SHARE-BASED COMPENSATION PLANS |
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| SHARE-BASED COMPENSATION PLANS | SHARE-BASED COMPENSATION PLANS The 2025 Equity Plan, adopted by shareholders in August 2025, provides for the issuance of incentive stock options, nonqualified stock options, stock appreciation rights, RSUs, PSUs, dividend equivalent awards and other awards. All share-based awards granted after the Merger date were issued under the 2025 Equity Plan. As of June 30, 2026, only RSUs and PSUs have been granted under the 2025 Equity Plan. Shares available for grant under the 2025 Equity Plan were 6,792,823 shares as of June 30, 2026. In connection with Mechanics Bank becoming a wholly-owned subsidiary of the Company, which is publicly traded, and the stock of Mechanics Bank being exchanged for shares of Class A common stock of the Company as a result of the Merger, the Company has elected to settle share-based compensation awards in Class A common stock of the Company that were outstanding following the Merger that historically were settled in cash by Mechanics Bank. Accordingly, during 2025, the Company modified the classification of these outstanding awards from liability to equity (RSU awards). These outstanding awards also were remeasured at the modification date fair value of the Company’s stock, and the previously recognized liability was reclassified to common stock within the consolidated balance sheets. Upon modification, $13.6 million of previously recognized liability-classified awards was reclassified to additional paid-in capital. Compensation expense on the accompanying consolidated income statements was $1.5 million and $1.2 million for the quarter ended June 30, 2026 and 2025 and $2.8 million and $3.7 million for the six months ended June 30, 2026 and 2025, respectively. The income tax benefit recognized in the consolidated income statements related to this expense was $393 thousand and $331 thousand for the quarter ended June 30, 2026 and 2025, and $654 thousand and $1.1 million for the six months ended June 30, 2026 and 2025, respectively. The amount of unrecognized compensation expense related to all RSUs and PSUs as of June 30, 2026 totaled $12.7 million. Such expense is expected to be recognized over a weighted average period of 2.33 years. RSUs generally vest over a period of to four years and PSUs vest over a period of three years with the fair market value of the awards determined at the grant date based on the Company’s stock price. The vesting date fair value of RSUs that vested was $2.7 million for the six months ended June 30, 2026. The table below summarizes activity related to the Company’s outstanding RSUs and PSUs for the six months ended June 30, 2026.
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