FirstSun Capital Bancorp in Denver will raise more capital to buy HomeStreet in Seattle and scrap plans to have a national charter with the Office of the Comptroller of the Currency.
The $7.8 billion-asset FirstSun said in a press release that it now plans to raise up to $235 million to buy the $9.5 billion-asset HomeStreet, representing a 34% increase from original projections. About $80 million has already been raised.
FirstSun also said it will now seek a Texas state charter and membership in the Federal Reserve System. FirstSun withdrew its application with the OCC.
“We decided this is a better long-term path for the continued organization,” Neal Arnold, FirstSun’s CEO, said during a conference call in explaining the regulator switch.
“In our discussions with the OCC in Washington, it became obvious that we would not gain near-term approval given their recent experience with multifamily and CRE positions,” Arnold added. “We believe their position also resided in the fact that they were not the primary regulator for HomeStreet. The Fed is taking a very different approach, in part due to the changes we have made through the transaction.”
FirstSun will issue $48.5 million of subordinated debt when the acquisition closes, and HomeStreet will unload about $300 million of commercial real estate loans.
Finally, FirstSun and HomeStreet agreed to lower the exchange ratio for the deal by 11%. The termination fee HomeStreet must pay if it goes with another offer was lowered to $2.6 million.