Firstsun Capital Bancorp(FSUN) - 2024 Q4 - Annual Report

Loan Portfolio and Credit Quality - Non-owner occupied commercial real estate loans accounted for 66.7% of the Company's risk-based capital, representing 11.8% of total loans as of December 31, 2024[58] - Owner-occupied commercial real estate loans associated with office space totaled $186.3 million, or 2.9% of total loans as of December 31, 2024[58] - The average FICO score for mortgage loans was 743 in 2024, indicating a focus on quality borrower credit profiles[64] - Consumer loans typically have shorter terms, lower balances, and higher risks of default compared to residential real estate mortgage loans[61] - Commercial real estate loans are often larger and involve greater risks, with adverse developments potentially increasing credit risk[58] - The Company maintains a diversified loan portfolio to manage credit risk, with tailored underwriting criteria for various loan products[73] - The bank's portfolio segments include commercial and industrial loans, residential real estate loans, and public finance loans, among others[478] - Loans that do not share similar risk characteristics are evaluated individually for credit losses based on discounted cash flows or the fair value of collateral[485] - Management estimates the ACL using relevant information, including historical credit loss experience and macroeconomic indicators such as unemployment rates and property values[476] Financial Performance - Net income for 2024 was$ 75,628 thousand, a decrease of 27.0% compared to $103,533 thousand in 2023[442] - Total interest income rose to$ 459,540 thousand in 2024, an increase of 11.1% from $413,684 thousand in 2023[442] - Provision for credit losses increased to$ 27,550 thousand in 2024, up from $18,247 thousand in 2023, reflecting a rise of 51.0%[442] - Total deposits grew to$ 6,672,260 thousand in 2024, compared to $6,374,103 thousand in 2023, marking an increase of 4.67%[441] - Noninterest income increased to$ 89,792 thousand in 2024, up from $79,092 thousand in 2023, a growth of 13.5%[442] - Basic earnings per share decreased to$ 2.76 in 2024 from $4.15 in 2023, a decline of 33.5%[442] - Total stockholders' equity rose to$ 1,041,366 thousand in 2024, compared to $877,197 thousand in 2023, an increase of 18.7%[441] - Interest expense on deposits increased significantly to$ 150,651 thousand in 2024, up from $101,355 thousand in 2023, a rise of 48.5%[442] Regulatory Compliance and Risk Management - The Dodd-Frank Act continues to impact financial institutions, mandating new regulations that could materially affect business operations[93] - The bank holding company is required to maintain a common equity Tier 1 (CET1) risk-based capital ratio of 4.5%[120] - The total risk-based capital ratio must be at least 8% to meet regulatory requirements[120] - The leverage ratio is mandated to be a minimum of 4%[120] - A capital conservation buffer of 2.5% is required under Basel III, bringing the effective CET1 capital ratio to 7.0%[121] - The bank must maintain a Tier 1 risk-based capital ratio of 6% and a total risk-based capital ratio of 10.5% to avoid restrictions on capital distributions[121] - The bank holding company must guarantee compliance of any undercapitalized subsidiary up to 5% of the institution's total assets[112] - The Federal Reserve can require a bank holding company to divest subsidiaries if deemed necessary for financial stability[109] - The bank is subject to comprehensive capital adequacy requirements under Basel III, which apply to all state and national banks regardless of size[119] Employee Engagement and Compensation - The total number of employees as of December 31, 2024, was 1,142, with 1,127 being full-time equivalent employees[81] - The company offers a competitive compensation and benefits package, including a 401(k) plan with employer matching contributions, healthcare benefits, and tuition reimbursement[82] - Employee engagement surveys are conducted to identify strengths and areas for improvement, ensuring continued satisfaction and retention of employees[85] Strategic Initiatives and Market Position - The Company aims to grow its commercial and industrial loan portfolio, emphasizing tailored programs to meet client needs[54] - The terminated merger with HomeStreet was agreed upon on November 18, 2024, indicating a strategic shift in the company's growth plans[453] - The company has fully transitioned from the use of LIBOR on all contracts as of December 31, 2024, following the FASB's standards associated with the cessation of LIBOR[496] Cash Flow and Asset Management - Cash flows from operating activities decreased to$ 101,120,000 in 2024 from $125,176,000 in 2023, representing a decline of 19.2%[450] - Net cash provided by operating activities for 2024 was$ 101,120,000, down from $125,176,000 in 2023, a decline of 19%[447] - The net change in deposits was$ 298,497,000 in 2024, compared to $610,007,000 in 2023, indicating a decrease of 51.0%[450] - Proceeds from Federal Home Loan Bank advances increased significantly to$ 5,460,410,000 in 2024 from $2,041,468,000 in 2023, a rise of 167.5%[450] - Cash and cash equivalents at the end of the period increased to$ 615,917,000 in 2024 from $479,362,000 in 2023, a growth of 28.5%[450] Compliance and Legal Obligations - The company must file suspicious activity reports if it finds any relationships or transactions with persons on lists of suspected terrorists[148] - The Office of Foreign Assets Control (OFAC) mandates that banks must freeze or block transactions involving names on its lists[150] - The company is subject to enhanced due diligence requirements for managing private bank accounts for non-U.S. persons[149] - The bank must maintain a designated compliance officer and conduct ongoing employee training programs as part of its anti-money laundering program[144] - The company recognizes interest and/or penalties related to income tax matters in income tax expense, with no examinations by taxing authorities for years before 2021[506]