Company: MCHB
Filing Date: 2025-07-15
Form Type: S-4/A
Source: 0001140361-25-025920
Chunk: 80

Company: Mechanics Bancorp
Filing Date: 2025-07-15
Form: S-4/A
Chunk 80
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 involving liquidity, may have a material effect on the combined company’s operations.**

Events in early 2023 relating to the failures of certain banking entities have caused general uncertainty and concern regarding the liquidity adequacy of the banking sector as a whole. Although Mechanics was not directly affected by these bank failures, the news caused depositors to withdraw or attempt to withdraw their funds from these and other financial institutions and caused the stock prices of many financial institutions to become volatile. In the future, events such as these bank failures or negative news or the public perception thereof, could have an adverse effect on Mechanics’ financial condition and results of operations, either directly or through an adverse impact on certain of Mechanics’ customers.

**Liquidity, primarily through deposits, is essential to Mechanics’ business. A lack of liquidity, or an increase in the cost of liquidity could materially impair Mechanics’ ability to fund its operations and jeopardize Mechanics’ consolidated financial condition, consolidated results of operation and cash flows.**

Liquidity represents an institution’s ability to provide funds to satisfy demands from depositors, borrowers and other creditors by either converting assets into cash or accessing new or existing sources of incremental funds. Liquidity risk arises from the possibility that Mechanics may be unable to satisfy current or future funding requirements and needs.

Liquidity is essential for the operation of Mechanics’ business. Market conditions, unforeseen outflows of funds or other events could have a negative effect on Mechanics’ level or cost of funding, affecting Mechanics’ ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, and fund new business transactions at a reasonable cost and in a timely manner. If Mechanics’ access to stable and low-cost sources of funding, such as client deposits, is reduced, then Mechanics may need to use alternative funding, which could be more expensive or of limited availability. Any substantial, unexpected or prolonged changes in the level or cost of liquidity could affect Mechanics’ business adversely.

Deposit levels may be affected by several factors, including rates paid by competitors, general interest rate levels, returns available to customers on alternative investments, customers seeking to maximize deposit insurance by limiting their deposits at a single financial institution to $250,000, general economic and market conditions and other factors. Loan repayments are a relatively stable source of funds but are subject to the borrowers’ ability to repay loans, which can be adversely affected by a number of factors, including changes in general economic conditions, adverse trends or events affecting business industry groups or specific businesses, declines in real estate values or markets, business closings