Firstsun Capital Bancorp(US:FSUN)2025-10-28 15:02Financial Data and Key Metrics Changes - The merger between FirstSun Capital and First Foundation was announced, with a focus on leveraging the combined strengths to enhance growth and profitability [2][4] - The pro forma CET1 capital level after closing is projected at a strong 10.5%, with no new capital required as part of the deal [18][33] - The company expects a significant improvement in the net interest margin (NIM) from a recent run rate of approximately 1.60% to nearly 4% by 2027 [19][20] Business Line Data and Key Metrics Changes - First Foundation's wealth management platform, with over $5.3 billion in assets under management, is expected to significantly enhance the fee income profile of the combined organization [15][67] - The merger is anticipated to create a top-tier organization with improved revenue synergies from treasury management and residential mortgage expertise [10][16] Market Data and Key Metrics Changes - The merger will expand FirstSun's geographic footprint into eight of the top 10 largest metropolitan statistical areas (MSAs) in the Central and Western regions of the U.S. [15] - The company aims to grow deposits significantly, targeting over $3 billion in deposit growth opportunities through enhanced branch operations and product offerings [58][62] Company Strategy and Development Direction - The merger is seen as a strategic move to tackle unloved companies in the industry, with a focus on transforming First Foundation's balance sheet and enhancing profitability [5][12] - The company plans to migrate more of First Foundation's balance sheet to its business model, improving the mix of deposits and asset yields [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Southern California market, highlighting its strong economic fundamentals and the opportunity to capture middle-market clients who feel neglected by larger banks [65][66] - The management team emphasized a proactive approach to reducing risk and enhancing the credit profile of the combined organization [9][18] Other Important Information - The repositioning plan includes a total downsizing of $3.4 billion, focusing on reducing non-relationship rate-sensitive elements on both sides of the balance sheet [16][80] - The company expects to achieve approximately 35% in cost savings, primarily from personnel reductions and professional services [81][82] Q&A Session Summary Question: Can you walk us through the mechanics of the $3.4 billion repositioning plan and its timing? - The repositioning is expected to be completed around the closing date, with some progress anticipated in Q4 and Q1 based on existing plans [25][26] Question: What are the expectations for capital management strategies in the long term? - The company expects to see CET1 leveling off beyond 2027, with future capital management strategies being employed that have not been historically utilized [33] Question: Can you provide visibility on the EPS accretion assumptions and how they compare to street estimates? - Internal projections indicate significant improvements in net interest income (NII) and expense reductions, with a projected improvement from break-even levels to approximately $28 million pre-loan loss provision by 2026 [40][42] Question: What gives you confidence in the regulatory approval process for this transaction? - Extensive conversations with regulators have been held, and the company has taken lessons from past experiences to ensure a clearer and more robust restructuring plan [46] Question: What are the sources of the expected 35% cost savings? - Approximately 70% of the cost savings are expected to come from personnel reductions, with additional savings from professional services and back-office opportunities [81][82]