Company: MCHB
Filing Date: 2025-07-16
Form Type: 424B3
Source: 0001140361-25-026051
Chunk: 89

Company: Mechanics Bancorp
Filing Date: 2025-07-16
Form: 424B3
Chunk 89
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 businesses frequently have smaller market share than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete and may experience significant volatility in operating results. Any one or more of these factors may impair the borrower’s ability to repay a loan. In addition, the success of a small- to medium-sized business often depends on the management talents and efforts of one or two persons or a small group of persons, and the death, disability or resignation of one or more of these persons could have a material adverse impact on the business and its ability to repay a loan. Economic downturns and other events that negatively impact Mechanics’ market areas could cause Mechanics to incur substantial credit losses that could negatively affect its consolidated financial condition and consolidated results of operations.

**Mechanics’ risk management processes may not fully identify and mitigate exposure to the various risks that Mechanics faces, including interest rate, credit, liquidity and market risk.**

Mechanics continues to refine its risk management techniques, strategies and assessment methods on an ongoing basis. However, Mechanics’ risk management techniques and strategies (as well as those available to the market generally) may not be fully effective in mitigating its risk exposure in all economic market environments or against all types of risk. For example, Mechanics might fail to identify or anticipate particular risks, or the systems that Mechanics use, and may not be capable of identifying certain risks. Certain of Mechanics’ strategies for managing risk are based upon observed historical market behavior. Mechanics applies statistical and other tools to these observations to quantify its risk exposure. Any failures in Mechanics’ risk management techniques and strategies to accurately identify and quantify its risk exposure could limit its ability to manage risks. In addition, any risk management failures could cause Mechanics’ losses to be significantly greater than the historical measures indicate. Further, Mechanics’ quantified modeling does not take all risks into account. As a result, Mechanics also takes a qualitative approach in reducing its risk, although Mechanics’ qualitative approach to managing those risks could also prove insufficient, exposing it to material unanticipated losses.

**Mechanics’ hedging strategies may not be successful in mitigating Mechanics’ exposure to interest rate risk.**

Mechanics has used, and may use, derivative financial instruments, such as interest rate swaps, to limit its exposure to interest rate risk. No hedging strategy can completely protect Mechanics, and the derivative financial instruments Mechanics elects may not have the effect of reducing Mechanics’ interest rate risk. Poorly designed strategies, improperly executed and documented transactions, inaccurate assumptions or the failure