Mechanics Bank in Walnut Creek, California, has agreed to acquire HomeStreet Bank from its holding company HomeStreet, Inc. in Seattle, Washington.

The all-stock deal values HomeStreet at $300 million, the companies said in a press release Monday.

The transaction will expand Mechanics Bank’s West Coast footprint and create a combined company with 168 branches and $23 billion in assets, Mechanics said in the release.

The merger is expected to close in the third quarter of 2025.

Upon completion of the deal, 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.

“This is a very significant milestone for Mechanics Bank and we are excited through this transaction to extend our market presence with a full West Coast footprint from San Diego to Seattle,” said Carl B. Webb, Chairman of the board of Mechanics Bank. “This strategic merger also provides us with the opportunity to become a publicly-traded bank holding company, which better positions Mechanics Bank for future opportunities.”

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.

“We believe this merger will improve our customers’ experiences and create new opportunities for many of our employees, enabling the company to retain and attract top talent,” Mason said in the release. “Both organizations share very similar banking strategies, strong credit cultures and a deep commitment to our customers, community service and being good corporate citizens.”

Mechanics Bank is a 120-year-old institution with 112 branches throughout California and more than $16 billion in assets.

Founded in 1921, HomeStreet operates 56 branches throughout Washington, Oregon, Southern California and Hawaii and has approximately $8 billion in assets.

HomeStreet reported a net loss of $123.3 million for the fourth quarter of 2024, compared to $7.3 million a year earlier. HomeStreet’s net losses for last year were $144.3 million.

The bank has reported losses for five consecutive quarters.

“The combined company will have a strong branch footprint and deposit market share in the best markets in the west, strong core deposit funding, a well-diversified, conservatively underwritten loan portfolio and a growing wealth management and trust business.”

 – Mark Mason
Chairman, President and CEO
HomeStreet Bank