Mechanics Bank and HomeStreet, the holding company of HomeStreet Bank, announced that they have entered into a definitive merger agreement, paving the way for an all-stock business combination between the two financial institutions. The unanimously approved merger by both boards of directors will integrate HomeStreet Bank into Mechanics Bank, with the latter surviving as a banking corporation under California law and becoming a wholly owned subsidiary of HomeStreet. The combined entity will be publicly traded under the name Mechanics Bancorp.
Under the terms of the agreement, existing shareholders of Mechanics Bank will receive common stock in HomeStreet in exchange for their shares. Upon completion of the transaction, HomeStreet shareholders will hold approximately 8.3% of the combined company, while legacy Mechanics Bank shareholders will own 91.7%, including Ford Financial Fund and its affiliates, which will control approximately 74.3%.
Founded in 1905, Mechanics Bank is a full-service community bank headquartered in Walnut Creek, California, operating 112 branches across the state with assets exceeding $16 billion. HomeStreet, founded in 1921, has a network of 56 branches spanning Washington, Oregon, Southern California, and Hawaii, managing approximately $8 billion in assets.
The merger will create a regional banking powerhouse with:
- 168 branches across the West Coast
- $23 billion in combined assets
- Stronger market share in key financial hubs from San Diego to Seattle
The transaction values HomeStreet at an estimated $300 million and Mechanics Bank at $3.3 billion. Upon completion, the combined entity will benefit from:
- An expanded branch network and stronger deposit base
- A well-diversified, conservatively underwritten loan portfolio
- Enhanced wealth management and trust services
- Opportunities for employees and talent retention
“This is a significant milestone for Mechanics Bank,” said Carl B. Webb, Chairman of Mechanics Bank. “Through this transaction, we will establish a full West Coast footprint and transition into a publicly traded bank holding company, positioning us for future opportunities.”
Mark Mason, Chairman, President & CEO of HomeStreet, who will remain in a consulting capacity post-merger, added, “This merger highlights the intrinsic value of HomeStreet’s loyal customer base and strong management. It enhances our ability to deliver superior banking services while creating long-term value for our shareholders.”
Following the merger, the board of directors will be composed primarily of Mechanics Bank directors, with one HomeStreet director to be named later. C.J. Johnson, CEO & President of Mechanics Bank, emphasized that a thorough due diligence process had been completed and that HomeStreet’s clients and employees would be welcomed into the Mechanics Bank family.
The merger is subject to customary regulatory approvals and shareholder approvals from both institutions. Ford Financial Fund and key Mechanics Bank shareholders have already entered into support agreements, securing the necessary votes for Mechanics Bank’s approval.
The transaction is expected to close in Q3 2025.
