Company: MCHB
Filing Date: 2025-07-03
Form Type: S-4
Source: 0001140361-25-024872
Chunk: 91

Company: Mechanics Bancorp
Filing Date: 2025-07-03
Form: S-4
Chunk 91
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, unemployment, natural disasters, supply chain disruptions or other factors, may affect Mechanics’ profitability more significantly and more adversely than Mechanics’ competitors that are less geographically concentrated and could have a material adverse effect on Mechanics’ results of operations and financial condition.

The trade policies and potential tariff initiatives being pursued by the U.S. government may present risks to Mechanics’ borrowers and the markets within which Mechanics operates, particularly with respect to the threatened imposition of additional tariffs on certain products imported from countries such as Mexico, Canada and China, which are significant international trading partners for the California economy. The imposition of tariffs on imports, the potential for retaliatory tariffs by foreign governments, or other similar restrictions on international trade could increase costs for manufacturers and resellers, reduce demand for U.S. exports and disrupt supply chains. Prolonged trade tensions or the implementation of tariffs could negatively impact the broader economic environment, potentially leading to reduced consumer spending, lower economic growth, and decreased demand for other banking products and services. As a result, Mechanics’ financial performance, including credit quality and loan growth, could be adversely affected by these policy changes.

**An adverse change in real estate market values may result in losses and otherwise adversely affect profitability.**

Many loans in Mechanics’ portfolio contain commercial or residential real estate as the primary component of collateral. The real estate collateral in such cases provides a source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended. A decline in commercial or residential real estate values generally, and in California specifically, could impair the value of the collateral underlying a significant portion of Mechanics’ loan portfolio and ability to sell the collateral upon any foreclosure. In the event

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of a default with respect to any of these loans, the amounts Mechanics receives upon sale of the collateral may be insufficient to recover the outstanding principal and interest on the loan. As a result, Mechanics’ results of operations and financial condition may be materially adversely affected by a decrease in real estate market values.

**Mechanics relies upon independent appraisals to determine the value of the real estate that secures a substantial portion of Mechanics’ loans, and the values indicated by such appraisals may not be realizable if Mechanics is forced to foreclose upon such loans.**

A substantial portion of Mechanics’ loan portfolio consists of loans secured by real estate. Mechanics relies upon appraisers at the time of origination to estimate the value of such real estate. App