Mechanics Bancorp (MCHB) — Agentic Tribune

Risks Related to Our Common Stock, including:

•Ford Financial Funds and their controlled affiliates control approximately 77% of the voting power of Mechanics

Bancorp, and have the ability to elect all of our directors and control most other matters submitted to our

shareholders for approval;

•we are a “controlled company” within the meaning of the rules of Nasdaq and, as a result, we qualify for, and rely

on, exemptions from certain corporate governance standards;

•future sales of shares by existing shareholders could cause our stock price to decline;

•our reliance on certain entities affiliated with the Ford Financial Funds for services;

•reduced disclosure requirements as a smaller reporting company; and

•certain of our shareholders have registration rights, the exercise of which could adversely affect the trading price

of our common stock.

ITEM 1.BUSINESS

Overview

Mechanics Bancorp, a Washington corporation, is a financial holding company and primarily operates through 121-year-

old Mechanics Bank, its wholly-owned subsidiary. Mechanics Bank is a full-service community bank with 166 branches

throughout California, Washington, Oregon and Hawaii. Following the strategic Merger of HomeStreet Bank with and into

Mechanics Bank on September 2, 2025, with Mechanics Bank surviving the Merger as a wholly-owned subsidiary of the

Company, the assets, liabilities and operations of HomeStreet Bank became the assets, liabilities and operations of

Mechanics Bank. Headquartered in Walnut Creek, California, Mechanics Bank provides 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.

Prior to merging with and into Mechanics Bank on September 2, 2025, HomeStreet Bank was principally engaged in

commercial banking, consumer banking, and real estate lending, including construction and permanent loans on

commercial real estate and single-family residences. It also sold insurance products for consumer clients. It provided these

financial products and services to its customers through bank branches, loan production offices and ATMs, and through

online, mobile and telephone banking channels.

Ceasing the origination of auto loans in February 2023, Mechanics Bank continued to service its existing auto loan

portfolio until May 1, 2025, when it entered into a servicing agreement with a third-party servicer to oversee and manage

Mechanics Bank’s active portfolio of auto loans. The portfolio consisted of new and pre-owned retail automobile sales

contracts purchased from both franchised and independent automobile dealerships in the United States.

The Company’s business strategy is to offer a full range of financial products and services to our customer base consistent

with a regional bank’s offerings while providing the responsive and personalized service of a community bank. We expect

to maintain our business by:

•marketing our services directly to prospective new customers;

•obtaining new client referrals from existing customers;

•adding experienced relationship managers, branch managers and loan officers who may have established client

relationships that we can serve;

•cross-selling our products and services; and

•making opportunistic acquisitions of complementary businesses and/or establishing de novo offices in select

markets within and outside our existing market areas.

Our primary sources of liquidity include deposits, loan repayments and investment securities payments, both principal and

interest, borrowings, and proceeds from the sale of loans and investment securities. Borrowings may include advances from

FHLB, borrowings from the Federal Reserve Bank, federal funds purchased and borrowings from other financial

institutions.

Locations

In addition to our main office, as of December 31, 2025, we operated 166 full service branch locations throughout

California, Oregon, Washington and Hawaii, and three stand-alone commercial lending centers in Southern California,

Idaho and Utah.

Loan Products

We are committed to offering competitive lending products that meet the needs of our clients, are underwritten in a prudent

manner, and provide an adequate return based on their size, credit risk and interest rate risk. Our loan products include

commercial business loans, single family residential mortgages, consumer loans, commercial loans secured by residential

and commercial real estate, and construction loans for residential and commercial real estate development. The lending

units under which these loans are offered include: Commercial Banking; Mortgage and Consumer Lending; Multifamily

Lending; Commercial Real Estate Lending and Residential Construction Lending and Private Banking. In addition, certain

consumer loans are offered through our retail branch network.

We believe that we mitigate the risks inherent in our loan portfolio by adhering to sound underwriting practices, managed

by experienced and knowledgeable credit professionals. These practices may include, among other considerations: analysis

of a borrower’s prior credit history, financial statements, tax returns, cash flow projections, valuations of collateral based

on reports of independent appraisers and verifications of liquid assets. Although we believe that our underwriting criteria is

Loading financial statements...

Financial statements

data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .

From 10-Q filed 2026-08-07 (period ending 2026-06-30).

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Annual Report on Form 10-K”) filed with the SEC. This Quarterly Report contains forward-looking statements that involve risks and uncertainties, including those described in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” There are a number of important risks and uncertainties that could cause our actual results to differ materially from those discussed in these forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in our other disclosures and filings.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, 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 Quarterly Report, 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.

We caution readers that actual results may differ materially from those expressed in or implied by the Company’s forward-looking statements. Factors that could affect the Company’s future results from those expressed or implied in any forward-looking statements include, but are not limited to:

•substantial non-recurring and integration costs, which may be greater than anticipated due to unexpected events;

•failure to realize the anticipated benefits of the Merger;

•our ability to effectively manage our expanded operations;

•negative developments and events impacting the financial services industry;

•the soundness of other financial institutions;

•our ability to maintain sufficient liquidity, or an increase in the cost of liquidity;

•unpredictable economic, market and business conditions;

•interest rate risk, and fluctuations in interest rates;

•inflationary pressures and rising prices;

•adverse changes in real estate market values;

•the impact of climate change, including indirectly through impacts on our customers;

•the adequacy of our allowances for credit losses for loans and debt securities;

•incurring losses in our loan portfolio despite strict adherence to our underwriting practices;

•fluctuations in our mortgage origination business based upon seasonal and other factors;

•our geographic concentration, which may magnify the adverse effects and consequences of any regional or local economic downturn;

•the accuracy of independent appraisals to determine the value of the real estate that secures a substantial portion of our loans;

•the ability of our small- to medium-sized borrowers to weather adverse business developments;

•our ability to fully identify and mitigate exposure to the various risks that we face, including interest rate, credit, liquidity and market risk;

•our ability to mitigate our exposure to interest rate risk;

•negative publicity regarding us, or financial institutions in general;

•environmental liability risk associated with our lending activities;

•our ability to manage risks associated with new lines of business, products, product enhancements and services;

•our ability to adapt our services to changes in the marketplace related to mortgage servicing or origination, technology or in changes in the requirements of governmental authorities and customers;

•our ability to develop, implement and maintain an effective system of internal control over financial reporting;

•the potential that we may identify material weaknesses in our internal control over financial reporting in the future, which may result in material misstatements of our financial statements;

•the potential that we may write off goodwill and other intangible assets resulting from business combinations;

•dependence on our management team;

•exposure to fraudulent and negligent acts by our customers and the parties they do business with, as well as from employees, contractors and vendors;

•legal claims and litigation, including potential securities law liabilities;

•employee class action lawsuits or other legal proceedings;

•our ability to raise additional capital, if needed;

•competition from other financial institutions and financial service companies;

•regulatory restrictions that may delay, impede or prohibit our ability to consider certain acquisitions and opportunities;

•extensive supervision and regulation that could restrict our activities and impose financial requirements or limitations on the conduct of our business and limit our ability to generate income;

•our ability to comply with stringent capital requirements;

•the impact of federal and state regulators’ examination of our business;

•our ability to comply with the Bank Secrecy Act and other anti-money laundering statutes and regulations;

•our reliance on dividends from Mechanics Bank;

•our ability to raise debt or capital to pay off our debts upon maturity;

•our level of indebtedness following the completion of the Merger;

•increasing and continually evolving cybersecurity and other technological risks;

•our ability to adapt to rapid technological change;

•our ability to effectively implement new technological solutions or enhancements to existing systems or platforms;

•our ability to manage risks and challenges relating to the development and use of artificial intelligence;

•our dependence on our computer and communications systems;

•our ability to effectively manage and aggregate data;

•Ford Financial Funds and their controlled affiliates control approximately 77% of the voting power of Mechanics Bancorp, and have the ability to elect all of our directors and control most other matters submitted to our shareholders for approval;

•we are a “controlled company” within the meaning of the rules of Nasdaq and, as a result, we qualify for, and rely on, exemptions from certain corporate governance standards;

•future sales of shares by existing shareholders could cause our stock price to decline;

•our reliance on certain entities affiliated with the Ford Financial Funds for services;

•reduced disclosure requirements as a smaller reporting company; and

•certain of our shareholders have registration rights, the exercise of which could adversely affect the trading price of our common stock.

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 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 Quarterly Report 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 Quarterly Report 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.

Overview

Mechanics Bancorp is a financial holding company and primarily operates through 121-year-old Mechanics Bank, a full-service community bank with 166 branches throughout California, Washington, Oregon and Hawaii. Following the strategic Merger of HomeStreet Bank with and into Mechanics Bank on September 2, 2025, with Mechanics Bank surviving the Merger as a wholly owned subsidiary of the Company, the assets, liabilities and operations of HomeStreet Bank became the assets, liabilities and operations of Mechanics Bank. Headquartered in Walnut Creek, California, Mechanics Bank provides 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.

General

The Company’s management’s discussion and analysis of results of operations and financial condition (“MD&A”) is intended to assist the reader in understanding and assessing significant changes and trends related to the results of operations and financial condition of the Company. This discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying footnotes in this Quarterly Report on Form 10-Q.

Recent Developments

Presentation of Results - HomeStreet Bank Merger

On September 2, 2025, we completed the Merger of HomeStreet Bank, the wholly-owned subsidiary of Mechanics Bancorp (formerly known as “HomeStreet, Inc.”) with and into Mechanics Bank, with Mechanics Bank as the surviving bank. Mechanics Bank is the accounting acquirer (“legal acquiree”), HomeStreet Bank is the accounting acquiree and Mechanics Bancorp is the legal acquirer. In this Quarterly Report on Form 10-Q, our financial results for all periods ended prior to September 2, 2025 reflect Mechanics Bank’s results on a standalone basis until the closing of the Merger on September 2, 2025 and results of the combined company beginning September 2, 2025. The number of shares issued and outstanding, earnings per share, and all references to share quantities or metrics of Mechanics Bancorp 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. The estimates of fair value were recorded based on initial valuations at the Merger date. These estimates are considered preliminary as of June 30, 2026, are subject to change for up to one year after the Merger date, and any changes could be material.

Unless we state otherwise or the content otherwise requires, references in this Quarterly Report on Form 10-Q to “Mechanics,” “we,” “our,” “us” or the “Company” refer collectively to Mechanics Bancorp, Mechanics Bank (the “Bank”) and other direct and indirect subsidiaries of Mechanics Bancorp, following completion of the Merger. In some instances, we refer to Mechanics Bank prior to the effective time of the Merger as “legacy Mechanics Bank,” HomeStreet Bank prior to the effective time of the Merger as “legacy HomeStreet Bank,” and HomeStreet, Inc. prior to the effective time of the Merger as “legacy HomeStreet, Inc.”

Asset Sale

As discussed in Note 1, “Summary of Significant Accounting Policies—Asset Sale,” on May 1, 2026, Mechanics Bank completed the previously announced sale of its DUS business line to Fifth Third.

Critical Accounting Estimates

The following discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements and the notes thereto, which have been prepared in accordance with GAAP and accounting practices in the banking industry. Certain of those accounting policies are considered critical accounting policies because they require us to make estimates and assumptions regarding circumstances or trends that could materially affect the value of those assets, such as economic conditions or trends that could impact our ability to fully collect our loans or ultimately realize the carrying value of certain of our other assets. Those estimates and assumptions are made based on current information available to us regarding those economic conditions or trends or other circumstances. If changes were to occur in the events, trends or other circumstances on which our estimates or assumptions were based, these changes could have a material adverse effect on the carrying value of assets and liabilities and on our results of operations. As a result of the Merger, the Company updated critical accounting estimates. Management believes the ACL policy and estimate, the

valuation of single family MSRs and business combinations estimates are important to the portrayal of the Company’s financial condition and results of operations and requires difficult, subjective, or complex judgments and, therefore, management considers them to be critical accounting estimates. There have been no material changes in the methodology of these estimates during the quarter and six months ended June 30, 2026.

Our critical accounting policies and estimates are described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2025 Annual Report on Form 10-K.

Summary Financial Data

	Quarter Ended						Six Months Ended
(dollars in thousands, except per share amounts)	June 30, 2026			March 31, 2026			June 30, 2026			June 30, 2025
Select income statement data:
Net interest income	$	177,172		$	179,045		$	356,217		$	258,583
Provision (reversal of provision) for credit losses on loans	(904)			7,593			6,689			(3,395)
Provision (reversal of provision) for credit losses on unfunded lending commitments	(1,863)			174			(1,689)			(631)
Noninterest income	23,796			21,020			44,816			34,606
Noninterest expense	124,473			130,427			254,900			176,718
Income before income tax expense	79,262			61,871			141,133			120,497
Net income	57,701			44,090			101,791			86,276
Basic earnings per share:
Class A common stock	$	0.25		$	0.19		$	0.44		$	0.41
Class B common stock	$	2.51		$	1.91		$	4.42		$	4.07
Diluted earnings per share:
Class A common stock	$	0.25		$	0.19		$	0.44		$	0.41
Class B common stock	$	2.51		$	1.91		$	4.42		$	4.07
Basic weighted-average shares outstanding:
Class A common stock	221,148,246			221,047,803			221,098,302			200,889,074
Class B common stock	1,114,448			1,114,448			1,114,448			1,114,448
Diluted weighted-average shares outstanding:
Class A common stock	221,338,344			221,203,293			221,271,096			200,948,494
Class B common stock	1,114,448			1,114,448			1,114,448			1,114,448
Cash dividends declared per share:
Class A common stock	$	0.70		$	0.40		$	1.10		$	—
Class B common stock	$	7.00		$	4.00		$	11.00		$	—
Select performance ratios:
Return on average equity (1)	8.48		%	6.25		%	7.35		%	7.37		%
Return on average tangible equity (1),(2)	14.42		%	11.07		%	12.73		%	12.28		%
Return on average assets (1)	1.09		%	0.82		%	0.95		%	1.06		%
Efficiency ratio	61.9		%	65.2		%	63.6		%	60.3		%
Efficiency ratio (non-GAAP) (2)	58.4		%	61.6		%	60.0		%	58.4		%
Net interest margin (1)	3.62		%	3.61		%	3.61		%	3.44		%

(1)Ratios are annualized.

(2)Return on average tangible equity, efficiency ratio (excluding the impact of intangibles 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.”

	As of
(dollars in thousands, except per share amounts)	June 30, 2026			December 31, 2025
Selected balance sheet data:
Loans held for sale	$	5,345		$	5,967
Loans held for investment	13,576,196			14,176,936
Allowance for credit losses on loans	(152,601)			(153,319)
Investment securities	5,452,623			5,379,535
Total assets	21,230,839			22,351,475
Deposits	18,089,437			19,024,997
Borrowings	80,000			—
Long-term debt	130,420			192,014
Total shareholders’ equity	2,689,931			2,862,375
Other data:
Book value per share	$	12.15		$	12.93
Tangible book value per share (2)	$	7.56		$	7.81
Common equity ratio	12.67		%	12.81		%
Tangible common equity ratio (2)	8.62		%	8.48		%
Loans to deposits ratio	75.05		%	74.52		%
Full time equivalent employees	1,756			1,921
Credit quality:
Nonaccrual loans	$	48,557		$	42,863
Nonperforming assets to total assets	0.28		%	0.23		%
ACL to total loans	1.12		%	1.08		%
ACL to nonaccrual loans	314.27		%	357.70		%
Nonaccrual loans to total loans	0.36		%	0.30		%
Nonperforming assets	$	59,362		$	51,796
Regulatory capital ratios:
Mechanics Bancorp:
Tier 1 leverage capital	8.71		%	8.65		%
Common equity Tier 1 capital	14.39		%	14.09		%
Tier 1 risk-based capital	14.39		%	14.09		%
Total risk based capital	16.70		%	16.27		%
Mechanics Bank:
Tier 1 leverage capital	9.38		%	9.58		%
Common equity Tier 1 capital	15.48		%	15.59		%
Tier 1 risk-based capital	15.48		%	15.59		%
Total risk based capital	16.74		%	16.81		%

(1)Ratios are annualized..

Management’s Overview of Financial Performance

Second Quarter of 2026 Compared to the First Quarter of 2026

General: Our net income and income before taxes were $57.7 million and $79.3 million, respectively, for the second quarter of 2026 as compared to net income and net income before taxes of $44.1 million and $61.9 million, respectively, for the first quarter of 2026. The $17.4 million increase in income before taxes compared to the first quarter of 2026 was due to a reversal of provision in the second quarter, which was primarily driven by the elimination of economic qualitative adjustments now that the Middle East conflict and corresponding economic impact are embedded in expected loss rate modeling, and a reduction in residential construction and HELOC unfunded commitments, offset by an increase in modeled loss rates for multifamily loans.

Income Taxes: Our effective tax rate during the second quarter of 2026 was 27.2% as compared to 28.7% in the first 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 a $1.7 million remeasurement of deferred tax assets in the first quarter.

Net Interest Income: The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest income from interest-earning assets and the resultant average yields on those assets; (ii) the total dollar amount of interest expense and the average rate of interest on our interest-bearing liabilities; (iii) net interest income; (iv) net interest rate spread; and (v) net interest margin. The average yields and rates are based on annualized interest income or expense for the periods presented.

	Quarter Ended
	June 30, 2026						March 31, 2026
(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	$	459,729	$	3,520	3.07	%	$	549,799	$	4,162	3.07	%
Investment securities	5,355,011		53,062		3.97	%	5,425,705		53,074		3.97	%
Loans (2)	13,694,264		178,170		5.22	%	14,002,665		181,190		5.25	%
FHLB stock and other investments	147,538		3,190		8.67	%	146,776		3,510		9.70	%
Total interest-earning assets	19,656,542		237,942		4.86	%	20,124,945		241,936		4.88	%
Noninterest-earning assets	1,661,711						1,697,660
Total assets	$	21,318,253					$	21,822,605
Liabilities and shareholders’ equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Demand deposits	$	1,707,751	$	1,839	0.43	%	$	1,804,524	$	2,176	0.49	%
Money market and savings	7,900,995		42,287		2.15	%	7,740,958		39,060		2.05	%
Certificates of deposit	2,036,264		12,418		2.45	%	2,472,421		17,087		2.80	%
Total	11,645,010		56,544		1.95	%	12,017,903		58,323		1.97	%
Borrowings:
Borrowings	114,121		1,055		3.71	%	24,667		228		3.75	%
Long-term debt	129,369		3,171		9.83	%	170,987		4,340		10.29	%
Total interest-bearing liabilities	11,888,500		60,770		2.05	%	12,213,557		62,891		2.09

Loading holders...

Held by

holders ( registered funds via N-PORT, institutional investors via 13F). Showing top by dollar value.

Holder	Type	ETF	MF	Position ($)	% of holder	Δ % of holder	Holder AUM

Recent insider activity

Last 90 days. Open-market trades (purchases & sales) by directors, officers, and 10%+ owners. 1 transaction across 1 insider. Net: -2 shares, -$30.

Date	Insider	Role	Action	Shares	Price	Value
2026-06-15	Downer Edward Michael indirect	Director	Sell	-2	$15.13	-$30

Source: SEC Form 4 filings.

Next expected filings

~2026-11-18 10-Q expected by 2026-11-20 (in 94 days)
~2027-03-18 10-K expected by 2027-03-28 (in 214 days)
~2027-05-09 10-Q expected by 2027-05-11 (in 266 days)
~2027-08-08 10-Q expected by 2027-08-10 (in 357 days)

Predicted from historical filing cadence; not an SEC commitment.

Recent SEC filings

2026-08-07 10-Q Quarterly Report
2026-07-29 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2026-05-13 8-K Other Events; Financial Statements and Exhibits
2026-05-08 10-Q Quarterly Report
2026-05-05 8-K Other Events
2026-04-30 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2026-04-16 DEF 14A Proxy Statement
2026-03-17 10-K Annual Report
2026-02-27 8-K Bylaws/Articles Amended; Other Events; Financial Statements and Exhibits
2026-01-30 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2025-12-09 8-K Material Agreement Entered; Other Events; Financial Statements and Exhibits
2025-11-26 8-K Other Events
2025-11-17 10-Q Quarterly Report
2025-10-30 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2025-10-30 8-K Earnings Release; Financial Statements and Exhibits

Line item
Period ending