HomeStreet(US:HMST)2025-10-30 21:21Financial Performance - Mechanics Bancorp reported net income of $55.2 million, or $0.25 per diluted share, for Q3 2025, up from $42.5 million, or $0.20 per diluted share, in Q2 2025[1]. - Net income for Q3 2025 was $55,161,000, compared to $42,485,000 in Q2 2025, reflecting a positive trend in profitability[40]. - Noninterest income totaled $109,778,000 in Q3 2025, a substantial increase from $19,625,000 in Q2 2025, driven by a bargain purchase gain of $90,363,000[40]. - Basic earnings per share for Class A common stock was $0.25 in Q3 2025, up from $0.20 in Q2 2025, while Class B common stock earnings per share increased to $2.53 from $2.00[40]. - Total noninterest expense rose to $163,329,000 in Q3 2025, compared to $91,080,000 in Q2 2025, largely due to acquisition and integration costs of $63,869,000[40]. Asset and Deposit Growth - Total assets increased by $6.1 billion to $22.7 billion, and total loans rose by $5.3 billion, resulting in a loans-to-deposits ratio of 75%[5]. - Total deposits increased by $5.5 billion to $19.5 billion, a 39% increase from the prior quarter, with noninterest-bearing deposits rising by $1.3 billion to $6.7 billion, a 24% increase[5]. - Total assets increased to $22,708,820 thousand as of September 30, 2025, up from $16,571,173 thousand in June 30, 2025, representing a growth of 37.5%[38]. - Total deposits rose to $19,452,819 thousand, up from $13,968,863 thousand, reflecting a growth of 39.5%[38]. - Interest-bearing transaction accounts increased to $7,918,670 thousand from $6,359,590 thousand, representing a rise of 24.5%[38]. Loan and Credit Quality - The provision for credit losses was $47.0 million, driven by reserves for non-PCD acquired loans and updates to ACL factors[10]. - Mechanics Bank's delinquent loans decreased to $94.2 million at September 30, 2025, down from $117.4 million at June 30, 2025, representing a decline of 19.6%[23]. - Nonperforming assets increased to $64.9 million at September 30, 2025, compared to $19.3 million at June 30, 2025, reflecting an increase of 236.8%[24]. - The allowance for credit losses on loans reached $169.0 million, or 1.16% of total loans, as of September 30, 2025, up from $68.3 million, or 0.74%, at June 30, 2025[26]. - The provision for credit losses for the third quarter was $46.1 million, which includes an initial provision of $20.2 million for acquired non-PCD loans from HomeStreet Bank[26]. Capital and Equity - Total shareholders' equity increased by $357.5 million to $2.8 billion, with book value per share rising to $12.54 from $11.96[19]. - As of September 30, 2025, Mechanics Bancorp's total risk-based capital ratio is 15.59% and Tier 1 leverage ratio is 10.33%[20]. - The common equity ratio decreased to 12.22% as of September 30, 2025, from 14.58% in the previous quarter[43]. - Average tangible shareholders' equity increased to $1,629,238,000 from $1,505,992,000 in the previous quarter[50]. - Tangible common equity ratio decreased to 8.23% from 9.81% in the previous quarter[50]. Merger and Acquisition Impact - The merger with HomeStreet Bank resulted in a preliminary bargain purchase gain of $90.4 million and non-recurring acquisition costs of $63.9 million[7]. - The merger with HomeStreet Bank was completed on September 2, 2025, with Mechanics Bank becoming a wholly-owned subsidiary of Mechanics Bancorp[20]. - The company is focusing on market expansion and new strategies, as evidenced by the significant increase in loans and deposits, reflecting a robust growth trajectory[41][42]. Operational Metrics - Mechanics Bancorp has available borrowing capacity of $3.8 billion from the FHLB, $4.0 billion from the FRBSF, and $5.3 billion from other financial institutions as of September 30, 2025[21]. - Full-time equivalent employees increased to 2,036, up from 1,303 in the previous quarter[43]. - The company highlighted potential risks including changes in regulatory capital and operational challenges due to technological changes and cyber-attacks[37]. Interest Income and Margin - Total interest income for Q3 2025 was $204,888,000, an increase from $178,153,000 in Q2 2025, while net interest income after provision for credit losses was $98,652,000, down from $130,497,000 in Q2 2025[40]. - Net interest margin for the quarter was 3.36%, up from 3.28% in the same quarter last year[45]. - Total interest-earning assets reached $17.18 billion, with net interest income of $145.67 million for the quarter[45]. - Cost of deposits, including noninterest-bearing deposits, was 1.45% for the quarter ended September 30, 2025[46].