Company: MCHB
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001518715-25-000026
Chunk: 134

Company: Mechanics Bancorp
Filing Date: 2025-03-07
Form: 10-K
Item: Item 8
Chunk 134
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 of the underlying valuation model. As the table above demonstrates, the Company's methodology for estimating the fair value of MSRs is highly sensitive to changes in key assumptions. Changes in fair value resulting from changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; in reality, changes in one factor may be associated with changes in another, which may magnify or counteract the sensitivities. Thus, any measurement of MSR fair value is limited by the conditions existing and assumptions made as of a particular point in time. Those assumptions may not be appropriate if they are applied to a different point in time.MSRs resulting from the sale of multifamily loans are recorded at fair value and subsequently carried at the lower of amortized cost or fair value. Multifamily MSRs are amortized in proportion to, and over, the estimated period the net servicing income will be collected.The changes in multifamily and SBA MSRs measured at LOCOM or fair value were as follows: Years Ended December 31,(in thousands)20242023Beginning balance$29,987 $35,256 Origination2,190 509 Amortization(5,612)(5,778)Ending balance$26,565 $29,987 

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Key economic assumptions used in measuring the initial fair value of capitalized multifamily MSRs were as follows: Years Ended December 31,(rates per annum) (1)20242023Discount rate13.10 %13.00 %(1)Based on a weighted average.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: At December 31, 2024At December 31, 2023Range of InputsAverage (1)Range of InputsAverage (1)Discount Rates13.00%  - 15.00%13.10 %13.00% - 15.00%13.00 %(1)   Weighted averages of all the inputs within the range.At December 31, 2024, the expected weighted-average life of the Company's multifamily and SBA MSRs was 11.41 years. Projected amortization expense for the gross carrying value of multifamily and S