FirstSun Capital Bancorp Reports Third Quarter 2022 Results

October 27, 2022

Third Quarter 2022 Highlights:

  • Net income of $26.5 million, $1.04 per diluted share
  • Net interest margin of 4.26%
  • Return on average assets of 1.52%
  • Return on average equity of 14.50%
  • Loan growth of 12.5% annualized
  • 26.7% fee revenue to total revenue

FirstSun Capital Bancorp (“FirstSun”) (OTCQX: FSUN) reported net income of $26.5 million for the third quarter of 2022 compared to net income of $8.7 million for the third quarter of 2021. Earnings per diluted share was $1.04 for the third quarter of 2022 compared to $0.46 for the third quarter of 2021.

Neal Arnold, FirstSun’s President and Chief Executive Officer, commented, “We are very pleased with our results this quarter. We realized a healthy expansion in our net interest margin in large part due to our specialized commercial & industrial lending business focus. Our revenue mix remained strong this quarter and overall credit quality remains stable. While the overall macro-economic outlook appears to generally be slowing, we continue to see strength in the Southwest and Mountain West markets we are operating in. Our strong returns this quarter highlight the benefits of our diversified business model and the continued growth we are seeing and we look forward to future growth across each of our markets.”

Third Quarter 2022 Results

Net income totaled $26.5 million, or $1.04 per diluted share, during the third quarter of 2022, compared to $0.4 million, or $0.02 per diluted share, during the prior quarter. Net income in the second quarter of 2022 was reduced by $16.8 million, or $0.66 per diluted share, in merger costs, net of tax. The return on average assets was 1.52% in the third quarter of 2022, compared to 0.02% in the prior quarter, and the return on average equity was 14.50% in the third quarter of 2022, compared to 0.23% in the prior quarter. Merger costs, net of tax, reduced return on average assets by 0.94% and return on average equity by 8.96% during the second quarter of 2022.

Net Interest Income and Net Interest Margin

Net interest income totaled $68.5 million during the third quarter of 2022, an increase of $9.9 million compared to the prior quarter. Our net interest margin increased 70 basis points to 4.26% compared to the prior quarter. Results in the third quarter of 2022, compared to the prior quarter, were driven by an increase of 74 basis points in yield on earning assets, partially offset by an increase of eight basis points in the cost of interest-bearing liabilities.

Average loans increased by $0.2 billion in the third quarter of 2022, compared to the prior quarter. Loan yield increased by 60 basis points to 4.95% in the third quarter of 2022, compared to the prior quarter, primarily due to the rising interest rate environment and its impact on variable rate loans in the loan portfolio and higher yields on new originations. Average deposits decreased $0.2 billion in the third quarter of 2022, compared to the prior quarter. Total cost of deposits increased by 12 basis points to 0.33% in the third quarter of 2022, compared to the prior quarter, primarily due to increased pricing on our deposit products as a result of the rising interest rate environment. Average other long-term borrowings decreased $2.1 million in the third quarter of 2022, compared to the prior quarter. The cost of other long-term borrowings decreased by 226 basis points to 5.95% in the third quarter of 2022, compared to the prior quarter, primarily due to accelerated discount accretion on certain convertible notes paid off during the second quarter of 2022.

Asset Quality and Provision for Loan Losses

The provision for loan losses totaled $3.8 million during the third quarter of 2022, a decrease of $1.3 million compared to the prior quarter. The decrease is primarily attributed to $2.9 million of provision for loan losses recognized during the second quarter of 2022 related to certain non-impaired acquired loans marked at a premium valuation upon the closing of the Pioneer Bancshares, Inc. (“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 in the second quarter; however, it was not due to credit deterioration since closing of the Pioneer merger. Excluding the $2.9 million of provision for loan losses related to the acquired Pioneer loans, the provision for loan losses increased $1.6 million compared to the prior quarter, primarily due to loan growth and macroeconomic factors.

Net charge-offs during the third quarter of 2022 were $0.1 million, or a ratio of net charge-offs (recoveries) to average loans of 0.01% annualized, compared to net recoveries of $0.6 million, or a ratio of net charge-offs (recoveries) to average loans of (0.04)% annualized, in the prior quarter. The allowance for loan losses as a percentage of total loans was 1.07% at September 30, 2022, compared to 1.04% at June 30, 2022. The ratio of nonperforming assets to total assets was 0.68% at September 30, 2022, compared to 0.62% at June 30, 2022.

Noninterest Income

Noninterest income totaled $25.0 million during the third quarter of 2022, an increase of $2.7 million from the prior quarter. Mortgage banking income increased $2.1 million during the third quarter of 2022 from the prior quarter, primarily due to an increase in the fair value of the mortgage servicing rights portfolio as prepayments are forecasted to slow due to the rising interest rate environment, partially offset by a decrease in net sale gains and fees from mortgage loan originations as the volume of mortgage loan sales decreased from the prior quarter. Total originations of mortgage loans held-for-sale decreased by $31.6 million, or 10.4%, in the third quarter of 2022 from the prior quarter. Noninterest income as a percentage of total revenue totaled 26.7% in the third quarter of 2022, compared to 27.6% in the prior quarter.

Noninterest Expense

Noninterest expense totaled $55.5 million during the third quarter of 2022, a decrease of $20.1 million from the prior quarter, primarily due to the $18.4 million of merger related expenses incurred during the second quarter of 2022. The efficiency ratio for the third quarter was 59.4% compared to 93.6% in the prior quarter, or 70.7% in the prior quarter excluding the impact of the merger related expenses.

Tax Rate

The effective tax rate was 22.3% in the third quarter of 2022, compared to (96.3)% in the prior quarter. In the second quarter of 2022, the effective tax rate was not meaningful due to the breakeven nature of income before income taxes.

Loans

Total loans were $5.6 billion at September 30, 2022, compared to $5.4 billion at June 30, 2022, an increase of $0.2 billion in the third quarter of 2022, or 12.5% on an annualized basis, resulting primarily from growth in commercial and industrial and residential real estate balances.

Deposits

Average deposits were $5.8 billion at September 30, 2022, compared to $6.0 billion at June 30, 2022, a decrease of $0.2 billion in the third quarter of 2022, or 11.4% on an annualized basis. Deposit trends reflect a decrease in customer average balances as consumer and business liquidity overall has declined slightly. Noninterest-bearing deposit accounts represented 33.8% of total deposits at September 30, 2022 and the loan-to-deposit ratio was 96.5% at September 30, 2022.

Capital

Capital ratios remain strong and above “well-capitalized” thresholds. As of September 30, 2022, our common equity tier 1 risk-based capital ratio was 9.99%, total risk-based capital ratio was 12.06% and tier 1 leverage ratio was 9.55%. Book value per common share was $30.14 at September 30, 2022, an increase of $0.86 from June 30, 2022. Tangible book value per common share, a non-GAAP financial measure, was $25.67 at September 30, 2022, an increase of $0.91 from June 30, 2022.

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

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 September 30, 2022.

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 current 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. The inclusion of these forward-looking statements should not be regarded as a representation by the Company or any other person that such expectations, estimates, and projections will be achieved. 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;
  • the inability to maintain or grow deposits;
  • the inability to manage strategic initiatives and/or organizational changes;
  • cyber-security risks;
  • FirstSun’s ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks;
  • the inability to implement technology system enhancements;
  • failures of internal controls and other risk management systems;
  • failures of third-party providers;
  • losses related to fraud, theft, misappropriation or violence; and
  • the potential effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, such as inflation and recessions, 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 nine months ended

($ in thousands, except per share amounts)

 

September 30,
2022

 

June 30,
2022

 

September 30,
2021

 

September 30,
2022

 

September 30,
2021

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

68,486

 

 

$

58,585

 

 

$

39,965

 

 

$

168,356

 

 

$

114,782

 

Provision for loan losses

 

 

3,750

 

 

 

5,000

 

 

 

3,500

 

 

 

12,450

 

 

 

1,750

 

Noninterest income

 

 

24,953

 

 

 

22,302

 

 

 

28,684

 

 

 

70,948

 

 

 

94,848

 

Noninterest expense

 

 

55,548

 

 

 

75,668

 

 

 

54,570

 

 

 

183,683

 

 

 

166,374

 

Income before income taxes

 

 

34,141

 

 

 

219

 

 

 

10,579

 

 

 

43,171

 

 

 

41,506

 

Provision for (benefit from) income taxes

 

 

7,628

 

 

 

(211

)

 

 

1,851

 

 

 

8,559

 

 

 

7,159

 

Net income

 

 

26,513

 

 

 

430

 

 

 

8,728

 

 

 

34,612

 

 

 

34,347

 

Net income, excluding merger costs (1)

 

 

26,513

 

 

 

17,208

 

 

 

9,317

 

 

 

51,643

 

 

 

36,004

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

1.04

 

 

$

0.02

 

 

$

0.46

 

 

$

1.49

 

 

$

1.83

 

Diluted earnings per share, excluding merger costs (1)

 

$

1.04

 

 

$

0.68

 

 

$

0.50

 

 

$

2.22

 

 

$

1.92

 

Return on average assets

 

 

1.52

%

 

 

0.02

%

 

 

0.62

%

 

 

0.70

%

 

 

0.85

%

Return on average assets, excluding merger costs (1)

 

 

1.52

%

 

 

0.96

%

 

 

0.66

%

 

 

1.04

%

 

 

0.89

%

Return on average stockholders' equity

 

 

14.50

%

 

 

0.23

%

 

 

6.68

%

 

 

6.90

%

 

 

8.95

%

Return on average stockholders’ equity, excluding merger costs (1)

 

 

14.50

%

 

 

9.19

%

 

 

7.13

%

 

 

10.29

%

 

 

9.38

%

Net interest margin

 

 

4.26

%

 

 

3.56

%

 

 

3.01

%

 

 

3.66

%

 

 

3.00

%

Net interest margin (FTE basis) (1)

 

 

4.31

%

 

 

3.64

%

 

 

3.10

%

 

 

3.75

%

 

 

3.13

%

Efficiency ratio

 

 

59.45

%

 

 

93.55

%

 

 

79.49

%

 

 

76.76

%

 

 

79.37

%

Efficiency ratio, excluding merger related expenses (1)

 

 

59.45

%

 

 

70.74

%

 

 

78.46

%

 

 

68.92

%

 

 

78.42

%

Fee revenue to total revenue

 

 

26.71

%

 

 

27.57

%

 

 

41.78

%

 

 

29.65

%

 

 

45.25

%

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

7,052,917

 

 

$

7,060,692

 

 

$

5,683,085

 

 

$

7,052,917

 

 

$

5,683,085

 

Total loans held-for-sale

 

 

67,535

 

 

 

61,253

 

 

 

122,217

 

 

 

67,535

 

 

 

122,217

 

Total loans held-for-investment

 

 

5,556,686

 

 

 

5,387,928

 

 

 

3,803,981

 

 

 

5,556,686

 

 

 

3,803,981

 

Total deposits

 

 

5,760,418

 

 

 

5,933,022

 

 

 

4,857,985

 

 

 

5,760,418

 

 

 

4,857,985

 

Total stockholders' equity

 

 

750,653

 

 

 

727,542

 

 

 

519,921

 

 

 

750,653

 

 

 

519,921

 

Period end loan-to-deposit ratio

 

 

96.46

%

 

 

90.81

%

 

 

78.30

%

 

 

96.46

%

 

 

78.30

%

Book value per common share

 

$

30.14

 

 

$

29.28

 

 

$

28.38

 

 

 

30.14

 

 

 

28.38

 

Tangible book value per common share (1)

 

$

25.67

 

 

$

24.76

 

 

$

26.10

 

 

 

25.67

 

 

 

26.10

 

 

(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 nine months ended

($ in thousands, except per share amounts)

 

September 30,
2022

 

June 30,
2022

 

September 30,
2021

 

September 30,
2022

 

September 30,
2021

 

 

 

 

 

 

 

 

 

 

 

Total interest income

 

$

73,763

 

$

63,228

 

 

$

43,261

 

$

181,652

 

$

125,776

Total interest expense

 

 

5,277

 

 

4,643

 

 

 

3,296

 

 

13,296

 

 

10,994

Net interest income

 

 

68,486

 

 

58,585

 

 

 

39,965

 

 

168,356

 

 

114,782

Provision for loan losses

 

 

3,750

 

 

5,000

 

 

 

3,500

 

 

12,450

 

 

1,750

Net interest income after provision for loan losses

 

 

64,736

 

 

53,585

 

 

 

36,465

 

 

155,906

 

 

113,032

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

4,807

 

 

4,379

 

 

 

3,471

 

 

13,111

 

 

8,659

Credit and debit card fees

 

 

3,103

 

 

2,990

 

 

 

2,472

 

 

8,508

 

 

7,140

Trust and investment advisory fees

 

 

1,552

 

 

1,909

 

 

 

1,974

 

 

5,408

 

 

5,871

Mortgage banking income, net

 

 

13,785

 

 

11,671

 

 

 

20,151

 

 

40,017

 

 

68,144

Other noninterest income

 

 

1,706

 

 

1,353

 

 

 

616

 

 

3,904

 

 

5,034

Total noninterest income

 

 

24,953

 

 

22,302

 

 

 

28,684

 

 

70,948

 

 

94,848

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

32,508

 

 

35,248

 

 

 

36,061

 

 

101,981

 

 

113,129

Occupancy and equipment

 

 

8,216

 

 

7,753

 

 

 

6,643

 

 

22,802

 

 

19,867

Amortization of intangible assets

 

 

935

 

 

935

 

 

 

354

 

 

2,197

 

 

1,062

Merger related expenses

 

 

 

 

18,448

 

 

 

705

 

 

18,751

 

 

1,984

Other noninterest expenses

 

 

13,889

 

 

13,284

 

 

 

10,807

 

 

37,952

 

 

30,332

Total noninterest expense

 

 

55,548

 

 

75,668

 

 

 

54,570

 

 

183,683

 

 

166,374

Income before income taxes

 

 

34,141

 

 

219

 

 

 

10,579

 

 

43,171

 

 

41,506

Provision for (benefit from) income taxes

 

 

7,628

 

 

(211

)

 

 

1,851

 

 

8,559

 

 

7,159

Net income

 

$

26,513

 

$

430

 

 

$

8,728

 

$

34,612

 

$

34,347

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

 

$

1.07

 

$

0.02

 

 

$

0.48

 

$

1.53

 

$

1.87

Earnings per share - diluted

 

$

1.04

 

$

0.02

 

 

$

0.46

 

$

1.49

 

$

1.83

Condensed Consolidated Balance Sheets as of (Unaudited):

($ in thousands)

 

September 30,
2022

 

June 30,
2022

 

September 30,
2021

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

325,039

 

 

$

510,701

 

 

$

949,541

 

Securities available-for-sale, at fair value

 

 

551,165

 

 

 

578,751

 

 

 

531,395

 

Securities held-to-maturity

 

 

39,148

 

 

 

39,803

 

 

 

19,811

 

Loans held-for-sale, at fair value

 

 

67,535

 

 

 

61,253

 

 

 

122,217

 

Loans

 

 

5,556,686

 

 

 

5,387,928

 

 

 

3,803,981

 

Allowance for loan losses

 

 

(59,678

)

 

 

(56,077

)

 

 

(47,868

)

Loans, net

 

 

5,497,008

 

 

 

5,331,851

 

 

 

3,756,113

 

 

 

 

 

 

 

 

Mortgage servicing rights, at fair value

 

 

73,850

 

 

 

66,047

 

 

 

43,971

 

Premises and equipment, net

 

 

88,490

 

 

 

89,674

 

 

 

54,094

 

Other real estate owned and foreclosed assets, net

 

 

5,391

 

 

 

5,391

 

 

 

5,747

 

Goodwill

 

 

93,483

 

 

 

93,483

 

 

 

33,050

 

Intangible assets, net

 

 

17,825

 

 

 

18,760

 

 

 

8,605

 

All other assets

 

 

293,983

 

 

 

264,978

 

 

 

158,541

 

Total assets

 

$

7,052,917

 

 

$

7,060,692

 

 

$

5,683,085

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing demand deposit accounts

 

$

1,946,215

 

 

$

1,942,078

 

 

$

1,578,306

 

Interest-bearing deposit accounts:

 

 

 

 

 

 

Interest-bearing demand accounts

 

 

160,082

 

 

 

165,287

 

 

 

201,510

 

Savings accounts and money market accounts

 

 

3,008,433

 

 

 

3,204,704

 

 

 

2,711,417

 

NOW accounts

 

 

46,128

 

 

 

50,126

 

 

 

37,888

 

Certificate of deposit accounts

 

 

599,560

 

 

 

570,827

 

 

 

328,864

 

Total deposits

 

 

5,760,418

 

 

 

5,933,022

 

 

 

4,857,985

 

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

 

51,256

 

 

 

70,838

 

 

 

117,001

 

Federal Home Loan Bank advances

 

 

310,872

 

 

 

159,968

 

 

 

40,000

 

Other borrowings

 

 

80,097

 

 

 

79,959

 

 

 

69,184

 

Other liabilities

 

 

99,621

 

 

 

89,363

 

 

 

78,994

 

Total liabilities

 

 

6,302,264

 

 

 

6,333,150

 

 

 

5,163,164

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

Common stock

 

 

2

 

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

460,530

 

 

 

460,263

 

 

 

260,864

 

Treasury stock

 

 

 

 

 

 

 

 

(38,148

)

Retained earnings

 

 

333,227

 

 

 

306,714

 

 

 

289,798

 

Accumulated other comprehensive (loss) income, net

 

 

(43,106

)

 

 

(39,437

)

 

 

7,405

 

Total stockholders' equity

 

 

750,653

 

 

 

727,542

 

 

 

519,921

 

Total liabilities and stockholders' equity

 

$

7,052,917

 

 

$

7,060,692

 

 

$

5,683,085

 

Share Data as of and for the periods ended:

 

As of and for the quarter ended

 

September 30,
2022

 

June 30,
2022

 

September 30,
2021

 

 

 

 

 

 

Weighted average common shares outstanding, basic

 

24,877,607

 

 

24,760,282

 

 

18,321,659

Weighted average common shares outstanding, diluted

 

25,494,315

 

 

25,458,311

 

 

18,770,681

Period end common shares outstanding

 

24,906,032

 

 

24,850,954

 

 

18,321,659

Book value per common share

$

30.14

 

$

29.28

 

$

28.38

Tangible book value per common share (1)

$

25.67

 

$

24.76

 

$

26.10

Consolidated Capital Ratios as of:

 

September 30,
2022

 

June 30,
2022

 

September 30,
2021

 

 

 

 

 

 

Stockholders' equity to total assets

10.64 %

 

10.30 %

 

9.15 %

Tangible equity to tangible assets (1)

9.21 %

 

8.86 %

 

8.48 %

Tier 1 leverage ratio

9.55 %

 

8.89 %

 

8.19 %

Common equity tier 1 risk-based capital ratio

9.99 %

 

9.59 %

 

10.32 %

Tier 1 risk-based capital ratio

9.99 %

 

9.59 %

 

10.32 %

Total risk-based capital ratio

12.06 %

 

11.60 %

 

12.55 %

 

(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
September 30, 2022

 

For the quarter ended
June 30, 2022

 

For the quarter ended
September 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

 

$

56,636

 

$

743

 

 

5.25

%

 

$

70,430

 

$

1,269

 

 

7.21

%

 

$

122,007

 

$

986

 

 

3.23

%

Loans held-for-investment (1)

 

 

5,456,210

 

 

67,527

 

 

4.95

%

 

 

5,264,355

 

 

57,316

 

 

4.35

%

 

 

3,779,517

 

 

39,710

 

 

4.20

%

Investment securities

 

 

613,325

 

 

3,644

 

 

2.38

%

 

 

651,180

 

 

3,333

 

 

2.05

%

 

 

522,870

 

 

1,954

 

 

1.49

%

Interest-bearing cash and other assets

 

 

308,482

 

 

1,849

 

 

2.40

%

 

 

591,208

 

 

1,310

 

 

0.89

%

 

 

895,288

 

 

611

 

 

0.27

%

Total earning assets

 

 

6,434,653

 

 

73,763

 

 

4.59

%

 

 

6,577,173

 

 

63,228

 

 

3.85

%

 

 

5,319,682

 

 

43,261

 

 

3.25

%

Other assets

 

 

519,663

 

 

 

 

 

 

585,760

 

 

 

 

 

 

287,323

 

 

 

 

Total assets

 

$

6,954,316

 

 

 

 

 

$

7,162,933

 

 

 

 

 

$

5,607,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand and NOW deposits

 

$

202,290

 

$

495

 

 

0.98

%

 

$

219,502

 

$

229

 

 

0.42

%

 

$

241,488

 

$

139

 

 

0.23

%

Savings deposits

 

 

506,548

 

 

227

 

 

0.18

%

 

 

516,045

 

 

133

 

 

0.10

%

 

 

453,687

 

 

101

 

 

0.09

%

Money market deposits

 

 

2,617,452

 

 

1,632

 

 

0.25

%

 

 

2,774,713

 

 

1,172

 

 

0.17

%

 

 

2,264,682

 

 

1,054

 

 

0.19

%

Certificates of deposits

 

 

593,479

 

 

920

 

 

0.62

%

 

 

581,803

 

 

638

 

 

0.44

%

 

 

337,906

 

 

684

 

 

0.81

%

Total deposits

 

 

3,919,769

 

 

3,274

 

 

0.33

%

 

 

4,092,063

 

 

2,172

 

 

0.21

%

 

 

3,297,763

 

 

1,978

 

 

0.24

%

Repurchase agreements

 

 

51,264

 

 

51

 

 

0.40

%

 

 

56,247

 

 

15

 

 

0.11

%

 

 

120,009

 

 

13

 

 

0.04

%

Total deposits and repurchase agreements

 

 

3,971,033

 

 

3,325

 

 

0.33

%

 

 

4,148,310

 

 

2,187

 

 

0.21

%

 

 

3,417,772

 

 

1,991

 

 

0.23

%

FHLB borrowings

 

 

160,310

 

 

761

 

 

1.90

%

 

 

184,100

 

 

771

 

 

1.67

%

 

 

40,000

 

 

151

 

 

1.51

%

Other long-term borrowings

 

 

80,031

 

 

1,191

 

 

5.95

%

 

 

82,154

 

 

1,685

 

 

8.21

%

 

 

69,028

 

 

1,154

 

 

6.69

%

Total interest-bearing liabilities

 

 

4,211,374

 

 

5,277

 

 

0.50

%

 

 

4,414,564

 

 

4,643

 

 

0.42

%

 

 

3,526,800

 

 

3,296

 

 

0.37

%

Noninterest-bearing deposits

 

 

1,924,055

 

 

 

 

 

 

1,923,870

 

 

 

 

 

 

1,483,010

 

 

 

 

Other liabilities

 

 

87,338

 

 

 

 

 

 

75,768

 

 

 

 

 

 

74,286

 

 

 

 

Stockholders' equity

 

 

731,549

 

 

 

 

 

 

748,731

 

 

 

 

 

 

522,909

 

 

 

 

Total liabilities and stockholders' equity

 

$

6,954,316

 

 

 

 

 

$

7,162,933

 

 

 

 

 

$

5,607,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

68,486

 

 

 

 

 

 

$

58,585

 

 

 

 

 

 

$

39,965

 

 

 

Net interest spread

 

 

 

 

4.09

%

 

 

 

 

 

 

3.43

%

 

 

 

 

 

 

2.88

%

 

 

Net interest margin

 

 

 

 

4.26

%

 

 

 

 

 

 

3.56

%

 

 

 

 

 

 

3.01

%

 

 

Net interest margin (on a FTE basis) (2)

 

 

 

 

4.31

%

 

 

 

 

 

 

3.64

%

 

 

 

 

 

 

3.10

%

 

 

 

(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 nine months ended

 

 

September 30, 2022

 

September 30, 2021

(In thousands)

 

Average
Balance

 

Interest

 

Average
Yield/Rate

 

Average
Balance

 

Interest

 

Average
Yield/Rate

Interest Earning Assets

 

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

 

$

62,638

 

$

2,707

 

 

5.76

%

 

$

135,202

 

$

3,257

 

 

3.21

%

Loans held-for-investment (1)

 

 

4,953,042

 

 

166,006

 

 

4.47

%

 

 

3,761,029

 

 

115,423

 

 

4.09

%

Investment securities

 

 

615,726

 

 

9,252

 

 

2.00

%

 

 

511,757

 

 

5,646

 

 

1.47

%

Interest-bearing cash and other assets

 

 

496,349

 

 

3,687

 

 

0.99

%

 

 

693,833

 

 

1,450

 

 

0.28

%

Total earning assets

 

 

6,127,755

 

 

181,652

 

 

3.95

%

 

 

5,101,821

 

 

125,776

 

 

3.29

%

Other assets

 

 

473,909

 

 

 

 

 

 

287,500

 

 

 

 

Total assets

 

$

6,601,664

 

 

 

 

 

$

5,389,321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Demand and NOW deposits

 

$

214,862

 

$

848

 

 

0.53

%

 

$

271,955

 

$

636

 

 

0.31

%

Savings deposits

 

 

497,240

 

 

451

 

 

0.12

%

 

 

454,371

 

 

363

 

 

0.11

%

Money market deposits

 

 

2,567,406

 

 

3,644

 

 

0.19

%

 

 

2,183,473

 

 

3,305

 

 

0.20

%

Certificates of deposits

 

 

498,753

 

 

2,077

 

 

0.56

%

 

 

350,217

 

 

2,427

 

 

0.92

%

Total deposits

 

 

3,778,261

 

 

7,020

 

 

0.25

%

 

 

3,260,016

 

 

6,731

 

 

0.28

%

Repurchase agreements

 

 

59,572

 

 

74

 

 

0.17

%

 

 

131,444

 

 

49

 

 

0.05

%

Total deposits and repurchase agreements

 

 

3,837,833

 

 

7,094

 

 

0.25

%

 

 

3,391,460

 

 

6,780

 

 

0.27

%

FHLB borrowings

 

 

128,654

 

 

1,680

 

 

1.74

%

 

 

43,379

 

 

758

 

 

2.33

%

Other long-term borrowings

 

 

82,768

 

 

4,522

 

 

7.28

%

 

 

68,787

 

 

3,456

 

 

6.70

%

Total interest-bearing liabilities

 

 

4,049,255

 

 

13,296

 

 

0.44

%

 

 

3,503,626

 

 

10,994

 

 

0.42

%

Noninterest-bearing deposits

 

 

1,805,982

 

 

 

 

 

 

1,295,984

 

 

 

 

Other liabilities

 

 

77,436

 

 

 

 

 

 

77,878

 

 

 

 

Stockholders' equity

 

 

668,991

 

 

 

 

 

 

511,833

 

 

 

 

Total liabilities and stockholders' equity

 

$

6,601,664

 

 

 

 

 

$

5,389,321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

168,356

 

 

 

 

 

 

$

114,782

 

 

 

Net interest spread

 

 

 

 

3.51

%

 

 

 

 

 

 

2.87

%

 

 

Net interest margin

 

 

 

 

3.66

%

 

 

 

 

 

 

3.00

%

 

 

Net interest margin (on a FTE basis) (2)

 

 

 

 

3.75

%

 

 

 

 

 

 

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)

 

September 30,
2022

 

June 30,
2022

 

September 30,
2022
vs

June 30,
2022
% change

 

September 30,
2021

 

September 30,
2022
vs

September 30,
2021
% change

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

2,738,068

 

$

2,674,043

 

2.4

%

 

$

2,222,261

 

23.2

%

Commercial real estate

 

 

1,772,315

 

 

1,750,882

 

1.2

%

 

 

1,137,820

 

55.8

%

Residential real estate

 

 

1,003,157

 

 

918,580

 

9.2

%

 

 

425,927

 

135.5

%

Consumer

 

 

43,146

 

 

44,423

 

(2.9

) %

 

 

17,973

 

140.1

%

Total loans held-for-investment

 

$

5,556,686

 

$

5,387,928

 

3.1

%

 

$

3,803,981

 

46.1

%

Asset Quality:

 

 

As of and for the quarter ended

 

As of and for the nine months ended

($ in thousands)

 

September 30,

2022

 

June 30,

2022

 

September 30,

2021

 

September 30,

2022

 

September 30,

2021

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs (recoveries)

 

$

149

 

 

$

(568

)

 

$

(1,390

)

 

$

319

 

 

$

1,648

 

Allowance for loan losses

 

$

59,678

 

 

$

56,077

 

 

$

47,868

 

 

$

59,678

 

 

$

47,868

 

Nonperforming loans, including nonaccrual loans, accrual TDRs, and accrual loans greater than 90 days past due

 

$

42,460

 

 

$

38,283

 

 

$

36,955

 

 

$

42,460

 

 

$

36,955

 

Nonperforming assets

 

$

47,851

 

 

$

43,674

 

 

$

42,702

 

 

$

47,851

 

 

$

42,702

 

Ratio of net charge-offs (recoveries) to average loans outstanding

 

 

0.01

%

 

 

(0.04

)%

 

 

(0.15

)%

 

 

0.01

%

 

 

0.06

%

Allowance for loan losses to total loans outstanding

 

 

1.07

%

 

 

1.04

%

 

 

1.26

%

 

 

1.07

%

 

 

1.26

%

Allowance for loan losses to total nonperforming loans

 

 

140.55

%

 

 

146.48

%

 

 

129.53

%

 

 

140.55

%

 

 

129.53

%

Nonperforming loans to total loans

 

 

0.76

%

 

 

0.71

%

 

 

0.97

%

 

 

0.76

%

 

 

0.97

%

Nonperforming assets to total assets

 

 

0.68

%

 

 

0.62

%

 

 

0.75

%

 

 

0.68

%

 

 

0.75

%

Non-GAAP Financial Measures and Reconciliations:

 

As of and for the quarter ended

 

As of and for the nine months ended

($ in thousands, except share and per share amounts)

September 30,
2022

 

June 30,
2022

 

September 30,
2021

 

September 30,
2022

 

September 30,
2021

Tangible stockholders’ equity:

Total stockholders' equity (GAAP)

$

750,653

 

 

$

727,542

 

 

$

519,921

 

 

$

750,653

 

 

$

519,921

 

Less: Goodwill and other intangible assets

 

 

 

 

 

 

 

 

 

Goodwill

 

(93,483

)

 

 

(93,483

)

 

 

(33,050

)

 

 

(93,483

)

 

 

(33,050

)

Other intangible assets

 

(17,825

)

 

 

(18,760

)

 

 

(8,605

)

 

 

(17,825

)

 

 

(8,605

)

Total tangible stockholders' equity (non-GAAP)

$

639,345

 

 

$

615,299

 

 

$

478,266

 

 

$

639,345

 

 

$

478,266

 

Tangible assets:

Total assets (GAAP)

$

7,052,917

 

 

$

7,060,692

 

 

$

5,683,085

 

 

$

7,052,917

 

 

$

5,683,085

 

Less: Goodwill and other intangible assets

 

 

 

 

 

 

 

 

 

Goodwill

 

(93,483

)

 

 

(93,483

)

 

 

(33,050

)

 

 

(93,483

)

 

 

(33,050

)

Other intangible assets

 

(17,825

)

 

 

(18,760

)

 

 

(8,605

)

 

 

(17,825

)

 

 

(8,605

)

Total tangible assets (non-GAAP)

$

6,941,609

 

 

$

6,948,449

 

 

$

5,641,430

 

 

$

6,941,609

 

 

$

5,641,430

 

Tangible stockholders’ equity to tangible assets:

Common equity to total assets (GAAP)

 

10.64

%

 

 

10.30

%

 

 

9.15

%

 

 

10.64

%

 

 

9.15

%

Less: Impact of goodwill and other intangible assets

 

1.43

%

 

 

1.44

%

 

 

0.67

%

 

 

1.43

%

 

 

0.67

%

Tangible common equity to tangible assets (non-GAAP)

 

9.21

%

 

 

8.86

%

 

 

8.48

%

 

 

9.21

%

 

 

8.48

%

Tangible book value per common share:

Stockholders' equity (GAAP)

$

750,653

 

 

$

727,542

 

 

$

519,921

 

 

$

750,653

 

 

$

519,921

 

Tangible stockholders' equity (non-GAAP)

$

639,345

 

 

$

615,299

 

 

$

478,266

 

 

$

639,345

 

 

$

478,266

 

Total common shares outstanding

 

24,906,032

 

 

 

24,850,954

 

 

 

18,321,659

 

 

 

24,906,032

 

 

 

18,321,659

 

Book value per common share (GAAP)

$

30.14

 

 

$

29.28

 

 

$

28.38

 

 

$

30.14

 

 

$

28.38

 

Tangible book value per common share (non-GAAP)

$

25.67

 

 

$

24.76

 

 

$

26.10

 

 

$

25.67

 

 

$

26.10

 

Net income excluding merger costs:

Net income (GAAP)

$

26,513

 

 

$

430

 

 

$

8,728

 

 

$

34,612

 

 

$

34,347

 

Add: Merger costs

 

 

 

 

 

 

 

 

 

Merger related expenses

 

 

 

 

18,448

 

 

 

705

 

 

 

18,751

 

 

 

1,984

 

Income tax effect on merger related expenses

 

 

 

 

(4,033

)

 

 

(116

)

 

 

(4,083

)

 

 

(327

)

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

 

 

 

589

 

 

 

17,031

 

 

 

1,657

 

Net income excluding merger costs (non-GAAP)

$

26,513

 

 

$

17,208

 

 

$

9,317

 

 

$

51,643

 

 

$

36,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average total assets excluding merger costs:

Return on average total assets (ROAA) (GAAP)

 

1.52

%

 

 

0.02

%

 

 

0.62

%

 

 

0.70

%

 

 

0.85

%

Add: Impact of merger costs, net of tax

 

%

 

 

0.94

%

 

 

0.04

%

 

 

0.34

%

 

 

0.04

%

ROAA excluding merger costs (non-GAAP)

 

1.52

%

 

 

0.96

%

 

 

0.66

%

 

 

1.04

%

 

 

0.89

%

Return on average stockholders’ equity excluding merger costs:

Return on average stockholders' equity (ROAE) (GAAP)

 

14.50

%

 

 

0.23

%

 

 

6.68

%

 

 

6.90

%

 

 

8.95

%

Add: Impact of merger costs, net of tax

 

%

 

 

8.96

%

 

 

0.45

%

 

 

3.39

%

 

 

0.43

%

ROAE excluding merger costs (non-GAAP)

 

14.50

%

 

 

9.19

%

 

 

7.13

%

 

 

10.29

%

 

 

9.38

%

Efficiency ratio excluding merger related expenses:

Efficiency ratio (GAAP)

 

59.45

%

 

 

93.55

%

 

 

79.49

%

 

 

76.76

%

 

 

79.37

%

Less: Impact of merger related expenses

 

%

 

 

22.81

%

 

 

1.03

%

 

 

7.84

%

 

 

0.95

%

Efficiency ratio excluding merger related expenses (non-GAAP)

 

59.45

%

 

 

70.74

%

 

 

78.46

%

 

 

68.92

%

 

 

78.42

%

Diluted earnings per share excluding merger costs:

Diluted earnings per share (GAAP)

$

1.04

 

 

$

0.02

 

 

$

0.46

 

 

$

1.49

 

 

$

1.83

 

Add: Impact of merger costs, net of tax

 

 

 

 

0.66

 

 

 

0.04

 

 

 

0.73

 

 

 

0.09

 

Diluted earnings per share excluding merger costs (non-GAAP)

$

1.04

 

 

$

0.68

 

 

$

0.50

 

 

$

2.22

 

 

$

1.92

 

Fully tax equivalent (FTE) net interest income and net interest margin on FTE basis:

Net interest income (GAAP)

$

68,486

 

 

$

58,585

 

 

$

39,965

 

 

$

168,356

 

 

$

114,782

 

Gross income effect of tax exempt income

 

1,236

 

 

 

1,284

 

 

 

924

 

 

 

3,841

 

 

 

4,419

 

FTE net interest income (non-GAAP)

$

69,722

 

 

$

59,869

 

 

$

40,889

 

 

$

172,197

 

 

$

119,201

 

Average earning assets

$

6,434,653

 

 

$

6,577,173

 

 

$

5,319,682

 

 

$

6,127,755

 

 

$

5,101,821

 

Net interest margin

 

4.26

%

 

 

3.56

%

 

 

3.01

%

 

 

3.66

%

 

 

3.00

%

Net interest margin on FTE basis (non-GAAP)

 

4.31

%

 

 

3.64

%

 

 

3.10

%

 

 

3.75

%

 

 

3.13

%

 

 

 

 

 

 

 

 

 

 

 

Investor Relations:
Kelly C. Rackley
Corporate Secretary & Sr. Paralegal
303.962.0150 | stockholder.relations@sunflowerbank.com

Media Relations:
Jeanne Lipson
Vice President, Marketing
915.881.6785

Source: FirstSun Capital Bancorp