Mechanics Bancorp (MCHB) M&A Announcement summary

Deal rationale and strategic fit

• Merger creates a premier, publicly traded West Coast bank with a full footprint from San Diego to Seattle, making it the third largest regional bank by deposits in California and Seattle, with virtually no branch overlap and strong market share in key cities.

• Combined entity will have $23 billion in pro forma assets and a top-3 deposit share in California and Seattle markets.

• Both banks have complementary business models, conservative risk cultures, and a focus on core deposit funding and relationship banking.

• Ford Financial Fund's experience and alignment with public investors support long-term value creation.

• HomeStreet shareholders retain participation in future upside, with improved KPIs and no expected branch closures.

Financial terms and conditions

• All-stock transaction values HomeStreet at $300 million and Mechanics Bank at $3.3 billion pre-transaction; HomeStreet issues 212.5 million shares to Mechanics shareholders.

• Post-close, Mechanics shareholders will own 91.7% and HomeStreet shareholders 8.3% of the combined company.

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

• Mechanics Bank is the accounting acquirer; HomeStreet's balance sheet will be fair valued.

• No special dividends are planned; high payout ratio of quarterly earnings is targeted.

Synergies and expected cost savings

• $82 million in annual non-interest expense reductions targeted (42% of HomeStreet's 2024 expense base), mainly from back office, vendor, and shared service overlaps.

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

• Additional $52 million after-tax net income in 2026 from fair value marks on HomeStreet's assets.

• EPS accretion of 23% for HomeStreet shareholders in 2026.