Bank holding companies FirstSun Capital Bancorp and HomeStreet Inc. have agreed to merge, conjoining their respective banks Sunflower Bank and HomeStreet Bank in an all-stock deal.
Under the agreement, unanimously approved by the boards at both companies, HomeStreet Bank will continue to operate under its original moniker in its current markets.
Upon close, the deal will create a 129-branch regional bank with $17 billion in total assets across high-growth markets, including FirstSun’s current presence in the Southwest and HomeStreet’s presence in Southern California, Hawaii and the Pacific Northwest.
FirstSun is headquartered in Denver, with Sunflower headquartered in Dallas. HomeStreet is headquartered in Seattle.
“We are very confident that this merger will enhance our ability to deliver stronger and more sustainable growth with greater earnings power and shareholder value creation to our combined shareholders. Each entity brings a presence in large, dynamic markets that are ripe for future organic growth,” said Mollie Hale Carter, executive chairman of FirstSun and Sunflower.
“The combination of FirstSun and HomeStreet creates a premier midcap bank in the nation’s best markets and an opportunity to deploy FirstSun’s proven playbook of C&I focused growth,” Carter said. “FirstSun is excited about the strategic synergies of this merger and the opportunities created to deliver strong sustainable growth and superior shareholder value creation. The HomeStreet team brings additional talent to enhance our specialty business line capabilities across this expanded footprint.”
In August, Bloomberg reported that HomeStreet was exploring options, including a potential sale, after its stock lost roughly two-thirds of its value last year amid the rising rate environment.
Carter will retain her current role at the company, as will FirstSun CEO Neal Arnold. HomeStreet CEO Mark Mason will serve as executive vice chairman at the combined company. Three HomeStreet directors, including Mason, will join the combined company’s board.
The combined firm will have “an attractive and comprehensive product suite and market footprint as well as a more diversified loan portfolio and increased lending capabilities across asset classes, geographies and industry verticals,” Mason said in a prepared statement.
FirstSun raised $175 million in capital to support the merger. Wellington Management led the equity raise, and upon the announcement of the merger Wellington received $80 million in common stock. The remainder will be issued to investors when the deal closes.
HomeStreet shareholders will receive 0.4345 of a share of FirstSun common stock per their share of HomeStreet common stock. Upon completion, they are expected to receive 22% shares of the combined company. Sixty-four percent will be issued to legacy FirstSun shareholders, and 14% will be issued to investors in the equity raise.
