Mechanics Bancorp Reports Third Quarter 2026 Results
WALNUT CREEK, Calif.--( BUSINESS WIRE)--Mechanics Bancorp (Nasdaq: MCHB):
Third Quarter Highlights
$20.9 billion
Total Assets
$46.0 million
Net Income
14.73%
CET1 Ratio (1)
$11.59
Book Value Per Share
$7.05
Tangible Book Value Per Share (2)
Mechanics Bancorp (Nasdaq: MCHB) (“Mechanics” or the “Company”), the financial holding company of Mechanics Bank, today announced its financial results for the quarter ended September 30, 2026. Mechanics reported net income of $46.0 million, or $0.20 per diluted share (3), for the third quarter of 2026, compared to $57.7 million, or $0.25 per diluted share, for the second quarter of 2026. For the nine months ended September 30, 2026, Mechanics reported net income of $147.8 million, or $0.64 per diluted share, compared to $154.6 million, or $0.72 per diluted share, for the nine months ended September 30, 2025. (4)
Third Quarter 2026 Highlights:
(1)
Regulatory capital ratios at September 30, 2026 are preliminary.
(2)
Non-GAAP measure. Refer to section “Non-GAAP Financial Measures and Reconciliations” below.
(3)
Unless otherwise specified, refers to diluted earnings per share for Class A common stock.
(4)
Mechanics’ financial results for the quarter and nine months ended September 30, 2025 were recast to reflect the adoption of ASU 2025-08. Refer to “Adoption of Purchased Seasoned Loans Accounting Standard” for additional discussion.
C.J. Johnson, President and CEO of Mechanics, said, “Our third quarter results reflect the continued execution of our strategic priorities. With the HomeStreet integration behind us, we move forward from a position of strength, focused on building long-term shareholder value through prudent growth and expense management, strong credit quality, and returning capital to shareholders via a market-leading dividend yield.”
Nathan Duda, CFO of Mechanics, added, “Third quarter financial results reflect our continued focus on balance sheet optimization and efficient capital deployment. During the quarter, we completed a $308 million securities portfolio restructuring, reinvesting the proceeds at significantly higher yields, and sold substantially all of our runoff auto loan portfolio, reducing servicing expenses going forward. Taken together, these actions further enhance our earnings profile and position us well for the future. At the same time, our credit performance remained strong, supported by a reduction in delinquent loans, disciplined underwriting practices and ongoing portfolio monitoring. Looking ahead, we remain focused on maintaining our credit discipline, prudent expense management, and preserving financial flexibility as we navigate a challenging interest rate environment.”
Presentation of Results – HomeStreet Bank Merger
On September 2, 2025, the merger of HomeStreet Bank, the wholly owned subsidiary of Mechanics Bancorp (formerly known as HomeStreet, Inc.) with and into Mechanics Bank, was completed. Mechanics Bank is the accounting acquirer (legal acquiree), HomeStreet Bank is the accounting acquiree and Mechanics Bancorp is the legal acquirer. Mechanics’ financial results for all periods ended prior to September 2, 2025 reflect Mechanics Bank’s historical financial results on a standalone basis and results of the combined company beginning September 2, 2025. In addition, for periods prior to September 2, 2025, the number of shares issued and outstanding, earnings per share, and all references to share quantities or metrics of Mechanics have been retrospectively restated to reflect the equivalent number of shares issued in the merger since the merger was accounted for as a reverse acquisition. As the accounting acquirer, Mechanics Bank remeasured the identifiable assets acquired and liabilities assumed in the merger as of September 2, 2025 at their acquisition date fair values.
Adoption of Purchased Seasoned Loans Accounting Standard
The Company early adopted Accounting Standards Update (“ASU”) 2025-08, “Financial Instruments–Credit Losses (Topic 326): Purchased Loans,” during the fourth quarter of 2025. This new standard, which the Company elected to early adopt as of January 1, 2025, requires acquired loans that meet certain criteria at acquisition (purchased seasoned loans) to be recognized at their purchase price plus the amount of the allowance for expected credit losses (gross-up approach). As a result, for purchased seasoned loans acquired in the HomeStreet merger, the Company established an allowance for credit losses of $20.3 million at the date of acquisition for these loans and reversed the provision for credit losses recorded in the third quarter of 2025, and recorded it as part of the acquired loans initial amortized cost basis. Required disclosures regarding the impact of the adoption were presented when the Company filed its annual report on Form 10-K for the year ended December 31, 2025. In addition, third quarter 2025 results will be retrospectively adjusted when the Company files its quarterly report on Form 10-Q for the quarter ended September 30, 2026.
The impact of the adoption is reflected in the comparative prior period results presented in this earnings release for the quarter and nine months ended September 30, 2025 and as of September 30, 2025.
INCOME STATEMENT HIGHLIGHTS
Summary Income Statement
Quarter Ended
Nine Months Ended
(in thousands)
September 30,
2026
June 30,
2026
September 30,
2025
September 30,
2026
September 30,
2025
Total interest income (1)
$
239,156
$
237,942
$
203,371
$
719,034
$
555,109
Total interest expense
64,254
60,770
59,218
187,915
152,373
Net interest income (1)
174,902
177,172
144,153
531,119
402,736
Provision (reversal of provision) for credit losses on loans (1)
(14,681
)
(904
)
25,806
(7,992
)
22,411
Provision (reversal of provision) for credit losses on unfunded lending commitments
(503
)
(1,863
)
960
(2,192
)
329
Total provision (reversal of provision) for credit losses (1)
(15,184
)
(2,767
)
26,766
(10,184
)
22,740
Net gain (loss) on sales of loans
(9,843
)
2,477
659
(6,223
)
659
Net gain (loss) on sales and calls of investment securities
(32,269
)
31
155
(32,186
)
4,292
Bargain purchase gain
2,871
—
90,363
2,871
90,363
Other noninterest income
25,807
21,288
18,601
66,920
49,070
Total noninterest income (loss)
(13,434
)
23,796
109,778
31,382
144,384
Acquisition and integration costs
559
5,923
63,869
11,276
69,858
Other noninterest expense
113,634
118,550
99,460
357,817
270,189
Total noninterest expense
114,193
124,473
163,329
369,093
340,047
Income before income tax expense (benefit) (1)
62,459
79,262
63,836
203,592
184,333
Income tax expense (benefit) (1)
16,467
21,561
(4,440
)
55,809
29,781
Net income (1)
$
45,992
$
57,701
$
68,276
$
147,783
$
154,552
(1)
Prior period comparative disclosures for the quarter and nine months ended September 30, 2025 reflect the impact of adoption of ASU 2025-08.
Net Interest Income
Third Quarter of 2026 vs. Second Quarter of 2026
Net interest income in the third quarter of 2026 was $2.3 million lower than the second quarter of 2026 primarily as a result of higher deposit costs and a $133.1 million decrease in average interest earning assets. Mechanics’ net interest margin decreased from 3.62% to 3.55% primarily due to higher deposit costs, partially offset by higher investment securities interest income from the partial quarter benefit of the AFS securities restructuring.
Nine Months Ended September 30, 2026 vs. Nine Months Ended September 30, 2025
Net interest income for the nine months ended September 30, 2026 increased $128.4 million as compared to the nine months ended September 30, 2025 due primarily to an increase of $3.9 billion in average interest-earning assets, as well as an increase in net interest margin from 3.40% in the nine months ended September 30, 2025 to 3.59% in the nine months ended September 30, 2026, as a result of the HomeStreet merger.
Provision for Credit Losses
Third Quarter of 2026 vs. Second Quarter of 2026
The reversal of provision for credit losses in the third quarter of 2026, which consists of the provision for loans and unfunded commitments, was $15.2 million, compared to a reversal of provision of $2.8 million for the second quarter of 2026. The reversal of provision for the third quarter was primarily driven by decreases in expected losses on our multifamily and CRE investor loans, corresponding decreases in qualitative factors and the auto loan portfolio sale.
Nine Months Ended September 30, 2026 vs. Nine Months Ended September 30, 2025
The reversal of provision for credit losses was $10.2 million for the nine months ended September 30, 2026, compared to a provision of $22.7 million for the nine months ended September 30, 2025. The decrease in provision for the nine months ended September 30, 2026 was driven primarily by the auto portfolio sale, lower qualitative adjustments, lower balances and lower unfunded commitments reserves.
Noninterest Income (Loss)
Third Quarter of 2026 vs. Second Quarter of 2026
Noninterest income (loss) in the third quarter of 2026 decreased $37.2 million from the second quarter of 2026 primarily due to the losses on the sales of auto loans and AFS securities during the quarter, partially offset by the increase in other noninterest income from a gain on other equity investments. In addition, noninterest income decreased in the third quarter of 2026 relative to the second quarter of 2026 due to the gain on sale of the Fannie Mae Multifamily Delegated Underwriting and Servicing (“DUS®”) business line in other noninterest income and a mortgage servicing rights valuation adjustment in net gain (loss) on sales of loans in the prior quarter.
Nine Months Ended September 30, 2026 vs. Nine Months Ended September 30, 2025
Noninterest income for the nine months ended September 30, 2026 decreased $113.0 million from the nine months ended September 30, 2025 primarily due to the losses on the sales of auto loans and AFS securities during 2026 and the bargain purchase gain from the HomeStreet merger recognized in 2025. The decrease was partially offset by an increase in noninterest income that resulted from a gain on other equity investments and gain on sale of the DUS business line in other noninterest income and a mortgage servicing rights valuation adjustment in net gain (loss) on sales of loans in 2026.
Noninterest Expense
Third Quarter of 2026 vs. Second Quarter of 2026
Noninterest expense decreased $10.3 million in the third quarter of 2026 compared to the second quarter of 2026, primarily due to lower acquisition and integration related costs, and lower salaries and employee benefits expense due to headcount reductions as a result of continued integration following the HomeStreet merger.
Nine Months Ended September 30, 2026 vs. Nine Months Ended September 30, 2025
Noninterest expense increased $29.0 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 primarily due to higher salaries and employee benefits expense, occupancy costs, equipment expense, and amortization of intangibles, partially offset by lower acquisition and integration related costs from the HomeStreet merger.
Income Taxes
Third Quarter of 2026 vs. Second Quarter of 2026
Our effective tax rate during the third quarter of 2026 was 26.4% as compared to 27.2% in the second quarter of 2026 and our federal statutory rate was 21.0%. The effective tax rate decreased compared to the prior quarter as a result of tax benefits related to stock awards that vested in the third quarter.
Nine Months Ended September 30, 2026 vs. Nine Months Ended September 30, 2025
Our effective tax rate for the nine months ended September 30, 2026 was 27.4% as compared to 16.2% for the nine months ended September 30, 2025 and our federal statutory rate was 21.0%. The effective tax rate increased compared to the nine months ended September 30, 2025 as a result of a non-taxable $90.4 million bargain purchase gain from the HomeStreet merger in 2025 and a $1.7 million remeasurement of deferred tax assets in 2026.
BALANCE SHEET HIGHLIGHTS
Selected Balance Sheet Items
(in thousands)
September 30,
2026
June 30,
2026
March 31,
2026
December 31,
2025
September 30,
2025
Cash and cash equivalents
$
602,455
$
553,915
$
483,513
$
1,029,983
$
1,442,647
Trading securities
46,099
46,595
49,463
49,518
50,357
Securities available-for-sale
4,292,236
4,119,215
3,933,705
3,993,385
3,490,478
Securities held-to-maturity
1,259,501
1,286,813
1,313,520
1,336,632
1,363,636
Loans held for investment (before ACL) (1)
13,012,998
13,576,196
13,852,209
14,176,936
14,587,530
Total assets (1)
20,944,704
21,230,839
21,388,955
22,351,475
22,721,935
Noninterest-bearing demand deposits
$
6,297,519
$
6,420,746
$
6,511,998
$
6,744,082
$
6,748,479
Total deposits
18,019,474
18,089,437
18,242,769
19,024,997
19,452,819
Borrowings
—
80,000
—
—
—
Long-term debt
131,992
130,420
128,815
192,014
190,123
Total liabilities
18,377,218
18,540,908
18,597,563
19,489,100
19,934,686
Total shareholders’ equity (1)
2,567,486
2,689,931
2,791,392
2,862,375
2,787,249
(1)
Prior period comparative disclosures for September 30, 2025 reflect the impact of adoption of ASU 2025-08.
Investment Securities
Trading securities totaled $46.1 million and $46.6 million at September 30, 2026 and June 30, 2026. Securities available-for-sale increased by $173.0 million during the third quarter of 2026 to $4.3 billion at September 30, 2026, primarily due to purchases, partially offset by sales and paydowns during the quarter. The Company performed a restructuring of the balance sheet through the sale of low-yielding AFS securities and reinvestment in MBS at then current market rates near the end of July 2026. Securities held-to-maturity decreased by $27.3 million in the third quarter of 2026, primarily due to paydowns, and totaled $1.3 billion at September 30, 2026.
Loans
Total loans at September 30, 2026 were $13.0 billion, a decrease of $563.2 million from $13.6 billion at June 30, 2026, due primarily to the sale of auto loans and loan repayments during the quarter, partially offset by originations and advances.
Deposits
Total deposits decreased by $70.0 million during the third quarter of 2026 to $18.0 billion at September 30, 2026. The decrease was due to the runoff of $66.1 million of certificates of deposit and a $3.9 million decrease in core deposits.
Noninterest-bearing demand deposits totaled $6.3 billion and represented 35% of total deposits at September 30, 2026, compared to $6.4 billion, or 35% of total deposits, at June 30, 2026.
Borrowings
Total borrowings were zero at September 30, 2026, compared to $80.0 million at June 30, 2026. The decrease was due to payoff of short-term Federal Reserve Discount Window borrowings during the third quarter.
Equity
During the third quarter of 2026, total shareholders’ equity decreased by $122.4 million to $2.6 billion and tangible common equity (1) decreased by $115.5 million to $1.6 billion. The decrease in total shareholders’ equity for the third quarter of 2026 primarily resulted from a net decrease in retained earnings from net income, less dividends paid to common shareholders, and an increase in accumulated other comprehensive loss due to changes in fair value of securities available for sale from higher interest rates.
At September 30, 2026, book value per common share decreased to $11.59, compared to $12.15 at June 30, 2026. At September 30, 2026, tangible book value per common share (1) decreased to $7.05, compared to $7.56 at June 30, 2026.
(1)
Non-GAAP measure. Refer to section “Non-GAAP Financial Measures and Reconciliations” below.
CAPITAL AND LIQUIDITY
Capital ratios remain strong with Total risk-based capital ratio at 16.98% and a Tier 1 leverage ratio of 8.74% at September 30, 2026. The following table presents our regulatory capital ratios as of the dates indicated:
September 30,
2026
June 30,
2026
March 31,
2026
December 31,
2025
September 30,
2025
Mechanics Bancorp (1)
Tier 1 leverage capital (to average assets)
8.74 %
8.71 %
8.66 %
8.65 %
10.34 %
Common equity Tier 1 capital (to risk-weighted assets)
14.73 %
14.39 %
13.92 %
14.09 %
13.42 %
Tier 1 risk-based capital (to risk-weighted assets)
14.73 %
14.39 %
13.92 %
14.09 %
13.42 %
Total risk-based capital (to risk-weighted assets)
16.98 %
16.70 %
16.16 %
16.27 %
15.57 %
Mechanics Bank (1)
Tier 1 leverage capital (to average assets)
9.37 %
9.38 %
9.31 %
9.58 %
11.46 %
Common equity Tier 1 capital (to risk-weighted assets)
15.81 %
15.48 %
14.96 %
15.59 %
14.87 %
Tier 1 risk-based capital (to risk-weighted assets)
15.81 %
15.48 %
14.96 %
15.59 %
14.87 %
Total risk-based capital (to risk-weighted assets)
16.96 %
16.74 %
16.21 %
16.81 %
16.13 %
(1)
Regulatory capital ratios at September 30, 2026 are preliminary.
At September 30, 2026, Mechanics had available borrowing capacity of $5.8 billion from the FHLB, $4.2 billion from the Federal Reserve and $5.0 billion under borrowing lines established with other financial institutions.
CREDIT QUALITY
Asset Quality Information and Ratios
(dollars in thousands)
September 30,
2026
June 30,
2026
March 31,
2026
December 31,
2025
September 30,
2025
Delinquent loans held for investment:
30-89 days past due (1)
$
25,936
$
54,529
$
43,556
$
58,459
$
55,899
90+ days past due
41,594
40,888
33,447
34,686
38,316
Total delinquent loans
$
67,530
$
95,417
$
77,003
$
93,145
$
94,215
Total delinquent loans to loans held for investment
0.52
%
0.70
%
0.56
%
0.66
%
0.65
%
Nonperforming assets:
Nonaccrual loans
$
49,014
$
48,557
$
44,379
$
42,863
$
60,586
90+ days past due and accruing
5,569
6,543
4,098
3,943
2,653
Total nonperforming loans
54,583
55,100
48,477
46,806
63,239
Foreclosed assets
5,081
4,262
4,658
4,990
1,675
Total nonperforming assets
$
59,664
$
59,362
$
53,135
$
51,796
$
64,914
Allowance for credit losses on loans
$
133,621
$
152,601
$
156,796
$
153,319
$
168,959
Allowance for credit losses on loans to total loans held for investment
1.03
%
1.12
%
1.13
%
1.08
%
1.16
%
Allowance for credit losses on loans to nonaccrual loans
272.62
%
314.27
%
353.31
%
357.70
%
278.88
%
Nonaccrual loans to total loans held for investment
0.38
%
0.36
%
0.32
%
0.30
%
0.42
%
Nonperforming assets to total assets
0.28
%
0.28
%
0.25
%
0.23
%
0.29
%
(1)
Prior period comparative disclosures for September 30, 2025 reflect the impact of adoption of ASU 2025-08.
At September 30, 2026, total delinquent loans were $67.5 million, compared to $95.4 million at June 30, 2026. The decrease was primarily due to the auto portfolio sale and two matured commercial real estate loans that were extended and brought current during the quarter. Total delinquent loans as a percentage of total loans were 0.52% at September 30, 2026, as compared to 0.70% at June 30, 2026.
At September 30, 2026, nonperforming assets were $59.7 million, compared to $59.4 million at June 30, 2026. Nonperforming assets as a percentage of total assets was 0.28% at both September 30, 2026 and June 30, 2026.
Allowance for Credit Losses
Quarter Ended
Nine Months Ended
(dollars in thousands)
September 30,
2026
June 30,
2026
September 30,
2025
September 30,
2026
September 30,
2025
Allowance for credit losses on loans:
Beginning balance
$
152,601
$
156,796
$
68,334
$
153,319
$
88,558
Initial allowance on acquired purchased credit deteriorated loans
—
—
63,494
—
63,494
Initial allowance on acquired purchased seasoned loans (1)
—
—
20,252
—
20,252
Provision (reversal of provision) for credit losses
(14,681
)
(904
)
25,806
(7,992
)
22,411
Loans charged off
(6,139
)
(6,308
)
(12,803
)
(19,652
)
(34,969
)
Recoveries
1,840
3,017
3,876
7,946
9,213
Ending balance
$
133,621
$
152,601
$
168,959
$
133,621
$
168,959
Allowance for credit losses on unfunded lending commitments:
Beginning balance
$
5,426
$
7,289
$
3,735
$
7,115
$
4,366
Initial allowance for credit losses
—
—
3,736
—
3,736
Provision (reversal of provision) for credit losses
(503
)
(1,863
)
960
(2,192
)
329
Ending balance
$
4,923
$
5,426
$
8,431
$
4,923
$
8,431
Net charge-offs to average loans (2)
0.13
%
0.10
%
0.32
%
0.11
%
0.35
%
(1)
The Company early adopted ASU 2025-08 in the fourth quarter of 2025. As a result, for purchased seasoned loans acquired in the HomeStreet merger, the Company established an allowance for credit losses of $20.3 million at the date of acquisition for these loans.
(2)
Ratios are annualized.
The allowance for credit losses on loans totaled $133.6 million, or 1.03% of total loans at September 30, 2026, compared to $152.6 million, or 1.12% of total loans at June 30, 2026. The decrease in allowance was primarily the result of lower expected losses on multifamily and CRE investor loans, corresponding decreases in qualitative factors and the auto portfolio sale.
Conference Call
The Company will host a conference call and webcast to discuss its third quarter 2026 financial results at 11:00 a.m. Eastern Time (ET) on Thursday, October 29, 2026. Investors and analysts interested in participating in the call are invited to dial 1-833-461-5787 (international callers please dial 1-585-542-9983) approximately 10 minutes prior to the start of the call. The pin to access the call is 210985311. A live audio webcast of the conference call will be available on the Company’s website at https://ir.mechanicsbank.com. The earnings presentation for the call will also be available on the Company’s Investor Relations website prior to the call.
A replay of the conference call will be available within two hours of the conclusion of the call and can be accessed through the News & Events tab of the Company’s website as well as through the webcast link: https://events.q4inc.com/attendee/210985311.
About Mechanics Bancorp
Mechanics Bancorp is headquartered in Walnut Creek, Calif., and is the financial holding company of Mechanics Bank, a full-service, FDIC-insured bank with $20.9 billion in assets as of September 30, 2026, and 166 branches across California, Oregon, Washington and Hawaii. Founded in 1905 to help families, businesses and communities prosper, Mechanics Bank offers a wide range of products and services in consumer and business banking, commercial lending, cash management services, private banking, and comprehensive wealth management and trust services.
To learn more, visit www.MechanicsBank.com.
Cautionary Note
The information contained herein is preliminary and based on Company data available at the time of this earnings release. It speaks only as of the particular date or dates included in the earnings release. Except as required by law, Mechanics does not undertake an obligation to, and disclaims any duty to, update any of the information herein.
Forward-Looking Statements
This earnings release, including information incorporated by reference herein, contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). All statements, other than statements of historical fact, contained or incorporated by reference in this earnings release, including statements regarding our plans, objectives, expectations, strategies, beliefs, or future performance or events, are forward-looking statements. Generally, forward-looking statements include the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “look,” “may,” “optimistic,” “plan,” “potential,” “projection,” “should,” “will,” and “would” and similar expressions (or the negative of these terms), although not all forward-looking statements contain these identifying words. Forward-looking statements involve known and unknown risks, uncertainties, assumptions, estimates, and other important factors that could cause actual results to differ materially from any results, performance or events expressed or implied by such forward-looking statements. Furthermore, the following factors, among others, may cause actual results to differ materially from current expectations in the forward-looking statements, including those set forth in this earnings release:
A discussion of the factors, risks and uncertainties that could affect our financial results, business goals and operational and financial objectives is also contained in Item 1A “Risk Factors” included in our 2025 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the “SEC”). We strongly recommend readers review those disclosures in conjunction with the discussions herein. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, and should not be relied upon as a prediction of actual results or future events.
Forward-looking statements in this earnings release are based on management’s expectations at the time such statements are made and speak only as of the date made. We do not assume any obligation or undertake to update any forward-looking statements after the date of this earnings release as a result of new information, future events or developments, except as required by federal securities or other applicable laws, although we may do so from time to time.
All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and factors that we currently deem immaterial may become material, and it is impossible for us to predict these events or how they may affect us.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
September 30,
2026
June 30,
2026
March 31,
2026
December 31,
2025
September 30,
2025
ASSETS
Cash and cash equivalents
$
602,455
$
553,915
$
483,513
$
1,029,983
$
1,442,647
Trading securities
46,099
46,595
49,463
49,518
50,357
Securities available-for-sale
4,292,236
4,119,215
3,933,705
3,993,385
3,490,478
Securities held-to-maturity
1,259,501
1,286,813
1,313,520
1,336,632
1,363,636
Loans held for sale
7,737
5,345
4,692
5,967
54,985
Loan receivables (1)
13,012,998
13,576,196
13,852,209
14,176,936
14,587,530
Allowance for credit losses on loans
(133,621
)
(152,601
)
(156,796
)
(153,319
)
(168,959
)
Net loan receivables (1)
12,879,377
13,423,595
13,695,413
14,023,617
14,418,571
Mortgage servicing rights
60,971
59,142
84,000
85,832
88,595
Other real estate owned
5,081
4,262
4,658
4,990
1,675
Federal Home Loan Bank stock, at cost
17,283
17,287
17,289
17,292
17,294
Premises and equipment, net
141,068
141,615
143,157
143,895
143,917
Bank-owned life insurance
173,809
172,980
171,674
170,339
169,163
Goodwill
843,305
843,305
843,305
843,305
843,305
Other intangible assets, net
90,937
97,906
205,269
212,491
143,264
Right-of-use asset
75,210
74,623
78,046
82,076
85,657
Interest receivable and other assets (1)
449,635
384,241
361,251
352,153
408,391
TOTAL ASSETS (1)
$
20,944,704
$
21,230,839
$
21,388,955
$
22,351,475
$
22,721,935
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Noninterest-bearing demand deposits
$
6,297,519
$
6,420,746
$
6,511,998
$
6,744,082
$
6,748,479
Interest-bearing transaction accounts
8,537,615
8,394,708
8,222,964
8,128,832
7,918,670
Savings and time deposits
3,184,340
3,273,983
3,507,807
4,152,083
4,785,670
Total deposits
18,019,474
18,089,437
18,242,769
19,024,997
19,452,819
Borrowings
—
80,000
—
—
—
Long-term debt
131,992
130,420
128,815
192,014
190,123
Operating lease liability
78,289
78,174
82,403
86,794
90,796
Interest payable and other liabilities
147,463
162,877
143,576
185,295
200,948
TOTAL LIABILITIES
18,377,218
18,540,908
18,597,563
19,489,100
19,934,686
SHAREHOLDERS’ EQUITY
Common stock
2,406,270
2,404,941
2,402,968
2,402,193
2,401,989
Retained earnings (1)
290,969
303,046
407,908
456,695
394,069
Accumulated other comprehensive income (loss), net of tax
(129,753
)
(18,056
)
(19,484
)
3,487
(8,809
)
TOTAL SHAREHOLDERS’ EQUITY (1)
2,567,486
2,689,931
2,791,392
2,862,375
2,787,249
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (1)
$
20,944,704
$
21,230,839
$
21,388,955
$
22,351,475
$
22,721,935
Common shares outstanding-Class A and B
221,474,752
221,425,469
221,400,590
221,305,009
221,203,135
(1)
Prior period comparative disclosures for September 30, 2025 reflect the impact of adoption of ASU 2025-08.
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
Quarter Ended
Nine Months Ended
(dollars in thousands, except per share amounts)
September 30,
2026
June 30,
2026
September 30,
2025
September 30,
2026
September 30,
2025
INTEREST INCOME
Loans interest and fees (1)
$
175,387
$
178,170
$
140,256
$
534,747
$
378,164
Investment securities
58,481
53,062
40,266
164,617
129,864
Interest-bearing cash and other
5,288
6,710
22,849
19,670
47,081
Total interest income (1)
239,156
237,942
203,371
719,034
555,109
INTEREST EXPENSE
Deposits
60,489
56,544
57,496
175,356
150,651
Borrowed funds
477
1,055
124
1,760
124
Long-term debt
3,288
3,171
1,598
10,799
1,598
Total interest expense
64,254
60,770
59,218
187,915
152,373
Net interest income (1)
174,902
177,172
144,153
531,119
402,736
Provision (reversal of provision) for credit losses on loans (1)
(14,681
)
(904
)
25,806
(7,992
)
22,411
Provision (reversal of provision) for credit losses on unfunded lending commitments
(503
)
(1,863
)
960
(2,192
)
329
Net interest income after provision for credit losses (1)
190,086
179,939
117,387
541,303
379,996
NONINTEREST INCOME (LOSS)
Service charges on deposit accounts
6,320
6,027
5,875
18,390
16,861
Trust fees and commissions
3,406
3,476
3,117
9,952
9,452
ATM network fee income
3,558
4,109
3,425
11,571
9,353
Loan servicing income
1,660
1,582
680
5,169
1,025
Net gain (loss) on sales of loans
(9,843
)
2,477
659
(6,223
)
659
Net gain (loss) on sales and calls of investment securities
(32,269
)
31
155
(32,186
)
4,292
Income from bank-owned life insurance
1,723
1,327
2,120
4,215
3,149
Bargain purchase gain
2,871
—
90,363
2,871
90,363
Other
9,140
4,767
3,384
17,623
9,230
Total noninterest income (loss)
(13,434
)
23,796
109,778
31,382
144,384
NONINTEREST EXPENSE
Salaries and employee benefits
60,319
63,090
54,168
191,959
150,753
Occupancy
12,090
11,851
9,566
36,370
25,875
Equipment
8,501
8,724
7,288
26,840
19,445
Professional services
6,605
7,435
5,560
20,111
16,383
FDIC assessments and regulatory fees
2,932
2,990
2,722
8,912
7,148
Amortization of intangible assets
6,969
7,207
4,251
21,398
9,655
Data processing
2,966
2,468
3,315
9,307
6,865
Loan related
2,697
3,616
4,439
9,819
9,236
Marketing and advertising
798
696
680
2,401
2,008
Other real estate owned related
25
47
(103
)
456
2,685
Acquisition and integration costs
559
5,923
63,869
11,276
69,858
Other
9,732
10,426
7,574
30,244
20,136
Total noninterest expense
114,193
124,473
163,329
369,093
340,047
Income before income tax expense (benefit) (1)
62,459
79,262
63,836
203,592
184,333
INCOME TAX EXPENSE (BENEFIT) (1)
16,467
21,561
(4,440
)
55,809
29,781
NET INCOME (1)
$
45,992
$
57,701
$
68,276
$
147,783
$
154,552
Basic earnings per share (1)
Class A common stock
$
0.20
$
0.25
$
0.31
$
0.64
$
0.72
Class B common stock
$
1.99
$
2.51
$
3.13
$
6.41
$
7.22
Diluted earnings per share (1)
Class A common stock
$
0.20
$
0.25
$
0.31
$
0.64
$
0.72
Class B common stock
$
1.99
$
2.51
$
3.13
$
6.41
$
7.22
Basic weighted-average shares outstanding
Class A common stock
221,182,860
221,148,246
207,189,764
221,126,798
203,012,384
Class B common stock
1,114,448
1,114,448
1,114,448
1,114,448
1,114,448
Diluted weighted-average shares outstanding
Class A common stock
221,502,583
221,338,344
207,258,678
221,348,568
203,075,003
Class B common stock
1,114,448
1,114,448
1,114,448
1,114,448
1,114,448
(1)
Prior period comparative disclosures for the quarter and nine months ended September 30, 2025 reflect the impact of adoption of ASU 2025-08.
LOANS HELD FOR INVESTMENT (1)
(in thousands)
September 30,
2026
June 30,
2026
March 31,
2026
December 31,
2025
September 30,
2025
Commercial and industrial
$
439,332
$
439,814
$
460,081
$
482,170
$
550,176
Commercial real estate
Multifamily
5,189,514
5,223,356
5,291,597
5,355,252
5,450,206
Non-owner occupied
1,482,817
1,614,883
1,711,611
1,740,277
1,866,119
Owner occupied
492,756
512,474
586,698
689,079
710,638
Construction and land development
344,976
360,668
399,546
493,992
538,754
Residential real estate
4,171,423
4,107,867
4,017,120
3,970,803
3,914,675
Auto (2)
9,915
510,232
639,825
791,012
954,617
Other consumer
882,265
806,902
745,731
654,351
602,345
Total LHFI
$
13,012,998
$
13,576,196
$
13,852,209
$
14,176,936
$
14,587,530
(1)
Prior period comparative disclosures for September 30, 2025 reflect the impact of adoption of ASU 2025-08.
(2)
On September 16, 2026, Mechanics Bank completed the sale of $417 million of its remaining performing indirect auto loans to Bank of America, N.A. and retained $13 million of runoff auto loans.
COMPOSITION OF DEPOSITS
(in thousands)
September 30,
2026
June 30,
2026
March 31,
2026
December 31,
2025
September 30,
2025
Deposits by product:
Noninterest-bearing demand deposits
$
6,297,519
$
6,420,746
$
6,511,998
$
6,744,082
$
6,748,479
Interest-bearing:
Interest-bearing demand deposits
1,619,183
1,671,232
1,767,403
1,878,468
1,733,215
Savings
1,304,923
1,328,503
1,363,137
1,367,475
1,398,430
Money market
6,918,432
6,723,476
6,455,561
6,250,364
6,185,455
Certificates of deposit
1,879,417
1,945,480
2,144,670
2,784,608
3,387,240
Total interest-bearing deposits
11,721,955
11,668,691
11,730,771
12,280,915
12,704,340
Total deposits
$
18,019,474
$
18,089,437
$
18,242,769
$
19,024,997
$
19,452,819
SUMMARY FINANCIAL DATA
Quarter Ended
Nine Months Ended
September 30,
2026
June 30,
2026
September 30,
2025
September 30,
2026
September 30,
2025
Select performance ratios: (1)
Return on average equity (2)
6.86
%
8.48
%
10.66
%
7.19
%
8.53
%
Return on average tangible equity (2),(3)
11.75
%
14.42
%
17.37
%
12.41
%
14.11
%
Return on average assets (2)
0.86
%
1.09
%
1.46
%
0.92
%
1.20
%
Efficiency ratio
70.7
%
61.9
%
64.3
%
65.6
%
62.2
%
Efficiency ratio (non-GAAP) (3)
66.4
%
58.4
%
62.6
%
61.8
%
60.4
%
Net interest margin (2)
3.55
%
3.62
%
3.33
%
3.59
%
3.40
%
Cash dividends declared per share:
Class A common stock
$
0.25
$
0.70
$
—
$
1.35
$
—
Class B common stock
$
2.50
$
7.00
$
—
$
13.50
$
—
As of
September 30,
2026
June 30,
2026
March 31,
2026
December 31,
2025
September 30,
2025
Other data:
Book value per share (4)
$
11.59
$
12.15
$
12.61
$
12.93
$
12.60
Tangible book value per share (3), (4)
$
7.05
$
7.56
$
7.53
$
7.81
$
7.79
Common equity ratio (4)
12.26
%
12.67
%
13.05
%
12.81
%
12.27
%
Tangible common equity ratio (3), (4)
8.16
%
8.62
%
8.57
%
8.48
%
8.28
%
Loans to deposit ratio (4)
72.22
%
75.05
%
75.93
%
74.52
%
74.99
%
Full time equivalent employees
1,768
1,756
1,890
1,921
2,036
(1)
Prior period comparative disclosures for the quarter and nine months ended September 30, 2025 reflect the impact of adoption of ASU 2025-08.
(2)
Ratios are annualized.
(3)
Return on average tangible equity, efficiency ratio (excluding the impact of intangible amortization), tangible book value per share, and tangible common equity ratio are non-GAAP financial measures. For a reconciliation of these measures to the comparable GAAP financial measure or the computation of the measure, see “Non-GAAP Financial Measures and Reconciliations” below.
(4)
Prior period comparative disclosures for September 30, 2025 reflect the impact of adoption of ASU 2025-08.
NET INTEREST MARGIN
Quarter Ended
September 30, 2026
June 30, 2026
September 30, 2025
(dollars in thousands)
Average
Balance
Interest
Average
Yield/
Cost (1)
Average
Balance
Interest
Average
Yield/
Cost (1)
Average
Balance
Interest
Average
Yield/
Cost (1)
Assets:
Interest-earning assets:
Cash and cash equivalents
$
428,244
$
3,277
3.04
%
$
459,729
$
3,520
3.07
%
$
1,851,414
$
19,858
4.26
%
Investment securities
5,517,088
58,481
4.21
%
5,355,011
53,062
3.97
%
4,248,163
40,266
3.76
%
Loans (2),(3)
13,430,196
175,387
5.18
%
13,694,264
178,170
5.22
%
10,959,795
140,256
5.08
%
FHLB stock and other investments
147,964
2,011
5.39
%
147,538
3,190
8.67
%
119,880
2,991
9.90
%
Total interest-earning assets (3)
19,523,492
239,156
4.86
%
19,656,542
237,942
4.86
%
17,179,252
203,371
4.70
%
Noninterest-earning assets
1,638,586
1,661,711
1,418,197
Total assets
$
21,162,078
$
21,318,253
$
18,597,449
Liabilities and shareholders’ equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Demand deposits
$
1,625,027
$
1,700
0.42
%
$
1,707,751
$
1,839
0.43
%
$
1,480,835
$
1,196
0.32
%
Money market and savings
8,222,792
46,796
2.26
%
7,900,995
42,287
2.15
%
6,701,690
42,382
2.51
%
Certificates of deposit
1,897,016
11,993
2.51
%
2,036,264
12,418
2.45
%
1,758,659
13,918
3.14
%
Total
11,744,835
60,489
2.04
%
11,645,010
56,544
1.95
%
9,941,184
57,496
2.29
%
Borrowings:
Borrowings
49,787
477
3.81
%
114,121
1,055
3.71
%
10,939
124
4.48
%
Long-term debt
130,958
3,288
9.96
%
129,369
3,171
9.83
%
63,034
1,598
10.06
%
Total interest-bearing liabilities
11,925,580
64,254
2.14
%
11,888,500
60,770
2.05
%
10,015,157
59,218
2.35
%
Noninterest-bearing liabilities:
Demand deposits (4)
6,321,146
6,440,279
5,823,539
Other liabilities
253,723
260,515
216,836
Total liabilities
18,500,449
18,589,294
16,055,532
Shareholders’ equity
2,661,629
2,728,959
2,541,917
Total liabilities and shareholders’ equity
$
21,162,078
$
21,318,253
$
18,597,449
Net interest income (3)
$
174,902
$
177,172
$
144,153
Net interest rate spread (3)
2.72
%
2.81
%
2.35
%
Net interest margin (3)
3.55
%
3.62
%
3.33
%
(1)
Ratios are annualized.
(2)
Includes loans held for sale.
(3)
Prior period comparative disclosures for the quarter ended September 30, 2025 reflect the impact of adoption of ASU 2025-08.
(4)
Cost of all deposits, including noninterest-bearing demand deposits, was 1.33%, 1.25% and 1.45% for the quarters ended September 30, 2026, June 30, 2026 and September 30, 2025, respectively.
Nine Months Ended
September 30, 2026
September 30, 2025
(dollars in thousands)
Average
Balance
Interest
Average
Yield/Cost (1)
Average
Balance
Interest
Average
Yield/Cost (1)
Assets:
Interest-earning assets:
Cash and cash equivalents
$
478,812
$
10,958
3.06
%
$
1,329,525
$
41,713
4.19
%
Investment securities
5,432,936
164,617
4.05
%
4,455,585
129,864
3.90
%
Loans (2),(3)
13,706,945
534,747
5.22
%
9,935,183
378,164
5.09
%
FHLB stock and other investments
147,430
8,712
7.90
%
108,261
5,368
6.63
%
Total interest-earning assets (3)
19,766,123
719,034
4.86
%
15,828,554
555,109
4.69
%
Noninterest-earning assets
1,665,769
1,338,126
Total assets
$
21,431,892
$
17,166,680
Liabilities and shareholders’ equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Demand deposits
$
1,711,776
$
5,715
0.45
%
$
1,409,713
$
3,539
0.34
%
Money market and savings
7,956,680
128,143
2.15
%
6,330,840
121,478
2.57
%
Certificates of deposit
2,133,126
41,498
2.60
%
1,222,456
25,634
2.80
%
Total
11,801,582
175,356
1.99
%
8,963,009
150,651
2.25
%
Borrowings:
Borrowings
62,950
1,760
3.74
%
3,691
124
4.48
%
Long-term debt
143,625
10,799
10.05
%
21,242
1,598
10.06
%
Total interest-bearing liabilities
12,008,157
187,915
2.09
%
8,987,942
152,373
2.27
%
Noninterest-bearing liabilities:
Demand deposits (4)
6,402,707
5,541,719
Other liabilities
271,396
215,971
Total liabilities
18,682,260
14,745,632
Shareholders’ equity
2,749,632
2,421,048
Total liabilities and shareholders’ equity
$
21,431,892
$
17,166,680
Net interest income (3)
$
531,119
$
402,736
Net interest spread (3)
2.77
%
2.42
%
Net interest margin (3)
3.59
%
3.40
%
(1)
Ratios are annualized.
(2)
Includes loans held for sale.
(3)
Prior period comparative disclosures for the nine months ended September 30, 2025 reflect the impact of adoption of ASU 2025-08.
(4)
Cost of all deposits, including noninterest-bearing demand deposits, was 1.29% and 1.39% for the nine months ended September 30, 2026 and 2025, respectively.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
This document contains non-GAAP financial measures of our financial performance, including tangible common equity, return on average tangible equity, efficiency ratio (excluding the impact of intangible amortization), tangible book value per share and tangible common equity ratio. We believe that these non-GAAP financial measures provide useful information because they are used by management to evaluate our operating performance, without the impact of goodwill and other intangible assets. However, these financial measures are not intended to be considered in isolation of or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP and should be viewed in addition to, and not as an alternative to, our GAAP results. The non-GAAP financial measures Mechanics presents may differ from similarly captioned measures presented by other companies. The following tables present the calculations of our non-GAAP financial measures.
(dollars in thousands, except per share amounts)
Quarter Ended
Nine Months Ended
Return on Average Equity and Return on Average Tangible Equity (1)
Ref.
September 30,
2026
June 30,
2026
September 30,
2025
September 30,
2026
September 30,
2025
Net income
(a)
$
45,992
$
57,701
$
68,276
$
147,783
$
154,552
Add: intangibles amortization, net of tax (2)
5,070
5,243
3,040
15,567
6,904
Net income, excluding the impact of intangible amortization, net of tax
(b)
$
51,062
$
62,944
$
71,316
$
163,350
$
161,456
Average shareholders’ equity
(c)
$
2,661,629
$
2,728,959
$
2,541,917
$
2,749,632
$
2,421,048
Less: average goodwill and other intangible assets
938,086
978,184
912,679
989,164
890,677
Average tangible shareholders’ equity
(d)
$
1,723,543
$
1,750,775
$
1,629,238
$
1,760,468
$
1,530,371
Return on average equity (3)
(a) / (c)
6.86
%
8.48
%
10.66
%
7.19
%
8.53
%
Return on average tangible equity (non-GAAP) (3)
(b) / (d)
11.75
%
14.42
%
17.37
%
12.41
%
14.11
%
Quarter Ended
Nine Months Ended
Efficiency Ratio (1)
Ref.
September 30,
2026
June 30,
2026
September 30,
2025
September 30,
2026
September 30,
2025
Noninterest expense
(e)
$
114,193
$
124,473
$
163,329
$
369,093
$
340,047
Less: intangibles amortization
6,969
7,207
4,251
21,398
9,655
Noninterest expense, excluding the impact of intangible amortization
(f)
$
107,224
$
117,266
$
159,078
$
347,695
$
330,392
Net interest income
(g)
$
174,902
$
177,172
$
144,153
$
531,119
$
402,736
Noninterest income (loss)
(h)
$
(13,434
)
$
23,796
$
109,778
$
31,382
$
144,384
Efficiency ratio
(e) / (g+h)
70.7
%
61.9
%
64.3
%
65.6
%
62.2
%
Efficiency ratio (non-GAAP)
(f) / (g+h)
66.4
%
58.4
%
62.6
%
61.8
%
60.4
%
(1)
Prior period comparative disclosures for the quarter and nine months ended September 30, 2025 reflect the impact of adoption of ASU 2025-08.
(2)
Estimated statutory tax rate of 27.25%, 27.25% and 28.50% for the quarters ended September 30, 2026, June 30, 2026 and September 30, 2025, respectively and 27.25% and 28.50% for the nine months ended September 30, 2026 and 2025, respectively.
(3)
Ratios are annualized.
As of
Book Value per Share and Tangible Book Value per Share (4)
Ref.
September 30,
2026
June 30,
2026
March 31,
2026
December 31,
2025
September 30,
2025
Total shareholders’ equity
(i)
$
2,567,486
$
2,689,931
$
2,791,392
$
2,862,375
$
2,787,249
Less: goodwill and other intangible assets
934,242
941,211
1,048,574
1,055,796
986,569
Total tangible shareholders’ equity
(j)
$
1,633,244
$
1,748,720
$
1,742,818
$
1,806,579
$
1,800,680
Common shares outstanding-Class A and B
(k)
221,474,752
221,425,469
221,400,590
221,305,009
221,203,135
Common shares outstanding-Class A
220,360,304
220,311,021
220,286,142
220,190,561
220,088,687
Common shares outstanding-Class B-adjusted
11,144,480
11,144,480
11,144,480
11,144,480
11,144,480
Shares outstanding at period end-adjusted (5)
(l)
231,504,784
231,455,501
231,430,622
231,335,041
231,233,167
Book value per share
(i) / (k)
$
11.59
$
12.15
$
12.61
$
12.93
$
12.60
Tangible book value per share (non-GAAP)
(j) / (l)
$
7.05
$
7.56
$
7.53
$
7.81
$
7.79
As of
Common Equity Ratio and Tangible Common Equity Ratio (4)
Ref.
September 30,
2026
June 30,
2026
March 31,
2026
December 31,
2025
September 30,
2025
Total shareholders’ equity
(m)
$
2,567,486
$
2,689,931
$
2,791,392
$
2,862,375
$
2,787,249
Less: goodwill and other intangible assets
934,242
941,211
1,048,574
1,055,796
986,569
Total tangible shareholders’ equity
(n)
$
1,633,244
$
1,748,720
$
1,742,818
$
1,806,579
$
1,800,680
Total assets
(o)
$
20,944,704
$
21,230,839
$
21,388,955
$
22,351,475
$
22,721,935
Less: goodwill and other intangible assets
934,242
941,211
1,048,574
1,055,796
986,569
Total tangible assets
(p)
$
20,010,462
$
20,289,628
$
20,340,381
$
21,295,679
$
21,735,366
Common equity ratio
(m) / (o)
12.26
%
12.67
%
13.05
%
12.81
%
12.27
%
Tangible common equity ratio (non-GAAP)
(n) / (p)
8.16
%
8.62
%
8.57
%
8.48
%
8.28
%
(4)
Prior period comparative disclosures for September 30, 2025 reflect the impact of adoption of ASU 2025-08.
(5)
Includes 11,144,480 Class A Shares issuable upon the conversion of 1,114,448 Class B Shares outstanding. Class B Shares also are treated as if such share had been converted into ten Class A Shares for purposes of calculating the economic rights of the Class B Shares, including upon liquidation of the Company or the declaration of dividends or distributions by the Company.