Company: MCHB
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001518715-25-000026
Chunk: 48

Company: Mechanics Bancorp
Filing Date: 2025-03-07
Form: 10-K
Item: Item 7
Chunk 48
---
.5 million, respectively, in 2024, as compared to $27.5 million and $32.8 million, respectively, in 2023. Our core net loss and core loss before income taxes, which exclude the loss on the sale of multifamily loans, the impact of merger related expenses, the valuation allowance for deferred tax assets and goodwill impairment charges, were $20.9 million and $27.8 million in 2024, compared to core net income of $8.3 million and core income before taxes of $8.6 million in 2023. The $36.4 million decrease in core income before taxes was primarily due to lower net interest income and lower noninterest income, partially offset by a decrease in noninterest expense.

Income Taxes: Due to our cumulative losses over the last three years, accounting rules require us to provide a valuation allowance for the balance of our deferred tax assets. Therefore, in 2024, we recorded a $53 million valuation allowance for deferred tax assets which was recorded as income tax expense. Excluding this valuation allowance, the income tax benefit would have been $29.5 million and would have resulted in an effective tax rate of 24.5% for 2024 as compared to an effective tax rate of 16.0% for 2023. Our effective tax rate in 2023 was significantly impacted by the goodwill impairment charge, a portion of which is not deductible for tax purposes.

22

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:

Years Ended December 31, 20242023(dollars in thousands)AverageBalanceInterestAverageYield/CostAverageBalanceInterestAverageYield/CostAssets:Interest-earning assetsLoans (1)$7,408,680 $347,367 4.64 %$7,474,410 $342,152 4.54 %Investment securities (1)1,163,597 43,181 3.71 %1,382,378 53,346 3.86 %FHLB Stock, Fed Funds and other275,956 16,