SHARE-BASED COMPENSATION PLANS

3 Months Ended

Mar. 31, 2026

Share-Based Payment Arrangement [Abstract]

The 2025 Equity Plan, adopted by shareholders in August 2025, provides for the issuance of incentive stock options, nonqualified stock options, stock appreciation rights, RSUs, PSUs, dividend equivalent awards and other awards. All share-based awards granted after the Merger date were issued under the 2025 Equity Plan. As of March 31, 2026, only RSUs and PSUs have been granted under the 2025 Equity Plan. Shares available for grant under the 2025 Equity Plan were 6,799,632 shares as of March 31, 2026.

In connection with Mechanics Bank becoming a wholly-owned subsidiary of the Company, which is publicly traded, and the stock of Mechanics Bank being exchanged for shares of Class A common stock of the Company as a result of the Merger, the Company has elected to settle share-based compensation awards in Class A common stock of the Company that were outstanding following the Merger that historically were settled in cash by Mechanics Bank. Accordingly, during 2025, the Company modified the classification of these outstanding awards from liability to equity (RSU awards). These outstanding awards also were remeasured at the modification date fair value of the Company’s stock, and the previously recognized liability was reclassified to common stock within the consolidated balance sheets. Upon modification, $13.6 million of previously recognized liability-classified awards was reclassified to additional paid-in capital.

Compensation expense on the accompanying consolidated income statements was $1.3 million and $2.6 million for the quarter ended March 31, 2026 and 2025, respectively. The income tax benefit recognized in the consolidated income statements related to this expense was $259 thousand and $733 thousand for the quarter ended March 31, 2026 and 2025, respectively. The amount of unrecognized compensation expense related to all RSUs and PSUs as of March 31, 2026 totaled $14.2 million. Such expense is expected to be recognized over a weighted average period of 2.61 years.

RSUs generally vest over a period of three to four years and PSUs vest over a period of three years with the fair market value of the awards determined at the grant date based on the Company’s stock price. The vesting date fair value of RSUs vested in the quarter ended March 31, 2026 and 2025 was $2.3 million and zero, respectively.


	Number	Weighted Average Grant Date Fair Value

Outstanding at December 31, 2025	1,553,634	$	13.02
Granted	528,127	14.26


Dividends reinvested into shares	24,383	13.87
Cancelled or forfeited	(23,611)	13.86
Vested	(154,017)	13.72
Outstanding at March 31, 2026	1,928,516	$	13.96