FirstSun Capital Bancorp in Denver has found a new fixer-upper, agreeing to buy First Foundation in Irving, Texas.
The $8.5 billion-asset FirstSun, which was unable to buy HomeStreet last year, said in a press release that it will pay $785 million in stock for the $12.6 billion-asset First Foundation. The deal, which is expected to close in the second quarter, priced First Foundation at 80% of its tangible book value.
Tom Shafer, First Foundation’s CEO, will become FirstSun’s vice chairman. Five First Foundation directors will join FirstSun’s board.
The acquisition “represents an exciting opportunity to strengthen our platform for long-term, sustainable growth, expand our earnings power, and drive greater value for our stockholders,” Mollie Hale Carter, FirstSun’s executive chairman, said in the release. “Both organizations have a strong presence in large, vibrant markets.”
The deal should be more than 30% accretive to FirstSun’s 2027 earnings per share. It should take a little more than three years for FirstSun to earn back the expected dilution to its tangible book value.
FirstSun said it is planning a balance sheet downsizing to take place at the time of closing that will include paying down $1.4 billion of FHLB borrowings, getting rid of $856 million of brokered deposits, and running off $1.1 billion of higher-rate, non-relationship deposits.
FirstSun also plans to liquidate $650 million of shared-national credits, $1.2 billion of non-owner-occupied CRE and multifamily loans, and $470 million of long-term municipal loans, and $1.1 billion of securities and excess cash.
Stephens and Nelson Mullins Riley & Scarborough advised FirstSun. Keefe Bruyette and Woods, Jefferies, and Alston & Bird advised First Foundation.