Mechanics Bank and HomeStreet have announced an all-stock merger, which will create a combined entity with $23bn in assets and168 branches.
The deal values HomeStreet at $300m and Mechanics Bank at $3.3bn in equity.
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It will see HomeStreet Bank merging with and into Mechanics Bank, which will become a fully owned subsidiary of HomeStreet.
HomeStreet will be renamed Mechanics Bancorp post-merger, while remaining publicly traded.
Post-merger, HomeStreet shareholders are expected to own about 8.3% of the combined entity, while legacy Mechanics Bank shareholders will hold around 91.7%, with Ford Financial Fund and its affiliates owning roughly 74.3%.
HomeStreet, founded in 1921 with 56 branches across Washington, Oregon, Southern California, and Hawaii, brings approximately $8bn in assets to the table.
Mechanics Bank, a 120-year-old institution based in Walnut Creek, California, has 112 branches and more than $16bn in assets.
In 2019, Mechanics Bank acquired Rabobank NA for $2.1bn, expanding its US retail, business banking, mortgage, and wealth management services.
Mechanics Bank board of directors’ chairman Carl Webb said: “This is a very significant milestone for Mechanics Bank and we are excited through this transaction to extend our market presence with a full West Coast footprint from San Diego to Seattle.”
The combined company’s board will include directors from Mechanics Bank and one director from HomeStreet, to be named later.
Mechanics Bank’s officers will lead the new entity, while HomeStreet’s chairman, president, and CEO, Mark Mason, will serve in a consulting role.
Mason said: “This merger validates the intrinsic value of HomeStreet’s loyal customer base, strong management and dynamic markets in which we operate and allows our shareholders to participate in the benefits of the combination going forward.
“The combined company will have a strong branch footprint and deposit market share in the best markets in the west, strong core deposit funding, a well-diversified, conservatively underwritten loan portfolio and a growing wealth management and trust business.”
Subject to regulatory approvals and shareholder consent, the merger is anticipated to conclude in the third quarter of 2025.
Ford Financial Fund and its affiliates, along with certain other Mechanics Bank shareholders, have agreed to support the merger.
