Company: MCHB
Filing Date: 2025-07-16
Form Type: 424B3
Source: 0001140361-25-026051
Chunk: 231

Company: Mechanics Bancorp
Filing Date: 2025-07-16
Form: 424B3
Chunk 231
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. KBW performed a dividend discount model analysis of Mechanics to estimate a range for the implied aggregate equity value of Mechanics. In this analysis, KBW applied management estimates for Mechanics and assumed long-term growth rates for Mechanics provided by Mechanics management, and KBW assumed discount rates ranging from 13.0% to 15.0% based on the cost of capital for comparable companies and the professional judgment of KBW. The range of values was derived by adding (i) the present value of the implied future excess capital available for dividends that Mechanics could generate over the period from December 31, 2025 through December 31, 2029 as a standalone company and (ii) the present value of Mechanics’ implied terminal value at the end of such period. The analysis utilized the assumptions provided by HomeStreet management that Mechanics would maintain a tangible common equity to tangible assets ratio of 8.00% and would retain sufficient earnings to maintain that level. In calculating the terminal value of Mechanics, KBW applied a range of 12.0x to 16.0x Mechanics’ estimated 2029 earnings based on comparable companies and the professional judgment of KBW. This dividend discount model analysis resulted in a range of implied aggregate equity value of Mechanics of $2,606 million to $3,414 million.

The dividend discount model analysis is a widely used valuation methodology, but the results of such methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values, and discount rates. The foregoing dividend discount model analysis did not purport to be indicative of the actual values or expected values of Mechanics or the pro forma combined company.

HomeStreet Dividend Discount Model Analysis. KBW performed a dividend discount model analysis of HomeStreet to estimate a range for the implied equity value of HomeStreet. In this analysis, KBW utilized financial forecasts and projections relating to the assets and earnings of HomeStreet provided by HomeStreet management, and KBW assumed discount rates ranging from 14.0% to 16.0% based on the cost of capital for comparable companies and the professional judgment of KBW. The range of values was derived by adding (i) the present value of the implied future excess capital available for dividends that HomeStreet could generate over the period from December 31, 2025 through December 31, 2029 and (ii) the present value of HomeStreet’s implied terminal value at the end of such period. The analysis utilized the assumptions provided by HomeStreet management that HomeStreet