Company: MCHB
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001518715-25-000083
Chunk: 52

Company: Mechanics Bancorp
Filing Date: 2025-05-08
Form: 10-Q
Item: Item 8
Chunk 52
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 2024, respectively. The changes in single family MSRs measured at fair value are as follows:Quarter Ended March 31,(in thousands)20252024Beginning balance$72,901 $74,249 Additions and amortization:Originations695 617 Purchases— — Amortization (1)(1,582)(1,428)Net additions and amortization(887)(811)Changes in fair value assumptions (2)271 618 Ending balance$72,285 $74,056 (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: Quarter Ended March 31,(rates per annum) (1)20252024Constant prepayment rate ("CPR") (2)17.96 %19.30 %Discount rate 10.14 %10.18 %(1)  Based on a weighted average.(2)  Represents an 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 March 31, 2025At December 31, 2024Range of InputsAverage (1)Range of InputsAverage (1)CPRs (2)5.80%  - 14.00%6.77 %6.00% - 13.50%6.60 %Discount Rates10.00%  - 16.00%10.27 %10.00% - 17.00%11.00 %(1)  Weighted averages of all the inputs within the range.(2)   Represents the expected lifetime average CPR used in the model.To compute hypothetical sensitivities of the value of our single family MSRs to immediate adverse changes in key assumptions, we computed the impact of changes to CPRs and in discount rates as outlined below:(dollars in thousands)At March 31, 2025Fair value of single family MSR$72,285 Expected weighted-average life (in years)8.31CPRImpact on fair value of 25 basis points adverse change in interest rates$(1,015)Impact