FirstSun Capital Bancorp and HomeStreet enter into a definitive merger agreement

FirstSun Capital Bancorp, the holding company of Dallas-based Sunflower Bank, and Seattle-based HomeStreet, the holding company of HomeStreet Bank, jointly announced that they have entered into a definitive merger agreement, which was unanimously approved by the board of directors of both companies. Under the terms of the agreement, HomeStreet and HomeStreet Bank will merge with and into FirstSun and Sunflower Bank, respectively, with HomeStreet Bank continuing to operate under its tradename in its current markets. Under the terms of the agreement, the companies will combine in an all-stock transaction in which HomeStreet shareholders will receive 0.4345 of a share of FirstSun common stock for each share of HomeStreet common stock which represents a value of $14.75 per share representing a 37% premium to the closing price per share of HomeStreet Shares on January 12. The combined entity is expected to be listed on the NASDAQ upon closing. FirstSun also announced that it has entered into investment agreements with investors to raise capital to support the merger, led by Wellington Management. In aggregate, $175M of common stock will be issued to those Investors: $80M of which will be issued to Wellington immediately following today’s merger announcement, and (b) the remaining $95M of which will be issued concurrently with, and subject to, closing of the merger. The proceeds of this capital are expected to support the pro forma company’s balance sheet, resulting in CET1 of 9%+ pro forma at the consolidated BHC level and 10%+ at the bank level. Upon completion of the merger, the shares issued to HomeStreet shareholders are expected to comprise 22% of the outstanding shares of the combined company, the shares issued to Investors in the common stock issuance are expected to represent 14% of the combined company, and the expected remaining ownership of 64% will be held by legacy FirstSun common shareholders. In the equity capital raise transaction, FirstSun will sell approximately 2.46 million shares of its common stock at an issuance price of $32.50 per share at the announcement of the merger and 2.92 million shares of its common stock at an issuance price of $32.50 per share at the closing of the merger. The parties expect the closing of the merger to occur in the middle of 2024. Stephens served as financial advisor and rendered a fairness opinion to FirstSun’s board of directors and Nelson Mullins Riley & Scarborough LLP served as legal counsel to FirstSun. Keefe Bruyette and Woods, A Stifel Company, served as financial advisor and rendered a fairness opinion to HomeStreet’s board of directors and Sullivan and Cromwell served as legal counsel to HomeStreet. Schulte, Roth & Zabel served as legal advisor to Wellington Management. Latham & Watkins served as legal advisor to Keefe Bruyette and Woods, A Stifel Company.