Company: MCHB
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001518715-25-000083
Chunk: 71

Company: Mechanics Bancorp
Filing Date: 2025-05-08
Form: 10-Q
Item: Item 8
Chunk 71
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 allowance and merger related expenses and recoveries, were $2.9 million and $2.7 million, respectively, in the first quarter of 2025, as compared to $5.1 million and $6.4 million respectively, in the fourth quarter of 2024. The decrease in core loss before income taxes was primarily due to an increase in net interest income and an increase in noninterest income, partially offset by an increase in provision for credit losses and an increase in noninterest expense.

Income Taxes: Due to our cumulative losses over the last three year period ended December 31, 2024, accounting rules required us to provide a valuation allowance for the balance of our deferred tax assets in the fourth quarter of 2024. As a result, we do not expect to recognize income tax expense until the deferred tax assets valuation allowance no longer exists. The $0.3 million income tax benefit recognized in the first quarter of 2025 primarily relates to the reversal of the disparate tax effects on our accumulated other comprehensive income ("AOCI") resulting from the recording in the fourth quarter of 2024, of a deferred tax valuation allowance for the deferred tax assets related to the AOCI. In the fourth quarter of 2024, we recorded a $53 million deferred tax allowance which was recorded as income tax expense. Excluding this allowance, the income tax benefit would have been $22.4 million and would have resulted in an effective tax rate of 24.3% for the fourth quarter of 2024. 

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Net Interest Income: The following tables set 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:

Quarter Ended  March 31, 2025December 31, 2024(dollars in thousands)AverageBalanceInterestAverageYield/CostAverageBalanceInterestAverageYield/CostAssets:Interest-earning assets:Loans (1)$6,198,659 $73,587 4.76 %$7,334,221 $86,119 4.62 %Investment securities (1)1,055,336 9,509 3.60 %1,096