FirstSun Capital Bancorp Reports Fourth Quarter and Full Year 2024 Results

Fourth Quarter 2024 Highlights:

• Net income of $16.4 million, $0.58 per diluted share (adjusted, $24.3 million, $0.86 per diluted share, see the “Non-GAAP Financial Measures and Reconciliations” below)
• Net interest margin of 4.11%
• Return on average total assets of 0.81% (adjusted, 1.21%, see the “Non-GAAP Financial Measures and Reconciliations” below)
• Return on average stockholders’ equity of 6.25% (adjusted, 9.30%, see the “Non-GAAP Financial Measures and Reconciliations” below)
• Average deposit growth of 3.0%, annualized
• 21.9% noninterest income to total revenue¹

FirstSun Capital Bancorp (“FirstSun”) (NASDAQ: FSUN) reported net income of $16.4 million for the fourth quarter of 2024 compared to net income of $24.0 million for the fourth quarter of 2023. Earnings per diluted share were $0.58 for the fourth quarter of 2024 compared to $0.94 for the fourth quarter of 2023. Adjusted net income, a non-GAAP financial measure, was $24.3 million or $0.86 per diluted share for the fourth quarter of 2024.

Neal Arnold, FirstSun’s Chief Executive Officer and President, commented, “We are very pleased to deliver another strong quarter with positive operating leverage driving core earnings growth. Our performance highlights this quarter include a continued strong net interest margin at 4.11% and deposit growth, complemented by our diversified business mix with noninterest income to total revenue at 21.9%. Our consistent focus on our C&I, consumer and service fee businesses has enabled us to deliver strong earnings again this year. Further, our strong performance was recognized earlier this month by Kroll Bond Rating Agency, LLC as they affirmed our debt ratings, as well as the debt and deposit ratings for our subsidiary, Sunflower Bank, N.A.

“Also, we have recently taken a few branching related actions as part of our recurring evaluation of all our markets. We are pleased to announce that late in the fourth quarter of 2024, our regulator approved our planned relocation of a branch located in Albuquerque, New Mexico. Additionally, earlier in January 2025, we submitted applications with our regulator to establish two new depository branches, one in each of our San Diego and Los Angeles, CA expansion markets. We expect to add to our investment in these large and diverse growth markets. Finally, I want to thank all of our hard working employees for their continued service to all of our customers and their commitment to excellence.”

Fourth Quarter 2024 Results

Net income totaled $16.4 million, or $0.58 per diluted share, for the fourth quarter of 2024, compared to $22.4 million, or $0.79 per diluted share, for the prior quarter. Net income, for the fourth quarter of 2024, was negatively impacted by $5.8 million, net of tax, of terminated merger costs or $0.21 per diluted share, $1.5 million, net of tax, of costs to dispose of a majority of our ATMs and amend our associated service contract as we move to participating in a national ATM network, or $0.05 per diluted share, and a $0.6 million, net of tax, write-off of the Guardian Mortgage trade name as we consolidate our brand names or $0.02 per diluted share, compared to $1.2 million, net of tax, in terminated merger costs or $0.05 per diluted share, for the prior quarter.

The return on average total assets was 0.81% for the fourth quarter of 2024, compared to 1.13% for the prior quarter, and the return on average stockholders’ equity was 6.25% for the fourth quarter of 2024, compared to 8.79% for the prior quarter. Fourth quarter of 2024 non-recurring expenses, net of tax, negatively impacted return on average total assets by 0.40% and return on average stockholders’ equity by 3.05%. Third quarter of 2024 non-recurring expenses, net of tax, negatively impacted return on average total assets by 0.06% and return on average stockholders’ equity by 0.48%.

Net Interest Income and Net Interest Margin

Net interest income totaled $77.0 million for the fourth quarter of 2024, an increase of $0.9 million compared to the prior quarter. Our net interest margin increased one basis point to 4.11% compared to the prior quarter. Results for the fourth quarter of 2024, compared to the prior quarter, were primarily driven by a decrease of 30 basis points in the cost of interest-bearing liabilities, largely offset by a decrease of 20 basis points in the yield on earning assets.

Average loans, including loans held-for-sale, increased by $21.2 million in the fourth quarter of 2024, compared to the prior quarter. Loan yield decreased by 16 basis points to 6.55% in the fourth quarter of 2024, compared to the prior quarter, primarily due to the declining interest rate environment and its impact on variable rate loans in the portfolio. Average interest-bearing deposits increased $35.8 million in the fourth quarter of 2024, compared to the prior quarter. Total cost of interest-bearing deposits decreased by 29 basis points to 2.87% in the fourth quarter of 2024, compared to the prior quarter, primarily due to a decrease in average certificates of deposit balances. Average FHLB borrowings decreased $13.7 million in the fourth quarter of 2024, compared to the prior quarter. The cost of FHLB borrowings decreased by 56 basis points to 5.05% in the fourth quarter of 2024, compared to the prior quarter.

Asset Quality and Provision for Credit Losses

The provision for credit losses totaled $4.9 million for the fourth quarter of 2024 primarily due to the combined impact of certain deteriorating factors influencing macroeconomic forecasts and deterioration on a specific customer relationship in our loan portfolio, partially offset by the release of a specific allowance for credit losses associated with the full pay-off of a previous nonperforming loan.

Net charge-offs (recoveries) for the fourth quarter of 2024 were $(0.5) million resulting in an annualized ratio of net charge-offs (recoveries) to average loans of (0.03)%, compared to net charge-offs of $1.4 million, or an annualized ratio of net-charge offs to average loans of 0.09% for the prior quarter.

The allowance for credit losses as a percentage of total loans was 1.38% at December 31, 2024, an increase of nine basis points from the prior quarter. The ratio of nonperforming assets to total assets was 0.92% at December 31, 2024, compared to 0.86% at September 30, 2024.

Noninterest Income

Noninterest income totaled $21.6 million for the fourth quarter of 2024, a decrease of $0.4 million from the prior quarter. Mortgage banking income increased $0.8 million for the fourth quarter of 2024, primarily due to an increase in net capitalized servicing values and a change in fair value of our MSR asset, net of hedging activity, partially offset by a decrease in revenue related to net sale gains and fees from mortgage loan originations, including fair value changes in the held-for-sale portfolio and hedging.

Other noninterest income decreased $1.1 million for the fourth quarter of 2024, primarily due to a decrease in the fair value of investments related to our deferred compensation plan. Noninterest income as a percentage of total revenue¹ was 21.9%, a decrease of 0.5% from the prior quarter.

Noninterest Expense

Noninterest expense totaled $73.7 million for the fourth quarter of 2024, an increase of $9.0 million from the prior quarter, primarily due to an increase in terminated merger related expenses of $6.4 million from the prior quarter. Additional non-recurring expenses in the fourth quarter of 2024 include $2.0 million of costs to dispose of a majority of our ATMs and amend our associated service contract as we move to participating in a national ATM network, and a $0.8 million write-off of the Guardian Mortgage trade name as we are in the process of rebranding our residential mortgage business as Sunflower Bank Mortgage Lending. Adjusted noninterest expense, a non-GAAP financial measure, totaled $62.8 million for the fourth quarter of 2024, a decrease of $0.2 million from the prior quarter.

The efficiency ratio for the fourth quarter of 2024 was 74.66% compared to 65.83% for the prior quarter. The adjusted efficiency ratio, a non-GAAP financial measure, for the fourth quarter of 2024 was 63.63% compared to 64.16% for the prior quarter.

Tax Rate

The effective tax rate was 18.9% for the fourth quarter of 2024, compared to 21.5% for the prior quarter.

Loans

Loans were $6.4 billion at December 31, 2024 and September 30, 2024, decreasing by $67.4 million in the fourth quarter of 2024, primarily due to a decrease of $68.8 million of non-owner occupied commercial real estate loans.

Deposits

Deposits were $6.7 billion at December 31, 2024 compared to $6.6 billion at September 30, 2024, an increase of $22.4 million in the fourth quarter of 2024, or 1.3% on an annualized basis. In the fourth quarter, $40.2 million in interest-bearing demand accounts growth and $225.3 million in savings accounts and money market accounts growth were partially offset by a decline of $233.9 million in certificate of deposit accounts. Average deposits were $6.6 billion for the fourth quarter of 2024 and the prior quarter, increasing $48.7 million in the fourth quarter of 2024, or 3.0% on an annualized basis. Noninterest-bearing deposit accounts represented 23.1% of total deposits at December 31, 2024 and the loan-to-deposit ratio was 95.6% at December 31, 2024.

The ratio of total uninsured deposits to total deposits was estimated to be 34.8% at December 31, 2024, compared to 32.7% at September 30, 2024. The ratio of total uninsured and uncollateralized deposits to total deposits was estimated to be 25.2% at December 31, 2024, compared to 26.8% at September 30, 2024.²

Capital

Capital ratios remain strong and above “well-capitalized” thresholds. As of December 31, 2024, our common equity tier 1 risk-based capital ratio was 13.18%, total risk-based capital ratio was 15.42% and tier 1 leverage ratio was 12.11%. Book value per share was $37.58 at December 31, 2024, an increase of $0.20 from September 30, 2024. Tangible book value per share, a non-GAAP financial measure, was $33.94 at December 31, 2024, an increase of $0.26 from September 30, 2024.

Full Year 2024 Results

Full Year Highlights:

• Net income of $75.6 million, $2.69 per diluted share (adjusted, $87.7 million, $3.13 per diluted share, see the “Non-GAAP Financial Measures and Reconciliations” below)
• Net interest margin of 4.06%
• Return on average total assets of 0.96% (adjusted, 1.12%, see the “Non-GAAP Financial Measures and Reconciliations” below)
• Return on average stockholders’ equity of 7.56% (adjusted, 8.77%, see the “Non-GAAP Financial Measures and Reconciliations” below)
• Average deposit growth of 5.8%
• Loan growth of 1.7%
• 23.2% fee revenue to total revenue¹

Net income totaled $75.6 million, or $2.69 per diluted share, in 2024, compared to $103.5 million, or $4.08 per diluted share, in 2023. Adjusted net income, a non-GAAP financial measure, was $87.7 million, or $3.13 per diluted share, in 2024. The return on average total assets was 0.96% in 2024, compared to 1.38% in 2023, and the return on average stockholders’ equity was 7.56% in 2024, compared to 12.50% in 2023. Adjusted return on average total assets and adjusted return on average stockholders’ equity, each a non-GAAP financial measure, were 1.12% and 8.77% respectively in 2024.

Net Interest Income and Net Interest Margin

Net interest income totaled $296.9 million in 2024, an increase of $3.5 million compared to 2023. Our net interest margin decreased 17 basis points to 4.06% in 2024, compared to 2023. Results in 2024, compared to the prior year, were driven by an increase of 66 basis points in the cost of interest-bearing liabilities, partially offset by an increase of 32 basis points in yield on earning assets.

Average loans, including loans held-for-sale, increased by $232.1 million in 2024, compared to 2023. Loan yield increased by 34 basis points to 6.58% in 2024, compared to 2023, primarily due to higher yields on new originations as compared to amortizing and maturing balances. Average deposits increased $490.3 million in 2024, compared to 2023. Total cost of deposits increased by 76 basis points to 3.03% in 2024, compared to 2023, primarily due to continued intense competition for deposits amidst the elevated interest rate environment. Average FHLB borrowings decreased $144.8 million in 2024, compared to 2023. The cost of FHLB borrowings increased by 43 basis points to 5.48% in 2024, compared to 2023.

Asset Quality and Provision for Credit Losses

The provision for credit losses totaled $27.6 million in 2024, an increase of $9.3 million compared to 2023, primarily due to a $13.6 million provision for credit loss on a specific customer in our commercial and industrial (C&I) loan portfolio in 2024.

Net charge-offs in 2024 were $20.4 million, or a ratio of net charge-offs to average loans of 0.32%, compared to net charge-offs of $7.8 million, or a ratio of net charge-offs to average loans of 0.13%, in 2023. The increase in net charge-offs in 2024 is primarily due to a $16.7 million net charge-off on a specific customer in our C&I loan portfolio.

The allowance for credit losses as a percentage of total loans was 1.38% at December 31, 2024, compared to 1.28% at December 31, 2023. The ratio of nonperforming assets to total assets was 0.92% at December 31, 2024, compared to 0.85% at December 31, 2023.

Noninterest Income

Noninterest income totaled $89.8 million during 2024, an increase of $10.7 million from 2023. Mortgage banking income increased $7.6 million in 2024, primarily due to an increase in revenue related to net sale gains and fees from mortgage loan originations, including fair value changes in the held-for-sale portfolio and hedging, an increase in net capitalized servicing values, and a change in fair value of our MSR asset, net of hedging activity.

Treasury management service fees increased $3.1 million in 2024, primarily due to growth in services provided to our business customers, as compared to 2023. Noninterest income as a percentage of total revenue¹ totaled 23.2% in 2024, compared to 21.2% in 2023.

Noninterest Expense

Noninterest expense totaled $264.0 million in 2024, an increase of $41.2 million from 2023, primarily due to an increase in salaries and benefits of $21.8 million as a result of increased head count of C&I bankers and higher levels of variable compensation associated with an increase in mortgage loan originations.

Noninterest expense in 2024 included terminated merger related expenses of $13.2 million. Additional non-recurring expenses include $2.0 million of costs to dispose of a majority of our ATMs and amend our associated service contract as we move to participating in a national ATM network, and a $0.8 million write-off of the Guardian Mortgage trade name as we are in the process of rebranding our residential mortgage business as Sunflower Bank Mortgage Lending. Adjusted noninterest expense, a non-GAAP financial measure, totaled $248.0 million in 2024, an increase of $25.2 million from 2023.

The efficiency ratio for 2024 was 68.28% compared to 59.81% in 2023. The adjusted efficiency ratio, a non-GAAP financial measure, in 2024 was 64.13% compared to 59.81% in 2023.

Tax Rate

The effective tax rate was 20.5% in 2024, compared to 21.3% in 2023.

Loans

Loans were $6.4 billion at December 31, 2024 compared to $6.3 billion at December 31, 2023, an increase of $109.3 million or 1.7%. Growth in C&I, owner occupied commercial real estate, construction and land loans, and residential real estate loans were partially offset by a decline in non-owner occupied commercial real estate, multifamily, and public finance loans.

Deposits

Average deposits were $6.5 billion for the year ending December 31, 2024, compared to $6.2 billion for the prior year, an increase of $354.9 million or 5.8%. Noninterest-bearing deposit accounts represented 23.1% of total deposits at December 31, 2024 and the loan-to-deposit ratio was 95.6% at December 31, 2024.

The ratio of total uninsured deposits to total deposits was estimated to be 34.8% at December 31, 2024. The ratio of total uninsured and uncollateralized deposits to total deposits was estimated to be 25.2% at December 31, 2024.²

Capital

Capital ratios remain strong and above “well-capitalized” thresholds. As of December 31, 2024, our common equity tier 1 risk-based capital ratio was 13.18%, total risk-based capital ratio was 15.42% and tier 1 leverage ratio was 12.11%. Book value per share was $37.58 at December 31, 2024, an increase of $2.44 from December 31, 2023. Tangible book value per share, a non-GAAP financial measure, was $33.94 at December 31, 2024, an increase of $2.98 from December 31, 2023.

Non-GAAP Financial Measures

This press release (including the tables within the “Non-GAAP Financial Measures and Reconciliations” section) contains financial 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 non-GAAP financial measures, however, 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 non-GAAP measures used in this press release:

• Tangible stockholders’ equity to tangible assets;
• Tangible stockholders’ equity to tangible assets, reflecting net unrealized losses on HTM securities, net of tax;
• Tangible book value per share;
• Adjusted net income;
• Adjusted diluted earnings per share;
• Adjusted return on average total assets;
• Adjusted return on average stockholders’ equity;
• Return on average tangible stockholders’ equity;
• Adjusted return on average tangible stockholders’ equity;
• Adjusted total noninterest expense;
• Adjusted efficiency ratio; and
• Fully tax equivalent (“FTE”) net interest income and net interest margin.

The tables within the “Non-GAAP Financial Measures and Reconciliations” section provide a reconciliation of each non-GAAP financial measure contained in this press release 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, which we are in the process of rebranding as Sunflower Bank Mortgage Lending. 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 $8.1 billion as of December 31, 2024.

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 Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In general, forward-looking statements usually may be identified through use of words such as “may,” “believe,” “expect,” “anticipate,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential,” or the negative of these terms or other comparable terminology, and include statements our expectations to expand in the San Diego and Los Angeles markets. Forward-looking statements are not historical facts and represent management’s beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements.

Factors that could cause or contribute to such differences include, but are not limited to (1) the risk regulators may delay or disapprove our branch applications, (2) the possibility that we may be unable to obtain suitable locations for the operation of branches in those markets, (3) the possibility that we may be unable to attract or retain suitable employees in the numbers required to support such expansion, and (4) general competitive, economic, political and market conditions.

Many of these factors are beyond FirstSun’s ability to control or predict. If one or more events related to these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, shareholders and investors should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this communication, and FirstSun undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for FirstSun to predict their occurrence or how they will affect FirstSun.

FirstSun qualifies all forward-looking statements by these cautionary statements.