Company: MCHB
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0001518715-25-000110
Chunk: 104

Company: Mechanics Bancorp
Filing Date: 2025-08-06
Form: 10-Q
Item: Item 2
Chunk 104
---
22 %0.76 %Net interest margin1.86 %1.40 %

(1)   Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $2.0 million and $2.2 million for the six months ended June 30, 2025 and 2024, respectively. The estimated federal statutory tax rate was 21% for the periods presented.

(2)   Cost of deposits including noninterest-bearing deposits, was 2.43% and 2.67% for the six months ended June 30, 2025 and 2024, respectively.

Net interest income in the six months ended June 30, 2025 increased $5.2 million as compared to the six months ended June 30, 2024 due primarily to an increase in net interest margin from 1.40% in the six months ended June 30, 2024 to 1.86% in the six months ended June 30, 2025. The increase in net interest margin is due to a 41 basis point decrease in the rates paid on interest-bearing liabilities and a 6 basis point increase in the yield on interest earning assets. The increase in yield on interest earning assets was primarily due to the sale of $990 million of lower yielding multifamily loans at the end of the fourth quarter of 2024. The decrease in rates on interest bearing liabilities are primarily due to our paydown at the end of 2024 and beginning of 2025 of higher cost borrowings and brokered certificates of deposit with proceeds from the sale of multifamily loans. 

Provision for Credit Losses: The $7.0 million provision for credit losses recognized during the six months ended June 30, 2025 was primarily due to the impact of adverse credit migration in certain multifamily loans and a $3.3 million increase in specific reserves which was partially offset by lower general reserves resulting in part from lower loan balances. There was no provision for credit losses during the six months ended June 30, 2024, which reflected the stable balance of our loan portfolio, a minimal level of identified credit issues in our loan portfolio and the lack of significant expected credit issues arising in future periods.

51

Noninterest Income consisted of the following:   

 Six Months Ended June 30,(in thousands)20252024Noninterest incomeGain on loan origination and sale activities (1)Single family $5,465 $