The fate of Denver-based FirstSun Capital Bancorp’s planned acquisition of Seattle-based HomeStreet, Inc., is in doubt after regulators didn’t approve the proposed merger.
According to a press release, FirstSun and its Dallas-based subsidiary Sunflower Bank, N.A., have failed to secure approval for the merger from the Federal Reserve and Texas Department of Banking. FirstSun and Sunflower were reportedly asked to withdraw their merger acquisitions.
FirstSun and HomeStreet are discussing “an alternative regulatory structure” for the proposed merger and are open to terminating the deal if no alternative structure is possible.
FirstSun CEO and President Neal Arnold said the regulatory approval process for such bank mergers has slowed. “We are disappointed in the process to date, but we remain hopeful that we will be able to continue productive discussions with regulators in order to obtain regulatory approval,” he said.
HomeStreet Chair and President Mark Mason said his company is “disappointed that the regulators are unwilling to grant the regulatory approvals necessary for this merger to proceed. Importantly, HomeStreet has been advised by its regulators that there were no regulatory concerns specifically related to HomeStreet that would have prevented approval of the merger.”
The deal was announced in January. Three months later, FirstSun and HomeStreet amended the deal to increase FirstSun’s aggregate capital raise to $235 million from $175 million. The companies agreed to allow HomeStreet to pursue another, competing acquisition offer within 30 days by paying a $2.6 million termination fee to FirstSun.
The company’s combined banking operations were expected to operate under a Texas state charter, with Sunflower Bank converting to a Texas state-chartered bank from a national bank. Sunflower Bank was also expected to seek Federal Reserve System membership. FirstSun Capital was expected to grow through the merger to approximately $17 billion with 129 branches and a footprint in six of the nation’s 10 fastest growing metropolitan areas.