Mar. 31 at 11:25 AM
$HMST Mechanics Bank, HomeStreet announce all-stock business combination
Mechanics Bank and HomeStreet jointly announced that they have entered into a definitive merger agreement providing for an all-stock business combination between HomeStreet and Mechanics Bank. Under the terms of the merger agreement, which was unanimously approved by the boards of directors of both companies, HomeStreet Bank will be merged with and into Mechanics Bank, with Mechanics Bank surviving as a banking corporation incorporated under the laws of the State of California and as a wholly owned subsidiary of HomeStreet.
Existing shareholders of Mechanics Bank will receive common stock in HomeStreet in exchange for their Mechanics Bank shares. Upon completion of the merger, HomeStreet will be renamed Mechanics Bancorp and remain a publicly traded company. The transaction will expand Mechanics Bank's West Coast footprint and create a combined company with 168 branches and
$23 billion in assets.
The transaction values HomeStreet at a pre-transaction estimated equity value of
$300M and Mechanics Bank at a pre-transaction estimated equity value of
$3.3B. Upon completion of the merger, existing HomeStreet shareholders are expected to own approximately 8.3% of the combined company, and the remaining ownership of approximately 91.7% will be held by legacy Mechanics Bank shareholders, with Ford Financial Fund and its affiliates owning approximately 74.3% of the combined company.
The board of directors of the combined company will consist of directors of Mechanics Bank and one director of HomeStreet, to be named at a later date. The officers of Mechanics Bank will be the officers of the combined company. Mark Mason, chairman, president and CEO of HomeStreet, will remain with the combined company in a consulting capacity. The transactions contemplated by the merger agreement are subject to customary closing conditions, including the receipt of regulatory approvals and approval by HomeStreet's and Mechanics Bank's shareholders.
Ford Financial Fund and its affiliates and certain other shareholders of Mechanics Bank have entered into support agreements agreeing, among other things, to vote their shares in favor of the Merger, which collectively represent the required vote of Mechanics Bank shareholders. The merger is expected to close in the third quarter of 2025.
