FirstSun and HomeStreet End Merger Talks Amid Regulatory Hurdles

Denver-based FirstSun Capital Bancorp and Seattle-based HomeStreet Inc. have mutually decided to terminate their merger agreement, citing regulatory challenges and strategic incompatibility. The proposed merger would have seen HomeStreet merge into a Dallas-based FirstSun subsidiary, although regulatory approval from bodies such as the Federal Reserve and Texas Department of Banking was not obtained. Complications arose from HomeStreet's significant Commercial Real Estate (CRE) exposure, prompting a reconsideration of strategic options. HomeStreet expressed possible legal action to dissolve the merger terms unless a mutual resolution is achieved. The merger's cessation frees HomeStreet to explore alternative acquisition offers, having previously received competing bids. This development occurs alongside existing shareholder discontent, including legal action alleging misleading information in a merger-related proxy statement. The merger's termination gets attributed partially to HomeStreet's CRE liability, sparking potential further asset sales to reduce its financial obligations and appeal to prospective buyers at a deferred valuation.