Company: MCHB
Filing Date: 2025-07-03
Form Type: S-4
Source: 0001140361-25-024872
Chunk: 89

Company: Mechanics Bancorp
Filing Date: 2025-07-03
Form: S-4
Chunk 89
---
 operations and financial condition.**

Inflation rose sharply at the end of 2021 and continued rising into 2024 at elevated levels. While the rise in inflation has slowed during the latter half of 2024, inflationary pressures are still expected to remain elevated throughout 2025. Small- to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses. Consequently, the ability of Mechanics’ business customers to repay their loans may deteriorate, and, in some cases, this deterioration may occur quickly, which would adversely impact Mechanics’ results of operations and financial condition. Similarly, rising interest rates will negatively impact Mechanics’ mortgage business by making home mortgages more expensive for home buyers and by making mortgage refinancing transactions less likely, which would adversely impact Mechanics’ results of operations and financial condition. Furthermore, a prolonged period of inflation could cause wages and other costs to Mechanics to increase, which could adversely affect Mechanics’ results of operations and financial condition.

**Mechanics’ mortgage origination business is subject to fluctuations based upon seasonal and other factors.**

Mechanics’ mortgage origination business is subject to several variables that can impact loan origination volume, including seasonal and interest rate fluctuations. An increase in the general level of interest rates may, among other things, adversely affect the demand for mortgage loans and Mechanics’ ability to originate mortgage loans. In particular, if mortgage interest rates increase, the demand for residential mortgage loans and the refinancing of residential mortgage loans will likely decrease, which will have an adverse effect on Mechanics’ mortgage origination activities. Conversely, a decrease in the general level of interest rates, among other things, may lead to increased competition for mortgage loan origination business.

**The financial services industry is characterized by rapid technological change, and if Mechanics fails to keep pace, its business may suffer.**

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services, including increased usage of artificial intelligence and automation. Many of Mechanics’ competitors have substantially greater resources to invest in technological improvements. Mechanics may not be able to effectively or timely implement new technology-driven products and services or be successful in marketing these products and services to its customers and clients. Failure to successfully keep pace with technological change affecting the financial services industry and avoid interruptions, errors and delays could have a material adverse impact on Mechanics’ business, financial condition, results of operations or cash flows.

<div align='center'>44</div>

####