**Mechanics Bancorp Reports Financial Results for 2025, Reflecting Merger Impact**
Mechanics Bancorp (MCHB) reported net income of $265.7 million for the year ended December 31, 2025, compared to $29.0 million for the previous year. The increase in profitability was primarily driven by a $145.5 million bargain purchase gain related to the merger with HomeStreet Bank, which closed on September 2, 2025. Basic earnings per share for Class A common stock were $1.22, while Class B common stock reported $12.03 per share. Net interest income increased to $585.7 million from $519.2 million in 2024, with the net interest margin rising to 3.43% from 3.31%.
The company's financial performance was also impacted by a $20.5 million provision for credit losses on loans, a shift from a $1.6 million reversal in 2024. Noninterest income reached $222.9 million, a significant increase compared to a $139.1 million loss in the prior year, largely due to the bargain purchase gain. Noninterest expense increased to $469.6 million, up from $345.9 million in 2024, primarily due to $73.4 million in acquisition and integration costs associated with the HomeStreet merger. As of December 31, 2025, total assets stood at $22.35 billion, compared to $16.49 billion the previous year, while total deposits reached $19.02 billion, up from $13.94 billion.
Strategic developments during the year included the completion of the merger with HomeStreet Bank on September 2, 2025. As a result of the merger, the company's business became primarily the business conducted by legacy Mechanics Bank. The company also entered into an agreement on December 3, 2025, to sell its Fannie Mae Delegated Underwriting and Servicing (DUS) business line to Fifth Third Bank for approximately $130 million, subject to adjustments. This sale is expected to close in the first or second quarter of 2026.
Key operational developments included an increase in full-time equivalent employees to 1,921 as of December 31, 2025, compared to 1,439 in the previous year. Nonaccrual loans increased to $42.9 million from $10.7 million in 2024, with nonperforming assets rising to $51.8 million from $26.5 million. The allowance for credit losses on loans increased to $153.3 million, representing 1.08% of total loans, compared to $88.6 million, or 0.92% of total loans, in the prior year. The company's Tier 1 leverage capital ratio was 8.65%, the Common equity Tier 1 capital ratio was 14.09%, the Tier 1 risk-based capital ratio was 14.09%, and the Total risk based capital ratio was 16.27%.
Looking ahead, Mechanics Bancorp anticipates continuing a regular quarterly cash dividend, although the company has no obligation to pay dividends and may change its dividend policy at any time. The company's ability to pay dividends is dependent on many factors, including the Bank's ability to pay dividends to the Company, financial condition, results of operations, capital needs, and other factors. The company will continue to focus on integrating the operations of Mechanics Bank and HomeStreet Bank, managing credit risk, and adapting to changes in the regulatory environment.
About HomeStreet, Inc.
HomeStreet, Inc. is a diversified financial services company providing commercial and consumer banking in the western U.S. through its subsidiary, HomeStreet Bank. It offers loans, deposit products, and community-focused services to individuals, small and medium-sized businesses, and real estate investors. The company emphasizes ethical standards, community involvement, and risk management, operating primarily in regional markets with a focus on real estate-secured lending.
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