Company: MCHB
Filing Date: 2025-07-16
Form Type: 424B3
Source: 0001140361-25-026051
Chunk: 77

Company: Mechanics Bancorp
Filing Date: 2025-07-16
Form: 424B3
Chunk 77
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 (“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, 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