Company: MCHB
Filing Date: 2025-07-03
Form Type: S-4
Source: 0001140361-25-024872
Chunk: 80

Company: Mechanics Bancorp
Filing Date: 2025-07-03
Form: S-4
Chunk 80
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 on risks relating to HomeStreet’s and HomeStreet Bank’s business, please see the prior section entitled “ —Risks Relating to HomeStreet’s Business. ”

**Mechanics’ allowances for credit losses for loans and debt securities may prove inadequate or Mechanics may be negatively affected by credit risk exposures. Future additions to Mechanics’ allowance for credit losses will reduce Mechanics’ future earnings.**

As a lender, Mechanics is exposed to the risk that it could sustain losses because its borrowers may not repay their loans in accordance with the terms of their loans. Mechanics maintains allowances for credit losses for loans and debt securities to provide for defaults and nonperformance, which represent an estimate of expected losses over the remaining contractual lives of the loan and debt security portfolios. This estimate is the result of Mechanics’ continuing evaluation of specific credit risks and loss experience, current loan and debt security portfolio quality, present economic, political and regulatory conditions, industry concentrations, reasonable and supportable forecasts for future conditions and other factors that may indicate losses. The determination of the appropriate levels of the allowances for loan and debt security credit losses inherently involves a high degree of subjectivity and judgment and requires Mechanics to make estimates of current credit risks and future trends, all of which may undergo material changes. Generally, Mechanics’ nonperforming loans and other real estate owned (“OREO”) reflect operating difficulties of individual borrowers and weaknesses in the economies of the markets Mechanics serves.

While Mechanics management endeavors to estimate the allowance to cover anticipated losses over the lives of its loan and debt security portfolios, no underwriting and credit monitoring policies and procedures that Mechanics could adopt to address credit risk could provide complete assurance that it will not incur unexpected losses. These losses could have a material adverse effect on Mechanics’ business, financial condition, results of operations and cash flows. In addition, regulators periodically evaluate the adequacy of Mechanics’ allowance for credit losses and may require Mechanics to increase its provision for credit losses or recognize further loan charge-offs based on judgments

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different from those of Mechanics management. Any such increase in Mechanics’ provision for (reversal of) credit losses or additional loan charge-offs could have a material adverse effect on Mechanics’ results of operations and financial condition.

**Mechanics may suffer losses in its loan portfolio despite strict adherence to its underwriting practices.**

Mechanics mitigates the risks inherent in its loan portfolio by adhering to sound and proven underwriting practices, managed by experienced and knowledgeable credit professionals. These practices may include,