Mechanics Bank and HomeStreet Announce $3.6 Billion Merger to Expand West Coast Presence

In a move that will reshape the banking landscape along the West Coast, Mechanics Bank and HomeStreet, Inc. (NASDAQ: HMST) have announced a definitive all-stock merger agreement, creating a $23 billion banking powerhouse spanning California, Washington, Oregon, and Hawaii.

Under the terms of the agreement, HomeStreet Bank will merge with Mechanics Bank, with Mechanics surviving as a banking corporation incorporated under California law. The newly combined entity, which will be publicly traded, will operate under the name Mechanics Bancorp upon completion of the deal.

Mechanics Bank, a 120-year-old community banking institution headquartered in Walnut Creek, California, currently holds $16 billion in assets and operates 112 branches throughout the state. HomeStreet Bank, founded in 1921, brings an additional 56 branches across Washington, Oregon, Southern California, and Hawaii, along with approximately $8 billion in assets.

The merger will result in a combined bank with 168 branches and a strong foothold from San Diego to Seattle, significantly expanding Mechanics Bank’s market presence across the West Coast.

“This is a very significant milestone for Mechanics Bank,” said Carl B. Webb, Chairman of Mechanics Bank’s board of directors. “Through this transaction, we extend our market presence with a full West Coast footprint, from San Diego to Seattle, and position ourselves as a publicly traded bank holding company for future opportunities.”

The transaction values HomeStreet at $300 million in pre-transaction equity and Mechanics Bank at $3.3 billion. Upon closing, HomeStreet shareholders will own 8.3% of the newly combined company, while legacy Mechanics Bank shareholders will retain 91.7% ownership. The deal is heavily backed by Ford Financial Fund, which, along with its affiliates, will control 74.3% of the merged entity.

“This merger validates the intrinsic value of HomeStreet’s loyal customer base, strong management, and dynamic markets,” said Mark Mason, Chairman, President, and CEO of HomeStreet. “We believe this merger will improve our customers’ experiences and create new opportunities for many of our employees.”

Following the merger, the board of directors will be primarily composed of Mechanics Bank executives, with one director from HomeStreet joining. The executive leadership team of Mechanics Bank will remain in place, while Mark Mason will stay on in a consulting capacity.

C.J. Johnson, CEO and President of Mechanics Bank, described the deal as “strategically and financially compelling” for shareholders of both institutions, emphasizing a thorough due diligence process and a shared commitment to strong credit cultures and community service.

The merger remains subject to regulatory approval and shareholder votes from both companies. However, Ford Financial Fund and other key shareholders have already agreed to support the deal, ensuring Mechanics Bank’s approval.

If all approvals proceed as expected, the merger is anticipated to close in the third quarter of 2025, solidifying Mechanics Bancorp’s status as a major regional banking force across the West Coast.

David Thompson
UCW Newswire