Company: MCHB
Filing Date: 2025-07-03
Form Type: S-4
Source: 0001140361-25-024872
Chunk: 92

Company: Mechanics Bancorp
Filing Date: 2025-07-03
Form: S-4
Chunk 92
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raisals are only estimates of value, and the soundness of those estimates may be affected by volatility in the real estate market or other changes in market conditions. In addition, the appraisers may make mistakes of fact or judgment, which adversely affect the reliability of their appraisals. In addition, events occurring after the initial appraisal may cause the value of the real estate to increase or decrease. For example, since 2020 and in light of the prevalence of hybrid work arrangements and associated lower occupancy rates, the value of commercial real estate secured by office properties has generally declined. As a result of these factors, the real estate securing some of Mechanics’ loans may be less valuable than anticipated at the time the loans were made. If a default occurs on a loan secured by real estate that is less valuable than originally estimated, then Mechanics may not be able to recover the outstanding balance of the loan and will suffer a loss.

**Some of the small- to medium-sized businesses that Mechanics lends to may have fewer resources to weather adverse business developments, which may impair Mechanics’ borrowers’ ability to repay loans.**

Mechanics targets its business development and marketing strategy to serve the banking and financial services needs of its community, including small- to medium-sized businesses and real estate owners. These small- to medium-sized 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