HomeStreet(HMST) - 2025 Q4 - Annual Results

Financial Performance - Mechanics Bancorp reported a net income of $124.3 million, or $0.54 per diluted share, for Q4 2025, compared to $55.2 million, or $0.25 per diluted share, in Q3 2025[1]. - Net interest income for Q4 2025 was $181.5 million, an increase of $35.8 million from Q3 2025, driven by the merger with HomeStreet Bank[9]. - Noninterest income for Q4 2025 decreased to $78.5 million from $109.8 million in Q3 2025, primarily due to a lower bargain purchase gain[13]. - Net income for the quarter was $124,302 thousand, compared to $55,161 thousand in the previous quarter, representing an increase of 125.5%[44]. - Basic earnings per share for Class A common stock increased to $0.54 from $0.25, a growth of 116%[44]. - Return on average equity increased significantly to 17.66% for the quarter ended December 31, 2025, up from 8.61% in the previous quarter, indicating strong profitability growth[47]. - Net interest income for the year ended December 31, 2025, was $585,718, compared to $519,169 for 2024, reflecting a 12.8% increase[51]. - Return on average equity for 2025 was 17.66%, significantly higher than 8.95% in 2024[54]. Assets and Liabilities - Total assets were $22.4 billion at December 31, 2025, down from $22.7 billion at September 30, 2025, and up from $16.5 billion at December 31, 2024[4]. - Total assets decreased to $22.35 billion at December 31, 2025, from $22.71 billion at September 30, 2025[19]. - Total liabilities decreased to $19,489,100 thousand from $19,934,686 thousand, a decline of 2.2% quarter-over-quarter[42]. - Total deposits decreased by $427.8 million to $19.02 billion at December 31, 2025, primarily due to maturities of certificates of deposits[22]. - Total deposits decreased to $19,024,997 thousand from $19,452,819 thousand, a decline of 2.2% quarter-over-quarter[42]. Loans and Credit Losses - The total loans amounted to $14.2 billion at December 31, 2025, with a loans-to-deposits ratio of 75%[4]. - The provision for credit losses in Q4 2025 was a reversal of $23.5 million, compared to a provision of $47.0 million in Q3 2025[11]. - The allowance for credit losses on loans was $153.3 million, representing 1.08% of total loans held for investment at December 31, 2025[28]. - The provision for credit losses was a reversal of $22.16 million for the quarter ended December 31, 2025, compared to a provision of $46.06 million for the previous quarter[30]. - Net charge-offs for the quarter were $17.05 million, compared to $12.80 million in the previous quarter[30]. Equity and Capital Ratios - Total shareholders' equity increased by $88.2 million to $2.86 billion at December 31, 2025, driven by net income for the quarter[25]. - Mechanics Bancorp's CET1 capital ratio was reported at 14.07% as of December 31, 2025[4]. - The Tier 1 leverage ratio was 8.65% at December 31, 2025, down from 10.34% at September 30, 2025[26]. - Common equity ratio improved to 12.81% in Q4 2025 from 14.58% in Q2 2025, indicating a stronger capital position[54]. Operational Efficiency - Noninterest expense decreased by $33.8 million in Q4 2025 compared to Q3 2025, largely due to reduced acquisition and integration costs[15]. - The efficiency ratio improved to 49.8% for the quarter ended December 31, 2025, compared to 63.9% in the previous quarter, reflecting enhanced operational efficiency[47]. - Total noninterest expense decreased to $129,510 thousand from $163,329 thousand, a reduction of 20.7%[44]. Other Key Metrics - The effective tax rate for Q4 2025 was 19.3%, compared to (22.3)% in Q3 2025, influenced by the bargain purchase gain from the merger[17]. - The net interest margin improved to 3.47% for the quarter ended December 31, 2025, compared to 3.36% in the previous quarter, indicating better interest income generation[49]. - The book value per common share increased to $12.93 at December 31, 2025, compared to $12.54 at September 30, 2025[25]. - The company operates 166 branches across California, Oregon, Washington, and Hawaii[34]. - The company will host a conference call on January 30, 2026, to discuss its fourth quarter 2025 financial results[32]. - The company emphasizes the potential risks and uncertainties that could affect its financial results, including economic conditions and regulatory changes[39].