Company: MCHB
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001518715-25-000026
Chunk: 144

Company: Mechanics Bancorp
Filing Date: 2025-03-07
Form: 10-K
Item: Item 8
Chunk 144
---
 valuation model is the implied spread to benchmark interest rate curve. The implied spread is not directly observable in the market and is derived from third party pricing which is based on market information from comparable loan pools. The fair value estimate of single family loans that have been transferred from held for sale to held for investment are sensitive to changes in the benchmark interest rate which might result in a significantly higher or lower fair value measurement.The Company transferred certain loans from held for sale to held for investment. These loans were originated as held for sale loans where the Company had elected the fair value option. The Company determined these loans to be level 3 recurring assets as the valuation technique included a significant unobservable input. The total amount of held for investment loans where fair value option election was made was $1.3 million at December 31, 2024 and 2023.The following information presents significant Level 3 unobservable inputs used to measure fair value of certain assets:(dollars in thousands)Fair ValueValuationTechniqueSignificant UnobservableInputLowHighWeighted AverageDecember 31, 2024Investment securities AFS$1,698 Income approachImplied spread to benchmark interest rate curve2.25%2.25%2.25%Single family LHFI1,287 Income approachImplied spread to benchmark interest rate curve2.94%5.56%3.69%Interest rate lock commitments, net126 Income approachFall-out factor0.83%29.13%9.28%Value of servicing0.78%2.15%1.37%December 31, 2023Investment securities AFS$1,860 Income approachImplied spread to benchmark interest rate curve2.25%2.25%2.25%Single family LHFI1,280 Income approachImplied spread to benchmark interest rate curve3.30%5.04%3.94%Interest rate lock commitments, net 411 Income approachFall-out factor0.81%41.64%10.54%Value of servicing0.32%0.80%0.57%We had no LHFS where the fair value was not derived with significant observable inputs at December 31, 2024 or 2023.The following table presents fair value changes and activity for certain Level 3 assets: (in thousands)Beginning balanceAdditionsTransfersPayoffs/SalesChange in mark to market (1)Ending balanceYear Ended December 31, 2024Investment securities AFS