$1,133,700

Standby letters of credit

$17,257

$19,227

(1)Within the commercial portfolio lines, undistributed construction loan proceeds, where the Company has an obligation to advance funds for

construction progress payments were $361.4 million and $129.9 million at December 31, 2025 and 2024, respectively.

62

Capital Resources

The capital rules applicable to United States based bank holding companies and federally insured depository institutions

require Mechanics Bancorp and Mechanics Bank to meet specific capital adequacy requirements that, for the most part,

involve quantitative measures, primarily in terms of the ratios of their capital to their assets, liabilities, and certain off-

balance sheet items, calculated under regulatory accounting practices. In addition, prompt corrective action regulations

place a federally insured depository institution, such as Mechanics Bank, into one of five capital categories on the basis of

its capital ratios: (i) well capitalized; (ii) adequately capitalized; (iii) undercapitalized; (iv) significantly undercapitalized;

or (v) critically undercapitalized. A depository institution’s primary federal regulatory agency may determine that, based on

certain qualitative assessments, the depository institution should be assigned to a lower capital category than the one

indicated by its capital ratios. At each successive lower capital category, a depository institution is subject to greater

operating restrictions and increased regulatory supervision by its federal bank regulatory agency.

The following tables present the regulatory capital amounts and ratios (inclusive of the capital 2.5% conservation buffer,

where applicable) for Mechanics Bancorp and Mechanics Bank as of the dates indicated:

At December 31, 2025

Actual

For Minimum Capital

Adequacy Purposes

(including Capital

Conservation Buffer)

To Be Categorized As

“Well Capitalized” 

(dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

Mechanics Bancorp (1)

Tier 1 leverage capital (to average assets)

$1,854,132

8.65%

$857,147

4.0%

n/a

n/a

Common equity Tier 1 capital (to risk-weighted

assets)

1,854,132

14.09%

921,471

7.0%

n/a

n/a

Tier 1 risk-based capital (to risk-weighted

assets)

1,854,132

14.09%

1,118,929

8.5%

n/a

n/a

Total risk-based capital (to risk-weighted

assets)

2,141,745

16.27%

1,382,207

10.5%

n/a

n/a

Mechanics Bank (1)

Tier 1 leverage capital (to average assets)

$2,054,349

9.58%

$857,560

4.0%

$1,071,950

5.0%

Common equity Tier 1 capital (to risk-weighted

assets)

2,054,349

15.59%

922,177

7.0%

856,307

6.5%

Tier 1 risk-based capital (to risk-weighted

assets)

2,054,349

15.59%

1,119,786

8.5%

1,053,917

8.0%

Total risk-based capital (to risk-weighted

assets)

2,214,783

16.81%

1,383,266

10.5%

1,317,396

10.0%

At December 31, 2024

Actual

For Minimum Capital

Adequacy Purposes

(including Capital

Conservation Buffer)

To Be Categorized As

“Well Capitalized”

(dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

Mechanics Bank (1)

Tier 1 leverage capital (to average assets)

$1,509,029

9.66%

$624,943

4.0%

$781,179

5.0%

Common equity Tier 1 capital (to risk-

weighted assets)

1,509,029

16.14%

654,297

7.0%

607,562

6.5%

Tier 1 risk-based capital (to risk-weighted

assets)

1,509,029

16.14%

794,504

8.5%

747,769

8.0%

Total risk-based capital (to risk-weighted

assets)

1,601,953

17.14%

981,446

10.5%

934,711

10.0%

(1)On September 2, 2025, HomeStreet Bank merged with and into Mechanics Bank, with Mechanics Bank surviving the Merger and becoming a

wholly-owned subsidiary of Mechanics Bancorp. As a result, for December 31, 2024, regulatory capital ratios are only presented for Mechanics

Bank.

63

As of the dates set forth in the above table, Mechanics Bancorp exceeded the minimum required capital ratios applicable to

it and Mechanics Bank’s capital ratios exceeded the minimums necessary to qualify as a well-capitalized depository

institution under the prompt corrective action regulations. In addition to the minimum capital ratios, Mechanics Bancorp

and Mechanics Bank are required to maintain a capital conservation buffer consisting of additional Common Equity Tier 1

Capital of 5% in addition to the required minimum levels in order to avoid limitations on paying dividends, engaging in

share repurchases, and paying discretionary bonuses. Mechanics maintained capital ratios necessary to satisfy the capital

conservation buffer requirements as of the dates indicated. At December 31, 2025, the capital conservation buffers for

Mechanics Bancorp and Mechanics Bank were 8.81% and 8.09%, respectively.

The Company paid cash dividends of $0.21 per share for Class A shareholders and $2.10 per share for Class B

shareholders in the fourth quarter of 2025 and on February 25, 2026, we declared a cash dividend of $0.40 per Class A

common share and $4.00 per Class B common share, payable on March 19, 2026 to shareholders of record as of the close

of business on March 9, 2026. The Company did not pay cash dividends in the first three quarters of 2025. The amount and

declaration of future cash dividends are subject to approval by our Board of Directors and certain statutory requirements

and regulatory restrictions. See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities—Dividends” for more information. 

We had no material commitments for capital expenditures as of December 31, 2025.

Non-GAAP Financial Measures and Reconciliations

This document contains non-GAAP financial measures of our financial performance, including return on average tangible

equity, efficiency ratio (excluding the impact of intangible amortization), tangible book value per share and tangible

common equity ratio. We believe that these non-GAAP financial measures provide useful information because they are

used by management to evaluate our operating performance, without the impact of goodwill and other intangible assets.

However, these financial measures are not intended to be considered in isolation of or as a substitute for, or superior to,

financial information prepared and presented in accordance with GAAP and should be viewed in addition to, and not as an

alternative to, its GAAP results. The non-GAAP financial measures Mechanics presents may differ from similarly

captioned measures presented by other companies.

The following table presents the calculations of our non-GAAP financial measures.

64

(dollars in thousands, except per share amounts)

Year Ended December 31,

Return on Average Equity and Return on Average Tangible Equity

Ref.

2025

2024

Net income

(a)

$265,739

$28,999

Add: intangibles amortization, net of tax (1)

12,305

9,615

Net income, excluding the impact of intangible amortization, net of tax

(b)

$278,044

$38,614

Average shareholders’ equity

(c)

$2,514,626

$2,255,266

Less: average goodwill and other intangible assets

914,226

888,462

Average tangible shareholders’ equity

(d)

$1,600,400

$1,366,804

Return on average equity

(a) / (c)

10.57%

1.29%

Return on average tangible equity (non-GAAP)

(b) / (d)

17.37%

2.83%

(1)Estimated statutory tax rate of 28.19% and 28.50% for years ended December 31, 2025 and 2024, respectively.

Year Ended December 31,

Efficiency Ratio

Ref.

2025

2024

Noninterest expense

(e)

$469,557

$345,859

Less: intangibles amortization

17,134

13,447

Noninterest expense, excluding the impact of intangible amortization

(f)

452,423

332,412

Net interest income

(g)

585,718

519,169

Noninterest income (loss)

(h)

222,905

(139,120)

Efficiency ratio

(e) / (g+h)

58.1%

91.0%

Efficiency ratio (non-GAAP)

(f) / (g+h)

55.9%

87.5%

December 31,

Book Value per Share and Tangible Book Value per Share

Ref.

2025

2024

Total shareholders’ equity

(i)

$2,862,375

$2,301,868

Less: goodwill and other intangible assets

1,055,796

882,049

Total tangible shareholders' equity

(j)

$1,806,579

$1,419,819

Common shares outstanding - Class A and B

(k)

221,305,009

201,999,328

Common shares outstanding - Class A

220,190,561

200,884,880

Common shares outstanding - Class B adjusted

11,144,480

11,144,480

Common shares outstanding at period end - adjusted (2)

(l)

231,335,041

212,029,360

Book value per share

(i) / (k)

$12.93

$11.40

Tangible book value per share (non-GAAP)

(j) / (l)

$8.16

$6.70

(2)    Includes 11,144,480 Class A Shares issuable upon the conversion of 1,114,448 Class B Shares outstanding. Class B Shares also are treated as if

such share had been converted into ten Class A Shares for purposes of calculating the economic rights of the Class B Shares, including upon

liquidation of the Company or the declaration of dividends or distributions by the Company.

December 31,

Common Equity Ratio and Tangible Common Equity Ratio

Ref.

2025

2024

Total shareholders’ equity

(m)

$2,862,375

$2,301,868

Less: goodwill and other intangible assets

1,055,796

882,049

Total tangible shareholders’ equity

(n)

$1,806,579

$1,419,819

Total assets

(o)

$22,351,475

$16,490,112

Less: goodwill and other intangible assets

1,055,796

882,049

Total tangible assets

(p)

$21,295,679

$15,608,063

Common equity ratio

(m) / (o)

12.81%

13.96%

Tangible common equity ratio (non-GAAP)

(n) / (p)

8.48%

9.10%

65