Company: MCHB
Filing Date: 2025-07-03
Form Type: S-4
Source: 0001140361-25-024872
Chunk: 82

Company: Mechanics Bancorp
Filing Date: 2025-07-03
Form: S-4
Chunk 82
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 fund new business transactions at a reasonable cost and in a timely manner. If Mechanics’ access to stable and low-cost sources of funding, such as client deposits, is reduced, then Mechanics may need to use alternative funding, which could be more expensive or of limited availability. Any substantial, unexpected or prolonged changes in the level or cost of liquidity could affect Mechanics’ business adversely.

Deposit levels may be affected by several factors, including rates paid by competitors, general interest rate levels, returns available to customers on alternative investments, customers seeking to maximize deposit insurance by limiting their deposits at a single financial institution to $250,000, general economic and market conditions and other factors. Loan repayments are a relatively stable source of funds but are subject to the borrowers’ ability to repay loans, which can be adversely affected by a number of factors, including changes in general economic conditions, adverse trends or events affecting business industry groups or specific businesses, declines in real estate values or markets, business closings or lay-offs, inclement weather, natural disasters and other factors.

Furthermore, loans generally are not readily convertible to cash. From time to time, if Mechanics’ ability to raise funds through deposits, borrowings, the sale of investment securities and other sources are not sufficient to meet its liquidity needs, then Mechanics may be required to rely on alternative funding sources of liquidity to meet growth

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in loans, deposit withdrawal demands or otherwise fund operations. Such alternative funding sources include FHLB advances, Federal Reserve borrowings, brokered deposits, unsecured federal funds lines of credit from correspondent banks and/or accessing the equity or debt capital markets. The availability of these alternative funding sources is subject to broad economic conditions, to regulation and to investor assessment of Mechanics’ financial strength and, as such, the cost of funds may fluctuate significantly and/or the availability of such funds may be restricted, thus impacting the net interest income of Mechanics, its immediate liquidity and/or its access to additional liquidity. Additionally, if Mechanics fails to remain “well-capitalized” its ability to utilize brokered deposits may be restricted. Mechanics has somewhat similar risks to the extent that high-balance core deposits exceed the amount of deposit insurance coverage available.

An inability to maintain or raise funds (including the inability to access alternative funding sources) in amounts necessary to meet Mechanics’ liquidity needs would have a substantial negative effect on its liquidity. Mechanics’ access to funding sources in amounts adequate to finance its activities, or on terms attractive to Mechanics, could be