Mechanics Bancorp Reports Second Quarter 2026 Results
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Second Quarter Highlights |
$21.2 billion Total Assets | | $57.7 million Net Income | | 14.39% CET1 Ratio (1) | | $12.15 Book Value Per Share $7.56 Tangible Book Value Per Share (2) |
Walnut Creek, CA – July 29, 2026 – (BUSINESS WIRE) – Mechanics Bancorp (Nasdaq: MCHB) (“Mechanics” or the “Company”), the financial holding company of Mechanics Bank, today announced its financial results for the quarter ended June 30, 2026. Mechanics reported net income of $57.7 million, or $0.25 per diluted share (3), for the second quarter of 2026, compared to $44.1 million, or $0.19 per diluted share, for the first quarter of 2026. For the six months ended June 30, 2026, Mechanics reported net income of $101.8 million, or $0.44 per diluted share, compared to $86.3 million, or $0.41 per diluted share, for the six months ended June 30, 2025.
Second Quarter 2026 Highlights:
•Total assets of $21.2 billion at June 30, 2026, compared with $21.4 billion at March 31, 2026.
•Total loans of $13.6 billion at June 30, 2026, compared with $13.9 billion at March 31, 2026.
•Loans-to-deposits ratio of 75% at June 30, 2026, compared with 76% at March 31, 2026.
•Total deposits of $18.1 billion at June 30, 2026, compared with $18.2 billion at March 31, 2026, and noninterest-bearing deposits of $6.4 billion at June 30, 2026, compared with $6.5 billion at March 31, 2026.
•Total cost of deposits was 1.25% for the second quarter of 2026 and 1.28% for the first quarter of 2026.
•Dividends paid in the second quarter of 2026 were $0.70 per share of Class A common stock and $7.00 per share of Class B common stock.
•Strong capital ratios (1), including an estimated 16.70% Total risk-based capital ratio, 14.39% Tier 1 capital ratio, 14.39% CET1 capital ratio and 8.71% Tier 1 leverage ratio at June 30, 2026.
•Allowance for credit losses (“ACL”) to total loans of 1.12%, down from 1.13% at the prior quarter-end.
•Non-recurring acquisition and integration costs of $5.9 million for the second quarter of 2026, compared to $4.8 million in the prior quarter.
(1)Regulatory capital ratios at June 30, 2026 are preliminary.
(2)Non-GAAP measure. Refer to section “Non-GAAP Financial Measures and Reconciliations” below.
(3)Unless otherwise specified, refers to diluted earnings per share for Class A common stock.
C.J. Johnson, President and CEO of Mechanics, said, “We had a strong second quarter financially and substantially completed our merger with HomeStreet. We also successfully sold our Fannie Mae DUS business line and paid $162 million in cash dividends during the quarter. Our merger was an unqualified success and I am very grateful to our employees for a job well-done on the integration. I look forward to getting back to “business as usual” and believe Mechanics is well-positioned for future growth.”
Nathan Duda, CFO of Mechanics, added, “Our second quarter results demonstrated the underlying earnings power of the franchise as we continued to realize merger-related cost savings, reduced our funding costs and maintained a stable net interest margin. While we continue to incur certain integration-related expenses, the benefits of the HomeStreet merger are increasingly evident in our results.”
Presentation of Results – HomeStreet Bank Merger
On September 2, 2025, the merger of HomeStreet Bank, the wholly owned subsidiary of Mechanics Bancorp (formerly known as HomeStreet, Inc.) with and into Mechanics Bank, was completed. Mechanics Bank is the accounting acquirer (legal acquiree), HomeStreet Bank is the accounting acquiree and Mechanics Bancorp is the legal acquirer. Mechanics’ financial results for all periods ended prior to September 2, 2025 reflect Mechanics Bank’s historical financial results on a standalone basis and results of the combined company beginning September 2, 2025. In addition, for periods prior to September 2, 2025, the number of shares issued and outstanding, earnings per share, and all references to share quantities or metrics of Mechanics 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 valuations as of the merger date. These estimates are considered preliminary as of June 30, 2026, are subject to change for up to one year after the merger date, and any changes could be material.
Adoption of Purchased Seasoned Loans Accounting Standard
The Company early adopted Accounting Standards Update (“ASU”) 2025-08, “Financial Instruments–Credit Losses (Topic 326): Purchased Loans,” during the fourth quarter of 2025. This new standard, which the Company elected to early adopt as of January 1, 2025, requires acquired loans that meet certain criteria at acquisition (purchased seasoned loans) to be recognized at their purchase price plus the amount of the allowance for expected credit losses (gross-up approach). As a result, for purchased seasoned loans acquired in the HomeStreet merger, the Company established an allowance for credit losses of $20.3 million at the date of acquisition for these loans and reversed the provision for credit losses recorded in the third quarter of 2025, and recorded it as part of the acquired loans initial amortized cost basis. Required disclosures regarding the impact of the adoption were presented when the Company filed its annual report on Form 10-K for the year ended December 31, 2025. In addition, third quarter 2025 results will be retrospectively adjusted when the Company files its quarterly report on Form 10-Q for the quarter ended September 30, 2026.
The impact of the adoption is reflected in the comparative prior period results as of September 30, 2025 presented in this earnings release.
INCOME STATEMENT HIGHLIGHTS
Summary Income Statement
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarter Ended | | Six Months Ended |
| (in thousands) | | June 30,
2026 | | March 31,
2026 | | June 30,
2025 | | June 30,
2026 | | June 30,
2025 |
| | | | | | | | | | |
| Total interest income | | $ | 237,942 | | | $ | 241,936 | | | $ | 178,153 | | | $ | 479,878 | | | $ | 351,738 | |
| Total interest expense | | 60,770 | | | 62,891 | | | 48,024 | | | 123,661 | | | 93,155 | |
| Net interest income | | 177,172 | | | 179,045 | | | 130,129 | | | 356,217 | | | 258,583 | |
| Provision (reversal of provision) for credit losses on loans | | (904) | | | 7,593 | | | 357 | | | 6,689 | | | (3,395) | |
| Provision (reversal of provision) for credit losses on unfunded lending commitments | | (1,863) | | | 174 | | | (725) | | | (1,689) | | | (631) | |
| Total provision (reversal of provision) for credit losses | | (2,767) | | | 7,767 | | | (368) | | | 5,000 | | | (4,026) | |
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| Total noninterest income | | 23,796 | | | 21,020 | | | 19,625 | | | 44,816 | | | 34,606 | |
| Acquisition and integration costs | | 5,923 | | | 4,794 | | | 5,639 | | | 10,717 | | | 5,989 | |
| Other noninterest expense | | 118,550 | | | 125,633 | | | 85,441 | | | 244,183 | | | 170,729 | |
| Total noninterest expense | | 124,473 | | | 130,427 | | | 91,080 | | | 254,900 | | | 176,718 | |
| Income before income tax expense | | 79,262 | | | 61,871 | | | 59,042 | | | 141,133 | | | 120,497 | |
| Income tax expense | | 21,561 | | | 17,781 | | | 16,557 | | | 39,342 | | | 34,221 | |
| Net income | | $ | 57,701 | | | $ | 44,090 | | | $ | 42,485 | | | $ | 101,791 | | | $ | 86,276 | |
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Net Interest Income
Second Quarter of 2026 vs. First Quarter of 2026
Net interest income in the second quarter of 2026 was $1.9 million lower than the first quarter of 2026 primarily as a result of a decrease in average interest earning assets of $468.4 million, partially offset by lower interest expense on certificates of deposit. Mechanics’ net interest margin increased from 3.61% to 3.62% primarily due to runoff of higher cost certificates of deposit.
Six Months Ended June 30, 2026 vs. Six Months Ended June 30, 2025
Net interest income for the six months ended June 30, 2026 increased $97.6 million as compared to the six months ended June 30, 2025 due primarily to an increase of $4.7 billion in average interest-earning assets, as well as an increase in net interest margin from 3.44% in the six months ended June 30, 2025 to 3.61% in the six months ended June 30, 2026, as a result of the HomeStreet merger.
Provision for Credit Losses
Second Quarter of 2026 vs. First Quarter of 2026
The reversal of provision for credit losses in the second quarter of 2026, which consists of the provision for loans and unfunded commitments, was $2.8 million, compared to a provision of $7.8 million for the first quarter of 2026. The reversal of provision for the second quarter was primarily driven by the combination of an increase in modeled loss rates for multifamily loans, the elimination of economic qualitative adjustments now that the Middle East conflict and corresponding economic impact are embedded in expected loss rate modeling, and a reduction in residential construction and HELOC unfunded commitments.
Six Months Ended June 30, 2026 vs. Six Months Ended June 30, 2025
The provision for credit losses was $5.0 million for the six months ended June 30, 2026, compared to a reversal of provision of $4.0 million for the six months ended June 30, 2025. The increase in provision for the six months ended June 30, 2026 was driven primarily by an increase in modeled loss rates for multifamily loans during 2026, offset slightly by downward qualitative adjustments and lower balances. The increase in provision was partially offset by a reduction in the unfunded commitments reserve.
Noninterest Income
Second Quarter of 2026 vs. First Quarter of 2026
Noninterest income in the second quarter of 2026 increased $2.8 million from the first quarter of 2026 primarily due to higher other noninterest income from the gain on sale of the Fannie Mae Multifamily Delegated Underwriting and Servicing (“DUS®”) business line and a mortgage servicing rights valuation adjustment.
Six Months Ended June 30, 2026 vs. Six Months Ended June 30, 2025
Noninterest income for the six months ended June 30, 2026 increased $10.2 million from the six months ended June 30, 2025 primarily due to higher loan servicing income, ATM network fee income and other noninterest income, which were all driven by the HomeStreet merger. In addition, the increase in other noninterest income resulted from the gain on sale of the DUS business line and a mortgage servicing rights valuation adjustment. The increases in noninterest income were partially offset by lower gain on sales and calls of investment securities.
Noninterest Expense
Second Quarter of 2026 vs. First Quarter of 2026
Noninterest expense decreased $6.0 million in the second quarter of 2026 compared to the first quarter of 2026, primarily due to lower salaries and employee benefits expense from a decrease in headcount as a result of integration following the HomeStreet merger.
Six Months Ended June 30, 2026 vs. Six Months Ended June 30, 2025
Noninterest expense increased $78.2 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to higher salaries and employee benefits expense, occupancy costs, equipment expense, amortization of intangibles and acquisition and integration related costs from the HomeStreet merger.
Income Taxes
Second Quarter of 2026 vs. First Quarter of 2026
Our effective tax rate during the second quarter of 2026 was 27.2% as compared to 28.7% in the first quarter of 2026 and our federal statutory rate was 21.0%. The effective tax rate decreased compared to the prior quarter as a result of a $1.7 million remeasurement of deferred tax assets in the first quarter.
Six Months Ended June 30, 2026 vs. Six Months Ended June 30, 2025
Our effective tax rate for the six months ended June 30, 2026 was 27.9% as compared to 28.4% for the six months ended June 30, 2025 and our federal statutory rate was 21.0%. The effective tax rate decreased compared to the six months ended June 30, 2025 as a result of a lower state tax rate due to more taxable income being apportioned to states with lower tax rates and an increase in tax exempt investments and loans, both a result of the HomeStreet merger. These were partially offset by the $1.7 million remeasurement of deferred tax assets in the current year.
BALANCE SHEET HIGHLIGHTS
Selected Balance Sheet Items
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| (in thousands) | | June 30,
2026 | | March 31,
2026 | | December 31,
2025 | | September 30,
2025 | | June 30,
2025 | | | | |
| | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 553,915 | | | $ | 483,513 | | | $ | 1,029,983 | | | $ | 1,442,647 | | | $ | 2,078,960 | | | | | |
| Trading securities | | 46,595 | | | 49,463 | | | 49,518 | | | 50,357 | | | — | | | | | |
| Securities available-for-sale | | 4,119,215 | | | 3,933,705 | | | 3,993,385 | | | 3,490,478 | | | 2,562,438 | | | | | |
| Securities held-to-maturity | | 1,286,813 | | | 1,313,520 | | | 1,336,632 | | | 1,363,636 | | | 1,391,211 | | | | | |
Loans held for investment (before ACL) (1) | | 13,576,196 | | | 13,852,209 | | | 14,176,936 | | | 14,587,530 | | | 9,239,834 | | | | | |
Total assets (1) | | 21,230,839 | | | 21,388,955 | | | 22,351,475 | | | 22,721,935 | | | 16,571,173 | | | | | |
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| Noninterest-bearing demand deposits | | $ | 6,420,746 | | | $ | 6,511,998 | | | $ | 6,744,082 | | | $ | 6,748,479 | | | $ | 5,453,890 | | | | | |
| Total deposits | | 18,089,437 | | | 18,242,769 | | | 19,024,997 | | | 19,452,819 | | | 13,968,863 | | | | | |
| Borrowings | | 80,000 | | | — | | | — | | | — | | | — | | | | | |
| Long-term debt | | 130,420 | | | 128,815 | | | 192,014 | | | 190,123 | | | — | | | | | |
| Total liabilities | | 18,540,908 | | | 18,597,563 | | | 19,489,100 | | | 19,934,686 | | | 14,154,556 | | | | | |
Total shareholders’ equity (1) | | 2,689,931 | | | 2,791,392 | | | 2,862,375 | | | 2,787,249 | | | 2,416,617 | | | | | |
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(1)Prior period comparative disclosures for September 30, 2025 reflect the impact of adoption of ASU 2025-08.
Investment Securities
Trading securities totaled $46.6 million and $49.5 million at June 30, 2026 and March 31, 2026. Securities available-for-sale increased by $185.5 million during the second quarter of 2026 to $4.1 billion at June 30, 2026, primarily due to purchases of agency MBS, partially offset by paydowns. Securities held-to-maturity decreased by $26.7 million in the second quarter of 2026, due to paydowns, and totaled $1.3 billion at June 30, 2026.
Loans
Total loans at June 30, 2026 were $13.6 billion, a decrease of $276.0 million from $13.9 billion at March 31, 2026, due primarily to loan repayments during the quarter, partially offset by originations.
Deposits
Total deposits decreased by $153.3 million during the second quarter of 2026 to $18.1 billion at June 30, 2026. The decrease was due to $199.2 million certificates of deposit runoff, partially offset by $45.9 million of core deposit growth.
Noninterest-bearing demand deposits totaled $6.4 billion and represented 35% of total deposits at June 30, 2026, compared to $6.5 billion, or 36% of total deposits, at March 31, 2026.
Borrowings
Total borrowings were $80.0 million at June 30, 2026, compared to zero at March 31, 2026. The increase in the second quarter of 2026 was due to short-term Federal Reserve Discount Window borrowings during the quarter.
Equity
During the second quarter of 2026, total shareholders’ equity decreased by $101.5 million to $2.7 billion and tangible common equity (1) increased slightly by $5.9 million, and was $1.75 billion at June 30, 2026. The decrease in total shareholders’ equity for the second quarter of 2026 primarily resulted from a net decrease in retained earnings in the second quarter of 2026 from net income, less dividends paid to common shareholders. Tangible common equity remained relatively flat due to the reduction in intangibles from the sale of the DUS business line, which offset the decrease in total shareholders’ equity.
At June 30, 2026, book value per common share decreased to $12.15, compared to $12.61 at March 31, 2026. At June 30, 2026, tangible book value per common share (1) increased to $7.56, compared to $7.53 at March 31, 2026.
(1)Non-GAAP measure. Refer to section “Non-GAAP Financial Measures and Reconciliations” below.
CAPITAL AND LIQUIDITY
Capital ratios remain strong with Total risk-based capital at 16.70% and a Tier 1 leverage ratio of 8.71% at June 30, 2026. The following table presents our regulatory capital ratios as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | June 30,
2026 | | March 31,
2026 | | December 31,
2025 | | September 30,
2025 | | June 30,
2025 |
| | | | | | | | | | |
Mechanics Bancorp (1),(2) | | | | | | | | | | |
| Tier 1 leverage capital (to average assets) | | 8.71 | % | | 8.66 | % | | 8.65 | % | | 10.34 | % | | n/a |
| Common equity Tier 1 capital (to risk-weighted assets) | | 14.39 | % | | 13.92 | % | | 14.09 | % | | 13.42 | % | | n/a |
| Tier 1 risk-based capital (to risk-weighted assets) | | 14.39 | % | | 13.92 | % | | 14.09 | % | | 13.42 | % | | n/a |
| Total risk-based capital (to risk-weighted assets) | | 16.70 | % | | 16.16 | % | | 16.27 | % | | 15.57 | % | | n/a |
| | | | | | | | | | |
Mechanics Bank (1) | | | | | | | | | | |
| Tier 1 leverage capital (to average assets) | | 9.38 | % | | 9.31 | % | | 9.58 | % | | 11.46 | % | | 10.16 | % |
| Common equity Tier 1 capital (to risk-weighted assets) | | 15.48 | % | | 14.96 | % | | 15.59 | % | | 14.87 | % | | 18.27 | % |
| Tier 1 risk-based capital (to risk-weighted assets) | | 15.48 | % | | 14.96 | % | | 15.59 | % | | 14.87 | % | | 18.27 | % |
| Total risk-based capital (to risk-weighted assets) | | 16.74 | % | | 16.21 | % | | 16.81 | % | | 16.13 | % | | 19.10 | % |
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(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 periods prior to September 30, 2025, regulatory capital ratios are only presented for Mechanics Bank.
(2)Regulatory capital ratios at June 30, 2026 are preliminary.
At June 30, 2026, Mechanics had available borrowing capacity of $5.9 billion from the FHLB, $4.4 billion from the Federal Reserve and $5.0 billion under borrowing lines established with other financial institutions.
CREDIT QUALITY
Asset Quality Information and Ratios
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (dollars in thousands) | | June 30,
2026 | | March 31,
2026 | | December 31,
2025 | | September 30,
2025 | | June 30,
2025 |
| | | | | | | | | | |
| Delinquent loans held for investment: | | | | | | | | | | |
30-89 days past due (1) | | $ | 54,529 | | | $ | 43,556 | | | $ | 58,459 | | | $ | 55,899 | | | $ | 106,710 | |
| 90+ days past due | | 40,888 | | | 33,447 | | | 34,686 | | | 38,316 | | | 10,660 | |
| Total delinquent loans | | $ | 95,417 | | | $ | 77,003 | | | $ | 93,145 | | | $ | 94,215 | | | $ | 117,370 | |
| Total delinquent loans to loans held for investment | | 0.70 | % | | 0.56 | % | | 0.66 | % | | 0.65 | % | | 1.27 | % |
| | | | | | | | | | |
| Nonperforming assets: | | | | | | | | | | |
| Nonaccrual loans | | $ | 48,557 | | | $ | 44,379 | | | $ | 42,863 | | | $ | 60,586 | | | $ | 18,606 | |
| 90+ days past due and accruing | | 6,543 | | | 4,098 | | | 3,943 | | | 2,653 | | | 717 | |
| Total nonperforming loans | | 55,100 | | | 48,477 | | | 46,806 | | | 63,239 | | | 19,323 | |
| Foreclosed assets | | 4,262 | | | 4,658 | | | 4,990 | | | 1,675 | | | — | |
| Total nonperforming assets | | $ | 59,362 | | | $ | 53,135 | | | $ | 51,796 | | | $ | 64,914 | | | $ | 19,323 | |
| | | | | | | | | | |
| Allowance for credit losses on loans | | $ | 152,601 | | | $ | 156,796 | | | $ | 153,319 | | | $ | 168,959 | | | $ | 68,334 | |
| Allowance for credit losses on loans to total loans held for investment | | 1.12 | % | | 1.13 | % | | 1.08 | % | | 1.16 | % | | 0.74 | % |
| Allowance for credit losses on loans to nonaccrual loans | | 314.27 | % | | 353.31 | % | | 357.70 | % | | 278.88 | % | | 367.27 | % |
| Nonaccrual loans to total loans held for investment | | 0.36 | % | | 0.32 | % | | 0.30 | % | | 0.42 | % | | 0.20 | % |
| Nonperforming assets to total assets | | 0.28 | % | | 0.25 | % | | 0.23 | % | | 0.29 | % | | 0.12 | % |
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(1)Prior period comparative disclosures for September 30, 2025 reflect the impact of adoption of ASU 2025-08.
At June 30, 2026, total delinquent loans were $95.4 million, compared to $77.0 million at March 31, 2026. The increase was primarily due to two matured commercial real estate loans that became past due during the quarter and were in process of refinance or extension as of June 30, 2026. Total delinquent loans as a percentage of total loans were 0.70% at June 30, 2026, as compared to 0.56% at March 31, 2026.
At June 30, 2026, nonperforming assets were $59.4 million, compared to $53.1 million at March 31, 2026. The slight increase was primarily due to additional single family, home equity and multifamily nonperforming loans during the quarter, partially offset by $2.4 million of foreclosed assets sold. Nonperforming assets as a percentage of total assets increased to 0.28% at June 30, 2026, as compared to 0.25% at March 31, 2026.
Allowance for Credit Losses
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | Six Months Ended |
| (dollars in thousands) | | June 30,
2026 | | March 31,
2026 | | June 30,
2025 | | June 30,
2026 | | June 30,
2025 |
| | | | | | | | | | |
| Allowance for credit losses on loans: | | | | | | | | | | |
| Beginning balance | | $ | 156,796 | | | $ | 153,319 | | | $ | 75,515 | | | $ | 153,319 | | | $ | 88,558 | |
| | | | | | | | | | |
| | | | | | | | | | |
| Provision (reversal of provision) for credit losses | | (904) | | | 7,593 | | | 357 | | | 6,689 | | | (3,395) | |
| Loans charged off | | (6,308) | | | (7,205) | | | (9,949) | | | (13,513) | | | (22,166) | |
| Recoveries | | 3,017 | | | 3,089 | | | 2,411 | | | 6,106 | | | 5,337 | |
| Ending balance | | $ | 152,601 | | | $ | 156,796 | | | $ | 68,334 | | | $ | 152,601 | | | $ | 68,334 | |
| | | | | | | | | | |
| Allowance for credit losses on unfunded lending commitments: | | | | | | | | | | |
| Beginning balance | | $ | 7,289 | | | $ | 7,115 | | | $ | 4,460 | | | $ | 7,115 | | | $ | 4,366 | |
| | | | | | | | | | |
| Provision (reversal of provision) for credit losses | | (1,863) | | | 174 | | | (725) | | | (1,689) | | | (631) | |
| Ending balance | | $ | 5,426 | | | $ | 7,289 | | | $ | 3,735 | | | $ | 5,426 | | | $ | 3,735 | |
| | | | | | | | | | |
Net charge-offs to average loans (1) | | 0.10 | % | | 0.12 | % | | 0.32 | % | | 0.11% | | 0.36% |
| | | | | | | | | | |
(1) Ratios are annualized.
The allowance for credit losses on loans totaled $152.6 million, or 1.12% of total loans at June 30, 2026, compared to $156.8 million, or 1.13% of total loans at March 31, 2026. The decrease in allowance was the result of a decrease in qualitative factors across loan types, with the greatest impact on commercial real estate loans due to the size of the portfolio, partially offset by higher expected loss rates due to a weaker economic outlook stemming from the conflict in the Middle East.
Conference Call
The Company will host a conference call and webcast to discuss its second quarter 2026 financial results at 11:00 a.m. Eastern Time (ET) on Wednesday, July 29, 2026. Investors and analysts interested in participating in the call are invited to dial 1-833-461-5787 (international callers please dial 1-585-542-9983) approximately 10 minutes prior to the start of the call. The pin to access the call is 513809929. A live audio webcast of the conference call will be available on the Company’s website at https://ir.mechanicsbank.com. The earnings presentation for the call will also be available on the Company’s Investor Relations website prior to the call.
A replay of the conference call will be available within two hours of the conclusion of the call and can be accessed through the News & Events tab of the Company’s website as well as through the webcast link: https://events.q4inc.com/attendee/513809929.
About Mechanics Bancorp
Mechanics Bancorp is headquartered in Walnut Creek, Calif., and is the financial holding company of Mechanics Bank, a full-service, FDIC-insured bank with $21.2 billion in assets as of June 30, 2026, and 166 branches across California, Oregon, Washington and Hawaii. Founded in 1905 to help families, businesses and communities prosper, Mechanics Bank offers 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.
To learn more, visit www.MechanicsBank.com.
Cautionary Note
The information contained herein is preliminary and based on Company data available at the time of this earnings release. It speaks only as of the particular date or dates included in the earnings release. Except as required by law, Mechanics does not undertake an obligation to, and disclaims any duty to, update any of the information herein.
Forward-Looking Statements
This earnings release, 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 (“Exchange Act”). All statements, other than statements of historical fact, contained or incorporated by reference in this earnings release, 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. Furthermore, the following factors, among others, may cause actual results to differ materially from current expectations in the forward-looking statements, including those set forth in this earnings release:
•substantial non-recurring and integration costs, which may be greater than anticipated due to unexpected events;
•failure to realize the anticipated benefits of the HomeStreet 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 HomeStreet 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 U.S. Securities and Exchange Commission (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 earnings release 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 earnings release 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.
Investor Relations Inquiries
| | | | | | | | |
| Contact: | | Mechanics Bancorp |
| | Nathan Duda |
| | Executive Vice President and Chief Financial Officer |
| | |
| | ir@mechanicsbank.com |
| | |
| | |
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| (dollars in thousands) | June 30,
2026 | | March 31,
2026 | | December 31,
2025 | | September 30,
2025 | | June 30,
2025 |
| | | | | | | | | |
| ASSETS | | | | | | | | | |
| Cash and cash equivalents | $ | 553,915 | | | $ | 483,513 | | | $ | 1,029,983 | | | $ | 1,442,647 | | | $ | 2,078,960 | |
| Trading securities | 46,595 | | | 49,463 | | | 49,518 | | | 50,357 | | | — | |
| Securities available-for-sale | 4,119,215 | | | 3,933,705 | | | 3,993,385 | | | 3,490,478 | | | 2,562,438 | |
| Securities held-to-maturity | 1,286,813 | | | 1,313,520 | | | 1,336,632 | | | 1,363,636 | | | 1,391,211 | |
| Loans held for sale | 5,345 | | | 4,692 | | | 5,967 | | | 54,985 | | | 415 | |
Loan receivables (1) | 13,576,196 | | | 13,852,209 | | | 14,176,936 | | | 14,587,530 | | | 9,239,834 | |
| Allowance for credit losses on loans | (152,601) | | | (156,796) | | | (153,319) | | | (168,959) | | | (68,334) | |
Net loan receivables (1) | 13,423,595 | | | 13,695,413 | | | 14,023,617 | | | 14,418,571 | | | 9,171,500 | |
| Mortgage servicing rights | 59,142 | | | 84,000 | | | 85,832 | | | 88,595 | | | — | |
| Other real estate owned | 4,262 | | | 4,658 | | | 4,990 | | | 1,675 | | | — | |
| Federal Home Loan Bank stock, at cost | 17,287 | | | 17,289 | | | 17,292 | | | 17,294 | | | 17,250 | |
| Premises and equipment, net | 141,615 | | | 143,157 | | | 143,895 | | | 143,917 | | | 114,715 | |
| Bank-owned life insurance | 172,980 | | | 171,674 | | | 170,339 | | | 169,163 | | | 84,786 | |
| Goodwill | 843,305 | | | 843,305 | | | 843,305 | | | 843,305 | | | 843,305 | |
| Other intangible assets, net | 97,906 | | | 205,269 | | | 212,491 | | | 143,264 | | | 33,309 | |
| Right-of-use asset | 74,623 | | | 78,046 | | | 82,076 | | | 85,657 | | | 56,696 | |
Interest receivable and other assets (1) | 384,241 | | | 361,251 | | | 352,153 | | | 408,391 | | | 216,588 | |
TOTAL ASSETS (1) | $ | 21,230,839 | | | $ | 21,388,955 | | | $ | 22,351,475 | | | $ | 22,721,935 | | | $ | 16,571,173 | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | |
| LIABILITIES | | | | | | | | | |
| Noninterest-bearing demand deposits | $ | 6,420,746 | | | $ | 6,511,998 | | | $ | 6,744,082 | | | $ | 6,748,479 | | | $ | 5,453,890 | |
| Interest-bearing transaction accounts | 8,394,708 | | | 8,222,964 | | | 8,128,832 | | | 7,918,670 | | | 6,359,590 | |
| Savings and time deposits | 3,273,983 | | | 3,507,807 | | | 4,152,083 | | | 4,785,670 | | | 2,155,383 | |
| Total deposits | 18,089,437 | | | 18,242,769 | | | 19,024,997 | | | 19,452,819 | | | 13,968,863 | |
| Borrowings | 80,000 | | | — | | | — | | | — | | | — | |
| Long-term debt | 130,420 | | | 128,815 | | | 192,014 | | | 190,123 | | | — | |
| Operating lease liability | 78,174 | | | 82,403 | | | 86,794 | | | 90,796 | | | 59,233 | |
| Interest payable and other liabilities | 162,877 | | | 143,576 | | | 185,295 | | | 200,948 | | | 126,460 | |
| TOTAL LIABILITIES | 18,540,908 | | | 18,597,563 | | | 19,489,100 | | | 19,934,686 | | | 14,154,556 | |
| SHAREHOLDERS’ EQUITY | | | | | | | | | |
| Common stock | 2,404,941 | | | 2,402,968 | | | 2,402,193 | | | 2,401,989 | | | 2,122,374 | |
Retained earnings (1) | 303,046 | | | 407,908 | | | 456,695 | | | 394,069 | | | 325,793 | |
| Accumulated other comprehensive income (loss), net of tax | (18,056) | | | (19,484) | | | 3,487 | | | (8,809) | | | (31,550) | |
TOTAL SHAREHOLDERS’ EQUITY (1) | 2,689,931 | | | 2,791,392 | | | 2,862,375 | | | 2,787,249 | | | 2,416,617 | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (1) | $ | 21,230,839 | | | $ | 21,388,955 | | | $ | 22,351,475 | | | $ | 22,721,935 | | | $ | 16,571,173 | |
| | | | | | | | | |
| Common shares outstanding-Class A and B | 221,425,469 | | 221,400,590 | | 221,305,009 | | 221,203,135 | | 202,015,832 |
| | | | | | | | | |
(1)Prior period comparative disclosures for September 30, 2025 reflect the impact of adoption of ASU 2025-08.
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Quarter Ended | | Six Months Ended |
| (dollars in thousands, except per share amounts) | June 30,
2026 | | March 31,
2026 | | June 30,
2025 | | June 30,
2026 | | June 30,
2025 |
| | | | | | | | | |
| INTEREST INCOME | | | | | | | | | |
| Loans interest and fees | $ | 178,170 | | | $ | 181,190 | | | $ | 120,116 | | | $ | 359,360 | | | $ | 237,908 | |
| Investment securities | 53,062 | | | 53,074 | | | 42,013 | | | 106,136 | | | 89,598 | |
| Interest-bearing cash and other | 6,710 | | | 7,672 | | | 16,024 | | | 14,382 | | | 24,232 | |
| Total interest income | 237,942 | | | 241,936 | | | 178,153 | | | 479,878 | | | 351,738 | |
| INTEREST EXPENSE | | | | | | | | | |
| Deposits | 56,544 | | | 58,323 | | | 48,024 | | | 114,867 | | | 93,155 | |
| Borrowed funds | 1,055 | | | 228 | | | — | | | 1,283 | | | — | |
| Long-term debt | 3,171 | | | 4,340 | | | — | | | 7,511 | | | — | |
| Total interest expense | 60,770 | | | 62,891 | | | 48,024 | | | 123,661 | | | 93,155 | |
| Net interest income | 177,172 | | | 179,045 | | | 130,129 | | | 356,217 | | | 258,583 | |
| Provision (reversal of provision) for credit losses on loans | (904) | | | 7,593 | | | 357 | | | 6,689 | | | (3,395) | |
| Provision (reversal of provision) for credit losses on unfunded lending commitments | (1,863) | | | 174 | | | (725) | | | (1,689) | | | (631) | |
| Net interest income after provision for credit losses | 179,939 | | | 171,278 | | | 130,497 | | | 351,217 | | | 262,609 | |
| NONINTEREST INCOME | | | | | | | | | |
| Service charges on deposit accounts | 6,027 | | | 6,043 | | | 5,492 | | | 12,070 | | | 10,986 | |
| Trust fees and commissions | 3,476 | | | 3,070 | | | 3,216 | | | 6,546 | | | 6,335 | |
| ATM network fee income | 4,109 | | | 3,904 | | | 3,040 | | | 8,013 | | | 5,928 | |
| | | | | | | | | |
| Loan servicing income | 1,582 | | | 1,927 | | | 168 | | | 3,509 | | | 345 | |
| Net gain on sales and calls of investment securities | 31 | | | 52 | | | 4,137 | | | 83 | | | 4,137 | |
| Income from bank-owned life insurance | 1,327 | | | 1,165 | | | 502 | | | 2,492 | | | 1,029 | |
| | | | | | | | | |
| Other | 7,244 | | | 4,859 | | | 3,070 | | | 12,103 | | | 5,846 | |
| Total noninterest income | 23,796 | | | 21,020 | | | 19,625 | | | 44,816 | | | 34,606 | |
| NONINTEREST EXPENSE | | | | | | | | | |
| Salaries and employee benefits | 63,090 | | | 68,550 | | | 47,734 | | | 131,640 | | | 96,585 | |
| Occupancy | 11,851 | | | 12,429 | | | 8,337 | | | 24,280 | | | 16,309 | |
| Equipment | 8,724 | | | 9,615 | | | 6,288 | | | 18,339 | | | 12,157 | |
| Professional services | 7,435 | | | 6,071 | | | 5,907 | | | 13,506 | | | 10,823 | |
| FDIC assessments and regulatory fees | 2,990 | | | 2,990 | | | 2,213 | | | 5,980 | | | 4,426 | |
| Amortization of intangible assets | 7,207 | | | 7,222 | | | 2,666 | | | 14,429 | | | 5,404 | |
| Data processing | 2,468 | | | 3,873 | | | 2,200 | | | 6,341 | | | 3,550 | |
| Loan related | 3,616 | | | 3,506 | | | 3,220 | | | 7,122 | | | 4,797 | |
| Marketing and advertising | 696 | | | 907 | | | 744 | | | 1,603 | | | 1,328 | |
| Other real estate owned related | 47 | | | 384 | | | 104 | | | 431 | | | 2,788 | |
| Acquisition and integration costs | 5,923 | | | 4,794 | | | 5,639 | | | 10,717 | | | 5,989 | |
| Other | 10,426 | | | 10,086 | | | 6,028 | | | 20,512 | | | 12,562 | |
| Total noninterest expense | 124,473 | | | 130,427 | | | 91,080 | | | 254,900 | | | 176,718 | |
| Income before income tax expense | 79,262 | | | 61,871 | | | 59,042 | | | 141,133 | | | 120,497 | |
| INCOME TAX EXPENSE | 21,561 | | | 17,781 | | | 16,557 | | | 39,342 | | | 34,221 | |
| NET INCOME | $ | 57,701 | | | $ | 44,090 | | | $ | 42,485 | | | $ | 101,791 | | | $ | 86,276 | |
| | | | | | | | | |
| Basic earnings per share | | | | | | | | | |
| Class A common stock | $ | 0.25 | | | $ | 0.19 | | | $ | 0.20 | | | $ | 0.44 | | | $ | 0.41 | |
| Class B common stock | $ | 2.51 | | | $ | 1.91 | | | $ | 2.00 | | | $ | 4.42 | | | $ | 4.07 | |
| Diluted earnings per share | | | | | | | | | |
| Class A common stock | $ | 0.25 | | | $ | 0.19 | | | $ | 0.20 | | | $ | 0.44 | | | $ | 0.41 | |
| Class B common stock | $ | 2.51 | | | $ | 1.91 | | | $ | 2.00 | | | $ | 4.42 | | | $ | 4.07 | |
| Basic weighted-average shares outstanding | | | | | | | | | |
| Class A common stock | 221,148,246 | | 221,047,803 | | | 200,893,223 | | | 221,098,302 | | | 200,889,074 | |
| Class B common stock | 1,114,448 | | 1,114,448 | | 1,114,448 | | 1,114,448 | | 1,114,448 |
| Diluted weighted-average shares outstanding | | | | | | | | | |
| Class A common stock | 221,338,344 | | 221,203,293 | | 200,952,643 | | 221,271,096 | | 200,948,494 |
| Class B common stock | 1,114,448 | | 1,114,448 | | 1,114,448 | | 1,114,448 | | 1,114,448 |
LOANS HELD FOR INVESTMENT (1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | June 30,
2026 | | March 31,
2026 | | December 31,
2025 | | September 30,
2025 | | June 30,
2025 |
| | | | | | | | | | |
| Commercial and industrial | | $ | 439,814 | | | $ | 460,081 | | | $ | 482,170 | | | $ | 550,176 | | | $ | 280,551 | |
| Commercial real estate | | | | | | | | | | |
| Multifamily | | 5,223,356 | | | 5,291,597 | | | 5,355,252 | | | 5,450,206 | | | 2,826,750 | |
| Non-owner occupied | | 1,614,883 | | | 1,711,611 | | | 1,740,277 | | | 1,866,119 | | | 1,551,617 | |
| Owner occupied | | 512,474 | | | 586,698 | | | 689,079 | | | 710,638 | | | 323,419 | |
| Construction and land development | | 360,668 | | | 399,546 | | | 493,992 | | | 538,754 | | | 135,013 | |
| Residential real estate | | 4,107,867 | | | 4,017,120 | | | 3,970,803 | | | 3,914,675 | | | 2,438,271 | |
| Auto | | 510,232 | | | 639,825 | | | 791,012 | | | 954,617 | | | 1,147,967 | |
| Other consumer | | 806,902 | | | 745,731 | | | 654,351 | | | 602,345 | | | 536,246 | |
| Total LHFI | | $ | 13,576,196 | | | $ | 13,852,209 | | | $ | 14,176,936 | | | $ | 14,587,530 | | | $ | 9,239,834 | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
(1)Prior period comparative disclosures for September 30, 2025 reflect the impact of adoption of ASU 2025-08.
COMPOSITION OF DEPOSITS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | June 30,
2026 | | March 31,
2026 | | December 31,
2025 | | September 30,
2025 | | June 30,
2025 |
| | | | | | | | | | |
| Deposits by product: | | | | | | | | | | |
| Noninterest-bearing demand deposits | | $ | 6,420,746 | | | $ | 6,511,998 | | | $ | 6,744,082 | | | $ | 6,748,479 | | | $ | 5,453,890 | |
| Interest-bearing: | | | | | | | | | | |
| Interest-bearing demand deposits | | 1,671,232 | | | 1,767,403 | | | 1,878,468 | | | 1,733,215 | | | 1,331,785 | |
| Savings | | 1,328,503 | | | 1,363,137 | | | 1,367,475 | | | 1,398,430 | | | 1,173,943 | |
| Money market | | 6,723,476 | | | 6,455,561 | | | 6,250,364 | | | 6,185,455 | | | 5,027,805 | |
| Certificates of deposit | | 1,945,480 | | | 2,144,670 | | | 2,784,608 | | | 3,387,240 | | | 981,440 | |
| Total interest-bearing deposits | | 11,668,691 | | | 11,730,771 | | | 12,280,915 | | | 12,704,340 | | | 8,514,973 | |
| Total deposits | | $ | 18,089,437 | | | $ | 18,242,769 | | | $ | 19,024,997 | | | $ | 19,452,819 | | | $ | 13,968,863 | |
SUMMARY FINANCIAL DATA
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarter Ended | | Six Months Ended |
| June 30,
2026 | | March 31,
2026 | | June 30,
2025 | | June 30,
2026 | | June 30,
2025 |
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| Select performance ratios: | | | | | | | | | |
Return on average equity (1) | 8.48 | % | | 6.25 | % | | 7.15 | % | | 7.35 | % | | 7.37 | % |
Return on average tangible equity (1),(2) | 14.42 | % | | 11.07 | % | | 11.82 | % | | 12.73 | % | | 12.28 | % |
Return on average assets (1) | 1.09 | % | | 0.82 | % | | 1.03 | % | | 0.95 | % | | 1.06 | % |
Efficiency ratio | 61.9 | % | | 65.2 | % | | 60.8 | % | | 63.6 | % | | 60.3 | % |
Efficiency ratio (non-GAAP) (2) | 58.4 | % | | 61.6 | % | | 59.0 | % | | 60.0 | % | | 58.4 | % |
Net interest margin (1) | 3.62 | % | | 3.61 | % | | 3.44 | % | | 3.61 | % | | 3.44 | % |
| | | | | | | | | |
| Cash dividends declared per share: | | | | | | | | | |
| Class A common stock | $ | 0.70 | | | $ | 0.40 | | | $ | — | | | $ | 1.10 | | | $ | — | |
| Class B common stock | $ | 7.00 | | | $ | 4.00 | | | $ | — | | | $ | 11.00 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of |
| June 30,
2026 | | March 31,
2026 | | December 31,
2025 | | September 30,
2025 | | June 30,
2025 |
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| Other data: | | | | | | | | | |
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Book value per share (3) | $ | 12.15 | | | $ | 12.61 | | | $ | 12.93 | | | $ | 12.60 | | | $ | 11.96 | |
Tangible book value per share (2), (3) | $ | 7.56 | | | $ | 7.53 | | | $ | 7.81 | | | $ | 7.79 | | | $ | 7.26 | |
Common equity ratio (3) | 12.67 | % | | 13.05 | % | | 12.81 | % | | 12.27 | % | | 14.58 | % |
Tangible common equity ratio (2), (3) | 8.62 | % | | 8.57 | % | | 8.48 | % | | 8.28 | % | | 9.81 | % |
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Loans to deposit ratio (3) | 75.05 | % | | 75.93 | % | | 74.52 | % | | 74.99 | % | | 66.15 | % |
| Full time equivalent employees | 1,756 | | 1,890 | | 1,921 | | 2,036 | | 1,303 |
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(1)Ratios are annualized.
(2)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” below.
(3)Prior period comparative disclosures for September 30, 2025 reflect the impact of adoption of ASU 2025-08.
NET INTEREST MARGIN
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarter Ended |
| | June 30, 2026 | | March 31, 2026 | | June 30, 2025 |
| (dollars in thousands) | | Average
Balance | | Interest | | Average Yield/ Cost (1) | | Average
Balance | | Interest | | Average Yield/ Cost (1) | | Average
Balance | | Interest | | Average Yield/ Cost (1) |
| | | | | | | | | | | | | | | | | | |
| Assets: | | | | | | | | | | | | | | | | | | |
| Interest-earning assets: | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 459,729 | | | $ | 3,520 | | | 3.07 | % | | $ | 549,799 | | | $ | 4,162 | | | 3.07 | % | | $ | 1,390,355 | | | $ | 14,668 | | | 4.23 | % |
| Investment securities | | 5,355,011 | | | 53,062 | | | 3.97 | % | | 5,425,705 | | | 53,074 | | | 3.97 | % | | 4,342,666 | | | 42,013 | | | 3.88 | % |
Loans (2) | | 13,694,264 | | | 178,170 | | | 5.22 | % | | 14,002,665 | | | 181,190 | | | 5.25 | % | | 9,337,910 | | | 120,116 | | | 5.16 | % |
| FHLB stock and other investments | | 147,538 | | | 3,190 | | | 8.67 | % | | 146,776 | | | 3,510 | | | 9.70 | % | | 103,468 | | | 1,356 | | | 5.26 | % |
| Total interest-earning assets | | 19,656,542 | | | 237,942 | | | 4.86 | % | | 20,124,945 | | | 241,936 | | | 4.88 | % | | 15,174,399 | | | 178,153 | | | 4.71 | % |
| Noninterest-earning assets | | 1,661,711 | | | | | | | 1,697,660 | | | | | | | 1,294,772 | | | | | |
| Total assets | | $ | 21,318,253 | | | | | | | $ | 21,822,605 | | | | | | | $ | 16,469,171 | | | | | |
| Liabilities and shareholders’ equity: | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | | | | | | | | |
| Demand deposits | | $ | 1,707,751 | | | $ | 1,839 | | | 0.43 | % | | $ | 1,804,524 | | | $ | 2,176 | | | 0.49 | % | | $ | 1,344,397 | | | $ | 1,045 | | | 0.31 | % |
| Money market and savings | | 7,900,995 | | | 42,287 | | | 2.15 | % | | 7,740,958 | | | 39,060 | | | 2.05 | % | | 6,231,772 | | | 40,956 | | | 2.64 | % |
| Certificates of deposit | | 2,036,264 | | | 12,418 | | | 2.45 | % | | 2,472,421 | | | 17,087 | | | 2.80 | % | | 960,431 | | | 6,023 | | | 2.52 | % |
| Total | | 11,645,010 | | | 56,544 | | | 1.95 | % | | 12,017,903 | | | 58,323 | | | 1.97 | % | | 8,536,600 | | | 48,024 | | | 2.26 | % |
| Borrowings: | | | | | | | | | | | | | | | | | | |
| Borrowings | | 114,121 | | | 1,055 | | | 3.71 | % | | 24,667 | | | 228 | | | 3.75 | % | | 13 | | | — | | | 4.61 | % |
| Long-term debt | | 129,369 | | | 3,171 | | | 9.83 | % | | 170,987 | | | 4,340 | | | 10.29 | % | | — | | | — | | | — | % |
| Total interest-bearing liabilities | | 11,888,500 | | | 60,770 | | | 2.05 | % | | 12,213,557 | | | 62,891 | | | 2.09 | % | | 8,536,613 | | | 48,024 | | | 2.26 | % |
| Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
Demand deposits (3) | | 6,440,279 | | | | | | | 6,448,090 | | | | | | | 5,355,287 | | | | | |
| Other liabilities | | 260,515 | | | | | | | 300,464 | | | | | | | 193,089 | | | | | |
| Total liabilities | | 18,589,294 | | | | | | | 18,962,111 | | | | | | | 14,084,989 | | | | | |
| Shareholders’ equity | | 2,728,959 | | | | | | | 2,860,494 | | | | | | | 2,384,182 | | | | | |
| Total liabilities and shareholders’ equity | | $ | 21,318,253 | | | | | | | $ | 21,822,605 | | | | | | | $ | 16,469,171 | | | | | |
Net interest income | | | | $ | 177,172 | | | | | | | $ | 179,045 | | | | | | | $ | 130,129 | | | |
| Net interest rate spread | | | | | | 2.81 | % | | | | | | 2.79 | % | | | | | | 2.45 | % |
| Net interest margin | | | | | | 3.62 | % | | | | | | 3.61 | % | | | | | | 3.44 | % |
(1)Ratios are annualized.
(2)Includes loans held for sale.
(3)Cost of all deposits, including noninterest-bearing demand deposits, was 1.25%, 1.28% and 1.39% for the quarters ended June 30, 2026, March 31, 2026 and June 30, 2025, respectively.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended |
| | June 30, 2026 | | June 30, 2025 |
| (dollars in thousands) | Average
Balance | | Interest | | Average Yield/Cost (1) | | Average
Balance | | Interest | | Average Yield/Cost (1) |
| | | | | | | | | | | |
| Assets: | | | | | | | | | | | |
| Interest-earning assets: | | | | | | | | | | | |
| Cash and cash equivalents | $ | 504,515 | | | $ | 7,681 | | | 3.07 | % | | $ | 1,064,256 | | | $ | 21,856 | | | 4.14 | % |
| Investment securities | 5,390,163 | | | 106,136 | | | 3.97 | % | | 4,561,015 | | | 89,598 | | | 3.96 | % |
Loans (2) | 13,847,613 | | | 359,360 | | | 5.23 | % | | 9,414,385 | | | 237,908 | | | 5.10 | % |
| FHLB stock and other investments | 147,159 | | | 6,701 | | | 9.18 | % | | 102,355 | | | 2,376 | | | 4.68 | % |
| Total interest-earning assets | 19,889,450 | | | 479,878 | | | 4.87 | % | | 15,142,011 | | | 351,738 | | | 4.68 | % |
| Noninterest-earning assets | 1,679,586 | | | | | | | 1,297,427 | | | | | |
| Total assets | $ | 21,569,036 | | | | | | | $ | 16,439,438 | | | | | |
| Liabilities and shareholders’ equity: | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | |
| Demand deposits | $ | 1,755,870 | | | $ | 4,015 | | | 0.46 | % | | $ | 1,373,563 | | | $ | 2,344 | | | 0.34 | % |
| Money market and savings | 7,821,419 | | | 81,347 | | | 2.10 | % | | 6,142,341 | | | 79,096 | | | 2.60 | % |
| Certificates of deposit | 2,253,137 | | | 29,505 | | | 2.64 | % | | 949,911 | | | 11,715 | | | 2.49 | % |
| Total | 11,830,426 | | | 114,867 | | | 1.96 | % | | 8,465,815 | | | 93,155 | | | 2.22 | % |
| Borrowings: | | | | | | | | | | | |
| Borrowings | 69,641 | | | 1,283 | | | 3.71 | % | | 7 | | | — | | | 4.61 | % |
| Long-term debt | 150,064 | | | 7,511 | | | 10.09 | % | | — | | | — | | | — | % |
| Total interest-bearing liabilities | 12,050,131 | | | 123,661 | | | 2.07 | % | | 8,465,822 | | | 93,155 | | | 2.22 | % |
| Noninterest-bearing liabilities: | | | | | | | | | | | |
Demand deposits (3) | 6,444,163 | | | | | | | 5,398,473 | | | | | |
| Other liabilities | 280,379 | | | | | | | 215,532 | | | | | |
| Total liabilities | 18,774,673 | | | | | | | 14,079,827 | | | | | |
| Shareholders’ equity | 2,794,363 | | | | | | | 2,359,611 | | | | | |
| Total liabilities and shareholders’ equity | $ | 21,569,036 | | | | | | | $ | 16,439,438 | | | | | |
Net interest income | | | $ | 356,217 | | | | | | | $ | 258,583 | | | |
| Net interest spread | | | | | 2.80 | % | | | | | | 2.47 | % |
| Net interest margin | | | | | 3.61 | % | | | | | | 3.44 | % |
(1)Ratios are annualized.
(2)Includes loans held for sale.
(3)Cost of all deposits, including noninterest-bearing demand deposits, was 1.27% and 1.35% for the six months ended June 30, 2026 and 2025, respectively.
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 tables present the calculations of our non-GAAP financial measures.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (dollars in thousands, except per share amounts) | | Quarter Ended | | Six Months Ended |
| Return on Average Equity and Return on Average Tangible Equity | | Ref. | | June 30,
2026 | | March 31,
2026 | | June 30,
2025 | | June 30,
2026 | | June 30,
2025 |
| | | | | | | | | | | | |
Net income | | (a) | | $ | 57,701 | | | $ | 44,090 | | | $ | 42,485 | | | $ | 101,791 | | | $ | 86,276 | |
Add: intangibles amortization, net of tax (1) | | | | 5,243 | | | 5,254 | | | 1,906 | | | 10,497 | | | 3,864 | |
| Net income, excluding the impact of intangible amortization, net of tax | | (b) | | $ | 62,944 | | | $ | 49,344 | | | $ | 44,391 | | | $ | 112,288 | | | $ | 90,140 | |
| | | | | | | | | | | | |
| Average shareholders’ equity | | (c) | | $ | 2,728,959 | | | $ | 2,860,494 | | | $ | 2,384,182 | | | $ | 2,794,363 | | | $ | 2,359,611 | |
| Less: average goodwill and other intangible assets | | | | 978,184 | | | 1,052,479 | | | 878,190 | | | 1,015,126 | | | 879,494 | |
| Average tangible shareholders’ equity | | (d) | | $ | 1,750,775 | | | $ | 1,808,015 | | | $ | 1,505,992 | | | $ | 1,779,237 | | | $ | 1,480,117 | |
| | | | | | | | | | | | |
Return on average equity (2) | | (a) / (c) | | 8.48 | % | | 6.25 | % | | 7.15 | % | | 7.35 | % | | 7.37 | % |
Return on average tangible equity (non-GAAP) (2) | | (b) / (d) | | 14.42 | % | | 11.07 | % | | 11.82 | % | | 12.73 | % | | 12.28 | % |
| | | | | | | | | | | | |
| | | | Quarter Ended | | Six Months Ended |
| Efficiency Ratio | | Ref. | | June 30,
2026 | | March 31,
2026 | | June 30,
2025 | | June 30,
2026 | | June 30,
2025 |
| | | | | | | | | | | | |
| Noninterest expense | | (e) | | $ | 124,473 | | | $ | 130,427 | | | $ | 91,080 | | | $ | 254,900 | | | $ | 176,718 | |
| Less: intangibles amortization | | | | 7,207 | | | 7,222 | | | 2,666 | | | 14,429 | | | 5,404 | |
| Noninterest expense, excluding the impact of intangible amortization | | (f) | | $ | 117,266 | | | $ | 123,205 | | | $ | 88,414 | | | $ | 240,471 | | | $ | 171,314 | |
| Net interest income | | (g) | | $ | 177,172 | | | $ | 179,045 | | | $ | 130,129 | | | $ | 356,217 | | | $ | 258,583 | |
| Noninterest income | | (h) | | $ | 23,796 | | | $ | 21,020 | | | $ | 19,625 | | | $ | 44,816 | | | $ | 34,606 | |
| Efficiency ratio | | (e) / (g+h) | | 61.9 | % | | 65.2 | % | | 60.8 | % | | 63.6 | % | | 60.3 | % |
| Efficiency ratio (non-GAAP) | | (f) / (g+h) | | 58.4 | % | | 61.6 | % | | 59.0 | % | | 60.0 | % | | 58.4 | % |
| | | | | | | | | | | | |
(1)Estimated statutory tax rate of 27.25%, 27.25% and 28.50% for the quarters ended and June 30, 2026, March 31, 2026 and June 30, 2025, respectively and 27.25% and 28.50% for the six months ended June 30, 2026 and 2025, respectively.
(2)Ratios are annualized.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (dollars in thousands, except per share amounts) | | As of |
Book Value per Share and Tangible Book Value per Share (3) | | Ref. | | June 30,
2026 | | March 31,
2026 | | December 31,
2025 | | September 30,
2025 | | June 30,
2025 |
| | | | | | | | | | | | |
| Total shareholders’ equity | | (i) | | $ | 2,689,931 | | | $ | 2,791,392 | | | $ | 2,862,375 | | | $ | 2,787,249 | | | $ | 2,416,617 | |
| Less: goodwill and other intangible assets | | | | 941,211 | | | 1,048,574 | | | 1,055,796 | | | 986,569 | | | 876,614 | |
| Total tangible shareholders’ equity | | (j) | | $ | 1,748,720 | | | $ | 1,742,818 | | | $ | 1,806,579 | | | $ | 1,800,680 | | | $ | 1,540,003 | |
| | | | | | | | | | | | |
| Common shares outstanding-Class A and B | | (k) | | 221,425,469 | | | 221,400,590 | | | 221,305,009 | | | 221,203,135 | | | 202,015,832 | |
| | | | | | | | | | | | |
| Common shares outstanding-Class A | | | | 220,311,021 | | | 220,286,142 | | | 220,190,561 | | | 220,088,687 | | | 200,901,384 | |
| Common shares outstanding-Class B-adjusted | | | | 11,144,480 | | | 11,144,480 | | | 11,144,480 | | | 11,144,480 | | | 11,144,480 | |
Shares outstanding at period end-adjusted (4) | | (l) | | 231,455,501 | | | 231,430,622 | | | 231,335,041 | | | 231,233,167 | | | 212,045,864 | |
| | | | | | | | | | | | |
| Book value per share | | (i) / (k) | | $ | 12.15 | | | $ | 12.61 | | | $ | 12.93 | | | $ | 12.60 | | | $ | 11.96 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Tangible book value per share (non-GAAP) | | (j) / (l) | | $ | 7.56 | | | $ | 7.53 | | | $ | 7.81 | | | $ | 7.79 | | | $ | 7.26 | |
| | | | | | | | | | | | |
| | | | As of |
Common Equity Ratio and Tangible Common Equity Ratio (3) | | Ref. | | June 30,
2026 | | March 31,
2026 | | December 31,
2025 | | September 30,
2025 | | June 30,
2025 |
| | | | | | | | | | | | |
| Total shareholders’ equity | | (m) | | $ | 2,689,931 | | | $ | 2,791,392 | | | $ | 2,862,375 | | | $ | 2,787,249 | | | $ | 2,416,617 | |
| Less: goodwill and other intangible assets | | | | 941,211 | | | 1,048,574 | | | 1,055,796 | | | 986,569 | | | 876,614 | |
| Total tangible shareholders’ equity | | (n) | | $ | 1,748,720 | | | $ | 1,742,818 | | | $ | 1,806,579 | | | $ | 1,800,680 | | | $ | 1,540,003 | |
| | | | | | | | | | | | |
| Total assets | | (o) | | $ | 21,230,839 | | | $ | 21,388,955 | | | $ | 22,351,475 | | | $ | 22,721,935 | | | $ | 16,571,173 | |
| Less: goodwill and other intangible assets | | | | 941,211 | | | 1,048,574 | | | 1,055,796 | | | 986,569 | | | 876,614 | |
| Total tangible assets | | (p) | | $ | 20,289,628 | | | $ | 20,340,381 | | | $ | 21,295,679 | | | $ | 21,735,366 | | | $ | 15,694,559 | |
| | | | | | | | | | | | |
| Common equity ratio | | (m) / (o) | | 12.67 | % | | 13.05 | % | | 12.81 | % | | 12.27 | % | | 14.58 | % |
Tangible common equity ratio (non-GAAP) | | (n) / (p) | | 8.62 | % | | 8.57 | % | | 8.48 | % | | 8.28 | % | | 9.81 | % |
| | | | | | | | | | | | |
(3)Prior period comparative disclosures for September 30, 2025 reflect the impact of adoption of ASU 2025-08.
(4)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.
