Company: MCHB
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001518715-25-000083
Chunk: 53

Company: Mechanics Bancorp
Filing Date: 2025-05-08
Form: 10-Q
Item: Item 8
Chunk 53
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 on fair value of 50 basis points adverse change in interest rates$(2,122)Discount rateImpact on fair value of 100 basis points increase$(2,827)Impact on fair value of 200 basis points increase$(5,628)The changes in multifamily and SBA MSRs measured at the lower of amortized cost or fair value were as follows: Quarter Ended March 31,(in thousands)20252024Beginning balance$26,565 $29,987 Originations463 278 Amortization(1,354)(1,402)Ending balance$25,674 $28,863 Key economic assumptions used in measuring the initial fair value of capitalized multifamily MSRs were as follows: Quarter Ended March 31,(rates per annum) (1)20252024Discount rate13.10 %13.00 %(1)Based on a weighted average.

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For multifamily MSRs, we use a discounted cash flow valuation technique which utilizes CPRs and discount rates as significant unobservable inputs as noted in the table below. Multifamily DUS loans typically contain yield maintenance features that significantly reduce loan prepayments, resulting in a CPR of zero for valuation purposes.At March 31, 2025At December 31, 2024Range of InputsAverage (1)Range of InputsAverage (1)Discount Rates13.00%  - 15.00%13.10 %13.00% - 15.00%13.10 %(1)   Weighted averages of all the inputs within the range.

NOTE 7–GUARANTEES AND MORTGAGE REPURCHASE LIABILITY: 

In the ordinary course of business, the Company sells loans through the Fannie Mae Multifamily Delegated Underwriting and Servicing Program ("DUS"®) that are subject to a credit loss sharing arrangement. The Company services the loans for Fannie Mae and shares in the risk of loss with Fannie Mae under the terms of the DUS contracts. Under the DUS program, the Company and Fannie Mae share losses on a pro rata basis, where the Company is responsible for losses incurred up to one-third of the principal balance on each loan with two-thirds of the loss covered by Fannie Mae. For loans that have been sold through this program, a liability is recorded for this loss sharing arrangement under the accounting guidance for guarantees. At March 31, 2025 and December 31, 2024