Company: MCHB
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001518715-25-000083
Chunk: 116

Company: Mechanics Bancorp
Filing Date: 2025-05-08
Form: 10-Q
Item: Item 2
Chunk 116
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3.74 %Noninterest-bearing liabilities:Demand deposits (2)1,265,701 1,319,309 Other liabilities86,537 113,277 Total liabilities7,466,134 8,964,562 Shareholders' equity404,800 537,627 Total liabilities and shareholders' equity$7,870,934 $9,502,189 Net interest income $34,243 $33,235 Net interest spread1.18 %0.80 %Net interest margin1.82 %1.44 %

(1)   Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $1.0 million and $1.1 million for the quarters ended March 31, 2025 and 2024, respectively. The estimated federal statutory tax rate was 21% for the periods presented.

(2)   Cost of deposits including noninterest-bearing deposits, was 2.52% and 2.61% for the quarters ended March 31, 2025 and 2024, respectively.

Net interest income in the first quarter of 2025 increased $1.1 million as compared to the first quarter of 2024 due primarily to an increase in net interest margin from 1.44% in the first quarter of 2024 to 1.82% in the first quarter of 2025. The increase in net interest margin is due to a 27 basis point decrease in the rates paid on interest-bearing liabilities and an 11 basis point increase in the yield on interest earning assets. The increase in yield on interest earning assets was primarily due to the sale of $990 million of lower yielding multifamily loans at the end of the fourth quarter of 2024. The decrease in rates on interest bearing liabilities are primarily due to our paydown at the end of 2024 and beginning of 2025 of higher cost borrowings and brokered certificates of deposit using the proceeds from the sale of multifamily loans. 

Provision for Credit Losses: The $1.0 million provision for credit losses recognized during the first quarter of 2025 was due to a $3.3 million increase in specific reserves which was partially offset by lower general reserves resulting in part from lower loan balances. During the first quarter of 2024, the provision for credit losses reflect the stable balance of our loan portfolio, a minimal level of identified credit issues in our loan portfolio and the