Company: MCHB
Filing Date: 2025-07-03
Form Type: S-4
Source: 0001140361-25-024872
Chunk: 237

Company: Mechanics Bancorp
Filing Date: 2025-07-03
Form: S-4
Chunk 237
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Illustrative Pro Forma Combined Dividend Discount Model Analysis. KBW performed an illustrative dividend discount model analysis of the pro forma combined company. In this analysis, KBW used financial forecasts and projections relating to the earnings and assets of Mechanics provided by Mechanics management, financial forecasts and projections relating to the earnings and assets of HomeStreet provided by HomeStreet management, and pro forma assumptions (including, without limitation, the cost savings expected to result from the merger as well as certain purchase accounting adjustments and other merger-related adjustments and restructuring charges assumed with respect thereto) provided by Mechanics management, and KBW assumed discount rates ranging from 13.0% to 15.0% based on the capital asset pricing model and the professional judgment of KBW. An illustrative range for the implied equity value of the pro forma combined company was derived by adding (i) the present value of the implied future excess capital available for dividends that the pro forma combined company could generate over the period from September 30, 2025 through December 31, 2030 and (ii) the present value of the pro forma combined company’s implied terminal value at the end of such period, in each case applying the pro forma assumptions. This analysis utilized the assumptions provided by HomeStreet management that the pro forma combined company would maintain a tangible common equity to tangible assets ratio of 8.00% and would retain sufficient earnings to maintain that level. In calculating implied terminal values of the pro forma combined company, KBW applied a range of 12.0x

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to 16.0x the pro forma combined company’s estimated 2030 earnings based on similar multiples for comparable companies and the professional judgment of KBW. This dividend discount model analysis resulted in an illustrative range of implied values for each share of the combined company that existing HomeStreet shareholders would have as a result of the merger of $15.07 to $19.91.

The dividend discount model analysis is a widely used valuation methodology, but the results of such methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values, and discount rates. The foregoing dividend discount model analysis did not purport to be indicative of the actual values or expected values of Mechanics or the pro forma combined company.

Miscellaneous . KBW acted as financial advisor to HomeStreet in connection with the merger and did not act as an advisor to or agent of any other person. As part of its