Mechanics Bank And HomeStreet Announce Merger Agreement

(RTTNews) - Mechanics Bank and HomeStreet, Inc. (HMST) Monday announced that they have entered into a definitive all-stock merger agreement, unanimously approved by both companies' boards of directors.

Under this agreement, HomeStreet Bank will merge into Mechanics Bank, which will continue as a California-incorporated banking corporation and a wholly owned subsidiary of HomeStreet. Existing Mechanics Bank shareholders will receive HomeStreet common stock in exchange for their shares, and HomeStreet will be renamed Mechanics Bancorp while remaining publicly traded.

Mechanics Bank, a 120-year-old community bank based in Walnut Creek, California, operates 112 branches and holds over $16 billion in assets. HomeStreet, founded in 1921, has 56 branches across Washington, Oregon, Southern California, and Hawaii, with approximately $8 billion in assets. The merger will create a larger entity with 168 branches and $23 billion in assets, significantly expanding Mechanics Bank's presence along the West Coast.

The transaction values HomeStreet at an estimated $300 million in equity and Mechanics Bank at $3.3 billion. Following the merger, HomeStreet shareholders will own approximately 8.3% of the combined company, while legacy Mechanics Bank shareholders will hold 91.7%. Ford Financial Fund and its affiliates will maintain a controlling stake of about 74.3%.

The combined company's board will include Mechanics Bank's current directors along with one HomeStreet representative to be named later. Mechanics Bank's executive team will remain in place, while HomeStreet's Chairman, President, and CEO, Mark Mason, will take on a consulting role.

The merger is subject to regulatory approvals, as well as shareholder approval from both banks. Certain shareholders of Mechanics Bank, including Ford Financial Fund and its affiliates, have agreed to vote in favor of the transaction. The merger is expected to close in the third quarter of 2025.

Monday, HMST closed at $11.74, up 26.24%, and is currently trading at $11.79 in after-hours, reflecting a 0.43% increase on the Nasdaq Global Select Market.