FirstSun, HomeStreet assess pending deal’s options after new setback

FirstSun Capital Bancorp in Denver and HomeStreet in Seattle are evaluating “an alternative regulatory structure” for their planned merger after the Federal Reserve asked them to withdraw their application.

The $8.1 billion-asset FirstSun agreed in January to buy the $9.4 billion-asset HomeStreet for $286 million. FirstSun has pledged to raise up to $235 million in fresh capital in conjunction with the acquisition.

The companies said in a press release that the Fed asked FirstSun to withdraw its application to buy HomeStreet. In addition to alternative structures, the companies are discussing the terms for terminating their merger agreement.

FirstSun earlier this year withdrew its application with the Office of the Comptroller of the Currency while announcing plans to seek a Texas state charter and Fed membership.

“We are disappointed in the process to date, but we remain hopeful that we will be able to continue productive discussions with regulators … to obtain regulatory approval,” Neal Arnold, FirstSun’s president and CEO, said in the release.

“We are disappointed that the regulators are unwilling to grant the regulatory approvals necessary for the merger to proceed,” Mark Mason, HomeStreet’s chairman, president and CEO, added. “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.”