Company: MCHB
Filing Date: 2025-04-15
Form Type: ARS
Source: 0001518715-25-000069
Chunk: 105

Company: Mechanics Bancorp
Filing Date: 2025-04-15
Form: ARS
Chunk 105
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 based on third-party appraisals that consider recent sales of comparable properties, including their income-generating characteristics, adjusted (generally based on unobservable inputs) to reflect the general assumptions that a market participant would make when analyzing the property for purchase. The Company uses a fair value of collateral technique to apply adjustments to the appraisal value of certain commercial LHFI that are collateralized by real estate. The Company uses a fair value of collateral technique to apply adjustments to the stated value of certain commercial LHFI that are not collateralized by real estate and to the appraisal value of OREO. Residential properties are generally based on unadjusted third-party appraisals. Factors considered in determining the fair value include geographic sales trends, the value of comparable surrounding properties as well as the condition of the property. These adjustments include management assumptions that are based on the type of collateral dependent loan and may increase or decrease an appraised value. Management adjustments vary significantly depending on the location, physical characteristics and income producing potential of each individual property. The quality and volume of market information available at the time of the appraisal can vary from period-to-period and cause significant changes to the nature and magnitude of the unobservable inputs used. Given these variations, changes in these unobservable inputs are generally not a reliable indicator for how fair value will increase or decrease from period to period. The following tables presents assets classified as Level 3 assets that had changes in their recorded fair value during 2024 and 2023 and what we still held at the end of the respective reporting period: (in thousands) Fair Value Total Gains (Losses) As of or for the year ended December 31, 2024 LHFI (1) $ 3,269 $ (3,114) As of or for the year ended December 31, 2023 LHFI (1) $ 4,349 $ (1,410) (1) Represents the carrying value of loans for which adjustments are based on the fair value of the collateral. 84

Fair Value of Financial Instruments The following presents the carrying value, estimated fair value and the levels of the fair value hierarchy for the Company's financial instruments other than assets and liabilities measured at fair value on a recurring basis: At December 31, 2024 (in thousands) Carrying Value Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 406,600 $ 406,600 $ 406,600 $ — $ — Investment securities HTM 2,301 2