Company: MCHB
Filing Date: 2025-07-15
Form Type: S-4/A
Source: 0001140361-25-025920
Chunk: 85

Company: Mechanics Bancorp
Filing Date: 2025-07-15
Form: S-4/A
Chunk 85
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 provision for credit losses, the carrying value of Mechanics’ deferred tax assets, Mechanics’ capital levels and liquidity, and Mechanics’ results of operations. Several factors could pose risks to the financial services industry, including tightening monetary policies by central banks, rising energy prices, trade wars, restrictions and tariffs; slowing growth in emerging economies; geopolitical matters, including international political unrest, disturbances and conflicts; acts of war and terrorism; pandemics; changes in interest rates; regulatory uncertainty; continued infrastructure deterioration; low oil prices; disruptions in global or national supply chains; and natural disasters. Each of these factors may adversely affect Mechanics’ fees and costs. Over the last several years, there have been several instances where there has been uncertainty regarding the ability of Congress and the President collectively to reach agreement on federal budgetary and spending matters. A period of failure to reach agreement on these matters, particularly if accompanied by an actual or threatened government shutdown, may have an adverse impact on the U.S. economy. Additionally, a prolonged government shutdown may inhibit Mechanics’ ability to evaluate borrower creditworthiness and originate and sell certain government-backed loans. Mechanics’ business is subject to interest rate risk, and fluctuations in interest rates may adversely affect Mechanics’ earnings, capital levels and overall results. Mechanics is subject to significant risk from changes in interest rates. Between August 2019 and March 2020, the Federal Open Market Committee of the Federal Reserve Board decreased its target range for the federal funds rate by 200 basis points, while between March 2022 and December 2023, it raised the target range for the federal funds rate by 525 basis points. Between September 2024 and December 2024, the Federal Reserve Board decreased its target range for the federal funds rate by 100 basis points and indicated that further changes may occur in 2025. Changes in interest rates have in the past and may continue to impact Mechanics’ net interest income in the future as well as the valuation of its assets and liabilities. Mechanics’ earnings are significantly dependent on its net interest income, which is the difference between interest income on interest-earning assets, such as loans and securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings. Mechanics expects to periodically experience “gaps” in the interest rate sensitivities of its bank assets and liabilities, meaning that either Mechanics’ interest-bearing liabilities will be more sensitive to changes in market interest rates than Mechanics’ interest-earning assets, or vice versa. In either event, if market interest rates should move contrary to Mechanics’