Combination will create a premier bank operating in the
nation’s best markets in the Southwest and West Coast
- Combined assets of approximately $17 billion
- Dallas, Texas headquartered bank with an extensive footprint in
6 of the top 10 fastest growing MSAs in the United States
- Top-tier performance metrics on a pro forma combined basis:
~1.4% ROA and ~17% ROATCE
- 30%+ accretion to FSUN’s 2025 estimated EPS
- $175 million equity raise, led by Wellington Management, is
fully committed
- Pro forma balance sheet well-positioned with a high-quality
combined deposit franchise and neutral interest rate risk
profile
- Highly experienced combined executive management team with
proven expertise in M&A
FirstSun Capital Bancorp (“FirstSun,” or the “Company”) (OTCQX:
FSUN), the holding company of Dallas-based Sunflower Bank, N.A.
(“Sunflower Bank”) and Seattle-based HomeStreet, Inc.
(“HomeStreet”) (Nasdaq: HMST), the holding company of HomeStreet
Bank (“HomeStreet Bank”) jointly announced today 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, 2024. The
combined entity is expected to be listed on the NASDAQ upon
closing.
FirstSun also announced today that it has entered into
investment agreements with investors to raise capital to support
the merger, led by Wellington Management (“Wellington”, and
combined the “Investors”). In aggregate, $175 million of common
stock will be issued to those Investors: (a) $80 million of which
will be issued to Wellington immediately following today’s merger
announcement, and (b) the remaining $95 million of which will be
issued concurrently with, and subject to, closing of the merger
(“acquisition equity”). 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.
Once completed, the merger will create a premier regional bank
with $17 billion in total assets and 129 branch locations across
some of the most attractive markets in the United States. The
expanded footprint complements FirstSun’s current presence in the
high growth markets of the Southwest to include HomeStreet’s strong
presence in Southern California, Hawaii, and other key markets in
the Pacific Northwest.
Mollie Hale Carter, Executive Chairman of FirstSun, and Neal
Arnold, CEO, President & Director of FirstSun, will retain
their current roles at the combined company. Mark Mason, who
currently serves as Executive Chairman, President & CEO of
HomeStreet, will serve as Executive Vice Chairman at the combined
company following the merger. Additionally, three current
HomeStreet directors, inclusive of Mr. Mason, will join the
combined company board of directors at closing.
“It brings us great excitement to welcome aboard HomeStreet’s
valued customers and associates,” said Mollie Hale Carter,
Executive Chairman of FirstSun and Sunflower. “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. 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. 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.”
Mark Mason, Chairman, CEO and President of HomeStreet said,
“This merger validates the intrinsic value of HomeStreet’s loyal
customer base, strong management and dynamic markets in which we
operate and allows our shareholders to participate in the benefits
of the combination going forward. The combined company 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. We believe this merger will also improve our customers’
experience and create new opportunities for our employees enabling
us to retain and attract top talent. Both organizations share
strong credit and risk management cultures and a deep commitment to
our customers, community service and being good corporate
citizens.”
“We are excited to be an anchor investor in the creation of a
new $17 billion asset bank serving customers in high growth markets
in the US,” said Nick Adams, portfolio manager, Wellington
Management. “We believe bringing together these companies and
combining their management teams will bolster the scale and
diversification of their business and create greater value for
shareholders.”
Strategic Benefits of the Transaction
- Operating in the largest and fastest growing markets:
Presence in 6 of the top 10 fastest growing MSAs in the United
States and a presence in 8 of the 10 largest Central and Western
United States MSAs.
- Complementary business lines and lending expertise:
Minimal geographic operating overlap between FirstSun and
HomeStreet provides for a complementary merger that combines a
strong C&I platform with an extensive multi-family lending
platform and two similarly sized single family lending
platforms.
- Combination of two top-tier core deposit franchises:
Granular deposit relationships with an emphasis on generating
low-cost, core deposits support overall growth prospects.
- Well-positioned balance sheet and revenue streams regardless
of macro-environment conditions: Interest rate neutral balance
sheet through combining an asset-sensitive FirstSun and a liability
sensitive HomeStreet, as well as a fully marked HomeStreet loan and
securities portfolio, and strong fee income sources, including
HomeStreet’s Fannie Mae Delegated Underwriter and Servicer
business.
- Material and immediate upside to current valuation:
Significant valuation upside as the combined company is expected to
generate profitability returns above peer levels.
Financial Benefits of the Merger
The financial benefits of the transaction are compelling, with
estimated 2025 EPS accretion of 30%+ and a < 2 years earn back
on tangible book value dilution. The pro forma combined company
financial metrics are based on management estimates for FirstSun
and HomeStreet, estimated combined company cost synergies,
anticipated purchase accounting adjustments, the expected merger
closing time-frame, and the capital raise. On a pro forma basis,
the business is expected to deliver compelling operating and return
metrics in 2025 with cost savings on a fully-phased in basis,
including:
- Total Assets of approximately $17 Billion
- Tangible Common Equity at Closing of approximately $1.2
Billion
- Tangible Common Equity to Tangible Assets Ratio of ~ 7.2%
- Common Equity Tier 1 Capital Ratio of ~ 9.1%
- Net Interest Margin of ~ 3.9%
- Fee Income to Total Revenue of ~ 22%
- Return on Average Assets of ~ 1.4%; and
- Return on Average Tangible Common Equity of ~ 17%
Transaction Details
FirstSun will be the legal and accounting acquirer and
HomeStreet and HomeStreet Bank will merge with and into FirstSun
and Sunflower Bank, respectively. HomeStreet Bank will continue to
operate under its name in its current markets of operation. Under
the terms of the merger agreement, HomeStreet shareholders will
receive 0.4345 of a share of FirstSun common stock for each share
of HomeStreet common stock.
In the equity capital raise transaction, FirstSun will sell
approximately (i) 2.46 million shares of its common stock at an
issuance price of $32.50 per share at the announcement of the
merger and (ii) 2.92 million shares of its common stock at an
issuance price of $32.50 per share at the closing of the
merger.
Timing and Approvals
The parties expect the closing of the merger to occur in the
middle of 2024, subject to satisfaction of closing conditions,
including receipt of customary required regulatory approvals and
requisite approval by the shareholders of each company. Principal
FirstSun investors, as well as members of the HomeStreet Board of
Directors, have executed voting agreements committing to support
the transaction. The acquisition equity capital is expected to
close concurrently with the merger, subject to the concurrent
closing of the merger and other closing conditions.
Advisors
Stephens Inc. 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 LLP served as legal
counsel to HomeStreet. Schulte, Roth & Zabel LLP served as
legal advisor to Wellington Management. Latham & Watkins served
as legal advisor to Keefe Bruyette and Woods, A Stifel Company.
Joint Conference Call
FirstSun and HomeStreet will conduct a conference call on
Tuesday January 16, 2024, at 12:00 p.m. ET. Neal Arnold, CEO of
FirstSun, Mark K. Mason, CEO and President of HomeStreet, Rob
Cafera, CFO of FirstSun and John Michel, CFO of HomeStreet, will
discuss the proposed merger between FirstSun and HomeStreet. A
question and answer session for analysts will follow the
presentation. Shareholders, analysts and other interested parties
may register in advance at the following URL:
https://www.netroadshow.com/events/login?show=fd0615ad&confId=59925%20%28or%20internationally%20at%20the%20following%20URL%20%20https%3A%2F%2Fwww.netroadshow.com%2Fevents%2Fglobal-numbers%3FconfId%3D59925%29%20or%20may%20join%20the%20call%20by%20dialing%20directly%20at%201-833-470-1428%20shortly%20before%2012%3A00%20p.m.%20ET%20using%20Access%20Code%20043835
About FirstSun Capital Bancorp
FirstSun Capital Bancorp, (OTCQX: FSUN) headquartered in Denver,
Colorado, is the financial holding company for Sunflower Bank,
headquartered in Dallas, Texas, and which also operates under the
brands First National 1870 and Guardian Mortgage. Sunflower Bank
provides a full range of relationship-focused services to meet
personal, business and wealth management financial objectives, with
a branch network in Texas, Kansas, Colorado, New Mexico, and
Arizona and mortgage capabilities in 43 states. FirstSun had total
consolidated assets of $7.8 billion as September 30, 2023.
First National 1870 and Guardian Mortgage are divisions of
Sunflower Bank. To learn more, visit SunflowerBank.com,
FirstNational1870.com or GuardianMortgageOnline.com.
About HomeStreet, Inc.
HomeStreet, Inc., (Nasdaq: HMST) headquartered in Seattle,
Washington, operates as the bank holding company for HomeStreet
Bank that provides commercial, mortgage, and consumer/retail
banking services primarily in the Western United States. The
company offers personal and business checking, savings accounts,
interest-bearing, money market accounts, and certificates of
deposit; credit cards, insurance, and cash management services.
HomeStreet had total assets of $9.5 billion and total deposits of
$6.7 billion as of September 30, 2023, with a branch network in
Washington, California, Oregon, and Hawaii, along with lending
offices in Utah and Idaho.
HomeStreet Bank is a subsidiary of HomeStreet, Inc. To learn
more, visit homestreet.com.
About Wellington Management
Wellington Management is one of the world’s largest independent
investment management firms, serving as a trusted adviser to over
2,500 clients in more than 60 countries. The firm manages more than
US$1.1 trillion for pensions, endowments and foundations, insurers,
family offices, fund sponsors, global wealth managers, and other
clients. Wellington aspires to provide excellent service to clients
through a unique combination of independence enabled by its
distinctive private partnership model, diverse perspectives through
its unified, multi-asset investment platform, and relentless
curiosity and intellectual rigor fostered by its enduring
collaborative cultures.
Cautionary Note Regarding Forward-Looking Statements
Statements included in this press release which are not
historical in nature are intended to be, and hereby are identified
as, forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Examples of
forward-looking statements include, but are not limited to,
statements regarding the outlook and expectations of FirstSun and
HomeStreet with respect to their planned merger and the expected
timing of the closing of the transaction. Words such as "may,"
"will," "believe," "anticipate," "expect," "intend," "opportunity,"
"continue," "should," and "could" and variations of such words and
similar expressions are intended to identify such forward-looking
statements. Forward-looking statements are subject to risks,
uncertainties and assumptions that are difficult to predict with
regard to timing, extent, likelihood and degree of occurrence,
which could cause actual results to differ materially from
anticipated results. Such risks, uncertainties and assumptions,
include, among others, the following:
- the failure to obtain necessary regulatory approvals when
expected or at all (and the risk that such approvals may result in
the imposition of conditions that could adversely affect the
combined company or the expected benefits of the transaction);
- the failure of HomeStreet to obtain shareholder approval, or
the failure of either party to satisfy any of the other closing
conditions to the transaction on a timely basis or at all;
- the occurrence of any event, change or other circumstances that
could give rise to the right of one or both of the parties to
terminate the merger agreement;
- the possibility that the anticipated benefits of the
transaction, including as a result of the impact of, or problems
arising from, the integration of the two companies or as a result
of the strength of the economy, competitive factors in the areas
where FirstSun and HomeStreet do business, or as a result of other
unexpected factors or events;
- diversion of management's attention from ongoing business
operations and opportunities;
- potential adverse reactions or changes to business or employee
relationships, including those resulting from the announcement or
completion of the transaction;
- the outcome of any legal proceedings that may be instituted
against FirstSun or HomeStreet; and
- other factors that may affect future results of FirstSun or
HomeStreet including changes in asset quality and credit risk; the
inability to sustain revenue and earnings growth; changes in
interest rates and capital markets; inflation; customer borrowing,
repayment, investment and deposit practices; the impact, extent and
timing of technological changes; capital management activities; and
actions of the Federal Reserve Board and legislative and regulatory
actions and reforms.
Further information regarding additional factors that could
affect the forward-looking statements can be found in the
cautionary language included under the headings “Cautionary Note
Regarding Forward-Looking Statements” (in the case of FirstSun),
“Forward-Looking Statements” (in the case of HomeStreet), and “Risk
Factors” in FirstSun’s and HomeStreet’s Annual Reports on Form 10-K
for the year ended December 31, 2022, and other documents
subsequently filed by FirstSun and HomeStreet with the SEC.
FirstSun and HomeStreet disclaim any obligation to update or revise
any forward-looking statements contained in this press release,
which speak only as of the date hereof, whether as a result of new
information, future events or otherwise, except as required by
law.
Additional Information About the Merger and Where to Find
It
This communication is being made in respect of the proposed
merger transaction between FirstSun and HomeStreet. In connection
with the proposed merger, FirstSun will file a registration
statement on Form S-4 with the SEC to register FirstSun's shares
that will be issued to HomeStreet's shareholders in connection with
the merger. The registration statement will include a proxy
statement of HomeStreet and a prospectus of FirstSun, as well as
other relevant documents concerning the proposed transaction.
INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE
PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS
WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION.
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction.
A free copy of the proxy statement/prospectus, when it becomes
available, as well as other documents filed with the SEC by
FirstSun may be obtained at the SEC's Internet site at
http://www.sec.gov. Investors and security holders may also obtain
free copies of the documents filed with the SEC by (i) FirstSun on
its website at
https://ir.firstsuncb.com/investor-relations/default.aspx -
“Financials and Filings”, and (ii) HomeStreet on its website at
https://ir.homestreet.com/sec-filings/all-filings/default.aspx.
Participants in the Solicitation
FirstSun, HomeStreet and certain of their directors and
executive officers may be deemed participants in the solicitation
of proxies from shareholders of HomeStreet in connection with the
proposed Merger. Information regarding the directors and executive
officers of FirstSun and HomeStreet and other persons who may be
deemed participants in the solicitation of the shareholders of
HomeStreet in connection with the proposed Merger will be included
in the proxy statement/prospectus for HomeStreet special meeting of
shareholders, which will be filed by FirstSun with the SEC.
Information about the directors and officers of FirstSun and their
ownership of FirstSun’s common stock can be found in FirstSun’s
annual report on Form 10-K, as filed with the SEC on March 16,
2023, and other documents subsequently filed by FirstSun with the
SEC. Information about the directors and officers of HomeStreet and
their ownership of HomeStreet’s common stock can be found in
HomeStreet’s definitive proxy statement in connection with its 2023
annual meeting of shareholders, as filed with the SEC on April 11,
2023, and other documents subsequently filed by HomeStreet with the
SEC. Additional information regarding the interests of such
participants will be included in the proxy statement/prospectus and
other relevant documents regarding the proposed Merger filed with
the SEC when they become available.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240116508493/en/
Investor Contacts:
FirstSun Capital Bancorp Kelly C. Rackley Corporate Secretary
& Stockholder Relations Manager 303.962.0150
stockholder.relations@sunflowerbank.com
HomeStreet, Inc. John Michel Executive Vice President, Chief
Financial Officer 206.515.2291 john.michel@homestreet.com
Media Contacts:
FirstSun Capital Bancorp Jeanne Lipson 915.881.6785
jeanne.lipson@sunflowerbank.com
HomeStreet, Inc. Misty Ford 206.876.5506
misty.ford@homestreet.com
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