Company: MCHB
Filing Date: 2025-07-16
Form Type: 424B3
Source: 0001140361-25-026051
Chunk: 94

Company: Mechanics Bancorp
Filing Date: 2025-07-16
Form: 424B3
Chunk 94
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 and growth could suffer.

**Mechanics is subject to losses due to fraudulent and negligent acts.**

Mechanics’ banking and mortgage origination businesses expose it to fraud risk from its loan and deposit customers and the parties they do business with, as well as from its employees, contractors and vendors. Mechanics relies heavily upon information supplied by third parties, including the information contained in credit applications, property appraisals, title information, equipment pricing and valuation, and employment and income documentation, in deciding which loans to originate and the terms of those loans. If any of the information upon which Mechanics relies is misrepresented, either fraudulently or negligently, and the misrepresentation is not detected before funding, then the value of the collateral may be significantly lower than expected, the source of repayment may not exist or may be significantly impaired, or Mechanics may fund a loan that it would not have funded or on terms Mechanics would not have extended. While Mechanics has underwriting and operational controls in place to help detect and prevent such fraud, no such controls are effective to detect or prevent all fraud. Whether a misrepresentation is made by the applicant, another third party or one of Mechanics’ own employees, Mechanics may bear the risk of loss associated with the misrepresentation. Mechanics has experienced losses resulting from fraud in the past, including loan, wire transfer, document and check fraud, and identity theft. Mechanics maintains fraud insurance, but this insurance may not be sufficient to cover all of Mechanics’ losses from any fraudulent acts.

**Negative publicity regarding Mechanics, or financial institutions in general, could damage Mechanics’ reputation and adversely impact its business and results of operations.**

Mechanics’ ability to attract and retain customers and conduct its business could be adversely affected to the extent Mechanics’ reputation is damaged. Reputational risk, or the risk to Mechanics’ business, earnings and capital from negative public opinion regarding its company, or financial institutions in general (such as the bank failures in the first half of 2023), is inherent in Mechanics’ business. Adverse perceptions concerning Mechanics’ reputation or financial institutions in general could lead to difficulties in generating and maintaining accounts as well as in financing them. In particular, such negative perceptions could lead to decreases in the level of deposits that consumer and commercial customers and potential customers choose to maintain with Mechanics. Negative public opinion could result from actual or alleged conduct in any number of activities or circumstances, including: lending or foreclosure practices; sales practices; corporate governance and potential conflicts of interest; ethical failures or fraud, including alleged deceptive or unfair lending