Company: MCHB
Filing Date: 2025-07-03
Form Type: S-4
Source: 0001140361-25-024872
Chunk: 402

Company: Mechanics Bancorp
Filing Date: 2025-07-03
Form: S-4
Chunk 402
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 real estate properties classified as other real estate owned are measured at the lower of the carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property or internal evaluations based on comparable sales, resulting in a Level 3 classification. Appraisals for both collateral-dependent impaired loans and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Bank. Once

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received, a member of the Appraisal Department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. In cases where the carrying amount exceeds the fair value, less cost to sell, an impairment loss is recognized. Management also considers inputs regarding market trends or other relevant factors and selling and commission costs. As of the quarters ended March 31, 2025 and December 31, 2024, the fair value of other real estate owned as presented in the Consolidated Balance Sheets was $13.4 million and $15.6 million, respectively. Other real estate owned assets fall under a level 3 fair value measurement methodology. For the quarters ended March 31, 2025 and December 31, 2024 there were no collateral dependent loans with specific allowance allocations of the allowance for credit losses, which are measured for impairment using the fair value of the collateral for collateral dependent loans. The following is a summary of the estimated fair value and carrying value of the Bank’s financial instruments as of March 31, 2025 and December 31, 2024 and the methods and assumptions used to evaluate them:

|                                       |     | March 31, 2025 |     |            |     | December 31, 2024 |     |            |
|:--------------------------------------|:----|---------------:|:----|-----------:|:----|------------------:|:----|-----------:|
| (in thousands)                        |     |      Estimated 
     Fair Value |     |   Carrying 
      Value |     |         Estimated 
        Fair Value |     |   Carrying 
      Value |
| Assets:                               |     |                |     |            |     |                   |     |