Firstsun Capital Bancorp(FSUN) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved adjusted net income of $26.9 million for the fourth quarter, with adjusted diluted EPS of $0.95 and an adjusted ROA of 1.27% [5] - Revenue growth was up 10.8% annualized over the previous quarter, with a net interest margin of 4.18%, marking a strong performance [5][12] - For the full year, net interest income grew by 7%, and the adjusted efficiency ratio for the fourth quarter was 63.36% [13][15] Business Line Data and Key Metrics Changes - Average loan growth was 8.5% annualized, with new loan fundings totaling approximately $350 million, up 30% from the previous year [9][10] - Non-interest income accounted for 24.3% of total revenue, with service fee revenue totaling $26.7 million, up almost 24% year-over-year [5][14] - Total deposits increased by over $400 million, or approximately 6.5%, with strong growth in money market and non-interest-bearing accounts [11] Market Data and Key Metrics Changes - The company operates in 7 of the 10 fastest-growing MSAs in the Southwest, indicating strong market positioning for future growth [8] - The loan-to-deposit ratio improved slightly to approximately 93.9% by year-end [11] Company Strategy and Development Direction - The company plans to continue investing in growth markets and expanding its portfolio of products and services to support a relationship-based banking model [7] - There is a focus on maintaining a healthy revenue mix and generating operating leverage, with expectations for mid-single digit growth in net interest income for 2026 [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance and emphasized the importance of monitoring credit conditions, particularly in the C&I loan portfolio [7][16] - The pending merger with First Foundation is seen as a positive step, with integration planning progressing well [8][39] Other Important Information - The company reported a provision expense of $6.2 million for the fourth quarter, with an ending allowance for credit losses at 1.27% of loans [16][17] - The tangible book value per share improved by $3.89, or roughly 11.5%, over the previous year [17] Q&A Session Summary Question: Insights on deposit pricing strategy and betas - Management noted a favorable decrease in interest-bearing costs by about 21 basis points and acknowledged the competitive environment for deposit pricing [22][23] Question: Commentary on expenses and investments in the West Coast - Management indicated plans to add to the sales force in Texas and Southern California, with infrastructure needs considered in synergy disclosures [24][26] Question: Drivers behind the increase in special mentions - The increase was attributed to macro interest rate pressures, with no pervasive themes identified [27][29] Question: Loan pricing and competition - Credit spreads have remained stable, with no material changes noted in trends across the franchise footprint [36][37] Question: Impact of interest rate cuts on the pending acquisition - Management remains optimistic about the merger's prospects and does not foresee any changes in expectations due to recent rate cuts [38][39] Question: Trajectory of net interest margin - Management expects net interest margin to remain stable, with some tightening in deposit pricing anticipated [44][45] Question: Opportunities in Texas and Southern California - Management highlighted increased opportunities in Texas due to M&A activity and emphasized the robust deposit potential in Southern California [46][49]