HomeStreet, Inc.
Download
SEC Document
SEC Filing

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

       
   Filed by the Registrant   Filed by a Party other than the Registrant

 

Check the appropriate box:
Preliminary Proxy Statement
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Under Rule 14a-12

  

HomeStreet, Inc.

(Name of Registrant as Specified In Its Charter)

 

 
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)

   
Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee paid previously with preliminary materials.
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
 

 

 

 

 

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

To the Shareholders of HomeStreet, Inc.:

On behalf of the board of directors of HomeStreet, Inc., which we refer to as “HomeStreet,” we are pleased to enclose the accompanying proxy statement/prospectus relating to, among other matters, the proposed combination of FirstSun Capital Bancorp, which we refer to as “FirstSun,” and HomeStreet. We are requesting that you take certain actions as a holder of HomeStreet common stock.

On January 16, 2024, FirstSun, HomeStreet, and Dynamis Subsidiary, Inc., a Washington corporation and wholly-owned subsidiary of FirstSun organized for the purposes of carrying out the merger (“Merger Sub”), entered into an Agreement and Plan of Merger (the “original merger agreement”). On April 30, 2024, FirstSun, HomeStreet and Merger Sub entered into Amendment No. 1 to the original merger agreement (the “April 30 amendment to the merger agreement”), which we refer to together with the original merger agreement as “the merger agreement.” The merger agreement provides for the combination of FirstSun and HomeStreet. The transaction will create a premier bank in the Southwest and West Coast with approximately $17 billion in assets. Under the merger agreement, Dynamis Subsidiary, Inc. will merge with and into HomeStreet, with HomeStreet remaining as the surviving entity and becoming a wholly-owned subsidiary of FirstSun, in a transaction we refer to as the “merger.” This surviving entity, immediately following the merger and as part of a single integrated transaction, will merge with and into FirstSun, with FirstSun continuing as the surviving corporation, in a transaction we refer to as the “second step merger,” and together with the merger, as the “mergers.” As a part of the proposed combination transaction, FirstSun’s wholly-owned subsidiary, Sunflower Bank, National Association, will convert from a national banking association into a Texas state-chartered bank that is a member of the Federal Reserve System. Immediately following the completion of the second step merger, HomeStreet’s wholly-owned subsidiary, HomeStreet Bank, a Washington state-chartered bank, will merge with and into, Sunflower Bank, a then Texas state-chartered, Federal-Reserve-System-member bank, with Sunflower Bank as the surviving bank, in a transaction we refer to as the “bank merger.”

If the mergers are completed, each outstanding share of HomeStreet common stock will be converted into the right to receive 0.3867 shares of FirstSun common stock, plus cash in lieu of fractional shares, except for (i) treasury stock and (ii) shares owned by HomeStreet or FirstSun, in each case, other than those held in certain accounts or in a fiduciary or agency capacity, shares held by HomeStreet or FirstSun in respect of debts previously contracted, which will be cancelled, and shares held by shareholders who properly exercise dissenters’ rights. Although HomeStreet shareholders will receive a fixed number of shares of FirstSun common stock, the market value of the merger consideration will fluctuate with the market price of FirstSun common stock and will not be known at the time HomeStreet shareholders vote on the merger agreement.

FirstSun common stock is currently quoted on the OTCQX® Best Market operated by the OTC Markets under the symbol “FSUN”, and as a closing condition to the mergers and undertakings in securities purchase agreements entered into in connection with the execution of the merger agreement, FirstSun will uplist its common stock to The Nasdaq Stock Market (“Nasdaq”) regardless of the mergers being consummated. The closing price of FirstSun common stock on the OTCQX® Best Market on April 29, 2024, the last trading day before the public announcement of the April 30 amendment to the merger agreement, was $35.00 per share. The closing price of FirstSun common stock on the OTCQX® Best Market on May 10, 2024, the last practicable trading day before the printing date of this proxy statement/prospectus, was $34.00 per share. The shares of FirstSun common stock that will be issued to HomeStreet shareholders in the mergers will be freely transferable.

HomeStreet common stock is traded on Nasdaq under the symbol “HMST.” The closing price of HomeStreet common stock on Nasdaq on April 29, 2024, the last trading day before the public announcement of the April 30 amendment to the merger agreement, was $12.28 per share. The closing price of HomeStreet common stock on the Nasdaq on May 10, 2024, the last practicable trading day before the printing date of this proxy statement/prospectus, was $10.33 per share. The implied value of the merger consideration payable for each share of HomeStreet common stock on April 29, 2024 and May 10, 2024 is $13.54 and $13.15, respectively. The value of the FirstSun common stock at the time of completion of the mergers could be greater than, less than or the same as the value of FirstSun common stock on the date of the accompanying proxy statement/prospectus or the date of the HomeStreet shareholder meeting. We urge you to obtain current market quotations for HomeStreet and FirstSun common stock.

Immediately following the completion of the mergers, FirstSun stockholders will continue to own shares of FirstSun common stock held by the FirstSun stockholders immediately prior to the completion of the mergers.

Concurrently with the execution of the merger agreement, FirstSun entered into an Upfront Securities Purchase Agreement (the “Upfront Securities Purchase Agreement”), dated January 16, 2024, with certain funds managed by Wellington Management (“Wellington”), pursuant to which, on the terms and subject to the conditions set forth therein, FirstSun sold, and Wellington purchased, for $32.50 per share and an aggregate purchase price of $80 million, approximately 2.46 million shares of FirstSun common stock. This transaction closed on January 17, 2024. Under the terms of the Upfront Securities Purchase Agreement, FirstSun is obligated to issue to Wellington, upon consummation of the mergers, warrants to purchase approximately 1.15 million shares of FirstSun common stock with such warrants having an initial exercise price of $32.50 per share (the “warrants”). The warrants will carry a term of three years, and may be settled on a “net share” basis by applying shares otherwise issuable under the warrants in satisfaction of the exercise price. In the event the mergers are not consummated, no warrants will be issued. Additionally, FirstSun entered into an Acquisition Finance Securities Purchase Agreement, dated January 16, 2024, as amended on April 30, 2024 by the First Amendment to the Acquisition Finance Securities Purchase Agreement (collectively, the “Acquisition Finance Securities Purchase Agreement,” and together with the Upfront Securities Purchase Agreement, the “Investment Agreements”) to increase the total amount of additional common equity capital to be raised at closing of the mergers from $95 million to $140 million to $155 million, with Wellington, Castle Creek Capital Partners VIII, L.P. (“Castle Creek”), and certain other institutional accredited investors. Pursuant to the Acquisition Finance Securities Purchase Agreement, on the terms and subject to the conditions set forth therein, substantially concurrently with the closing of the mergers, the investors will invest an aggregate of $140 million in exchange for the sale and issuance, at a purchase price of $32.50 per share, of approximately 4.31 million shares of FirstSun common stock. Further, FirstSun may offer an additional 461,539 shares of FirstSun common stock, at a purchase price of $32.50 per share, for an additional investment of $15 million from (i) Castle Creek, who has a 30-day window from the execution of the First Amendment to the Acquisition Finance Securities Purchase Agreement to elect to purchase such shares, or (ii) any other investor selected by FirstSun if Castle Creek does not elect to purchase such shares.

The mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Accordingly, HomeStreet shareholders generally will not recognize any gain or loss for U.S. federal income tax purposes on the exchange of shares of HomeStreet common stock for FirstSun common stock in the mergers, except with respect to any cash received by HomeStreet shareholders in lieu of fractional shares of FirstSun common stock or from the exercise of dissenters’ rights.

 
 

Based on the number of shares of HomeStreet common stock outstanding as of April 30, 2024 and underlying outstanding HomeStreet equity awards as of April 30, 2024 that, at the effective time of the mergers, will be cancelled and entitle the holder to receive a number of shares of FirstSun common stock (for more information, see the section entitled “The Merger— Interests of HomeStreet’s Directors and Executive Officers in the Mergers”), the total number of shares of FirstSun common stock expected to be issued in connection with the mergers is approximately 7,509,395 shares. In addition, based on (i) the number of outstanding shares of FirstSun common stock and HomeStreet common stock as of April 30, 2024, (ii) the exchange ratio of 0.3867, and (iii) upon completion of the FirstSun capital raise transaction and the consummation of the mergers, it is expected that FirstSun stockholders, inclusive of the purchasers of shares in connection with the closing of the mergers, will hold approximately 81% of the issued and outstanding shares of FirstSun common stock and HomeStreet shareholders will hold approximately 19% of the issued and outstanding shares of FirstSun common stock. The merger agreement also provides for HomeStreet’s disposition or sale of approximately $300 million (based on principal balance) of certain of its commercial real estate loans, which disposition or loan sales will be consummated upon, or as soon as reasonably practicable, after the closing of the mergers. Additionally, the merger agreement provides that FirstSun will use its reasonable best efforts to enter into, prior to or as of closing, one or more definitive agreements, whereby FirstSun will issue, at the closing, an aggregate principal amount of at least $48.5 million in subordinated debt that qualifies as Tier 2 capital.

 

Effective January 15, 2024, the holders of a majority of the voting power of FirstSun common stock executed a written consent approving the issuance of common stock to be issued by FirstSun in connection with the mergers. The written consent was signed by the holders of 12,945,632 shares of FirstSun common stock. Accordingly, the holders of approximately 51.9% of the voting power of FirstSun common stock signed the written consent approving such share issuance. No additional vote or consent of the holders of FirstSun common stock was required in connection with the amendment to the original merger agreement.

HomeStreet will hold a meeting of its shareholders to ask shareholders to vote to approve the merger agreement and other related matters as described in this proxy statement/prospectus. In addition to the proposal to approve the merger agreement, HomeStreet will ask shareholders to approve a proposal to adjourn the HomeStreet shareholder meeting if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the merger agreement, elect directors and vote on the other proposals described in the notice that follows this letter.

Your vote is important. HomeStreet and FirstSun cannot complete the mergers unless HomeStreet shareholders approve the merger agreement and the transactions contemplated thereby. The failure of any shareholder to vote will have the same effect as a vote against approving the merger agreement. Accordingly, whether or not you plan to virtually attend the HomeStreet shareholder meeting, you are requested to promptly vote your shares by proxy electronically via the Internet, by telephone or by sending in the appropriate paper proxy card as instructed in these materials.

Certain HomeStreet shareholders have entered into voting and support agreements with FirstSun pursuant to which they have agreed to vote “FOR” the approval of the merger agreement, subject to the terms of the voting and support agreements. The meeting of HomeStreet shareholders will be held virtually on June 18, 2024 at 10:00 a.m. Pacific Time at the website www.virtualshareholdermeeting.com/HMST2024SM.

The HomeStreet board of directors has unanimously determined that the merger agreement, the mergers, and the transactions contemplated by the merger agreement are advisable and in the best interests of HomeStreet and its shareholders and unanimously authorized, adopted and approved the merger agreement, the mergers and the transactions contemplated by the merger agreement, and unanimously recommends that HomeStreet shareholders vote “FOR” the proposal to approve the merger agreement, as amended by the April 30 amendment to the merger agreement, “FOR” the proposal to approve, on an advisory (non-binding) basis, the merger-related compensation payments that will or may be paid to named executive officers of HomeStreet in connections with the transactions contemplated by the merger agreement and “FOR” the proposal to adjourn the HomeStreet shareholder meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the merger agreement. The members of the HomeStreet board of directors have, as shareholders of HomeStreet, agreed to vote their shares of HomeStreet common stock to approve the merger proposal.

This document, which serves as a proxy statement for the HomeStreet shareholder meeting and as a prospectus for the shares of FirstSun common stock to be issued in the mergers to HomeStreet shareholders, describes the meeting of HomeStreet shareholders, the mergers, the documents related to the mergers and other related matters, and the other proposals to be considered by HomeStreet shareholders. Please carefully read this entire proxy statement/prospectus. In particular, you should carefully read the information under the section entitled “Risk Factors” beginning on page 27. You can also obtain information about FirstSun and HomeStreet from documents that have been filed with the U.S. Securities and Exchange Commission that are either incorporated by reference into or attached to the accompanying proxy statement/prospectus.

On behalf of HomeStreet, thank you for your prompt attention to this important matter.

Sincerely,

 

Mark K. Mason

Chairman, Chief Executive Officer and President

HomeStreet, Inc.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the mergers or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The securities to be issued in the mergers are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of either FirstSun or HomeStreet, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of this proxy statement/prospectus is May 15, 2024, and it is first being mailed or otherwise delivered to HomeStreet shareholders on or about May 16, 2024.

 
 

 

 

 

NOTICE OF THE HOMESTREET SHAREHOLDER MEETING
To be held on June 18, 2024, 10:00 a.m. (Pacific Time)
Virtual Meeting Only – No Physical Meeting Location

 

To the Shareholders of HomeStreet, Inc.:

We are pleased to invite you to virtually attend a meeting of shareholders, which we refer to as the HomeStreet shareholder meeting, of HomeStreet, Inc. (which we refer to as “HomeStreet” and references to “we,” “us,” and “our” for purposes of this notice refer to HomeStreet), to be held via webcast at www.virtualshareholdermeeting/HMST2024SM on June 18, 2024, at 10:00 a.m. Pacific time, for the following purposes:

1.To consider and vote on a proposal to approve the Agreement and Plan of Merger, dated as of January 16, 2024, as amended on April 30, 2024 by Amendment No. 1 to Agreement and Plan of Merger, by and between FirstSun Capital Bancorp, which we refer to as “FirstSun,” HomeStreet and Dynamis Subsidiary, Inc., which we refer to as “Merger Sub,” as it may be further amended from time to time, which we collectively refer to as the “merger agreement,” a copy of which is included as Annex A to the proxy statement/prospectus of which this notice is a part, under which Merger Sub will merge with and into HomeStreet and then HomeStreet with and into FirstSun, with FirstSun as the surviving corporation in the mergers, which we refer to as the “merger proposal”;
2.To consider and vote on a proposal to approve, on an advisory (non-binding) basis, the merger-related compensation payments that will or may be paid to the named executive officers of HomeStreet in connection with the transactions contemplated by the merger agreement, which we refer to as the “merger-related compensation proposal”;
3.To consider and vote on a proposal to adjourn the HomeStreet shareholder meeting, if necessary or appropriate to permit further solicitation of proxies in favor of the merger proposal, which we refer to as the “adjournment proposal”;
4.To consider and vote on a proposal to elect eight directors of HomeStreet to serve until the next annual meeting of shareholders of HomeStreet, or until their successors are elected or appointed or until earlier death, resignation or removal, which we refer to as the “director election proposal”;
5.To consider and vote on a proposal to approve, on an advisory (non-binding) basis, the executive compensation of HomeStreet’s named executive officers for 2023, which we refer to as the “compensation (non-merger) proposal”;
6.To consider and vote on a proposal to approve, on an advisory (non-binding) basis, the frequency of future advisory (non-binding) votes on executive compensation, which we refer to as the “frequency of compensation vote proposal”; and
7.To consider and vote on a proposal to ratify, on an advisory (non-binding) basis, HomeStreet’s independent registered public accounting firm for the fiscal year ending December 31, 2024, which we refer to as the “auditor ratification proposal”.

The HomeStreet board of directors has set April 11, 2024 as the record date for the HomeStreet shareholder meeting. Only holders of record of HomeStreet common stock at the close of business on April 11, 2024 will be entitled to notice of and to vote at the HomeStreet shareholder meeting and any adjournments or postponements thereof.

 
 

The affirmative vote of a majority of the outstanding shares of HomeStreet common stock entitled to vote thereon is required to approve the merger proposal. Assuming a quorum is present, approval of each of the merger-related compensation proposal, adjournment proposal, director election proposal (for a non-contested election), compensation (non-merger) proposal and auditor ratification proposal requires that the votes cast in favor of such proposal exceed the votes cast against such proposal. For the frequency of compensation vote proposal, the frequency (one year, two years or three years) receiving the highest number of votes from shareholders present virtually or by proxy at the HomeStreet shareholder meeting and entitled to vote thereon will be considered the frequency preferred by shareholders. HomeStreet will transact no other business at the shareholder meeting, except for business properly brought before the HomeStreet shareholder meeting or any adjournment or postponement thereof. Certain HomeStreet shareholders have entered into voting and support agreements with FirstSun pursuant to which they have agreed to vote “FOR” the approval of the merger agreement, subject to the terms of the voting and support agreements.

HomeStreet shareholders must approve the merger proposal in order for the mergers to occur. If HomeStreet shareholders fail to approve the merger proposal, the mergers will not occur. The proxy statement/prospectus accompanying this notice explains the merger agreement and the transactions contemplated thereby, as well as the proposals to be considered at the HomeStreet shareholder meeting. Please review the proxy statement/prospectus and its annexes carefully and in their entirety.

HomeStreet shareholders who do not vote in favor of the proposal to approve the merger agreement and who deliver a demand for payment before the vote is taken on the merger proposal and comply with all of the requirements of Chapter 23B.13 (“Chapter 23B.13”) of the Washington Business Corporation Act (“WBCA”), which are summarized in the accompanying proxy statement/prospectus, will have the right to seek appraisal of the fair value of their shares of HomeStreet common stock, in accordance with Chapter 23B.13 of the WBCA. Pursuant to Chapter 23B.13, when a proposed merger is to be submitted to a vote at a meeting of shareholders, the meeting notice must state that shareholders are or may be entitled to assert dissenters’ rights and must be accompanied by a copy of Chapter 23B.13. Accordingly, this notice of the HomeStreet shareholder meeting constitutes notice to the shareholders of HomeStreet common stock of their dissenters’ rights, and a copy of Chapter 23B.13 is attached to the accompanying proxy statement/prospectus as Annex C.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OF HOMESTREET COMMON STOCK YOU OWN. Whether or not you plan to virtually attend the HomeStreet shareholder meeting, please complete, sign, date and return the enclosed proxy card in the postage-paid envelope provided at your earliest convenience. You may also submit a proxy by telephone or via the Internet by following the instructions in the enclosed proxy statement/prospectus and on your proxy card. If you hold your shares in “street name” through a broker, bank or other nominee, you should direct the vote of your shares in accordance with the voting instruction form received from your broker, bank or other nominee.

The HomeStreet board of directors has unanimously determined that the merger agreement, the mergers, and the transactions contemplated by the merger agreement are advisable and in the best interests of HomeStreet and its shareholders and unanimously authorized, adopted and approved the merger agreement, the mergers and the transactions contemplated by the merger agreement, and unanimously recommends that HomeStreet shareholders vote “FOR” the merger proposal, “FOR” the merger-related compensation proposal, “FOR” the adjournment proposal, “FOR” the director election proposal, “FOR” the compensation (non-merger) proposal, “FOR” one year as the frequency of future votes to approve executive compensation and “FOR” the auditor ratification proposal.

 
 

HomeStreet has adopted a virtual format for the HomeStreet shareholder meeting to provide a safe, consistent and convenient experience to all shareholders regardless of location. You will be able to virtually attend the meeting, submit your questions and comments during the meeting, and vote your shares at the meeting by visiting www.virtualshareholdermeeting.com/HMST2024SM and entering your control number found on your proxy card or broker instruction letter.

 

If you have any questions or need assistance with voting, please contact:

 

OKAPI PARTNERS LLC
1212 Avenue of the Americas
New York, NY 10036
Toll-Free: (877) 566-1922
Email: pmchugh@okapipartners.com 

 

 

BY ORDER OF THE BOARD OF DIRECTORS,

 

 

Godfrey B. Evans

Executive Vice President, General Counsel, and Corporate Secretary

May 16, 2024

 
 

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a Registration Statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by FirstSun, constitutes a prospectus of FirstSun under Section 5 of the Securities Act of 1933, as amended, which we refer to as the “Securities Act,” with respect to the shares of FirstSun common stock to be offered to HomeStreet shareholders in connection with the mergers. This proxy statement/prospectus also constitutes a notice of meeting and proxy statement being used by the HomeStreet board of directors to solicit proxies of HomeStreet shareholders in connection with approval of the mergers and related matters.

 

All references in this proxy statement/prospectus to “FirstSun” refer to FirstSun Capital Bancorp, a Delaware corporation, all references to “Sunflower Bank” refer to Sunflower Bank, following its conversion from a national banking association into a Texas state-chartered bank and member of the Federal Reserve, and all references to “Merger Sub” refer to Dynamis Subsidiary, Inc.

 

All references in this proxy statement/prospectus to “HomeStreet” refer to HomeStreet, Inc., a Washington corporation, and all references to “HomeStreet Bank” refer to HomeStreet Bank, a Washington state-chartered bank.

 

All references in this proxy statement/prospectus to the “combined company” refer to FirstSun immediately following completion of the second step merger.

 

All references in this proxy statement/prospectus to “FirstSun common stock” refer to the common stock of FirstSun, par value $0.0001 per share, and all references in this proxy statement/prospectus to “HomeStreet common stock” refer to the common stock of HomeStreet, no par value.

 

All references in this proxy statement/prospectus to the “merger agreement” refer to the Agreement and Plan of Merger dated January 16, 2024, as amended on April 30, 2024 by Amendment No. 1 to Agreement and Plan of Merger, by and between FirstSun, HomeStreet, and Merger Sub.

 

All references in this proxy statement/prospectus to “we,” “our” and “us” refer to FirstSun and HomeStreet collectively, unless otherwise indicated or as the context requires.

 

You should rely only on the information contained in, attached to or incorporated by reference into the accompanying proxy statement/prospectus. No person has been authorized to give any information or make any representation about the mergers or FirstSun or HomeStreet that differs from, or adds to, the information in this proxy statement/prospectus or in documents that are publicly filed with the SEC. We take no responsibility for, and provide no assurance as to the reliability of, any other information that others may give you. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than the date of this proxy statement/prospectus, and neither the mailing of this proxy statement/prospectus to HomeStreet shareholders nor the issuance of FirstSun common stock in the mergers or investment agreements will create any implication to the contrary.

 

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

 

 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE HOMESTREET SHAREHOLDER MEETING TO BE HELD ON JUNE 18, 2024:

 

The proxy materials, including the proxy statement/prospectus and Annual Report on Form 10-K for the fiscal year ended December 31, 2023 are available free of charge at www.proxyvote.com.

i
 

WHERE YOU CAN FIND MORE INFORMATION

Both FirstSun and HomeStreet file annual, quarterly and special or current reports, proxy statements and other business and financial information with the SEC. In addition, FirstSun and HomeStreet file reports and other business and financial information with the SEC electronically, and the SEC maintains a website located at www.sec.gov containing this information. You will also be able to obtain these documents, free of charge, from FirstSun at https://ir.firstsuncb.com/investor-relations/default.aspx under the section “Financials and Filings” and then click the tab “View Filings”, or from HomeStreet at https://ir.homestreet.com/corporate-profile/default.aspx under the tab “SEC Filings.”

 

FirstSun has filed a registration statement on Form S-4 of which this proxy statement/prospectus forms a part. As permitted by SEC rules, this proxy statement/prospectus does not contain all of the information included in the registration statement or in the exhibits or schedules to the registration statement. You may obtain a free copy of the registration statement, including any amendments, schedules and exhibits at the addresses set forth below. Statements contained in this proxy statement/prospectus as to the contents of any contract or other documents referred to in this proxy statement/prospectus are not necessarily complete. In each case, you should refer to the copy of the applicable contract or other document filed as an exhibit to the registration statement. This proxy statement/prospectus incorporates by reference documents that FirstSun and HomeStreet have previously filed with the SEC. These documents contain important information about the companies and their financial condition. See “Incorporation of Certain Documents by Reference” beginning on page 189. These documents are available without charge to you upon written or oral request to the applicable company’s principal executive offices. The respective addresses and telephone numbers of such principal executive offices are listed below.

 

FirstSun Capital Bancorp HomeStreet, Inc.
1400 16th Street, Suite 250 601 Union Street, Suite 2000
Denver, Colorado 80202 Seattle, WA 98101
Attention: Investor Relations Attention: Investor Relations
(303) 962-0150 (206) 515-2291

 

If you have any questions regarding the accompanying proxy statement/prospectus, you may contact FirstSun, by calling (303) 962-0150, or HomeStreet, by calling (206) 515-2291.

 

To obtain timely delivery of these documents, you must request them no later than five business days before the date of the HomeStreet shareholder meeting. This means that to obtain timely delivery of these documents, you must request the information no later than June 11, 2024 in order to receive them before the HomeStreet shareholder meeting.

 

MARKET AND INDUSTRY DATA

This proxy statement/prospectus includes government, industry and trade association data, forecasts and information that FirstSun and HomeStreet have prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys, government agencies and other information available to us, which information may be specific to particular markets or geographic locations. Statements as to market position are based on market data currently available to FirstSun and HomeStreet. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Although FirstSun and HomeStreet believe these sources are reliable, FirstSun and HomeStreet have not independently verified the information. Some data is also based on FirstSun’s and HomeStreet’s good faith estimates, which are derived from management’s knowledge of the industry and independent sources. FirstSun and HomeStreet believe their internal research is reliable, even though such research has not been verified by any independent sources. While FirstSun and HomeStreet are not aware of any misstatements regarding industry data presented herein, FirstSun’s and HomeStreet’s estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this proxy statement/prospectus. Forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this proxy statement/prospectus.

ii
 

IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY

As a company with less than $1.235 billion in total annual gross revenue during its last fiscal year, FirstSun qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company:

 

·FirstSun is exempt from the requirement to obtain an attestation from its auditors on management’s assessment of FirstSun’s internal control over financial reporting under the Sarbanes-Oxley Act of 2002;
·FirstSun will be permitted an extended transition period for complying with new or revised accounting standards affecting public companies and such new or revised accounting standards will not be applicable to FirstSun until such time as they are applicable to private companies;
·FirstSun is permitted to provide reduced disclosure regarding its executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means FirstSun does not have to include a compensation discussion and analysis and certain other disclosures regarding its executive compensation arrangements; and
·FirstSun is not required to hold non-binding stockholder advisory votes on executive compensation or golden parachute arrangements.

FirstSun may take advantage of some or all of these provisions through 2026, or such earlier time as FirstSun ceases to qualify as an emerging growth company, which will occur if FirstSun has more than $1.235 billion in total annual gross revenue, if FirstSun issues more than $1.0 billion of non-convertible debt in a three-year period, or if FirstSun is deemed to be a large accelerated filer, which means the market value of its common stock that is held by non-affiliates exceeds $700.0 million as of any June 30, in which case FirstSun would no longer be an emerging growth company as of the following December 31.

FirstSun expects to take advantage of certain of the reduced reporting and other requirements of the JOBS Act with respect to the periodic reports it files and will file with the SEC and proxy statements that it uses to solicit proxies from its stockholders. As a result, the information that FirstSun provides to its stockholders may be different than what you might receive from other public reporting companies from which you hold equity interests. In addition, the JOBS Act permits FirstSun to take advantage of an extended transition period for complying with new or revised accounting standards affecting public companies. FirstSun has elected to use this extended transition period, which means that the financial information included in this prospectus, as well as any financial statements that it files in the future, may not be subject to all new or revised accounting standards generally applicable to public companies for the transition period as long as it remains an emerging growth company or until it affirmatively and irrevocably opts out of the extended transition period under the JOBS Act. As a result, FirstSun’ financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards on a non-delayed basis.

iii
 

TABLE OF CONTENTS

 

  Page
ABOUT THIS PROXY STATEMENT/PROSPECTUS i
WHERE YOU CAN FIND MORE INFORMATION ii
MARKET AND INDUSTRY DATA ii
IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY iii
QUESTIONS AND ANSWERS 1
SUMMARY 13
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 24
RISK FACTORS 27
HOMESTREET SHAREHOLDER MEETING 37
HOMESTREET MERGER-RELATED PROPOSALS 38
THE MERGERS 40
Terms of the Mergers 40
Background of the Mergers 40
HomeStreet’s Reasons for the Mergers 51
Certain Unaudited Prospective Financial Information 54
Opinion of HomeStreet’s Financial Advisor 58
Interests of HomeStreet’s Directors and Executive Officers in the Mergers 72
Merger-Related Compensation for FirstSun’s Named Executive Officers 80
Governance of the Combined Company After the Mergers 81
Investment Agreements 82
Public Trading Market and No Restrictions on Resale 83
Litigation Relating to the Mergers  83
Regulatory Approvals Required for the Mergers 84
THE MERGER AGREEMENT 87
ACCOUNTING TREATMENT 108
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGERS 109
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 112
DISSENTERS’ RIGHTS TO THE MERGERS 121
DESCRIPTION OF CAPITAL STOCK OF FIRSTSUN 125
COMPARISON OF STOCKHOLDERS’ RIGHTS 133
ADDITIONAL HOMESTREET PROPOSALS 140
HOMESTREET CORPORATE GOVERNANCE AND OTHER MATTERS 145
2023 EXECUTIVE COMPENSATION PROGRAM 164
OTHER PRACTICES, POLICIES AND GUIDELINES 173
2023 SUMMARY COMPENSATION TABLE 176
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL 178
PRINCIPAL SHAREHOLDERS OF HOMESTREET 186
LEGAL MATTERS 188
EXPERTS 188
HOUSEHOLDING OF PROXY MATERIALS 188
OTHER MATTERS 188
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 189
   
ANNEX A – Agreement and Plan of Merger A-1
ANNEX B – Opinion of Keefe, Bruyette & Woods, Inc. B-1
ANNEX C – Washington Dissenters’ Rights Statute C-1
 iv 

 

QUESTIONS AND ANSWERS

The following are brief answers to certain questions that you may have regarding the mergers between FirstSun Capital Bancorp (“FirstSun”) and HomeStreet, Inc. (“HomeStreet”) and the meeting of the shareholders of HomeStreet and the other matters being proposed for the HomeStreet shareholder meeting. We urge you to read this section carefully, as well as the entirety of this proxy statement/prospectus, including all annexes and exhibits, because the information in this section may not provide all the information that might be important to you in determining how to vote regarding the mergers and the other matters being proposed for the HomeStreet shareholder meeting. Additional important information is also contained in the annexes to, and the documents incorporated by reference in, this proxy statement/prospectus. See “Where You Can Find More Information” on page ii.

 

Q:What are the mergers?

 

A:FirstSun, HomeStreet and Dynamis Subsidiary, Inc. (“Merger Sub”) have entered into an Agreement and Plan of Merger, dated as of January 16, 2024, as amended April 30, 2024, (the “original merger agreement”). On April 30, 2024, FirstSun, HomeStreet and Merger Sub entered into Amendment No. 1 to the original merger agreement (the “April 30 amendment to the merger agreement,” and together with the original merger agreement, the “merger agreement”). Under the merger agreement, subject to the terms and conditions of the merger agreement, Merger Sub will merge with and into HomeStreet, with HomeStreet remaining as the surviving entity and becoming a wholly-owned subsidiary of FirstSun, in a transaction we refer to as the “merger.” Immediately following the merger and as part of a single integrated transaction, HomeStreet will merge with and into FirstSun, with FirstSun as the surviving entity, in a transaction we refer to as the “second step merger” and together with the merger, as the “mergers.” As a part of the proposed combination, FirstSun’s wholly-owned subsidiary, Sunflower Bank, National Association, a national banking association will convert from a national banking association into a Texas state-chartered bank that is a member of the Federal Reserve System. Immediately following the completion of the second step merger, HomeStreet’s wholly-owned subsidiary, HomeStreet Bank, a Washington state-chartered bank, will merge with and into, Sunflower Bank, a then Texas state-chartered, Federal-Reserve-System-member bank, with Sunflower Bank as the surviving bank, in a transaction we refer to as the “bank merger.” Following the bank merger, the surviving bank will operate the assumed branches of HomeStreet Bank under the “HomeStreet Bank” or “HomeStreet” name and brand.

 

At the effective time of the mergers (the “effective time”), each holder of HomeStreet common stock issued and outstanding immediately prior to the effective time, except for (i) treasury stock and (ii) shares owned by HomeStreet or FirstSun, in each case, other than those held in certain accounts or in a fiduciary or agency capacity that are beneficially owned by third parties, shares held by HomeStreet or FirstSun in respect of debts previously contracted, which will be cancelled, and shares held by shareholders who properly exercise dissenters’ rights, will be entitled to receive 0.3867 of a share (the “exchange ratio”) of FirstSun common stock, and cash in lieu of fractional shares of FirstSun common stock, subject to certain exceptions (the “merger consideration”).

 

Immediately following the effective time, (i) HomeStreet will no longer be a public company, (ii) HomeStreet common stock will be delisted from The Nasdaq Stock Market (“Nasdaq”) and will cease to be publicly traded and (iii) HomeStreet common stock will be deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Immediately following the second step merger, FirstSun stockholders will continue to own their existing shares of FirstSun common stock and the separate corporate existence of HomeStreet will cease.

 

The mergers cannot be completed unless, among other things, HomeStreet shareholders approve the merger agreement and the mergers, see the section entitled “Q: What is the vote required to approve each proposal at the HomeStreet shareholder meeting?” beginning on page 6, and the bank merger has been approved by applicable banking regulators.

 

 

A copy of the merger agreement is attached to this proxy statement/prospectus as Annex A. Additionally, see the information provided in the section entitled “The Merger Agreement—Structure of the Mergers” beginning on page 87. We urge you to read carefully this proxy statement/prospectus and all annexes and exhibits hereto, including the merger agreement, in their entirety.

1
 
Q:Why am I receiving this proxy statement/prospectus?
A:You are receiving this proxy statement/prospectus to help you decide how to vote your shares of HomeStreet common stock at the HomeStreet shareholder meeting in connection with the mergers and related matters and with respect to the other matters to be considered at the HomeStreet shareholder meeting.

 

In order to complete the mergers, among other things, HomeStreet shareholders must approve the merger agreement. HomeStreet shareholders will also be asked to approve a proposal to approve, by a non-binding advisory vote, the merger-related compensation payments that will or may be paid to the named executive officers of HomeStreet in connection with the transactions contemplated by the merger agreement and to adjourn the meeting of the HomeStreet shareholders, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the HomeStreet shareholder meeting to approve the merger agreement. The approval of neither the merger-related compensation proposal nor the adjournment proposal is a condition to the obligations of HomeStreet or FirstSun to complete the merger.

To approve the merger agreement and related matters, as well as the other matters described in this proxy statement/prospectus, HomeStreet has called a meeting of its shareholders. This document serves as the proxy statement for the HomeStreet shareholder meeting because HomeStreet’s board of directors is soliciting proxies from its shareholders and the document describes the proposals to be presented at the HomeStreet shareholder meeting.

This document is also a prospectus being delivered to HomeStreet shareholders because, pursuant to the merger agreement, FirstSun is offering shares of FirstSun common stock to HomeStreet shareholders in exchange for HomeStreet common stock as merger consideration.

This proxy statement/prospectus contains important information about the mergers and the other proposals described in this proxy statement/prospectus that will be voted on at the HomeStreet shareholder meeting and important information on the investment agreements and information to consider in connection with an investment in FirstSun common stock. You should read the proxy statement/prospectus and all annexes and exhibits hereto in their entirety, carefully. The enclosed materials allow you to have your shares of HomeStreet common stock voted by proxy without attending the HomeStreet shareholder meeting. Your vote is important and we encourage you to submit your proxy as soon as possible whether or not you plan to virtually attend the HomeStreet shareholder meeting.

Q:Why did the parties amend the original merger agreement?
A:Since the date of the announcement of the mergers, the banking environment has continued to experience persistently higher interest rates as well as some modest stress related to certain assets, including commercial real estate. In FirstSun’s discussions with the Office of the Comptroller of the Currency (the “OCC”), it became apparent that the bank merger would not receive approval over the near term, which we believed was partially related to its recent negative experience with multifamily and commercial real estate assets in some banks. We also believe the OCC’s position resided in the fact that the OCC was not the primary regulator for HomeStreet. FirstSun has had significant interaction with the Federal Reserve and the Texas Department of Banking, and we believe there is a pathway for this merger application to be approved.
Q:What will HomeStreet shareholders receive in the mergers?
A:If the mergers are completed, each issued and outstanding share of HomeStreet common stock immediately prior to the effective time will be converted into the right to receive 0.3867 shares of FirstSun common stock, except for (i) treasury stock and (ii) shares owned by HomeStreet or FirstSun, in each case, other than those held in certain accounts or a fiduciary or agency capacity that are beneficially owned by third parties, shares held by HomeStreet or FirstSun in respect of debts previously contracted, which will be cancelled, and shares held by shareholders who properly exercise dissenters’ rights. FirstSun will not issue any fractional shares of FirstSun common stock in the mergers. Instead, a HomeStreet shareholder who otherwise would be entitled to receive a fraction of a share of FirstSun common stock will receive an amount in cash (without interest) equal to such fractional part of a share of FirstSun common stock, rounded to the nearest one-thousandth, multiplied by $35.00.

 

2
 

It is currently expected that the shareholders of HomeStreet existing immediately prior to the effective time, in the aggregate, will receive shares in the mergers constituting approximately 19% of the outstanding shares of FirstSun common stock immediately following the completion of the mergers and the investments under the Investment Agreements.

 

Q:Will the value of the merger consideration change between the date of this proxy statement/prospectus and the time the mergers are completed?
A:Yes. Although the number of shares of FirstSun common stock that HomeStreet shareholders will be entitled to receive is fixed at 0.3867 per share, the value of the merger consideration will fluctuate between the date of this proxy statement/prospectus and the effective time based upon the market value of FirstSun common stock.

 

Q:How will the mergers affect HomeStreet equity awards?

 

A:At the effective time, the merger agreement provides that each outstanding restricted stock unit granted on or before December 31, 2023 under the Amended and Restated HomeStreet 2014 Equity Incentive Plan (the “2014 Plan”, and each such restricted stock unit, a “Pre-2024 HomeStreet RSU”), and each outstanding performance stock unit granted under the 2014 Plan (a “HomeStreet PSU”), will automatically accelerate (with performance-based vesting for HomeStreet PSUs occurring at target), be cancelled and entitle the holder to receive, no later than three business days after the effective time, (i) a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the Pre-2024 HomeStreet RSU or HomeStreet PSU immediately prior to the effective time (for HomeStreet PSUs, based on target performance) multiplied by (y) the exchange ratio, plus, (ii) an amount in cash equal to the amount of all dividends, if any, accrued but unpaid as of the effective time with respect to such Pre-2024 HomeStreet RSU or HomeStreet PSU.

 

At the effective time, the merger agreement provides that each outstanding HomeStreet restricted stock unit granted after December 31, 2023 (a “2024 HomeStreet RSU”) will automatically be converted into a FirstSun restricted stock unit award in respect of a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the 2024 HomeStreet RSU immediately prior to the effective time multiplied by (y) the exchange ratio (the “Converted RSU Awards”). Each Converted RSU Award will be subject to the same terms and conditions, including payment of accrued dividends upon vesting, as applied to the corresponding 2024 HomeStreet RSU immediately prior to the effective time, provided that time-based vesting conditions will accelerate upon the earlier of (i) a termination of employment of the applicable holder of such Converted RSU Award without Cause or for Good Reason (each as defined in the 2014 Plan and 2024 HomeStreet RSU), (ii) the date on which the system conversion of the banking operations of FirstSun and HomeStreet is completed (or up to 30 days thereafter, at FirstSun’s discretion), (iii) six months from the closing date or (iv) any earlier vesting date or event required by the 2024 HomeStreet RSU prior to the effective time.

 

Q:How will the merger affect HomeStreet’s 401(k) plan?
A:The merger agreement provides that if requested by FirstSun in writing not less than ten business days prior to the closing date, the board of directors of HomeStreet or HomeStreet Bank will cause HomeStreet’s 401(k) plan to be terminated effective as of the day immediately prior to the closing date and contingent upon the occurrence of the effective time. If FirstSun requests that HomeStreet’s 401(k) plan be terminated, (i) HomeStreet will provide FirstSun with evidence that such plan has been terminated (the form and substance of which will be subject to reasonable review and comment by FirstSun) not later than two days immediately preceding the closing date, and (ii) any continuing employees will be eligible to participate, effective as of the effective time, in a 401(k) plan sponsored or maintained by FirstSun or one of its subsidiaries, it being agreed that there will be no gap in participation. FirstSun and HomeStreet will take any and all actions as may be required, including amendments to HomeStreet’s 401(k) plan and/or FirstSun’s 401(k) plan, to permit the continuing employees to make rollover contributions to FirstSun’s 401(k) plan of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of Code) in the form of cash, notes (in the case of loans), or a combination thereof in an amount equal to the full account balance distributed to such employee from the HomeStreet 401(k) plan.
3
 
Q:What will happen in the mergers with respect to the agreements FirstSun entered into with certain third parties when the merger agreement was executed to provide financing for the transactions contemplated by the merger agreement?
A:Concurrently with the execution of the merger agreement, FirstSun entered into an Upfront Securities Purchase Agreement (the “Upfront Securities Purchase Agreement”), dated January 16, 2024, with certain funds managed by Wellington Management (“Wellington”), pursuant to which, on the terms and subject to the conditions set forth therein, FirstSun sold, and Wellington purchased, for $32.50 per share and an aggregate purchase price of $80 million, approximately 2.46 million shares of FirstSun common stock. This transaction closed on January 17, 2024. Under the terms of the Upfront Securities Purchase Agreement, FirstSun is committed to listing FirstSun’s common stock on a national securities exchange, regardless of whether the mergers are consummated, and FirstSun is obligated to issue to Wellington, upon consummation of the mergers, warrants to purchase approximately 1.15 million shares of FirstSun common stock with such warrants having an initial exercise price of $32.50 per share. The warrants will carry a term of three years, and may be settled on a “net share” basis by applying shares otherwise issuable under the warrants in satisfaction of the exercise price. In the event the mergers are not consummated, no warrants will be issued.

 

Additionally, FirstSun entered into an Acquisition Finance Securities Purchase Agreement, dated January 16, 2024, as amended on April 30, 2024 by the First Amendment to the Acquisition Finance Securities Purchase Agreement (collectively, the “Acquisition Finance Securities Purchase Agreement,” and together with the Upfront Securities Purchase Agreement, the “Investment Agreements”) with Wellington, Castle Creek and certain other institutional accredited investors. Pursuant to the Acquisition Finance Securities Purchase Agreement, on the terms and subject to the conditions set forth therein, substantially concurrently with the closing of the mergers, the investors will invest an aggregate of $140 million in exchange for the sale and issuance, at a purchase price of $32.50 per share, of approximately 4.31 million shares of FirstSun common stock. Further, FirstSun may offer an additional 461,539 shares of FirstSun common stock, at a purchase price of $32.50 per share, for an additional investment of $15 million from (i) Castle Creek, who has a 30-day window from the execution of the First Amendment to the Acquisition Finance Securities Purchase Agreement to elect to purchase such shares, or (ii) any other investor selected by FirstSun if Castle Creek does not elect to purchase such shares.

The Acquisition Finance Securities Purchase Agreement investment is contingent upon the merger closing in accordance with the terms of the merger agreement and are subject to the satisfaction or waiver of certain other closing conditions. See the information provided in the section entitled “The Mergers—Investment Agreements” beginning on page 82.

Q:What are the material U.S. federal income tax consequences of the mergers to HomeStreet shareholders?

 

A:The mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to the completion of the mergers that FirstSun and HomeStreet receive written opinions from their respective counsel to the effect that the mergers will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. If the mergers so qualify, a U.S. holder (as defined under “Material U.S. Federal Income Tax Consequences of the Mergers”) of HomeStreet common stock generally will not recognize gain or loss for U.S. federal income tax purposes upon the exchange of shares of HomeStreet common stock for shares of FirstSun common stock pursuant to the mergers, except with respect to any cash received in lieu of fractional shares of FirstSun common stock or from the exercise of dissenters’ rights. You should be aware that the tax consequences to you of the mergers may depend upon your own situation. In addition, you may be subject to state, local or foreign tax laws that are not discussed in this proxy statement/prospectus. For further information, see “Material U.S. Federal Income Tax Consequences of the Mergers” beginning on page 109. HomeStreet shareholders should consult their own tax advisors for a full understanding of the particular tax consequences of the mergers to them.

 

Q:If I am a HomeStreet shareholder, should I send in my HomeStreet stock certificate(s) now?

 

A:No. Please do not send in your HomeStreet stock certificate(s) with your proxy. After the mergers close, you will receive further documents and detailed instructions regarding the exchange of your HomeStreet stock certificates for the merger consideration. See “The Merger Agreement—Exchange of Shares” beginning on page 91.
4
 
Q:When and where is the HomeStreet shareholder meeting?
A:The HomeStreet shareholder meeting will be held via webcast on June 18, 2024 at 10:00 a.m. Pacific Time at www.virtualshareholdermeeting/HMST2024SM.
Even if you plan to virtually attend the HomeStreet shareholder meeting, HomeStreet recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend or become unable to attend the applicable meeting. See the section entitled “Q: How do I vote my shares?” beginning on page 9.
Q:What are HomeStreet shareholders being asked to vote on at the HomeStreet shareholder meeting?
A:At the HomeStreet shareholder meeting, HomeStreet shareholders will be asked to consider and vote on the following three proposals, which are referred to in this proxy statement/prospectus as the “merger-related proposals”:
·Proposal No. 1 – a proposal to approve the merger agreement, which HomeStreet refers to as the “merger proposal”;

 

·Proposal No. 2 – a proposal to approve, on an advisory (non-binding) basis the merger-related compensation payments that will or may be paid to the named executive officers of HomeStreet in connection with the transactions contemplated by the merger agreement, which HomeStreet refers to as the “merger-related compensation proposal”; and

 

·Proposal No. 3 – a proposal to adjourn the HomeStreet shareholder meeting, if necessary or appropriate, for the purpose of soliciting additional proxies in favor of the merger proposal, which HomeStreet refers to as the “adjournment proposal.”

In order to complete the mergers, among other things, HomeStreet shareholders must approve the HomeStreet merger proposal. The approval of neither the merger-related compensation proposal nor the adjournment proposal is a condition to the obligations of HomeStreet or FirstSun to complete the mergers.

In addition to the merger-related proposals, HomeStreet shareholders will be asked to consider and vote on the following four proposals:

·Proposal No. 4 – a proposal to elect eight directors of HomeStreet to serve until the next annual the meeting of shareholders of HomeStreet, or until their successors are elected or appointed or until death, resignation or removal, whichever is earlier, which HomeStreet refers to as the “director election proposal” (provided that if Proposal No. 1 is approved and the mergers are completed, the separate corporate existence of HomeStreet will cease and the term of the directors will end in accordance with the merger agreement);

 

·Proposal No. 5 – a proposal to approve, on an advisory (non-binding) basis, the executive compensation of HomeStreet’s named executive officers for 2023, which HomeStreet refers to as the “compensation (non-merger) proposal”;

 

·Proposal No. 6 – a proposal to approve, on an advisory (non-binding) basis, the frequency of future advisory (non-binding) votes on executive compensation, which HomeStreet refers to as the “frequency of compensation vote proposal” (provided that if mergers are completed, no such future advisory votes will occur); and

 

·Proposal No. 7 – a proposal to ratify, on an advisory (non-binding) basis, HomeStreet’s independent registered public accounting firm for the fiscal year ending December 31, 2024, which HomeStreet refers to as the “auditor ratification proposal” however, if the mergers are completed, HomeStreet will be merged out of existence and this engagement will end).
5
 
QWhy am I being asked to consider and vote on the merger-related compensation proposal?
A:Under the U.S. Securities and Exchange Commission (the “SEC”) rules, HomeStreet is required to seek an advisory non-binding vote with respect to the compensation that will or may be paid to HomeStreet’s named executive officers in connection with the consummation of the transactions contemplated by the merger agreement, or “golden parachute” compensation.
QWhat happens if holders of HomeStreet common stock do not approve, by advisory, non-binding vote, the merger-related compensation proposal?
A:The vote on the merger-related compensation proposal is separate and apart from the votes to approve the other proposals being presented at the HomeStreet shareholder meeting. Because the vote on the merger-related compensation proposal is advisory in nature only, it will not be binding on HomeStreet, FirstSun or the combined company in the mergers. Accordingly, the merger-related compensation will be paid to HomeStreet’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements even if the holders of HomeStreet common stock do not approve the merger-related compensation proposal.
Q:What constitutes a quorum for the HomeStreet shareholder meeting?

 

A:The presence at the HomeStreet shareholder meeting, virtually or represented by proxy, of a majority of the outstanding shares of HomeStreet common stock will constitute a quorum for the transaction of business at the HomeStreet shareholder meeting. Abstentions, votes withheld and broker non-votes will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum. Under certain circumstances banks, brokers and other nominees are prohibited from exercising discretionary authority for beneficial owners who have not provided voting instructions to the bank, broker or other nominee, which is referred to as a “broker non-vote”. In these cases, those shares will be counted for the purpose of determining whether a quorum is present. Please see “Q: If my shares are held in ‘street name’ by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote my shares for me?”
Q:Who is entitled to vote?
A:All shareholders of record of HomeStreet’s common stock at the close of business on April 11, 2024 (the “record date”) are entitled to notice of, and to vote at, the HomeStreet shareholder meeting.

 

Q:How many shares are entitled to vote at the meeting?
A:As of the record date, 18,857,566 shares of HomeStreet common stock were issued, outstanding and entitled to vote at the HomeStreet shareholder meeting.
Q:How many votes do I have?
A:Each share of HomeStreet common stock you owned on the record date is entitled to one vote for each director candidate. You may NOT cumulate votes relating to the election of directors. For the other matters presented at this meeting, you are entitled to one vote for each share of common stock you owned on the record date.
Q:What is the vote required to approve each proposal at the HomeStreet shareholder meeting?
A:Merger proposal

Standard: Approval of the merger proposal requires the affirmative vote of at least a majority of the outstanding shares of HomeStreet common stock. HomeStreet shareholders must approve the merger proposal in order for the mergers to occur. If HomeStreet shareholders fail to approve the HomeStreet merger proposal, the mergers will not occur and HomeStreet shareholders will not receive the merger consideration.

Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy card or fail to instruct your bank or broker how to vote with respect to the merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

6
 
B.Merger-related compensation proposal, compensation (non-merger) proposal, adjournment proposal, and auditor ratification proposal

Standard: Approval of the merger-related compensation proposal, compensation (non-merger) proposal, adjournment proposal, and auditor ratification proposal requires the votes cast by shareholders of HomeStreet in favor of the proposal to exceed the votes cast by shareholders of HomeStreet against the proposal at the HomeStreet shareholder meeting.

Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy card or fail to instruct your bank or broker how to vote with respect to any of these proposals, you will be deemed not to have cast a vote with respect to the proposal for which you failed to vote, marked “ABSTAIN” or failed to instruct your bank or broker, and it will have no effect on the proposal.

 

C.Director election proposal

Standard: Assuming a quorum is present, and in accordance with HomeStreet’s Amended and Restated Bylaws, dated July 25, 2019, in an uncontested election, the number of votes cast for a director nominee must exceed the votes cast against the director nominee for the director to be elected.

Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy card or fail to instruct your bank or broker how to vote with respect to the director election proposal, you will be deemed not to have cast a vote, marked “ABSTAIN” or failed to instruct your bank or broker, with respect to the proposal and it will have no effect on the proposal.

D.Frequency of compensation vote proposal

Standard: Assuming a quorum is present, the frequency (one year, two years or three years) receiving the highest number of votes from shareholders present virtually or by proxy at the HomeStreet shareholder meeting and entitled to vote thereon will be considered the frequency preferred by the shareholders.

Effect of abstentions and broker non-votes: If you fail to vote, mark “ABSTAIN” on your proxy card or fail to instruct your bank or broker how to vote with respect to the frequency of compensation vote proposal, you will be deemed not to have cast a vote, marked “ABSTAIN” or failed to instruct your bank or broker, with respect to the proposal and it will have no effect on the proposal.

Q:Are there any voting agreements with existing shareholders?
A:Yes. In connection with entering into the merger agreement, each member of the HomeStreet board of directors has entered into a voting agreement with FirstSun in which such HomeStreet director has agreed to vote all HomeStreet common stock owned by such director in favor of the mergers, and against alternative transactions or other proposals that could prevent or materially delay the mergers, grant a corresponding proxy with respect to their shares of HomeStreet common stock under certain circumstances and not, directly or indirectly, assign, sell, transfer or otherwise dispose of their shares of HomeStreet common stock, subject to certain exceptions. The voting agreements relate only to the merger-related proposals. As of the record date, shares constituting 1.67% of HomeStreet common stock entitled to vote at the HomeStreet shareholder meeting are subject to the voting agreements.
Q:Are there any risks I should consider in deciding whether to vote for the approval of the merger proposal or the other proposals to be considered at the HomeStreet shareholder meeting?
A:Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 27. You also should read and carefully consider the risk factors of FirstSun and HomeStreet contained in the documents that are incorporated by reference into or attached as an annex to this proxy statement/prospectus, and we also urge you to read carefully this proxy statement/prospectus and all annexes and exhibits hereto in their entirety.
7
 
Q:What are the conditions to complete the mergers?
A:The obligations of FirstSun and HomeStreet to complete the mergers are subject to the satisfaction or waiver of certain closing conditions contained in the merger agreement, including, among other things, (i) adoption of the merger agreement by the requisite vote of the HomeStreet shareholders, (ii) Sunflower Bank’s conversion from a national banking association to a Texas state-chartered bank that will be a member of the Federal Reserve, (iii) the receipt of the requisite regulatory approvals from the Federal Reserve, the Texas Department of Banking and the Washington Department of Financial Institutions (“WDFI”), (iv) no governmental entity having imposed, and no requisite regulatory approval containing, a materially burdensome condition (as defined in “The Mergers—Regulatory Approvals Required for the Mergers” beginning on page 84) and (v) the absence of any order, injunction, decree or other legal restraint preventing the completion of the transactions contemplated by the merger agreement or any law making the completion thereof illegal. FirstSun’s and HomeStreet’s obligation to complete the mergers is also subject to certain additional conditions, including (a) subject to certain materiality thresholds, the accuracy of the representations and warranties of HomeStreet, in the case of FirstSun and Merger Sub, and FirstSun and Merger Sub, in the case of HomeStreet, including the absence of a material adverse effect, (b) performance in all material respects by HomeStreet, in the case of FirstSun and Merger Sub, and FirstSun and Merger Sub, in the case of HomeStreet, of its respective obligations under the merger agreement and authorization for listing on Nasdaq of the shares of FirstSun common stock, subject to official notice of issuance, (c) receipt by such party of an opinion from its counsel to the effect that the mergers will qualify as a reorganization within the meaning of Section 368(a) of the Code, and (d) FirstSun causing the election or appointment of three qualified nominees from the board of directors of HomeStreet to the board of directors of FirstSun and Sunflower Bank.

 

Q:How does the HomeStreet board of directors recommend that I vote at the HomeStreet shareholder meeting?
A:The HomeStreet board of directors unanimously recommends that you vote:
·“FOR” the merger proposal,
·“FOR” the merger-related compensation proposal,
·“FOR” the adjournment proposal,
·“FOR” the director election proposal,
·“FOR” the compensation (non-merger) proposal,
·“FOR” one year for the frequency of future advisory (non-binding) votes on executive compensation, and
·“FOR” the auditor ratification proposal.
In considering the recommendations of the HomeStreet board of directors, HomeStreet shareholders should be aware that HomeStreet directors and executive officers may have interests in the mergers that are different from, or in addition to, the interests of the HomeStreet shareholders generally. For a more complete description of these interests, see the information provided in the section entitled “The Mergers—Interests of HomeStreet’s Directors and Executive Officers in the Mergers” beginning on page 72.
Q:What do I need to do now?
A:After carefully reading and considering the information contained in this proxy statement/prospectus, including all annexes, exhibits and documents incorporated by reference in this document in its entirety, please vote your shares as soon as possible so that your shares will be represented at the HomeStreet shareholder meeting. Please follow the instructions set forth herein or on the enclosed proxy card and return the proxy card in the enclosed postage-paid envelope, or by submitting your proxy by telephone or through the Internet, as soon as possible so that your shares may be represented at your meeting. Please note that you should follow the voting instruction form provided by your broker, bank or other nominee if your shares are held in the name of your broker, bank or other nominee.
8
 
Q:How do I vote my shares?

 

A:If you are a shareholder of record of HomeStreet as of April 11, 2024, the record date for the HomeStreet shareholder meeting, you may submit your proxy before the HomeStreet shareholder meeting in any of the following ways:

 

·via the Internet, by accessing the website www.proxyvote.com and following the instructions on the website;

 

·by mail, by completing, signing, dating and returning the enclosed proxy card to HomeStreet using the enclosed postage-paid envelope; or

 

·by telephone, by calling toll-free 1-800-690-6903 and following the recorded instructions.

 

If you intend to submit your proxy by telephone or via the Internet, you must do so by 11:59 p.m. Eastern Time on June 17, 2024. If you intend to submit your proxy by mail, your completed proxy card must be received before the HomeStreet shareholder meeting. Shares held in the HomeStreet 401(k) plan must be voted by 11:59 p.m. Eastern Time on June 13, 2024.

 

If you are a HomeStreet shareholder as of the Record Date, and you virtually attend the HomeStreet shareholder meeting through the website provided using the control number from your proxy card or voting instruction materials, you may vote your shares associated with that control number online during the HomeStreet shareholder meeting. Whether or not you intend to be virtually present at the HomeStreet shareholder meeting, you are urged to complete, sign, date and return the enclosed proxy card to HomeStreet in the enclosed postage-paid envelope or submit a proxy by telephone or via the Internet as described on the enclosed instructions as soon as possible. If you then virtually attend and wish to vote your shares during the meeting, your original proxy may be revoked by virtually attending and voting at the HomeStreet shareholder meeting.

 

If you hold your shares in “street name” through a broker, bank or other nominee, your broker, bank or other nominee will send you separate instructions describing the procedure for voting your shares. To participate and vote at the HomeStreet shareholder meeting, you will need the control number included in the instructions or proxy card you receive. You may contact the bank, broker, or other nominee where you hold your account if you have questions about obtaining your control number.

Q:How do I virtually attend and participate in the HomeStreet shareholder meeting?
A:The meeting webcast on June 18, 2024 will begin promptly at 10:00 a.m. Pacific Time. You are encouraged to access the meeting prior to the start time. Online check-in will begin at 9:45 a.m. Pacific Time, and you should allow ample time for the check-in procedures.

Only HomeStreet shareholders or their duly authorized and constituted proxies may virtually attend the HomeStreet shareholder meeting. The control number printed on your proxy card or voting instruction materials is required to virtually attend the meeting through the website at www.virtualshareholdermeeting.com/HMST2024SM regardless of whether you are a registered shareholder or a beneficial shareholder. HomeStreet has been advised that Google Chrome and Microsoft Edge browsers will give the best user experience for participation in the virtual meeting.

HomeStreet’s Chairman of the Board and Chief Executive Officer is expected to lead the meeting, and members of the HomeStreet board of directors are expected to be present and available during the HomeStreet shareholder meeting. During the HomeStreet shareholder meeting, you will be able to hear the business of the meeting as it is conducted, vote your shares if you have not already done so, access information that

 

9
 

would normally be available at an in-person meeting, including the list of shareholders entitled to vote at the meeting, and submit questions to be answered by HomeStreet’s Chairman of the Board. Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints.

The virtual HomeStreet shareholder meeting has been designed to provide substantially the same rights to participate as you would have at an in-person meeting. Shareholders participating in the virtual meeting will be in a listen-only mode and will not be able to speak during the webcast. However, in order to maintain the interactive nature of the virtual meeting, virtual attendees are able to submit questions before and during the meeting through the virtual meeting portal. To submit a question, log into the virtual meeting platform at www.virtualshareholdermeeting.com/HMST2024SM, type your question into the “Ask a Question” field, and click “Submit.” Questions and answers may be grouped by topic and substantially similar questions may be grouped and answered once. In order to promote fairness and efficient use of time, HomeStreet will respond to up to two questions from a single shareholder and may not be able to respond to all questions. FirstSun and certain advisors are expected guests.

The virtual HomeStreet shareholder meeting website will be hosted by Broadridge. In the event you have any technical difficulties logging into the meeting, support from Broadridge will be available. For more information, please go to the virtual meeting website, where you will be able to find additional information on technical support matters.

 

Q:If my shares are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote my shares for me?

 

A:No. Under the rules of the NYSE, brokers who hold shares in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion only on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not permitted to exercise their voting discretion with respect to the approval of matters that the NYSE determines to be “non-routine” without specific instructions from the beneficial owner. Under the NYSE rules, all of the proposals to be voted on at the HomeStreet shareholder meeting are considered “non-routine” matters, except for the auditor ratification proposal. As a result, if you hold your shares of HomeStreet common stock in “street name,” your shares will not be represented and will not be voted on any matter, except for the auditor ratification proposal, unless you affirmatively instruct your bank, broker or other nominee how to vote your shares in one of the ways indicated by your bank, broker or other nominee. It is therefore critical that you cast your vote by instructing your bank, broker or other nominee on how to vote.

 

Please follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote shares held in “street name” by returning a proxy card directly to HomeStreet or by voting at the HomeStreet shareholder meeting, unless you provide a legal proxy, executed in your favor, from the broker, bank or other nominee that is the record holder of your shares. In addition to such legal proxy, if you plan to attend the HomeStreet shareholder meeting virtually, but you are not a shareholder of record because you hold your shares in “street name,” you will receive voting instructions from your broker, bank or other nominee, which will include a control number that you can use to virtually attend the HomeStreet shareholder meeting.

Q:Can I change my vote?
A:Yes. If you are the record holder of HomeStreet common stock, you can change your vote or revoke your proxy at any time before your proxy is voted at the HomeStreet shareholder meeting. You can do this by:

 

·timely delivering a signed written notice of revocation to the Corporate Secretary of HomeStreet;

 

·timely delivering a new, valid proxy bearing a later date; or

 

·virtually attending the HomeStreet shareholder meeting and voting during the meeting. Simply virtually attending the HomeStreet shareholder meeting without voting will not revoke any proxy that you have previously given or change your vote.

 

10
 

If you hold your shares in “street name” through a bank, broker, or other holder of record, you should contact your record holder to change your vote or you may change your vote by participating in and voting during the HomeStreet shareholder meeting.

 

Q:Why is my vote important?
A:If you do not vote, it will be more difficult for HomeStreet to obtain the necessary quorum to hold the HomeStreet shareholder meeting. In addition, your failure to submit a proxy or vote virtually, or failure to instruct your bank, broker other nominee how to vote, or an abstention will have the same effect as a vote “AGAINST” the merger proposal.
Q:What will happen if I return my proxy card without indicating how to vote?
A:If you sign and return your proxy card without indicating how to vote on any particular proposal, the shares of HomeStreet common stock represented by your proxy will be voted as recommended by the HomeStreet board of directors with respect to such proposal, as the case may be.

 

Q:What should I do if I receive more than one set of voting materials?

 

A:HomeStreet shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold shares of HomeStreet common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold such shares. If you are a holder of record of HomeStreet common stock and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date, and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this proxy statement/prospectus to ensure that you vote every share of HomeStreet common stock that you own.

 

Q:Will HomeStreet be required to submit the merger proposal to its shareholders even if the HomeStreet board of directors has withdrawn, modified or qualified its recommendation?
A:Yes. Unless the merger agreement is terminated before the HomeStreet shareholder meeting, HomeStreet is required to submit the merger proposal to its shareholders even if the HomeStreet board of directors has withdrawn, modified or qualified its recommendation that HomeStreet shareholders approve the merger agreement; provided, however, in order for HomeStreet to terminate the merger agreement pursuant to this circumstance, a termination fee may be required to be paid by HomeStreet. See “The Merger Agreement—Termination Fee” for a complete discussion of the circumstances under which any such termination fee will be required to be paid.
Q:Are HomeStreet shareholders entitled to dissenters’ rights?
A:Each HomeStreet shareholder who does not vote in favor of the merger proposal will have the right to seek appraisal of the fair value of such shareholder’s shares of HomeStreet common stock, in accordance with Chapter 23B.13 of the Washington Business Corporation Act ( “Chapter 23B.13”), if such shareholder delivers a demand for appraisal before the vote is taken on the merger proposal in accordance with Chapter 23B.13 and otherwise complies with all requirements of Chapter 23B.13, which are summarized in this proxy statement/prospectus. Pursuant to Chapter 23B.13, when a proposed merger is to be submitted to a vote at a meeting of the shareholders, the meeting notice must state that shareholders are or may be entitled to assert dissenters’ rights and must be accompanied by a copy of Chapter 23B.13. The notice of the HomeStreet shareholder meeting included with this proxy statement/prospectus constitutes notice to the holders of HomeStreet common stock of their dissenters’ rights, and a copy of Chapter 23B.13 is attached to this proxy statement/prospectus as Annex C.

 

Q:What happens if I sell my shares of HomeStreet common stock before the completion of the mergers?
A:If you transfer your shares of HomeStreet common stock, you will have transferred your right to receive the merger consideration in the mergers or to exercise dissenters’ rights in connection with the mergers. In order to receive the merger consideration or to exercise dissenters’ rights in connection with the mergers, you must
11
 
  hold your shares of HomeStreet common stock through the effective time of the mergers. The record date for shareholders entitled to vote at the HomeStreet shareholder meeting is earlier than the date the mergers is anticipated to be consummated. Accordingly, if you sell or transfer your shares of HomeStreet common stock after the record date but before the HomeStreet shareholder meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your shares, and each of you (the transferor and the transferee) notifies HomeStreet in writing of such special arrangements, you will transfer the right to receive the merger consideration, if the mergers are consummated, to the person to whom you sell or transfer your shares of HomeStreet common stock, but you will have retained your right to vote these shares at the shareholder meeting. Even if you sell or otherwise transfer your shares of HomeStreet common stock after the record date, we encourage you to complete, date, sign, and return the enclosed proxy card or vote via the Internet or by telephone.
Q:When do you expect to complete the mergers?
A:FirstSun and HomeStreet expect to complete the mergers in late 2024. FirstSun and HomeStreet must obtain the approval of the merger agreement by the HomeStreet shareholders at the HomeStreet shareholder meeting, and also must obtain necessary regulatory approvals in addition to satisfying certain other closing conditions prior to the completion of the mergers. However, neither FirstSun nor HomeStreet can assure you of when or if the mergers will be completed, because completion is subject to conditions and factors outside the control of both companies.
Q:What happens if the mergers are not completed?
A:If the mergers are not completed, HomeStreet shareholders will not receive any consideration for their shares of HomeStreet common stock in connection with the mergers. Instead, HomeStreet will remain an independent company and its stock is expected to remain listed on Nasdaq. In addition, if the merger agreement is terminated in certain circumstances, a termination fee of $10.0 million may be required to be paid by either HomeStreet or FirstSun to the other party, as applicable; however, if HomeStreet receives a competing acquisition proposal that constitutes a superior proposal prior to 11:59 p.m., New York time on May 30, 2024, and in connection with such superior proposal, HomeStreet or FirstSun terminates the merger agreement no later than 10 days after the receipt of the acquisition proposal or May 30, 2024, whichever is later, then HomeStreet will be required to pay FirstSun a reduced termination fee of $2.6 million plus reimbursement of FirstSun’s transaction fees and expenses. See “The Merger Agreement—Termination Fee” beginning on page 105 for a complete discussion of the circumstances under which any such termination fee will be required to be paid.
Q:Who will count the votes?
A:Broadridge Financial Solutions, Inc. will serve as the independent inspector of election and, in such capacity, will count and tabulate the votes.
Q:Where can I find the results of the HomeStreet shareholder meeting?
A:HomeStreet intends to announce preliminary voting results at the HomeStreet shareholder meeting and intends to publish final results in a Current Report on Form 8-K, which HomeStreet will file with the SEC within four business days after the HomeStreet shareholder meeting.
Q:If I have any questions regarding the meeting or voting my shares, whom may I contact?
A.If you have any questions or need any assistance in voting your shares, please contact our proxy solicitor:

OKAPI PARTNERS LLC

1212 Avenue of the Americas

New York, NY 10036

Toll-Free: (877) 566-1922

Email: pmchugh@okapipartners.com

12
 

SUMMARY

 

This summary highlights selected information included in this proxy statement/prospectus and does not contain all of the information that may be important to you. You should read this entire document and its annexes. Each item in this summary includes a page reference directing you to a more complete description of that item.

 

The Mergers (page 40)

 

FirstSun and HomeStreet have entered into the merger agreement that provides for the combination of FirstSun and HomeStreet. Under the merger agreement, a wholly-owned subsidiary of FirstSun will merge with and into HomeStreet, with HomeStreet remaining as the surviving entity and becoming a wholly-owned subsidiary of FirstSun. This surviving entity, immediately following the merger and as part of a single integrated transaction, will merge with and into FirstSun, with FirstSun as the surviving entity. The terms and conditions of the mergers are contained in the merger agreement, which is attached as Annex A to this proxy statement/prospectus. We encourage you to read the merger agreement carefully, as it is the legal document that governs the mergers. Immediately following the completion of the second step merger, HomeStreet Bank will merge with and into Sunflower Bank, with Sunflower Bank as the surviving bank.

 

Merger Consideration (page 89)

 

If the mergers are completed, each outstanding share of HomeStreet common stock will be converted into the right to receive the merger consideration of 0.3867 shares of FirstSun common stock (which we refer to as the “exchange ratio” and together with cash in lieu of fractional shares as discussed below, the “merger consideration”), except for treasury stock or shares owned by HomeStreet or FirstSun, in each case, other than in a fiduciary or agency capacity or as a result of debts previously contracted, which will be cancelled, and shares held by shareholders who properly exercise dissenters’ rights. FirstSun will not issue any fractional shares of FirstSun common stock in the mergers. Instead, a HomeStreet shareholder who otherwise would have received a fraction of a share of FirstSun common stock will receive an amount in cash (without interest) equal to such fractional part of a share of FirstSun common stock multiplied by $35.00.

 

The following table shows the closing sale prices of FirstSun common stock and HomeStreet common stock as reported on the OTCQX® Best Market and Nasdaq, as applicable, on April 29, 2024, the last trading day before the public announcement of the April 30 amendment to the merger agreement, and on May 10, 2024, the last practicable trading day before the date of this proxy statement/prospectus. This table also shows the implied value of the merger consideration to be issued in exchange for each share of HomeStreet common stock, which was calculated by multiplying the closing price of FirstSun common stock on April 29, 2024 and May 10, 2024 by the exchange ratio of 0.3867 rounded to the nearest cent.

   FirstSun
Common
Stock
   HomeStreet
Common
Stock
   Implied Value of
One Share of
HomeStreet
Common Stock
 
April 29, 2024  $35.00   $12.28   $13.54 
May 10, 2024  $34.00   $10.33   $13.15 

 

Based on the number of shares of FirstSun and HomeStreet common stock outstanding as of the close of business on April 30, 2024, and based on the number of shares of FirstSun common stock estimated to be issued to holders of HomeStreet common stock and equity awards in the mergers and, in connection the closing of the mergers, expected to be issued pursuant to the Acquisition Finance Securities Purchase Agreement, the former holders of HomeStreet common stock and equity awards, as a group, are estimated to own approximately 19% of the outstanding common shares of the combined company immediately after completion of the mergers, and the holders of FirstSun common stock, as a group, immediately prior to the mergers, including and together with the investors that purchase shares of FirstSun common stock pursuant to the Acquisition Finance Securities Purchase Agreement in connection with the completion of the mergers, are estimated to own approximately 81% of the

13
 

outstanding shares of the combined company immediately after completion of the mergers (assuming no exercise of FirstSun stock options prior to the closing of the HomeStreet merger, and excluding shares issuable upon exercise of the FirstSun stock options and the warrants).

Treatment of HomeStreet Equity Awards (page 73)

 

Upon completion of the mergers, outstanding HomeStreet equity awards will be treated as follows:

 

·at the effective time, the merger agreement provides that each outstanding Pre-2024 HomeStreet RSU, and each outstanding HomeStreet PSU, will automatically accelerate (with performance-based vesting for HomeStreet PSUs occurring at target), be cancelled and entitle the holder to receive, no later than three business days after the effective time, (1) a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the Pre-2024 HomeStreet RSU or HomeStreet PSU immediately prior to the effective time (for HomeStreet PSUs, based on target performance) multiplied by (y) the exchange ratio, plus, (2) an amount in cash equal to the amount of all dividends, if any, accrued but unpaid as of the effective time with respect to such Pre-2024 HomeStreet RSU or HomeStreet PSU; and

 

·at the effective time, the merger agreement provides that each outstanding 2024 HomeStreet RSU will automatically be converted into a Converted RSU Award in respect of a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the 2024 HomeStreet RSU immediately prior to the effective time multiplied by (y) the exchange ratio. Each Converted RSU Award will be subject to the same terms and conditions, including payment of accrued dividends upon vesting, as applied to the corresponding 2024 HomeStreet RSU immediately prior to the effective time, provided that time-based vesting conditions will accelerate upon the earlier of (a) a termination of employment of the applicable holder of such Converted RSU Award without Cause or for Good Reason (each as defined in the 2014 Plan and 2024 HomeStreet RSU), (b) the date on which the system conversion of the banking operations of FirstSun and HomeStreet is completed (or up to 30 days thereafter, at FirstSun’s discretion), (c) six months from the closing date of the mergers or (d) any earlier vesting date or event required by the 2024 HomeStreet RSU prior to the effective time.

 

For more information, see the section entitled “The Merger—Interests of HomeStreet’s Directors and Executive Officers in the Mergers—Treatment of HomeStreet Equity Awards.”

 

HomeStreet’s Reasons for the Mergers; Recommendation of the HomeStreet Board of Directors (page 51)

The HomeStreet board of directors has unanimously determined that the merger agreement, the merger, and the transactions contemplated by the merger agreement are advisable and in the best interests of HomeStreet and its shareholders and unanimously authorized, adopted and approved the merger agreement, the merger and the transactions contemplated by the merger agreement. The HomeStreet board of directors unanimously recommends that the HomeStreet shareholders vote “FOR” the merger proposal, “FOR” the merger-related compensation proposal and “FOR” the adjournment proposal. For the factors considered by the HomeStreet board of directors in reaching its decision to approve the merger agreement, see “The Mergers—HomeStreet’s Reasons for the Mergers; Recommendation of the HomeStreet Board of Directors,” beginning on page 51.

 

Opinion of HomeStreet’s Financial Advisor ((page 58) and Annex B)

 

In connection with the mergers, HomeStreet’s financial advisor, Keefe, Bruyette & Woods, Inc. (“KBW”), delivered a written opinion, dated April 30, 2024, to the HomeStreet board of directors as to the fairness, from a financial point of view and as of the date of the opinion, to the holders of HomeStreet common stock of the exchange ratio in the proposed merger. The full text of the opinion, which describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW in preparing the opinion, is attached as Annex B to this proxy statement/prospectus. The opinion was for the information of, and was directed to, the HomeStreet board of directors (in its capacity as such) in connection with its consideration of

14
 

the financial terms of the mergers. The opinion does not address the underlying business decision of HomeStreet to engage in the mergers or enter into the merger agreement or constitute a recommendation to the HomeStreet board of directors in connection with the mergers, and it does not constitute a recommendation to any holder of HomeStreet common stock or any stockholder of any other entity as to how to vote or act in connection with the mergers or any other matter.

 

For more information, see the section entitled “The Mergers—Opinion of HomeStreet’s Financial Advisor” beginning on page 58 of this proxy statement/prospectus and the copy of the KBW opinion included in this proxy statement/prospectus as Annex B.

HomeStreet Shareholder Meeting (page 37)

 

The HomeStreet shareholder meeting will be held via webcast at www.virtualshareholdermeeting.com/HMST2024SM on June 18, 2024 at 10:00 a.m. Pacific Time. At the HomeStreet shareholder meeting, HomeStreet shareholders will be asked to approve the merger proposal, the merger-related compensation proposal, the adjournment proposal, the director election proposal, the compensation (non-merger) proposal, the frequency of compensation vote proposal, and the auditor ratification proposal.

The HomeStreet board of directors has set April 11, 2024 as the record date for the HomeStreet shareholder meeting. Only holders of record of HomeStreet common stock at the close of business on April 11, 2024 will be entitled to notice of and to vote at the HomeStreet shareholder meeting and any adjournments or postponements thereof. As of the HomeStreet record date, there were 18,857,566 shares of HomeStreet common stock outstanding and entitled to vote at the HomeStreet shareholder meeting held by 2,168 holders of record.

The presence, in person or represented by proxy, of at least a majority of the total number of outstanding shares of HomeStreet common stock entitled to vote is necessary in order to constitute a quorum for purposes of the matters being voted on at the HomeStreet shareholder meeting.

HomeStreet Voting and Support Agreements

At the close of business on the record date for the HomeStreet shareholder meeting, HomeStreet directors and executive officers and their affiliates were entitled to vote 725,804 shares, representing approximately 3.8%, of the HomeStreet common stock issued and outstanding on that date.

 

Each member of the HomeStreet board of directors has entered into a voting agreement with FirstSun in which such HomeStreet director has agreed to vote all HomeStreet common stock owned by such director in favor of the mergers, and against alternative transactions or other proposals that could prevent or materially delay the mergers, grant a corresponding proxy with respect to their shares of HomeStreet common stock under certain circumstances and not, directly or indirectly, assign, sell, transfer or otherwise dispose of their shares of HomeStreet common stock, subject to certain exceptions. The voting agreements relate only to the merger-related proposals. As of the record date, shares constituting 1.67% of HomeStreet common stock entitled to vote at the HomeStreet shareholder meeting are subject to the voting agreements.

 

Material U.S. Federal Income Tax Consequences of the Mergers (page 109)

 

The mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to the completion of the merger that FirstSun and HomeStreet receive written opinions from their counsel to the effect that the mergers will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. If the mergers so qualify, a U.S. holder (as defined under “Material U.S. Federal Income Tax Consequences of the Mergers”) of HomeStreet common stock generally will not recognize gain or loss for U.S. federal income tax purposes upon the exchange of shares of HomeStreet common stock for shares of FirstSun common stock pursuant to the merger, except with respect to cash received in lieu of fractional shares of FirstSun common stock or from the exercise of dissenters’ rights. All HomeStreet shareholders should consult their own tax advisors for a full understanding of the particular tax consequences of the mergers to them.

15
 

Interests of HomeStreet’s Directors and Executive Officers in the Mergers (page 72)

In considering the recommendation of the HomeStreet board of directors to vote for the merger proposal, the merger-related compensation proposal and the adjournment proposal, holders of HomeStreet common stock should be aware that the directors and executive officers of HomeStreet have interests in the mergers that are different from, or in addition to, the interests of holders of HomeStreet common stock generally. References to the named executive officers of HomeStreet include Mark K. Mason, John M. Michel and William D. Endresen. The HomeStreet board of directors was aware of these interests and considered them, among other matters, in making its recommendation that HomeStreet shareholders vote to approve the merger proposal, the merger-related compensation proposal and the adjournment proposal.

 

These interests include, among others, the following:

 

·at the effective time, each outstanding Pre-2024 HomeStreet RSU and HomeStreet PSU will automatically accelerate, be cancelled and entitle the holder to receive (1) a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the Pre-2024 HomeStreet RSU or HomeStreet PSU immediately prior to the effective time (for HomeStreet PSUs, based on target performance) multiplied by (y) the exchange ratio, plus (2) an amount in cash equal to the amount of all dividends, if any, accrued but unpaid as of the effective time with respect to such Pre-2024 HomeStreet RSU or HomeStreet PSU;
·at the effective time, each outstanding 2024 HomeStreet RSU will automatically be converted into a Converted RSU Award in respect of a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the 2024 HomeStreet RSU immediately prior to the effective time multiplied by (y) the exchange ratio. Each Converted RSU Award will be subject to the same terms and conditions as applied to the corresponding 2024 HomeStreet RSU immediately prior to the effective time, provided that time-based vesting conditions will accelerate upon the earlier of (a) a termination of employment of the applicable holder of such Converted RSU Award without Cause or for Good Reason (each as defined in the 2014 Plan and 2024 HomeStreet RSU), (b) the date on which the system conversion of the banking operations of FirstSun and HomeStreet is completed (or up to 30 days thereafter, at FirstSun’s discretion), (c) six months from the closing date of the mergers or (d) any earlier vesting date or event required by the 2024 HomeStreet RSU prior to the effective time;
·FirstSun has entered into an employment agreement with Mr. Mason whose term will commence at the effective time of the mergers and provide for certain compensation and benefits in connection with his employment following the closing of the mergers, including severance, upon a subsequent qualifying termination (the “Mason Employment Agreement”);
·Mr. Mason will also be entitled to receive payment of the severance payments and benefits contemplated by, and in accordance with, the applicable change in control severance terms of his employment agreement with HomeStreet, notwithstanding Mr. Mason’s entry into the Mason Employment Agreement and subsequent employment with FirstSun;
·to the extent applicable under the terms of their respective agreements, each HomeStreet executive officer is entitled to change in control severance payments and benefits upon a qualifying termination of employment or termination for good reason within 90 days prior to or within 12 months following the consummation of the mergers;
·pursuant to the terms of the merger agreement, prior to closing, if requested by FirstSun and contingent upon the occurrence of the effective time, HomeStreet’s 401(k) plan will be terminated, and any continuing employees will be eligible to participate, effective as of the effective time, in a 401(k) plan sponsored or maintained by FirstSun or one of its subsidiaries. FirstSun and HomeStreet will take any and all actions as may be required, including amendments to HomeStreet’s 401(k) plan and/or FirstSun’s 401(k) plan, to permit the continuing employees to make rollover contributions to FirstSun’s 401(k) plan
16
 
 of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Code) in the form of cash, notes (in the case of loans), or a combination thereof in an amount equal to the full account balance distributed to such employee from the HomeStreet 401(k) plan;
·certain of HomeStreet’s directors and executive officers will continue to serve as directors or executive officers, as applicable, of the combined company or the combined bank following the closing of the mergers; and
·pursuant to the terms of the merger agreement, HomeStreet’s directors and executive officers are entitled to indemnification, advancement of expenses and six years of continued liability insurance coverage. See the section entitled “The Merger Agreement — Indemnification, Directors’ and Officers’ Insurance”.

 

The HomeStreet board of directors was aware of and considered these respective interests, among other matters, in evaluating and negotiating the merger agreement, when deciding to adopt and approve the merger agreement and in making its recommendation that HomeStreet shareholders vote to approve the merger proposal, merger-related compensation proposal and adjournment proposal. For a more complete description of these interests, see the section entitled “The Merger — Interests of HomeStreet’s Directors and Executive Officers in the Merger,” beginning on page 72.

 

Governance of the Combined Company After the Mergers (page 81)

 

Boards of Directors; Board Representative Right; Other Governance Matters

 

Immediately after the effective time of the second step merger, FirstSun will increase the size of its board of directors by three for a total of 12 directors, and Mark Mason and two other legacy directors of HomeStreet will be appointed to the board of directors of FirstSun. Further, the merger agreement provides that upon such appointment, Mark Mason will serve as the Executive Vice Chair of the board of directors of FirstSun. Pursuant to the Acquisition Finance Securities Purchase Agreement, FirstSun and Castle Creek have entered into an agreement to provide certain governance and other rights to Castle Creek upon consummation of the closing of the mergers and its investment in FirstSun. Among other rights, Castle Creek will initially appoint an observer to the board of directors of FirstSun, and, upon Castle Creek’s request after the earlier of six months or a private equity investor losing a board nomination right pursuant to its existing agreements with FirstSun, Castle Creek will receive the right, so long as Castle Creek maintains beneficial ownership of at least 40% of the shares of FirstSun common stock acquired pursuant to the Acquisition Finance Securities Purchase Agreement, to nominate an individual for election or appointment to the board of directors of FirstSun.

 

The merger agreement provides that (a) the names of the combined company and the surviving bank will be FirstSun Capital Bancorp and Sunflower Bank, respectively, (b) the headquarters of the combined company and the surviving bank will be located in Denver, Colorado and Dallas, Texas, respectively, and (c) FirstSun will retain the HomeStreet branding of the HomeStreet Bank branches.

Termination of Stockholders’ Agreement; Retention of Board Representative Rights

 

FirstSun is party to a Stockholders’ Agreement with its stockholders that, pursuant to the merger agreement, will be terminated at the effective time of the second step merger. Effective as of January 16, 2024, the Stockholders’ Agreement was amended to provide that the Stockholders’ Agreement would terminate automatically and without further action by any party at the effective time of the second step merger.

 

Effective upon closing of the mergers and the termination of the Stockholders’ Agreement, FirstSun will enter into board representative letter agreements with the five following FirstSun stockholders such that the stockholders will retain the right to appoint a director to the combined company board of directors, in each case, so long as certain stock ownership thresholds are maintained: entities affiliated with Lightyear Fund III LP; Twin Meadow VHC Trust dated May 25, 2011 (associated with Mollie Hale Carter); Aquiline SGB Holdings LLC (“Aquiline”); JLL/FCH Holdings I, LLC (“JLL”); and Karen Hale Young Family Irrevocable Trust (associated with Karen Hale Young).

17
 

Investment Agreements

 

Concurrently with the execution of the merger agreement, FirstSun entered into an Upfront Securities Purchase Agreement with Wellington, pursuant to which, on the terms and subject to the conditions set forth therein, FirstSun sold, and Wellington purchased, for $32.50 per share and an aggregate purchase price of $80 million, approximately 2.46 million shares of FirstSun common stock. This transaction closed on January 17, 2024. Under the terms of the Upfront Securities Purchase Agreement, FirstSun is obligated to issue to Wellington, upon consummation of the mergers, warrants to purchase approximately 1.15 million shares of FirstSun common stock with such warrants having an initial exercise price of $32.50 per share, referred to as the warrants. The warrants will carry a term of three years, and may be settled on a “net share” basis by applying shares otherwise issuable under the warrants in satisfaction of the exercise price. In the event the mergers are not consummated, no warrants will be issued. Additionally, and concurrently with execution of the merger agreement, FirstSun entered into an Acquisition Finance Securities Purchase Agreement with Wellington, Castle Creek, and certain other institutional accredited investors. Pursuant to the Acquisition Finance Securities Purchase Agreement, on the terms and subject to the conditions set forth therein, substantially concurrently with the closing of the mergers, such Investors will invest an aggregate of $140 million in exchange for the sale and issuance, at a purchase price of $32.50 per share, of approximately 4.31 million shares of FirstSun common stock. Further, FirstSun may offer an additional 461,539 shares of FirstSun common stock, at a purchase price of $32.50 per share, for an additional investment of $15 million from (i) Castle Creek, who has a 30-day window from the execution of the First Amendment to the Acquisition Finance Securities Purchase Agreement to elect to purchase such shares, or (ii) any other investor selected by FirstSun if Castle Creek does not elect to purchase such shares.

Litigation Relating to the Merger (page 83)

 

Certain litigation is pending in connection with the mergers. For more information, see “The Merger—Litigation Relating to the Mergers” beginning on page 83.

Regulatory Approvals Required for the Mergers (page 84)

Subject to the terms of the merger agreement, both FirstSun and HomeStreet have agreed to use their reasonable best efforts to obtain as promptly as reasonably practicable all regulatory approvals necessary or advisable to complete the transactions contemplated by the merger agreement, including the mergers and the bank merger, and comply with the terms and conditions of such approvals. These approvals include approvals from the Board of Governors of the Federal Reserve System, which we refer to as the “Federal Reserve,” in connection with the mergers, and the Federal Reserve in connection with the bank merger. Notifications and/or applications requesting approval for the transactions contemplated by the merger agreement may also be submitted to other federal and state regulatory authorities and self-regulatory organizations. For instance, HomeStreet Bank is regulated by the Washington Department of Financial Institutions, which we refer to as the WDFI. As required by Washington law, a joint holding company application was filed with the WDFI. As further required by Washington law, FirstSun filed a notice of the bank merger with the WDFI. Further, Sunflower Bank, prior to the completion of the mergers, will convert from a national banking association to a Texas state-chartered bank that will be a member of the Federal Reserve. Accordingly, Sunflower Bank will file applications with the Texas Department of Banking with respect to such conversion and the bank merger and with the Federal Reserve with respect to its membership in the Federal Reserve System and the bank merger.

FirstSun, HomeStreet and/or their respective subsidiaries have or will file notices and applications to obtain the necessary regulatory approvals. The completion of the merger is also subject to the expiration of certain waiting periods and other requirements. FirstSun and HomeStreet knows of no reason why it would not be able to obtain the necessary regulatory approvals to complete the mergers and bank merger, as applicable, in a timely manner, but neither FirstSun nor HomeStreet can be certain when or if it will obtain such approvals or, if obtained, whether such approvals will contain terms, conditions or restrictions not currently contemplated that will restrain, prevent or delay the closing of the mergers or contain any condition or restriction that would reasonably be expected to have a material adverse effect on the combined company, which we refer to as a “materially burdensome condition.”

18
 

Conditions to Complete the Mergers (page 103)

 

As more fully described elsewhere in this proxy statement/prospectus and in the merger agreement, the completion of the mergers depends on a number of conditions being satisfied or waived. These conditions include:

  · the requisite FirstSun stockholder approval and the requisite HomeStreet shareholder approval having been obtained. See the section entitled “The Merger Agreement—Shareholder Meetings and Recommendations of FirstSun’s and HomeStreet’s Boards of Directors” beginning on page 100 for additional information regarding the requisite FirstSun stockholder approval and the requisite HomeStreet shareholder approval;

 

  · (i) all requisite regulatory approvals (including with respect to Sunflower Bank’s conversion from a national banking association to a Texas state-chartered bank that will be a member of the Federal Reserve) having been obtained and remaining in full force and effect, and all statutory waiting periods in respect thereof having expired or been terminated, and (ii) such requisite regulatory approvals not having resulted in any materially burdensome condition;
     
  · the registration statement of which this proxy statement/prospectus is a part having become effective under the Securities Act and no stop order suspending the effectiveness of such registration statement having been issued, and no proceedings for such purpose having been initiated or threatened by the SEC and not withdrawn;
     
  · no order, injunction or decree issued by any court or other governmental entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the mergers, the bank merger, the FirstSun issuance of FirstSun common stock or any of the other transactions contemplated by the merger agreement being in effect, and no law, statute, rule, order, injunction or decree having been enacted, entered, promulgated or enforced by any governmental entity which prohibits or makes illegal the consummation of the mergers, the bank merger, the FirstSun issuance of FirstSun common stock or any of the other transactions contemplated by the merger agreement;
     
  · the accuracy of the representations and warranties of each party contained in the merger agreement generally as of the date on which the merger agreement was entered into and as of the closing date, subject to the materiality standards provided in the merger agreement (and the receipt by each party of a certificate, dated as of the closing date and signed on behalf of the other party by the chief executive officer or the chief financial officer, to the foregoing effect);
     
  · the performance by the other party in all material respects of the obligations, covenants and agreements required to be performed by it under the merger agreement at or prior to the closing (and the receipt by each party of a certificate, dated as of the closing date, signed on behalf of the other party by the chief executive officer or the chief financial officer, to the foregoing effect);
     
  · receipt by each party of an opinion of its legal counsel, in form and substance reasonably satisfactory to such party, dated as of the closing date, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code;
     
  · the authorization of the listing of the shares of FirstSun issuable pursuant to the merger agreement on the Nasdaq, subject to official notice of issuance; and
     
  · FirstSun shall have taken all actions necessary to cause the three legacy HomeStreet directors to be elected or appointed to each of the board of directors of the surviving entity and surviving bank.

 

Neither FirstSun nor HomeStreet can be certain when, or if, the conditions to the mergers will be satisfied or waived, or that the mergers will be completed. For more information, see “The Merger Agreement — Conditions to Complete the Mergers,” beginning on page 103.

19
 

Termination of the Merger Agreement (page 104)

 

The merger agreement can be terminated at any time prior to the effective time, in the following circumstances:

 

·by mutual written consent of FirstSun and HomeStreet;
·by either FirstSun or HomeStreet if any governmental entity that must grant a requisite regulatory approval has denied approval of the mergers or the bank merger and such denial has become final and nonappealable or any governmental entity of competent jurisdiction shall have issued a final and nonappealable government order or other legal restraint or prohibition permanently enjoining or otherwise prohibiting or making illegal the consummation of the mergers or the bank merger or the other transactions contemplated by the merger agreement, unless the failure to obtain a requisite regulatory approval shall be due to the failure of the party seeking to terminate the merger agreement to perform or observe the obligations, covenants and agreements of such party set forth in the merger agreement;

 

·by either FirstSun or HomeStreet if the mergers have not been consummated on or before January 16, 2025, unless the failure of the closing to occur by such date is due to the failure of the party seeking to terminate the merger agreement to perform or observe its obligations, covenants and agreements of such party under the merger agreement; provided, however, that the termination date may be extended by either party if all of the conditions to FirstSun or HomeStreet’s obligation to consummate the closing, other than conditions relating to a requisite regulatory approval, have been satisfied or waived and each of the other closing conditions have been satisfied, waived or remains capable of being satisfied, then the termination date may be extended by an additional three months by written notice to the other party;

 

·by either FirstSun or HomeStreet (provided, that the terminating party is not then in material breach of any representation, warranty, obligation, covenant or other agreement contained in the merger agreement) if there is a breach of any of the obligations, covenants or agreements or any of the representations or warranties (or any such representation or warranty ceases to be true or correct) set forth in the merger agreement on the part of HomeStreet, in the case of a termination by FirstSun or on the part of FirstSun or Merger Sub, in the case of a termination by HomeStreet, which breach or failure to be true, either individually or in the aggregate with all other breaches by such party (or failures of such representations or warranties to be true), would constitute, if occurring or continuing on the closing date, the failure of a closing condition of the terminating party and which is not cured within 45 days following written notice to the party committing such breach, or by its nature or timing cannot be cured during such period (or such fewer days as remain prior to the termination date);

 

·by either FirstSun or HomeStreet if the requisite HomeStreet shareholder approval shall not have been obtained at the HomeStreet shareholder meeting or at any adjournment or postponement thereof or (ii) if the requisite FirstSun stockholder approval shall not have been obtained at the FirstSun stockholder meeting or at any adjournment or postponement thereof;

 

·by HomeStreet prior to such time as the requisite HomeStreet shareholder approval is obtained, if the HomeStreet board of directors has made a recommendation change. See the section entitled “The Merger Agreement—Shareholder Meetings and Recommendations of FirstSun’s and HomeStreet’s Boards of Directors” beginning on page 100 for additional information regarding the meaning of a “recommendation change”;

 

·by HomeStreet prior to such time as the requisite FirstSun stockholder approval is obtained, if FirstSun or the FirstSun board of directors has breached certain covenants related to stockholder approvals or acquisition proposals in any material respect;

 

·by FirstSun prior to such time as the requisite HomeStreet shareholder approval is obtained, if (i) HomeStreet or the HomeStreet board of directors has made a recommendation change or (ii) HomeStreet or the HomeStreet board of directors has breached certain covenants related to stockholder

 

20
 
  approvals or acquisition proposals in any material respect. See the section entitled “The Merger Agreement—Shareholder Meeting and Recommendation HomeStreet’s Boards of Directors” beginning on page 100 for additional information and regarding the meaning of a “recommendation change”; and
   
·by HomeStreet if (i) there is a breach of the representations or warranties (or any such representation or warranty shall cease to be true) of FirstSun in connection with the investment agreements and such breach is not cured within thirty days or FirstSun is unable to obtain capital sufficient to replace any committed capital under any investment agreement which was terminated, reduced, withdrawn or rescinded or (ii) the initial investment is not funded in full (and without rescission or attempt to rescind) prior to the end of the second business day following the date of the merger agreement.

 

Termination Fee (page 105)

If the merger agreement is terminated by either FirstSun or HomeStreet under certain circumstances, FirstSun or HomeStreet may be required to pay a termination fee to the other party equal to $10.0 million (or HomeStreet may be required to pay FirstSun a reduced termination fee of $2.6 million plus reimbursement of FirstSun’s transaction fees and expenses in certain circumstances). The circumstances under which FirstSun may be required to pay the termination fee to HomeStreet include, but are not limited to, a termination of the merger agreement by HomeStreet due to FirstSun’s uncured breach of warranties related to the investment agreements or FirstSun’s failure to fund the initial investment with Wellington. The circumstances under which HomeStreet may be required to pay the termination fee include, but are not limited to, a termination of the merger agreement by HomeStreet as a result of alternative acquisition proposals and a change in the recommendation of the HomeStreet board of directors.

 

Comparison of Stockholders’ Rights (page 133)

 

The rights of HomeStreet shareholders will change as a result of the mergers due to differences in FirstSun’s and HomeStreet’s governing documents. The rights of HomeStreet shareholders are governed by Washington law and by the HomeStreet articles of incorporation and bylaws. Upon the completion of the mergers, HomeStreet shareholders will become FirstSun stockholders, as the continuing legal entity in the mergers, and the rights of HomeStreet shareholders will therefore be governed by Delaware law and the FirstSun certificate of incorporation and bylaws.

 

Dissenters’ Rights to the Mergers (page 121)

 

HomeStreet shareholders who do not vote in favor of the proposal to approve the merger agreement and who deliver a demand for payment before the vote is taken on the merger proposal and comply with all of the requirements of Chapter 23B.13 of the WBCA will have the right to seek appraisal of the fair value of their shares of HomeStreet common stock, in accordance with Chapter 23B.13 of the WBCA. A copy of Chapter 23B.13 is attached to the proxy statement/prospectus as Annex C.

Public Trading Market and No Restrictions on Resale (page 83)

 

FirstSun common stock is currently quoted on the OTCQX® Best Market operated by the OTC Markets under the symbol “FSUN”, and as a closing condition to the mergers and undertakings in securities purchase agreements entered into in connection with the execution of the merger agreement, FirstSun will uplist its common stock to Nasdaq regardless of the mergers being consummated. Upon completion of the mergers, HomeStreet common stock will be delisted from Nasdaq and thereafter will be deregistered under the Exchange Act and HomeStreet will no longer be required to file periodic reports with the SEC with respect to the HomeStreet common stock.

All FirstSun common stock received by HomeStreet shareholders in the mergers will be freely tradable for purposes of the Securities Act and the Exchange Act, except for FirstSun common stock received by any HomeStreet shareholder who becomes an “affiliate” of FirstSun after completion of the mergers. This proxy statement/prospectus does not cover resales of FirstSun common stock received by any person upon completion of the mergers, and no person is authorized to make any use of this proxy statement/prospectus in connection with any resale.

21
 

Risk Factors (page 27)

You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in the proxy statement/prospectus. In particular, you should consider the factors described under “Risk Factors” beginning on page 27.

 

Information About the Companies

FirstSun

FirstSun Capital Bancorp

1400 16th Street, Suite 250

Denver, Colorado 80202

Telephone: (303) 831-6704

FirstSun Capital Bancorp, (OTCQX: FSUN), a financial holding company headquartered in Denver, Colorado, provides a full spectrum of deposit, lending, treasury management, wealth management and online banking products and services through its wholly-owned bank subsidiary, Sunflower Bank, and its registered investment advisor subsidiary.

Sunflower Bank, with its main office in Dallas, Texas was founded in 1892 and offers a full range of specialized financial services to retail, commercial and institutional clients. Sunflower Bank also offers relationship-focused services that satisfy Sunflower Bank’s customers’ personal, business and wealth management financial needs. With a branch network in Texas, Kansas, Colorado, New Mexico, Arizona and Washington and mortgage banking capabilities in 43 states, Sunflower Bank has a strong regional presence in the Southwestern United States. Sunflower Bank’s product line includes commercial loans and commercial real estate loans, residential mortgages and other consumer loans. To meet its customers’ deposit needs, Sunflower Bank’s product line includes a variety of commercial, consumer and private banking deposit products, including noninterest-bearing accounts, interest-bearing demand products, savings accounts, money market accounts and certificates of deposit. Additionally, Sunflower Bank provides treasury management products and services and offers wealth management and trust products including personal trust and agency accounts, employee benefit and retirement-related trust and agency accounts, investment management and advisory agency accounts and foundation and endowment trust and agency accounts. Sunflower Bank also operates under the brands First National 1870 and Guardian Mortgage. First National 1870 and Guardian Mortgage are divisions of Sunflower Bank.

FirstSun owns 100% of the outstanding capital stock of Sunflower Bank, and, therefore, FirstSun is a bank holding company registered under the federal Bank Holding Company Act of 1956 (the “BHC Act”). As a result, FirstSun is primarily subject to the supervision, examination and reporting requirements of the Federal Reserve under the BHC Act and the regulations promulgated thereunder. Sunflower Bank, as of the date of this proxy statement/prospectus, is a national banking association, which is subject to regulation and supervision primarily by the OCC and secondarily by the Federal Reserve, the Federal Deposit Insurance Corporation (“FDIC”), and the Consumer Financial Protection Bureau (“CFPB”). However, Sunflower Bank, prior to the completion of the mergers, will convert from a national banking association supervised by the OCC to a Texas state-chartered bank that will be a member bank of and supervised primarily by the Federal Reserve and Texas Department of Banking, and secondarily by the FDIC and the CFPB.

FirstSun’s principal source of funds to pay dividends on FirstSun’s common stock and service any of FirstSun’s obligations are dividends received directly from its subsidiaries, including Sunflower Bank.  Subject to various regulatory considerations and restrictions, Sunflower Bank’s profitability, in part, determines the amount of dividends that Sunflower Bank may pay to FirstSun.

As of March 31, 2024, FirstSun had consolidated total assets of $7.8 billion, total net loans of $6.3 billion, total deposits of $6.5 billion and total stockholders’ equity of $964.7 million.

22
 

For more information about FirstSun, please visit https://ir.firstsuncb.com/home/default.aspx. The information provided on FirstSun’s website (other than the documents incorporated by reference herein) is not part of this proxy statement/prospectus and is not incorporated herein by reference. Additional information about FirstSun is included in documents incorporated by reference in this proxy statement/prospectus.

 

HomeStreet

HomeStreet, Inc.

601 Union Street, Suite 2000

Seattle, Washington 98101

Telephone: (206) 623-3050

HomeStreet, Inc., (Nasdaq: HMST), headquartered in Seattle, Washington, is the bank holding company for HomeStreet Bank. HomeStreet Bank was chartered as a state bank in 1986, was founded as Continental Mortgage in 1921 and offers a full range of specialized financial services to business customers as well as leading relationship-focused retail services. With a retail branch network in Washington, California, Oregon and Hawaii, HomeStreet Bank has a strong regional presence in the West and Northwest United States. HomeStreet Bank’s product line includes commercial loans and commercial real estate loans, residential mortgages and other consumer loans. To meet its customers’ deposit needs, HomeStreet Bank offers a variety of commercial, consumer and private banking deposit products, including noninterest-bearing accounts, interest-bearing demand products, savings accounts, money market accounts and certificates of deposit. HomeStreet Bank also offers treasury management products and services.

As a bank holding company, HomeStreet, Inc. is subject to supervision and regulation by the Federal Reserve under the BHC Act. As a state-chartered non-member commercial bank, HomeStreet Bank is subject to examination by the State of Washington Department of Financial Institutions and the FDIC. HomeStreet Bank’s consumer business, including HomeStreet Bank’s mortgage and other consumer lending and non-lending businesses, is also governed by policies enacted or regulations adopted by the CFPB which under the Dodd-Frank Act has broad rulemaking authority over consumer financial products and services.

HomeStreet, Inc. depends on dividends, distributions and other payments from its subsidiaries to meet HomeStreet, Inc.’s obligations. Subject to various regulatory considerations and restrictions, HomeStreet Bank’s profitability affects the amount of dividends that HomeStreet Bank may pay to HomeStreet, Inc.

As of March 31, 2024, HomeStreet Inc. had consolidated total assets of $9.5 billion, total gross loans of $7.4 billion, total deposits of $6.5 billion and total shareholders’ equity of $527.3 million.

For more information about HomeStreet, please visit https://www.homestreet.com. The information provided on HomeStreet’s website (other than the documents incorporated by reference herein) is not part of this proxy statement/prospectus and is not incorporated herein by reference. Additional information about HomeStreet is included in documents incorporated by reference in this proxy statement/prospectus.

Merger Sub

Dynamis Subsidiary, Inc.

1400 16th Street, Suite 250

Denver, Colorado 80202

Telephone: (303) 831-6704

Merger Sub is a Washington corporation and a direct wholly-owned subsidiary of FirstSun. Merger Sub was incorporated on January 11, 2024, for the sole purpose of effecting the merger. As of the date of this proxy statement/prospectus, Merger Sub has not conducted, and will not conduct, any activities other than those incidental to its formation, the execution of the merger agreement and the transactions contemplated by the merger agreement. Following the merger, the separate corporate existence of Merger Sub will cease.

23
 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus contains forward-looking statements regarding FirstSun’s and HomeStreet’s outlook or expectations with respect to the mergers, including the expected costs to be incurred and cost savings to be realized in connection with the mergers, the expected impact of the mergers on the combined company’s future financial performance (including anticipated accretion to earnings per share), the assumed purchase accounting adjustments, other key transaction assumptions, the timing of the closing of the mergers and consequences of the integration of the businesses and operations of FirstSun and HomeStreet. Words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “plan,” “predict,” “project,” “forecast,” “guidance,” “goal,” “objective,” “prospects,” “possible” or “potential,” by future conditional verbs such as “assume,” “will,” “would,” “should,” “could” or “may,” or by variations of such words or by similar expressions are intended to identify such forward-looking statements. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time, are difficult to predict and are generally beyond the control of either company. Forward-looking statements speak only as of the date they are made and FirstSun and HomeStreet assume no duty to update forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results. Actual results may differ materially from current projections.

In addition to factors identified elsewhere in this proxy statement/prospectus (including the “Risk Factors” beginning on page 27), the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance:

·the failure to obtain necessary regulatory approvals when expected or at all (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction);
·the failure of HomeStreet to obtain the requisite shareholder approval, or the failure of either party to satisfy any of the other closing conditions to the transaction on a timely basis or at all;
·the inability to obtain alternative or additional capital in the event it becomes necessary to complete an equity financing, which is a condition to the consummation of the mergers;
·the failure to dispose or sell of approximately $300 million (based on principal balance) of certain of HomeStreet’s commercial real estate loans, which disposition or loan sales is contemplated to be consummated upon, or as soon as reasonably practicable, after the closing of the mergers;
   
·the failure to issue an aggregate principal amount of at least $48.5 million in subordinated FirstSun debt that qualifies as Tier 2 capital;
·the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement or the investment agreements;
·the possibility that the anticipated benefits of the mergers, including anticipated cost savings and strategic gains, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy, competitive factors in the areas where FirstSun and HomeStreet do business or as a result of other unexpected factors or events;
·the impact of purchase accounting with respect to the mergers, or any change in the assumptions used regarding the assets purchased and liabilities assumed to determine their fair value;
·diversion of management’s attention from ongoing business operations and opportunities;
24
 
·potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the mergers;
·the integration of the business and operations of HomeStreet, which may take longer than anticipated or be more costly than anticipated or have unanticipated adverse results relating to HomeStreet’s existing business;
·challenges retaining or hiring key personnel;
·business disruptions resulting from or following the mergers;

 

·further delay in closing the mergers and the bank merger;
·the outcome of pending or threatened litigation or of matters before regulatory agencies, whether currently existing or commencing in the future, including litigation related to the mergers;
·increased capital requirements, other regulatory requirements or enhanced regulatory supervision;
·the inability to sustain revenue and earnings growth;
·the inability to efficiently manage operating expenses;
·changes in interest rates, including the increases in the Federal Reserve benchmark rate since March 2022 and the duration at which such increased interest rate levels are maintained, which could adversely affect FirstSun’s and HomeStreet’s revenue and expenses, the value of assets and obligations, the availability and cost of capital and liquidity, and the ability to obtain regulatory approval;
·changes in asset quality and credit risk;
·adverse changes in economic conditions, and the impacts of continuing inflation;
·capital management activities;
·customer borrowing, repayment, investment and deposit practices;
·the impact, extent and timing of technological changes;
·changes in legislation, regulation, policies or administrative practices, whether by judicial, governmental or legislative action and other changes pertaining to banking, securities, taxation, rent regulation and housing, financial accounting and reporting, environmental protection and insurance and the ability to comply with such changes in a timely manner, including changes as a result of the outcomes of political elections;
·changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Department of the Treasury and the Federal Reserve;
·changes in accounting principles, policies, practices or guidelines;
·the potential impact of announcement or consummation of the mergers on relationships with third parties, including customers, vendors, employees and competitors;
·failure to attract new customers and retain existing customers in the manner anticipated;
25
 
·any interruption or breach of security resulting in failures or disruptions in customer account management, general ledger, deposit, loan or other systems;
·the adverse effects of events beyond each party’s control that may have a destabilizing effect on financial markets and the economy, such as epidemics and pandemics, war or terrorist activities, essential utility outages, deterioration in the global economy, instability in the credit markets, disruptions in each party’s customers’ supply chains or disruption in transportation; and
·other actions of the Federal Reserve and legislative and regulatory actions and reforms.

 

These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a forward-looking statement.

26
 

RISK FACTORS

An investment by HomeStreet shareholders in FirstSun common stock as a result of the mergers involves certain risks. Certain material risks and uncertainties connected with the merger agreement and the investment agreements and transactions contemplated thereby, including the mergers and bank merger, and ownership of FirstSun common stock are discussed below. Additionally, FirstSun and HomeStreet have discussed certain other material risks connected with the ownership of FirstSun common stock and with FirstSun’s business, and with the ownership of HomeStreet common stock and HomeStreet’s business, respectively, under the caption “Risk Factors” appearing in their Annual Reports on Form 10-K most recently filed with the SEC and their Quarterly Report on Form 10-Q filed with the SEC for the first quarter of 2024, and may include additional or updated disclosures of such material risks in their subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that FirstSun or HomeStreet may file with the SEC after the date of this proxy statement/prospectus.

 

Holders of HomeStreet common stock should carefully read and consider all of these risks and all other information contained in this proxy statement/prospectus in deciding whether to vote for approval of the proposals at the HomeStreet shareholder meeting described herein. The risks described in this proxy statement/prospectus may adversely affect the value of FirstSun common stock that you, as an existing holder of HomeStreet common stock, will hold upon consummation of the mergers, and could result in a significant decline in the value of FirstSun common stock and cause the current holders of HomeStreet common stock to lose all or part of the value of their investment in FirstSun common stock.

 

Risks Related to the Mergers

 

Because the exchange ratio is fixed and the market price of FirstSun common stock will fluctuate, HomeStreet shareholders cannot be certain of the market value of the merger consideration they will receive.

 

Upon completion of the mergers, each outstanding share of HomeStreet common stock, except for treasury stock or shares owned by HomeStreet or FirstSun (in each case other than in a fiduciary or agency capacity or as a result of debts previously contracted), will be converted into the right to receive 0.3867 shares of FirstSun common stock. This exchange ratio is fixed in the merger agreement. The market value of the merger consideration will vary from the closing price of FirstSun common stock on the date FirstSun and HomeStreet announced the mergers, the date FirstSun and HomeStreet announced the April 30 amendment to the merger agreement, on the date that this proxy statement/prospectus is mailed to HomeStreet shareholders, on the date of the HomeStreet shareholder meeting, and on the date the mergers are completed. Any change in the market price of FirstSun common stock prior to the completion of the mergers will affect the market value of the merger consideration that HomeStreet shareholders will receive upon completion of the mergers, and there will be no adjustment to the merger consideration for changes in the market price of either shares of FirstSun common stock or HomeStreet common stock.

 

Changes in the market price of FirstSun common stock and HomeStreet common stock may result from a variety of factors, including, but not limited to, changes in sentiment in the market regarding FirstSun’s and HomeStreet’s assets, liabilities, operations or business prospects, including market sentiment regarding FirstSun’s and/or HomeStreet’s entry into the merger agreement, and any potential changes to the merger agreement.

 

Changes in the market price of FirstSun common stock and HomeStreet common stock may result from a variety of factors, including, but not limited to, changes in sentiment in the market regarding FirstSun’s or HomeStreet’s assets, liabilities, operations or business prospects, including changes in interest rates, changes in market sentiment to FirstSun’s and/or HomeStreet’s entry into the HomeStreet merger agreement, and any potential changes to the merger agreement. These risks may also be affected by:

 

  · operating results that vary from the expectations of FirstSun’s and/or HomeStreet’s management or of securities analysts and investors;
  · developments in FirstSun’s and/or HomeStreet’s business or in the financial services sector generally;
27
 
  · regulatory or legislative requirements or changes affecting the banking industry generally or FirstSun’s and/or HomeStreet’s business and operations;
  · operating and securities price performance of companies that investors consider to be comparable to FirstSun and/or HomeStreet;
  · changes in estimates or recommendations by securities analysts or rating agencies;
  · announcements of strategic developments, acquisitions, dispositions, financings and other material events by FirstSun, HomeStreet or their competitors; and
  · changes in global financial markets and economies and general market conditions, such as interest rates, foreign exchange rates, or stock, commodity, credit or asset valuations or volatility.

 

Many of these factors are outside the control of FirstSun and HomeStreet. Accordingly, at the time of the HomeStreet shareholder meeting, HomeStreet shareholders will not know the precise market value of the merger consideration that HomeStreet shareholders will receive upon completion of the mergers. You should obtain current market quotations for both FirstSun common stock and HomeStreet common stock.

 

The fairness opinion received by the HomeStreet board of directors from KBW has not been, and is not expected to be, updated to reflect any changes in circumstances that may have occurred since the date of such opinion.

 

The fairness opinion of KBW was rendered to the HomeStreet board of directors on April 30, 2024. Changes in the operations and prospects of HomeStreet, general market and economic conditions, and other factors which may be beyond the control of HomeStreet may have altered the value of HomeStreet or the sale prices of shares of HomeStreet common stock as of the date of this proxy statement/​prospectus, or may alter such value and sale prices by the time the mergers are completed. The opinion from KBW, dated April 30, 2024, does not speak as of any date other than the date of such opinion.

 

The success of the mergers and bank merger will depend on a number of uncertain factors and may cause the market price of FirstSun common stock or HomeStreet common stock to fluctuate.

 

The success of the mergers will depend on a number of factors, including, without limitation:

 

·The consummation of the mergers is subject to the satisfaction (or waiver, if permitted) of all requisite closing conditions as specified in the merger agreement, including, without limitation, receipt of regulatory and HomeStreet shareholder approvals;

 

·FirstSun’s ability to integrate the business and operations of HomeStreet in the mergers;

 

·FirstSun’s ability to limit the outflow of deposits held by legacy HomeStreet customers and to successfully retain and manage interest-earning assets (i.e., loans) acquired in the mergers;

·FirstSun’s ability to control the incremental noninterest expense in a manner that enables it to maintain a favorable overall efficiency ratio;

·FirstSun’s ability to retain and attract the appropriate personnel; and

·FirstSun’s ability to earn acceptable levels of interest and noninterest income, including fee income;

Additionally, no assurance can be given that the business and operations of HomeStreet will not adversely affect FirstSun’s existing profitability, that FirstSun will be able to achieve results in the future similar to those achieved by its existing banking business, or that FirstSun will be able to manage any growth resulting from the mergers effectively.

28
 

Combining FirstSun and HomeStreet may be more difficult, costly or time consuming than expected and FirstSun may fail to realize the anticipated benefits of the mergers.

 

The success of the mergers will depend, in part, on the ability to realize the anticipated cost savings from combining the businesses of FirstSun and HomeStreet. To realize the anticipated benefits and cost savings from the mergers, FirstSun and HomeStreet must successfully integrate and combine their businesses in a manner that permits those cost savings to be realized. If FirstSun and HomeStreet are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings and anticipated benefits of the mergers could be less than anticipated, and integration may result in additional unforeseen expenses. For reference, as of the date of signing of the April 30 amendment to the merger agreement, the pre-tax costs savings for the transaction were estimated to be approximately $62.6 million or an approximate 12% reduction of the combined company’s run-rate expense base. An inability to realize the full extent of the anticipated benefits of the mergers, as well as any delays encountered in the integration process, could have an adverse effect upon the capital position, revenues, levels of expenses and operating results of the combined company following the completion of the mergers, which may adversely affect the value of the common stock of the combined company following the completion of the mergers.

FirstSun and HomeStreet have operated and, until the completion of the mergers, must continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the companies’ ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the mergers. Integration efforts between the two companies may also divert management attention and resources. These integration matters could have an adverse effect on each of FirstSun and HomeStreet during this transition period and for an undetermined period after completion of the mergers on the combined company.

 

The combined company may be unable to retain HomeStreet personnel successfully after the mergers are completed.

 

The success of the mergers will depend in part on the combined company’s ability to retain the talents and dedication of employees currently employed by HomeStreet. The consummation of the mergers will expand FirstSun’s market areas to include operations in Washington, California, Hawaii, Oregon and other smaller markets, and retaining HomeStreet personnel within such markets is important to the success of the integration of the operations and business of HomeStreet and the success of the combined company. It is possible that these employees may decide not to remain with HomeStreet while the mergers are pending or with the combined company after the mergers are consummated. If employees terminate their employment, or if an insufficient number of employees are retained to maintain effective operations, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating HomeStreet to hiring suitable replacements, all of which may cause the combined company’s business to suffer. In addition, FirstSun may not be able to locate suitable replacements for any such employees who leave the combined company, or to offer employment to potential replacements on reasonable terms. Further, FirstSun’s lack of operating experience in HomeStreet’s existing markets may adversely impact the combined company’s ability to successfully compete in such market areas without retaining HomeStreet’s employees.

 

The combined company expects to incur substantial expenses related to the mergers.

 

The combined company expects to incur substantial expenses in connection with completing the mergers and combining the business, operations, networks, systems, technologies, policies and procedures of FirstSun and those of HomeStreet. Although FirstSun and HomeStreet have assumed that a certain level of transaction and combination expenses would be incurred, there are a number of factors beyond their control that could affect the total amount or the timing of their combination expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Due to these factors, the transaction and combination expenses associated with the mergers could, particularly in the near term, exceed the savings that the combined company expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the combination of the businesses following the completion of the mergers.

29
 

In addition, before completing the mergers, each of FirstSun and HomeStreet will incur or have incurred substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement. In preparation for the consummation of the mergers, the companies will also incur the additional costs and expenses of preparing and filing the Registration Statement of which this proxy statement/prospectus forms a part, printing and mailing the proxy statement/prospectus to solicit HomeStreet shareholder approval of the merger proposal, and all filing and other fees expected to be paid to the SEC, bank regulatory authorities and other governmental agencies in connection with the proposed mergers. If the mergers are not completed, FirstSun and HomeStreet would have to recognize these expenses without realizing the anticipated benefits of the mergers.

Regulatory approvals may not be received, have taken longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the mergers.

 

Before the mergers and the bank merger may be completed, various approvals, consents and non-objections must be obtained from the Federal Reserve, the Texas Department of Banking, the WDFI, and other regulatory authorities. In determining whether to grant these approvals, the regulators consider a variety of factors, including the regulatory standing of each party and the factors described under “The Mergers—Regulatory Approvals Required for the Mergers” beginning on page 84. Required approvals have been delayed and could be further delayed or not obtained at all, including due to any or all of the following: an adverse development in either party’s regulatory standing, or any other factors considered by regulators in granting such approvals; governmental, political or community group inquiries, investigations or opposition; changes in legislation or the political environment, including as a result of changes of the U.S. executive administration, or Congressional leadership and regulatory agency leadership.

 

The approvals that are granted may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of the combined company’s business or require changes to the terms of the transactions contemplated by the merger agreement. There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions or that such conditions, limitations, obligations or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by the merger agreement, imposing additional material costs on or materially limiting the revenues of the combined company following the mergers or will otherwise reduce the anticipated benefits of the mergers. In addition, there can be no assurance that any such conditions, limitations, obligations or restrictions will not result in the delay or abandonment of the mergers. Additionally, the completion of the mergers is conditioned on the absence of certain orders, injunctions or decrees by any governmental entity of competent jurisdiction that would prohibit or make illegal the completion of any of the transactions contemplated by the merger agreement.

 

Despite the parties’ commitments to use their reasonable best efforts to respond to any request for information and resolve any objection that may be asserted by any governmental entity with respect to the merger agreement, neither FirstSun, HomeStreet nor their respective subsidiaries are required under the terms of the merger agreement to take any action, commit to take any action, or agree to any condition or restriction in connection with obtaining these approvals, that would reasonably be expected to have a material adverse effect on the combined company and its subsidiaries, taken as a whole, after giving effect to the mergers. See the section entitled “The Mergers—Regulatory Approvals Required for the Mergers” beginning on page 84.

 

The unaudited pro forma combined financial information included in this proxy statement/prospectus is preliminary and the actual financial condition and results of operations of the combined company after the mergers may differ materially.

 

The unaudited pro forma combined financial information in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what the combined company’s actual financial condition or results of operations would have been had the mergers been completed on the dates indicated. The unaudited pro forma combined financial information reflects adjustments, which are based upon preliminary estimates, to record the HomeStreet identifiable assets acquired and liabilities assumed at fair value, and to record any resulting bargain purchase gain. The fair value estimates reflected in this proxy statement/prospectus are

30
 

preliminary, and final amounts will be based upon the actual consideration paid and the fair value of the assets and liabilities of HomeStreet as of the date of the completion of the mergers, which fair value is directly impacted by, among other things, changes in interest rates. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this proxy statement/prospectus. For more information, see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 112.

 

Certain of HomeStreet’s directors and executive officers may have interests in the mergers that may differ from, or be in addition to, the interests of holders of HomeStreet common stock generally.

 

Holders of HomeStreet common stock should be aware that some of HomeStreet’s directors and executive officers may have interests in the mergers and have arrangements that are different from, or in addition to, those of holders of HomeStreet common stock generally. These interests and arrangements may create potential conflicts of interest. The HomeStreet board of directors was aware of these interests and considered these interests, among other matters, when making its decision to approve the mergers and merger agreement, and in recommending that shareholders vote to approve the merger agreement. The actual financial condition and results of operations of the combined company after the mergers may differ materially from those reflected in the unaudited pro forma combined financial information in this proxy statement/prospectus. For a more complete description of these interests, please see the section entitled “The Mergers—Interests of HomeStreet’s Directors and Executive Officers in the Mergers” beginning on page 72.

Shareholder litigation could prevent or delay the completion of the mergers or otherwise negatively impact the business and operations of FirstSun and HomeStreet.

 

Holders of common stock of FirstSun or HomeStreet may file lawsuits against FirstSun, HomeStreet and/or the directors and officers of either company in connection with the mergers. For more information about current litigation that is pending in connection with the mergers, see “The Merger-Litigation Relating to the Mergers” beginning on page 83. One of the conditions to the closing of the mergers is that there must be no order, injunction or decree issued by any court or governmental entity of competent jurisdiction or other legal restraint preventing the consummation of the mergers or any of the other transactions contemplated by the merger agreement. If any plaintiff were successful in obtaining an injunction prohibiting FirstSun or HomeStreet from completing the mergers or any of the other transactions contemplated by the merger agreement, then such injunction may delay or prevent the effectiveness of the mergers and could result in significant costs to FirstSun or HomeStreet, including any cost associated with the indemnification of directors and officers of each company. FirstSun and HomeStreet may incur additional costs in connection with the defense or settlement of any stockholder or shareholder lawsuits filed in connection with the mergers. Such litigation could have an adverse effect on the financial condition and results of operations of FirstSun and HomeStreet and could prevent or delay the completion of the mergers.

 

The merger agreement may be terminated in accordance with its terms, and the mergers may not be consummated.

 

The obligation of the merger agreement parties to consummate the mergers is subject to a number of conditions that must be satisfied or waived in order to consummate the mergers. Those conditions include, among other things: (i) receiving the requisite approval by the HomeStreet shareholders of certain matters relating to the mergers at HomeStreet’s meeting of shareholders; (ii) Sunflower Bank converting from a national banking association to a Texas state-chartered bank that will be a member of the Federal Reserve, (iii) the receipt of the requisite regulatory approvals and that no requisite regulatory approval contains any materially burdensome condition; (iv) the absence of any order, injunction, decree or other legal restraint preventing the consummation of the mergers, the bank merger or any of the other transactions contemplated by the merger agreement or making the completion of the mergers, the bank merger or any of the other transactions contemplated by the merger agreement illegal; and (v) the registration statement of which this proxy statement/prospectus is a part becoming effective by the SEC under the Securities Act. Each party’s obligation to consummate the mergers is also subject to certain additional conditions, including: (a) subject to applicable materiality standards, the accuracy of the representations and warranties of the other party (including the absence of any material adverse effect, as defined in the merger agreement); (b) the performance in all material respects by the other party of its obligations under

31
 

the merger agreement; (c) the receipt by each party of an opinion from its counsel to the effect that the mergers will qualify as a reorganization within the meaning of Section 368(a) of the Code; (d) the FirstSun common stock issued in the mergers having been authorized for listing on Nasdaq; and (e) FirstSun taking all necessary actions to elect or appoint the legacy HomeStreet directors to the board of directors of the combined company and combined bank.

 

These conditions to the consummation of the mergers may not be satisfied or waived in a timely manner or at all, and, accordingly, the mergers may not be consummated. In addition, the parties can mutually decide to terminate the merger agreement at any time, before or after the requisite HomeStreet shareholder approval, or FirstSun or HomeStreet may elect to terminate the merger agreement in certain other circumstances, including by FirstSun upon the occurrence of a material adverse effect under certain circumstances with respect to HomeStreet or by HomeStreet upon the occurrence of a material adverse effect under certain circumstances with respect to FirstSun.

 

Termination of the merger agreement could negatively affect HomeStreet.

 

If the mergers are not completed for any reason, including as a result of HomeStreet shareholders failing to approve the merger proposal, there may be various adverse consequences. For example, HomeStreet’s businesses may be affected adversely by the failure to pursue other beneficial opportunities due to the focus of management on the mergers, without realizing any of the anticipated benefits of completing the mergers. Additionally, if the merger agreement is terminated under certain circumstances, HomeStreet or FirstSun may be required to pay the other party a termination fee of $10 million (or HomeStreet may be required to pay FirstSun a reduced termination fee of $2.6 million plus reimbursement of FirstSun’s transaction fees and expenses in certain circumstances).

 

Each investor’s investment under the Acquisition Finance Securities Purchase Agreement is conditioned upon the substantially concurrent closing of the mergers.

 

Concurrently with its entry into the merger agreement, FirstSun entered into an Acquisition Finance Securities Purchase Agreement with Wellington, Castle Creek and certain other institutional accredited investors. Pursuant to the Acquisition Finance Securities Purchase Agreement, substantially concurrently with the closing of the mergers, such investors will invest an aggregate of $140 million (and up to $155 million if the additional $15 million is raised) in exchange for the sale and issuance, at a purchase price of $32.50 per share, of approximately 4.31 million (or approximately 4.77 million if the additional $15 million is raised) shares of FirstSun common stock.

Failure to consummate the mergers and investments could negatively impact FirstSun and HomeStreet. Although FirstSun has legally binding agreements with such investors under Acquisition Finance Securities Purchase Agreement pursuant to which such investors (in the aggregate) have agreed to invest $140 million in FirstSun’s common stock substantially concurrently with the consummation of the mergers, the obligation of each such investor to make such investment is subject to various conditions. Failure to consummate (or a delay in consummating) the investments may cause the failure or delay in the ability of the parties to consummate the mergers. The consummation of the mergers is subject to the receipt of requisite regulatory approval, approval of the HomeStreet shareholders and the satisfaction of other closing conditions. If the mergers are not completed for any reason, including as a result of HomeStreet shareholders failing to approve the merger proposal at the HomeStreet shareholder meeting or the imposition of a materially burdensome condition resulting in either FirstSun or HomeStreet refusing to consummate the mergers, there may be various adverse consequences and FirstSun and HomeStreet may experience negative reactions from the financial markets and from their customers and employees. For example, FirstSun’s business and HomeStreet’s business may each be impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the mergers, without realizing any of the anticipated benefits of consummating the mergers.

 

Additionally, if the merger agreement is terminated, the market price of the FirstSun common stock and/or the HomeStreet common stock could decline to the extent that current market prices reflect a market assumption that the mergers and/or, in the case of FirstSun, the investments will be beneficial and will be consummated. FirstSun or HomeStreet also could be subject to litigation related to any failure to complete the mergers or, in the case of FirstSun, the investments or to proceedings commenced against FirstSun or HomeStreet to perform its obligations under the merger agreement or, in the case of FirstSun, the investment agreements. If the merger agreement is terminated

32
 

under certain circumstances, HomeStreet may be required to pay a termination fee of $10 million to FirstSun (or HomeStreet may be required to pay FirstSun a reduced termination fee of $2.6 million plus reimbursement of FirstSun’s transaction fees and expenses in certain circumstances).

 

The Acquisition Finance Securities Purchase Agreement may be terminated in accordance with its terms and such investment may not be consummated.

 

The obligation of the parties to the Acquisition Finance Securities Purchase Agreement to consummate the investments is subject to a number of conditions which must be satisfied or waived in order to consummate the investments. Those conditions include, among other things: (i) the substantially concurrent consummation of the mergers and the satisfaction of the conditions to the mergers under the merger agreement; (ii) no purchaser or any of its affiliates, for purposes of any bank regulation or law, shall collectively be deemed to own, control or have the power to vote securities which would represent more than the greater of 9.9% (or 4.9% if such purchaser is a bank holding company) of any class of voting securities of FirstSun outstanding at such time or any greater limit provided by the Federal Reserve applicable to such purchaser (such as Wellington in which the Federal Reserve, subject to certain conditions, permits Wellington to own more than 9.9% but less than 15% of the FirstSun common stock); (iii) the absence of any statute, rule, regulation, executive order, decree, ruling or injunction that prohibits the consummation of any of the transactions contemplated by the Acquisition Finance Securities Purchase Agreement; (iv) the consummation, or substantially concurrent consummation, of a total of $140 million investment in FirstSun’s common stock; and (v) FirstSun shall have filed with Nasdaq a notification form for the listing of the FirstSun common stock, and Nasdaq shall not have objected to the listing of such shares of FirstSun common stock. Each party’s obligation to consummate such investment is also subject to certain additional customary conditions, including (a) subject to applicable materiality standards, the accuracy of the representations and warranties of the other party, and (b) the performance in all material respects by the other party of its obligations under the applicable investment agreement.

 

These conditions to the consummation of such investments may not be satisfied or waived in a timely manner or at all, and, accordingly, such investments may not be consummated. In addition, the parties to the Acquisition Finance Securities Purchase Agreement can mutually decide to terminate the agreement at any time, before or after the requisite HomeStreet shareholder approval, or the parties may elect to terminate the agreement in certain other circumstances.

 

In connection with the mergers, FirstSun will assume HomeStreet’s and HomeStreet Bank’s outstanding debt obligations, and the combined company’s level of indebtedness following the completion of the mergers could adversely affect the combined company’s ability to raise additional capital and to meet its obligations under FirstSun’s existing indebtedness.

 

Upon the closing of the mergers, FirstSun will assume HomeStreet’s and HomeStreet Bank’s outstanding indebtedness. FirstSun’s existing debt (including HomeStreet’s and HomeStreet Bank’s assumed indebtedness), together with any future incurrence of additional indebtedness, could have important consequences for the combined company’s creditors and stockholders. For example, it could:

·limit the combined company’s ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes;
·restrict the combined company from making strategic acquisitions or cause the combined company to make non-strategic divestitures;
·restrict the combined company from paying dividends to its stockholders;
·increase the combined company’s vulnerability to general economic and industry conditions; and
·require a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on the combined company’s indebtedness, thereby reducing the combined company’s ability to use cash flows to fund its operations, capital expenditures and future business opportunities.

 

33
 

HomeStreet, and consequently, FirstSun will be subject to business uncertainties and contractual restrictions while the mergers are pending.

 

Uncertainty about the effect of the mergers on employees and customers may have an adverse effect on HomeStreet and, consequently, the combined company. These uncertainties may impair HomeStreet’s ability to attract, retain, and motivate key personnel until the mergers are completed, and could cause customers and others that deal with HomeStreet to seek to change existing business relationships with HomeStreet. Retention of certain employees by HomeStreet may be challenging while the mergers are pending, as certain employees may experience uncertainty about their future roles with the combined company. If key employees depart because of issues relating to the uncertainty and difficulty of integration, or a desire not to remain with HomeStreet and, ultimately, the combined company, the combined company’s business could be harmed. In addition, subject to certain exceptions, HomeStreet has agreed to conduct its business in all material respects in the usual, regular and ordinary course and to use reasonable best efforts to maintain and preserve its business organization and its current relationships with its customers, regulators, employees and others with which it has business relationships prior to closing. See “The Merger Agreement—Covenants and Agreements” for a description of the restrictive covenants applicable to HomeStreet.

 

The merger agreement contains provisions that may discourage other companies from trying to acquire HomeStreet for greater merger consideration.

 

The merger agreement contains provisions that may discourage a third-party from submitting an acquisition proposal to HomeStreet that might result in greater value to HomeStreet shareholders than the proposed merger with FirstSun or may result in a potential competing acquirer proposing to pay a lower per share price to acquire HomeStreet than it might otherwise have proposed to pay absent such provisions. These provisions include a general prohibition on HomeStreet from soliciting, or entering into discussions with any third-party regarding, any acquisition proposal or offers for competing transactions, subject to certain exceptions relating to the exercise of fiduciary duties by the HomeStreet board of directors. In addition, HomeStreet may be required to pay FirstSun a $10 million termination fee (or HomeStreet may be required to pay FirstSun a reduced termination fee of $2.6 million plus reimbursement of FirstSun’s transaction fees and expenses in certain circumstances) upon termination of the merger agreement in certain circumstances involving acquisition proposals for competing transactions. See “The Merger Agreement—Termination Fee” beginning on page 105.

 

The shares of FirstSun common stock to be received by holders of HomeStreet common stock as a result of the mergers will have different rights from the shares of HomeStreet common stock.

 

In the mergers, holders of HomeStreet common stock will become holders of FirstSun common stock and their rights as shareholders will be governed by Delaware law and the governing documents of the combined company. The rights associated with FirstSun common stock are different from the rights associated with HomeStreet common stock. See the section entitled “Comparison of Stockholders’ Rights” beginning on page 133 for a discussion of the different rights associated with FirstSun common stock.

Holders of HomeStreet common stock will have a reduced ownership and voting interest in the combined company after the mergers and will exercise less influence over management.

 

Upon completion of the mergers, each HomeStreet shareholder and equity award holder who receives shares of FirstSun common stock will become a FirstSun stockholder. Based on the number of shares of HomeStreet common stock and HomeStreet equity awards outstanding as of the date hereof, the total number of shares of FirstSun common stock estimated to be issued to holders of HomeStreet common stock and equity awards in connection with, and subject to, the completion of the mergers is approximately 7.509 million shares. In addition, FirstSun is also obligated, substantially concurrently with the closing of the mergers, to issue to Wellington, the warrants (having an initial exercise price of $32.50 per share, and a term of three years) to purchase approximately 1.15 million shares of FirstSun common stock and to issue to the investors pursuant to the Acquisition Finance Securities Purchase Agreement approximately 4.31 million shares of FirstSun common stock (with an option of an additional 461,539 shares of FirstSun common stock, at a purchase price of $32.50 per share, for an additional investment of

34
 

$15 million), at a purchase price of $32.50 per share. Based on the number of shares of FirstSun and HomeStreet common stock outstanding as of April 30, 2024, and based on the number of shares of FirstSun common stock estimated to be issued to holders of HomeStreet common stock and equity awards in the mergers and, in connection the closing of the mergers, expected to be issued pursuant to the Acquisition Finance Securities Purchase Agreement, the former holders of HomeStreet common stock and equity awards, as a group, are estimated to own approximately 19% of the outstanding common shares of the combined company immediately after completion of the mergers, and the holders of FirstSun common stock, as a group, immediately prior to the mergers, including and together with the investors that purchase shares of FirstSun common stock pursuant to the Acquisition Finance Securities Purchase Agreement in connection with the completion of the mergers, are estimated to own approximately 81% of the outstanding shares of the combined company immediately after completion of the mergers (assuming no exercise of FirstSun stock options prior to the closing of the mergers, and excluding shares issuable upon exercise of the FirstSun stock options and the warrants). And because of this, HomeStreet shareholders may have less influence on the management and policies of the combined company than they now have on the management and policies of HomeStreet.

 

There is a limited trading market for FirstSun common stock.

 

If the mergers are completed, the shares of FirstSun common stock which will be issued to HomeStreet shareholders in the mergers will be freely transferable. However, there is a limited trading market in FirstSun common stock, which may hinder HomeStreet shareholders’ ability to sell FirstSun common stock and may lower the market price of the stock. FirstSun common stock is currently quoted on the OTCQX® Best Market operated by the OTC Markets, and as a closing condition to the mergers and undertakings in securities purchase agreements entered into in connection with the execution of the merger agreement, FirstSun will uplist its common stock to Nasdaq. Nevertheless, the development of a trading market depends upon the existence of willing buyers and sellers, the presence of which is not within the control of FirstSun. Accordingly, HomeStreet shareholders should consider the potential illiquid and long-term nature of an investment in FirstSun common stock. Even though the FirstSun stockholder base will increase as a result of the mergers and the FirstSun common stock will trade on Nasdaq, there can be no assurance that an active and liquid trading market for FirstSun common stock will develop, or once developed, will continue, nor any assurance that HomeStreet shareholders will be able to sell their shares at or above the exchange ratio following the mergers.

 

The market price of FirstSun common stock after the mergers may be affected by factors different from and in addition to those affecting the shares of HomeStreet or FirstSun currently.

 

As a result of the mergers, holders of HomeStreet common stock will become holders of FirstSun common stock. FirstSun’s business differs from that of HomeStreet. HomeStreet’s business, assets, liabilities, financial condition, results of operations and prospects are of major significance with respect to the combined company. Accordingly, the business, assets, liabilities, financial condition, results of operations and prospects of the combined company and the market price of FirstSun common stock after the completion of the mergers may be affected by factors different from and in addition to those currently affecting the independent business, assets, liabilities, financial condition, results of operations and prospects of FirstSun. Among other things, the net interest income, assets, such as securities and loans, and economic value of equity of the combined company are expected to have different sensitivities to changes in interest rates than the current sensitivities of net interest income, assets, such as securities and loans, and economic value of equity of FirstSun independently to changes in interest rates. For a discussion of the businesses of FirstSun and HomeStreet and of certain factors to consider in connection with those businesses, see the documents incorporated by reference into this proxy statement/prospectus.

Issuance of shares of FirstSun common stock in connection with the mergers may adversely affect the market price of FirstSun common stock.

 

In connection with the completion of the mergers, FirstSun expects to issue approximately 7.292 million shares of FirstSun common stock to HomeStreet shareholders, approximately 0.217 million shares of FirstSun common stock to the holders of HomeStreet equity awards, approximately 4.31 million shares of FirstSun common stock to the investors under the Acquisition Finance Securities Purchase Agreement at a purchase price of $32.50

35
 

per share (with an option of an additional 461,539 shares of FirstSun common stock, at a purchase price of $32.50 per share, for an additional investment of $15 million), and to Wellington, the warrants (having an initial exercise price of $32.50 per share, and a term of three years) to purchase approximately 1.15 million shares of FirstSun common stock. The issuance of these new shares and warrants to acquire FirstSun common stock may result in fluctuations in the market price of FirstSun common stock, including a stock price decrease.

 

Risks Relating to FirstSun’s Business

 

You should read and consider risk factors specific to FirstSun’s business that will also affect the combined company after the mergers. These risks are described in the “Risk Factors” section of FirstSun’s Annual Report on Form 10-K for the year ended December 31, 2023, and in any updates to those risk factors set forth in FirstSun’s Quarterly Reports on Form 10-Q and in other documents incorporated by reference into this proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information” beginning on page ii of this proxy statement/prospectus for the location of information incorporated by reference into this proxy statement/prospectus.

 

Risks Relating to HomeStreet’s Business

 

You should read and consider risk factors specific to HomeStreet’s business that will also affect the combined company after the mergers. These risks are described in the “Risk Factors” section of HomeStreet’s Annual Report on Form 10-K for the year ended December 31, 2023, and in any updates to those risk factors set forth in HomeStreet’s Quarterly Reports on Form 10-Q and in other documents incorporated by reference into this proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information” beginning on page ii of this proxy statement/prospectus for the location of information incorporated by reference into this proxy statement/prospectus.

36
 

HOMESTREET SHAREHOLDER MEETING

 

The HomeStreet shareholder meeting will be held via webcast at www.virtualshareholdermeeting.com/HMST2024SM on June 18, 2024 at 10:00 a.m. Pacific Time. At the HomeStreet shareholder meeting, HomeStreet shareholders will be asked to vote on seven proposals. Proposals 1, 2 and 3 relate to the mergers and consist of the merger proposal, the merger-related compensation proposal and the adjournment proposal. These proposals follow immediately below in the section entitled “HomeStreet Merger-Related Proposals”. Proposals 4, 5, 6 and 7 are additional proposals not related to the mergers, and consist of the director election proposal, compensation (non-merger) proposal, the frequency of compensation vote proposal and the auditor ratification proposal. These four proposals are in the section entitled “Additional HomeStreet Proposals” which begins on page 140.

 

The HomeStreet board of directors has set April 11, 2024 as the record date for the HomeStreet shareholder meeting. Only holders of record of HomeStreet common stock at the close of business on April 11, 2024 will be entitled to notice of and to vote at the HomeStreet shareholder meeting and any adjournments or postponements thereof. As of the HomeStreet record date, there were 18,857,566 shares of HomeStreet common stock outstanding and entitled to vote at the HomeStreet shareholder meeting held by 2,168 holders of record.

 

The presence, in person or represented by proxy, of at least a majority of the total number of outstanding shares of HomeStreet common stock entitled to vote is necessary in order to constitute a quorum for purposes of the matters being voted on at the HomeStreet shareholder meeting.

 

If you have any questions or need any assistance in voting your shares, please contact our proxy solicitor:

 

OKAPI PARTNERS LLC

1212 Avenue of the Americas
New York, NY 10036

Toll-Free: (877) 566-1922

Email: pmchugh@okapipartners.com

37
 

HOMESTREET MERGER-RELATED PROPOSALS

Proposal No. 1 – Merger Proposal

At the HomeStreet shareholder meeting, the HomeStreet shareholders will be asked to approve the merger agreement, as amended by the April 30 amendment to the merger agreement. HomeStreet shareholders should read this proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the mergers. A copy of the merger agreement is attached to this proxy statement/prospectus as Annex A.

After careful consideration, the HomeStreet board of directors unanimously adopted the merger agreement, as amended by the April 30 amendment to the merger agreement, authorized and approved the mergers and the transactions contemplated by the merger agreement and determined the merger agreement and the mergers to be advisable and in the best interests of HomeStreet and its shareholders . Please see “The Mergers—HomeStreet’s Reasons for the Mergers” included elsewhere in this proxy statement/prospectus for a more detailed discussion of the HomeStreet board of directors’ recommendation.

The board of directors of HomeStreet has unanimously approved the merger agreement, as amended by the April 30 amendment to the merger agreement, has determined that the mergers, on the terms and conditions set forth in the merger agreement, are fair to, advisable and in the best interests of HomeStreet and its shareholders and unanimously recommends that HomeStreet shareholders vote “FOR” the merger proposal.

Proposal No. 2 – Merger-Related Compensation Proposal

Pursuant to Section 14A of the Exchange Act and Rule 14a-21(c) thereunder, HomeStreet is seeking a non-binding, advisory shareholder approval of the compensation of HomeStreet’s named executive officers that may or will be payable in connection with the mergers as disclosed in the section entitled “The Mergers – Interests of HomeStreet’s Directors and Executive Officers in the Mergers” beginning on page 72. The proposal gives holders of HomeStreet common stock the opportunity to vote, on a non-binding, advisory basis, on the merger-related compensation that may be paid or will be payable to HomeStreet’s named executive officers.

The vote on the merger-related compensation proposal is a vote separate and apart from the votes on the merger proposal and the adjournment proposal. Accordingly, if you are a holder of HomeStreet common stock, you may vote to approve the merger proposal and/or the adjournment proposal and vote not to approve the merger-related compensation proposal, and vice versa. The approval of the merger-related compensation proposal by holders of HomeStreet common stock is not a condition to the completion of the merger. Because the vote on the merger-related compensation proposal is advisory only, it will not be binding on HomeStreet or FirstSun. Accordingly, because HomeStreet is contractually obligated to make these payments if the merger is completed, the merger-related compensation will be paid to HomeStreet’s named executive officers to the extent payable in accordance with the terms of the compensation agreements and arrangements even if shareholders of HomeStreet common stock fail to approve the advisory vote regarding merger-related compensation.

The HomeStreet board of directors unanimously recommends that HomeStreet shareholders vote “FOR” the merger-related compensation proposal.

Proposal No. 3 – Adjournment Proposal

 

The HomeStreet shareholder meeting may be adjourned to another time, if necessary or appropriate, to permit, among other things, further solicitation of proxies if necessary to obtain additional votes in favor of the merger proposal.

38
 

If, at the HomeStreet shareholder meeting, the number of shares of HomeStreet common stock present or represented and voting in favor of the merger proposal is insufficient to approve such proposal, HomeStreet intends to move to adjourn the HomeStreet shareholder meeting in order to solicit additional proxies for the approval of the merger agreement.

 

The HomeStreet board of directors unanimously recommends that HomeStreet shareholders vote “FOR” the adjournment proposal.

 

 In addition to the above merger-related proposals, HomeStreet is asking its shareholders to consider and vote on four additional proposals which are described under “ADDITIONAL HOMESTREET PROPOSALS” beginning on page 140 of this proxy statement/prospectus.

 

39
 

THE MERGERS

The following discussion contains certain information about the mergers. The discussion is subject, and qualified in its entirety by reference, to the merger agreement attached as Annex A to this proxy statement/prospectus and incorporated herein by reference. We urge you to read carefully this entire proxy statement/prospectus, including the merger agreement attached as Annex A, for a more complete understanding of the mergers.

Terms of the Mergers

 

Each of the FirstSun board of directors and the HomeStreet board of directors has approved the merger agreement. Under the merger agreement, a wholly-owned subsidiary of FirstSun will merge with and into HomeStreet, with HomeStreet remaining as the surviving entity and becoming a wholly-owned subsidiary of FirstSun. This surviving entity, immediately following the merger and as part of a single integrated transaction, will merge with and into FirstSun, with FirstSun as the surviving entity. Immediately following the completion of the second step merger, HomeStreet’s wholly-owned subsidiary, HomeStreet Bank, will merge with and into FirstSun’s wholly-owned subsidiary, Sunflower Bank, with Sunflower Bank as the surviving bank.

 

If the mergers are completed, each outstanding share of HomeStreet common stock will be converted into the right to receive the merger consideration of 0.3867 shares of FirstSun common stock, except for treasury stock or shares owned by HomeStreet or FirstSun, in each case, other than in a fiduciary or agency capacity or as a result of debts previously contracted, which will be cancelled, and shares held by shareholders who properly exercise dissenters’ rights. FirstSun will not issue any fractional shares of FirstSun common stock in the mergers. Instead, a HomeStreet shareholder who otherwise would have received a fraction of a share of FirstSun common stock will receive an amount in cash (without interest) equal to such fractional part of a share of FirstSun common stock multiplied by $35.00.

 

HomeStreet shareholders are being asked to approve the merger agreement. See “The Merger Agreement” for additional and more detailed information regarding the legal documents that govern the mergers, including information about conditions to the completion of the mergers and provisions for terminating or amending the merger agreement.

 

Background of the Mergers

In the course of its business planning processes undertaken each year, the management and the Board of Directors (the “HomeStreet Board”) of HomeStreet frequently review the business strategies and objectives of HomeStreet, including strategic opportunities and challenges. For years prior to the execution of the merger agreement, they each considered various strategic options potentially available to HomeStreet, in each case with the goal of enhancing value for HomeStreet shareholders and delivering the best possible services to its customers and communities. These strategic considerations have focused on, among other things, the business and regulatory environments facing financial institutions generally, as well as conditions and trends in the banking industry and financial markets, including for regional banks. From time to time, the HomeStreet Board and management met with representatives of KBW to discuss market conditions, industry trends and potential strategic opportunities and alternatives, including business combination opportunities.

In May 2023, HomeStreet management began evaluating potential strategic alternatives for HomeStreet and HomeStreet Bank.

On May 25, 2023, a meeting of the HomeStreet Board was held to discuss, among other items, the general market conditions in the banking industry and various strategic alternatives for HomeStreet and HomeStreet Bank. Members of HomeStreet management and representatives of KBW attended the meeting. Representatives of KBW provided an overview of the banking market, focusing on investor concerns and competition with deposit rates. Representatives of KBW also discussed certain strategic alternatives for HomeStreet and HomeStreet Bank,

40
 

including a standalone approach, a recapitalization approach or a strategic merger, as well as the process for pursuing any such potential transaction. The HomeStreet Board then authorized the formation of a joint special committee (the “HomeStreet Transaction Committee”), consisting of Mark Mason as chair, S. Craig Tompkins (an independent director who was appointed co-chair of the HomeStreet Transaction Committee on August 24, 2023 with Mr. Mason) and three other independent directors of HomeStreet, Jim Mitchell, Sandra Cavanaugh and Scott Boggs, each of whom are members of HomeStreet’s Executive Committee. The members of the HomeStreet Transaction Committee did not receive any additional compensation related to their service on the HomeStreet Transaction Committee, other than Mr. Tompkins, who received $5,000 in additional compensation related to his service as co-chair on the committee. The purpose of the HomeStreet Transaction Committee was to (i) consider and evaluate strategic alternatives and (ii) potentially recommend to the full HomeStreet Board for approval such strategic alternative transaction or transactions. The HomeStreet Transaction Committee was authorized to hire financial, legal and other experts and to take other action necessary to effectuate the HomeStreet Transaction Committee’s purpose, but the HomeStreet Transaction Committee was not authorized to veto any potential transaction and overall final approvals remained vested in the HomeStreet Board.

At the May 25, 2023 meeting, the HomeStreet Board instructed KBW to prepare a process that would position KBW to assist HomeStreet with a variety of potential transactions. The work included, but was not limited to, KBW’s due diligence on HomeStreet, the establishment of the virtual data room and the commission of a third party to create a credible methodology by which HomeStreet’s balance sheet’s fair value could be determined, accounting for all anticipated purchase accounting adjustments.

Between May 2023 and December 2023, the HomeStreet Transaction Committee met six times to discuss the strategic transaction process and ongoing negotiations with potential counterparties. The HomeStreet Transaction Committee was not dissolved following these meetings.

On June 29, 2023, a regularly scheduled meeting of the HomeStreet Board was held. Members of HomeStreet’s management and representatives of KBW and HomeStreet’s outside securities counsel, Orrick, Herrington & Sutcliffe LLP (“Orrick”), attended portions of the meeting. The purpose of the meeting was to discuss, among other items, a potential strategic transaction, including a presentation by representatives of KBW of the ongoing review of potential strategic alternatives, the results of the third party’s valuation and other financial advice from KBW.

On July 27, 2023, a regularly scheduled meeting of the HomeStreet Board was held to discuss, among other items, a proposed strategic transaction. Members of HomeStreet management and representatives of Sullivan & Cromwell LLP (“Sullivan & Cromwell”), HomeStreet’s outside legal counsel, KBW and Orrick attended portions of the meeting. The HomeStreet Board discussed with representatives of KBW the ongoing review of potential strategic alternatives. During the meeting, representatives of Sullivan & Cromwell and the HomeStreet Board discussed the current regulatory environment for bank mergers and acquisitions, including recent regulatory trends. Representatives of KBW also discussed potential benefits of reaching out to potential partners in a strategic transaction.

Through the months of July, August, September, October and November 2023, representatives of KBW, acting at the direction of HomeStreet, contacted, and/or made aware of the possibility of a strategic transaction, several private equity funds and banks, and responded to unsolicited inquiries received from other institutions. During this time, HomeStreet entered into substantially similar forms of mutual and one-way confidentiality agreements (“NDAs”) with 24 of the aforementioned parties, each of which had terms between one to two years. The NDAs contained, among other things, a customary standstill provision (which included a customary “don’t ask, don’t waive” clause and was subject to customary fall-away periods, including following the end of the one- to two-year periods).

On August 1, 2023, a Bloomberg article was published titled “HomeStreet Bank Is Said to Explore Options Including Sale” discussing that HomeStreet was exploring raising capital, selling assets or a potential sale.

41
 

On August 10, 2023, Mark Mason, Chief Executive Officer of HomeStreet, and Neal Arnold, President and Chief Executive Officer of FirstSun, had an introductory telephonic discussion regarding a potential strategic transaction between HomeStreet and FirstSun. They discussed, in general terms, their respective companies, the financial services industry sectors in which they operate, general financial services industry trends and strategic developments, and business combination trends and a potential strategic transaction between HomeStreet and FirstSun, without making any specific proposal with respect to pricing, timing or other potential transaction terms of any potential strategic transaction between HomeStreet and FirstSun.

Beginning on August 22, 2023, HomeStreet made available a virtual data room (the “HomeStreet Data Room”) to each party who executed an NDA. The HomeStreet Data Room was updated over time to facilitate due diligence regarding a proposed transaction.

On August 24, 2023, a regularly scheduled meeting of the HomeStreet Board was held to discuss, among other items, the process for a proposed strategic transaction. Members of HomeStreet management and representatives of KBW and Orrick attended portions of the meeting. Mr. Mason presented a summary of meetings held with certain potential counterparties over the prior month, the progress in pursuing a potential strategic transaction and discussions with federal and state banking regulators regarding a potential transaction. Representatives of KBW discussed with the HomeStreet Board a review of current market conditions for regional banks, including potential investors and partners for a potential strategic transaction.

On August 29, 2023, a potential counterparty (the “First Bidder”) entered into a one-way NDA with HomeStreet. Additionally, a consortium of investors (the “Potential Investors”) entered into one-way NDAs with HomeStreet on September 7, 2023 and September 15, 2023.

On September 21, 2023, a regularly scheduled meeting of the HomeStreet Board was held to discuss, among other items, the current status of a potential strategic transaction. Members of HomeStreet management and representatives of KBW and Orrick attended portions of the meeting. Representatives of KBW provided an update regarding the ongoing strategic transaction process and efforts to raise additional capital from reputable investors, and reviewed potential strategic counterparties. Mr. Mason discussed with the HomeStreet Board communications with several interested parties regarding a potential strategic transaction.

On September 25, 2023, HomeStreet executed a formal engagement letter with KBW regarding KBW’s engagement as HomeStreet’s financial advisor in connection with a potential transaction. KBW was engaged to serve as HomeStreet’s financial advisor in connection with a potential strategic transaction based on KBW’s qualifications, reputation and experience in mergers and acquisitions and capital raising involving banks and its familiarity with HomeStreet.

On September 26, 2023, another potential counterparty (the “Second Bidder”) entered into a mutual NDA with HomeStreet.

On October 12, 2023, the HomeStreet Transaction Committee convened a meeting to discuss the strategic alternative transaction process. Members of HomeStreet management and representatives of KBW attended the meeting. Mr. Mason and representatives of KBW discussed with the HomeStreet Transaction Committee that they were currently vetting several additional counterparties, negotiating and executing NDAs, updating the HomeStreet Data Room and conducting and participating in management interviews with potential strategic transaction counterparties. Representatives of KBW discussed the current outreach and discussions that had occurred related to a potential strategic transaction, including discussions with one of the Potential Investors, the First Bidder and the Second Bidder.

On October 17, 2023, representatives of Sullivan & Cromwell spoke with legal representatives of the Potential Investors who had expressed interest in making a capital investment in HomeStreet, regarding potential transaction structures and legal and regulatory considerations.

42
 

On October 25 and October 26, 2023, regularly scheduled meetings of the HomeStreet Board were held to discuss, among other items, the current status of a proposed strategic transaction. Members of HomeStreet management and representatives of KBW and Orrick attended portions of the meeting. Representatives of KBW discussed the current market themes and investor sentiment in the banking industry, as well as a general update on merger and acquisition activity. Additionally, representatives of KBW provided an update on the ongoing discussions with potential counterparties to the strategic alternative transactions. During the meetings, an executive session of the independent directors also occurred in which the directors discussed updates to a potential strategic alternative transaction process.

During the week of October 30, 2023, KBW solicited term sheets from each potential counterparty who had executed an NDA and was still participating in the offer process and requested that the term sheets be submitted by November 15, 2023.

On November 2, 2023, FirstSun entered into a mutual NDA with HomeStreet (the “FirstSun NDA”).

On November 13, 2023, Mr. Mason met with Mr. Arnold to discuss the possibility of FirstSun submitting a proposal regarding a potential strategic transaction. Following this meeting, FirstSun provided a presentation to representatives of HomeStreet summarizing FirstSun’s transaction proposal.

On November 15, 2023, representatives of HomeStreet received a non-binding letter of intent (“LOI”) and a presentation from FirstSun, as well as an indication of interest and proposed exclusivity agreement from the First Bidder.

FirstSun proposed an all stock merger, with a fixed number of shares of FirstSun common stock exchanged for the outstanding shares of HomeStreet. Based on FirstSun’s then-current stock value, this represented a transaction value of approximately $8.00 – $9.00 per HomeStreet share, resulting in a 20 – 35% premium over the then-current HomeStreet market price. FirstSun proposed procuring between $125 – $175 million of common equity financing in connection with the proposed transaction, with the procurement of such equity financing being a condition for closing. In light of HomeStreet’s business lines and locations, FirstSun indicated that continuity of management of the HomeStreet team members would be critical to the success of a merger of HomeStreet and FirstSun. FirstSun proposed that three existing members of the HomeStreet Board would be appointed to the FirstSun board of directors following the proposed transaction. FirstSun also proposed a three-year employment contract for Mr. Mason, as Executive Vice Chairman of the combined company, and that certain senior HomeStreet management would likely continue to serve post-closing. The FirstSun proposal further provided for a 45-day period in which HomeStreet would agree to negotiate with FirstSun exclusively with respect to the potential transaction. The proposal would expire by its terms on November 30, 2023.

The First Bidder proposed a cash offer to acquire 100% of the shares of HomeStreet for $9.84 per HomeStreet share, representing a market premium of 45% as of November 15, 2023. The proposal did not include any financial contingencies and provided for a 60-day exclusivity period should HomeStreet accept the proposal.

From November 15, 2023 until the execution of the original merger agreement on January 16, 2024, representatives of KBW and members of HomeStreet management discussed certain matters regarding HomeStreet’s and the potential counterparties’ respective businesses, including the business, financial, credit, operational, legal and compliance matters, among other subjects, pertaining to the due diligence process with representatives of FirstSun, the First Bidder, the Second Bidder and the Potential Investors.

On November 16, 2023, representatives of HomeStreet received proposals from two of the Potential Investors, which were treated as a single proposal. The Potential Investors proposed solely acquiring newly-issued shares of HomeStreet common stock, at a price of $4.00 per share, representing a majority of the issued and outstanding shares of HomeStreet common stock in the aggregate following the proposed transaction. Existing HomeStreet shareholders would not sell HomeStreet shares to the Potential Investors. No single Potential Investor would acquire more than 24.9% of the equity interests of HomeStreet. The Potential Investors would also be provided

43
 

proportional board representation of the pro forma HomeStreet Board and one seat for each Potential Investor on all HomeStreet Board committees other than the audit committee. The offer proposed a 60-day exclusivity period should HomeStreet accept the proposal.

On November 17, 2023, representatives of HomeStreet received a non-binding LOI from the Second Bidder proposing an all-cash transaction. The Second Bidder proposed a 100% cash acquisition at a price per HomeStreet share consisting of (i) a base level of cash equal to the then-current market value of HomeStreet stock and (ii) a “contingent value right” of up to an additional $2.50 per HomeStreet share. The contingent value right would only be paid following the first anniversary of the closing of the proposed transaction subject to satisfaction of certain performance hurdles. The proposal, including the full realization of the contingent value right one year following the closing of the proposed transaction, represented a potential market premium of 37% as of November 17, 2023. The offer proposed a 45-day exclusivity period should HomeStreet accept the proposal and would expire by its terms on December 1, 2023.

On November 22, 2023, the HomeStreet Transaction Committee convened a meeting to discuss the inbound transaction proposals received and the process for further evaluation. Members of HomeStreet management and representatives of KBW and Sullivan & Cromwell attended the meeting. Representatives of KBW and the HomeStreet Transaction Committee discussed the negotiations and engagement process with each potential counterparty, the economic, regulatory and other considerations set forth in each proposal, the contemplated transaction structures set forth in each proposal, certain post-closing considerations set forth in each proposal and the timing and closing conditions of each proposal. Representatives of Sullivan & Cromwell also advised the HomeStreet Transaction Committee as to directors’ fiduciary duties. The HomeStreet Transaction Committee directed HomeStreet’s advisors to continue discussions and negotiations with each counterparty that had submitted a proposal.

On November 26, 2023, FirstSun submitted a revised proposal. FirstSun increased the fixed exchange ratio to 0.3165 shares of FirstSun common stock for each HomeStreet share, or approximately $10.00 per HomeStreet share based on the November 24, 2023 closing price of FirstSun common stock, representing a market premium of 61% as of November 26, 2023. FirstSun indicated that FirstSun was holding advanced discussions with outside investors for such outside investors to provide committed capital prior to the announcement of a proposed transaction with HomeStreet. FirstSun proposed to raise $175 million in equity financing to support the capital required for the proposed transaction with HomeStreet. In addition, Mr. Mason’s existing employment contract with HomeStreet would be honored, including change-in-control terms. The revised proposal indicated that FirstSun would also offer a new three-year employment contract to Mr. Mason that would help assure the continuity of the HomeStreet talent during the transition period, promote continuity of the existing customer base and provide valuable leadership in the roll-out of the commercial lending platform initiative FirstSun envisioned. The proposal also provided that certain other HomeStreet senior management personnel (including market presidents and leadership and executives) would likely continue serving in their roles, or in refined key roles, following the consummation of the proposed transaction.

On November 27, 2023, a special meeting of the HomeStreet Board was held to discuss the four proposals received and an overview and background of the process conducted, including KBW’s outreach to potential counterparties. Members of HomeStreet management and representatives of KBW and Sullivan & Cromwell attended the meeting. Representatives of Sullivan & Cromwell advised the HomeStreet Board as to the directors’ fiduciary duties. Representatives of KBW summarized the proposals received from FirstSun, the First Bidder, the Second Bidder and the Potential Investors. The HomeStreet Board engaged in a discussion with KBW and Mr. Mason regarding the risks and opportunities associated with each proposal, and ongoing negotiations with each potential counterparty. The HomeStreet Board agreed that HomeStreet management and KBW should continue to negotiate with each potential counterparty to improve and refine the proposals.

On December 1, 2023, Mr. Mason along with a representative of KBW met with a representative of the First Bidder and the First Bidder’s financial advisor to discuss a potential transaction. On the same day, Wellington Management (“Wellington”), as a potential investor in FirstSun in connection with the proposed transaction,

44
 

entered into a joinder to the FirstSun NDA to facilitate such potential investor’s due diligence review. Castle Creek Capital LLC and an additional potential investor similarly entered into joinders to the FirstSun NDA on January 2, 2024 and January 10, 2024, respectively.

On December 2, 2023, Mr. Arnold requested the opportunity to present to the HomeStreet Board, given the ongoing equity ownership that would be part of a transaction with FirstSun. Given the ongoing equity ownership that would be part of a transaction with the Potential Investors, the Potential Investors were also invited by KBW to present at the December 7, 2023 HomeStreet Board meeting, but they did not accept the invitation.

During the week of December 4, 2023, Mr. Mason and Mr. Michel met with Mr. Arnold and Robert Cafera, Chief Financial Officer of FirstSun, and discussed the ongoing process regarding a potential strategic transaction with FirstSun.

On December 6, 2023, representatives of the Second Bidder submitted a revised proposal to KBW. The revised proposal increased the offer to $10.00 per HomeStreet common share, eliminated the contingent value right and reduced the requested exclusivity to 30 days. The proposal would expire on December 11, 2023.

On December 6, 2023, representatives of the Potential Investors and representatives of KBW discussed the proposal on recapitalization.

On December 7, 2023, the First Bidder sent a revised offer to KBW. The First Bidder offered a revised fixed price of $235 million in cash, which equated to a per share price of $12.04 per HomeStreet common share using the most recent share counts and vesting of unvested units estimated at that time. The First Bidder also verbally proposed to a representative of KBW a retention package for certain HomeStreet employees, including Mr. Mason.

On December 7, 2023, a regularly scheduled board meeting of the HomeStreet Board was held to discuss a potential transaction. Members of HomeStreet’s management and representatives of KBW, Sullivan & Cromwell, Orrick and FirstSun attended portions of the meeting. During the meeting, an executive session of the independent directors was held to discuss matters regarding a proposed transaction. Following the executive session of independent directors, an executive session of all directors occurred to discuss the directors’ views related to a proposed transaction. After the executive sessions were held, Mr. Mason engaged in a discussion with the HomeStreet Board regarding the ongoing discussions with several potential counterparties. Representatives of KBW discussed each of the four proposals received to date. Mr. Arnold attended a portion of this meeting and provided the HomeStreet Board with an overview of FirstSun’s proposal dated November 26, 2023 and its business, and shared his perspectives on the business prospects of the combined company that would result from a potential transaction, including the potential synergies and benefits that could be realized for both parties and their respective shareholders in light of the HomeStreet shareholders’ substantial ownership of the proposed combined company. The HomeStreet Board decided to reconvene on December 11, 2023 to continue to deliberate on offers received before making a final decision.

On December 11, 2023, FirstSun, the First Bidder and the Second Bidder each submitted revised written proposals.

·FirstSun proposed an increased exchange ratio of 0.3692 FirstSun shares for each HomeStreet share, an increase from the exchange ratio of 0.3165 offered in the previous proposal, or approximately the equivalent of $12.00 per HomeStreet share, representing a market premium of 56% as of December 8, 2023. The updated proposal would expire on its own terms on December 13, 2023.
·The First Bidder offered a fixed price of $260 million in cash, which equated to a per-share price of $13.32 per HomeStreet common share using the most recent share counts and vesting of unvested units estimated at that time. This was an increase from the previous offer made on December 7, 2023 of $12.04.
·The Second Bidder proposed a cash price of $12.00 per HomeStreet share. This was an increase from the previous offer of $10.00.

45
 

On December 11, 2023, a special meeting of the HomeStreet Board was held to discuss the updated proposals and progress related to a potential transaction. Members of HomeStreet management and representatives of KBW and Sullivan & Cromwell attended the meeting. Representatives of Sullivan & Cromwell advised the HomeStreet Board as to the directors’ fiduciary duties, as they had previously done. Representatives of KBW then discussed the process, negotiations, economics, transaction structures, closing and post-closing considerations with respect to a potential transaction and each of the three updated proposals that had been received. KBW noted the Potential Investors declined to improve their initial offer. The HomeStreet Board discussed concerns over the financing contingencies present in the FirstSun proposal. The HomeStreet Board discussed the process for negotiating with the three potential counterparties that continued to remain interested and had submitted improved proposals. The HomeStreet Board decided to invite all three potential counterparties to continue to conduct due diligence. The HomeStreet Board also determined to provide a merger agreement to each of the three potential counterparties, and that each counterparty would be requested to provide a markup of the merger agreement by January 5, 2024. Additionally, each counterparty would be requested to deliver the “best and final” proposed offer, including management retention terms and economic terms, by January 11, 2024.

Between December 11, 2023 and the execution of the original merger agreement on January 16, 2024, members of HomeStreet’s management and KBW met with representatives of each of FirstSun, the First Bidder and the Second Bidder, and their respective advisors, to discuss various topics related to a proposed transaction, including due diligence with respect to the parties.

On December 13, 2023, the updated FirstSun proposal expired while FirstSun pursued capital-raising efforts.

On December 14, 2023, a meeting of the HomeStreet Transaction Committee was held to discuss recent developments regarding ongoing negotiations with each potential counterparty. Members of HomeStreet management and representatives of KBW and Sullivan & Cromwell attended the meeting. Representatives of Sullivan & Cromwell advised the HomeStreet Transaction Committee as to the directors’ fiduciary duties in connection with its evaluation of the proposals, as they had done previously.

On December 15, 2023, a meeting of the HomeStreet Transaction Committee was held to discuss the process with respect to the proposals received from FirstSun, the First Bidder and the Second Bidder. Members of HomeStreet management and representatives of KBW and Sullivan & Cromwell attended the meeting. The HomeStreet Transaction Committee directed Sullivan & Cromwell to deliver an initial draft merger agreement to each of FirstSun, the First Bidder and the Second Bidder and their respective legal advisors.

On December 19, 2023, Sullivan & Cromwell delivered initial draft merger agreements to FirstSun, the First Bidder and the Second Bidder. Sullivan & Cromwell requested each potential counterparty deliver a proposed markup of the merger agreement no later than January 5, 2024.

On December 21, 2023, a special meeting of the HomeStreet Board was held to discuss the progress and due diligence conducted relating to a potential transaction. Members of HomeStreet management and representatives of KBW attended the meeting. Mr. Mason discussed the extensive due diligence with the First Bidder and the Second Bidder, and a meeting between Mr. Mason, Mr. Michel and the Second Bidder discussing the infrastructure of HomeStreet. Additionally, Mr. Mason reported that FirstSun was engaged in capital-raising efforts and had not been in communication for a few days. The HomeStreet Board also discussed the timeline for a potential final decision. Representatives of KBW discussed the process of the transaction, including KBW’s outreach to potential counterparties.

On January 4, 2024, FirstSun made available to HomeStreet a virtual data room to permit an expanded mutual due diligence review. HomeStreet and FirstSun, and their respective legal, financial and other advisors continued to engage in mutual due diligence, including with respect to business, credit, operational, legal and compliance matters, among others.

On January 5, 2024, FirstSun, the First Bidder and the Second Bidder each provided a revised draft merger agreement that did not include a final offer price.

46
 

On January 10, 2024, Sullivan & Cromwell delivered updated draft merger agreements, revised to reflect HomeStreet management’s comments, to FirstSun, the First Bidder and the Second Bidder and requested that a final markup of the updated draft merger agreements be provided by January 11, 2024.

On January 10 and 11, 2024, HomeStreet, FirstSun, and their respective legal counsel, Sullivan & Cromwell and Nelson Mullins Riley & Scarborough LLP (“Nelson Mullins”), discussed the equity financing agreement that FirstSun would execute with certain investors.

On January 11, 2024, FirstSun, the First Bidder and the Second Bidder each sent their “best and final” offer on a proposed transaction, including an updated draft of the respective merger agreement and proposed retention agreements for Mr. Mason.

FirstSun proposed an increased exchange ratio of 0.4345 FirstSun shares for each HomeStreet share, an increase from the exchange ratio of 0.3692 previously offered, or approximately the equivalent of $14.75 per HomeStreet share, representing a market premium of 40% as of January 10, 2024. The offer would expire on its own terms on January 12, 2024. Additionally, FirstSun offered Mr. Mason a continuing role at the proposed combined company as Executive Vice Chairman, and he would be awarded an equity grant and a board seat at the proposed combined company.

The First Bidder offered a fixed price of $295 million in cash, which equated to a per-share price of $15.19 per HomeStreet common share, an increase from the offer made on December 11, 2023 of $13.32. The per-share price was determined using the share counts along with unvested units estimated at the time of the First Bidder’s “best and final” offer. The First Bidder also submitted its proposal on Mr. Mason’s ongoing consulting arrangement as initially proposed on December 7, which included $4 million in compensation for Mr. Mason.

The Second Bidder proposed a revised offer of $13.50 per HomeStreet share, an increase from the offer made on December 11, 2023 of $12.00. Additionally, the Second Bidder offered Mr. Mason a continuing role at the proposed combined company in a consulting or advisory capacity with between $4.5 million and $6 million in aggregate compensation paid over five years of employment.

On January 12, 2024, Sullivan & Cromwell reached out to the First Bidder’s legal counsel and Nelson Mullins regarding improving certain legal terms in the proposals submitted by the First Bidder and FirstSun.

On January 12, 2024, a special meeting of the HomeStreet Board was held to consider the negotiated terms of a proposed transaction with each of FirstSun, the First Bidder and the Second Bidder. Members of HomeStreet management and representatives of Sullivan & Cromwell, KBW and Orrick attended the meeting. Representatives of Sullivan & Cromwell presented a fulsome review of the legal terms of each offer, the fiduciary duties of the HomeStreet Board and the regulatory approval process and likelihood of approval necessary for each proposal. Sullivan & Cromwell discussed each of the First Bidder’s, the Second Bidder’s and FirstSun’s employment offers to Mr. Mason with the HomeStreet Board. Representatives of KBW provided a detailed review of the financial terms of each offer received, the current market conditions in the banking industry and potential reactions by investors to the proposed strategic transactions. The HomeStreet Board and representatives of KBW discussed the results of the due diligence and reverse due diligence processes that had been conducted on FirstSun, the First Bidder and the Second Bidder, specifically with a focus on each party’s ability to complete a transaction in a timely manner. The HomeStreet Board also discussed with representatives of KBW that each offer received was materially better than the prior offers received, validating the competitive process that was used by HomeStreet. The HomeStreet Board considered the fact that FirstSun’s proposed transaction included definitive investment agreements with certain investors that were already negotiated and would be executed definitively concurrently with execution of the proposed merger agreement. The HomeStreet Board further considered the fact that FirstSun’s proposed transaction included $80 million of financing that would be closed on or about the date of execution of the proposed merger agreement with the remaining $95 million that would be closed concurrent with the merger closing. Following extensive deliberation by the HomeStreet Board, the HomeStreet Board authorized HomeStreet management to execute an LOI with FirstSun. On the same day, Mr. Mason sent Mr. Arnold an executed FirstSun LOI, which provided mutual exclusivity through January 16, 2024. Following the execution

47
 

of the LOI with FirstSun, a representative of KBW separately notified the First Bidder’s financial advisor and the Second Bidder that HomeStreet had entered into an exclusivity agreement with respect to a potential transaction with another party.

Between January 12, 2024 and January 16, 2024, HomeStreet and FirstSun and representatives of their respective legal and financial advisors finalized negotiations of the original merger agreement and the employment agreement with Mr. Mason.

From January 12, 2024 until January 16, 2024, HomeStreet, FirstSun and Wellington, and their respective legal representatives, negotiated voting agreements requiring certain directors or shareholders to vote in favor of particular matters, including the FirstSun share issuance, amendments to the FirstSun certificate of incorporation, and against alternative proposals that could delay the merger, and also granted a proxy with respect to FirstSun common stock under select circumstances, which the parties executed.

On January 15, 2024, a special meeting of the HomeStreet Board was held to consider the proposed final terms of a potential transaction with FirstSun. Members of HomeStreet management and representatives of Sullivan & Cromwell, KBW and Orrick attended the meeting. During the meeting, the HomeStreet Board received materials relevant to the agenda for the meeting that had been prepared by KBW and Sullivan & Cromwell. The HomeStreet Board, Sullivan & Cromwell and KBW discussed the key terms of the proposed transaction with FirstSun, including the original merger agreement and voting agreements. Representatives of Sullivan & Cromwell again advised the HomeStreet Board as to the directors’ fiduciary duties, and discussed the key considerations regarding the original merger agreement, the treatment of employees, Mr. Mason’s separate employment agreement and the voting agreements between FirstSun and HomeStreet’s directors. Representatives of KBW discussed the financial aspects of the mergers, including the value of the FirstSun common stock to be received by HomeStreet shareholders. KBW rendered its oral opinion to the HomeStreet Board, which was confirmed by a written opinion, dated January 15, 2024, to the effect that, as of such date and based upon and subject to the factors and assumptions made, procedures followed, matters considered and limitations and qualifications set forth in KBW’s opinion, the exchange ratio of 0.4345 FirstSun shares for each HomeStreet share in the mergers was fair, from a financial point of view, to the holders of HomeStreet common stock. After further review and discussion by the HomeStreet Board, including consideration of the factors described in the section entitled “HomeStreet’s Reasons for the Mergers” on page 51, the HomeStreet Board unanimously (i) determined that the original merger agreement, the voting agreements and the transactions contemplated thereby, including the mergers, were fair and reasonable and in the best interests of HomeStreet and its shareholders, (ii) authorized HomeStreet to enter into the original merger agreement with FirstSun and (iii) approved the execution, delivery and performance of the original merger agreement, and the consummation of the transactions contemplated thereby.

HomeStreet and FirstSun executed the original merger agreement on the morning of January 16, 2024. The transaction was announced on January 16, 2024 before the opening of the financial markets in New York, in a press release jointly issued by HomeStreet and FirstSun.

On March 28, 2024, a regularly scheduled board meeting of the HomeStreet Board was held to discuss, among other items, the proposed merger transaction with FirstSun, certain economic and market factors, including heightened interest rates, interest margins and funding costs, and certain regulatory matters, including the applications filed with banking regulators in connection with the proposed merger transaction and the banking regulatory environment generally, including with respect to commercial real estate concentrations. Members of HomeStreet’s management and representatives of Sullivan & Cromwell and Orrick attended portions of the meeting regarding the proposed merger transaction. During the meeting, representatives of Sullivan & Cromwell, in light of expected challenges FirstSun discussed with HomeStreet with respect to obtaining OCC approval of the bank merger, discussed with the HomeStreet Board potential alternative structures for the proposed merger transaction that were most consistent with the regulatory environment.

48
 

From March 28, 2024 until April 30, 2024, representatives of KBW and Sullivan & Cromwell and members of HomeStreet management discussed on several occasions certain potential alternative structures for the proposed merger transaction with representatives of Nelson Mullins, Stephens Inc. (“Stephens”), FirstSun’s financial advisor, and FirstSun that were most consistent with approval of the transaction by applicable banking regulators. Potential changes that were considered included a conversion of Sunflower Bank’s national bank charter to a Texas state bank charter with Federal Reserve membership, an increase in the capitalization of the surviving entity and surviving bank by raising additional common equity and subordinated debt, HomeStreet’s disposition of certain commercial real estate loans in connection with the proposed merger transaction and an unspecified reduction in the exchange ratio.

On April 3, 2024, representatives from HomeStreet and Sullivan & Cromwell met with representatives from FirstSun and Nelson Mullins to discuss adjusting the proposed merger transaction in light of regulatory considerations.

On April 19, 2024, Stephens proposed to representatives of KBW that the proposed merger transaction structure would need to be amended. Stephens did not deliver any specific terms or structures.

On April 22, 2024, representatives of HomeStreet and KBW met with representatives of FirstSun and Stephens to discuss a proposed modification to the transaction structure. During the meeting, Mr. Arnold proposed a reduction in the exchange ratio provided in the original merger agreement, but did not specify the proposed reduction amount.

On April 23, 2024, in connection with prior discussions regarding potential alternative transaction structures, representatives of Stephens proposed to representatives of KBW to amend the original merger agreement to reflect a reduction in the exchange ratio provided in the original merger agreement by between 12% and 15%, approximately the equivalent of between $13.19 and $12.74 per HomeStreet share, representing a market premium/discount of between 1.7% and minus 1.8% as of April 23, 2024 and a market premium of between 22.5% and 18.3% as compared to the price per HomeStreet share as of January 12, 2024.

On April 24, 2024, representatives of HomeStreet and KBW met with representatives of FirstSun to discuss a proposed reduction in the exchange ratio. Representatives of HomeStreet proposed that the exchange ratio should not change when compared to the original merger agreement despite a first quarter earnings loss for HomeStreet and lower future earnings forecasts. FirstSun proposed a reduction of 12% in the exchange ratio compared to the original merger agreement. That same day, representatives of HomeStreet delivered a counterproposal to FirstSun for a reduction of less than 10% in the exchange ratio compared to the original merger agreement, as well as a reduction in the termination fee payable by HomeStreet in the event that HomeStreet received a superior competing transaction proposal during the 60 day period after the announcement of the amendment. Representatives of FirstSun responded to HomeStreet’s counterproposal by informing the HomeStreet representatives that FirstSun would accept an 11% reduction in the exchange ratio, approximately the equivalent of $13.34 per HomeStreet share, representing a market premium of 8.7% as of April 24, 2024 and 23.9% as compared to the price per HomeStreet share as of January 12, 2024, the conversion of Sunflower Bank’s national charter to a Texas state bank charter, an increase in capitalization of the combined company through raising additional common equity and subordinated debt, a disposition of certain commercial real estate loans of HomeStreet, and, if HomeStreet received a superior competing transaction proposal and terminated the merger agreement within 30 days after announcement of the amendment, with the potential for the period to extend up to 40 days after the announcement of the amendment depending on when a superior competing transaction proposal was received, a reduction of the termination fee to 1% of the proposed merger transaction’s value plus out of pocket expenses.

On April 25, 2024, at a regularly scheduled meeting of the HomeStreet Board, the HomeStreet Board considered the recently negotiated terms of the proposed amendment to the merger agreement. Members of HomeStreet management and representatives of Orrick attended the meeting, with representatives of Sullivan & Cromwell and KBW joining the meeting for the executive session discussing the proposed merger transaction. The

49
 

HomeStreet Board discussed the capitalization of the combined company and the size of HomeStreet’s commercial real estate portfolio, including the impact such features could have on the ability to obtain regulatory approval of the proposed merger transaction. The HomeStreet Board also discussed the further decline in HomeStreet’s forecasted earnings as a result of higher forecasted interest rates. Mr. Mason also presented FirstSun’s offer to amend the proposed transaction to the HomeStreet Board and the HomeStreet Board discussed the amendments. Representatives of Sullivan & Cromwell advised the HomeStreet Board as to the directors’ fiduciary duties with respect to the proposed amendments to the original merger agreement. Representatives of KBW provided a detailed review of the proposed amendments compared to the original merger agreement, including the proposed amended exchange ratio. The HomeStreet Board engaged in a further discussion of the proposed amendments to the original merger agreement, including the likelihood that other potential counterparties might be interested in a potential strategic transaction, the potential for regulatory approval and the timing for such approvals, FirstSun’s ability to raise additional equity and debt capital and the potential risks associated with HomeStreet remaining a standalone entity. The HomeStreet board discussed that there had been no changes to Mr. Mason’s employment agreement with FirstSun. After further review and discussion by the HomeStreet Board, the HomeStreet Board authorized management to continue negotiating a definitive amendment to the merger agreement on substantially the terms presented at the meeting and to request a new fairness opinion on the proposed amendments to the original merger agreement to be delivered by KBW.

Between April 25, 2024 and April 30, 2024, HomeStreet and FirstSun and representatives of their respective legal and financial advisors finalized negotiations of the amendment to the merger agreement.

On April 30, 2024, a special meeting of the HomeStreet Board was held to consider the recently negotiated terms of the proposed merger transaction with FirstSun. Members of HomeStreet management and representatives of KBW, Sullivan & Cromwell and Orrick attended the meeting. Prior to the meeting, the HomeStreet Board received materials relevant to the agenda for the meeting that had been prepared by HomeStreet, FirstSun, KBW and Sullivan & Cromwell. The HomeStreet Board, KBW and Sullivan & Cromwell discussed the key terms of the proposed merger transaction with FirstSun, including the amendment to the original merger agreement. Mr. Mason provided an overview of the environmental factors that had been affecting the banking industry since entry into the original merger agreement, including the higher interest rate environment continuing for longer than anticipated and continued regulatory scrutiny of bank mergers and commercial real estate portfolios. Representatives of Sullivan & Cromwell again advised the HomeStreet Board as to the directors’ fiduciary duties, and discussed the key considerations regarding the amendment to the original merger agreement. Representatives of KBW discussed the financial aspects of the proposed amendment to the original merger agreement, including the value of the FirstSun common stock to be received by HomeStreet shareholders and HomeStreet shareholders ownership of the combined company following the proposed merger transaction. KBW rendered its oral fairness opinion to the HomeStreet Board, which was confirmed by a written fairness opinion, dated April 30, 2024, to the effect that the exchange ratio of 0.3867 FirstSun shares for each HomeStreet share in the mergers was fair, from a financial point of view, to the holders of HomeStreet common stock. See the section entitled “Opinion of HomeStreet’s Financial Advisor” on page 58. After review and discussion by the HomeStreet Board, including careful consideration of the factors described in the section entitled “HomeStreet’s Reasons for the Mergers” on page 51, the HomeStreet Board unanimously (i) determined that the amendment to the merger agreement and the transactions contemplated thereby, including the mergers, were fair and reasonable and in the best interests of HomeStreet and its shareholders, (ii) authorized HomeStreet to enter into the amendment to the merger agreement with FirstSun and (iii) approved the execution, delivery and performance of the amendment to the merger agreement, and the consummation of the transactions contemplated thereby.

On the afternoon of April 30, 2024, HomeStreet and FirstSun executed the amendment to the merger agreement to, among other things, (i) increase FirstSun’s total equity capital raised in connection with the proposed merger transaction by an additional $45 million to $60 million, resulting in an increase from an aggregate capital raise of $175 million to up to $235 million, (ii) reduce the exchange ratio from 0.4345 to 0.3867, (iii) reduce the termination fee payable by HomeStreet, in certain circumstances, if HomeStreet receives a competing acquisition proposal within 30 days after April 30, 2024 from $10 million to $2.6 million plus FirstSun’s out of pocket expenses related to the proposed merger transaction, (iv) change the structure of the bank merger so that Sunflower

50
 

Bank will convert from a national banking association into a Texas state-chartered bank that is a member of the Federal Reserve System, and HomeStreet Bank will merge with and into the Texas state-chartered bank, with the Texas state-chartered bank as the surviving entity in the bank merger, (v) provide for FirstSun’s issuance of $48.5 million of subordinated debt, (vi) provide for HomeStreet’s disposition of approximately $300 million of certain commercial real estate loans, and (vii) amend the regulatory approvals necessary to consummate the transactions contemplated by the merger agreement such that the approval of the Texas Department of Banking and additional approvals of the Federal Reserve would be required, but approval would no longer be required from the OCC. HomeStreet and FirstSun each believe that a Texas state-chartered bank is an appropriate charter for the combined company’s banking operations in the long-term since Sunflower Bank is now headquartered in Dallas, Texas, and have withdrawn the application for approval of the mergers that was submitted to the OCC. The amendment to the merger agreement was announced on April 30, 2024 after the close of the financial markets in New York, in a press release jointly issued by HomeStreet and FirstSun.

 

HomeStreet’s Reasons for the Mergers

After careful consideration, the HomeStreet board of directors, at a special meeting held on January 15, 2024, based upon the information provided to the board and upon such other matters as were deemed relevant by the board, unanimously (a) determined that the original merger agreement and the transactions contemplated thereby (including the mergers and the voting agreements) are fair and in the best interests of the HomeStreet and its shareholders and declared it advisable for HomeStreet to enter into the original merger agreement, (b) adopted and approved the original merger agreement and the voting agreements and (c) authorized and approved the execution, delivery and performance of the original merger agreement and the transactions contemplated thereby, including the mergers. In connection with the adoption of the April 30 amendment to the original merger agreement, as described in this proxy statement/prospectus under “— Background of the Mergers” beginning on page 40, and after careful consideration, the HomeStreet board of directors, at a special meeting held on April 30, 2024, based upon the information provided to the board and upon such other matters as were deemed relevant by the board, unanimously (a) determined that the merger agreement, as amended by the April 30 amendment to the original merger agreement, is fair and in the best interests of HomeStreet and its shareholders and declared it advisable for HomeStreet to enter the amendment to the original merger agreement, (b) adopted and approved the amendment to the original merger agreement and (c) authorized and approved the execution, delivery and performance of the amendment to the original merger agreement and the transactions contemplated thereby, including the mergers.

In reaching the decision to execute the merger agreement, as amended by the April 30 amendment to the original merger agreement, the HomeStreet board of directors carefully evaluated the original merger agreement, the amendment to the original merger agreement, the mergers, the bank merger and the other matters contemplated by the merger agreement, as well as the investment agreements, in consultation with HomeStreet’s senior management, and HomeStreet’s legal counsel and financial advisors, and considered a number of factors, including the following principal factors:

·the review undertaken by the HomeStreet board of directors and management with respect to the strategic alternatives available to HomeStreet, including remaining independent or engaging in alternative strategic merger transactions;
·the business strategy of HomeStreet and its prospects for the future as an independent institution, including the risks inherent in successful execution of its strategic plan and its projected financial results;
·the challenges facing HomeStreet in the current competitive, economic, financial and regulatory climate, including elevated interest rate levels, evolving trends in technology and increasing nationwide and global competition, and the potential benefits of aligning HomeStreet with a larger combined organization;
·the terms of the merger agreement, including the fixed exchange ratio, the 10.2% premium for HomeStreet shares as of April 29, 2024, the expected tax treatment and the termination fee provisions which the HomeStreet board of directors reviewed with HomeStreet’s management and HomeStreet’s legal counsel and financial advisors;
51
 
·the resultant institution operating in the largest and fastest growing markets in United States inclusive of presence in six of the top 10 fastest growing MSAs in the United States and a presence in eight of the 10 largest Central and Western United States MSAs;
·the complementary business lines and lending expertise of HomeStreet and FirstSun providing for a complementary merger that combines a strong commercial and industrial lending platform with an extensive multi-family and construction lending platforms and two similarly sized single family lending platforms;
·the combination of two top-tier core deposit franchises;
·the minimal geographic operating overlap between HomeStreet and FirstSun which provides for the expansion of services offered by each of HomeStreet and FirstSun to new geographic markets;
·the customer focused granular deposit relationships with an emphasis on generating low-cost, core deposits of each of HomeStreet and FirstSun;
·the well-positioned revenue streams regardless of macro-environment conditions of HomeStreet and FirstSun;
·the fact that the merger will create a balance sheet with a more neutral interest rate risk profile through combining an asset-sensitive FirstSun and a liability sensitive HomeStreet, a fully marked HomeStreet loan portfolio, and strong fee income sources, including HomeStreet’s Fannie Mae DUS business;
·the material and immediate upside to current valuation as a result of the merger;
·the opportunity for HomeStreet shareholders to participate in the significant valuation upside as the combined company is expected to be generating profitability returns and increasing tangible book value well above peer levels;
·the financial benefits of the transaction, with estimated 2025 EPS accretion of 24.3% and a 3.0 year earn back on tangible book value dilution;
·the pro forma combined company financial metrics, which are based on management estimates for FirstSun and HomeStreet, the estimated combined company cost synergies, anticipated purchase accounting adjustments, the expected closing time frame of the mergers, and the anticipated FirstSun capital raise;
·the pro forma expectation of the combined company delivering compelling operating and return metrics in 2025 with cost savings on a fully-phased in basis, including:
ototal Assets of ~$16.6 billion;
otangible Common Equity of ~$1.2 billion;
otangible Common Equity to Tangible Assets Ratio of ~7.2%;
ocommon Equity Tier 1 Capital Ratio of ~9.3%;
onet Interest Margin of 3.8%;
ofee Income to Total Revenue of 23%;
ocore return on Average Assets of 1.3%;
ocore return on Average Tangible Common Equity of 17%; and
oCET1 capital generation of ~130 basis points.

 

52
 

The HomeStreet board of directors also considered potential risks related to the mergers. The HomeStreet board of directors concluded that the anticipated benefits of combining with FirstSun and FirstSun’s receipt of executed capital commitments from investors were likely to outweigh these risks. These potential risks include:

 

·the possibility that the anticipated benefits of the transaction will not be realized when expected or at all, including as a result of the impact of, or difficulties arising from, the integration of the two companies or as a result of general market conditions and competitive factors in the areas where HomeStreet and FirstSun operate businesses;
·the regulatory and other approvals required in connection with the mergers and the risk that such regulatory approvals may not be received in a timely manner or at all or may impose materially burdensome conditions that would lead to the termination or abandonment of the merger agreement or the investment agreements;
·the risk that increases in interest rates may negatively impact the value of HomeStreet’s net assets and liabilities such that additional capital will need to be raised to meet capital levels projected to be needed to complete the merger;
·the risk that the mergers may not be completed despite the efforts of HomeStreet and FirstSun or that completion of the mergers may be unduly delayed, including as a result of factors outside either party’s control;
·the costs to be incurred in connection with the mergers and the integration of HomeStreet’s business into FirstSun and the possibility that the transaction and the integration may be more expensive to complete than anticipated, including as a result of unexpected factors or events;
·the possibility of encountering difficulties in achieving anticipated cost savings and synergies in the amounts currently estimated or within the time frame currently contemplated;
·the possibility of encountering difficulties in successfully integrating the businesses, operations and workforces of HomeStreet and FirstSun;
·the fact that the merger agreement places restrictions on the conduct of HomeStreet’s business prior to the completion of the mergers, which could potentially delay or prevent HomeStreet from undertaking business opportunities that might arise or certain other actions it might otherwise take with respect to its operations absent the pendency of the mergers;
·the potential effect of the mergers on HomeStreet’s overall business, including its relationships with customers, employees, suppliers and regulators;
·the risk of losing key HomeStreet or FirstSun employees during the pendency of the mergers and following completion of the mergers;
·the possible diversion of management focus and resources from the operation of HomeStreet’s business while working to consummate the merger and integrate the two companies;
·the risk that, because the exchange ratio under the merger agreement would not be adjusted for changes in the market price of HomeStreet common stock or FirstSun common stock, the value of the shares of FirstSun common stock to be issued to HomeStreet shareholders at the effective time could be significantly less value than the value of such shares immediately prior to the announcement of the parties’ entry into the merger agreement;
·the potential for legal claims already challenging the mergers or that could challenge the mergers; and
·the other risks described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

53
 

The foregoing discussion of the information and factors considered by the HomeStreet board of directors is not intended to be exhaustive but includes the material factors considered by the HomeStreet board of directors in reaching its unanimous decision to adopt and approve the merger agreement, as amended by the April 30 amendment to the merger agreement, and the transactions contemplated thereby, including the mergers. In reaching its decision to approve the merger agreement and the transactions contemplated thereby, including the mergers, the HomeStreet board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The HomeStreet board of directors considered all these factors as a whole, including through its discussions with HomeStreet’s management and financial and legal advisors, in evaluating the merger agreement and the transactions contemplated thereby, including the mergers.

There can be no assurance about future results, including results expected or considered in the factors listed above. This explanation of the reasoning of the HomeStreet board of directors and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the future factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements.” The HomeStreet board of directors unanimously concluded that the potential positive factors outweighed the potential risks of completing the mergers.

In considering the recommendation of the HomeStreet board of directors, you should be aware that certain directors and executive officers of HomeStreet may have interests in the mergers that are different from, or in addition to, interests of HomeStreet shareholders generally and may create potential conflicts of interest. The HomeStreet board of directors was aware of these interests and considered them when evaluating and negotiating the merger agreement, the mergers and the other transactions contemplated by the merger agreement, and in unanimously recommending to HomeStreet shareholders that they vote in favor of the HomeStreet merger proposal. See the section entitled “The Mergers—Interests of HomeStreet’s Directors and Executive Officers in the Mergers” for more information.

For the reasons set forth above, the HomeStreet board of directors unanimously determined that the merger was fair to, advisable and in the best interests of HomeStreet and its shareholders and unanimously adopted and approved the merger agreement, as amended by the April 30 amendment to the merger agreement, and the transactions contemplated thereby, including the mergers and the bank merger (which was also approved by the board of directors of HomeStreet Bank in a joint board capacity with the HomeStreet board of directors) and entry into the merger agreement, as amended by the April 30 amendment to the merger agreement, by HomeStreet. The HomeStreet board of directors recommends that HomeStreet shareholders vote “FOR” the merger proposal, “FOR” the merger-related compensation proposal and “FOR” the adjournment proposal.

Certain Unaudited Prospective Financial Information

FirstSun and HomeStreet do not, as a matter of course, publicly disclose forecasts or internal projections as to their respective future performance, financial condition, revenues, earnings or other results due to, among other reasons, the inherent uncertainty of the underlying assumptions and estimates.

 

However, in connection with the mergers, FirstSun’s senior management and HomeStreet’s senior management prepared or approved for use certain unaudited prospective financial information in April 2024 (the “Projections”) and January 2024 (the “January Information”). Both projections were reviewed by the boards of FirstSun and HomeStreet and the equity investors, and the Projections were provided to and considered by KBW for the purpose of performing financial analyses in connection with its fairness opinion, as described in this proxy statement/prospectus under “— Opinion of HomeStreet’s Financial Advisor” beginning on page 58. We refer to this information collectively as the “prospective financial information.”

 

The prospective financial information was not prepared for the purpose of, or with a view toward, public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, published guidelines of the SEC regarding forward-looking statements or generally accepted accounting principles, or GAAP. A summary

54
 

of certain significant elements of this information is set forth below, and is included in this proxy statement/prospectus solely for the purpose of providing holders of HomeStreet common stock access to certain nonpublic information made available to HomeStreet’s financial advisor for the purpose of performing financial analyses in connection with KBW’s fairness opinion.

 

Although presented with numeric specificity, the prospective financial information reflects numerous estimates and assumptions made by FirstSun’s senior management or HomeStreet’s senior management, as applicable, at the time such prospective financial information was prepared or approved for use by HomeStreet’s financial advisor and represents FirstSun senior management’s or HomeStreet senior management’s respective evaluation of FirstSun’s expected future financial performance on a stand-alone basis, without reference to the mergers, and HomeStreet’s expected future financial performance on a stand-alone basis, without reference to the mergers. These and the other estimates and assumptions underlying the prospective financial information involve judgments with respect to, among other things, economic, competitive, regulatory, financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among other things, the inherent uncertainty of the business and economic conditions affecting the industry in which FirstSun and HomeStreet operate and the risks and uncertainties described under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information” in this proxy statement/prospectus, all of which are difficult to predict and many of which are outside the control of FirstSun and HomeStreet and will be beyond the control of the combined company. There can be no assurance that the underlying assumptions would prove to be accurate or that the projected results would be realized, and actual results could differ materially from those reflected in the prospective financial information, whether or not the mergers are completed. Further, these assumptions do not include all potential actions that the senior management of FirstSun or HomeStreet could or might have taken during these time periods. The inclusion in this proxy statement/prospectus of the unaudited prospective financial information below should not be regarded as an indication that FirstSun, HomeStreet, their respective boards of directors or HomeStreet’s financial advisor considered, or now consider, this prospective financial information to be material information to any holders of HomeStreet common stock, particularly in light of the inherent risks and uncertainties associated with such prospective financial information. The prospective financial information is not fact and should not be relied upon as being necessarily indicative of actual future results. Further, the prospective financial information should not be construed as financial guidance and it should not be relied on as such. The prospective financial information also reflects numerous variables, expectations and assumptions available at the time it was prepared as to certain business decisions that are subject to change and do not take into account any circumstances or events occurring after the date they were prepared. No assurances can be given that if the prospective financial information and the underlying assumptions had been prepared as of the date of this proxy statement/prospectus, similar assumptions would be used. In addition, the prospective financial information may not reflect the manner in which the combined company would operate after the mergers.

 

By including in this proxy statement/prospectus a summary of the prospective financial information, neither FirstSun nor HomeStreet nor any of their respective representatives has made or makes any representation to any person regarding the ultimate performance of FirstSun or HomeStreet compared to the information contained in the prospective financial information. Neither FirstSun, HomeStreet nor, after completion of the mergers, the combined company undertakes any obligation to update or otherwise revise the prospective financial information to reflect circumstances existing since their preparation or to reflect the occurrence of subsequent or unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions.

 

The prospective financial information included in this document has been prepared by, and is the responsibility of, management of FirstSun and HomeStreet, as applicable. Neither Crowe LLP, FirstSun’s and HomeStreet’s independent registered public accounting firm, nor Deloitte & Touche LLP, HomeStreet’s previous independent registered public accounting firm, has audited, reviewed, examined, compiled or applied agreed upon procedures with respect to the prospective financial information and, accordingly, neither Crowe LLP nor Deloitte & Touche LLP has expressed any opinion or given any other form of assurance with respect thereto and assumes no responsibility for the prospective financial information. The reports of FirstSun’s independent

55
 

registered public accounting firm and HomeStreet’s independent auditor incorporated by reference in this proxy statement/prospectus relate to the historical financial information of FirstSun and HomeStreet, respectively. Such reports do not extend to the prospective financial information and should not be read to do so. No independent registered public accounting firm has examined, compiled or otherwise performed any procedures with respect to the prospective financial information and, accordingly, no independent registered public accounting firm has expressed any opinion or given any other form of assurance with respect thereto and no independent registered public accounting firm assumes any responsibility for the prospective financial information.

 

In light of the foregoing, and taking into account that the HomeStreet shareholder meeting will be held after the prospective financial information was prepared, as well as the uncertainties inherent in any forecasted information, HomeStreet shareholders are strongly cautioned not to place unwarranted reliance on such information.

 

HomeStreet Prospective Financial Information

 

Management Projections

 

The following prospective financial information was prepared by HomeStreet senior management in April 2024: (i) estimates of net income for the years ending December 31, 2024 through December 31, 2027 of ($23.0) million for 2024, $12.2 million for 2025, $30.2 for 2026, and $32.3 million for 2027; (ii) estimated EPS for the years ending December 31, 2024 through December 31, 2027 of ($1.21) for 2024, $0.65 for 2025, $1.60 for 2026, and $1.71 for 2027; (iii) estimated total assets of $9,066.0 million, deposits of $6,353.9 million, and gross loans of $7,344.8 million as of December 31, 2024; (iv) estimated annual net income growth rates for the year ending December 31, 2028 of 7.5%; and (v) estimated pre-tax cost of cash of 4.00% and an estimated marginal tax rate of 23.0%.

 

Street Estimates

 

The following table presents the consensus Wall Street research estimates for HomeStreet 2024 and 2025 EPS, which we refer to collectively as the HomeStreet consensus “street” estimates, that were used by KBW in performing certain financial analyses in connection with its opinion delivered to the HomeStreet board of directors.

 

    For the year ending December 31, 2024   For the year ending December 31, 2025  
EPS   $ (0.03 ) $ 0.92  

 

FirstSun Prospective Financial Information

 

Management Projections

 

The following prospective financial information was prepared by FirstSun senior management in April 2024: (i) estimates of net income for the years ending December 31, 2024 through and December 31, 2027 of $90.9 million for 2024, $114.3 million for 2025, $123.2 million for 2026, and $132.0 million for 2027; (ii) estimated EPS for the years ending December 31, 2024 through December 31, 2027 of $3.25 for 2024, $4.08 for 2025, $4.40 for 2026, and $4.72 for 2027; (iii) estimated total assets of $8,370.1 million, deposits of $7,015.0 million, and gross loans of $6,771.6 million as of December 31, 2024; (iv) estimated annual net income growth rates for the year ending December 31, 2028 of 7.5%; and (v) estimated pre-tax cost of cash of 4.00% and an estimated marginal tax rate of 23.0%.

 

Pro Forma Assumptions — Estimated Costs Savings and Expenses Resulting or Derived from the Merger and Purchase Accounting Adjustments

 

Senior management of FirstSun prepared certain additional prospective financial information in April 2024 including (i) an estimate of $86.6 million of remaining pre-tax transaction expenses, (ii) an estimate of $62.6 million of annual pre-tax cost synergies expected to result or be derived from the merger fully realized in 2025, and (iii) certain additional pro forma assumptions (including the purchase accounting and other merger-related

56
 

adjustments and restructuring charges) that were included on page 16 of an investor presentation that was filed as Exhibit 99.2 to FirstSun’s Form 8-K filed on April 30, 2024, which is incorporated by reference into this proxy statement/prospectus.

 

Additional Information

 

January Information is included for informational purposes only because such projections were provided to FirstSun, HomeStreet, and KBW during the due diligence process prior to, and solely in connection with, the execution of the original merger agreement on January 16, 2024, and should not be relied upon in any way. Readers are cautioned not to place reliance on the January Information because, among other things, it does not reflect the impacts of subsequent increases in the interest rate environment, the migration of deposits to higher yielding products, the anticipated additional capital, the anticipated disposition or sale by HomeStreet of certain commercial real estate loans, and updated synergy estimates that affected the Projections. The January Information has been superseded by the Projections.

 

HomeStreet Prospective Financial Information

 

The following prospective financial information was prepared by HomeStreet senior management in January 2024: (i) estimates of net income for the years ending December 31, 2024 and December 31, 2025 of $6.4 million and $32.7 million, respectively; (ii) estimated EPS for the years ending December 31, 2024 and December 31, 2025 of $0.34 and $1.74, respectively; (iii) estimated total assets of $9,439.4 million, deposits of $6,634.1 million, and gross loans of $7,448.1 million as of June 30, 2024; (iv) estimated annual net income growth rates for the year ending December 31, 2026 of 7.5%, for the year ending December 31, 2027 of 7.5% and the year ended December 31, 2028 of 7.5%; and (v) estimated pre-tax cost of cash of 4.00% and an estimated marginal tax rate of 23.0%.

 

The following table presents the January 2024 consensus Wall Street research estimates for HomeStreet 2024 and 2025 EPS, which we refer to collectively as the HomeStreet consensus “street” estimates, that were used by KBW in performing certain financial analyses in connection with its opinion delivered to the HomeStreet board of directors.

 

    For the year ending December 31, 2024   For the year ending December 31, 2025  
EPS   $ 0.27   $ 0.97  

 

  FirstSun Prospective Financial Information

 

The following prospective financial information was prepared by FirstSun senior management in January 2024: (i) estimates of net income for the years ending December 31, 2024 through and December 31, 2026 of $103.5 million for 2024, $114.5 million for 2025, and $123.1 million for 2026; (ii) estimated EPS for the years ending December 31, 2024 through December 31, 2026 of $4.08 for 2024, $4.52 for 2025 and $4.86 for 2026; (iii) estimated total assets of $8,030.0 million, deposits of $6,788.0 million, and gross loans of $6,540.3 million as of June 30, 2024; (iv) estimated annual net income growth rates for the year ending December 31, 2027 of 7.5% and the year ended December 31, 2028 of 7.5%; and (v) estimated pre-tax cost of cash of 4.00% and an estimated marginal tax rate of 23.0%.

 

Pro Forma Assumptions — Estimated Costs Savings and Expenses Resulting or Derived from the Merger and Purchase Accounting Adjustments 

 

Senior management of FirstSun prepared certain additional prospective financial information in January 2024 including (i) an estimate of $86.8 million of pre-tax transaction expenses, (ii) an estimate of $55.0 million of annual pre-tax synergies expected to result or be derived from the merger fully realized in 2025, and (iii) certain additional pro forma assumptions (including the purchase accounting and other merger-related adjustments and restructuring charges) that were included on page 17 of an investor presentation that was filed as Exhibit 99.2 to FirstSun’s Form 8-K filed on January 16, 2024, which is incorporated by reference into this proxy statement/prospectus.

57
 

Opinion of HomeStreet’s Financial Advisor

HomeStreet engaged KBW to render financial advisory and investment banking services to HomeStreet, including an opinion to the HomeStreet board of directors as to the fairness, from a financial point of view, to the holders of HomeStreet common stock of the exchange ratio in the proposed merger. HomeStreet selected KBW because KBW is a nationally recognized investment banking firm with substantial experience in transactions similar to the merger. As part of its investment banking business, KBW is continually engaged in the valuation of financial services businesses and their securities in connection with mergers and acquisitions.

 

As part of its engagement, representatives of KBW attended the meetings of the HomeStreet board of directors held on April 30, 2024, at which the HomeStreet board of directors evaluated the Amendment No. 1. At this meeting, KBW reviewed the financial aspects of the proposed merger and rendered to the HomeStreet board an opinion to the effect that, as of such date and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW as set forth in its opinion, the exchange ratio in the proposed merger was fair, from a financial point of view, to the holders of HomeStreet common stock. The HomeStreet board of directors approved the Amendment No. 1 at this meeting.

 

The description of the opinion set forth herein is qualified in its entirety by reference to the full text of the opinion, which is attached as Annex B to this proxy statement/prospectus and is incorporated herein by reference, and describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW in preparing the opinion.

 

KBW’s opinion speaks only as of the date of the opinion. The opinion was for the information of, and was directed to, the HomeStreet board of directors (in its capacity as such) in connection with its consideration of the financial terms of the transaction. The opinion addressed only the fairness, from a financial point of view, of the exchange ratio in the merger to the holders of HomeStreet common stock. It did not address the underlying business decision of HomeStreet to engage in the transaction or enter into the merger agreement or constitute a recommendation to the HomeStreet board of directors in connection with the transaction, and it does not constitute a recommendation to any holder of HomeStreet common stock or any shareholder of any other entity as to how to vote in connection with the transaction or any other matter, nor does it constitute a recommendation regarding whether or not any such shareholder should enter into a voting, shareholders’ or affiliates’ agreement with respect to the transaction or exercise any dissenters’ or appraisal rights that may be available to such shareholder.

 

KBW’s opinion was reviewed and approved by KBW’s Fairness Opinion Committee in conformity with its policies and procedures established under the requirements of Rule 5150 of the Financial Industry Regulatory Authority.

 

In connection with the opinion, KBW reviewed, analyzed and relied upon material bearing upon the financial and operating condition of HomeStreet and FirstSun and bearing upon the transaction, including, among other things:

 

·the merger agreement dated January 16, 2024 and a draft of Amendment No. 1 dated April 30, 2024 (the most recent draft made available to KBW);
·the audited financial statements and Annual Reports on Form 10-K for the three fiscal years ended December 31, 2023 of HomeStreet;
·certain preliminary draft and unaudited financial results for the quarter ended March 31, 2024 of HomeStreet (provided by HomeStreet);
·the audited financial statements and Annual Reports on Form 10-K for the three fiscal years ended December 31, 2023 of FirstSun;
58
 
·certain preliminary draft and unaudited financial results for the quarter ended March 31, 2024 of FirstSun (provided by FirstSun);
·certain regulatory filings of HomeStreet and FirstSun and their respective subsidiaries, including as applicable, the quarterly reports on Form FR Y-9C and the quarterly call reports required to be filed (as the case may be) with respect to each quarter during the three-year period ended December 31, 2023;
·certain other interim reports and other communications of HomeStreet and FirstSun to their respective shareholders; and
·other financial information concerning the businesses and operations of HomeStreet and FirstSun furnished to KBW by HomeStreet and FirstSun or that KBW was otherwise directed to use for purposes of KBW’s analyses.

 

KBW’s consideration of financial information and other factors that it deemed appropriate under the circumstances or relevant to its analyses included, among others, the following:

 

·the historical and current financial position and results of operations of HomeStreet and FirstSun;
·the assets and liabilities of HomeStreet and FirstSun;
·the nature and terms of certain other merger transactions and business combinations in the banking industry;
·a comparison of certain financial and stock market information for HomeStreet and FirstSun with similar information for certain other companies the securities of which were publicly traded;
·financial and operating forecasts and projections of HomeStreet that were prepared by HomeStreet management, provided to and discussed with KBW by such management, and used and relied upon by KBW at the direction of such management and with the consent of the HomeStreet board of directors;
·financial and operating forecasts and projections of FirstSun that were prepared by FirstSun management, provided to and discussed with KBW by such management, and used and relied upon by KBW based on such discussions, at the direction of HomeStreet management and with the consent of the HomeStreet board of directors; and
·estimates regarding certain pro forma financial effects of the transaction on FirstSun (including, without limitation, the cost savings expected to result or be derived from the transaction) that were prepared by FirstSun management, provided to and discussed with KBW by such management and used and relied upon by KBW based on such discussions, at the direction of HomeStreet management and with the consent of the HomeStreet board of directors.

 

KBW also performed such other studies and analyses as it considered appropriate and took into account its assessment of general economic, market and financial conditions and its experience in other transactions, as well as its experience in securities valuation and knowledge of the banking industry generally. KBW also participated in discussions held by the managements of HomeStreet and FirstSun regarding the past and current business operations, regulatory relations, financial condition and future prospects of their respective companies and such other matters as KBW deemed relevant to its inquiry. In addition, KBW considered the results of the efforts undertaken by HomeStreet, with KBW’s assistance, to solicit indications of interest from third parties regarding a potential transaction with HomeStreet.

 

59
 

In conducting its review and arriving at its opinion, KBW relied upon and assumed the accuracy and completeness of all of the financial and other information that was provided to or discussed with it or that was publicly available and KBW did not independently verify the accuracy or completeness of any such information or assume any responsibility or liability for such verification, accuracy or completeness. KBW relied upon the management of HomeStreet as to the reasonableness and achievability of the financial and operating forecasts and projections of HomeStreet referred to above (and the assumptions and bases therefor), and KBW assumed that such forecasts and projections represented the best currently available estimates and judgments of such management and that such forecasts and projections would be realized in the amounts and in the time periods estimated by such management. KBW further relied, with the consent of the HomeStreet board of directors, upon FirstSun management as to the reasonableness and achievability of the financial and operating forecasts and projections of FirstSun referred to above (and the assumptions and bases therefor), and KBW assumed that such forecasts and projections were reasonably prepared and represented the best currently available estimates and judgments of such management and that such forecasts and projections would be realized in the amounts and in the time periods currently estimated by such management. In addition, KBW relied, with the consent of the Board, upon the respective managements of HomeStreet and FirstSun as to the reasonableness and achievability of the estimates regarding certain pro forma financial effects of the transaction on FirstSun (including, without limitation, the cost savings expected to result or be derived from the transaction), all as referred to above (and the assumptions and bases for all such information), and KBW assumed that such information was reasonably prepared and represented the best currently available estimates and judgments of such managements and that the forecasts, projections and estimates reflected in such information would be realized in the amounts and in the time periods currently estimated by such managements.

 

The portion of the foregoing financial information of HomeStreet and FirstSun that was provided to KBW was not prepared with the expectation of public disclosure and that all of the foregoing financial information was based on numerous variables and assumptions that are inherently uncertain (including, without limitation, factors related to general economic and competitive conditions and, in particular, the widespread disruption, extraordinary uncertainty and unusual volatility arising from global tensions and political unrest, economic uncertainty, inflation, rising interest rates, the COVID-19 pandemic and, in the case of the banking industry, recent actual or threatened regional bank failures, including the effect of evolving governmental interventions and non-interventions) and, accordingly, actual results could vary significantly from those set forth in such information. KBW assumed, based on discussions with the respective managements of HomeStreet and FirstSun and with the consent of the HomeStreet board of directors, that all such information provided a reasonable basis upon which KBW could form its opinion and KBW expressed no view as to any such information or the assumptions or bases therefor. KBW relied on all such information without independent verification or analysis and did not in any respect assume any responsibility or liability for the accuracy or completeness thereof.

 

KBW also assumed that there were no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of either HomeStreet or FirstSun since the date of the last financial statements of each such entity that were made available to KBW. KBW is not an expert in the independent verification of the adequacy of allowances for loan and lease losses and KBW assumed, without independent verification and with HomeStreet’s consent, that the aggregate allowances for loan and lease losses for each of HomeStreet and FirstSun are adequate to cover such losses. In rendering its opinion, KBW did not make or obtain any evaluations or appraisals or physical inspection of the property, assets or liabilities (contingent or otherwise) of HomeStreet or FirstSun, the collateral securing any of such assets or liabilities, or the collectability of any such assets, nor did KBW examine any individual loan or credit files, nor did it evaluate the solvency, financial capability or fair value of HomeStreet or FirstSun under any state or federal laws, including those relating to bankruptcy, insolvency or other matters. KBW made note of the classification by each of HomeStreet and FirstSun of its loans and owned securities as either held to maturity or held for investment, on the one hand, or held for sale, on the other hand, and also reviewed reported fair value marks-to-market and other reported valuation information, if any, relating to such loans or owned securities contained in the respective financial statements of HomeStreet and FirstSun, but

60
 

KBW expressed no view as to any such matters. Estimates of values of companies and assets do not purport to be appraisals or necessarily reflect the prices at which companies or assets may actually be sold. Such estimates are inherently subject to uncertainty and should not be taken as KBW’s view of the actual value of any companies or assets.

 

KBW assumed, in all respects material to its analyses:

 

·that the transaction and any related transactions (including, without limitation the bank merger, the equity financing, the subordinated debt issuance and the loan sale) would be completed substantially in accordance with the terms set forth in the merger agreement (the final terms of which KBW assumed would not differ in any respect material to KBW’s analyses from the draft Amendment No. 1 reviewed by KBW and referred to above), with no adjustments to the exchange ratio and with no other consideration or payments in respect of HomeStreet common stock;
·that the representations and warranties of each party in the merger agreement and in all related documents and instruments referred to in the merger agreement were true and correct;
·that each party to the merger agreement and all related documents would perform all of the covenants and agreements required to be performed by such party under such documents;
·that there were no factors that would delay or subject to any adverse conditions, any necessary regulatory or governmental approval for the transaction or any related transactions and that all conditions to the completion of the transaction and any related transactions would be satisfied without any waivers or modifications to the merger agreement or any of the related documents; and
·that in the course of obtaining the necessary regulatory, contractual, or other consents or approvals for the transaction and any related transactions, no restrictions, including any divestiture requirements, termination or other payments or amendments or modifications, would be imposed that would have a material adverse effect on the future results of operations or financial condition of HomeStreet, FirstSun or the pro forma entity, or the contemplated benefits of the transaction, including without limitation the cost savings expected to result or be derived from the transaction.

 

KBW assumed that the transaction would be consummated in a manner that complies with the applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and all other applicable federal and state statutes, rules and regulations. KBW was further advised by representatives of HomeStreet that HomeStreet relied upon advice from its advisors (other than KBW) or other appropriate sources as to all legal, financial reporting, tax, accounting and regulatory matters with respect to HomeStreet, FirstSun, the transaction and any related transaction, and the merger agreement. KBW did not provide advice with respect to any such matters.

 

KBW’s opinion addressed only the fairness, from a financial point of view, as of the date of the opinion, of the exchange ratio in the merger to the holders of HomeStreet common stock. KBW expressed no view or opinion as to any other terms or aspects of the transaction or any term or aspect of any related transactions (including the bank merger, the equity financing, the subordinated debt issuance and the loan sale), including without limitation, the form or structure of the transaction or any such related transaction, any consequences of the transaction or any such related transaction to HomeStreet, its shareholders, creditors or otherwise, or any terms, aspects, merits or implications of any employment, consulting, voting, support, shareholder or other agreements, arrangements or understandings contemplated or entered into in connection with the transaction or otherwise. KBW’s opinion was necessarily based upon conditions as they existed and could be evaluated on the date of such opinion and the information made available to KBW through the date of such opinion. There is currently significant volatility in the stock and other financial markets arising from global tensions and political unrest, economic uncertainty,

61
 

inflation, rising interest rates, the COVID-19 pandemic and, in the case of the banking industry, recent actual or threatened regional bank failures, including the effect of evolving governmental interventions and non-interventions. Developments subsequent to the date of KBW’s opinion may have affected, and may affect, the conclusion reached in KBW’s opinion and KBW did not and does not have an obligation to update, revise or reaffirm its opinion. KBW’s opinion did not address, and KBW expressed no view or opinion with respect to:

 

·the underlying business decision of HomeStreet to engage in the transaction or enter into the merger agreement;
·the relative merits of the transaction as compared to any strategic alternatives that are, have been or may be available to or contemplated by HomeStreet or the HomeStreet board of directors;
·the fairness of the amount or nature of any compensation to be received by any of HomeStreet’s officers, directors or employees, or any class of such persons, relative to the compensation to the holders of HomeStreet common stock;
·the effect of the transaction or any related transaction on, or the fairness of the consideration to be received by, holders of any class of securities of HomeStreet (other than the holders of HomeStreet common stock, solely with respect to the exchange ratio as described in KBW’s opinion and not relative to the consideration to be received by holders of any other class of securities) or holders of any class of securities of FirstSun or any other party to any transaction contemplated by the merger agreement;
·the actual value of FirstSun common stock to be issued in the transaction;
·the prices, trading range or volume at which HomeStreet common stock or FirstSun common stock would trade following the public announcement of the transaction or the prices, trading range or volume at which FirstSun common stock would trade following the consummation of the transaction;
·any advice or opinions provided by any other advisor to any of the parties to the transaction or any other transaction contemplated by the merger agreement; or
·any legal, regulatory, accounting, tax or similar matters relating to HomeStreet, FirstSun, Merger Sub, any of their respective shareholders, or relating to or arising out of or as a consequence of the transaction or any related transactions (including the bank merger, the equity financing, the subordinated debt issuance and the loan sale), including whether or not the transaction would qualify as a tax-free reorganization for United States federal income tax purposes.

 

In performing its analyses, KBW made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, which are beyond the control of KBW, HomeStreet and FirstSun. Any estimates contained in the analyses performed by KBW are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty. In addition, KBW’s opinion was among several factors taken into consideration by the HomeStreet board of directors in making its determination to approve the merger agreement and the transaction. Consequently, the analyses described below should not be viewed as determinative of the decision of the HomeStreet board of directors with respect to the fairness of the exchange ratio. The type and amount of consideration payable in the transaction were determined through negotiation between HomeStreet and FirstSun and the decision of HomeStreet to enter into the merger agreement was solely that of the HomeStreet board of directors.

 

62
 

The following is a summary of the material financial analyses presented by KBW to the HomeStreet board of directors in connection with its opinion. The summary is not a complete description of the financial analyses underlying the opinion or the presentation made by KBW to the HomeStreet board of directors, but summarizes the material analyses performed and presented in connection with such opinion. The financial analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex analytic process involving various determinations as to appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, KBW did not attribute any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, KBW believes that its analyses and the summary of its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying its analyses and opinion.

 

For purposes of the financial analyses described below, KBW utilized an implied transaction value for the transaction of $13.53 per outstanding share of HomeStreet common stock, or approximately $262.8 million in the aggregate, based on the 0.3867x exchange ratio, as used occasionally in this discussion, the “Fixed Exchange Ratio,” in the proposed transaction and the closing price of FirstSun common stock on April 29, 2024. In addition to the financial analyses described below, KBW reviewed with the HomeStreet board of directors for informational purposes, among other things, implied transaction multiples for the proposed transaction (based on the implied transaction value for the transaction of $13.53 per outstanding share of HomeStreet common stock) of 20.9x HomeStreet’s estimated calendar year 2025 EPS using financial and operating forecasts and projections of HomeStreet provided by HomeStreet management.

 

FirstSun Selected Companies Analysis. Using publicly available information, KBW compared the financial performance, financial condition and market performance of FirstSun to 16 selected major exchange-traded banks headquartered in the Western Region (Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming), Texas and Kansas with total assets between $5 billion and $15 billion. Merger targets and ethnic-focused banks were excluded from the selected companies.

 

The selected companies were as follows (shown in descending order of total assets):

 

First Foundation Inc.

First Financial Bankshares, Inc.

Veritex Holdings, Inc.

Stellar Bancorp, Inc.

National Bank Holdings Corporation

TriCo Bancshares

Capitol Federal Financial, Inc.

LendingClub Corporation

Southside Bancshares, Inc.

Central Pacific Financial Corp.

CrossFirst Bankshares, Inc.

Heritage Financial Corporation

Westamerica Bancorporation

Triumph Financial, Inc.

Heritage Commerce Corp

Equity Bancshares, Inc.

 

To perform this analysis, KBW used profitability and other financial information for the latest 12 months (“LTM”) or the most recent completed fiscal quarter (“MRQ”) publicly available (which, in all cases, were the periods ended December 31, 2023) or as of the end of such periods and market price information as of April 29, 2024. KBW also used 2024 and 2025 EPS estimates taken from FirstSun management for FirstSun and from publicly available consensus “street estimates” for the selected companies. Certain financial data presented in the tables below may not correspond to the data presented in FirstSun’s historical financial statements as a result of the different periods, or the data presented under the section “Opinion of FirstSun’s Financial Advisor” assumptions and methods used to compute the financial data presented below.

63
 

 

KBW’s analysis showed the following concerning the financial performance of FirstSun and the selected companies:

 

           Selected Companies 
   FirstSun(1)   75th
Percentile
   Average   Median   25th
Percentile
 
MRQ Core Return on Average Assets(2)   1.29%/0.78%(4)   1.24%   1.05%   1.04%   0.80%
MRQ Core Return on Average Tangible Common Equity(2)   13.1%/7.3%(4)   17.2%   12.3%   12.8%   9.6%
MRQ Net Interest Margin   4.15%/4.06%   4.06%   3.73%   3.41%   3.17%
MRQ Fee Income/Revenue Ratio(3)   18.8%/32.2%   17.0%   14.7%   14.3%   10.5%
MRQ Non Interest Expense/Average Assets   2.71%/3.23%   1.84%   2.58%   2.04%   2.54%
MRQ Efficiency Ratio   57.2%/66.1%   52.8%   61.4%   57.7%   69.4%

 

 
(1)First ratio based on reported data for the quarter ended 12/31/2023; second ratio based on preliminary data for the quarter ended 3/31/2024, as provided by FirstSun management.
(2)Core net income after taxes and before extraordinary items, less net income attributable to noncontrolling interest, gain on the sale of held to maturity and available for sale securities, amortization of intangibles, goodwill and nonrecurring items.
(3)Excludes gain/(loss) on sale of securities.
(4)Net income in Q1 2024 includes a provision for credit losses of $16.5 million, an increase primarily due to a $17.4 million charge-off on a specific customer in FirstSun’s loan portfolio.

  

KBW’s analysis also showed the following concerning the financial condition of FirstSun and the selected companies:

 

           Selected Companies 
   FirstSun(1)   75th
Percentile
   Average   Median   25th
Percentile
 
Tangible Common Equity/Tangible Assets   9.94%/11.21%   10.02%   9.12%   9.06%   8.54%
Total Capital Ratio   13.25%/14.73%   17.13%   15.47%   15.11%   13.97%
Loans HFI/Deposits   98.3%/97.5%   74.9%   82.6%   83.6%   94.1%
Loan Loss Reserve/Loans   1.27%/1.27%   1.34%   1.42%   1.19%   1.07%
Nonperforming Assets/Loans + OREO   0.65%/N/D    0.16%   0.42%   0.36%   0.57%
MRQ Net Charge-offs/Average Loans   0.30%/1.11%   0.02%   0.51%   0.12%   0.40%

 

 
(1)First ratio based on reported data for the quarter ended 12/31/2023; second ratio based on preliminary data for the quarter ended 3/31/2024, as provided by FirstSun management.

 

64
 

In addition, KBW’s analysis showed the following concerning the market performance of FirstSun and the selected companies:

 

           Selected Companies 
   FirstSun   75th
Percentile
   Average   Median   25th
Percentile
 
One-Year Stock Price Change   28.9%   18.5%   7.7%   3.2%   (3.4%)
Year-To-Date Stock Price Change   3.2%   (10.1%)   (14.1%)   (13.9%)   (19.1%)
Price/Tangible Book Value per Share   113%/112%(1)   145%   138%   120%   97%
Price/LTM EPS   8.6x/10.0x(1)   10.1x   11.2x   9.5x   9.1x
Price/2024 EPS Estimate   10.8x   11.3x   11.0x   10.8x   9.5x
Price/2025 EPS Estimate   8.6x   10.3x   11.2x   9.8x   8.6x
Dividend Yield   0.0%   5.2%   3.2%   3.5%   1.2%
MRQ Dividend Payout Ratio   0.0%   50.1%   34.9%   37.2%   22.9%
                          
 
(1)First multiple based on reported data for the quarter ended 12/31/2023; second multiple based preliminary data for the quarter ended 3/31/2024, as provided by FirstSun management.

 

The low and high stock price-to-tangible book value per share multiples of the selected companies were 0.37x (the multiple for First Foundation Inc.) and 3.58x (the multiple for First Financial Bankshares, Inc.), respectively, the low and high stock price-to-2024 estimated EPS multiples of the selected companies were 8.6x (the multiple for CrossFirst Bankshares, Inc.) and 20.1x (the multiple for First Financial Bankshares, Inc.), respectively, and the low and high stock price-to-2025 estimated EPS multiples of the selected companies were 7.2x (the multiple for First Foundation Inc.) and 29.7x (the multiple for Triumph Financial, Inc.), respectively.

No company used as a comparison in the above selected companies analysis is identical to FirstSun. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

 

HomeStreet Selected Companies Analysis. Using publicly available information, KBW compared the financial performance, financial condition and market performance of HomeStreet to ten selected major exchange-traded banks headquartered in the Western Region (Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming), with total assets between $5 billion and $20 billion. Merger targets and ethnic-focused banks were excluded from the selected companies.

 

The selected companies were as follows (shown in descending order of total assets):

 

Pacific Premier Bancorp, Inc.
CVB Financial Corp.
Banner Corporation
National Bank Holdings Corporation
TriCo Bancshares
LendingClub Corporation
Central Pacific Financial Corp.
Heritage Financial Corporation
Westamerica Bancorporation
Heritage Commerce Corp

 

To perform this analysis, KBW used profitability and other financial information for the latest 12 months (“LTM”) or the most recent completed fiscal quarter (“MRQ”) publicly available (which, in all cases, were the periods ended December 31, 2023) or as of the end of such periods and market price information as of April 29, 2024. KBW also used 2024 and 2025 EPS estimates taken from publicly available consensus “street estimates” for HomeStreet and the selected companies to the extent publicly available. Certain financial data presented in the tables below may not correspond to the data presented in HomeStreet’s historical financial statements as a result of the different periods, assumptions and methods used to compute the financial data presented below.

 

65
 

KBW’s analysis showed the following concerning the financial performance of HomeStreet and the selected companies:

             Selected Companies 
   HomeStreet(1)    75th
Percentile
   Average   Median   25th
Percentile
 
MRQ Core Return on Average Assets(2)   (0.08%)/(0.23 %)   1.36%   1.18%   1.14%   0.88%
MRQ Core Return on Average Tangible Common Equity(2)   (1.5%)/(4.2 %)   16.2%   13.5%   14.2%   11.5%
MRQ Net Interest Margin   1.59%/1.44 %   3.92%   3.86%   3.61%   3.31%
MRQ Fee Income/Revenue Ratio(3)   23.8%/22.7 %   15.5%   13.8%   12.8%   11.5%
MRQ Non Interest Expense/Average Assets   2.07%/2.20 %   1.97%   2.49%   2.27%   2.47%
MRQ Efficiency Ratio   102.1%/118.0 %   55.7%   56.5%   57.9%   62.6%
                            
 
(1)First ratio based on reported data for the quarter ended 12/31/2023; second ratio based on preliminary data for the quarter ended 3/31/2024, as provided by HomeStreet management.
(2)Core net income after taxes and before extraordinary items, less net income attributable to noncontrolling interest, gain on the sale of held to maturity and available for sale securities, amortization of intangibles, goodwill and nonrecurring items.
(3)Excludes gain/(loss) on sale of securities.

 

KBW’s analysis showed the following concerning the financial condition of HomeStreet and, to the extent publicly available, the selected companies:

 

           Selected Companies 
   HomeStreet(1)   75th
Percentile
   Average   Median   25th
Percentile
 
Tangible Common Equity/Tangible Assets   5.64%/5.49%   10.29%   9.34%   8.81%   8.57%
Total Capital Ratio   12.84%/12.70%   16.84%   15.84%   15.11%   14.58%
Loans HFI/Deposits   109.8%/115.0%   76.7%   74.9%   78.7%   85.8%
Loan Loss Reserve/Loans   0.54%/0.53%   1.70%   1.81%   1.41%   1.20%
Nonperforming Assets/Loans + OREO   1.12%/N/D   0.17%   0.28%   0.22%   0.38%
MRQ Net Charge-offs/Average Loans   (0.01%)/0.06%   0.02%   0.67%   0.05%   0.33%
                          
 
(1)First ratio based on reported data for the quarter ended 12/31/2023; second ratio based on preliminary data for the quarter ended 3/31/2024, as provided by HomeStreet management.

 

66
 

In addition, KBW’s analysis showed the following concerning the market performance of HomeStreet and, to the extent publicly available, the selected companies:

           Selected Companies 
   HomeStreet   75th
Percentile
   Average   Median   25th
Percentile
 
One-Year Stock Price Change   25.8%   9.7%   4.8%   2.6%   (2.4%)
Year-To-Date Stock Price Change   19.2%   (11.9%)   (14.9%)   (17.2%)   (18.9%)
Price/Tangible Book Value per Share   44%/45%(1)   144%   127%   114%   103%
Price/LTM EPS   NM/NM(1)   10.1x   10.5x   9.3x   8.4x
Price/2024 EPS Estimate   NM/NM(2)   11.7x   10.8x   10.9x   10.1x
Price/2025 EPS Estimate   13.4x/18.9x(2)   10.5x   10.0x   10.0x   9.6x
Dividend Yield   0.0%   5.2%   4.3%   4.6%   3.7%
MRQ Dividend Payout Ratio   NM    50.1%   75.0%   42.0%   29.8%

 

 

Note: NM shown for multiples less than 0.0x or greater than 30.0x.

(1)First multiple based on reported data for the quarter ended 12/31/2023; second multiple based on preliminary data for the quarter ended 3/31/2024, as provided by HomeStreet management.
(2)First multiple based on consensus “street” estimate for HomeStreet and second multiple based on 2025 EPS estimates taken from financial and operating forecasts and projections of HomeStreet provided by HomeStreet management.

 

The low and high stock price-to-tangible book value per share multiples of the selected companies were 0.74x (the multiple for LendingClub Corporation) and 1.95x (the multiple for Westamerica Bancorporation), respectively, the low and high stock price-to-2024 estimated EPS multiples of the selected companies were 9.0x (the multiple for Westamerica Bancorporation) and 12.3x (the multiple for Heritage Financial Corporation), respectively, and the low and high stock price-to-2025 estimated EPS multiples of the selected companies were8.6x (the multiple for Central Pacific Financial Corp.) and 11.4x (the multiple for Pacific Premier Bancorp, Inc.), respectively.

No company used as a comparison in the above selected companies analysis is identical to HomeStreet. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

Selected Transactions Analysis. KBW reviewed publicly available information related to 15 selected U.S. whole bank transactions announced since January 1, 2022 with announced transaction values between $200 million and $400 million.

 

The 15 selected transactions in this group were as follows:

Acquiror Acquired Company
Southern California Bancorp California BanCorp
Global Federal Credit Union First Financial Northwest Bank
Orrstown Financial Services, Inc. Codorus Valley Bancorp, Inc.
Old National Bancorp CapStar Financial Holdings, Inc.
Burke & Herbert Financial Services Corp. Summit Financial Group, Inc.
Shore Bancshares, Inc. The Community Financial Corporation
NBT Bancorp Inc. Salisbury Bancorp, Inc.
Peoples Bancorp Inc. Limestone Bancorp, Inc.
Prosperity Bancshares, Inc. First Bancshares of Texas, Inc.
Prosperity Bancshares, Inc. Lone Star State Bancshares, Inc.
The First Bancshares, Inc. Heritage Southeast Bancorporation, Inc.

 

67
 

Acquiror Acquired Company
Brookline Bancorp, Inc. PCSB Financial Corporation
United Community Banks, Inc. Progress Financial Corporation
National Bank Holdings Corporation Bancshares of Jackson Hole, Incorporated
Origin Bancorp, Inc. BT Holdings, Inc.

 

For each selected transaction, KBW derived the following implied transaction statistics, in each case based on the transaction consideration value paid for the acquired company and using financial data based on the acquired company’s then latest publicly available financial statements prior to the announcement of the respective transaction or the acquiror’s public investor presentation for respective transaction and, to the extent publicly available, one year forward EPS consensus “street estimates” prior to the announcement of the respective transaction:

 

·Transaction value per share to tangible book value per share of the acquired company;

 

·Price per common share to LTM estimated EPS of the acquired company (in the case of selected transactions involving a private acquired company, this transaction statistic was calculated as total transaction consideration divided by LTM earnings);

 

·Price per common share to estimated EPS of the acquired company for the first full year after the announcement of the respective transaction, referred to as Forward EPS, in the 13 selected transactions in which either consensus “street estimates” for the acquired company were available at announcement or price per common share to Forward EPS multiples were publicly disclosed; and

 

·Tangible equity premium to core deposits (total deposits less time deposits greater than $100,000) of the acquired company, referred to as core deposit premium.

 

KBW also reviewed the price per common share paid for the acquired company for the 10 selected transactions involving publicly traded acquired companies as a premium to the closing stock price of the acquired company one day prior to the announcement of the acquisition (expressed as a percentage and referred to as the one-day market premium). The resulting transaction statistics for the selected transactions were compared with the corresponding transaction statistics for the proposed merger based on the implied transaction value for the merger of $13.53 per outstanding share of HomeStreet’s common stock, or $262.8 million in the aggregate, and using historical financial information for HomeStreet as of, or for the 12-month period ended, March 31, 2024 provided by HomeStreet and the closing price of FirstSun common stock on April 29, 2024.

 

The results of the analysis are set forth in the following table:

       Selected Transactions 
   FirstSun/
HomeStreet
Transaction
   75th
Percentile
   Average   Median   25th
Percentile
 
Price/Tangible Book Value per Share   49%/111%(1)   177%   151%   151%   118%
Price/LTM EPS   NM    14.2x   13.3x   12.3x   10.0x
Price/Forward EPS(2)   20.9%(3)   12.2x   10.9x   11.4x   9.5x
Core Deposit Premium   (5.0%)   8.2%   5.9%   6.9%   3.4%
One-Day Market Premium   10.2%   27.5%   20.7%   12.2%   7.4%

 

 

Note: NM shown for multiples less than 0.0x or greater than 30.0x.

 

(1)Based on HomeStreet’s tangible common equity of $518.3 million as of 3/31/2024 and 18,857,566 HomeStreet shares outstanding as of 4/29/2024, adjusted for preliminary after-tax fair value marks as of 3/31/2024 calculated as (a) the sum of (i) write down of loans of $443.1 million, (ii) write-up of mortgage servicing rights of $5.4 million, (iii) write-down of certificates of deposits of $7.8 million, (iv) write-down of borrowings of $5.5 million, and (v) write-down of long-term debt of $49.8 million (b) tax affected using an effective tax rate of 23.0%.
68
 
(2)Based on consensus estimates for the first full year after announcement as available.
(3)Forward earnings based on 2025 HomeStreet management estimates.

 

The low and high transaction price-to-tangible book value multiples of the selected transactions were 1.06x (the multiple for the Old National Bancorp/CapStar Financial Holdings, Inc. transaction) and 1.96x (the multiple for National Bank Holdings Corporation/Bancshares of Jackson Hole, Incorporated transaction), respectively, the low and high price-to-LTM EPS multiples of the selected transactions were 6.5x (the multiple for the Burke & Herbert Financial Services Corp./Summit Financial Group, Inc. transaction) and 26.1x (the multiple for the Global Federal Credit Union/First Financial Northwest, Inc. transaction), respectively, and the low and high core deposit premiums of the selected transactions were 0.9% (the core deposit premium for the Old National Bancorp/CapStar Financial Holdings, Inc. transaction) and 11.6% (the core deposit premium for the Prosperity Bancshares, Inc./Lone Star State Bancshares, Inc. transaction), respectively. For the 13 selected transactions in which FWD EPS estimates for the acquired company were available, the low and high transaction price-to-FWD estimated EPS multiples of the selected transactions were 6.1x (the multiple for the Burke & Herbert Financial Services Corp./Summit Financial Group, Inc. transaction) and 14.9x (the multiple for the Brookline Bancorp, Inc./PCSB Financial Corporation transaction), respectively. For the 10 selected transactions in which the acquired company was publicly traded, the low and high one-day market premiums of the selected transactions were 3.1% (the one-day market premium for the Old National Bancorp/CapStar Financial Holdings, Inc. transaction) and 71.8% (the one-day market premium for the Global Federal Credit Union/First Financial Northwest, Inc. transaction), respectively.

 

No company or transaction used as a comparison in the above selected transaction analysis is identical to HomeStreet or the proposed merger. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

 

Relative Contribution Analysis. KBW analyzed the relative standalone contribution of FirstSun and HomeStreet to the combined market capitalization of the combined entity and various pro forma balance sheet and income statement items. This analysis did not include purchase accounting adjustments or cost savings. To perform this analysis, KBW used (i) balance sheet and net income data for FirstSun and HomeStreet as of, or for the 12-month period ended, March 31, 2024 provided by FirstSun and HomeStreet, respectively, (ii) financial and operating forecasts and projections of FirstSun provided by FirstSun management, (iii) financial and operating forecasts and projections of HomeStreet provided by HomeStreet management, and (iv) market price information as of April 29,

 

2024. The results of KBW’s analysis are set forth in the following table, which also compares the results of KBW’s analysis with the implied pro forma ownership percentages of FirstSun’s and HomeStreet’s respective shareholders in the combined company based on the 0.3867x exchange ratio provided for in the merger agreement:

 

    FirstSun
% of Total(1)
    HomeStreet
% of Total(1)
 
Ownership at 100% stock:     78.5 %     21.5 %
Market Information:                
Pre-Transaction Market Capitalization(2)     80.6 %     19.4 %
Balance Sheet:                
Assets     45.1 %     54.9 %
Gross Loans Held for Investment     45.8 %     54.2 %
Deposits     49.8 %     50.2 %
Tangible Common Equity     62.4 %     37.6 %
Income Statement:(3)                
2025 Estimated Earnings     90.3 %     9.7 %
2026 Estimated Earnings     80.3 %     19.7 %
Ownership at 100% stock with Equity Financing(4)     69.1 %     18.9 %

 

 
(1)Preliminary 3/31/2024 data as provided by FirstSun and HomeStreet managements.
69
 
(2)Market capitalization as of 4/29/2024. Based on 27,442,943 FirstSun common shares outstanding as of 4/29/2024 and 18,857,566 HomeStreet common shares outstanding as of 4/29/2024.
(3)FirstSun earnings estimates per FirstSun management. HomeStreet earnings estimates per HomeStreet management.
(4)Based on (a) 27,442,943 FirstSun common shares outstanding as of 4/29/2024, plus (b) shares issued to HomeStreet in the merger equal to the product of (x) the Fixed Exchange Ratio and (y) the sum of (i) 18,857,566 HomeStreet shares outstanding plus (ii) 294,517 RSUs as of 4/29/2024 plus (iii) 267,093 PSUs as of 4/29/2024, plus (c) 4,769,231 FirstSun common shares issued under Equity Financing. On a fully diluted basis, HomeStreet’s pro forma ownership is 18.5%, inclusive of FirstSun dilutive securities as of 4/29/2024 which include (a) 78,799 shares issuable under the 2022 long term incentive plan, (b) 97,694 shares issuable under the 2023 long term incentive plan, (c) 93,868 shares issuable under the 2024 long term incentive plan and (d) 609,316 FirstSun shares issuable using the treasury stock method. Excludes the effect of the issuance of warrants to purchase 1,152,453 shares at $32.50 to the equity investors.

 

Financial Impact Analysis. KBW performed a pro forma financial impact analysis that combined projected income statement and balance sheet information of FirstSun and HomeStreet. Using (i) closing balance sheet estimates assumed as of December 31, 2024 for FirstSun and HomeStreet taken from FirstSun and HomeStreet management estimates, (ii) earnings projections for FirstSun and HomeStreet provided by FirstSun management and HomeStreet management, respectively, and (iii) pro forma assumptions (including, without limitation, a common equity raise of $155 million, a subordinated debt issuance of $48.5 million, the sale of $370 million of securities, the repayment of HomeStreet’s FHLB borrowings, the sale of $300 million of HomeStreet commercial real estate loans, as well as the cost savings expected to result from the merger and certain purchase accounting and other merger-related adjustments and restructuring charges assumed with respect thereto) provided by FirstSun management, KBW analyzed the potential financial impact of the merger on certain projected financial results of FirstSun. This analysis indicated the merger could be accretive to each of FirstSun’s estimated 2025 EPS and estimated 2026 EPS by 36.6% and 49.8%, respectively, using stated diluted shares as of March 31, 2024, accretive to each of FirstSun’s estimated 2025 EPS and 2026 EPS by 24.5% and 36.7%, respectively, using adjusted diluted shares as of March 31, 2024, and dilutive to FirstSun’s estimated tangible book value per share at closing assumed as of December 31, 2024 by 13.1%. Furthermore, the analysis indicated that the merger could reduce each of FirstSun’s tangible common equity to tangible assets ratio, Tier 1 Leverage Ratio, Common Equity Tier 1 (CET1) Ratio, Tier 1 Capital Ratio and Total Risk-based Capital Ratio at closing assumed as of December 31, 2024 by 4.16%, 4.48%, 3.33%, 3.33% and 2.99%, respectively. For all of the above analysis, the actual results achieved by FirstSun following the merger may vary from the projected results, and the variations may be material.

 

FirstSun Dividend Discount Model Analysis. KBW performed a dividend discount model analysis of FirstSun to estimate a range for the implied equity value of FirstSun. In this analysis, KBW utilized financial forecasts and projections relating to the assets and earnings of FirstSun provided by FirstSun management, and assumed discount rates ranging from 11.0% to 15.0% based on the capital asset pricing model and the professional judgement of KBW. The range of values was derived by adding (i) the present value of implied future excess capital available for dividends that FirstSun could generate over the period from March 31, 2024 through December 31, 2028 as a standalone company, and (ii) the present value of FirstSun’s implied terminal value at the end of such period. This analysis utilized the assumptions provided by HomeStreet management that FirstSun would maintain a tangible common equity to tangible assets ratio of 8.00% and would retain sufficient earnings to maintain that level. In calculating implied terminal values for FirstSun, KBW applied a range of 8.0x to 12.0x FirstSun’s estimated 2029 earnings based upon similar multiples for the banking industry and the professional judgment of KBW. This dividend discount model analysis resulted in a range of implied values per share of FirstSun common stock of $37.38 to $53.83.

The dividend discount model analysis is a widely used valuation methodology, but the results of such methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values and discount rates. The foregoing dividend discount model analysis did not purport to be indicative of the actual values or expected values of FirstSun or the pro forma combined entity.

70
 

HomeStreet’s Dividend Discount Model Analysis. KBW performed a dividend discount model analysis of HomeStreet to estimate a range for the implied equity value of HomeStreet. In this analysis, KBW utilized financial forecasts and projections relating to the assets and earnings of HomeStreet provided by HomeStreet management, and assumed discount rates ranging from 13.0% to 17.0% based on the capital asset pricing model and the professional judgement of KBW. The range of values was derived by adding (i) the present value of implied future excess capital available for dividends that HomeStreet could generate over the period from March 31, 2024 through December 31, 2028 as a standalone company, and (ii) the present value of HomeStreet’s implied terminal value at the end of such period. This analysis utilized the assumptions provided by HomeStreet management that HomeStreet would maintain a tangible common equity to tangible assets ratio of 8.00% and would retain sufficient earnings to maintain that level. In calculating implied terminal values for HomeStreet, KBW applied a range of 8.0x to 12.0x HomeStreet’s estimated 2029 earnings based on similar multiples for the banking industry and the professional judgement of KBW. This dividend discount model analysis resulted in a range of implied values per share of HomeStreet common stock of $2.53 to $9.07.

The dividend discount model analysis is a widely used valuation methodology, but the results of such methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values and discount rates. The foregoing dividend discount model analysis did not purport to be indicative of the actual values or expected values of HomeStreet.

Illustrative Pro Forma Combined Dividend Discount Model Analysis. KBW performed an illustrative dividend discount model analysis of the pro forma combined entity. In this analysis, KBW used financial forecasts and projections relating to the earnings and assets of FirstSun provided by FirstSun management, financial forecasts and projections relating to the earnings and assets of HomeStreet provided by HomeStreet management, and pro forma assumptions (including, without limitation, the cost savings expected to result from the merger as well as certain purchase accounting adjustments and other merger-related adjustments and restructuring charges assumed with respect thereto) provided by FirstSun management, and KBW assumed discount rates ranging from 11.0% to 15.0% based on the capital asset pricing model and the professional judgment of KBW. An illustrative range for the implied equity value of the pro forma combined entity was derived by adding (i) the present value of the implied future excess capital available for dividends that the pro forma combined entity could generate over the period from December 31, 2024 through December 31, 2029, and (ii) the present value of the pro forma combined entity’s implied terminal value at the end of such period, in each case applying the pro forma assumptions. This analysis utilized the assumptions provided by HomeStreet management that the pro forma combined entity would maintain a tangible common equity to tangible assets ratio of 8.00% and would retain sufficient earnings to maintain that level. In calculating implied terminal values of the pro forma combined entity, KBW applied a range of 8.0x to 12.0x the pro forma combined entity’s estimated 2030 earnings based on similar multiples for the banking industry and the professional judgment of KBW. This dividend discount model analysis resulted in an illustrative range of implied values for the 0.3867 shares of FirstSun common stock to be received in the proposed merger for each share of HomeStreet common stock of $16.74 to $24.90.

The dividend discount model analysis is a widely used valuation methodology, but the results of such methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values, and discount rates. The foregoing dividend discount model analysis did not purport to be indicative of the actual values or expected values of FirstSun or the pro forma combined entity.

Miscellaneous. KBW acted as financial advisor to HomeStreet in connection with the proposed transaction and did not act as an advisor to or agent of any other person. As part of its investment banking business, KBW is continually engaged in the valuation of bank and bank holding company securities in connection with acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for various other purposes. As specialists in the securities of banking companies, KBW has experience in, and knowledge of, the valuation of banking enterprises. KBW and its affiliates, in the ordinary course of its and their broker-dealer businesses (and further to existing sales and trading relationships between a KBW broker-dealer affiliate and each of HomeStreet and FirstSun), may from time to time purchase securities from, and sell securities to, HomeStreet, FirstSun or any of their respective affiliates. A commercial bank affiliate of KBW

71
 

currently holds subordinated notes issued by FirstSun. In addition, as a market maker in securities, KBW and its affiliates may from time to time have a long or short position in, and buy or sell, debt or equity securities of HomeStreet or FirstSun for its and their own respective accounts and for the accounts of its and their respective customers and clients.

 

Pursuant to the KBW engagement agreement, HomeStreet agreed to pay KBW a cash fee equal to the greater of (i) $10,000,000 and (ii) 1.25% of the aggregate merger consideration, $500,000 of which became payable to KBW with the rendering of KBW’s opinion on January 15, 2024 and the balance of which is contingent upon the closing of the transaction. In addition, an additional amount of $500,000 became payable to KBW with the rendering of KBW’s opinion on April 30, 2024. HomeStreet also agreed to reimburse KBW for reasonable out-of-pocket expenses and disbursements incurred in connection with its retention and to indemnify KBW against certain liabilities relating to or arising out of KBW’s engagement or KBW’s role in connection therewith. In addition to the present engagement, in the two years preceding the date of its opinion, KBW provided investment banking and financial advisory services to HomeStreet and received compensation for such services. KBW acted as lead book-running manager in connection with HomeStreet’s January 2022 offering of subordinated notes. In the two years preceding the date of its opinion, KBW provided investment banking and financial advisory services to FirstSun and received compensation for such services. KBW acted as placement agent in connection with FirstSun’s January 2022 placement of subordinated notes. KBW may in the future provide investment banking and financial advisory services to HomeStreet or FirstSun and receive compensation for such services.

Interests of HomeStreet’s Directors and Executive Officers in the Mergers

In considering the recommendation of the HomeStreet board of directors to vote for the merger proposal, the merger-related compensation proposal and the adjournment proposal, holders of HomeStreet common stock should be aware that the directors and executive officers of HomeStreet have interests in the mergers that are different from, or in addition to, the interests of holders of HomeStreet common stock generally. References to the named executive officers of HomeStreet include Mark K. Mason, John M. Michel and William D. Endresen. The HomeStreet board of directors was aware of these interests and considered them, among other matters, in making its recommendation that HomeStreet shareholders vote to approve the merger proposal, the merger-related compensation proposal and the adjournment proposal.

These interests include, among others, the following:

 

·at the effective time, each outstanding Pre-2024 HomeStreet RSU and HomeStreet PSU will automatically accelerate, be cancelled and entitle the holder to receive (1) a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the Pre-2024 HomeStreet RSU or HomeStreet PSU immediately prior to the effective time (for HomeStreet PSUs, based on target performance) multiplied by (y) the exchange ratio, plus (2) an amount in cash equal to the amount of all dividends, if any, accrued but unpaid as of the effective time with respect to such Pre-2024 HomeStreet RSU or HomeStreet PSU;

 

·at the effective time, each outstanding 2024 HomeStreet RSU will automatically be converted into a Converted RSU Award in respect of a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the 2024 HomeStreet RSU immediately prior to the effective time multiplied by (y) the exchange ratio. Each Converted RSU Award will be subject to the same terms and conditions as applied to the corresponding 2024 HomeStreet RSU immediately prior to the effective time, provided that time-based vesting conditions will accelerate upon the earlier of (a) a termination of employment of the applicable holder of such Converted RSU Award without Cause or for Good Reason (each as defined in the Amended and Restated HomeStreet 2014 Equity Incentive Plan (the “2014 Plan”) and 2024 HomeStreet RSU), (b) the date on which the system conversion of the banking operations of FirstSun and HomeStreet is completed (or up to 30 days thereafter, at FirstSun’s discretion), (c) six months from the closing date of the mergers or (d) any earlier vesting date or event required by the 2024 HomeStreet RSU prior to the effective time;
72
 
·FirstSun has entered into the Mason Employment Agreement, which will commence at the effective time of the mergers and which provides for certain compensation and benefits in connection with his employment following the closing of the mergers, including severance upon a subsequent qualifying termination;
·Mr. Mason will also be entitled to receive payment of the severance payments and benefits contemplated by, and in accordance with, the applicable change in control severance terms of his employment agreement with HomeStreet, notwithstanding Mr. Mason’s entry into the Mason Employment Agreement and subsequent employment with FirstSun;
·Each other HomeStreet executive officer is entitled to change in control severance payments and benefits upon a qualifying termination of employment within 90 days prior to or within 12 months following the consummation of the mergers;
·pursuant to the terms of the merger agreement, prior to closing, if requested by FirstSun and contingent upon the occurrence of the effective time, HomeStreet’s 401(k) plan will be terminated, and any continuing employees will be eligible to participate, effective as of the effective time, in a 401(k) plan sponsored or maintained by FirstSun or one of its subsidiaries. FirstSun and HomeStreet will take any and all actions as may be required, including amendments to HomeStreet’s 401(k) plan and/or FirstSun’s 401(k) plan, to permit the continuing employees to make rollover contributions to FirstSun’s 401(k) plan of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Code) in the form of cash, notes (in the case of loans), or a combination thereof in an amount equal to the full account balance distributed to such employee from the HomeStreet 401(k) plan;

 

·certain of HomeStreet’s directors and executive officers will continue to serve as directors or executive officers, as applicable, of the combined company or the combined bank following the closing of the mergers; and
·pursuant to the terms of the merger agreement, HomeStreet’s directors and executive officers are entitled to indemnification, advancement of expenses and six years of continued liability insurance coverage. See the section entitled “The Merger Agreement—Indemnification, Directors’ and Officers’ Insurance”.

 

The HomeStreet board of directors was aware of and considered these respective interests, among other matters, in evaluating and negotiating the merger agreement, when deciding to adopt and approve the merger agreement and in making its recommendation that HomeStreet shareholders vote to approve the merger proposal, merger-related compensation proposal and adjournment proposal. These interests are described in more detail below, and certain of them are quantified in the narrative and in the section entitled “Quantification of Potential Payments and Benefits to HomeStreet’s Named Executive Officers in Connection with the Mergers” beginning on page 78.

 

Treatment of HomeStreet Equity Awards

 

Each of HomeStreet’s executive officers holds one or more of the following types of awards: Pre-2024 HomeStreet RSUs, HomeStreet PSUs and 2024 HomeStreet RSUs. HomeStreet’s non-employee directors do not hold any unvested or outstanding HomeStreet equity awards. Upon completion of the mergers, outstanding HomeStreet equity awards will be treated as follows:

 

·at the effective time, the merger agreement provides that each outstanding Pre-2024 HomeStreet RSU, and each outstanding HomeStreet PSU, will automatically accelerate (with performance-based vesting for HomeStreet PSUs occurring at target), be cancelled and entitle the holder to receive, no later than three business days after the effective time, (1) a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the Pre-2024 HomeStreet RSU or HomeStreet PSU immediately prior to the effective time (for HomeStreet PSUs, based on target performance) multiplied by (y) the exchange ratio, plus, (2) an amount in cash equal to the amount of all dividends, if any, accrued but unpaid as of the effective time with respect to such Pre-2024 HomeStreet RSU or HomeStreet PSU; and

 

73
 
·at the effective time, the merger agreement provides that each outstanding 2024 HomeStreet RSU will automatically be converted into a Converted RSU Award in respect of a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the 2024 HomeStreet RSU immediately prior to the effective time multiplied by (y) the exchange ratio. Each Converted RSU Award will be subject to the same terms and conditions, including payment of accrued dividends upon vesting, as applied to the corresponding 2024 HomeStreet RSU immediately prior to the effective time, provided that time-based vesting conditions will accelerate upon the earlier of (a) a termination of employment of the applicable holder of such Converted RSU Award without Cause or for Good Reason (each as defined in the 2014 Plan and 2024 HomeStreet RSU), (b) the date on which the system conversion of the banking operations of FirstSun and HomeStreet is completed (or up to 30 days thereafter, at FirstSun’s discretion), (c) six months from the closing date of the mergers or (d) any earlier vesting date or event required by the 2024 HomeStreet RSU prior to the effective time.

 

The table below sets forth the number of outstanding Pre-2024 HomeStreet RSUs, HomeStreet PSUs and 2024 HomeStreet RSUs held by each of HomeStreet’s executive officers as of May 6, 2024 and an estimate of the value of such awards (on a pre-tax basis) using a price per share of HomeStreet common stock of $10.92 (the average closing price of HomeStreet’s common stock over the first three trading days following the announcement of the April 30 amendment to the merger agreement) (for HomeStreet PSUs, based on target performance). Depending on the date upon which the closing of the mergers actually occurs, certain Pre-2024 HomeStreet RSUs, HomeStreet PSUs and 2024 HomeStreet RSUs that are unvested as of the date of this proxy statement/prospectus and that are included in the table below may vest and settle pursuant to their terms, without regard to the mergers.

 

Name  Unvested
Pre-2024
HomeStreet
RSUs
(#)
   Unvested
Pre-2024
HomeStreet
RSUs
($)
   Unvested
HomeStreet
PSUs
(#)
   Unvested
HomeStreet
PSUs
($)
   Unvested
2024
HomeStreet
RSUs
(#)
   Unvested
2024
HomeStreet
RSUs
($)
 
Mark K. Mason   12,469   $136,161    55,891   $610,330    46,744   $510,444 
John M. Michel   4,282   $46,759    23,797   $259,863    16,052   $175,288 
William D. Endresen   3,138   $34,267    17,437   $190,412    11,761   $128,430 
Godfrey B. Evans   2,363   $25,804    13,129   $143,369    8,855   $96,697 
Erik D. Hand   812   $8,867    4,510   $49,249    3,042   $33,219 
Troy D. Harper   2,202   $24,046    12,446   $135,910    8,564   $93,519 
Jay C. Iseman   2,138   $23,347    12,035   $131,422    8,169   $89,205 
Paulette Lemon   1,638   $17,887    9,348   $102,080    6,389   $69,768 
David Parr   1,909   $20,846    11,368   $124,139    7,946   $86,770 
Darrell S. van Amen   2,629   $28,709    14,604   $159,476    9,849   $107,551 
Diane P. Novak   1,209   $13,202    8,486   $92,667    6,456   $70,500 

 

These amounts do not attempt to forecast any additional equity award grants, issuances or forfeitures that may occur prior to the closing of the mergers following the date of this proxy statement/prospectus. As a result of the foregoing assumptions, which may or may not actually occur or be accurate on the relevant date, the actual amounts, if any, to be received by HomeStreet’s executive officers may materially differ from the amounts set forth above.

Employment Agreement with Mark K. Mason Following the Mergers

 

Effective immediately following the effective time of the mergers (the “Mason Start Date”), contingent upon the closing of the mergers, Mark K. Mason will serve as Executive Vice Chairman of FirstSun and Sunflower Bank and will serve on the boards of directors of FirstSun and Sunflower Bank subject to the approval and appointment requirements of such boards.

74
 

Accordingly, FirstSun and Sunflower Bank have entered into an employment agreement with Mr. Mason, which we refer to as the Mason Employment Agreement, whose term will commence upon the Mason Start Date, contingent upon the closing of the mergers, and will provide for certain compensation and benefits, including severance, in connection with Mr. Mason’s employment following the closing of the mergers. The Mason Employment Agreement provides for an initial term of three years commencing upon the Mason Start Date. Following the initial term, the Mason Employment Agreement will renew for successive one-year periods without further action by the parties, unless terminated earlier as set forth in the Mason Employment Agreement or either party determines not to renew the Mason Employment Agreement upon at least 90 days advance written notice to the other party prior to the commencement of a renewal term.

 

The Mason Employment Agreement provides for a base salary of $830,180 per year, eligibility to earn an annual bonus with a target incentive opportunity of 100% of base salary, and eligibility to participate in FirstSun equity and/or other long-term compensation plans covering Mr. Mason and similarly-situated executives of FirstSun. The Mason Employment Agreement also provides for eligibility for a grant of 195,525 shares of restricted common stock of FirstSun (the “Equity Grant”) which will vest in equal annual installments on each of the first three anniversaries of the Mason Start Date subject to Mr. Mason’s continued employment through such date.

 

Pursuant to the terms of the Mason Employment Agreement, in the event of Mr. Mason’s termination of employment without Cause or by the executive with Good Reason (each as defined in the Mason Employment Agreement) or by mutual agreement of the parties after the first anniversary of the Mason Start Date, Mr. Mason would be entitled to receive, in addition to accrued but unpaid compensation and benefits and the full amount of Mr. Mason’s target bonus for the fiscal year that includes the termination date, the following payments and benefits, in each case, subject to Mr. Mason’s execution of a release and waiver of claims and other requirements: (i) cash severance in an amount equal to (1) 36 months of base salary and annual bonus (at Mr. Mason’s then-current base salary rate and target annual bonus for the year of termination) plus (2) 18 months of COBRA premiums, (ii) immediate vesting of all unvested balances in Mr. Mason’s deferral account under the Sunflower Financial, Inc. Deferred Compensation Plan, and (iii) immediate vesting of all unvested equity-based awards. In addition, the Equity Grant will vest in full upon the date of such termination, provided that Mr. Mason agrees to reasonably cooperate in transitioning his responsibilities and duties to any successor(s) designated by FirstSun.

 

The Mason Employment agreement also provides that (i) FirstSun’s decision not to renew Mr. Mason’s employment at the end of any term, or (ii) Mr. Mason’s election to terminate his employment within one year after a Change in Control subsequent to the mergers (as defined in the Mason Employment Agreement) will be treated as a termination without Cause or a termination for Good Reason, respectively, and will entitle Mr. Mason, in each case, to the severance described in the preceding paragraph.

In addition, the Mason Employment Agreement contains restrictive covenants concerning the nondisclosure of confidential information at any time during or after the term of employment and non-interference and nonsolicitation obligations during the term of employment and for a period of 24 months following termination of employment.

 

Good Reason Terminations and Corresponding Change in Control Payments at Closing

 

FirstSun and HomeStreet have agreed that the employment of John Michel, Godfrey Evans and Jay Iseman (collectively, the “Separating Executives”) will terminate at and subject to the occurrence of the effective time of the mergers or, to the extent agreed between FirstSun and the applicable Separating Executive prior to the closing date of the mergers, following a transition period following the closing. The parties have agreed that each such termination of employment shall constitute a termination without Cause or for Good Reason (each as defined in the applicable CIC Agreement (as defined below) or employment agreement), entitling the applicable Separating Executive to the severance payments and benefits contemplated by, and in accordance with the terms of, the Separating Executive’s CIC Agreement and employment agreement, as applicable. 

 

75
 

Change in Control Severance and Similar Agreements

 

Each of HomeStreet’s executive officers, including each of the named executive officers, is party to an Executive Change in Control Agreement with HomeStreet (the “CIC Agreements”) or an employment agreement with HomeStreet, in each case, which provide for severance payments and benefits in the event that the executive officer’s employment is terminated (i) by HomeStreet other than for Cause or (ii) by the executive for Good Reason (each as defined in the applicable CIC Agreement or employment agreement), in each case within one year following or 90 days immediately prior to a Change in Control of HomeStreet, such as the mergers, and subject to the executive’s execution of a release and waiver of claims:

 

·a lump sum payment equal to two times (or for Mr. Mason, 2.5 times) the executive’s (i) annual salary at the rate in effect immediately prior to termination and (ii) annual incentive payment (calculated as the greater of the executive’s annual incentive payment earned in the year prior to termination or the executive’s target incentive payment for the current year);
·for Mr. Mason, Mr. Evans and Mr. Iseman, as well as Mr. Michel and William D. Endresen whose CIC Agreements are expected to be amended prior to the closing of the mergers to afford them the same, continuing health insurance coverage for the shorter of (i) 18 months, (ii) until such date as the executive is no longer entitled to continuation coverage pursuant to COBRA or (iii) until such date as executive obtains health coverage through another employer; and
·for all executive officers immediate vesting of all unvested equity awards.

 

For an estimate of the value of the payments and benefits described above that would be payable to HomeStreet’s named executive officers upon a qualifying termination in connection with the mergers, see the section entitled “Golden Parachute Compensation” beginning on page 79. The estimated aggregate value of the severance and other benefits described above that would be payable to HomeStreet’s eight executive officers who are not named executive officers under their CIC Agreement or employment agreement, as applicable, if the effective time occurred on May 6, 2024 and each executive officer experienced a qualifying termination on that date is $9,617,059. These amounts do not reflect any possible reductions under the Section 280G “net-better” cutback provision included in the CIC Agreements and employment agreements.

Pursuant to the merger agreement, FirstSun acknowledges that the transactions contemplated by the merger agreement will constitute a “change in control” under the terms of the CIC Agreements, employment agreements and other Company Benefit Plans (as defined in the merger agreement).

Annual Incentive Plan

Pursuant to the merger agreement, HomeStreet will be permitted to determine in good faith (and in consultation with FirstSun) the amounts payable under its annual cash incentive program (the “Performance Bonus Plan”) for the fiscal year in which the closing occurs (the “Closing Year Bonuses”) based on performance through the closing date. If HomeStreet determines in good faith (and in consultation with FirstSun) that an insufficient portion of the performance year has occurred as of the closing date of the mergers to be able to reasonably determine individual performance, HomeStreet may base individual performance on target performance. Further, if HomeStreet determines in good faith (and in consultation with FirstSun) that an insufficient portion of the performance year has occurred as of the closing date of the mergers to be able to reasonably determine corporate or business unit performance, HomeStreet may base corporate or business unit performance on target performance.

FirstSun will cause the Closing Year Bonuses, pro-rated to reflect the portion of the calendar year prior to the closing date of the mergers during which the continuing employees participated in such program, to be paid to the continuing employees no later than the earlier to occur of (i) the date HomeStreet has historically paid such amounts in the ordinary course of business (but no later than March 15 of the calendar year following the closing); (ii) within 60 days following the applicable continuing employee’s qualifying termination of employment and (iii) the date on which the applicable continuing employee is otherwise entitled to receive payment under the Performance Bonus Plan.

 

76
 

For the balance of the calendar year in which the closing of the mergers occurs, continuing employees are expected to participate in an annual cash incentive program sponsored by FirstSun, and such bonuses will be paid to the continuing employees in accordance with the terms of FirstSun’s program on the date FirstSun pays annual cash bonuses to similarly situated employees in the ordinary course of business, pro-rated to reflect the portion of the calendar year following the closing date during which the continuing employees participated in such program.

Termination of HomeStreet 401(k) Plan

The merger agreement provides that if requested by FirstSun in writing not less than 10 business days prior to the closing date, the board of directors of HomeStreet or HomeStreet Bank will cause HomeStreet’s 401(k) plan to be terminated effective as of the day immediately prior to the closing date and contingent upon the occurrence of the effective time. If FirstSun requests that HomeStreet’s 401(k) plan be terminated, (i) HomeStreet will provide FirstSun with evidence that such plan has been terminated (the form and substance of which will be subject to reasonable review and comment by FirstSun) not later than two days immediately preceding the closing date, and (ii) any continuing employees will be eligible to participate, effective as of the effective time, in a 401(k) plan sponsored or maintained by FirstSun or one of its subsidiaries, it being agreed that there will be no gap in participation. FirstSun and HomeStreet will take any and all actions as may be required, including amendments to HomeStreet’s 401(k) plan and/or FirstSun’s 401(k) plan, to permit the continuing employees to make rollover contributions to FirstSun’s 401(k) plan of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Code) in the form of cash, notes (in the case of loans), or a combination thereof in an amount equal to the full account balance distributed to such employee from the HomeStreet 401(k) plan.

Director Compensation

Pursuant to the merger agreement and confidential disclosure schedules, HomeStreet may pay compensation to its non-employee directors in the ordinary course of business consistent with past practice; provided that (i) HomeStreet may pay non-employee directors in full for the quarter in which the closing date of the mergers occurs and (ii) equity-based compensation may be paid in cash equivalents to the extent HomeStreet reasonably determines there are insufficient shares of HomeStreet’s common stock available under the applicable benefit plan.

Indemnification; Directors’ and Officers’ Insurance

Under the merger agreement, HomeStreet’s directors and executive officers are entitled to indemnification and advancement of expenses by FirstSun to the fullest extent permitted by applicable law, HomeStreet’s governing or organizational documents and their existing agreements with HomeStreet.

Under the merger agreement, for a period of six years after the effective time, FirstSun will also cause to be maintained in effect the current policies of directors’ and officers’ liability insurance maintained by HomeStreet (provided that FirstSun may substitute therefor policies with a substantially comparable insurer of at least the same coverage and amounts containing terms and conditions that are no less advantageous to the insured) with respect to claims against each present and former director or officer of HomeStreet and its subsidiaries (in each case when acting in such capacity) arising from facts or events which occurred at or before the effective time (including the approval of the transactions contemplated by the merger agreement); provided that FirstSun will not be obligated to expend, on an annual basis, an amount in excess of 300% of the current annual premium paid as of the date of the merger agreement by HomeStreet for such insurance (the “Premium Cap”). In lieu of the foregoing, FirstSun or, with the prior consent of FirstSun, HomeStreet may obtain at or prior to the effective time a six-year “tail” policy under HomeStreet’s existing directors’ and officers’ insurance policy providing equivalent coverage to that described in the preceding sentence if and to the extent that the same may be obtained for an amount that, in the aggregate, does not exceed the Premium Cap. For additional information, see ’‘The Merger Agreement — Director and Officer Indemnification and Insurance” beginning on page 99.

 

77
 

Membership on the Combined Company’s Board of Directors

The board of directors of the combined company and the combined bank after the merger will have 12 members, including Mr. Mason and two other legacy HomeStreet directors. For additional information, see “—Governance of the Combined Company After the Merger” beginning on page 81.

Tax Planning Strategies

Pursuant to the merger agreement and confidential disclosure schedules, HomeStreet may implement strategies to mitigate the impact of Sections 280G and 4999 of the Code and to reduce the amount of compensation or benefits otherwise expected to constitute “excess parachute payments” in connection with the transactions contemplated by the merger agreement. As of the date of this proxy statement/prospectus, no such tax planning strategies have been finalized.

Quantification of Potential Payments and Benefits to HomeStreet’s Named Executive Officers in Connection with the Mergers

This section sets forth the information required by Item 402(t) of the SEC’s Regulation S-K regarding compensation that is based on, or otherwise relates to, the mergers for each named executive officer of HomeStreet. This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules, and in this section we use such term to describe the merger-related compensation payable to HomeStreet’s named executive officers. The “golden parachute” compensation payable to these individuals is subject to a non-binding, advisory vote of HomeStreet’s shareholders, as described elsewhere in this proxy statement/prospectus. The plans or arrangements pursuant to which such “golden parachute” compensation would be payable (other than the merger agreement), consist of the named executive officers’ employment agreements, change in control agreements and the respective equity awards specifying the terms and conditions of each such award.

Throughout the discussion, the named executive officers of HomeStreet include the following executive officers, as determined in accordance with applicable SEC rules:

·Mark K. Mason — Chairman, President and Chief Executive Officer of HomeStreet and HomeStreet Bank
·John M. Michel — Executive Vice President, Chief Financial Officer of HomeStreet and HomeStreet Bank
·William D. Endresen — Executive Vice President, Commercial Real Estate and Commercial Capital President of HomeStreet Bank

The amount of payments and benefits that each named executive officer would receive (on a pre-tax basis), as set forth in the table below, is based on the following assumptions:

·the closing date of the mergers is May 6, 2024, which is the latest practicable date prior to this filing and used solely for purposes of this golden parachute compensation disclosure;
·the named executive officers of HomeStreet experience a qualifying termination immediately following the assumed closing date of the mergers that results in change in control severance benefits becoming payable to him under such individual’s applicable CIC Agreement or employment agreement with HomeStreet without taking into account any possible reduction that might be required to avoid the excise tax in connection with Section 280G under Section 4999 of the Code;
·the named executive officers’ base salary rate and target annual bonus remain unchanged from those in effect as of the date of this proxy statement/prospectus;
78
 
·the HomeStreet equity awards that are outstanding as of May 6, 2024 are the equity awards that HomeStreet has granted to its named executive officers through, and are outstanding as of, the closing date of the merger (with the number of HomeStreet shares subject to HomeStreet PSUs determined at target level of achievement); and
·the per share value of HomeStreet’s common stock is $10.92, which is the average closing price of HomeStreet’s common stock over the first three trading days following the public announcement of the April 30 amendment to the merger agreement, as required by Item 402(t) of Regulation S-K.

 

The amounts below do not include the value of benefits which the named executive officers are already entitled to or vested in as of the assumed date of the merger without regard to the occurrence of a change in control, and do not reflect any possible reductions under the Section 280G “net-better” cutback provisions included in the named executive officers’ CIC Agreements and employment agreements. In addition, these amounts do not include any other incentive award grants, issuances or forfeitures that may be made or occur, or future dividends or dividend equivalents that may be accrued, prior to the completion of the mergers, and do not reflect any HomeStreet equity or other incentive awards that are expected to vest in accordance with their terms prior to the closing date of the mergers. The amounts shown are estimates of amounts that would be payable to the named executive officers based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement/prospectus. Some of the assumptions are based on information not currently available. As a result of the foregoing assumptions, which may or may not actually occur or be accurate on the relevant date, including the assumptions described in the footnotes to the table, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below.

For purposes of this discussion, “single-trigger” refers to benefits that arise as a result of the closing of the mergers and “double-trigger” refers to benefits that require two conditions, which are the closing of the mergers as well as a qualifying termination of employment.

Golden Parachute Compensation

Name  Cash ($)(1)   Equity
($)(2)
   Perquisites /
benefits
($)(3)
   Total ($) 
Mark K. Mason  $3,741,020   $1,256,935   $0   $4,997,955 
John M. Michel  $1,566,076   $481,910   $55,209   $2,103,195 
William D. Endresen  $2,437,708   $353,109   $41,421   $2,832,238 

 

 
(1)Cash. The cash payments payable to the named executive officers consist of the following severance benefits payable on a termination without cause or a resignation for good reason within one year following closing or during the 90 days immediately preceding closing of the mergers, pursuant to Mr. Mason’s HomeStreet employment agreement and Messrs. Michel’s and Endresen’s CIC Agreements, subject to the executive’s execution and non-revocation of a release of claims: a lump sum payment equal to two times (2.5 times for Mr. Mason) the sum of (i) the named executive officer’s annual base salary as in effect immediately prior to termination of employment, plus (ii) an amount equal to the annual incentive payment (calculated as the greater of the executive’s annual incentive payment earned in the year prior to termination or the executive’s target incentive payment for the current year). These amounts for Mr. Endresen are payable on a “double-trigger” basis. Pursuant to the merger agreement and confidential disclosure schedules, FirstSun and HomeStreet have agreed that, effective as of and subject to the occurrence of the mergers, Mr. Michel will be entitled to receive payment of the severance payments and benefits contemplated by, and in accordance with, the applicable change in control severance terms of his employment agreement with HomeStreet. Pursuant to the merger agreement and confidential disclosure schedules, FirstSun and HomeStreet have agreed that, effective as of and subject to the occurrence of the mergers, Mr. Mason will be entitled to receive payment of the severance payments and benefits contemplated by, and in accordance with, the applicable change in control severance terms of his employment agreement with HomeStreet, notwithstanding Mr. Mason’s entry into the Mason Employment Agreement and subsequent employment with FirstSun.
79
 
(2)Equity. As described in the section above entitled “— Treatment of HomeStreet Equity Awards,” the amount shown represents the value of Pre-2024 HomeStreet RSUs, HomeStreet PSUs and 2024 HomeStreet RSUs (which will be converted into Converted RSU Awards at the effective time), calculated as follows:

 

Name 

Pre-2024
HomeStreet
RSUs

($)(a)

  

HomeStreet
PSUs

($)(a)

   Converted
RSU
Awards
($)(b)
   Value of
All Equity
Awards
($)
 
Mark K. Mason  $136,161   $610,330   $510,444   $1,256,935 
John M. Michel  $46,759   $259,863   $175,288   $481,910 
William D. Endresen  $34,267   $190,412   $128,430   $353,109 

 

 
(a)Even if the named executive officer was not terminated, all Pre-2024 HomeStreet RSUs and all HomeStreet PSUs will automatically accelerate on a “single-trigger” basis (with performance-based vesting for HomeStreet PSUs occurring at target), be cancelled and entitle the holder to receive, no later than three business days after the effective time, (1) a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the Pre-2024 HomeStreet RSU or HomeStreet PSU immediately prior to the effective time (for HomeStreet PSUs, based on target performance) multiplied by (y) the exchange ratio, plus, (2) an amount in cash equal to the amount of all dividends, if any, accrued but unpaid as of the effective time with respect to such Pre-2024 HomeStreet RSU or HomeStreet PSU. The amounts shown are based on the per share value of HomeStreet common stock of $10.92, which is the average closing price HomeStreet’s common stock over the first three trading days following the public announcement of the April 30 amendment to the merger agreement.
(b)As disclosed above, each Converted RSU Award will be subject to the same terms and conditions, including payment of accrued dividends upon vesting, as applied to the corresponding 2024 HomeStreet RSU immediately prior to the effective time, provided that time-based vesting conditions will accelerate upon the occurrence of certain events, including, among others, a qualifying termination of employment. The amounts shown reflect the market value of the Converted RSUs that would accelerate on a “double-trigger” basis in the event that a named executive officer experiences a qualifying termination following the change in control, based on the per share value of HomeStreet common stock of $10.92, which is the average closing price HomeStreet’s common stock over the first three trading days following the public announcement of the April 30 amendment to the merger agreement. The ultimate value of accelerated vesting for the foregoing 2024 HomeStreet RSU will depend on the FirstSun stock price on the date of acceleration. Even if the named executive officer was not terminated, time-based vesting conditions applicable to such Converted RSU Award will accelerate upon the earlier of (i) the date on which the system conversion of the banking operations of FirstSun and HomeStreet is completed (or up to 30 days thereafter, at FirstSun’s discretion), (ii) six months from the closing date of the mergers or (iii) any earlier vesting date or event required by the 2024 HomeStreet RSU prior to the effective time.
(3)Perquisites/Benefits. Represents, for each of Messrs. Michel and Endresen, health insurance benefits for up to 18 months following a qualifying termination. Pursuant to the merger agreement and confidential disclosure schedules, prior to closing, HomeStreet may amend Messrs. Michel’s and Endresen’s CIC Agreements to provide, in each case, that, in the event of a qualifying termination of employment thereunder, in addition to the other change in control severance payments and benefits contemplated therein, the executive will also receive a lump sum payment equal to 18 months of the cost of the health coverage in which the executive and his eligible dependents were enrolled at the time of closing (based on COBRA premium rates for such coverage, irrespective of eligibility for COBRA). The benefits set forth above are “double-trigger.” Mr. Mason is not expected to elect COBRA continuation coverage under the applicable HomeStreet group health plan in light of his expected continued employment with FirstSun.

Merger-Related Compensation for FirstSun’s Named Executive Officers

 

On March 6, 2024, the Compensation and Succession Committee (the “Committee”) of the board of directors of FirstSun, with approval by the board of directors, granted special restricted stock awards (the “awards”) to certain officers of FirstSun for (i) retention purposes and (ii) to incentivize them in their efforts to work towards

80
 

both a timely and efficient consummation of the mergers and a successful post-closing integration of the two companies. Such awards will be subject to and conditioned upon closing of the mergers, provided that if the closing of the mergers does not occur, such awards will be cancelled and void ab initio. These actions, to the extent they impacted the compensation of FirstSun’s named executive officers, are described in greater detail below.

 

The Committee granted the following awards to the following named executive officers:

 

·114,286 shares of restricted stock to Neal E. Arnold, Chief Executive Officer and President of FirstSun and Sunflower Bank and Chief Operating Officer of the Company, with a grant date fair value of approximately $4.0 million; and

 

·57,143 shares of restricted stock to Robert A. Cafera, Jr., Executive Vice President and Chief Financial Officer of FirstSun and Sunflower Bank, with grant date fair value of approximately $2.0 million.

 

Such awards will vest one-third per year over a three-year period, provided that the officer continues to provide services to FirstSun on the applicable vesting date, with accelerated vesting upon death, disability, or termination by FirstSun without “cause” or by the officer with “good reason” (each as defined in the applicable award agreement).

 

If, prior to the vesting of the awards shares, there is a change of control (as that term is defined in the FirstSun 2021 Equity Incentive Plan, all shares underlying the awards will become vested upon the earlier of (i) the vesting of the awards in accordance with vesting provisions described above; (ii) the one-year anniversary of such change of control; and (iii) the date of termination of the executive officer’s continuous service with FirstSun without “cause” or for “good reason” (as defined in the applicable award agreement), in each case, during the one-year period following such change of control, provided that, in all cases such change of control has been consummated. If the conditions set forth in (i)-(iii) above occur prior to the closing of the mergers with HomeStreet, such conditions will be automatically extended through the date of the mergers with HomeStreet if the mergers with HomeStreet close. 

Governance of the Combined Company After the Mergers

 

Boards of Directors

 

Immediately after the effective time of the second step merger, FirstSun will increase the size of its board of directors for a total of 12 directors, and Mark Mason and two other legacy directors of HomeStreet will be appointed to the board of directors of FirstSun.

 

Immediately after the effective time of the bank merger, Sunflower Bank will increase the size of its board of directors for a total of 12 directors, and Mark Mason and two other legacy directors of HomeStreet will be appointed to the board of directors of Sunflower Bank.

 

Termination of Stockholders’ Agreement

 

FirstSun is party to a Stockholders’ Agreement with its stockholders that, pursuant to the merger agreement, will be terminated at the effective time of the second step merger. Effective as of January 16, 2024, the Stockholders’ Agreement was amended to provide that the Stockholders’ Agreement would terminate automatically and without further action by any party at the effective time of the second step merger.

 

Board Representative Right

 

Pursuant to the Acquisition Finance Securities Purchase Agreement (discussed below), FirstSun and Castle Creek entered into an agreement to provide certain governance and other rights to Castle Creek upon consummation of the closing of the mergers. Among other rights, Castle Creek will initially appoint an observer to the board of directors of FirstSun, and, upon Castle Creek’s request after the earlier of six months or a private equity investor losing a board nomination right pursuant to its existing agreements with FirstSun, Castle Creek

81
 

will receive the right, so long as Castle Creek maintains beneficial ownership of at least 40% of the shares of FirstSun common stock acquired pursuant to the Acquisition Finance Securities Purchase Agreement, to nominate an individual for election or appointment to the board of directors of FirstSun.

 

Investment Agreements

 

Upfront Securities Purchase Agreement

 

Concurrently with the execution of the merger agreement, FirstSun entered into an Upfront Securities Purchase Agreement with certain funds managed by Wellington, pursuant to which, on the terms and subject to the conditions set forth therein, FirstSun sold, and Wellington purchased, for $32.50 per share and an aggregate purchase price of $80 million, approximately 2.46 million shares of FirstSun common stock. This transaction closed on January 17, 2024. Under the terms of the Upfront Securities Purchase Agreement, FirstSun committed to listing FirstSun’s common stock on a national securities exchange, regardless of whether the mergers are consummated. Under the terms of the Upfront Securities Purchase Agreement, FirstSun is obligated to issue to Wellington, upon consummation of the mergers, warrants to purchase approximately 1.15 million shares of FirstSun common stock with such warrants having an initial exercise price of $32.50 per share. The warrants will carry a term of three years, and may be settled on a “net share” basis by applying shares otherwise issuable under the warrants in satisfaction of the exercise price. In the event the mergers are not consummated, no warrants will be issued.

 

In connection with the Upfront Securities Purchase Agreement, FirstSun and Wellington also entered into a Registration Rights Agreement (the “Upfront Registration Rights Agreement”), dated January 16, 2024, pursuant to which FirstSun agreed to provide customary resale registration rights with respect to the shares of FirstSun common stock obtained by Wellington pursuant to the investments, including those issued upon exercise of the warrants.

 

Acquisition Finance Securities Purchase Agreement

 

Concurrently with its entry into the merger agreement, FirstSun entered into an Acquisition Finance Securities Purchase Agreement with Wellington, Castle Creek, and certain other institutional accredited investors. Pursuant to the Acquisition Finance Securities Purchase Agreement, on the terms and subject to the conditions set forth therein, substantially concurrently with the closing of the mergers, such investors will invest an aggregate of $140 million in exchange for the sale and issuance, at a purchase price of $32.50 per share, of approximately 4.31 million shares of FirstSun common stock. Further, FirstSun may offer an additional 461,539 shares of FirstSun common stock, at a purchase price of $32.50 per share, for an additional investment of $15 million from (i) Castle Creek, who has a 30-day window from the execution of the First Amendment to the Acquisition Finance Securities Purchase Agreement to elect to purchase such shares, or (ii) any other investor selected by FirstSun if Castle Creek does not elect to purchase such shares.

The Acquisition Finance Securities Purchase Agreement contemplates that, in connection with the closing of the investments under the Acquisition Finance Securities Purchase Agreement, FirstSun will enter into a resale registration rights agreement with such investors, the material terms and conditions of which are consistent with the terms and conditions of the Upfront Registration Rights Agreement. Under the terms of the Acquisition Finance Securities Purchase Agreement, FirstSun is obligated to undertake reasonable best efforts to consummate the mergers and may not amend, modify, or agree to waive certain terms under the merger agreement without the consent of the Investors. The closing of the investments under the Acquisition Finance Securities Purchase Agreement is conditioned on the substantially concurrent closing of the mergers and other customary closing conditions.

 

The Acquisition Finance Securities Purchase Agreement will automatically terminate upon the valid termination of the merger agreement for any reason. Further, the Acquisition Finance Securities Purchase Agreement may be terminated (i) with the mutual written consent of FirstSun and the applicable investors, (ii) following written notice from either FirstSun or the applicable investor following either (x) the applicable investment closing having not occurred on or prior to January 16, 2025 (which may be extended by three months in certain circumstances set forth in the merger agreement) or (y) certain breaches of the investment agreements

82
 

by the other party (subject to certain exceptions and following applicable cure periods) and (iii) by either FirstSun or the applicable investor if any required approval (as defined in the Acquisition Finance Securities Purchase Agreement) is required or the failure of which to obtain would reasonably be expected to have a material adverse effect on FirstSun, has been denied, with such denial becoming final and not subject to appeal, and (iv) by either FirstSun or the applicable investor (with respect to itself only) upon written notice to the other, if a statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Acquisition Finance Securities Purchase Agreement, with such legal action becoming final and not subject to appeal.

 

Under the Acquisition Finance Securities Purchase Agreement, FirstSun may not, without the prior written consent of the investors, (a) amend, modify or agree to waive certain sections in the merger agreement relating to (i) the exchange ratio, (ii) the definition of a materially burdensome condition, (iii) the amended and restated certificate of incorporation, as amended under the merger agreement, and the bylaws of FirstSun each remain in effect following the mergers, (iv) each share of FirstSun common stock issued and outstanding immediately prior to the second step merger shall remain issued and outstanding after the second step merger (v) certain prohibited (A) adjustments, splits, combinations or reclassifications of capital stock by either party, (B) make, declare or pay certain dividends, (C) certain equity issuances by either party, (D) dispositions by either party of its material properties or assets, and (E) material restructuring or changes by either party of its investment securities or derivatives portfolio or its interest rate exposure, in each case, prior to the mergers closing, (vi) the conditions to the mergers closing and (vi) the provisions governing termination and amendment of the merger agreement, and (b) except with respect to any matter that is otherwise expressly permitted by certain exceptions to the foregoing clause (a), amend, modify or agree to any waiver of any term or provision in the merger agreement (including any of the exhibits or schedules thereto) which is not operational in nature and which would change the nature or amount of the consideration payable to HomeStreet’s equity holders under the merger agreement.

 

The foregoing description of the transactions contemplated by the investment agreements does not purport to be complete and is qualified in its entirety by reference to the full text of such investment agreement.

 

Public Trading Market and No Restrictions on Resale

 

FirstSun common stock is currently quoted on the OTCQX® Best Market operated by the OTC Markets under the symbol “FSUN”, and as a closing condition to the mergers and undertakings in the Upfront Securities Purchase Agreement, FirstSun will uplist its common stock to Nasdaq regardless of the mergers being consummated. Upon completion of the mergers, HomeStreet common stock will be delisted from Nasdaq and thereafter will be deregistered under the Exchange Act and HomeStreet will no longer be required to file periodic reports with the SEC with respect to the HomeStreet common stock.

 

All FirstSun common stock received by HomeStreet shareholders in the mergers will be freely tradable for purposes of the Securities Act and the Exchange Act, except for FirstSun common stock received by any HomeStreet shareholder who becomes an “affiliate” of FirstSun after completion of the mergers. This proxy statement/prospectus does not cover resales of FirstSun common stock received by any person upon completion of the mergers, and no person is authorized to make any use of this proxy statement/prospectus in connection with any resale.

 

Litigation Relating to the Mergers

 

On April 11, 2024, a putative shareholder of HomeStreet filed a complaint related to the transaction in the U.S. District Court for the Southern District of New York (the “complaint”). The action is captioned as Marsha Ederer v. HomeStreet, Inc. et al., No. 24-cv-02748. In addition to the complaint, five purported shareholders of HomeStreet sent demand letters (together with the complaint, the “demands”) alleging statements made in the proxy statement/prospectus filed with the SEC on March 8, 2024 were materially incomplete and misleading. HomeStreet believes all such demands are without merit and vigorously disputes these allegations. The complaint named as defendants HomeStreet and the HomeStreet board of directors. The complaint alleges, among other

83
 

things, that the proxy statement/prospectus filed with the SEC on March 8, 2024 in connection with the merger agreement was materially incomplete and misleading. This, according to the complaint, violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder and Section 20(a) of the Exchange Act. The complaint seeks, among other things: (i) an injunction enjoining the mergers, (ii) rescission or rescissory damages in the event the mergers contemplated by the merger agreement are consummated, (iii) direction that defendants cause a revised proxy statement/prospectus to be disseminated, (iv) costs of the action, including plaintiffs’ attorneys’ fees and experts’ fees, and (v) other relief the court may deem just and proper. This amended proxy statement/prospectus includes additional disclosures concerning the proposed mergers. The complaint remains pending, but no defendant in the case has been served, and the plaintiff has taken no additional steps to pursue the litigation.

 

Additional lawsuits arising out of the mergers may be filed in the future. There can be no assurance that any of the defendants will be successful in the outcome of any pending or any potential future lawsuits. HomeStreet and FirstSun believe that the demands are without merit and intend to defend vigorously against the demands described above and any other future demands challenging the mergers. If additional similar complaints are filed or demands sent, absent new or significantly different allegations, HomeStreet or FirstSun will not necessarily disclose such additional filings or demands.

 

Regulatory Approvals Required for the Mergers

 

Completion of the mergers is subject to the receipt of all approvals, consents, non-objections and waivers required to complete the transactions contemplated by the merger agreement from applicable governmental and regulatory authorities, and the expiration of any applicable statutory waiting periods, in each case, without the imposition of a condition or restriction that would reasonably be expected to have a material adverse effect on the combined company. Subject to the terms and conditions of the merger agreement, FirstSun and HomeStreet have agreed to use their commercially reasonable efforts and cooperate to promptly prepare and file, or cause to be prepared and filed, all necessary documentation, to obtain as promptly as practicable all regulatory approvals necessary or advisable to complete the transactions contemplated by the merger agreement, and to comply with the terms and conditions of all such approvals.

 

Federal Reserve

 

Completion of the mergers is subject to, among other things, approval by the Federal Reserve pursuant to Section 3 of the Bank Holding Company Act of 1956, which we refer to as the BHC Act. In considering the approval of an application under Section 3 of the BHC Act, the Federal Reserve reviews certain factors, including: (i) the competitive impact of the transaction, (ii) the financial and managerial resources of the bank holding companies and banks involved (including consideration of capital adequacy, liquidity, and earnings performance; the competence, experience, and integrity of the officers, directors, and principal shareholders; and the records of compliance with applicable laws and regulations) and the future prospects of the combined organization (including consideration of the current and projected capital positions and levels of indebtedness), (iii) the convenience and needs of the communities to be served, (iv) the effectiveness of the companies in combating money laundering, and (v) the extent to which the proposal would result in greater or more concentrated risks to the stability of the United States banking or financial system.

 

In considering an application under Section 3 of the BHC Act, the Federal Reserve also reviews the records of performance of the relevant insured depository institutions under the Community Reinvestment Act of 1977, which we refer to as the CRA. In addition, in connection with an interstate merger transaction, the Federal Reserve considers certain additional factors under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, including the capital position of the acquiring bank holding company, state laws regarding the minimum age of the bank to be acquired, the concentration of deposits on a nationwide and statewide basis, and compliance with any applicable state community reinvestment and antitrust laws.

 

84
 

Additionally, due to Sunflower Bank’s conversion from a national banking association to a Texas state-chartered bank, which will be a member of the Federal Reserve, the prior approval of the OCC will not be required, instead, the prior approval of the Federal Reserve under the Bank Merger Act is required for the merger of HomeStreet Bank with and into Sunflower Bank. In reviewing applications under the Bank Merger Act, the Federal Reserve must consider a number of factors, including: (i) the competitive impact of the transaction; (ii) the financial condition and future prospects, including capital positions and managerial resources of the institutions, on both a current and pro forma basis; (iii) the convenience and needs of the communities to be served and the record of the insured depository institution subsidiaries of the bank holding companies under the CRA; (iv) the effectiveness of the companies and the depository institutions concerned in combating money laundering activities; and (v) the extent to which the proposal would result in greater or more concentrated risks to the stability of the U.S. banking or financial system.

 

Public Comments and Notice

 

Furthermore, the BHC Act, the Bank Merger Act, and Federal Reserve regulations require published notice of, and the opportunity for public comment on, the applications to the Federal Reserve, and authorize the Federal Reserve to hold a public hearing or meeting if the Federal Reserve determines that a hearing or meeting would be appropriate. The Federal Reserve takes into account the views of third-party commenters, particularly on the subject of the merging parties’ CRA performance and record of service to their communities. As part of the review process in merger transactions, the Federal Reserve frequently receives protests from community groups

and others. Any hearing, meeting or comments provided by third parties could prolong the period during which the applicable application is under review by the Federal Reserve. As of their last respective CRA examinations, Sunflower Bank received an overall “satisfactory,” and HomeStreet Bank received an overall “satisfactory,” regulatory rating with respect to CRA compliance.

Waiting Periods

Transactions approved under Section 3 of the BHC Act or the Bank Merger Act generally may not be completed until 30 days after the approval of the applicable federal agency is received, during which time the Department of Justice, which we refer to as the DOJ, may challenge the transaction on antitrust grounds. With the approval of the applicable federal agency and the concurrence of the DOJ, the waiting period may be reduced to no less than 15 days. The commencement of an antitrust action would stay the effectiveness of such an approval unless a court specifically ordered otherwise. In reviewing the merger, the DOJ could analyze the merger’s effect on competition differently than the Federal Reserve, and thus it is possible that the DOJ could reach a different conclusion than the Federal Reserve regarding the merger’s effects on competition. A determination by the DOJ not to object to the mergers may not prevent the filing of antitrust actions by private persons or state attorneys general. There can be no assurance if and when DOJ clearance will be obtained, or as to the conditions or limitations that such DOJ approval may contain or impose.

Additional Regulatory Approvals and Notices

HomeStreet Bank is regulated by the Washington Department of Financial Institutions, which we refer to as the WDFI. As required by Washington law, a joint holding company application was filed with the WDFI. As further required by Washington law, FirstSun filed a notice of the bank merger with the WDFI. Additionally, in connection with Sunflower Bank’s conversion from a national banking association to a Texas state-chartered bank that is a member of the Federal Reserve, the conversion and the bank merger requires the approval of the Texas Department of Banking. Accordingly, Sunflower Bank will file applications with the Texas Department of Banking with respect to such conversion and the bank merger and with the Federal Reserve with respect to its membership in the Federal Reserve System and the bank merger.

85
 

Notifications and/or applications requesting approval may be submitted to various other federal and state regulatory authorities and self-regulatory organizations. Fannie Mae’s consent will be required in order to assign the origination and servicing of multifamily mortgage loans under the Fannie Mae DUS program from HomeStreet to FirstSun.

Based on information available to us as of the date hereof, FirstSun and HomeStreet believe that neither the mergers nor the bank merger raises substantial antitrust or other significant regulatory concerns and that we will be able to obtain all requisite regulatory approvals. However, neither FirstSun nor HomeStreet can assure you that all of the regulatory approvals described above will be obtained and, if obtained, we cannot assure you as to the timing of any such approvals, each party’s ability to obtain the approvals on satisfactory terms, or the absence of any litigation challenging such approvals. In addition, there can be no assurance that such approvals will not impose conditions or requirements that would reasonably be expected to have a material adverse effect on the financial condition, results of operations, assets or business of the combined company and its subsidiaries, taken as a whole, after giving effect to the mergers. There can likewise be no assurances that U.S. federal or state regulatory authorities will not attempt to challenge the merger on antitrust grounds or for other reasons, or if such a challenge is made, as to the result of such a challenge.

If there is an adverse development in either party’s regulatory standing, FirstSun may be required to withdraw some or all of its application for approval of the mergers and the bank merger, and, if possible, resubmit it after the applicable supervisory concerns have been resolved.

86
 

THE MERGER AGREEMENT

 

This section of the proxy statement/prospectus describes the material terms of the merger agreement. The description in this section and elsewhere in this proxy statement/prospectus is subject to, and qualified in its entirety by reference to, the complete text of the merger agreement, which is attached as Annex A to this document and incorporated by reference herein. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. We urge you to read the full text of the merger agreement, as it is the legal document governing the mergers. This section is not intended to provide you with any factual information about FirstSun or HomeStreet. Such information can be found elsewhere in this proxy statement/prospectus and in the public filings FirstSun and HomeStreet make with the SEC as described in the section entitled “Where You Can Find More Information” beginning on page ii of this proxy statement/prospectus.

 

Explanatory Note Regarding the Merger Agreement and the Investment Agreements

 

The merger agreement, the investment agreements and the applicable summaries of terms in this document are included to provide you with information regarding the terms of the merger agreement and the investment agreements. Factual disclosures about FirstSun and HomeStreet contained in this proxy statement/prospectus or in the public reports of FirstSun or HomeStreet filed with the SEC may supplement, update or modify the factual disclosures about FirstSun and HomeStreet contained in the merger agreement and the investment agreements. The merger agreement contains representations and warranties by HomeStreet, on the one hand, and representations and warranties by FirstSun on the other hand, made solely for the benefit of the other. The representations, warranties and covenants made in the merger agreement by HomeStreet and FirstSun were qualified and subject to important limitations agreed to by HomeStreet and FirstSun in connection with negotiating the terms of the merger agreement. The investment agreements contain representations, warranties and covenants by FirstSun and the applicable investor, and were qualified and subject to important limitations agreed to by FirstSun and each applicable investor in connection with negotiating the terms of each applicable investment agreement. In particular, in your review of the representations and warranties contained in the merger agreement and the investment agreements and described in the applicable summaries in this document, it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of establishing circumstances in which a party to the merger agreement and the applicable investment agreement may have the right not to consummate the mergers or its applicable investment if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating certain risk between the parties to the merger agreement and each applicable investment agreement, rather than establishing matters as facts. The representations and warranties also may be subject to a contractual standard of materiality different from that generally applicable to stockholders and reports and documents filed with the SEC, and some were qualified by the matters contained in the confidential disclosure schedules that FirstSun and HomeStreet each delivered in connection with the merger agreement and that FirstSun delivered to the applicable investor in connection with each applicable investment agreement and by certain documents filed with the SEC. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the merger agreement and each applicable investment agreement. Accordingly, the representations and warranties in the merger agreement and each applicable investment agreement should not be relied on by any persons as characterizations of the actual state of facts about FirstSun and HomeStreet (or the applicable investors) at the time they were made or otherwise and should be read only in conjunction with the other information provided elsewhere in this proxy statement/prospectus, and in the documents incorporated by reference into this proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information.”

 

Structure of the Mergers

 

Each of FirstSun’s and HomeStreet’s board of directors has unanimously approved and adopted the merger agreement. Under the merger agreement, Merger Sub will merge with and into HomeStreet, with HomeStreet remaining as the surviving entity and becoming a wholly-owned subsidiary of FirstSun, in a transaction we refer to as the “merger.” As set forth in the merger agreement, this surviving entity, immediately following the

87
 

merger and as part of a single integrated transaction, will merge with and into FirstSun, in a transaction we refer to as the “second step merger,” and together with the merger, as the “mergers.” Immediately following the completion of the second step merger, HomeStreet’s wholly-owned subsidiary, HomeStreet Bank, will merge with and into FirstSun’s wholly-owned subsidiary, Sunflower Bank, with Sunflower Bank as the surviving bank, in a transaction we refer to as the “bank merger.”

 

88
 

 

  *Wellington’s ownership does not include the warrants (which are described in the section entitled “The Merger—Investment Agreements”).
  **Castle Creek and Other Investors’ ownership includes the additional capital raise of $15 million, or 461,539 shares of FirstSun common stock at a purchase price of $32.50 per share, provided to investors under the Acquisition Finance Securities Purchase Agreement.

 

At any time prior to the effective time of the merger, HomeStreet and FirstSun may, by mutual agreement, change the method or structure of effecting the combination of HomeStreet and FirstSun (including the mergers), if and to the extent they both deem such change to be necessary, appropriate or desirable; provided, however, that no such change may (i) alter or change the exchange ratio or the number of shares of FirstSun common stock to be received by HomeStreet shareholders in exchange for each share of HomeStreet common stock, (ii) adversely affect the tax treatment of the HomeStreet shareholders or the FirstSun stockholders pursuant to the merger agreement, (iii) adversely affect the tax treatment of HomeStreet or FirstSun pursuant to the merger agreement or (iv) materially impede or delay the consummation of the transactions contemplated by the merger agreement in a timely manner.

 

Merger Consideration

 

If the mergers are completed, each issued and outstanding share of HomeStreet common stock immediately prior to the effective time will be converted into the right to receive 0.3867 shares of FirstSun common stock, except for (i) treasury stock and (ii) shares owned by HomeStreet or FirstSun, in each case, other than those held in certain accounts or a fiduciary or agency capacity that are beneficially owned by third parties, shares held by HomeStreet or FirstSun in respect of debts previously contracted, which will be cancelled, and shares held by shareholders who properly exercise dissenters’ rights.

 

Treatment of Fractional Shares

 

No fractional shares of FirstSun common stock will be issued in the mergers, no dividend or distribution with respect to FirstSun common stock will be payable on or with respect to any fractional share, and such fractional share interests will not entitle the owner thereof to vote or to any other rights of a FirstSun stockholder. In lieu of the issuance of any such fractional share, FirstSun will pay to each former HomeStreet shareholder who otherwise would be entitled to receive such fractional share an amount in cash rounded to the nearest cent. This cash amount will be determined by multiplying (i) $35.00 by (ii) the fraction of a share (after taking into account all shares of HomeStreet common stock held by such holder immediately prior to the effective time and rounded to the nearest one-thousandth when expressed in decimal form) of FirstSun common stock which such holder would otherwise be entitled to receive pursuant to the merger agreement. 

89
 

Surviving Entity Organizational Documents

 

At the effective time, the FirstSun charter, as amended in accordance with the merger agreement, as in effect immediately prior to the effective time of the second step merger, will be the charter of the combined company. At the effective time, the FirstSun bylaws, as in effect immediately prior to the effective time of the second step merger, will be the bylaws of the combined company.

 

Treatment of HomeStreet Equity Awards

 

Upon completion of the mergers, outstanding HomeStreet equity awards will be treated as follows:

 

·at the effective time, the merger agreement provides that each outstanding Pre-2024 HomeStreet RSU, and each outstanding HomeStreet PSU, will automatically accelerate, be cancelled and entitle the holder to receive, no later than three business days after the effective time, (i) a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the Pre-2024 HomeStreet RSU or HomeStreet PSU immediately prior to the effective time (for HomeStreet PSUs, based on target performance) multiplied by (y) the exchange ratio, plus, (ii) an amount in cash equal to the amount of all dividends, if any, accrued but unpaid as of the effective time with respect to such Pre-2024 HomeStreet RSU or HomeStreet PSU; and

 

·at the effective time, the merger agreement provides that each outstanding 2024 HomeStreet RSU will automatically be converted into a Converted RSU Award in respect of a number of shares of FirstSun common stock equal to (x) the number of shares of HomeStreet common stock subject to the 2024 HomeStreet RSU immediately prior to the effective time multiplied by (y) the exchange ratio. Each Converted RSU Award will be subject to the same terms and conditions, including payment of accrued dividends upon vesting, as applied to the corresponding 2024 HomeStreet RSU immediately prior to the effective time, provided that time-based vesting conditions will accelerate upon the earlier of (a) a termination of employment of the applicable holder of such Converted RSU Award without Cause or for Good Reason (each as defined in the 2014 Plan and 2024 HomeStreet RSU), (b) the date on which the system conversion of the banking operations of FirstSun and HomeStreet is completed (or up to 30 days thereafter, at FirstSun’s discretion), (c) six months from the closing date or (d) any earlier vesting date or event required by the 2024 HomeStreet RSU prior to the effective time.

 

For more detail on the Pre-2024 HomeStreet RSUs, HomeStreet PSUs and 2024 HomeStreet RSUs of HomeStreet executive officers, see the section entitled “The Merger—Interests of HomeStreet’s Directors and Executive Officers in the Mergers.”

 

Closing and Effective Time of the Mergers

 

The mergers will be completed only if all conditions to the mergers discussed in this proxy statement/prospectus and set forth in the merger agreement are either satisfied or waived (subject to applicable law). Please see “—Conditions to Complete the Mergers.”

The merger will become effective as set forth in the certificate of merger to be filed with the Secretary of State of the State of Washington. The closing of the merger will take place on a date no later than the first day of the first calendar month after the satisfaction or waiver (subject to applicable law) by the party entitled to the benefit thereof of the latest to occur of the conditions set forth in the merger agreement, unless extended by mutual agreement of the parties.

On the date of the completion of the merger and immediately following the effective time of the merger, FirstSun will cause HomeStreet, as the interim surviving entity in the merger, to be merged with and into FirstSun, with FirstSun surviving the second step merger. To effect the second step merger, FirstSun will cause to be filed articles of merger with the Washington Secretary of State in accordance with the WCBA and a certificate

90
 

of ownership and merger with the Delaware Secretary of State in accordance with the DGCL (collectively, the “second step certificates of merger”). The second step merger will become effective as of the date and time set forth in the second step certificates of merger.

It currently is anticipated that the completion of the mergers will occur in late 2024 subject to the receipt of HomeStreet shareholder approval, regulatory approvals and other customary closing conditions, but neither FirstSun nor HomeStreet can guarantee when or if the mergers will be completed.

Exchange of Shares

 

Exchange Procedures

 

As promptly as practicable after the effective time, but in no event later than ten days thereafter, FirstSun and HomeStreet will cause the exchange agent to mail to each holder of record of one or more old certificates (which, for purposes of this proxy statement/prospectus, will be deemed to include certificates or book-entry account statements) representing shares of HomeStreet common stock immediately prior to the effective time a letter of transmittal and instructions for use in effecting the surrender of such old certificates in exchange for new certificates (which, for purposes of this proxy statement/prospectus, will be deemed to include certificates or, at FirstSun’s option, evidence in book-entry form) representing the number of whole shares of FirstSun common stock and any cash in lieu of fractional shares which the shares of HomeStreet common stock represented by such old certificates will have been converted into the right to receive pursuant to the merger agreement, as well as any dividends or distributions to be paid as described in “—Dividends and Distributions” below.

 

If an old certificate for HomeStreet common stock has been lost, stolen or destroyed, the exchange agent will issue the merger consideration upon (i) the making of an affidavit of that fact by the claimant and (ii) if required by FirstSun or the exchange agent, the posting by such person of a bond in such amount as FirstSun or the exchange agent may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such old certificate.

 

After the effective time, there will be no further transfers on the stock transfer books of HomeStreet of the shares of HomeStreet common stock that were issued and outstanding immediately prior to the effective time.

 

Withholding

 

FirstSun will be entitled to deduct and withhold, or cause the exchange agent to deduct and withhold, from any cash in lieu of fractional shares of HomeStreet common stock, any cash dividends or distributions payable pursuant to the merger agreement or any other consideration otherwise payable pursuant to the merger agreement to any holder of HomeStreet common stock, or HomeStreet equity awards, the amounts as it is required to deduct and withhold with respect to the making of such payment under the Code or any provision of federal, state, local, or foreign tax law. If any such amounts are so withheld by FirstSun or the exchange agent, as the case may be, and paid over to the appropriate governmental entity, such amounts will be treated for all purposes of the merger agreement as having been paid to the holder of HomeStreet common stock or HomeStreet equity awards in respect of which the deduction and withholding was made by FirstSun or the exchange agent, as the case may be.

 

Dividends and Distributions

 

No dividends or other distributions declared with respect to FirstSun common stock will be paid to the holder of any unsurrendered old certificate of HomeStreet common stock until the holder surrenders such old certificate in accordance with the merger agreement. After the surrender of an old certificate in accordance with the merger agreement, the record holder thereof will be entitled to receive any such dividends or other distributions, without any interest, which had previously become payable with respect to the whole shares of FirstSun common stock that the shares of HomeStreet common stock represented by such old certificate have been converted into the right to receive under the merger agreement.

91
 

Representations and Warranties

 

The merger agreement contains representations and warranties made by each of FirstSun and HomeStreet relating to a number of matters, including the following:

·corporate matters, including due organization and qualification and subsidiaries;
·capitalization;
·authority relative to execution and delivery of the merger agreement and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the merger;
·required governmental and other regulatory filings and consents and approvals in connection with the merger;
·reports to regulatory authorities;
·financial statements, internal controls, books and records, and the absence of undisclosed liabilities;
·broker’s fees payable in connection with the mergers;
·the absence of certain effects, changes, events, circumstances, conditions, occurrences or developments;
·the conduct of the business in the ordinary course;
·legal and regulatory proceedings;
·tax matters, including the absence of action or circumstance that would prevent or impede the mergers from qualifying as a “reorganization” under Section 368(a) of the Code;
·employee, labor and employee benefit plan matters;
·SEC reports;
·compliance with applicable laws, cybersecurity matters and fiduciary duties;
·certain contracts;
·absence of agreements with regulatory authorities;
·environmental matters;
·investment securities;
·derivative instruments and transactions;
·real property;
·intellectual property;
·related-party transactions;
·inapplicability of takeover statutes;
·the receipt of opinions from each party’s respective financial advisor;
·the accuracy of information supplied for inclusion in this proxy statement/prospectus and other similar documents filed with governmental entities;
92
 
·loan matters;
·operation or the absence of broker-dealer, investment advisor and insurance business; and
·insurance matters.

 

The merger agreement contains additional representations and warranties made by FirstSun with respect to:

 

·investment agreement matters; and
·investment advisory subsidiary matters.

 

The representations and warranties in the merger agreement are (i) subject, in some cases, to specified exceptions and qualifications contained in the confidential disclosure schedules delivered by HomeStreet and FirstSun, respectively, and (ii) qualified by the reports of HomeStreet or FirstSun, as applicable, publicly filed with the SEC during the period from January 1, 2022 through the execution and delivery of the merger agreement (excluding, in each case, any risk factor disclosures in the risk factor section or any “forward-looking statements” disclaimer or any other statements that are similarly non-specific or cautionary, predictive or forward-looking in nature).

Certain representations and warranties of FirstSun and HomeStreet are qualified as to knowledge, “materiality” or “material adverse effect.” For purposes of the merger agreement, a “material adverse effect,” means, with respect to HomeStreet, FirstSun or Merger Sub, any effect, change, event, circumstance, condition, occurrence or development that, either individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (i) the business, properties, assets, liabilities, results of operations or financial condition of such party and its subsidiaries taken as a whole or (ii) the ability of such party to timely consummate the transactions contemplated by the merger agreement.

However, with respect to clause (i) above, material adverse effect shall not be deemed to include the impact of:

·changes, after the date of the merger agreement, in U.S. GAAP or applicable regulatory accounting requirements;
·changes, after the date of the merger agreement, in laws, rules or regulations (including any pandemic measures) of general applicability to companies in the industries in which such party and its subsidiaries operate, or interpretations thereof by courts or governmental entities;

 

·changes, after the date of the merger agreement, in global, national or regional political conditions (including the outbreak, continuation or escalation of any acts of war (whether or not declared), acts of terrorism, sabotage or military actions) or any pandemic or economic or market (including equity, credit and debt markets, as well as changes in interest rates) conditions affecting the financial services industry generally and not specifically relating to such party or its subsidiaries (including any such changes arising out of pandemics);

 

·changes, after the date of the merger agreement, resulting from hurricanes, earthquakes, tornados, floods or other natural disasters or from any outbreak of any disease or other public health event or emergencies (including any pandemic);

 

·public disclosure of the transactions contemplated by the merger agreement or actions expressly required by the merger agreement or that are taken with the prior written consent of the other party in contemplation of the transactions contemplated by the merger agreement; or

 

·a decline in the trading price of a party’s common stock or the failure, in and of itself, to meet earnings projections or internal financial forecasts, but not, in either case, including any underlying causes thereof;

 

except, with respect to the bullet points described above, to the extent that the effects of such change are materially disproportionately adverse to the business, properties, assets, liabilities, results of operations or financial condition

93
 

of such party and its subsidiaries, taken as a whole, as compared to other companies in the industry in which such party and its subsidiaries operate.

 

The representations and warranties in the merger agreement do not survive the effective time.

 

Covenants and Agreements

 

Conduct of Business Prior to the Completion of the Mergers

 

Prior to the closing (or earlier termination of the merger agreement), except as expressly contemplated or permitted by the merger agreement (including as set forth in the confidential disclosure schedules), as required by law or as consented to in writing by the other party (such consent not to be unreasonably withheld, conditioned or delayed), each of FirstSun, Merger Sub and HomeStreet will, and will cause its subsidiaries to, (a) conduct its business in the ordinary course in all material respects, (b) use reasonable best efforts to maintain and preserve intact its business organization and advantageous business relationships, and (c) take no action that would reasonably be expected to adversely affect or materially delay the ability of FirstSun, Merger Sub or HomeStreet to obtain any necessary approvals of any regulatory agency or other governmental entity required for the transactions contemplated by the merger agreement or to perform its respective covenants and agreements under the merger agreement or to consummate the transactions contemplated thereby on a timely basis. Notwithstanding the foregoing (other than with respect to covenants regarding its capital stock and benefit plans), a party and its subsidiaries may take any commercially reasonable actions that such party reasonably determines are necessary or prudent for it to take or not take in response to a pandemic or any related pandemic measures, provided, that such party will provide prior notice to and consult in good faith with the other party to the extent such actions would otherwise require the other party’s consent.

 

Additionally, prior to the closing (or earlier termination of the merger agreement), except as expressly contemplated or permitted by the merger agreement (including as set forth in the confidential disclosure schedules) or as required by law, neither HomeStreet nor FirstSun will, and neither HomeStreet nor FirstSun will permit any of its respective subsidiaries to, without the prior written consent of the other party to the merger agreement (such consent not to be unreasonably withheld, conditioned or delayed), take any of the following actions:

·other than (i) federal funds borrowings (including under the Federal Reserve Bank Term Funding Program (“BTFP”) and Federal Home Loan Bank borrowings, in each case with a maturity not in excess of two years, (ii) the creation of deposit liabilities (including reciprocal and brokered deposits), (iii) issuances of letters of credit, (iv) purchases of federal funds, (v) sales of certificates of deposit and (vi) entry into repurchase agreements, in each case in the ordinary course of business, incur any indebtedness for borrowed money (other than indebtedness of FirstSun or any of its wholly owned subsidiaries to FirstSun or any of its wholly owned subsidiaries, on the one hand, or of HomeStreet or any of its wholly owned subsidiaries to HomeStreet or any of its wholly owned subsidiaries, on the other hand), or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, corporation or other entity;
·adjust, split, combine or reclassify any capital stock;
·make, declare, pay or set a record date for any dividend, or any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its capital stock or other equity or voting securities or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) or exchangeable into or exercisable for any shares of its capital stock or other equity or voting securities, except, in each case, (i) regular quarterly cash dividends by HomeStreet at a rate not in excess of $0.10 per share of HomeStreet common stock, (ii) dividends paid by any of the subsidiaries of each of FirstSun and HomeStreet to FirstSun or HomeStreet or any of their wholly owned subsidiaries, respectively, (iii) regular distributions or dividends provided for and paid on any preferred securities (including trust preferred securities) of FirstSun, HomeStreet or their respective subsidiaries in accordance with the terms thereof or (iv) the acceptance of shares of
94
 
  HomeStreet common stock or FirstSun common stock, as the case may be, as payment for withholding taxes incurred in connection with the vesting or settlement of equity compensation awards, in each case, in accordance with past practice and the terms of the applicable award agreements;
·except, in the case of FirstSun and the 2024 HomeStreet RSUs, pursuant to the equity financing and in accordance with the investment agreements, grant any stock options, stock appreciation rights, performance shares, restricted stock units, performance stock units, phantom stock units, restricted shares or other equity-based awards or interests, or grant any person any right to acquire any shares of capital stock or other securities of HomeStreet or FirstSun or any of their respective subsidiaries;
·except, in the case of FirstSun, pursuant to the equity financing and in accordance with the investment agreements, issue, sell, transfer, encumber or otherwise permit to become outstanding any shares of capital stock or voting securities or equity interests or securities convertible (whether currently convertible or convertible only after the passage of time of the occurrence of certain events) or exchangeable into, or exercisable for, any shares of its capital stock or other equity or voting securities, including any HomeStreet capital stock or any capital stock of any HomeStreet subsidiary, in the case of HomeStreet, or FirstSun capital stock or any capital stock of any FirstSun subsidiary, in the case of FirstSun, or any options, warrants, or other rights of any kind to acquire any shares of capital stock or other equity or voting securities, including any HomeStreet capital stock or any capital stock of any HomeStreet subsidiary, in the case of HomeStreet, or FirstSun capital stock or any capital stock of any FirstSun subsidiary, in the case of FirstSun, except pursuant to the settlement of equity compensation awards in accordance with their terms and the payment of director fees as set forth in HomeStreet’s director compensation program (with respect to HomeStreet) or FirstSun’s director compensation program (with respect to FirstSun);
·sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties or assets (other than intellectual property) to any individual, corporation or other entity other than a wholly owned subsidiary, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, in each case other than in the ordinary course of business or pursuant to contracts or agreements in force at the date of the merger agreement;
·sell, assign, license, transfer or otherwise dispose of, cancel, abandon or allow to lapse or expire any material intellectual property owned by HomeStreet, FirstSun or any of their respective subsidiaries, except for (i) non-exclusive licenses granted in the ordinary course of business or (ii) cancellations, abandonments, lapses or expirations of intellectual property at the end of such intellectual property’s statutory term;
·except for foreclosure or acquisitions of control in a fiduciary or similar capacity or in satisfaction of debts previously contracted in good faith in the ordinary course of business, make any material investment in or acquisition of (whether by purchase of stock or securities, contributions to capital, property transfers, merger or consolidation, or formation of a joint venture or otherwise) any other person or the property or assets of any other person, in each case other than a wholly owned subsidiary of FirstSun or HomeStreet, as applicable;

 

·except, in the case of FirstSun, pursuant to the equity financing and in accordance with the investment agreements, and except for transactions in the ordinary course of business, terminate, materially amend, or waive any material provision of, any material contract or make any change in any instrument or agreement governing the terms of any of its securities, other than normal renewals of contracts without material adverse changes of terms with respect to HomeStreet or FirstSun, as the case may be, or enter into any contract that would constitute a material contract, as the case may be, if it were in effect on the date of the merger agreement;
95
 
·except as required under applicable law or the terms of any FirstSun benefit plan or HomeStreet benefit plan existing as of the date of the merger agreement, as applicable, (i) enter into, establish, adopt, materially amend or terminate any benefit plan, or any arrangement that would be a benefit plan if in effect on the date of the merger agreement, other than (x) in the ordinary course of business consistent with past practice and (y) as would not reasonably be expected to materially increase the cost of benefits under any FirstSun benefit plan or HomeStreet benefit plan, (ii) increase the compensation or benefits payable to any current or former employee, officer, director or individual consultant, other than increases to current employees and officers (x) in connection with a promotion or change in responsibilities and to a level consistent with similarly situated peer employees, (y) in the ordinary course of business consistent with past practice, or (z) consisting of the payment of incentive compensation for completed performance periods based upon actual performance pursuant to the applicable FirstSun benefit plan or HomeStreet benefit plan, (iii) accelerate the vesting of any equity-based awards or other compensation, (iv) become a party to, establish, adopt, amend, commence participation in or terminate any collective bargaining agreement or other agreement with a labor union, works council or similar organization, or (v) notwithstanding clauses (i) or (ii), for employees who are executive officers, enter into any new, or materially amend or terminate any existing, employment, severance, change in control or similar agreement;
·settle any material claim, suit, action or proceeding, except involving solely monetary remedies in an amount, individually and in the aggregate, that is not material to HomeStreet or FirstSun, as applicable, and that would not impose any material restriction on, or create any adverse precedent that would be material to, the business of it or its subsidiaries