Dallas-Based FirstSun and Seattle-Based HomeStreet Announce Merger

The holding companies of Dallas’ Sunflower Bank and Seattle’s HomeStreet Bank, FirstSun Capital Bancorp (FirstSun) and HomeStreet, Inc.(HomeStreet), respectively, have entered into a definitive all-stock merger agreement. The deal, which both companies’ board of directors unanimously approved, sees HomeStreet becoming a part of FirstSun and Sunflower Bank, though it will continue to operate under its current name in existing markets.

The transaction entails the exchange of HomeStreet’s common shares for 0.4345 of a share of FirstSun’s common stock. This arrangement values each HomeStreet common stock at $14.75, which represents a 37% premium on the closing price per share of HomeStreet Shares as of January 12, 2024. The combined organization is set to be listed on NASDAQ.

FirstSun also outlined plans to raise $175 million in common equity, with Wellington Management leading the investment. The raised capital will assist the merger, with $80 million issued to Wellington following the merger announcement and the remaining $95 million issued upon the merger’s closure.

Projected to constitute a premier regional bank post-merger, the combined firm will hold approximately $17 billion in assets and oversee 129 branch locations across the United States. As part of the managerial changes, Mark Mason, the current Executive Chairman, President & CEO of HomeStreet, will serve as the Executive Vice Chairman in the newly merged company.

Both companies’ management expressed optimism about the merger. Mollie Hale Carter, Executive Chairman of FirstSun, stated that the merger would enhance their growth and shareholder value creation capabilities. Mark Mason also lauded the merger, citing expected improvements in customer experience, new opportunities for employees, and shareholder value creation as the major benefits of the union.

Nick Adams, a Wellington Management portfolio manager, also expressed support for the merger, stating his firm’s belief in the potential for shareholder growth through the merging of the companies and their respective management teams.

The merger aims to take advantage of the fast-growing markets in the central and western U.S., where both firms maintain a strong presence. The combined company is expected to deliver total assets of around $17 billion in 2025, along with positive figures in Tangible Common Equity to Tangible Assets Ratio, Common Equity Tier 1 Capital Ratio, and Net Interest Margin.

The merger is anticipated to be concluded by mid-2024, dependent on the satisfaction of closing conditions and regulatory approvals. Shares issued to HomeStreet and investor shares from the common stock issuance are expected to make up 22% and 14% of the combined company, respectively. The remaining 64% would be held by legacy FirstSun common shareholders.

Source: Press Release