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Mechanics Bancorp Class A (MCHB)
NASDAQ:MCHB
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Mechanics Bancorp Class A
(NASDAQ:MCHB)
Select Model
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Rating:44Neutral
Price Target:
$12.50
▼(-6.09% Downside)
The overall stock score for Mechanics Bancorp Class A is primarily impacted by its poor financial performance, characterized by declining revenue, profitability, and cash flow. Technical analysis provides a neutral outlook, while valuation metrics are unfavorable due to negative earnings and lack of dividends. The absence of earnings call insights and corporate events means these factors do not influence the score.
Mechanics Bancorp Class A (MCHB) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.97B
Dividend Yield6.47%
Average Volume (3M)247.83K
Price to Earnings (P/E)―
Beta (1Y)1.23
Revenue Growth-26.58%
EPS Growth-838.48%
CountryUS
Employees1,800
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)N/A
Shares Outstanding219,822,190
10 Day Avg. Volume279,156
30 Day Avg. Volume247,832
Financial Highlights & Ratios
PEG Ratio>-0.01
Price to Book (P/B)<0.01
Price to Sales (P/S)0.00192
P/FCF Ratio<0.01
Enterprise Value/Market Cap0.44
Enterprise Value/Revenue3.19
Enterprise Value/Gross Profit8.35
Enterprise Value/Ebitda-40.47
Forecast
1Y Price Target
$14.00Price Target Upside5.18% Upside
Rating ConsensusHold
Number of Analyst Covering2
Mechanics Bancorp Class A Business Overview & Revenue Model
Company DescriptionMechanics Bank provides various financial services for individual clients, and small and middle-market businesses. The company offers checking and savings accounts. It also provides home and auto loans; term loans and lines of credit, multi-family lending, commercial real estate loans, owner-occupied real estate loans, equipment financing, and trade services and letters of credit; and small business administration loans. In addition, the company offers credit and debit cards; payable and receivable solutions, fraud prevention, and cash management services; merchant and payroll services, paycheck protection program solutions, and workplace benefit plans; foreign currency, cashier's checks, wire transfers, overdraft, deposit and treasury, trust and estate, investment and asset management, retirement planning, and wealth management services; and online and mobile banking services. It operates through a network of 115 branch locations in the Greater San Francisco, Sacramento, Los Angeles, and San Diego areas, as well as Central Valley in California. Mechanics Bank was founded in 1905 and is headquartered in Walnut Creek, California.
How the Company Makes MoneyHomeStreet generates revenue primarily through the interest earned on loans, including commercial real estate loans, residential mortgages, and consumer loans. The bank also earns fee income from various services such as mortgage origination, deposit account fees, and transaction services. A significant portion of the company's income comes from the spread between the interest it pays on deposits and the interest it earns on loans. Additionally, HomeStreet engages in investment activities, which contribute to its earnings. The company has established partnerships with real estate developers and local businesses, enhancing its ability to offer competitive financing options and drive revenue growth. Market conditions, interest rates, and the overall economic environment also play crucial roles in influencing its financial performance.
Mechanics Bancorp Class A Earnings Call Summary
Earnings Call Date:―
(Q4-2024)
| Next Earnings Date:―
Earnings Call Sentiment Negative
The earnings call reveals significant financial challenges faced by HomeStreet Bank, including a major net loss and increased nonperforming assets. However, there are positive strategic steps being taken, such as improving liquidity and reducing noninterest expenses, with an expectation of returning to profitability in the near future.Q4-2024 Updates
Positive Updates
Decrease in Noninterest Expenses
Noninterest expenses were $5.2 million lower in the fourth quarter of 2024 due to a decrease in compensation benefits and administrative expenses.
Improved Liquidity Position
Following the sale of $990 million in multifamily loans, the bank improved its liquidity position, increasing cash and securities balances to $1.5 billion, which is 18% of total assets.
Continued Loan Repricing and Profitability Expectations
The bank anticipates returning to profitability in the first half of the next year due to loan repricing, reduction in borrowings, and expected reductions in short-term interest rates.
Strong Deposit Loyalty
Despite various challenges, the bank maintained a high roll rate on certificates of deposit and reported low levels of uninsured deposits at 9%.
Negative Updates
Significant Net Loss
The bank reported a net loss of $123.3 million for the fourth quarter of 2024, a significant increase from the $7.3 million loss in the previous quarter.
Multifamily Loan Sale Loss
The bank incurred an $88.8 million loss on the sale of multifamily loans, which contributed significantly to the overall financial loss.
Deferred Tax Asset Valuation Allowance
A $53.3 million deferred tax asset valuation allowance was recorded, negatively impacting the reported income tax expense.
Increase in Nonperforming Assets
Nonperforming assets to total assets ratio increased, partly due to the sale of multifamily loans and a downgraded syndicated commercial loan.
Company Guidance
In the fourth quarter of 2024, HomeStreet Bank reported a significant net loss of $123.3 million, equivalent to $6.54 per share, compared to a net loss of $7.3 million or $0.39 per share in the previous quarter. This loss was primarily driven by an $88.8 million pretax loss on the sale of $990 million in multifamily loans, alongside a $53.3 million deferred tax asset valuation allowance. However, on a core basis, excluding these impacts and merger-related expenses, the net loss was reduced to $5.1 million or $0.27 per share. The bank's net interest income increased by $1 million due to a rise in the net interest margin from 1.33% to 1.38%, despite a decrease in noninterest income. The ratio of nonperforming assets to total assets increased to 71 basis points, and loans delinquent over 30 days rose to 106 basis points. HomeStreet Bank's restructuring efforts, including the loan sale, improved liquidity and lowered the loan-to-deposit ratio to 97.4%, with expectations of a return to profitability in the first half of 2025.Mechanics Bancorp Class A Financial Statement Overview
Summary
Mechanics Bancorp Class A is facing significant financial challenges, with declining revenue, profitability, and cash flow. The high leverage and negative returns on equity further exacerbate financial risks. While there are some improvements in debt management, the company needs to address its revenue and profitability issues to improve its financial health.Income Statement
Mechanics Bancorp Class A has experienced declining revenue and profitability over recent periods. The TTM data shows a negative revenue growth rate of -5.12%, with net profit margins deteriorating to -46.82%. The gross profit margin has also decreased significantly compared to previous years. These trends indicate challenges in maintaining revenue and controlling costs, impacting overall profitability.35
Negative
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio, particularly in recent years, indicating increased leverage and potential financial risk. The TTM data shows a debt-to-equity ratio of 0.56, which is an improvement from previous years but still reflects significant leverage. Return on equity is negative, suggesting the company is not generating sufficient returns on shareholder investments. The equity ratio remains stable, indicating a reasonable proportion of equity financing.40
Negative
Cash Flow
Cash flow analysis shows negative operating and free cash flows in the TTM period, with a free cash flow growth rate of -22.08%. The operating cash flow to net income ratio is negative, indicating cash flow challenges. The free cash flow to net income ratio is relatively high, suggesting that while cash flow is negative, it is less negative than net income, indicating some level of cash management.30
Negative
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 410.65M | 381.61M | 636.83M | 694.97M | 692.08M | 647.47M |
| Gross Profit | 157.08M | 374.58M | 636.83M | 694.97M | 692.08M | 647.47M |
| EBITDA | -32.41M | 58.52M | 305.93M | 333.80M | 324.15M | -28.38M |
| Net Income | -93.06M | 29.00M | 201.91M | 216.58M | 206.01M | 93.46M |
Balance Sheet | ||||||
| Total Assets | 16.54B | 16.53B | 17.50B | 18.14B | 19.42B | 19.14B |
| Cash, Cash Equivalents and Short-Term Investments | 4.38B | 4.06B | 3.57B | 351.18M | 1.11B | 1.26B |
| Total Debt | 58.91M | 56.09M | 832.70M | 331.02M | 62.93M | 77.88M |
| Total Liabilities | 14.17B | 14.23B | 15.27B | 16.00B | 17.04B | 16.68B |
| Stockholders Equity | 2.37B | 2.30B | 2.24B | 2.13B | 2.39B | 2.47B |
Cash Flow | ||||||
| Free Cash Flow | -34.44M | 285.94M | 259.13M | 308.70M | 288.02M | 204.58M |
| Operating Cash Flow | -39.51M | 292.31M | 266.00M | 318.18M | 295.26M | 212.47M |
| Investing Cash Flow | 1.06B | 475.80M | 1.67B | 258.06M | -665.44M | -1.82B |
| Financing Cash Flow | -1.13B | -1.23B | -813.45M | -1.25B | 199.71M | 1.73B |
Mechanics Bancorp Class A Technical Analysis
Positive
13.31
Price Trends
13.32
Positive
13.01
Positive
11.72
Positive
Market Momentum
0.08
Negative
51.41
Neutral
69.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCHB, the sentiment is Positive. The current price of 13.31 is below the 20-day moving average (MA) of 13.36, below the 50-day MA of 13.32, and above the 200-day MA of 11.72, indicating a bullish trend. The MACD of 0.08 indicates Negative momentum. The RSI at 51.41 is Neutral, neither overbought nor oversold. The STOCH value of 69.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MCHB.
Mechanics Bancorp Class A Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $288.36M | 15.29 | 6.94% | 1.48% | 23.76% | 682.33% | |
72 Outperform | $245.43M | 10.01 | ― | 2.05% | 5.11% | -2.77% | |
72 Outperform | $255.84M | 22.51 | 4.77% | 2.42% | -6.64% | -51.99% | |
58 Neutral | $206.06M | 13.43 | 3.96% | 1.01% | 17.13% | -16.81% | |
53 Neutral | $264.17M | 89.33 | -4.61% | 3.73% | 4.72% | ― | |
44 Neutral | $2.97B | ― | -30.22% | 6.47% | -26.58% | -838.48% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
MCHB
Mechanics Bancorp Class A
13.31
-2.19
-14.13%
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FRST
Primis Financial
10.51
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CHMG
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52.69
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14.39%
INBK
First Internet Bancorp
22.43
-10.49
-31.87%
JMSB
John Marshall Bancorp
19.82
1.07
5.71%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.