Mechanics Bancorp · NASDAQ:MCHB
Mechanics Bancorp — Q3 2026 Earnings Presentation
30 slides from Mechanics Bancorp's earnings presentation, Oct 29, 2026
Slide 1: Third Quarter Earnings Presentation
Mechanics Bancorp Third Quarter Earnings Presentation October 28, 2026 Seattle, WA San Francisco, CA Los Angeles, CA 1
Slide 2: Disclaimer
Disclaimer FORWARD-LOOKING STATEMENTS AND OTHER This presentation and statements made by representatives of Mechanics Bancorp (“Mechanics” or the “Company”) during the course of this presentation include “forward- looking statements” within the meaning of the Private Securities Litigation Reform Act
Slide 3: Disclaimer (cont'd)
Disclaimer (cont’d) FORWARD-LOOKING STATEMENTS AND OTHER (cont’d) For further discussion of such factors, see the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2025, Quarterly Reports on Form 10-Q and other reports that we have filed with the Securities and
Slide 4: Mechanics Bancorp 3rd Quarter 2026 Financial Highlights
Mechanics Bancorp 3rd Quarter 2026 Financial Highlights Condensed Balance Sheet 3rd Quarter 2026 Financial Highlights ($ in millions, except per share data) Q3 '26 Q2 '26 Q1 '26 Cash & Investments $ 6,200 $ 6,007 $ 5,780 Net Loans, including HFS 12,887 13,429 13,700 ▪ Mechanics Bancorp reported net
Slide 5: Mechanics Bancorp Strategic Update
Mechanics Bancorp Strategic Update ➢ We had a very noisy third quarter, with several non-core items: ➢ At the end of July, we sold $308mm of AFS securities yielding 1.78% at a $32.3mm pre-tax loss and re-invested the net proceeds in mortgage-backed securities yielding 5.50%, with an expected earnbac
Slide 6: Mechanics Bancorp Overview
Mechanics Bancorp Overview 705 Everett Mechanics Bancorp Overview WA Seattle #4 / #4 $20.9bn 166 90 Tacoma 90 CA / West Coast market Seattle Olympia Total assets Branches 82 share by deposits1 5 182 5 Vancouver Portland 84 Key Stats vs. $10–100bn public U.S. banks 405 As of MRQ: As of MRQ: As of MRQ
Slide 7: Low-Cost Deposits Deliver Superior Returns Despite Low-Risk Assets
Low-Cost Deposits Deliver Superior Returns Despite Low-Risk Assets LOW-COST LOW-RISK SUPERIOR MARKET-LEADING DEPOSIT BASE ASSET STRATEGY PROFITABILITY DIVIDEND YIELD Cost of Deposits of $10–100bn RWA / Assets of $10–100bn 2027E ROATCE of $10–100bn 2027E Dividend Yield of $10–100bn U.S. public banks
Slide 8: Compelling Investment Thesis
Compelling Investment Thesis ✓ Premier community bank in attractive West Coast markets (#4 CA and #4 West Coast bank by deposits¹) ✓ Superior profitability (~17% 2027E ROATCE) despite low-risk assets (57% RWA / Assets) ✓ Simple and efficient business model – straightforward asset strategy powered by
Slide 9: Third Quarter 2026 Financial Drivers
Third Quarter 2026 Financial Drivers 9
Slide 10: Net Interest Income & Margin
Net Interest Income & Margin Average Earning Assets and NIM Trends 1 Key Highlights ($ in billions) 3.61% 3.62% 3.50% 3.55% ➢ Q3‘26 net interest income decreased $2.3 million, or 1.3%, to $174.9 million from $177.2 million for Q2‘26 3.33% $20.7 $17.2 $20.1 $19.7 $19.5 ➢ Net interest margin decreased
Slide 11: Low-Yielding Legacy Earning Asset Re-Pricing
Low-Yielding Legacy Earning Asset Re-Pricing ➢ Legacy earning asset repricing remains a key driver of net interest income growth as ~$4.7 billion of low-yielding, COVID-era assets (weighted average roll-off yield of 3.25%) run off or reset and adjust to current market rates 2033 & Q4 '26 2027 2028 2
Slide 12: Net Interest Income Analysis – Variable Assets / Deposits
Net Interest Income Analysis – Variable Assets / Deposits ➢ Net interest income remains sensitive to changes in short-term interest rates, as we have ~$4.6 billion in greater balances of rate sensitive deposits than we do floating rate assets ➢ Our deposit beta was ~30% last Fed hiking cycle and we
Slide 13: Non-Interest Income
Non-Interest Income Non-Interest Income Trend Key Highlights ($ in millions) $109.8 ➢ Q3’26 non-interest income decreased $37.2 million, or 157%, to a net loss of $13.4 million from income of $78.5 $23.8 million in Q2’26 $90.4 $55.1 ➢ Q3’26 included $34.6 million of non-recurring items: $21.0 $23.8
Slide 14: Non-Interest Expense
Non-Interest Expense Non-Interest Expense Trend 1, 2 Key Highlights ($ in millions) $163.3 ➢ Q3’26 non-interest expense decreased $10.3 million, or 8.3%, to $114.2 million from $124.5 million in $129.5 $130.4 Q2’26 $124.5 $64.4 $3.5 $4.8 $114.2 59.2% $5.9 57.9% 57.4% $0.6 ➢ Merger-related costs duri
Slide 15: Loan Portfolio Overview
Loan Portfolio Overview Loan Balance and Yield Trends 1 Key Highlights ($ in billions) ➢ Q3‘26 loan interest income decreased $2.8 million, or 14.6 1.6%, to $175.4 million from $178.2 million in Q2‘26 14.2 14.4 13.9 14.0 13.6 13.7 13.0 13.4 5.34% ➢ Loan yields decreased 4 bps in Q3‘26, driven by 11.
Slide 16: Granular, Low-Risk Commercial Lending with a Multifamily Focus
Granular, Low-Risk Commercial Lending with a Multifamily Focus ✓ Mechanics Bank’s commercial lending is highly granular and well-diversified across both collateral types and geography ✓ Focus on multifamily lending, with an emphasis on Southern California (53% of total multifamily) ▪ Average multifa
Slide 17: High-Quality, Low-Risk Consumer Lending
High-Quality, Low-Risk Consumer Lending ✓ Mechanics Bank’s SFR Mortgage and HELOC lending efficiently generates high-quality, low-risk loans with strong risk-adjusted returns ✓ SFR product offerings include Agency, Government, Bond, Correspondent and Portfolio lending ✓ $4.1 billion SFR Servicing Po
Slide 18: Asset Quality
Asset Quality NCOs / Average Loans NPAs / Assets 0.38% 0.32% 0.29% 0.28% 0.28% 0.15% 0.25% 0.02% 0.23% 0.02% 0.01% 0.02% 0.02% 0.28% 0.13% 0.12% 0.10% 0.26% 0.26% 0.28% 0.23% 0.21% 0.23% 0.09% 0.12% 0.09% 0.04% 0.01% 0.04% Q3 '25 Q4 '25 Q1 '26 Q2 '26 Q3 '26 Q3 '25 Q4 '25 Q1 '26 Q2 '26 Q3 '26 Non-Aut
Slide 19: Securities Portfolio
Securities Portfolio Securities Balance and Yield Trends Key Highlights ($ in billions) 4.21% ➢ Executed a $308 million securities restructure in Q3’26 3.97% 3.97% 3.86% to convert low-yielding AFS securities into current 3.76% market-rate MBS 5.4 5.5 5.6 5.5 • Resulted in a $32.3 million pre-tax lo
Slide 20: Deposits Overview
Deposits Overview Deposit Balance and Cost Trends Key Highlights ($ in billions) ➢ Q3‘26 deposit interest expense increased $3.9 million, 19.5 or 7%, to $60.5 million from $56.5 million for Q2’26 19.0 19.2 1.45% 1.43% 18.2 18.5 18.1 18.1 18.0 18.1 1.28% 1.33% ➢ Cost of deposits increased 8 bps in Q3
Slide 21: Mechanics Bank Deposit Stratification at 9/30/2026
Mechanics Bank Deposit Stratification at 9/30/2026 Mechanics Bank Deposits ($ in millions, except account data) Avg Median Relationship Number of Deposit Deposit Account Account Weighted Segment Accounts Balance ($) Balance (%) Size ($) Size ($) Age (yrs) Cost1 (%) Consumer 338,968 8,864 49% 26,149
Slide 22: Capital and Liquidity Update
Capital and Liquidity Update Capital Ratios Trend (%) 1 Key Highlights 16.3 16.2 16.7 17.0 ➢ Mechanics Bancorp’s capital ratios exceed minimums 15.6 14.1 13.9 14.4 14.7 to be “well-capitalized” and meet all regulatory 13.4 capital requirements and internal policy limits 10.3 8.7 8.7 8.7 8.7 ➢ Availa
Slide 23: Appendix
& Mechanics Appendix
Slide 24: Details on Mechanics Bank Standalone CRE Portfolio
Details on Mechanics Bank Standalone CRE Portfolio Source: Mechanics Bank management; Note: Financial data as of September 30, 2026 1 LTV defined as current loan balance divided by most recent appraisal 24
Slide 25: Details on Mechanics Bank Standalone CRE Portfolio (cont'd)
Details on Mechanics Bank Standalone CRE Portfolio (cont’d) Source: Mechanics Bank management; Note: Financial data as of September 30, 2026 25
Slide 26: Non-GAAP Financial Measures and Reconciliations
Non-GAAP Financial Measures and Reconciliations Return on Average Equity and Return on Average Tangible Equity ($ in thousands) Quarter Ended Return on Average Equity and September 30, June 30, March 31, Return on Average Tangible Equity Ref 2026 2026 2026 Net Income (a) $ 45,992 $ 57,701 $ 44,090 A
Slide 27: Non-GAAP Financial Measures and Reconciliations (cont'd)
Non-GAAP Financial Measures and Reconciliations (cont’d) Efficiency Ratio and Core Efficiency Ratio (Non-GAAP) ($ in thousands) Quarter Ended September 30, June 30, March 31, December 31, September 30, 1 Efficiency Ratio Ref 2026 2026 2026 2025 2025 Noninterest expense (a) $ 114,192 $ 124,474 $ 130,
Slide 28: Non-GAAP Financial Measures and Reconciliations (cont'd)
Non-GAAP Financial Measures and Reconciliations (cont’d) Book Value and Tangible Book Value Per Share ($ in thousands, except shares and per share data) As of September 30, June 30, March 31, Book Value and Tangible Book Value P er Share Ref 2026 2026 2026 Total shareholders’ equity (a) $ 2,567,486
Slide 29: Non-GAAP Financial Measures and Reconciliations (cont'd)
Non-GAAP Financial Measures and Reconciliations (cont’d) Common Equity Ratio and Tangible Common Equity Ratio ($ in thousands) As of Common Equity Ratio and September 30, June 30, March 31, Tangible Common Equity Ratio Ref 2026 2026 2026 Total shareholders’ equity (a) $ 2,567,486 $ 2,689,931 $ 2,791
Slide 30: Non-GAAP Financial Measures and Reconciliations (cont'd)
Non-GAAP Financial Measures and Reconciliations (cont’d) Core Net Income ($ in thousands) Quarter Ended September 30, 2026 As Non-Core Core Core Net Income Ref Reported Adjustments Net Income Net Interest Income before Provision $ 174,901 $ - $ 174,901 Provision / (Reversal of Provision) 1 (15,183)