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BUSINESS COMBINATION (Tables) | 9 Months Ended
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Sep. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] |
Schedule of Equity Interest Transferred In Merger |
|  | Company |  | Mechanics Bank
Shares of voting common stock outstanding and converted to shares as of September 2, 2025 |  | 18,920,808 |  | 60,859
Shares of PSUs outstanding that vested and converted to shares as of September 2, 2025 |  | 243,096 |  | —
Shares of voting common stock outstanding and converted to shares as of September 2, 2025, after PSU vesting |  | 19,163,904 |  | 60,859
Fixed exchange ratio |  |  |  | 3,301.0920
Shares of non-voting common stock outstanding as of September 2, 2025 |  |  |  | 3,376
Fixed exchange ratio |  |  |  | 330.1092
Company shares issued to Mechanics Bank shareholders |  |  |  | 202,015,832
Company Ownership as of September 2, 2025 |  | Number of Shares |  | Percentage Ownership
Mechanics Bank shareholders |  | 202,015,832 |  | 91.34%
Company shareholders |  | 19,163,904 |  | 8.66%
|  | 221,179,736 |  | 100%
Ratio of Company to Mechanics Bank |  |  |  | 9%
Reverse Acquisition Purchase Price Determination |  |  |  |
Number of Mechanics Bank shares issued to Company shareholders |  |  |  | 19,163,904
Company price per share as of August 29, 2025 |  |  |  | $13.87
Purchase price for accounting purposes |  |  |  | $265,803,348
Schedule Of Business Combination, Recognized Asset Acquired and Liability Assumed | The following table provides the preliminary purchase price allocation and the assets acquired and liabilities assumed at their estimated fair values as of the Merger date, resulting in a preliminary bargain purchase gain of $90.4 million. The preliminary bargain purchase gain resulted from a combination of factors. First, HomeStreet was a company in financial distress, losing $27.5 million after-tax in 2023, $144.3 million after-tax in 2024 and $8.9 million across the first two quarters of 2025. As such, public market investors priced its shares at a significant discount to HomeStreet’s reported tangible book value. Second, HomeStreet was subject to a failed merger attempt with FirstSun Capital Bancorp in 2024. This failed merger occurred due to an inability to obtain regulatory approval, which may have contributed to the sense of financial distress around the company. Any failed merger causes difficulty retaining key employees, which may have contributed to HomeStreet’s desire to find a new merger partner quickly. Third, HomeStreet recorded a valuation allowance in 2024 against its deferred tax asset due to uncertainty surrounding its prospects of achieving future profitability. However, Mechanics Bancorp is a profitable company and expects to be able to utilize the deferred tax assets acquired from HomeStreet over time. $81.4 million of the net assets acquired from HomeStreet came from deferred tax assets, which significantly contributed to the $90.4 million preliminary bargain purchase gain. The estimates of fair value were recorded based on initial valuations at the Merger date and these estimates, including initial accounting for deferred taxes, are considered preliminary as of September 30, 2025 and subject to adjustment for up to one year after the Merger date. In many cases, the determination of fair value required management to make estimates about discount rates, expected future cash flows, market conditions and other future events that are highly subjective in nature and subject to change. Additional information may be obtained during the measurement period that could result in changes to the estimated fair value amounts, and that could result in adjustments to the valuation amounts presented herein. These estimates are considered preliminary as of September 30, 2025, are subject to change for up to one year after the Merger date, and any changes could be material. The measurement period ends on the earlier of one year after the Merger date or the date the Company concludes that all necessary information about the facts and circumstances that existed as of the Merger date have been obtained.
(in thousands) | September 2, 2025
Net assets identified |  |
Purchase price consideration |  | $265,803
Fair value of assets acquired: |  |
Cash and cash equivalents | $156,890 |
Total investment securities | 1,028,627 |
Loans held for sale | 39,489 |
Loans held for investment | 5,625,463 |
Allowance for credit losses | (63,494) |
Mortgage servicing rights | 89,704 |
Premises and equipment, net | 31,979 |
Other intangible assets, net | 114,207 |
Deferred tax assets | 81,420 |
Other assets | 283,208 |
Total assets acquired | $7,387,493 |
Fair value of liabilities assumed: |  |
Deposits | $5,743,725 |
FHLB advances | 1,005,370 |
Long-term debt | 193,466 |
Accrued interest payable and other liabilities | 88,766 |
Total liabilities assumed | $7,031,327 |
Net assets acquired |  | 356,166
Bargain purchase gain |  | $90,363
Schedule Of Financing Receivable, Purchased With Credit Deterioration | The following table provides a summary of these PCD loans at acquisition:
(in thousands) | September 2, 2025
Principal of PCD loans acquired | $2,956,577
PCD ACL at acquisition | (63,494)
Non-credit discount on PCD loans | (108,617)
Fair value of PCD loans | $2,784,466
Schedule of Expenses Related to Merger | The following table shows the amount of the expenses related to the Merger for the quarter and nine months ended September 30, 2025:
(in thousands) | Quarter Ended September 30, 2025 |  | Nine Months Ended September 30, 2025
Severance and employee related | $27,795 |  | $27,795
Legal and professional | 11,947 |  | 17,683
System conversion, integration and other | 24,127 |  | 24,380
| $63,869 |  | $69,858
Schedule Of Business Combination, Pro Forma Information | The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three and nine months ended September 30, 2025 and 2024, respectively, as if the Merger had been completed on January 1, 2024, after giving effect to certain purchase accounting adjustments, primarily related to the preliminary bargain purchase gain, amortization of intangible assets and non-recurring transaction costs. These pro forma results have been prepared for comparative purposes only and are based on estimates and assumptions that have been made solely for purposes of developing such pro forma information and are not necessarily indicative of what the Company’s operating results would have been, had the acquisitions actually taken place at the beginning of the previous annual period.
| Quarter Ended September 30, |  | Nine Months Ended September 30,
(in thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Net interest income | $171,854 |  | $290,698 |  | $502,713 |  | $878,684
Noninterest income (loss) | 117,263 |  | 26,994 |  | 178,812 |  | (37,220)
Net income before income taxes (1) | 38,205 |  | 170,919 |  | 144,157 |  | 337,865
(1) The pro forma net income before income taxes includes $69.9 million of acquisition and integration costs from the Merger for the nine months ended September 30, 2024.

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