HomeStreet (HMST) M&A Announcement summary

Deal rationale and strategic fit

• The merger creates a premier, publicly traded West Coast bank with a $23 billion asset base, 168 branches, and a top-3 deposit share in California and Seattle, with virtually no branch overlap and strong market share in key cities.

• Both organizations have complementary business models, conservative underwriting, and a focus on core, low-risk assets, with a shared commitment to community and customer service.

• The deal leverages Mechanics' strong deposit franchise and HomeStreet's loyal customer base, enhancing scale and competitive positioning against larger banks.

• Ford Financial Fund's deep M&A experience and strong regulatory relationships support the transaction.

• Strategic focus on operational excellence, technology investment, and prudent lending, with continued M&A opportunities.

Financial terms and conditions

• All-stock transaction values HomeStreet at $300 million and Mechanics Bank at $3.3 billion, with HomeStreet shareholders owning 8.3% and Mechanics shareholders 91.7% of the combined company.

• HomeStreet issues 212.5 million shares to Mechanics shareholders; pro forma diluted shares: 231.7 million.

• Ford Financial Fund and affiliates will own approximately 74.3% of the combined company.

• The combined bank will operate under the Mechanics Bank name, with one HomeStreet director joining the board and HomeStreet's CEO serving as a consultant for two years.

• Pro forma capital at close: Tier 1 leverage 8.3%, CET1 12.4%, total risk-based capital 14.4%.

Synergies and expected cost savings

• $82 million in pre-tax cost synergies targeted, representing 42% of HomeStreet's 2024 non-interest expense, mainly from back office, vendor, and shared service redundancies.

• $59 million after-tax cost savings expected, with 90% phased in by Q2 2026.

• $52 million incremental net interest income from balance sheet repositioning.

• Full cost savings are expected by the end of Q2 2026.