Company: MCHB
Filing Date: 2025-04-15
Form Type: ARS
Source: 0001518715-25-000069
Chunk: 97

Company: Mechanics Bancorp
Filing Date: 2025-04-15
Form: ARS
Chunk 97
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4,627 Other (1.18) % 1,419 (0.75) % 246 Total 24.46 % (29,478) 16.02 % (5,249) Change in valuation allowance 53,310 — Total $ 23,832 $ (5,249) The following is a summary of the Company's deferred tax assets and liabilities: At December 31, (in thousands) 2024 2023 Deferred tax assets Provision for credit losses $ 10,220 $ 10,977 Unrealized loss on investments AFS 28,343 28,571 LIHTC tax credits carryforwards 5,667 — Net operating loss carryforwards 26,736 370 Accrued liabilities 2,241 1,917 Other investments 786 463 Lease liabilities 8,071 9,019 Nonaccrual interest 1,695 1,112 Intangibles 4,796 4,725 Stock based compensation 849 782 Loan valuation 240 274 Premises and equipment 681 — Other 457 401 Total 90,782 58,611 Deferred tax liabilities Mortgage servicing rights (22,805) (24,204) Deferred loan fees and costs (8,465) (8,967) Lease right-of-use assets (6,202) (6,906) Premises and equipment — (364) Total (37,472) (40,441) Net deferred tax asset (liability) 53,310 18,170 Valuation allowance (53,310) — Total $ — $ 18,170 Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to fully utilize the existing deferred tax assets. As of December 31, 2024, management determined that sufficient 78

evidence did not exist to support the future utilization of all of the Company's deferred tax assets. As a result the Company recorded a $53.3 million deferred tax assets valuation allowance. During 2024, the Company created federal and state net operating loss carryforwards of $111.9 million and $111.0 million, respectively. The federal net operating loss carryforwards do not expire while the state net operating loss carryforwards generally expire in 2044. The Company’s LIHTC tax credits carryforwards expire in 2043 $0.4 million and 2044 $5.3 million. The Company has state