HomeStreet (HMST) M&A Announcement summary

Deal rationale and strategic fit

• The merger creates a premier, publicly traded West Coast bank with a footprint from San Diego to Seattle, $23 billion in pro forma assets, and top-3 deposit share in California and Seattle markets, with virtually no branch overlap.

• Both banks have complementary business models, conservative risk cultures, and a focus on core deposit funding, enabling efficient competition against larger banks and enhancing scale and profitability.

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

• The deal is positioned as a unique, non-traditional merger with a structure designed for long-term value creation and strategic optionality.

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

Financial terms and conditions

• All-stock transaction values HomeStreet at $300 million and Mechanics at $3.3 billion; HomeStreet issues 212.5 million shares to Mechanics shareholders, resulting in a 91.7%/8.3% ownership split.

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

• Pro forma assets of $23 billion, with projected GAAP earnings of $302 million in 2026 and $325 million in 2027.

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

• HomeStreet will be renamed Mechanics Bancorp and remain publicly traded; Mechanics is the accounting acquiror.

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 systems overlap.

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

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

• Additional value from running off $1 billion of high-cost CDs and leveraging Mechanics' low-cost deposit base.

• Cost savings are expected to be fully realized by the end of Q2 2026.