Company: MCHB
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001518715-25-000026
Chunk: 133

Company: Mechanics Bancorp
Filing Date: 2025-03-07
Form: 10-K
Item: Item 8
Chunk 133
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 fair value assumptions (2)1,743 414 Ending balance$72,901 $74,249 (1)Represents changes due to collection/realization of expected cash flows and curtailments.(2)Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates.Key economic assumptions used in measuring the initial fair value of capitalized single family MSRs were as follows: Years Ended December 31,(rates per annum) (1)20242023Constant prepayment rate ("CPR") (2)18.07 %14.89 %Discount rate10.23 %11.99 %(1)Based on a weighted average.(2)Represents the expected lifetime average CPR used in the model.

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For single family 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: At December 31, 2024At December 31, 2023Range of InputsAverage (1)Range of InputsAverage (1)CPRs6.00%  - 13.50%6.60 %6.80%- 32.50%7.00 %Discount Rates10.00%  - 17.00%11.00 %10.00% -17.00%10.00 %(1)   Weighted averages of all the inputs within the range.To compute hypothetical sensitivities of the value of our single MSRs to immediate adverse changes in key assumptions, we computed the impact of changes in CPRs and in discount rates as outlined below:(dollars in thousands)At December 31, 2024Fair value of single family MSRs$72,901 Expected weighted-average life (in years)8.37CPRImpact on fair value of 25 basis points adverse change in interest rates$(759)Impact on fair value of 50 basis points adverse change in interest rates$(1,594)Discount rateImpact on fair value of 100 basis points increase$(2,133)Impact on fair value of 200 basis points increase$(4,669) Generally, increases in the CPR or the discount rate utilized in the fair value measurements of single family MSRs will result in a decrease in fair value. Conversely, decreases in the CPR or the discount rate will result in an increase in fair value. These sensitivities are hypothetical and subject to key assumptions