Press Release Details

DENVER--(BUSINESS WIRE)-- FirstSun Capital Bancorp (“FirstSun”) reported net income of $0.4 million for the second quarter of 2022, compared to net income of $7.7 million in the prior quarter and $11.3 million in the second quarter of 2021. Earnings per diluted share was $0.02 for the second quarter of 2022, compared to $0.41 in the prior quarter and $0.60 in the second quarter of 2021. Earnings for the second quarter of 2022 were impacted by the completion of our previously announced merger with Pioneer and the $16.8 million in merger costs, net of tax or $0.66 per diluted share.

Neal Arnold, FirstSun’s President and Chief Executive Officer, commented, “We are pleased with our continued progress this quarter, including organic loan growth and our growth in core returns, which excludes merger related expenses. The macro rate environment continues to impact our overall mortgage banking trends; however, we believe the strength of our diversified revenue mix will continue to position us well moving forward. Our loan portfolio continues to perform well and we remain focused on our credit quality. We expanded our business with the April 1st closing of the Pioneer merger and look forward to introducing all of our products and services to our new customers. We are actively working on the full integration of the Pioneer business following our successful completion of the system conversion during the second quarter. Our Southwest markets have exhibited strong economic growth and we look forward to our future growth across each of our markets.”

Second Quarter 2022 Results

Net income totaled $0.4 million, or $0.02 per diluted share, during the second quarter of 2022, compared to $7.7 million, or $0.41 per diluted share, during the prior quarter. Net income in the second quarter of 2022 included $16.8 million in merger costs, net of tax. The return on average assets was 0.02% in the second quarter of 2022, compared to 0.54% in the prior quarter and 0.82% in the second quarter of 2021, and the return on average equity was 0.22% in the second quarter of 2022, compared to 5.85% in the prior quarter and 8.82% in the second quarter of 2021. The negative impact in the second quarter of 2022 of merger costs to return on average assets was 0.94% and to return on average equity was 8.66%.

Net Interest Income and Net Interest Margin

Net interest income totaled $58.6 million during the second quarter of 2022, an increase of $17.3 million compared to the prior quarter. Our net interest margin increased 48 basis points to 3.56% compared to the prior quarter. Results in the second quarter of 2022, compared to the prior quarter, were driven by an increase of 52 basis points in yield on earning assets, and an increase of four basis points in the cost of interest-bearing liabilities, primarily due to the rising interest rate environment. Driven primarily by the completion of the Pioneer merger, average loans grew by $1.1 billion, and average investment securities grew $68.8 million in the second quarter of 2022, compared to the prior quarter. Total loan yield including loans held-for-sale increased by 39 basis points in the second quarter of 2022, compared to the prior quarter, primarily due to the rising interest rate environment, and to a lesser extent, the impact of the accretion of net loan discounts related to our Pioneer merger. Investment securities yield increased by 49 basis points in the second quarter of 2022, compared to the prior quarter, primarily due to higher yielding acquired securities from the Pioneer merger and the slowing prepayment speeds on the existing portfolio. Our total cost of deposits increased by two basis points to 0.21% in the second quarter of 2022, compared to the prior quarter.

Asset Quality and Provision for Loan Losses

The provision for loan losses totaled $5.0 million during the second quarter of 2022, an increase of $1.3 million compared to the prior quarter. During the second quarter of 2022, $2.9 million of the provision for loan losses was related to certain non-impaired acquired loans marked at a premium valuation upon the closing of the Pioneer merger. The premium valuation on certain of the acquired loans was due to higher contractual interest rates compared to market interest rates upon closing of the Pioneer merger. In total, we realized a net discount valuation on the entire acquired portfolio. Due to the premium on certain of the loans, a provision for loan losses was required; however, it was not due to credit deterioration since closing of the Pioneer merger. Net recoveries during the second quarter of 2022 were $0.6 million, or a ratio of net charge-offs (recoveries) to average loans of (0.04)% annualized, compared to net charge-offs of $0.7 million, or a ratio of net charge-offs to average loans of 0.07% annualized, in the prior quarter. The allowance for loan losses as a percentage of total loans was 1.04% at June 30, 2022, compared to 1.17% at March 31, 2022. The decrease in the allowance for loan losses as a percentage of total loans relates to the acquired Pioneer loans. The ratio of nonperforming assets to total assets was 0.62% at June 30, 2022, compared to 0.64% at March 31, 2022, and 0.94% at June 30, 2021.

Noninterest Income

Noninterest income totaled $22.3 million during the second quarter of 2022, a decrease of $1.4 million from the prior quarter. Mortgage banking income decreased $2.9 million during the second quarter of 2022 from the prior quarter, primarily due to lesser sold volume and associated loan sale gains and a decline in the rate lock pipeline valuation in a rising interest rate environment. Total originations of mortgage loans held-for-sale decreased by $19.0 million, or 5.9%, in the second quarter of 2022 from the prior quarter. Noninterest income as a percentage of total revenue totaled 27.6% in the second quarter of 2022, compared to 36.5% in the prior quarter.

Noninterest Expense

Noninterest expense totaled $75.7 million during the second quarter of 2022, an increase of $23.2 million from the prior quarter, primarily driven by the Pioneer merger and the merger related expenses. Noninterest expenses for the second quarter of 2022 included $18.4 million in merger related expenses compared to $0.3 million in the prior quarter.

Tax Rate

The effective tax rate was (96.3)% in the second quarter of 2022, compared to 13.0% in the prior quarter. The effective tax rate was not meaningful due to the breakeven nature of income before income taxes in the second quarter of 2022.

Loans

Total loans were $5.4 billion at June 30, 2022, compared to $4.3 billion at March 31, 2022, an increase of $1.1 billion in the second quarter of 2022, or 99.5% on an annualized basis. Total loans, excluding impact from acquired Pioneer loans, increased $261.6 million in the second quarter of 2022, or 24.2% on an annualized basis from the prior quarter, resulting primarily from growth in commercial and industrial and residential real estate balances. See the “Non-GAAP Financial Measures and Reconciliations” below.

Deposits

Average deposits increased $1.1 billion in the second quarter of 2022, or 92.9% on an annualized basis to $5.9 billion, compared to the prior quarter. Average deposits, excluding impact from acquired Pioneer deposits, decreased $58.6 million in the second quarter of 2022, or (4.8)% on an annualized basis, compared to the prior quarter. See the “Non-GAAP Financial Measures and Reconciliations” below. Noninterest-bearing deposit accounts represented 32.7% of total deposits at June 30, 2022 and the loan-to-deposit ratio was 90.8% at June 30, 2022.

Capital

Capital ratios remain strong and above “well-capitalized” thresholds. As of June 30, 2022, our common equity tier 1 risk-based capital ratio was 9.59%, total risk-based capital ratio was 11.60% and tier 1 leverage ratio was 8.89%. Book value per common share was $30.34 at June 30, 2022, an increase of $2.24 from March 31, 2022. Tangible book value per common share, a non-GAAP financial measure, was $24.76 at June 30, 2022, a decrease of $1.11 from March 31, 2022. The decline in the tangible book value per common share at June 30, 2022 relates to the increases in our intangible assets as a result of the Pioneer merger, and the impact of the decline in accumulated other comprehensive income (loss), net, for unrealized losses in our available-for-sale securities portfolio resulting from the rising interest rate environment.

Non-GAAP Financial Measures

This press release contains financial information and performance measures determined by methods other than in accordance with principles generally accepted in the United States (“GAAP”). FirstSun management uses these non-GAAP financial measures in their analysis of FirstSun’s performance and the efficiency of its operations. Management believes these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results with prior periods and demonstrate the effects of significant items in the current period. FirstSun believes a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. FirstSun management believes investors may find these non-GAAP financial measures useful. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Below is a listing of the types of non-GAAP measures used in this press release:

• Tangible stockholders’ equity
• Tangible assets
• Tangible stockholders’ equity to tangible assets
• Tangible book value per common share
• Net income excluding merger costs
• Return on average total assets excluding merger costs
• Return on average stockholders’ equity excluding merger costs
• Efficiency ratio excluding merger related expenses
• Diluted earnings per share excluding merger related costs
• Fully tax equivalent (FTE) net interest income and net interest margin on FTE basis
• Total loan growth, excluding Pioneer acquired loans, annualized
• Total average deposit growth, excluding Pioneer acquired deposits, annualized

See the tables within the “Non-GAAP Financial Measures and Reconciliations” section for a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

About FirstSun Capital Bancorp

FirstSun Capital Bancorp, headquartered in Denver, Colorado, is the financial holding company for Sunflower Bank, N.A., which operates as Sunflower Bank, First National 1870 and Guardian Mortgage. Sunflower Bank provides a full range of relationship-focused services to meet personal, business and wealth management financial objectives, with a branch network in five states and mortgage capabilities in 43 states. FirstSun had total consolidated assets of $7.1 billion as of June 30, 2022. On April 1, 2022, we completed our merger with Pioneer Bancshares, Inc.

First National 1870 and Guardian Mortgage are divisions of Sunflower Bank, N.A. To learn more, visit ir.firstsuncb.com, SunflowerBank.com, FirstNational1870.com or GuardianMortgageOnline.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains ”forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and the future performance of FirstSun. Words such as “anticipates,” “believes,” “estimates,” “expects,” “focused,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” “would,” “could,” “look forward” and other similar expressions are intended to identify these forward-looking statements. Forward-looking statements are not based on historical facts but instead represent management’s expectations and assumptions regarding FirstSun’s business, the economy and other future conditions. Such statements involve inherent uncertainties, risks and changes in circumstances that are difficult to predict. As such, FirstSun’s actual results may differ materially from those contemplated by forward-looking statements. While there can be no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those contemplated by forward-looking statements include, without limitation, the following:

• the possibility that the anticipated benefits of the merger with Pioneer, which closed on April 1, 2022, 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 does business or as a result of other unexpected factors or events;
• the COVID-19 pandemic and its continuing effects on the economic and business environments in which we operate;
• potential fluctuations or unanticipated changes in the interest rate environment, including interest rate changes made by the Federal Reserve, the discontinuation of LIBOR as an interest rate benchmark, and cash flow reassessments, may reduce net interest margin and/or the volumes and values of loans made or held as well as the value of other financial assets;
• the inability to sustain revenue and earnings growth;
• the inability to efficiently manage operating expenses;
• the impact of competition with other financial institutions, including pricing pressures and the resulting impact on FirstSun’s results, including as a result of compression to net interest margin;
• deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses;
• changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments;
• adverse changes in asset quality and credit risk; and
• the potential effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, such as epidemics and pandemics, war or terrorist activities, disruptions in our customers’ supply chains, disruptions in transportation, essential utility outages or trade disputes and related tariffs.

Further information regarding additional factors which could affect the forward-looking statements contained in this press release can be found in the cautionary language included under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in FirstSun’s Annual Report on Form 10-K for the year ended December 31, 2021, and other documents subsequently filed by FirstSun with the United States Securities and Exchange Commission (“SEC”). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by applicable law or regulation, FirstSun undertakes no obligation to revise or update any forward-looking statements.

Summary Data:

		As of and for the quarter ended												As of and for the six months ended
($ in thousands, except per share amounts)		June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022				June 30, 2021
Net interest income		$	58,585			$	41,285			$	36,400			$	99,870			$	74,817
Provision for (benefit from) loan losses			5,000				3,700				(1,400	)			8,700				(1,750	)
Noninterest income			22,302				23,693				32,283				45,995				66,164
Noninterest expense			75,668				52,467				56,624				128,135				111,804
Income before income taxes			219				8,811				13,459				9,030				30,927
Provision for income taxes			(211	)			1,142				2,178				931				5,308
Net income			430				7,669				11,281				8,099				25,619
Net income, excluding merger costs (1)			17,208				7,922				12,349				25,130				26,687
Diluted earnings per share		$	0.02			$	0.41			$	0.60			$	0.36			$	1.37
Diluted earnings per share, excluding merger costs (1)		$	0.68			$	0.42			$	0.66			$	1.13			$	1.43
Return on average assets			0.02	%			0.54	%			0.82	%			0.25	%			0.97	%
Return on average assets, excluding merger costs (1)			0.96	%			0.56	%			0.90	%			0.78	%			1.01	%
Return on average equity			0.22	%			5.85	%			8.82	%			2.49	%			10.12	%
Return on average equity, excluding merger costs (1)			8.88	%			6.04	%			9.65	%			7.73	%			10.54	%
Net interest margin			3.56	%			3.08	%			2.81	%			3.34	%			3.00	%
Net interest margin (FTE basis) (1)			3.64	%			3.17	%			2.93	%			3.43	%			3.13	%
Efficiency ratio			93.55	%			80.75	%			82.44	%			87.84	%			79.30	%
Efficiency ratio, excluding merger related expenses (1)			70.74	%			80.28	%			80.58	%			74.99	%			78.40	%
Fee revenue to total revenue			27.57	%			36.46	%			47.00	%			31.53	%			46.93	%
Total assets		$	7,087,184			$	5,733,748			$	5,563,076			$	7,087,184			$	5,563,076
Total loans held-for-sale			61,253				57,700				136,999				61,253				136,999
Total loans held-for-investment			5,387,928				4,315,031				3,794,355				5,387,928				3,794,355
Total deposits			5,933,022				4,946,482				4,748,698				5,933,022				4,748,698
Total stockholders' equity			754,034				515,541				510,582				754,034				510,582
Period end loan-to-deposit ratio			90.81	%			87.23	%			79.90	%			90.81	%			79.90	%
Book value per common share		$	30.34			$	28.10			$	27.87				30.34				27.87
Tangible book value per common share (1)		$	24.76			$	25.87			$	25.57				24.76				25.57

_______________________________
¹ Represents a non-GAAP financial measure. See the tables within the “Non-GAAP Financial Measures and Reconciliations” section for a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.
² Loans are inclusive of loans held-for-sale and loans held-for-investment.

Condensed Consolidated Statements of Income (Unaudited):

		As of and for the quarter ended											As of and for the six months ended
($ in thousands, except per share amounts)		June 30, 2022				March 31, 2022			June 30, 2021				June 30, 2022			June 30, 2021
Total interest income		$	63,228			$	44,661		$	40,069			$	107,889		$	82,515
Total interest expense			4,643				3,376			3,669				8,019			7,698
Net interest income			58,585				41,285			36,400				99,870			74,817
Provision for (benefit from) loan losses			5,000				3,700			(1,400	)			8,700			(1,750	)
Net interest income after provision for loan losses			53,585				37,585			37,800				91,170			76,567
Noninterest income:
Service charges on deposits			4,379				3,925			2,645				8,304			5,188
Credit and debit card fees			2,990				2,415			2,544				5,405			4,668
Trust and investment advisory fees			1,909				1,947			1,992				3,856			3,897
Mortgage banking income, net			11,671				14,561			22,936				26,232			47,993
Other noninterest income			1,353				845			2,166				2,198			4,418
Total noninterest income			22,302				23,693			32,283				45,995			66,164
Noninterest expense:
Salaries and benefits			35,248				34,225			38,449				69,473			77,068
Occupancy and equipment			7,753				6,833			6,527				14,586			13,224
Amortization of intangible assets			935				327			354				1,262			708
Merger related expenses			18,448				303			1,279				18,751			1,279
Other noninterest expenses			13,284				10,779			10,015				24,063			19,525
Total noninterest expense			75,668				52,467			56,624				128,135			111,804
Income before income taxes			219				8,811			13,459				9,030			30,927
(Benefit) provision for income taxes			(211	)			1,142			2,178				931			5,308
Net income		$	430			$	7,669		$	11,281			$	8,099		$	25,619
Earnings per share - basic		$	0.02			$	0.42		$	0.62			$	0.38		$	1.40
Earnings per share - diluted		$	0.02			$	0.41		$	0.60			$	0.36		$	1.37

Condensed Consolidated Balance Sheets as of (Unaudited):

($ in thousands)		June 30, 2022				March 31, 2022				June 30, 2021
Assets
Cash and cash equivalents		$	510,701			$	487,689			$	840,600
Securities available-for-sale, at fair value			578,751				556,723				508,975
Securities held-to-maturity			39,803				16,799				21,894
Loans held-for-sale, at fair value			61,253				57,700				136,999
Loans			5,387,928				4,315,031				3,794,355
Allowance for loan losses			(56,077	)			(50,509	)			(42,978	)
Loans, net			5,331,851				4,264,522				3,751,377
Mortgage servicing rights, at fair value			66,047				60,481				40,844
Premises and equipment, net			89,674				52,198				54,304
Other real estate owned and foreclosed assets, net			5,391				5,162				4,013
Goodwill			119,975				33,050				33,050
Intangible assets, net			18,760				7,923				8,959
All other assets			264,978				191,501				162,061
Total assets		$	7,087,184			$	5,733,748			$	5,563,076
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposit accounts		$	1,942,078			$	1,662,980			$	1,359,112
Interest-bearing deposit accounts:
Interest-bearing demand accounts			165,287				155,388				194,840
Savings accounts and money market accounts			3,204,704				2,742,393				2,746,373
NOW accounts			50,126				74,106				101,749
Certificate of deposit accounts			570,827				311,615				346,624
Total deposits			5,933,022				4,946,482				4,748,698
Securities sold under agreements to repurchase			70,838				69,627				113,786
Federal Home Loan Bank advances			159,968				40,000				40,000
Other borrowings			79,959				87,799				68,910
Other liabilities			89,363				74,299				81,100
Total liabilities			6,333,150				5,218,207				5,052,494
Stockholders' equity:
Preferred stock			—				—				—
Common stock			2				2				2
Additional paid-in capital			486,755				262,071				260,516
Treasury stock			—				(38,148	)			(38,148	)
Retained earnings			306,714				306,284				281,070
Accumulated other comprehensive (loss) income, net			(39,437	)			(14,668	)			7,142
Total stockholders' equity			754,034				515,541				510,582
Total liabilities and stockholders' equity		$	7,087,184			$	5,733,748			$	5,563,076

Share Data as of and for the periods ended:

	As of and for the quarter ended
	June 30, 2022			March 31, 2022			June 30, 2021
Weighted average common shares outstanding, basic		24,760,282			18,346,288			18,321,659
Weighted average common shares outstanding, diluted		25,458,311			18,899,852			18,761,034
Period end common shares outstanding		24,850,954			18,346,288			18,321,659
Book value per common share	$	30.34		$	28.10		$	27.87
Tangible book value per common share (1)	$	24.76		$	25.87		$	25.57

Consolidated Capital Ratios as of:

	June 30, 2022			March 31, 2022			June 30, 2021
Stockholders' equity to total assets	10.64	%		8.99	%		9.18	%
Tangible equity to tangible assets (1)	8.86	%		8.34	%		8.49	%
Tier 1 leverage ratio	8.89	%		8.42	%		8.21	%
Common equity tier 1 risk-based capital ratio	9.59	%		9.27	%		10.28	%
Tier 1 risk-based capital ratio	9.59	%		9.27	%		10.28	%
Total risk-based capital ratio	11.60	%		11.74	%		12.44	%

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¹ Represents a non-GAAP financial measure. See the tables within the “Non-GAAP Financial Measures and Reconciliations” section for a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

Summary of Net Interest Margin:

		For the quarter ended June 30, 2022										For the quarter ended March 31, 2022										For the quarter ended June 30, 2021
(In thousands)		Average Balance			Interest				Average Yield/Rate			Average Balance			Interest				Average Yield/Rate			Average Balance			Interest				Average Yield/Rate
Interest Earning Assets
Loans held-for-sale		$	70,430		$	1,269			7.21	%		$	60,895		$	694			4.56	%		$	133,592		$	1,168			3.50	%
Loans held-for-investment (1)			5,264,355			57,316			4.35	%			4,123,920			41,164			3.99	%			3,736,120			36,557			3.91	%
Investment securities			651,180			3,333			2.05	%			582,333			2,275			1.56	%			514,248			1,877			1.46	%
Interest-bearing cash and other assets			591,208			1,310			0.89	%			592,478			528			0.36	%			800,851			467			0.23	%
Total earning assets			6,577,173			63,228			3.85	%			5,359,626			44,661			3.33	%			5,184,811			40,069			3.09	%
Other assets			612,253										314,043										294,765
Total assets		$	7,189,426									$	5,673,669									$	5,479,576
Interest-bearing liabilities
Demand and NOW deposits		$	219,502		$	229			0.42	%		$	223,020		$	124			0.22	%		$	317,651		$	286			0.36	%
Savings deposits			516,045			133			0.10	%			468,713			91			0.08	%			452,537			142			0.10	%
Money market deposits			2,774,713			1,172			0.17	%			2,306,638			840			0.15	%			2,233,460			1,120			0.21	%
Certificates of deposits			581,803			638			0.44	%			317,948			519			0.65	%			351,350			801			0.91	%
Total deposits			4,092,063			2,172			0.21	%			3,316,319			1,574			0.19	%			3,354,998			2,349			0.28	%
Repurchase agreements			56,247			15			0.11	%			71,425			8			0.04	%			144,421			18			0.05	%
Total deposits and repurchase agreements			4,148,310			2,187			0.21	%			3,387,744			1,582			0.19	%			3,499,419			2,367			0.27	%
FHLB borrowings			184,100			771			1.67	%			40,229			148			1.48	%			40,000			150			1.50	%
Other long-term borrowings			82,154			1,685			8.21	%			86,191			1,646			7.63	%			68,760			1,152			6.70	%
Total interest-bearing liabilities			4,414,564			4,643			0.42	%			3,514,164			3,376			0.38	%			3,608,179			3,669			0.41	%
Noninterest-bearing deposits			1,923,870										1,566,088										1,283,536
Other liabilities			75,768										68,999										76,080
Stockholders' equity			775,224										524,418										511,781
Total liabilities and stockholders' equity		$	7,189,426									$	5,673,669									$	5,479,576
Net interest income					$	58,585									$	41,285									$	36,400
Net interest spread						3.43	%									2.95	%									2.68	%
Net interest margin						3.56	%									3.08	%									2.81	%
Net interest margin (on a FTE basis) (2)						3.64	%									3.17	%									2.93	%

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¹ Includes nonaccrual loans.
² Represents a non-GAAP financial measure. See the tables within the “Non-GAAP Financial Measures and Reconciliations” section for a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

		For the six months ended
		June 30, 2022										June 30, 2021
(In thousands)		Average Balance			Interest				Average Yield/Rate			Average Balance			Interest				Average Yield/Rate
Interest Earning Assets
Loans held-for-sale		$	65,689		$	1,963			5.98	%		$	141,909		$	2,271			3.20	%
Loans held-for-investment (1)			4,697,288			98,480			4.19	%			3,751,632			75,713			4.04	%
Investment securities			616,947			5,608			1.82	%			506,109			3,692			1.46	%
Interest-bearing cash and other assets			591,839			1,838			0.62	%			591,436			839			0.28	%
Total earning assets			5,971,763			107,889			3.61	%			4,991,086			82,515			3.31	%
Other assets			463,972										287,590
Total assets		$	6,435,735									$	5,278,676
Interest-bearing liabilities
Demand and NOW deposits		$	221,251		$	353			0.32	%		$	287,440		$	497			0.35	%
Savings deposits			492,510			224			0.09	%			454,719			262			0.12	%
Money market deposits			2,541,968			2,012			0.16	%			2,142,197			2,251			0.21	%
Certificates of deposits			450,604			1,157			0.51	%			356,474			1,743			0.98	%
Total deposits			3,706,333			3,746			0.20	%			3,240,830			4,753			0.29	%
Repurchase agreements			63,795			23			0.07	%			137,255			36			0.05	%
Total deposits and repurchase agreements			3,770,128			3,769			0.20	%			3,378,085			4,789			0.28	%
FHLB borrowings			112,562			919			1.63	%			45,096			607			2.69	%
Other long-term borrowings			84,161			3,331			7.91	%			68,665			2,302			6.71	%
Total interest-bearing liabilities			3,966,851			8,019			0.40	%			3,491,846			7,698			0.44	%
Noninterest-bearing deposits			1,745,967										1,200,921
Other liabilities			72,403										79,706
Stockholders' equity			650,514										506,203
Total liabilities and stockholders' equity		$	6,435,735									$	5,278,676
Net interest income					$	99,870									$	74,817
Net interest spread						3.21	%									2.87	%
Net interest margin						3.34	%									3.00	%
Net interest margin (on a FTE basis) (2)						3.43	%									3.13	%

_______________________________
¹ Includes nonaccrual loans.
² Represents a non-GAAP financial measure. See the tables within the “Non-GAAP Financial Measures and Reconciliations” section for a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

Loan Portfolio

($ in thousands)		June 30, 2022			March 31, 2022			June 30, 2022 vs March 31, 2022 % change			June 30, 2021			June 30, 2022 vs June 30, 2021 % change
Commercial		$	2,674,043		$	2,515,203		6.3	%		$	2,211,084		20.9	%
Commercial real estate			1,750,882			1,214,505		44.2	%			1,124,131		55.8	%
Residential real estate			918,580			567,342		61.9	%			444,491		106.7	%
Consumer			44,423			17,981		147.1	%			14,649		203.2	%
Total loans held-for-investment		$	5,387,928		$	4,315,031		24.9	%		$	3,794,355		42.0	%

Asset Quality:

		As of and for the quarter ended												As of and for the six months ended
($ in thousands)		June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022				June 30, 2021
Net (recoveries) charge-offs		$	(568	)		$	738			$	2,836			$	170			$	3,038
Allowance for loan losses		$	56,077			$	50,509			$	42,978			$	56,077			$	42,978
Nonperforming loans, including nonaccrual loans, accrual TDR’s, and accrual loans greater than 90 days past due		$	38,283			$	31,367			$	48,203			$	38,283			$	48,203
Nonperforming assets		$	43,674			$	36,529			$	52,216			$	43,674			$	52,216
Ratio of net (recoveries) charge-offs to average loans outstanding			(0.04	)%			0.07	%			0.30	%			0.01	%			0.16	%
Allowance for loan losses to total loans outstanding			1.04	%			1.17	%			1.13	%			1.04	%			1.13	%
Allowance for loan losses to total nonperforming loans			146.48	%			161.03	%			89.16	%			146.48	%			89.16	%
Nonperforming loans to total loans			0.71	%			0.73	%			1.27	%			0.71	%			1.27	%
Nonperforming assets to total assets			0.62	%			0.64	%			0.94	%			0.62	%			0.94	%

Non-GAAP Financial Measures and Reconciliations:

	As of and for the quarter ended												As of and for the six months ended
($ in thousands, except share and per share amounts)	June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022				June 30, 2021
Tangible stockholders’ equity:
Total stockholders' equity (GAAP)	$	754,034			$	515,541			$	510,582			$	754,034			$	510,582
Less: Goodwill and other intangible assets
Goodwill		(119,975	)			(33,050	)			(33,050	)			(119,975	)			(33,050	)
Other intangible assets		(18,760	)			(7,923	)			(8,959	)			(18,760	)			(8,959	)
Total tangible stockholders' equity (non-GAAP)	$	615,299			$	474,568			$	468,573			$	615,299			$	468,573
Tangible assets:
Total assets (GAAP)	$	7,087,184			$	5,733,748			$	5,563,076			$	7,087,184			$	5,563,076
Less: Goodwill and other intangible assets
Goodwill		(119,975	)			(33,050	)			(33,050	)			(119,975	)			(33,050	)
Other intangible assets		(18,760	)			(7,923	)			(8,959	)			(18,760	)			(8,959	)
Total tangible assets (non-GAAP)	$	6,948,449			$	5,692,775			$	5,521,067			$	6,948,449			$	5,521,067
Tangible stockholders’ equity to tangible assets:
Common equity to total assets (GAAP)		10.64	%			8.99	%			9.18	%			10.64	%			9.18	%
Less: Impact of goodwill and other intangible assets		1.78	%			0.65	%			0.69	%			1.78	%			0.69	%
Tangible common equity to tangible assets (non-GAAP)		8.86	%			8.34	%			8.49	%			8.86	%			8.49	%
Tangible book value per common share:
Stockholders' equity (GAAP)	$	754,034			$	515,541			$	510,582			$	754,034			$	510,582
Tangible stockholders' equity (non-GAAP)	$	615,299			$	474,568			$	468,573			$	615,299			$	468,573
Total common shares outstanding		24,850,954				18,346,288				18,321,659				24,850,954				18,321,659
Book value per common share (GAAP)	$	30.34			$	28.10			$	27.87			$	30.34			$	27.87
Tangible book value per common share (non-GAAP)	$	24.76			$	25.87			$	25.57			$	24.76			$	25.57
Net income excluding merger costs:
Net income (GAAP)	$	430			$	7,669			$	11,281			$	8,099			$	25,619
Add: Merger costs
Merger related expenses		18,448				303				1,279				18,751				1,279
Income tax effect on merger related expenses		(4,033	)			(50	)			(211	)			(4,083	)			(211	)
Provision for loan loss on Pioneer loans marked at a premium		2,884				—				—				2,884				—
Income tax effect on provision for loan loss on Pioneer loans marked at a premium		(521	)			—				—				(521	)			—
Total merger costs		16,778				253				1,068				17,031				1,068
Net income excluding merger costs (non-GAAP)	$	17,208			$	7,922			$	12,349			$	25,130			$	26,687
Return on average total assets excluding merger costs:
Return on average total assets (ROAA) (GAAP)		0.02	%			0.54	%			0.82	%			0.25	%			0.97	%
Add: Impact of merger costs, net of tax		0.94	%			0.02	%			0.08	%			0.53	%			0.04	%
ROAA excluding merger costs (non-GAAP)		0.96	%			0.56	%			0.90	%			0.78	%			1.01	%
Return on average stockholders’ equity excluding merger costs:
Return on average stockholders' equity (ROAE) (GAAP)		0.22	%			5.85	%			8.82	%			2.49	%			10.12	%
Add: Impact of merger costs, net of tax		8.66	%			0.19	%			0.83	%			5.24	%			0.42	%
ROAE excluding merger costs (non-GAAP)		8.88	%			6.04	%			9.65	%			7.73	%			10.54	%
Efficiency ratio excluding merger related expenses:
Efficiency ratio (GAAP)		93.55	%			80.75	%			82.44	%			87.84	%			79.30	%
Less: Impact of merger related expenses		22.81	%			0.47	%			1.86	%			12.85	%			0.90	%
Efficiency ratio excluding merger related expenses (non-GAAP)		70.74	%			80.28	%			80.58	%			74.99	%			78.40	%
Diluted earnings per share excluding merger costs:
Diluted earnings per share (GAAP)	$	0.02			$	0.41			$	0.60			$	0.36			$	1.37
Add: Impact of merger costs, net of tax		0.66				0.01				0.06				0.77				0.06
Diluted earnings per share excluding merger costs (non-GAAP)	$	0.68			$	0.42			$	0.66			$	1.13			$	1.43
Fully tax equivalent (FTE) net interest income and net interest margin on FTE basis:
Net interest income (GAAP)	$	58,585			$	41,285			$	36,400			$	99,870			$	74,817
Gross income effect of tax exempt income		1,284				1,321				1,704				2,605				3,495
FTE net interest income (non-GAAP)	$	59,869			$	42,606			$	38,104			$	102,475			$	78,312
Average earning assets	$	6,577,173			$	5,359,626			$	5,184,811			$	5,971,763			$	4,991,086
Net interest margin		3.56	%			3.08	%			2.81	%			3.34	%			3.00	%
Net interest margin on FTE basis (non-GAAP)		3.64	%			3.17	%			2.93	%			3.43	%			3.13	%

($ in thousands)	As of June 30, 2022
Total loan growth, excluding Pioneer acquired loans, annualized:
Total loans for the quarter ended:
June 30, 2022	$	5,387,928
March 31, 2022		4,315,031
Total loan growth for the quarter ended June 30, 2022		1,072,897
Less: Acquired loans at date of merger, net of purchase accounting adjustments		(811,300	)
Total loan increase for the quarter ended June 30, 2022	$	261,597
Total loan growth, annualized (GAAP)		99.5	%
Total loan growth, excluding Pioneer acquired loans, annualized (non-GAAP)		24.2	%
Total average deposit growth, excluding Pioneer acquired deposits, annualized:
Total average deposits for the quarter ended:
June 30, 2022	$	6,015,933
March 31, 2022		4,882,407
Total average deposit growth for the quarter ended June 30, 2022		1,133,526
Less: Acquired deposits at date of merger, net of purchase accounting adjustments		(1,192,081	)
Total average deposit decrease for the quarter ended June 30, 2022	$	(58,555	)
Total average deposit growth, annualized (GAAP)		92.9	%
Total average deposit growth, excluding Pioneer acquired deposits, annualized (non-GAAP)		(4.8	)%

 

Source: FirstSun Capital Bancorp