Firstsun Capital Bancorp(FSUN) - 2024 Q1 - Quarterly Report

Financial Performance - FirstSun reported a net income of $12.3 million for Q1 2024, down from $26.3 million in Q1 2023, with diluted earnings per share of $0.45 compared to $1.03 in the prior year[211]. - The provision for credit losses increased to $16.5 million in Q1 2024, compared to $3.36 million in Q1 2023[213]. - Net income (GAAP) for the three months ended March 31, 2024, was $12,296 thousand, a decrease of 53.3% from $26,281 thousand in the same period of 2023[216]. - Return on common stockholders' equity (GAAP) decreased to 5.10% for the three months ended March 31, 2024, down from 13.16% for the same period in 2023[216]. - Income before income taxes increased by $5.5 million to $3.1 million for Q1 2024, compared to a loss of $2.4 million in Q1 2023, driven by higher net interest income and increased revenue from mortgage banking services[221]. Revenue and Income Sources - Noninterest income accounted for 24.4% of total revenue in Q1 2024[211]. - Revenue from mortgage banking services increased by $2.5 million to $10.1 million for Q1 2024, compared to $7.6 million in Q1 2023, primarily due to net sale gains and fees from mortgage loan originations[221]. - Noninterest income for Q1 2024 was $22.8 million, an increase from $18.9 million in Q1 2023, reflecting growth in various service charges and fees[235]. - Income from mortgage banking services increased by $2.1 million to $9,502 thousand in Q1 2024 compared to Q1 2023[1][4]. Asset and Liability Management - Total assets as of Q1 2024 were $7.78 billion, up from $7.61 billion in Q1 2023[213]. - Total deposits grew to $4,849,323 thousand in Q1 2024, compared to $4,066,645 thousand in Q1 2023, with a total interest-bearing liabilities of $5,056,743 thousand[1]. - Total assets increased to $7,648,965 thousand as of March 31, 2024, compared to $7,309,894 thousand in the same period of 2023[1]. - Stockholders' equity increased by $87.5 million, or 10.0%, to $964.7 million as of March 31, 2024, compared to $877.2 million at December 31, 2023[307]. Loan and Deposit Growth - Loan growth was recorded at 1.1% annualized, while deposit growth was 4.5% annualized[211]. - Average total loans grew to $6.3 billion at March 31, 2024, an increase of $0.3 billion or 4.7% compared to March 31, 2023[242]. - Total loans held-for-investment remained stable at $6.3 billion as of March 31, 2024, consistent with December 31, 2023[278]. - Average interest-bearing deposits increased by $0.8 billion or 19.2% in Q1 2024 compared to Q1 2023, supporting the growth in the loan portfolio[243]. Credit Quality and Losses - The provision for credit losses was $16.5 million for Q1 2024, significantly higher than $3.36 million in Q1 2023, indicating increased risk in the loan portfolio[235]. - Total loan charge-offs for the three months ended March 31, 2024, were $17,506,000, compared to $123,000 in the same period last year[289]. - The net charge-offs for the three months ended March 31, 2024, were $17,429,000, compared to $54,000 in the same period last year[289]. - Nonperforming assets include loans categorized as nonaccrual and those greater than 90 days past due, with policies in place to monitor credit quality[292][293]. Efficiency and Cost Management - The efficiency ratio for Q1 2024 was 66.05%, compared to 60.47% in Q1 2023[213]. - Noninterest expenses increased by $5.6 million to $61.8 million for Q1 2024, compared to $56.3 million in Q1 2023[266]. - Salary and employee benefits rose by $2.3 million to $37.4 million in Q1 2024, primarily due to higher wages and incentive accrual[266]. Mergers and Acquisitions - The company entered into a merger agreement with HomeStreet, expected to close in Q4 2024, with a combined total asset projection of approximately $17 billion[208]. - FirstSun raised $80 million through an initial investment agreement to support the merger, with plans to increase this amount[209]. - The company incurred $2.5 million in merger-related expenses in Q1 2024, with no such expenses in Q1 2023[267]. Interest Rate Risk - Interest rate risk is a primary market risk affecting net interest income and fee income related to mortgage origination[316]. - A simulation model is used to analyze the sensitivity of net interest income to changes in interest rates, with a +300 basis points scenario showing a 4.1% change in 2024[324]. - The impact of a -300 basis points change in interest rates results in a -0.6% change in net interest income for 2024[324].