Company: MCHB
Filing Date: 2025-07-16
Form Type: 424B3
Source: 0001140361-25-026051
Chunk: 391

Company: Mechanics Bancorp
Filing Date: 2025-07-16
Form: 424B3
Chunk 391
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 the loan (or a portion of the loan) is written off. Therefore, the amortized cost of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. Credit Quality Indicators: The Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, current economic trends and other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. This analysis includes all loans regardless of balances. This analysis is performed on a quarterly basis.

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The Bank uses the following definitions for risk ratings: Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans not meeting the criteria above are considered to be pass rated loans. Based on the most recent analysis performed, the risk category of loans by class and origination year of loans is as follows at March 31, 2025 and December 31, 2024.

| (in thousands)                  
 As of March 31, 2025            |     |   2025 |     |    2024 |     |    2023 |     |    2022 |     |    2021 |     |   Prior |     |  Revolving 
      Loans 
  Amortized 
 Cost Basis |     | Revolving 
 Loans     
 Converted 
 to Term   |     |    Total |
|:--------------------------------|:----|-------:|:----|--------:|:----|--------:|:----|--------:|:----|--------:|:----|--------:|