Company: MCHB
Filing Date: 2025-07-03
Form Type: S-4
Source: 0001140361-25-024872
Chunk: 81

Company: Mechanics Bancorp
Filing Date: 2025-07-03
Form: S-4
Chunk 81
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 among other considerations: analysis of a borrower’s prior credit history, financial statements, tax returns, cash flow projections, valuations of collateral based on reports of independent appraisers and verifications of liquid assets. Although Mechanics believes that its underwriting criteria is appropriate for the various kinds of loans it makes, Mechanics may incur losses on loans that meet its underwriting criteria, and these losses may exceed the amounts set aside as reserves in Mechanics’ allowance for credit losses.

Bank regulatory agencies, as an integral part of their examination process, review Mechanics’ loans and allowance for credit losses. While Mechanics believes that its allowance for credit losses is adequate to cover potential losses, Mechanics cannot guarantee that future increases to the allowance for credit losses may not be required by regulators or other third-party loan review or financial audits. Any of these occurrences could materially and adversely affect Mechanics’ business, financial condition and results of operations.

**Adverse developments affecting the financial services industry, such as bank failures or concerns 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