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What changed in FIRSTSUN CAPITAL BANCORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of FIRSTSUN CAPITAL BANCORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+381 added−465 removedSource: 10-K (2025-03-07) vs 10-K (2024-03-07)

Top changes in FIRSTSUN CAPITAL BANCORP's 2024 10-K

381 paragraphs added · 465 removed · 305 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

78 edited+18 added−24 removed197 unchanged
Biggest changeFirstSun is a Delaware corporation and subject to the limitations of the Delaware General Corporation Law, which we refer to as the “DGCL.” The DGCL allows FirstSun to pay dividends only out of its surplus (as defined and computed in accordance with the provisions of the DGCL) or if FirstSun has no such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. 18 Table of Contents In addition, as a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should eliminate, defer or significantly reduce dividends to stockholders if: (a) the company’s net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (b) the prospective rate of earnings retention is inconsistent with the company’s capital needs and overall current and prospective financial condition; or (c) the company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
Biggest changeIn addition, as a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should eliminate, defer or significantly reduce dividends to stockholders if: (a) the company’s net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (b) the prospective rate of earnings retention is inconsistent with the company’s capital needs and overall current and prospective financial condition; or (c) the company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
We believe our competitive compensation and benefits package, along with our positive and inclusive work environment, bring out the best in our employees. We have designed our compensation program around the philosophy of mutual respect and the continued success of our organization. We know that our most valuable asset is our people.
Compensation and Benefits. We believe our competitive compensation and benefits package, along with our positive and inclusive work environment, bring out the best in our employees. We have designed our compensation program around the philosophy of mutual respect and the continued success of our organization. We know that our most valuable asset is our people.
The loan operations of the Bank are also subject to federal laws applicable to credit transactions, such as: • the Truth-In-Lending Act, or “TILA,” and Regulation Z, governing disclosures of credit and servicing terms to consumer borrowers and including substantial requirements for mortgage lending and servicing, as mandated by the Dodd-Frank Act; • the Home Mortgage Disclosure Act and Regulation C, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the communities they serve; • ECOA and Regulation B, prohibiting discrimination on the basis of race, color, religion, or other prohibited factors in any aspect of a credit transaction; • the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act and Regulation V, as well as the rules and regulations of the FDIC governing the use of consumer reports, provision of information to credit reporting agencies, certain identity theft protections and certain credit and other disclosures; • the Fair Debt Collection Practices Act and Regulation F, governing the manner in which consumer debts may be collected by collection agencies and intending to eliminate abusive, deceptive, and unfair debt collection practices; • the Real Estate Settlement Procedures Act, or “RESPA,” and Regulation X, which governs various aspects of residential mortgage loans, including the settlement and servicing process, dictates certain disclosures to be provided to consumers, and imposes other requirements related to compensation of service providers, insurance escrow accounts, and loss mitigation procedures; 23 Table of Contents • The Secure and Fair Enforcement for Mortgage Licensing Act, the “SAFE Act,” which mandates a nationwide licensing and registration system for residential mortgage loan originators.
The loan operations of the Bank are also subject to federal laws applicable to credit transactions, such as: • the Truth-In-Lending Act, or “TILA,” and Regulation Z, governing disclosures of credit and servicing terms to consumer borrowers and including substantial requirements for mortgage lending and servicing, as mandated by the Dodd-Frank Act; • the Home Mortgage Disclosure Act and Regulation C, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the communities they serve; • ECOA and Regulation B, prohibiting discrimination on the basis of race, color, religion, or other prohibited factors in any aspect of a credit transaction; • the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act and Regulation V, as well as the rules and regulations of the FDIC governing the use of consumer reports, provision of information to credit reporting agencies, certain identity theft protections and certain credit and other disclosures; • the Fair Debt Collection Practices Act and Regulation F, governing the manner in which consumer debts may be collected by collection agencies and intending to eliminate abusive, deceptive, and unfair debt collection practices; • the Real Estate Settlement Procedures Act, or “RESPA,” and Regulation X, which governs various aspects of residential mortgage loans, including the settlement and servicing process, dictates certain disclosures to be provided to consumers, and imposes other requirements related to compensation of service providers, insurance escrow accounts, and loss mitigation procedures; • The Secure and Fair Enforcement for Mortgage Licensing Act, the “SAFE Act,” which mandates a nationwide licensing and registration system for residential mortgage loan originators.
Notably, changes include: • expansion of coordination and information sharing efforts among the agencies tasked with administering anti-money laundering and countering the financing of terrorism requirements, including the Financial Crimes Enforcement Network, or “FinCEN,” the primary federal banking regulators, federal law enforcement agencies, national security agencies, the intelligence community, and financial institutions; • providing additional penalties with respect to violations of BSA and enhancing the powers of FinCEN; • significant updates to the beneficial ownership collection rules and the creation of a registry of beneficial ownership which will track the beneficial owners of reporting companies which may be shared with law enforcement and financial institutions conducting due diligence under certain circumstances; • improvements to existing information sharing provisions that permit financial institutions to share information relating to SARs with foreign branches, subsidiaries, and affiliates (except those located in China, Russia, or certain other jurisdictions) for the purpose of combating illicit finance risks; and • enhanced whistleblower protection provisions, allowing whistleblower(s) who provide original information which leads to successful enforcement of anti-money laundering laws in certain judicial or administrative actions 25 Table of Contents resulting in certain monetary sanctions to receive up to 30% of the amount that is collected in monetary sanctions as well as increased protections.
Notably, changes include: • expansion of coordination and information sharing efforts among the agencies tasked with administering anti-money laundering and countering the financing of terrorism requirements, including the Financial Crimes Enforcement Network, or “FinCEN,” the primary federal banking regulators, federal law enforcement agencies, national security agencies, the intelligence community, and financial institutions; • providing additional penalties with respect to violations of BSA and enhancing the powers of FinCEN; • significant updates to the beneficial ownership collection rules and the creation of a registry of beneficial ownership which will track the beneficial owners of reporting companies which may be shared with law enforcement and financial institutions conducting due diligence under certain circumstances; • improvements to existing information sharing provisions that permit financial institutions to share information relating to SARs with foreign branches, subsidiaries, and affiliates (except those located in China, Russia, or certain other jurisdictions) for the purpose of combating illicit finance risks; and • enhanced whistleblower protection provisions, allowing whistleblower(s) who provide original information which leads to successful enforcement of anti-money laundering laws in certain judicial or administrative actions resulting in certain monetary sanctions to receive up to 30% of the amount that is collected in monetary sanctions as well as increased protections.
We strive to become trusted advisers to our clients and achieve long-term relationships. We deliver a wide range of banking products and services tailored to meet the needs of our clients across our geographic footprint. Our Mortgage Operations segment offers full-service residential mortgage products, including conforming residential loans and services through Guardian, our mortgage division.
We strive to become trusted advisers to our clients and achieve long-term relationships. We deliver a wide range of banking products and services tailored to meet the needs of our clients across our geographic footprint. Our Mortgage Operations segment offers full-service residential mortgage products, including conforming residential loans and services through our mortgage division.
Among other things, as an emerging growth company: • FirstSun is exempt from the requirement to obtain an attestation from its auditors on management’s assessment of FirstSun’s internal control over financial reporting under the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act”; • FirstSun will be permitted an extended transition period for complying with new or revised accounting standards affecting public companies and such new or revised accounting standards will not be applicable to FirstSun until such time as they are applicable to private companies; • FirstSun is permitted to provide reduced disclosure regarding its executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means FirstSun does not have to include a compensation discussion and analysis and certain other disclosures regarding its executive compensation arrangements; and • FirstSun is not required to hold non-binding stockholder advisory votes on executive compensation or golden parachute arrangements.
Among other things, as an emerging growth company: • FirstSun is exempt from the requirement to obtain an attestation from its auditors on management’s assessment of FirstSun’s internal control over financial reporting under the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act”; • FirstSun will be permitted an extended transition period for complying with new or revised accounting standards affecting public companies and such new or revised accounting standards will not be applicable to FirstSun until such time as they are applicable to private companies; • FirstSun is permitted to provide reduced disclosure regarding its executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means FirstSun does not have to include a compensation discussion and analysis and certain other disclosures regarding its executive compensation arrangements; and 14 Table of Contents • FirstSun is not required to hold non-binding stockholder advisory votes on executive compensation or golden parachute arrangements.
Mortgage Banking Activities We offer full-service residential mortgage products and services through Guardian, our mortgage division, with offices strategically located throughout our bank branches, as well as in other locations both in and outside our community banking footprint.
Mortgage Banking Activities We offer full-service residential mortgage products and services through our mortgage division, with offices strategically located throughout our bank branches, as well as in other locations both in and outside our community banking footprint.
Bank Regulation Sunflower Bank is a national banking association with its main office in Dallas, Texas, which is subject to regulation and supervision primarily by the OCC and secondarily by the Federal Reserve, the FDIC, and the CFPB.
Bank Regulation Sunflower Bank is a national banking association with its main office in Dallas, Texas, which is subject to regulation and supervision primarily by the OCC and secondarily by the Federal Reserve and the FDIC.
Banks and holding companies that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio of greater than 9%, off-balance-sheet exposures of 25% or less of total consolidated assets and 20 Table of Contents trading assets plus trading liabilities of 5% or less of total consolidated assets, are deemed “qualifying community banking organizations” are eligible to opt into the “community bank leverage ratio framework.” A qualifying community banking organization that elects to use the community bank leverage ratio framework and that maintains a leverage ratio of greater than 9% is considered to have satisfied the generally applicable risk-based and leverage capital requirements under the Basel III rules and, if applicable, is considered to have met the “well capitalized” ratio requirements for purposes of its primary federal regulator’s prompt corrective action rules, discussed below.
Banks and holding companies that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio of greater than 9%, off-balance-sheet exposures of 25% or less of total consolidated assets and trading assets plus trading liabilities of 5% or less of total consolidated assets, are deemed “qualifying community banking organizations” are eligible to opt into the “community bank leverage ratio framework.” A qualifying community banking organization that elects to use the community bank leverage ratio framework and that maintains a leverage ratio of greater than 9% is considered to have satisfied the generally applicable risk-based and leverage capital requirements under the Basel III rules and, if applicable, is considered to have met the “well capitalized” ratio requirements for purposes of its primary federal regulator’s prompt corrective action rules, discussed below.
Among other things, the rules adopted by the CFPB require banks to: (i) develop and implement procedures to ensure compliance with a “reasonable ability-to-repay” test; (ii) implement new or revised disclosures, policies and procedures for originating and servicing mortgages, including, but not limited to, pre-loan counseling, early intervention with delinquent borrowers and specific loss mitigation procedures for loans secured by a borrower’s principal residence, and mortgage origination disclosures, which integrate existing requirements under TILA and RESPA; (iii) comply with additional restrictions on mortgage loan originator hiring and compensation; and (iv) comply with new disclosure requirements and standards for appraisals and certain financial products.
Among other things, the rules adopted by the CFPB require banks to: (i) develop and implement procedures to ensure compliance with a “reasonable ability-to-repay” test; (ii) implement new or revised disclosures, policies and procedures for originating and servicing mortgages, including, but not limited to, pre-loan counseling, early intervention with delinquent borrowers and specific loss mitigation procedures for loans secured by a borrower’s principal residence, and mortgage origination disclosures, which integrate existing requirements under TILA and RESPA; (iii) comply with additional restrictions on mortgage loan originator hiring and compensation; and (iv) comply with new disclosure requirements and standards for appraisals and certain financial produ cts.
The law requires each federal banking agency to promulgate regulations defining the following five categories in which an insured depository institution will be placed, based on the level of capital ratios: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized.” As of December 31, 2023, we maintained capital ratios that exceeded the minimum ratios established for a “well capitalized” institution.
The law requires each federal banking agency to promulgate regulations defining the following five categories in which an insured depository institution will be placed, based on the level of capital ratios: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized.” As of December 31, 2024, we maintained capital ratios that exceeded the minimum ratios established for a “well capitalized” institution.
Sarbanes-Oxley and the various regulations promulgated under Sarbanes-Oxley, established, among other things: (a) requirements for audit committees, including independence, expertise, and responsibilities; (b) additional responsibilities relating to financial statements for the Chief Executive Officer and Chief Financial Officer of reporting companies; (c) standards for auditors and regulation of audits, including independence provisions that restrict non-audit services that accountants may provide to their audit clients; (d) increased disclosure and reporting obligations for reporting companies and their directors and executive officers, including accelerated reporting of stock transactions and a prohibition on trading during blackout periods; and (e) a range of civil and criminal penalties for fraud and other violations of the securities laws.
Sarbanes- 18 Table of Contents Oxley and the various regulations promulgated under Sarbanes-Oxley, established, among other things: (a) requirements for audit committees, including independence, expertise, and responsibilities; (b) additional responsibilities relating to financial statements for the Chief Executive Officer and Chief Financial Officer of reporting companies; (c) standards for auditors and regulation of audits, including independence provisions that restrict non-audit services that accountants may provide to their audit clients; (d) increased disclosure and reporting obligations for reporting companies and their directors and executive officers, including accelerated reporting of stock transactions and a prohibition on trading during blackout periods; and (e) a range of civil and criminal penalties for fraud and other violations of the securities laws.
The USA PATRIOT Act amended the Bank Secrecy Act and provides, in part, for the facilitation of information sharing among governmental entities and financial institutions for the purpose of combating terrorism and money laundering by enhancing anti-money laundering and financial transparency laws, as well as enhanced information collection tools and enforcement mechanics for the U.S. government, including: (a) requiring standards for verifying customer identification at account opening; (b) rules to promote cooperation among financial institutions, regulators, and law enforcement entities in identifying parties that may be involved in terrorism or money laundering; (c) reports by nonfinancial trades and businesses filed with the U.S.
The USA PATRIOT Act amended the Bank Secrecy Act and provides, in part, for the facilitation of information sharing among governmental entities and financial institutions for the purpose of combating terrorism and money laundering by enhancing anti-money laundering and financial transparency laws, as well as enhanced information collection tools and 24 Table of Contents enforcement mechanics for the U.S. government, including: (a) requiring standards for verifying customer identification at account opening; (b) rules to promote cooperation among financial institutions, regulators, and law enforcement entities in identifying parties that may be involved in terrorism or money laundering; (c) reports by nonfinancial trades and businesses filed with the U.S.
In evaluating each potential loan relationship, we adhere to a disciplined underwriting evaluation process that includes the following: • understanding the customer’s financial condition and ability to repay the loan; 13 Table of Contents • verifying that the primary and secondary sources of repayment are adequate in relation to the amount and structure of the loan; • observing appropriate loan-to-value guidelines for collateral secured loans; • maintaining our targeted levels of diversification for the loan portfolio as to type of borrower; and • ensuring that each loan is properly documented with perfected liens on collateral.
In evaluating each potential loan relationship, we adhere to a disciplined underwriting evaluation process that includes the following: • understanding the customer’s financial condition and ability to repay the loan; • verifying that the primary and secondary sources of repayment are adequate in relation to the amount and structure of the loan; • observing appropriate loan-to-value guidelines for collateral secured loans; • maintaining our targeted levels of diversification for the loan portfolio as to type of borrower; and • ensuring that each loan is properly documented with perfected liens on collateral.
Additionally, our Mortgage Operations segment includes the servicing of residential mortgage loans and the packaging and securitization of loans to governmental agencies. For further information, see “ Segments ” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 23 - Segment Information in the notes to consolidated financial statements included in “Item 8.
Additionally, our Mortgage Operations segment includes the servicing of residential mortgage loans and the packaging and securitization of loans to governmental agencies. For further information, see “ Segments ” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 21 - Segment Information in the notes to consolidated financial statements included in “Item 8.
As described above, the Bank exceeded its capital requirements under applicable guidelines as of December 31, 2023. Notwithstanding the availability of funds for dividends, the OCC may prohibit the payment of dividends by the Bank if it determines such payment would constitute an unsafe or unsound practice.
As described above, the Bank exceeded its capital requirements under applicable guidelines as of December 31, 2024. Notwithstanding the availability of funds for dividends, the OCC may prohibit the payment of dividends by the Bank if it determines such payment would constitute an unsafe or unsound practice.
Under the BHC Act, a bank holding company is generally permitted to engage in, or acquire direct or indirect control of more than 5% of the voting shares of any company engaged in, the following activities: • banking or managing or controlling banks; • furnishing services to or performing services for our subsidiaries; and • any activity that the Federal Reserve determines to be so closely related to banking as to be a proper incident to the business of banking.
Under the BHC Act, a bank holding company is generally permitted to engage in, or acquire direct or indirect control of more than 5% of the voting shares of any company engaged in, the following activities: • banking or managing or controlling banks; • furnishing services to or performing services for our subsidiaries; and 15 Table of Contents • any activity that the Federal Reserve determines to be so closely related to banking as to be a proper incident to the business of banking.
Additionally, we believe our growing treasury management business will continue to benefit our attractive funding base. Continue our Greater Texas Market Expansion Strategy. The greater Texas market has been a top strategic priority for our organization from an organic and acquisition perspective.
Additionally, we believe our growing treasury management business will continue to benefit our attractive funding base. Continue our Greater Texas and Southern California Market Expansion Strategy. The greater Texas market has been a top strategic priority for our organization from an organic and acquisition perspective.
In November 2023, following the closures of Silicon Valley Bank and Signature Bank and in connection with its systemic risk determination announced on March 12, 2023, the FDIC announced a special deposit insurance assessment rate of 13.4 26 Table of Contents basis points beginning in the first quarterly assessment period of 2024, adjusted to exclude the first $5 billion in deposits for an anticipated total of eight quarterly assessment periods.
In November 2023, following the closures of Silicon Valley Bank and Signature Bank and in connection with its systemic risk determination announced on March 12, 2023, the FDIC announced a special deposit insurance assessment rate of 13.4 basis points beginning in the first quarterly assessment period of 2024, adjusted to exclude the first $5 billion in deposits for an anticipated total of eight quarterly assessment periods.
The law of choice for enforcement against such business practices has been Section 5 of the Federal Trade Commission Act—the primary federal law that prohibits “unfair or deceptive acts or practices” and unfair methods of competition in or affecting commerce (“UDAP” or “FTC Act”). “Unjustified consumer injury” is the principal focus of the FTC Act.
The law of choice for enforcement against such business practices has been Section 5 of the Federal Trade Commission Act—the primary federal law that prohibits “unfair or deceptive acts or practices” and unfair methods of competition in or 22 Table of Contents affecting commerce (“UDAP” or “FTC Act”). “Unjustified consumer injury” is the principal focus of the FTC Act.
Our consumer loans typically are part of an overall client 11 Table of Contents relationship designed to support the individual consumer borrowing needs of our commercial and industrial loan and deposit clients, and are well diversified across our markets. Consumer loans typically have shorter terms, lower balances, higher yields and higher risks of default than residential real estate mortgage loans.
Our consumer loans typically are part of an overall client relationship designed to support the individual consumer borrowing needs of our commercial and industrial loan and deposit clients, and are well diversified across our markets. Consumer loans typically have shorter terms, lower balances, higher yields and higher risks of default than residential real estate mortgage loans.
A well-capitalized institution: • has total risk-based capital ratio of 10% or greater; and • has a Tier 1 risk-based capital ratio of 8% or greater; and • has a common equity Tier 1 risk-based capital ratio of 6.5% or greater; and • has a leverage capital ratio of 5% or greater; and • is not subject to any order or written directive to meet and maintain a specific capital level for any capital measure.
A well-capitalized institution: • has total risk-based capital ratio of 10% or greater; and • has a Tier 1 risk-based capital ratio of 8% or greater; and • has a common equity Tier 1 risk-based capital ratio of 6.5% or greater; and • has a leverage capital ratio of 5% or greater; and 20 Table of Contents • is not subject to any order or written directive to meet and maintain a specific capital level for any capital measure.
Additionally, Sunflower Bank provides treasury management products and services and offers wealth management and trust products including personal trust and agency accounts, employee benefit and retirement related trust and agency accounts, investment management and advisory agency accounts, and foundation and endowment trust and agency accounts.
Additionally, Sunflower Bank provides treasury management products and services and offers wealth management and trust products including private banking, personal trust and agency accounts, employee benefit and retirement related trust and agency accounts, investment management and advisory agency accounts, and foundation and endowment trust and agency accounts.
In addition, with prior regulatory approval, Sunflower Bank may acquire branches of existing banks located in Texas or other states. 19 Table of Contents Capital and Related Requirements We are subject to comprehensive capital adequacy requirements intended to protect against losses that we may incur.
In addition, with prior regulatory approval, Sunflower Bank may acquire branches of existing banks located in Texas or other states. Capital and Related Requirements We are subject to comprehensive capital adequacy requirements intended to protect against losses that we may incur.
The monetary policies of the Federal Reserve have major effects on the levels of bank loans, investments and deposits through its open market operations in U.S. government securities and through its regulation of the discount rate on borrowings of member banks and the reserve requirements against member bank deposits.
The monetary policies of the Federal Reserve have major effects on the levels of bank loans, investments and deposits through its open market operations in U.S. government securities and through its regulation 26 Table of Contents of the discount rate on borrowings of member banks and the reserve requirements against member bank deposits.
Under the merger agreement for the SGB mergers, FirstSun also acquired Guardian Mortgage Company, Inc., which we refer to as “Guardian,” a former subsidiary of Strategic. Guardian was merged with and into Sunflower Bank, and now operates as a division of Sunflower Bank.
Under the merger agreement for the SGB mergers, FirstSun also acquired Guardian Mortgage Company, Inc., which we refer to as “Guardian,” a former subsidiary of Strategic. Guardian was merged with and into Sunflower Bank.
Due to the larger average size of commercial real estate loans, we face the risk that losses incurred on a small number of commercial real estate loans could have a material adverse impact on our financial condition and results of operations. • Residential Real Estate Loans .
Due to the larger average size of commercial real estate loans, we face the risk that 10 Table of Contents losses incurred on a small number of commercial real estate loans could have a material adverse impact on our financial condition and results of operations. • Residential Real Estate Loans .
Further, federal law grants federal bank regulatory authorities’ additional discretion to require a bank holding company to divest itself of any bank or nonbank subsidiary if the agency determines that divestiture may aid the depository institution’s financial condition.
Further, federal law grants federal bank regulatory authorities’ 17 Table of Contents additional discretion to require a bank holding company to divest itself of any bank or nonbank subsidiary if the agency determines that divestiture may aid the depository institution’s financial condition.
AOCI is presumptively included in CET1 capital and often would operate to reduce this category of capital. When implemented, Basel III provided a one-time opportunity for covered banking organizations to opt out of much of this treatment of AOCI. We made this opt-out election.
AOCI is presumptively included in CET1 capital and often would operate to reduce this category of capital. When implemented, Basel III provided a one-time opportunity for covered banking organizations to opt out of much of this treatment of AOCI.
The payment of dividends by any FDIC-insured institution is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and an FDIC-insured institution generally is prohibited from paying any dividends if, following payment thereof, the institution would be undercapitalized.
The payment of dividends by any FDIC-insured institution is affected by the requirement to maintain adequate capital pursuant 21 Table of Contents to applicable capital adequacy guidelines and regulations, and an FDIC-insured institution generally is prohibited from paying any dividends if, following payment thereof, the institution would be undercapitalized.
The deposit operations of the Bank are also subject to federal laws, such as: • the Federal Deposit Insurance Act which, among other things, limits the amount of deposit insurance available per insured depositor category to $250,000 and imposes other limits on deposit-taking; • the Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • the Electronic Funds Transfer Act and Regulation E, which governs the rights, liabilities, and responsibilities of consumers and financial institutions using electronic fund transfer services, and which generally mandates disclosure requirements, establishes limitations on liability applicable to consumers for unauthorized electronic fund transfers, dictates certain error resolution processes, and applies other requirements relating to automatic deposits to and withdrawals from deposit accounts; • The Expedited Funds Availability Act and Regulation CC, setting forth requirements to make funds deposited into transaction accounts available according to specified time schedules, disclose funds availability policies to customers, and relating to the collection and return of checks and electronic checks, including the rules regarding the creation or receipt of substitute checks; and • the Truth in Savings Act and Regulation DD, which requires depository institutions to provide disclosures so that consumers can make meaningful comparisons about depository institutions and accounts.
The deposit operations of the Bank are also subject to federal laws, such as: • the Federal Deposit Insurance Act which, among other things, limits the amount of deposit insurance available per insured depositor category to $250,000 and imposes other limits on deposit-taking; • the Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • the Electronic Funds Transfer Act and Regulation E, which governs the rights, liabilities, and responsibilities of consumers and financial institutions using electronic fund transfer services, and which generally mandates disclosure requirements, establishes limitations on liability applicable to consumers for unauthorized electronic fund transfers, dictates certain error resolution processes, and applies other requirements relating to automatic deposits to and withdrawals from deposit accounts; • The Expedited Funds Availability Act and Regulation CC, setting forth requirements to make funds deposited into transaction accounts available according to specified time schedules, disclose funds availability policies to customers, and relating to the collection and return of checks and electronic checks, including the rules regarding the creation or receipt of substitute checks; and • the Truth in Savings Act and Regulation DD, which requires depository institutions to provide disclosures so that consumers can make meaningful comparisons about depository institutions and accounts. 23 Table of Contents The CFPB is an independent regulatory authority housed within the Federal Reserve.
In addition to our organic expansion in Dallas, we closed our merger with Pioneer on April 1, 2022, which further increased our Texas loans and deposit market position. The Bank’s headquarters was relocated to Dallas, Texas in November 2023. We anticipate continuing to grow our Texas loan and deposit customer base in the years to come. Engage in Opportunistic M&A.
In addition to our organic expansion in Dallas, we closed our merger with Pioneer on April 1, 2022, which further increased our Texas loans and deposit market position. The Bank’s headquarters was relocated to Dallas, Texas in November 2023. We anticipate continuing to grow our Texas loan and deposit customer base in the years to come.
Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002, which we refer to as “Sarbanes-Oxley,” implemented a broad range of corporate governance, accounting and reporting measures for companies, that have securities registered under the Exchange Act. FirstSun became subject to Sarbanes-Oxley on August 10, 2021.
Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002, which we refer to as “Sarbanes-Oxley,” implemented a broad range of corporate governance, accounting and reporting measures for companies that have securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). FirstSun became subject to Sarbanes-Oxley on August 10, 2021.
In times when interest rates are rising or at high levels, servicing mortgage loans can represent a steady source of noninterest 12 Table of Contents income and can, at times, offset decreases in mortgage banking gains.
In times when interest rates are rising or at high levels, servicing mortgage loans can represent a steady source of noninterest income and can, at times, offset decreases in mortgage banking gains.
No information contained on our website is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K. 27 Table of Contents
No information contained on our website is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K.
On July 9, 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy. Among other initiatives, the Executive Order encouraged the federal banking agencies to review their current merger oversight practices under the BHC Act and the Bank Merger Act and adopt a plan for revitalization of such practices.
On July 9, 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy. Among other initiatives, the Executive Order encouraged the federal banking agencies to review their current merger oversight practices under the BHCA and the Bank Merger Act and adopt a plan for revitalization of such practices. In December 2021, the U.S.
As an approved participant in the SBA Preferred Lender’s Program, we enable our clients to obtain 10 Table of Contents SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders.
As an approved participant in the SBA Preferred Lender’s Program, we enable our clients to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders.
Mortgage loans are subject to the same uniform lending policies referenced below and consist primarily of loans with relatively stronger borrower credit scores, with an average FICO score of 736 in 2023.
Mortgage loans are subject to the same uniform lending policies referenced below and consist primarily of loans with relatively stronger borrower credit scores, with an average FICO score of 743 in 2024.
Management believes that our long-standing presence in the community and personal one-on-one service philosophy enhances our ability to compete favorably in attracting and 9 Table of Contents retaining individual and business customers.
Management believes that our long-standing presence in the community and personal one-on-one service philosophy enhances our ability to compete favorably in attracting and retaining individual and business customers.
Sunflower Bank was founded in 1892 and offers a full range of specialized financial services to business customers as well as relationship-focused services to meet personal, business and wealth management financial objectives for its customers, with a branch network in Texas, Kansas, Colorado, New Mexico, Arizona and Washington and mortgage banking capabilities in 43 states.
Sunflower Bank was founded in 1892 and offers a full range of specialized financial services to business customers as well as relationship-focused services to meet personal, business and wealth management financial objectives for its customers throughout Texas, Kansas, Colorado, New Mexico, Arizona, California and Washington and a mortgage lending platform with capabilities in 43 states.
A critically undercapitalized institution has a ratio of tangible equity to total assets that is equal to or less than 2%. 21 Table of Contents Depending upon the capital category to which an institution is assigned, the primary federal regulators’ corrective powers include: (a) requiring the institution to submit a capital restoration plan; (b) limiting the institution’s asset growth and restricting its activities; (c) requiring the institution to issue additional capital stock (including additional voting stock) or to sell itself; (d) restricting transactions between the institution and its affiliates; (e) restricting the interest rate that the institution may pay on deposits; (f) ordering a new election of directors of the institution; (g) requiring that senior executive officers or directors be dismissed; (h) prohibiting the institution from accepting deposits from correspondent banks; (i) requiring the institution to divest certain subsidiaries; (j) prohibiting the payment of principal or interest on subordinated debt; and (k) ultimately, appointing a receiver for the institution.
Depending upon the capital category to which an institution is assigned, the primary federal regulators’ corrective powers include: (a) requiring the institution to submit a capital restoration plan; (b) limiting the institution’s asset growth and restricting its activities; (c) requiring the institution to issue additional capital stock (including additional voting stock) or to sell itself; (d) restricting transactions between the institution and its affiliates; (e) restricting the interest rate that the institution may pay on deposits; (f) ordering a new election of directors of the institution; (g) requiring that senior executive officers or directors be dismissed; (h) prohibiting the institution from accepting deposits from correspondent banks; (i) requiring the institution to divest certain subsidiaries; (j) prohibiting the payment of principal or interest on subordinated debt; and (k) ultimately, appointing a receiver for the institution.
Our mortgage banking business is also directly impacted by the interest rate environment, increased regulations, consumer demand, driven in large part by general economic conditions and the real estate markets, and investor demand for mortgage securities. Mortgage production, especially refinancing activity, declines in rising interest rate environments.
Our mortgage banking business is also directly impacted by the interest rate environment, increased regulations, consumer demand, driven in large part by general economic conditions and the real estate markets, and investor demand for mortgage securities. In general, mortgage production, especially refinancing activity, declines in rising interest rate environments. 11 Table of Contents Sale of residential mortgages .
The real estate securing our existing commercial real estate loans includes a wide variety of property types, such as offices, warehouses, production facilities, health care facilities, hotels, mixed-use residential/commercial, retail centers, restaurants, assisted living facilities and self-storage facilities. Non-owner occupied CRE loans were 85.2% of the Company’s risk-based capital, or 13.0% of total loans as of December 31, 2023.
The real estate securing our existing commercial real estate loans includes a wide variety of property types, such as offices, warehouses, production facilities, health care facilities, hotels, mixed-use residential/commercial, retail centers, restaurants, assisted living facilities and self-storage facilities. Non-owner occupied CRE loans were 66.7% of the Company’s risk-based capital, or 11.8% of total loans as of December 31, 2024.
The CFPB may issue regulations that impact products and services offered by Sunflower Bank.
T he CFPB may issue regulations that impact products and services offered by Sunflower Bank.
The CFPB is an independent regulatory authority housed within the Federal Reserve. The CFPB has broad authority to regulate the offering and provision of consumer financial products and services. The CFPB has the authority to supervise and examine depository institutions with more than $10 billion in assets for compliance with federal consumer laws.
The CFPB has broad authority to regulate the offering and provision of consumer financial products and services. The CFPB has the authority to supervise and examine depository institutions with more than $10 billion in assets for compliance with federal consumer laws.
Item 1. Business In this report, unless the context suggests otherwise, references to “we,” “us,” and “our” mean the combined business of FirstSun and its wholly-owned subsidiaries, including Sunflower Bank, Logia Portfolio Management, LLC, and FEIF Capital Partners, LLC.
Item 1. Business In this report, unless the context suggests otherwise, references to “we,” “us,” and “our” mean the combined business of FirstSun Capital Bancorp (“FirstSun” or the “Company”) and its wholly-owned subsidiaries, including Sunflower Bank, National Association (“Sunflower Bank” or the “Bank”), Logia Portfolio Management, LLC, and FEIF Capital Partners, LLC.
Non-owner occupied CRE loans associated with office space were $109.3 million, or 1.7% of total loans as of December 31, 2023. Owner occupied CRE loans associated with office space were $149.4 million, or 2.4% of total loans as of December 31, 2023. We are primarily focused on growing the owner-occupied portion of our commercial real estate loan portfolio.
Non-owner occupied CRE loans associated with office space were $88.8 million, or 1.4% of total loans as of December 31, 2024. Owner occupied CRE loans associated with office space were $186.3 million, or 2.9% of total loans as of December 31, 2024. We are primarily focused on growing the owner-occupied portion of our commercial real estate loan portfolio.
As of December 31, 2023, we had 1,128 total employees and 1,110 full-time equivalent employees, primarily located in Texas, Kansas, Colorado, New Mexico and Arizona. Our employees are not covered by a collective bargaining agreement. We consider our relationship with our employees to be good and have not experienced interruptions of operations due to labor disagreements. Compensation and Benefits.
As of December 31, 2024, we had 1,142 total employees and 1,127 full-time equivalent employees, primarily located throughout Texas, Kansas, Colorado, New Mexico, Arizona, California and Washington. Our employees are not covered by a collective bargaining agreement. We consider our relationship with our employees to be good and have not experienced interruptions of operations due to labor disagreements.
In addition, in order to avoid restrictions on capital distributions or discretionary bonus payments to executives, under Basel III, a banking organization must maintain a “capital conservation buffer” on top of its minimum risk-based capital requirements.
We made this opt-out election. 19 Table of Contents In addition, in order to avoid restrictions on capital distributions or discretionary bonus payments to executives, under Basel III, a banking organization must maintain a “capital conservation buffer” on top of its minimum risk-based capital requirements.
Activities that the Federal Reserve has found to be so closely related to banking as to be a proper incident to the business of banking include: • factoring accounts receivable; • making, acquiring, brokering or servicing loans and usual related activities; • leasing personal or real property; • operating a non-bank depository institution, such as a savings association; • trust company functions; • financial and investment advisory activities; • conducting discount securities brokerage activities; • underwriting and dealing in government obligations and money market instruments; • providing specified management consulting and counseling activities; • performing selected data processing services and support services; • acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and • performing selected insurance underwriting activities. 16 Table of Contents The Federal Reserve has the authority to order a bank holding company or its subsidiaries to terminate any of these activities or to terminate its ownership or control of any subsidiary when it has reasonable cause to believe that the bank holding company’s continued ownership, activity or control constitutes a serious risk to the financial safety, soundness or stability of it or any of its bank subsidiaries.
Activities that the Federal Reserve has found to be so closely related to banking as to be a proper incident to the business of banking include: • factoring accounts receivable; • making, acquiring, brokering or servicing loans and usual related activities; • leasing personal or real property; • operating a non-bank depository institution, such as a savings association; • trust company functions; • financial and investment advisory activities; • conducting discount securities brokerage activities; • underwriting and dealing in government obligations and money market instruments; • providing specified management consulting and counseling activities; • performing selected data processing services and support services; • acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and • performing selected insurance underwriting activities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 4 - Loans in the notes to consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” elsewhere in this report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 3 - Loans in the notes to consolidated financial statements included in “Item 8.
The final rule established four categories of tiered presumptions of noncontrol that are based on the percentage of voting shares held by the investor (less 17 Table of Contents than 5%, 5-9.9%, 10-14.9% and 15-24.9%) and the presence of other indicia of control.
The final rule established four categories of tiered presumptions of noncontrol that are based on the percentage of voting shares held by the investor (less than 5%, 5-9.9%, 10-14.9% and 15-24.9%) and the presence of other indicia of control. As the percentage of ownership increases, fewer indicia of control are permitted without falling outside of the presumption of noncontrol.
Our asset management solutions are focused on seeking to generate the highest net after tax returns for our clients relative to their appropriate risk level. Credit Administration and Loan Review Certain credit risks are inherent in making loans.
Our holistic and personalized approach delivers a customized asset management solution focused on the client’s personal, family and multi-generational needs. Our asset management solutions are focused on seeking to generate the highest net after tax returns for our clients relative to their appropriate risk level. Credit Administration and Loan Review Certain credit risks are inherent in making loans.
Commercial and industrial also includes our healthcare, SBA and other small business lending products. Commercial and industrial loans generally include lines of credit and loans with maturities of five years or less.
Commercial and industrial loans include our specialty lending verticals such as structured finance products, asset based lending and family office. Commercial and industrial also includes our healthcare, SBA and other small business lending products. Commercial and industrial loans generally include lines of credit and loans with maturities of five years or less.
These programs include a 401(k) plan with an employer matching contribution, healthcare and insurance benefits, flexible spending accounts, paid time off, tuition reimbursement, volunteer and parenting leave and an employee assistance program. 14 Table of Contents We annually review benefit programs and compensation programs to seek to ensure that we remain competitive in our markets to meet the needs of our employees and their families.
We offer competitive benefits to our employees and their families. These programs include a 401(k) plan with an employer matching contribution, healthcare and insurance benefits, flexible spending accounts, paid time off, tuition reimbursement, volunteer and parenting leave and an employee assistance program.
The CFPB has engaged in rulemakings that affect, among other things, credit card late fees, overdraft fees, data collection and reporting requirements for small business lenders such as Sunflower Bank, and personal financial data rights, including a proposed rule announced on January 17, 2024, that would, among other requirements, limit the overdraft fees that banks with greater than $10 billion in assets could charge. 24 Table of Contents Bank regulators take into account compliance with consumer protection laws when considering approval of any proposed expansionary proposals, including merger proposals.
The CFPB has engaged in rulemakings that affect, among other things, credit card late fees, overdraft fees, data collection and reporting requirements for small business lenders such as Sunflower Bank, and personal financial data rights, including a final rule announced on December 12, 2024, that would, among other requirements, limit the overdraft fees that banks with greater than $10 billion in assets could charge.
That vision continues to drive us today, as our 1,110 full-time equivalent employee base, as of December 31, 2023, serves our business and consumer customers, including through our network of 69 branches principally located in Texas, Kansas, Colorado, New Mexico and Arizona.
That vision continues to drive us today, as our 1,127 full-time equivalent employee base, as of December 31, 2024, serves our business and consumer customers throughout Texas, Kansas, Colorado, New Mexico, Arizona, California and Washington.
For additional information on the proposed merger and equity raise, see Note 27 - Subsequent Events included in our consolidated financial statements included elsewhere in this report. 7 Table of Contents History and Growth We were originally incorporated in the State of Kansas on November 9, 1981, as Handi-Bancshares, Inc., to serve as the holding company of Sunflower Bank (formerly The First National Bank and Trust Company of Salina), before we changed our name to Sunflower Financial, Inc. in 2008.
History and Growth We were originally incorporated in the State of Kansas on November 9, 1981, as Handi-Bancshares, Inc., to serve as the holding company of Sunflower Bank (formerly The First National Bank and Trust Company of Salina), before we changed our name to Sunflower Financial, Inc. in 2008.
Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence.
These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationship and restrictive contractual covenants. Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence.
We are unable to predict these future changes or the effects, if any, that these changes could have on our business, revenues, and results of operations. 15 Table of Contents Legislative and Regulatory Developments Although the 2008 financial crisis has now passed, the legislative and regulatory response, including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), will continue to have an impact on our operations.
Legislative and Regulatory Developments Although the 2008 financial crisis has now passed, the legislative and regulatory response, including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), will continue to have an impact on our operations.
Overview FirstSun Capital Bancorp (“FirstSun”), a financial holding company headquartered in Denver, Colorado, provides a full spectrum of deposit, lending, treasury management, wealth management and online banking products and services through its two primary operating wholly-owned subsidiaries—Sunflower Bank, National Association (“Sunflower Bank” or the “Bank”), a national banking association headquartered in Dallas, Texas, that operates as Sunflower Bank, N.A., First National 1870 and Guardian Mortgage and Logia Portfolio Management, LLC, a registered investment advisor organized under the laws of the State of Kansas that provides discretionary investment management to retail and institutional accounts.
We provide those services through our two primary operating wholly-owned subsidiaries—Sunflower Bank, a national banking association headquartered in Dallas, Texas, that operates as Sunflower Bank, N.A., First National 1870 and Logia Portfolio Management, LLC, a registered investment advisor organized under the laws of the State of Kansas that provides discretionary investment management to retail and institutional accounts.
We currently offer a comprehensive range of business deposit products and services to assist with the banking needs of our business customers, including a variety of remote deposit and cash management products along with commercial transaction accounts.
We currently offer a comprehensive range of business deposit products and services to assist with the banking needs of our business customers, including a variety of remote deposit and cash management products along with commercial transaction accounts. 12 Table of Contents Wealth Management We offer our clients a comprehensive suite of services that include private banking, wealth planning, investment management, trust and retirement plan services through our team of wealth advisors, trust specialists and investment professionals.
In addition, we facilitate the educational and professional development of our employees through financial support to attend conferences and obtain degrees, licenses and certifications while employed by us. Employee Engagement Surveys.
We have internal programs for emerging managers and leaders that are designed to train and enhance the skills of our employees to promote career advancement from within our company. In addition, we facilitate the educational and professional development of our employees through financial support to attend conferences and obtain degrees, licenses and certifications while employed by us. Employee Engagement Surveys.
We are able to sell participations in larger loans to other financial institutions, which allows us to better manage the risk and exposure involved with larger loans and to meet the lending needs of our customers requiring extensions of credit in excess of regulatory limits.
We are able to sell participations in larger loans to other financial institutions, which allows us to better manage the risk and exposure involved with larger loans and to meet the lending needs of our customers requiring extensions of credit in excess of regulatory limits. 13 Table of Contents Sunflower Bank’s legal lending limit as of December 31, 2024, on loans to a single borrower was $152.8 million (15%) and $254.7 million (25%), for fully secured loans.
Critically Undercapitalized —The institution fails to meet a critical capital level set by the appropriate federal banking agency.
Critically Undercapitalized —The institution fails to meet a critical capital level set by the appropriate federal banking agency. A critically undercapitalized institution has a ratio of tangible equity to total assets that is equal to or less than 2%.
Commercial and Industrial Loans Our commercial and industrial loans are typically made to small- and medium-sized manufacturing, service, wholesale and retail businesses for working capital and operation needs and business expansions, including the purchase of capital equipment. Commercial and industrial loans include our specialty lending verticals such as structured finance products, asset based lending and family office.
Financial Statements and Supplementary Data” elsewhere in this report. 9 Table of Contents Commercial and Industrial Loans Our commercial and industrial loans are typically made to small- and medium-sized manufacturing, service, wholesale and retail businesses for working capital and operation needs and business expansions, including the purchase of capital equipment.
Federal banking agencies, including the OCC, have adopted guidelines for establishing information security standards and cybersecurity programs for implementing safeguards under the supervision of the board of directors. These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information technology and the use of third parties in the provision of financial services.
Federal banking agencies, including the OCC, have adopted guidelines for establishing information security standards and cybersecurity programs for implementing safeguards under the supervision of the board of directors.
Learning and Development. Our goal is to better equip our managers and leaders with the most effective resources and tools to succeed in their roles. We want to create strong leaders with a platform that allows open communication, provides consistency across regions as well as fosters growth and development.
We want to create strong leaders with a platform that allows open communication, provides consistency across regions as well as fosters growth and development. Our goal is to establish strong leaders who will be able to effectively engage their employees to meet and reinforce the mission and goals of Sunflower Bank.
Our business is focused on providing specialized commercial and consumer banking services to our clients, with an emphasis on key Southwest growth markets. Upon completion of our proposed merger with HomeStreet, we intend to expand our focus to the additional western markets in which HomeStreet operates, including the Pacific Northwest, Southern California and Hawaii.
Our business is focused on providing specialized commercial and consumer banking services to our clients, with an emphasis on key Southwest and Western growth markets.
In November 2023, the Bank relocated its main office from Denver, Colorado, to Dallas, Texas. Our Market Areas We currently operate our principal executive office at 1400 16th Street, Suite 250, Denver, Colorado 80202, with Sunflower Bank’s main office at 8117 Preston Road, Suite 220, Dallas, Texas 75225.
Our Market Areas We currently operate our principal executive office at 1400 16th Street, Suite 250, Denver, Colorado 80202, with Sunflower Bank’s main office at 8117 Preston Road, Suite 220, Dallas, Texas 75225. We have a model of delivering relationship-driven banking services with local decision-making to communities throughout Texas, Kansas, Colorado, New Mexico, Arizona, California and Washington.
The final rule takes effect April 1, 2024, but the majority of its operative provisions are effective January 1, 2026, with the data reporting requirements effective January 1, 2027.
The final rule took effect April 1, 2024, but the majority of its operative provisions are effective January 1, 2026, with the data reporting requirements effective January 1, 2027. We expect the rule will increase Sunflower Bank’s obligations and compliance costs necessary to achieve a “Satisfactory” or “Outstanding” rating under the CRA.
Pioneer’s wholly-owned subsidiary, Pioneer Bank, SSB, a Texas state savings bank, was merged with and into the Bank, with the Bank continuing as the surviving bank.
Pioneer’s wholly-owned subsidiary, Pioneer Bank, SSB, a Texas state savings bank, was merged with and into the Bank, with the Bank continuing as the surviving bank. With the merger, we acquired 19 branches in Texas. 7 Table of Contents In November 2023, the Bank relocated its main office from Denver, Colorado, to Dallas, Texas.
An important component of the FirstSun story is our expertise and experience in mergers and acquisitions. Our executive team has extensive experience with successful acquisitions and integrations. We plan to continue to evaluate acquisitions that we believe are strategic and could produce attractive returns for our stockholders.
We plan to continue to evaluate acquisitions that we believe are strategic and could produce attractive returns for our stockholders.
(3) Colorado deposits and branch count includes Sunflower Bank’s office located at 1400 16th Street, Suite 250, Denver, CO 80202. 8 Table of Contents Our Business Strategy Our goal is to build a premier regional bank serving our key markets, primarily through our organic growth strategy of investing in people, technology and infrastructure to create a top-tier banking platform.
The bank’s national lines of business include specialty commercial services and a mortgage lending platform with capabilities in 43 states. Our Business Strategy Our goal is to build a premier regional bank serving our key markets, primarily through our organic growth strategy of investing in people, technology and infrastructure to create a top-tier banking platform.
As of December 31, 2023, we had consolidated total assets of $7.9 billion, total net loans of $6.2 billion, total deposits of $6.4 billion and total stockholders’ equity of $877.2 million. Proposed Merger with HomeStreet, Inc. and Common Equity Raise On January 16, 2024, FirstSun and Seattle based HomeStreet, Inc.
As of December 31, 2024, we had consolidated total assets of $8.1 billion, total net loans of $6.3 billion, total deposits of $6.7 billion and total stockholders’ equity of $1.0 billion.
These statutes and regulations are subject to change, and additional statutes, regulations, and corresponding guidance may be adopted.
These statutes and regulations are subject to change, and additional statutes, regulations, and corresponding guidance may be adopted. We are unable to predict these future changes or the effects, if any, that these changes could have on our business, revenues, and results of operations.
Consumers must be notified in the event of a data breach under applicable federal and state laws.
These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information technology and the use of third parties in the provision of financial services. 25 Table of Contents Consumers must be notified in the event of a data breach under applicable federal and state laws.
We expect the rule will increase Sunflower Bank’s obligations and compliance costs necessary to achieve a “Satisfactory” or “Outstanding” rating under the CRA. 22 Table of Contents Fair Lending Requirements We are subject to certain fair lending requirements and reporting obligations involving lending operations.
Fair Lending Requirements We are subject to certain fair lending requirements and reporting obligations involving lending operations.
Removed
(“HomeStreet”), the holding company of HomeStreet Bank (“HomeStreet Bank”) entered into a definitive merger agreement (the “merger agreement”). Under the merger agreement, HomeStreet will merge with and into FirstSun, with FirstSun continuing as the surviving entity (the “merger”). Immediately following the merger, HomeStreet Bank will merge with and into Sunflower Bank, with Sunflower bank continuing as the surviving bank.
Added
Overview We are a financial holding company headquartered in Denver, Colorado, providing a full spectrum of deposit, lending, treasury management, wealth management and online banking products and services.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf the pending merger with HomeStreet is completed, then FirstSun expects to have more than $15 billion in assets and, as a result, will be subject to the additional regulatory requirements, increased supervision and increased costs, including the following: • Supervision, examination and enforcement by the CFPB with respect to consumer financial protection laws; • A different methodology for calculating FDIC insurance assessments and potentially higher assessment rates for institutions with $10 billion or more in assets; • If we exceed $15 billion in assets through an acquisition (or make an acquisition after exceeding $15 billion in assets through organic growth), then our trust preferred securities will be excluded from Tier 1 capital and instead included in Tier 2 capital; and if the proposed HomeStreet merger is completed, we expect to have more than $15 billion in assets, and therefore any trust preferred securities of the combined company will be excluded from Tier 1 capital and instead included in Tier 2 capital (as of December 31, 2023, FirstSun had approximately $13.9 million in trust preferred securities and HomeStreet had approximately $62 million in trust preferred securities); • Heightened compliance standards under the Volcker Rule; • Enhanced supervision as a larger financial institution; and • Under the Durbin Amendment to the Dodd-Frank Act, institutions with $10 billion or more in assets are subject to a cap on the interchange fees that may be charged in certain electronic debit and prepaid card transactions.
Biggest changeFuture organic growth or merger and acquisition activity could cause our assets to be more than $10 billion and, as a result, we will become subject to the additional regulatory requirements, increased supervision and increased costs, including the following: • Supervision, examination and enforcement by the CFPB with respect to consumer financial protection laws; • A different methodology for calculating FDIC insurance assessments and potentially higher assessment rates for institutions with $10 billion or more in assets; • Heightened compliance standards under the Volcker Rule; • Enhanced supervision as a larger financial institution; and • Under the Durbin Amendment to the Dodd-Frank Act, institutions with $10 billion or more in assets are subject to a cap on the interchange fees that may be charged in certain electronic debit and prepaid card transactions.
Declines in the financial markets or a lack of sustained growth may result in a decline in the performance of our wealth management business and may adversely affect the market value and performance of the investment securities that we manage, which could lead to reductions in our wealth management fees, because they are based primarily on the market value of the securities we manage, and could lead some of our clients to reduce their assets under management by us or seek legal remedies for investment performance.
Declines in the financial markets or a lack of sustained growth may result in a decline in the performance of our trust and wealth management business and may adversely affect the market value and performance of the investment securities that we manage, which could lead to reductions in our trust and wealth management fees, because they are based primarily on the market value of the securities we manage, and could lead some of our clients to reduce their assets under management by us or seek legal remedies for investment performance.
Failure to perform in any of these areas could significantly weaken our competitive position, making it more difficult to attract new and retain existing clients and our net interest margin, net interest income and wealth management fees could decline, which would adversely affect our results of operations and could cause us to incur losses in the future.
Failure to perform in any of these areas could significantly weaken our competitive position, making it more difficult to attract new and retain existing clients and our net interest margin, net interest income and trust and wealth management fees could decline, which would adversely affect our results of operations and could cause us to incur losses in the future.
Our merger and acquisition activities, including our proposed merger with HomeStreet, could involve a number of additional risks, including the risks of: • the possibility that the expected benefits of a transaction, including cost savings, may not materialize in the timeframe expected or at all, or may be costlier to achieve; • the incurrence and possible impairment of goodwill and other intangible assets associated with an acquisition or merger and possible adverse short-term effects on our results of operations; • the occurrence of a change in the interest rate environment, including the magnitude and duration of interest rate changes, which could adversely affect both ours and HomeStreet’s revenue and expenses, value of assets and obligations, and the availability and cost of capital and liquidity, along with the consummation of the merger; • incurring the time and expense associated with identifying, evaluating and negotiating with potential merger or acquisition targets and with seeking to complete and preparing for integration with proposed mergers or acquisitions; • our inability to obtain regulatory and other approvals necessary to consummate mergers, acquisitions or other expansion activities, or the risk that such regulatory approvals are delayed, impeded, or conditioned due to existing or new regulatory issues surrounding us, the target institution or the proposed combined entity as a result of, among other things, issues related to anti-money laundering/Bank Secrecy Act compliance, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive or abusive acts or practices regulations, or the Community Reinvestment Act; • diversion of our management’s attention to the negotiation of a transaction, and the integration of the operations and personnel of the combining businesses; • the inability to obtain alternative capital in the event it becomes necessary to complete the proposed merger; • our estimates and judgments used to evaluate financial performance, credit, asset values, operations, management and market risks with respect to the acquired or merged company may not be accurate; 43 Table of Contents • the ability to develop and maintain a strong core deposit base or other low cost funding sources necessary to fund ours and HomeStreet’s activities, particularly in a rising or high interest rate environment; • potential exposure to unknown or contingent liabilities of the acquired or merged company; • difficulty or unanticipated expense associated with converting the operating systems of, and otherwise integrating the business of, the acquired or merged company into ours; • the possibility that we will be unable to successfully implement integration strategies, due to challenges associated with integrating complex systems, technology, banking centers, and other assets of the acquired or merged company in a manner that minimizes any adverse effect on customers, suppliers, employees, and other constituencies; • delays in completing or failure to complete a merger or acquisition due to litigation, closing conditions or the regulatory approval process; • the possibility that a proposed acquisition or merger may not be timely completed, if at all; • creating an adverse short‑term effect on our results of operations; and • the possible loss of our key employees and customers or those of the acquired or merged company.
Our merger and acquisition activities could involve a number of additional risks, including the risks of: • the possibility that the expected benefits of a transaction, including cost savings, may not materialize in the timeframe expected or at all, or may be costlier to achieve; • the incurrence and possible impairment of goodwill and other intangible assets associated with an acquisition or merger and possible adverse short-term effects on our results of operations; • the occurrence of a change in the interest rate environment, including the magnitude and duration of interest rate changes, which could adversely affect our revenue and expenses, value of assets and obligations, and the availability and cost of capital and liquidity, along with the consummation of the merger; • incurring the time and expense associated with identifying, evaluating and negotiating with potential merger or acquisition targets and with seeking to complete and preparing for integration with proposed mergers or acquisitions; • our inability to obtain regulatory and other approvals necessary to consummate mergers, acquisitions or other expansion activities, or the risk that such regulatory approvals are delayed, impeded, or conditioned due to existing or new regulatory issues surrounding us, the target institution or the proposed combined entity as a result of, among other things, issues related to anti-money laundering/Bank Secrecy Act compliance, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive or abusive acts or practices regulations, or the Community Reinvestment Act; • diversion of our management’s attention to the negotiation of a transaction, and the integration of the operations and personnel of the combining businesses; • the inability to obtain alternative capital in the event it becomes necessary to complete the proposed merger; • our estimates and judgments used to evaluate financial performance, credit, asset values, operations, management and market risks with respect to the acquired or merged company may not be accurate; • the ability to develop and maintain a strong core deposit base or other low-cost funding sources necessary to fund our activities, particularly in a rising or high-interest rate environment; • potential exposure to unknown or contingent liabilities of the acquired or merged company; • difficulty or unanticipated expense associated with converting the operating systems of, and otherwise integrating the business of, the acquired or merged company into ours; • the possibility that we will be unable to successfully implement integration strategies, due to challenges associated with integrating complex systems, technology, banking centers, and other assets of the acquired or merged company in a manner that minimizes any adverse effect on customers, suppliers, employees, and other constituencies; • delays in completing or failure to complete a merger or acquisition due to litigation, closing conditions or the regulatory approval process; • the possibility that a proposed acquisition or merger may not be timely completed, if at all; • creating an adverse short‑term effect on our results of operations; and • the possible loss of our key employees and customers or those of the acquired or merged company.
These risks include, without limitation, the following: • our inability to attract and retain clients in our banking market areas; • our inability to achieve and maintain growth in our earnings while pursuing new business opportunities; • our inability to maintain a high level of client service while optimizing our physical branch count due to changing client demand, all while expanding our remote banking services and expanding or enhancing our information processing, technology, compliance, and other operational infrastructures effectively and efficiently; • our inability to maintain loan quality in the context of significant loan growth; • our inability to attract or maintain sufficient deposits and capital to fund anticipated loan growth; • our inability to maintain adequate common equity and regulatory capital while managing the liquidity and capital requirements associated with growth, especially organic growth and cash-funded acquisitions; • our inability to hire or retain adequate management personnel and systems to oversee and support such growth; • our inability to implement additional policies, procedures and operating systems required to support our growth; and • our inability to manage effectively and efficiently the changes and adaptations necessitated by a complex, burdensome, and evolving regulatory environment.
These risks include, without limitation, the following: • our inability to attract and retain clients in our banking market areas; • our inability to achieve and maintain growth in our earnings while pursuing new business opportunities; • our inability to maintain a high level of client service while optimizing our physical branch count due to changing client demand, all while expanding our remote banking services and expanding or enhancing our information processing, technology, compliance, and other operational infrastructures effectively and efficiently; • our inability to maintain loan quality in the context of significant loan growth; • our inability to attract or maintain sufficient deposits and capital to fund anticipated loan growth; • our inability to maintain adequate common equity and regulatory capital while managing the liquidity and capital requirements associated with growth, especially organic growth and cash-funded acquisitions; 43 Table of Contents • our inability to hire or retain adequate management personnel and systems to oversee and support such growth; • our inability to implement additional policies, procedures and operating systems required to support our growth; and • our inability to manage effectively and efficiently the changes and adaptations necessitated by a complex, burdensome, and evolving regulatory environment.
For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies but not to “emerging growth companies,” including, but not limited to: • not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act; • not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; • reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and • exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies but not to “emerging growth companies,” including, but not limited to: • not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act; • not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; • reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and 50 Table of Contents • exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Some of the services we provide, such as wealth management services require us to act as fiduciaries for our customers and others. Customers make claims and on occasion take legal action pertaining to our performance of our fiduciary responsibilities.
Some of the services we provide, such as trust and wealth management services, require us to act as fiduciaries for our customers and others. Customers make claims and on occasion take legal action pertaining to our performance of our fiduciary responsibilities.
Such a recession or any other adverse changes in business and economic conditions generally or specifically in the markets in which we operate could affect our business, including causing one or more of the following negative developments: • an increase in our deposit and funding costs; • a decrease in the demand for loans, mortgage banking products and services and other products and services we offer; • a decrease in our deposit account balances as customers move funds to seek to obtain maximum federal deposit insurance coverage or to seek higher interest rates; • a decrease in the value of the collateral securing our residential or commercial real estate loans; 28 Table of Contents • a permanent impairment of our assets; or • an increase in the number of customers or other counterparties who default on their loans or other obligations to us, which could result in a higher level of NPAs, net charge-offs and provision for credit losses.
Such a recession or any other adverse changes in business and economic conditions generally or specifically in the markets in which we operate could affect our business, including causing one or more of the following negative developments: • an increase in our deposit and funding costs; • a decrease in the demand for loans, mortgage banking products and services and other products and services we offer; • a decrease in our deposit account balances as customers move funds to seek to obtain maximum federal deposit insurance coverage or to seek higher interest rates; • a decrease in the value of the collateral securing our residential or commercial real estate loans; • a permanent impairment of our assets; or • an increase in the number of customers or other counterparties who default on their loans or other obligations to us, which could result in a higher level of NPAs, net charge-offs and provision for credit losses.
In addition, our ability to successfully attract and retain wealth management clients is dependent on our ability to compete with competitors’ investment products, level of investment performance, client services and marketing and distribution capabilities.
In addition, our ability to successfully attract and retain trust and wealth management clients is dependent on our ability to compete with competitors’ investment products, level of investment performance, client services and marketing and distribution capabilities.
Elimination of the traditional roles of Fannie Mae and Freddie Mac, or any changes to the nature or extent of the guarantees provided by Fannie Mae and Freddie Mac or the fees, terms and guidelines that govern our selling and servicing 34 Table of Contents relationships with them, could also materially and adversely affect our ability to sell and securitize loans through our loan production segment, and the performance, liquidity and market value of our investments.
Elimination of the traditional roles of Fannie Mae and Freddie Mac, or any changes to the nature or extent of the guarantees provided by Fannie Mae and Freddie Mac or the fees, terms and guidelines that govern our selling and servicing 33 Table of Contents relationships with them, could also materially and adversely affect our ability to sell and securitize loans through our loan production segment, and the performance, liquidity and market value of our investments.
For example, in deciding whether to extend credit to clients, we may assume that a customer’s audited financial statements conform to GAAP and present 35 Table of Contents fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. Our earnings are significantly affected by our ability to properly originate, underwrite and service loans.
For example, in deciding whether to extend credit to clients, we may assume that a customer’s audited financial statements conform to GAAP and present 34 Table of Contents fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. Our earnings are significantly affected by our ability to properly originate, underwrite and service loans.
Provisions in our certificate of incorporation, bylaws and Stockholders’ Agreement, as well as provisions of the DGCL, could make it more difficult for a third-party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, including transactions in which stockholders might otherwise receive a premium for their shares.
Provisions in our certificate of incorporation and bylaws, as well as provisions of the DGCL, could make it more difficult for a third-party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, including transactions in which stockholders might otherwise receive a premium for their shares.
Commercial and industrial lending and commercial real estate lending usually involves higher credit risks than that of single-family residential lending. At December 31, 2023, approximately 69.6% of our loan portfolio consisted of commercial and industrial and commercial real estate loans. These types of loans generally involve larger loan balances to a single borrower or groups of related borrowers.
Commercial and industrial lending and commercial real estate lending usually involves higher credit risks than that of single-family residential lending. At December 31, 2024, approximately 69.6% of our loan portfolio consisted of commercial and industrial and commercial real estate loans. These types of loans generally involve larger loan balances to a single borrower or groups of related borrowers.
For example, there could be electrical or telecommunications outages; natural disasters such as 36 Table of Contents earthquakes, tornadoes, and hurricanes; disease pandemics (such as the COVID-19 pandemic); events arising from local or larger scale political or social matters, including terrorist acts; and cyber-attacks.
For example, there could be electrical or telecommunications outages; natural disasters such as 35 Table of Contents earthquakes, tornadoes, and hurricanes; disease pandemics (such as the COVID-19 pandemic); events arising from local or larger scale political or social matters, including terrorist acts; and cyber-attacks.
Maintenance of our reputation depends not only on our success in maintaining our core values and controlling and mitigating the various risks described herein, but also on our success in identifying and appropriately addressing issues that may arise in areas such as potential conflicts of interest, anti-money laundering, client personal information and privacy issues, record-keeping, regulatory investigations and any litigation that may arise from the failure or perceived failure of us to comply with legal and regulatory requirements.
Maintenance 36 Table of Contents of our reputation depends not only on our success in maintaining our core values and controlling and mitigating the various risks described herein, but also on our success in identifying and appropriately addressing issues that may arise in areas such as potential conflicts of interest, anti-money laundering, client personal information and privacy issues, record-keeping, regulatory investigations and any litigation that may arise from the failure or perceived failure of us to comply with legal and regulatory requirements.
Continuing deterioration in economic conditions, including the possibility of a recession, affecting borrowers; inflation; rising interest rates; new information regarding existing loans, credit commitments; the lingering effects of the COVID-19 pandemic or other global pandemics; natural 30 Table of Contents disasters and risks related to climate change; and identification of additional problem loans, and other factors, both within and outside of our control, may require an increase in the allowance for credit losses on loans.
Continuing deterioration in economic conditions, including the possibility of a recession, affecting borrowers; inflation; rising interest rates; new information regarding existing loans, credit commitments; the lingering effects of the COVID-19 pandemic or other global pandemics; natural disasters and risks related to climate change; and identification of additional problem loans, and other factors, both within and outside of our control, may require an increase in the allowance for credit losses on loans.
Additional information concerning these risks and our management of them, all of which is incorporated into this Item 1A by this reference, appears: under the captions Capital and Related Requirements in Item 1 of this report; under the caption “ Capital ” of Part II, Item 7; and “ Note 19 - Regulatory Capital Requirements ,” under Part II, Item 8.
Additional information concerning these risks and our management of them, all of which is incorporated into this Item 1A by this reference, appears: under the captions Capital and Related Requirements in Item 1 of this report; under the caption “ Capital ” of Part II, Item 7; and “ Note 17 - Regulatory Capital Requirements ,” under Part II, Item 8.
Loan repayments are a relatively stable source of funds but are subject to the borrowers’ ability to repay loans, which can be adversely affected by a number of factors including changes in general economic conditions, adverse trends or events affecting business industry groups or specific businesses, declines in real estate values or markets, business closings or lay-offs, inclement weather, natural disasters and other factors.
Loan repayments are a relatively stable source of funds but are subject to the borrowers’ ability to repay loans, which can be adversely affected by a number of factors including changes in general economic 40 Table of Contents conditions, adverse trends or events affecting business industry groups or specific businesses, declines in real estate values or markets, business closings or lay-offs, inclement weather, natural disasters and other factors.
The concentration of ownership may also delay, defer or even prevent a change in control of FirstSun, even if such a change in control would benefit our other stockholders, and may make some transactions more difficult or impossible without the support of FirstSun’s Significant Stockholders.
The concentration of ownership may also delay, defer or even prevent a change in control of FirstSun, even if such a change in control would benefit our other stockholders, and may make some transactions more difficult or impossible without the support of FirstSun’s larger stockholders.
In a period of rising interest rates, we expect our mortgage revenue to decrease due to decreased residential mortgage origination volume and pricing decisions of competitors may adversely affect our profitability. Our mortgage division originates, sells and services residential mortgage loans.
In a period of rising or high-interest rates, we expect our mortgage revenue to decrease due to decreased residential mortgage origination volume and pricing decisions of competitors may adversely affect our profitability. Our mortgage division originates, sells and services residential mortgage loans.
Due to the inherent nature of these estimates, it is possible that, at some time in the future, we may significantly increase the allowance for credit losses and/or sustain credit 51 Table of Contents losses that are significantly higher than the provided allowance, or we may recognize a significant provision for impairment of assets, or we may make some other adjustment that will differ materially from the estimates that we make today.
Due to the inherent nature of these estimates, it is possible that, at some time in the future, we may significantly increase the allowance for credit losses and/or sustain credit losses that are significantly higher than the provided allowance, or we may recognize a significant provision for impairment of assets, or we may make some other adjustment that will differ materially from the estimates that we make today.
Some provisions of our organizational documents, our Stockholders’ Agreement and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders.
Some provisions of our organizational documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. Federal, state and local consumer lending laws restrict our ability to originate certain mortgage loans and increase our risk of liability with respect to such loans and increase our cost of doing business.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. 45 Table of Contents Federal, state and local consumer lending laws restrict our ability to originate certain mortgage loans and increase our risk of liability with respect to such loans and increase our cost of doing business.
The banking regulators give commercial real estate lending greater scrutiny, and may require banks with higher levels of commercial real estate loans to implement enhanced underwriting, internal controls, risk management policies and portfolio stress testing, as well as possibly higher levels of allowances for losses and capital levels as a result of commercial real estate lending growth and exposures.
The banking regulators give commercial real estate lending greater scrutiny, and may require banks with higher levels of commercial real estate loans to implement enhanced underwriting, internal controls, risk management policies and portfolio 30 Table of Contents stress testing, as well as possibly higher levels of allowances for losses and capital levels as a result of commercial real estate lending growth and exposures.
As a consequence of these various limitations and restrictions, we may not be able to pay dividends on our common stock. See “Item 1. Business - Supervision and Regulation - Dividend Payments” for additional information. 53 Table of Contents An investment in FirstSun common stock is not an insured deposit and is subject to risk of loss.
As a consequence of these various limitations and restrictions, we may not be able to pay dividends on our common stock. See “Item 1. Business - Supervision and Regulation - Dividend Payments” for additional information. An investment in FirstSun common stock is not an insured deposit and is subject to risk of loss.
Unfavorable market conditions can result in a deterioration of the credit quality of borrowers, an increase in the number of loan delinquencies, defaults and charge-offs, foreclosures, additional provisions for credit losses, adverse asset values, a reduction in assets under management or administration, and an increase in our deposit and funding costs.
Unfavorable market 27 Table of Contents conditions can result in a deterioration of the credit quality of borrowers, an increase in the number of loan delinquencies, defaults and charge-offs, foreclosures, additional provisions for credit losses, adverse asset values, a reduction in assets under management or administration, and an increase in our deposit and funding costs.
Although we have in place strategies designed to achieve those elements that are significant to us at present, our challenge is to execute those strategies and adjust them, or adopt new strategies, as conditions change. 47 Table of Contents New lines of business or new products and services may subject us to additional risk.
Although we have in place strategies designed to achieve those elements that are significant to us at present, our challenge is to execute those strategies and adjust them, or adopt new strategies, as conditions change. New lines of business or new products and services may subject us to additional risk.
FirstSun has filed a resale shelf registration statement, which was declared effective by the SEC on November 1, 2023 and remains in effect, with respect to the potential resale of up to approximately 20.47 million shares of our common stock by certain stockholders, including certain significant stockholders, of FirstSun.
FirstSun has filed a resale shelf registration statement, which was declared effective by the SEC on November 1, 2023 and remains in effect, with respect to the potential resale of up to approximately 20.47 million shares of our common stock by certain large stockholders.
Accordingly, the market price of FirstSun common stock could be adversely affected by actual or anticipated issuances of a significant number of shares of FirstSun common stock in the future. We are authorized to issue up to 50,000,000 shares of our common stock, and to issue up to 10,000,000 shares of preferred stock, w ithout further stockholder approval.
Accordingly, the market price of FirstSun common stock could be adversely affected by actual or anticipated issuances of a significant number of shares of FirstSun common stock in the future. We are authorized to issue up to 50,000,000 shares of our common stock, and to issue up to 10,000,000 shares of preferred stock, without further stockholder approval.
Interest Rate and Yield Curve Risks We are subject to interest rate risk, which could adversely affect our financial condition and profitability. The majority of our banking assets are subject to changes in interest rates.
Interest Rate Risks We are subject to interest rate risk, which could adversely affect our financial condition and profitability. The majority of our banking assets are subject to changes in interest rates.
We believ e that our continued growth and future success will depend in large part on the skills of our executive officers and other key employees and our ability to motivate and retain these individuals, as well as our ability to attract, motivate and retain highly qualified senior and middle management and other skilled employees.
We believe that our continued growth and future success will depend in large part on the skills of our executive officers and other key employees and our ability to motivate and retain these individuals, as well as our ability to attract, motivate and retain highly qualified senior and middle management and other skilled employees.
As a result, our inability to successfully manage credit risk could have a material adverse effect on our business, financial condition and results of operations. Our allowance for credit losses in our loan portfolio may prove to be inadequate, which may adversely affect our business, financial condition and results of operations.
As a result, our inability to successfully manage credit risk could have a material adverse effect on our business, financial condition and results of operations. 29 Table of Contents Our allowance for credit losses in our loan portfolio may prove to be inadequate, which may adversely affect our business, financial condition and results of operations.
Certain claims may seek injunctive relief, which could disrupt the ordinary conduct of our business and operations, increase our cost of doing business or delay or prevent our planned mergers or acquisitions. 50 Table of Contents Our insurance or indemnities may not cover all claims that may be asserted against us.
Certain claims may seek injunctive relief, which could disrupt the ordinary conduct of our business and operations, increase our cost of doing business or delay or prevent our planned mergers or acquisitions. Our insurance or indemnities may not cover all claims that may be asserted against us.
Such a determination may lead to an additional increase in our provisions for credit losses, which could also adversely affect our business, financial condition, and results of operations. 31 Table of Contents Nonperforming assets take significant time and resources to resolve and adversely affect our results of operations and financial condition.
Such a determination may lead to an additional increase in our provisions for credit losses, which could also adversely affect our business, financial condition, and results of operations. Nonperforming assets take significant time and resources to resolve and adversely affect our results of operations and financial condition.
Regulations and laws may be modified at any time, and new legislation may be enacted that will affect us or our subsidiaries. 48 Table of Contents Furthermore, our regulators also have the ability to compel us to take certain actions, or restrict us from taking certain actions entirely, such as actions that our regulators deem to constitute an unsafe or unsound banking practice.
Regulations and laws may be modified at any time, and new legislation may be enacted that will affect us or our subsidiaries. Furthermore, our regulators also have the ability to compel us to take certain actions, or restrict us from taking certain actions entirely, such as actions that our regulators deem to constitute an unsafe or unsound banking practice.
Any financial liability or reputational damage could have a material adverse effect on our business, which, in turn, could have a material adverse impact on our financial condition and results of operations. We are party to various claims and lawsuits incidental to our business.
Any financial liability or reputational damage could have a material adverse effect on our business, which, in turn, could have a material adverse impact on our financial condition and results of operations. 46 Table of Contents We are party to various claims and lawsuits incidental to our business.
We act as servicer for approximately $5.4 billion of residential loans owned by third parties as of December 31, 2023. As a servicer for those loans we have certain contractual obligations, including foreclosing on defaulted mortgage loans or, to the extent applicable, considering alternatives to foreclosure such as loan modifications or short sales.
We act as servicer for approximately $5.8 billion of residential loans owned by third parties as of December 31, 2024. As a servicer for those loans we have certain contractual obligations, including foreclosing on defaulted mortgage loans or, to the extent applicable, considering alternatives to foreclosure such as loan modifications or short sales.
If we are unable to continue to attract and retain core deposits, to obtain third-party financing on favorable terms, or to have access to interbank or other liquidity sources, we 42 Table of Contents may not be able to grow our assets as quickly. We compete with banks and other financial services companies for deposits.
If we are unable to continue to attract and retain core deposits, to obtain third-party financing on favorable terms, or to have access to interbank or other liquidity sources, we may not be able to grow our assets as quickly. We compete with banks and other financial services companies for deposits.
Damage to our reputation could undermine the confidence of our current and potential clients in our ability to provide financial services. Such damage could also impair the 37 Table of Contents confidence of our counterparties and business partners, and ultimately affect our ability to effect transactions.
Damage to our reputation could undermine the confidence of our current and potential clients in our ability to provide financial services. Such damage could also impair the confidence of our counterparties and business partners, and ultimately affect our ability to effect transactions.
These circumstances could result in material changes in deposit levels over relatively short time periods, and they could pressure us to raise interest we pay on our deposits, which could shrink our net interest margin if loan rates do not rise correspondingly.
These circumstances could result in material changes in deposit levels over relatively short time periods, and they could 41 Table of Contents pressure us to raise interest we pay on our deposits, which could shrink our net interest margin if loan rates do not rise correspondingly.
The ultimate tax outcome may differ from the amounts recorded in our financial statements and could have a material adverse effect on our financial results in the period or periods for which such determination is made. Our internal controls and procedures may fail or be circumvented.
The ultimate tax outcome may differ from the amounts recorded in our financial statements and could have a material adverse effect on our financial results in the period or periods for which such determination is made. 48 Table of Contents Our internal controls and procedures may fail or be circumvented.
These provisions include: • establishing a classified board of directors such that not all members of the board are elected at one time, with nine of our ten director seats being nominated by certain Significant Stockholders under the Stockholders’ Agreement, so long as certain stock ownership thresholds are maintained; • providing for a plurality voting standard in the election of directors without cumulative voting; • providing that our stockholders may remove members of our board of directors only for cause; • enabling our board of directors to issue additional shares of authorized, but unissued capital stock; • enabling our board to issue “blank check” preferred stock without further stockholder approval; and • enabling our board of directors to amend our bylaws without stockholder approval.
These provisions include: • establishing a classified board of directors such that not all members of the board are elected at one time, with four of our ten director seats being nominated by certain larger stockholders under agreements with them, so long as certain stock ownership thresholds are maintained; • providing for a plurality voting standard in the election of directors without cumulative voting; • providing that our stockholders may remove members of our board of directors only for cause; • enabling our board of directors to issue additional shares of authorized, but unissued capital stock; • enabling our board to issue “blank check” preferred stock without further stockholder approval; and • enabling our board of directors to amend certain provisions of our bylaws without stockholder approval.
We may issue additional shares of our stock or equity derivative securities in the future pursuant to current or future equity compensation plans, in connection with future acquisitions or financings (including in connection with the proposed HomeStreet merger), or to raise additional capital to support our growth or to otherwise strengthen our balance sheet.
We may issue additional shares of our stock or equity derivative securities in the future pursuant to current or future equity compensation plans, in connection with future acquisitions or financings, or to raise additional capital to support our growth or to otherwise strengthen our balance sheet.
The directors nominated by the Significant Stockholders will have significant authority to make decisions affecting our business, including, among others, the issuance of additional capital stock, the incurrence of additional indebtedness, mergers and acquisitions, the decision of whether or not to declare dividends and other extraordinary corporate matters.
The directors nominated by these larger stockholders will have significant authority to make decisions affecting our business, including, among others, the issuance 49 Table of Contents of additional capital stock, the incurrence of additional indebtedness, mergers and acquisitions, the decision of whether or not to declare dividends and other extraordinary corporate matters.
In addition, new regulations, increased regulatory reviews, and/or changes in the structure of the secondary mortgage markets which we utilize to sell mortgage loans may increase costs and make it more difficult to operate a residential mortgage origination business. Our revenue from the mortgage banking business was $31.4 million in 2023 and $46.3 million in 2022.
In addition, new regulations, increased regulatory reviews, and/or changes in the structure of the secondary mortgage markets which we utilize to sell mortgage loans may increase costs and make it more difficult to operate a residential mortgage origination business. Our revenue from the mortgage banking business was $39.0 million in 2024 and $31.4 million in 2023.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our business financial condition and results of operations. In addition, we are subject to the growing risk of climate change.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our business financial condition and results of operations. In addition, we are subject to the growing risk of climate change. See Climate Risks in this Item 1A of this report.
As of December 31, 2023, approximately 48.8% of our loan portfolio had real estate as primary collateral (owner occupied, non-owner occupied, non-residential construction, multifamily, and residential). Additionally, certain loans may have real estate as a secondary component of collateral.
As of December 31, 2024, approximately 49.5% of our loan portfolio had real estate as primary collateral (owner occupied, non-owner occupied, non-residential construction, multifamily, and residential). Additionally, certain loans may have real estate as a secondary component of collateral.
FirstSun is obligated to (and intends to promptly) file with the SEC a resale shelf registration statement with respect to the potential resale of up to approximately 2.46 million shares of our common stock by certain institutional stockholders who purchased such shares from FirstSun in a private placement on January 17, 2024.
FirstSun also filed with the SEC a resale shelf registration statement with respect to the potential resale of up to approximately 2.46 million shares of our common stock by certain institutional stockholders who purchased such shares from FirstSun in a private placement on January 17, 2024.
In addition, there are continuing concerns related to, among other things, the level of U.S. government debt and fiscal actions that may be taken to address that debt, the potential impacts of artificial intelligence, potential pandemic risks, the potential resurgence of economic and political tensions with China, the Middle East or the continuing Russian invasion of Ukraine, any of which may have a destabilizing effect on financial markets and economic activity.
In addition, there are continuing concerns related to, among other things, the level of U.S. government debt and fiscal actions that may be taken to address that debt, the potential impacts of artificial intelligence, potential pandemic risks, the potential resurgence of economic and political tensions with China, the Middle East or the Russian invasion of Ukraine, the growth of global trade and commerce, trade policies, tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, and trade wars, any of which may have a destabilizing effect on financial markets and economic activity.
Our underwriting, review, and monitoring cannot eliminate all of the risks related to these loans. As of December 31, 2023, our commercial real estate loans were equal to 198.9% of our total risk-based capital.
Our underwriting, review, and monitoring cannot eliminate all of the risks related to these loans. As of December 31, 2024, our commercial real estate loans were equal to 169.5% of our total risk-based capital.
Our wealth management business may be negatively impacted by changes in economic and market conditions and clients may seek legal remedies for investment performance. Our wealth management business may be negatively impacted by changes in general economic and market conditions because the performance of this businesses is directly affected by conditions in the financial and securities markets.
Our trust and wealth management business may be negatively impacted by changes in general economic and market conditions because the performance of this businesses is directly affected by conditions in the financial and securities markets.
This revenue will likely decline in future periods if interest rates continue to rise or if the other risks highlighted in this paragraph are realized, which will adversely affect our profitability.
This revenue could decline in future periods if interest rates rise or remain elevated or if the other risks highlighted in this paragraph are realized, which will adversely affect our profitability.
Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than we can.
Many of our competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than we can.
At December 31, 2023, we had a total of approximately $67.2 million of nonperforming assets or approximately 0.85% of total assets. Our nonperforming assets adversely affect our net income in various ways.
At December 31, 2024, we had a total of approximately $74.2 million of nonperforming assets or approximately 0.92% of total assets. Our nonperforming assets adversely affect our net income in various ways.
As of March 6, 2024, FirstSun had 27,430,682 shares of common stock outstanding, and no shares of preferred stock outstanding.
As of March 6, 2024, FirstSun had 27,753,918 shares of common stock outstanding, and no shares of preferred stock outstanding.
The process for determining whether a credit loss has occurred usually requires complex, subjective judgments about the future financial performance of the issuer in order to assess the probability of receiving all contractual principal and interest payments on the security.
We analyze our securities on a quarterly basis to determine if an expected credit loss has occurred. The process for determining whether a credit loss has occurred usually requires complex, subjective judgments about the future financial performance of the issuer in order to assess the probability of receiving all contractual principal and interest payments on the security.
We publicly disclosed this breach and provided appropriate notifications to potentially impacted customers. While our business has not been materially impacted by these cybersecurity incidents, similar incidents could have a material adverse effect on our business in the future. See “Vendor Incident” in Item 1.C, of this Annual Report on Form 10-K.
We publicly disclosed this breach and provided appropriate notifications to potentially impacted customers. While our business has not been materially impacted by these cybersecurity incidents, similar incidents could have a material adverse effect on our business in the future.
Sales by stockholders of FirstSun, before or after any completion of the proposed HomeStreet merger, of significant amounts of our common stock, as well as the anticipation of such sales by the public markets, could cause the market price of our common stock to decline.
Sales by stockholders of FirstSun of significant amounts of our common stock, as well as the anticipation of such sales by the public markets, could cause the market price of our common stock to decline.
If, as a result of an examination, a banking agency were to determine that the financial condition, capital adequacy, asset quality, asset concentration, earnings prospects, management, liquidity sensitivity to market risk or other aspects of any of our operations has become unsatisfactory, or that we or our management are in violation of any law or regulation, the banking agency could take a number of different remedial actions as it deems appropriate.
If, as a result of an examination, a banking agency were to determine that the financial condition, capital adequacy, asset quality, asset concentration, earnings prospects, management, liquidity sensitivity to market risk or other aspects of any of our operations has become unsatisfactory, or that we or our management are in violation of any law or regulation, the banking agency could take a number of different remedial actions as it deems appropriate. 44 Table of Contents Regulation by these agencies is intended primarily for the protection of our depositors and the deposit insurance fund and not for the benefit of our stockholders.
For example, adverse weather events could damage or destroy our properties or our counterparties’ properties and other assets and disrupt operations, making it more difficult for counterparties to repay their obligations, whether due to reduced 55 Table of Contents profitability, asset devaluations or otherwise.
The physical risk from climate change could result from increased frequency and/or severity of adverse weather events. For example, adverse weather events could damage or destroy our properties or our counterparties’ properties and other assets and disrupt operations, making it more difficult for counterparties to repay their obligations, whether due to reduced profitability, asset devaluations or otherwise.
As prepayments occur, the rate at which net deferred loan origination costs and premiums are expensed will accelerate. The effect of the acceleration of deferred costs and premium amortization may be mitigated by prepayment penalties paid by the borrower when the loan is paid in full within a certain period of time, which varies between loans.
The effect of the acceleration of deferred costs and premium amortization may be mitigated by prepayment penalties paid by the borrower when the loan is paid in full within a certain period of time, which varies between loans.
Recently, some government leaders have discussed having the U.S. Post Office offer banking services. The nature of technology-driven disruption to our industry is changing, in some cases seeking to displace traditional financial service providers rather than merely enhance traditional services or their delivery.
The nature of technology-driven disruption to our industry is changing, in some cases seeking to displace traditional financial service providers rather than merely enhance traditional services or their delivery.
If we are not successful in attracting new and retaining existing clients, our business, financial condition, results of operations and prospects may be materially and adversely affected. 39 Table of Contents Consumers may decide not to use banks to complete their financial transactions.
If we are not successful in attracting new and retaining existing clients, our business, financial condition, results of operations and prospects may be materially and adversely affected. Consumers may decide not to use banks to complete their financial transactions. Technology and other changes are allowing parties to complete financial transactions through alternative methods that historically have involved banks.
Although our banking offices are geographically dispersed throughout portions of the midwestern and southwestern United States and we maintain insurance coverage for such events, a significant natural disaster in or near one or more of our markets could have a material adverse effect on our financial condition, results of operations or liquidity.
Although our banking offices are geographically dispersed throughout portions of the western, midwestern and southwestern United States and we maintain insurance coverage for such events, a significant natural disaster in or near one or more of our markets could have a material adverse effect on our financial condition, results of operations or liquidity. 51 Table of Contents The markets in which we operate also are exposed to the adverse impacts of climate change, as well as uncertainties related to the transition to a low-carbon economy.
Certain Relationships and Related Transactions, and Director Independence ,” under the heading “Stockholders’ Agreement.” The interests of FirstSun’s Significant Stockholders may conflict with the interests of our stockholders. For example, some or all of FirstSun’s Significant Stockholders may support certain long-term strategies or objectives for FirstSun that may not be accretive to our stockholders in the short term.
The interests of FirstSun’s larger stockholders may conflict with the interests of our stockholders. For example, some or all of FirstSun’s larger stockholders may support certain long-term strategies or objectives for FirstSun that may not be accretive to our stockholders in the short term.
Unlike larger financial institutions that are more geographically diversified, we are a regional bank that provides banking and financial services to customers primarily in Texas, Kansas, Colorado, New Mexico and Arizona. HomeStreet operates in California, Hawaii, Oregon and Washington, and, if completed, the proposed HomeStreet merger will provide additional geographic diversity.
Unlike larger financial institutions that are more geographically diversified, we are a regional bank that provides banking and financial services to customers primarily in Texas, Kansas, Colorado, New Mexico, Arizona, California and Washington.
Any issuance of shares of our stock or derivative equity securities will dilute the percentage ownership of our shareholders, may dilute the book value per share of our common stock, may dilute the economic and voting ownership interest of our existing stockholders, and could have a material negative effect on the value of our common stock. 54 Table of Contents Sales by FirstSun stockholders of substantial amounts of our common stock, as well as the anticipation of such sales by the public markets, could depress the market price of our common stock.
Any issuance of shares of our stock or derivative equity securities will dilute the percentage ownership of our shareholders, may dilute the book value per share of our common stock, may dilute the economic and voting ownership interest of our existing stockholders, and could have a material negative effect on the value of our common stock.
In addition, under our Stockholders’ Agreement, as amended, certain of FirstSun’s Significant Stockholders, are entitled to designate nominees for nine of the ten directors, in each case, so long as certain stock ownership thresholds are maintained.
In addition, certain of FirstSun’s larger stockholders, are entitled to designate nominees for four of the ten director seats, in each case, so long as certain stock ownership thresholds are maintained.
Any future additional assessments, increases or required prepayments in FDIC insurance premiums could reduce our profitability, may limit our ability to pursue certain business opportunities, or otherwise negatively impact our operations.
Also, if our financial condition deteriorates or if the bank regulators otherwise have supervisory concerns about us, then our assessments could rise. Any future additional assessments, increases or required prepayments in FDIC insurance premiums could reduce our profitability, may limit our ability to pursue certain business opportunities, or otherwise negatively impact our operations.
As discussed elsewhere in this Item 1A, inflationary pressures have caused the Federal Reserve to increase interest rates. Increases in interest rates in the past have led to recessions of various lengths and intensities and might lead to such a recession in the near future.
Increases in interest rates in the past have led to recessions of various lengths and intensities and might lead to such a recession in the near future.
Further, economic conditions and rising 32 Table of Contents interest rates could result in a decrease of our transaction deposit account balances as customers seek to obtain maximum federal deposit insurance coverage or to seek higher interest rates. Our cost of funds has increased in the past 12 months due largely to overall increases in the cost of our deposits.
Further, economic conditions and rising interest rates could result in a decrease of our transaction deposit account balances as customers seek to obtain maximum federal deposit insurance coverage or to seek higher interest rates.
Our mergers and acquisitions, including our proposed merger with HomeStreet, are subject to approval by a variety of federal and state regulatory agencies. The process for obtaining these required regulatory approvals has become substantially more difficult in recent years.
Future mergers and acquisitions may be delayed, impeded, not approved or prohibited due to regulatory issues. Our mergers and acquisitions are subject to approval by a variety of federal and state regulatory agencies. The process for obtaining these required regulatory approvals has become substantially more difficult in recent years, including in connection with prior proposed mergers that we have pursued.
Difficulties associated with potential mergers and acquisitions that may result from these factors could have a material adverse effect on our business, and, in turn, our financial condition and results of operations. We face risks and uncertainties related to our proposed merger with HomeStreet.
Difficulties associated with potential mergers and acquisitions that may result from these factors could have a material adverse effect on our business, and, in turn, our financial condition and results of operations. Additional growth will subject FirstSun to additional regulation, increased supervision and increased costs.
Regulation by these agencies is intended primarily for the protection of our depositors and the deposit insurance fund and not for the benefit of our stockholders. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. The Dodd-Frank Act, enacted in July 2010, instituted major changes to the banking and financial institutions regulatory regimes.
Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. The Dodd-Frank Act, enacted in July 2010, instituted major changes to the banking and financial institutions regulatory regimes.
Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. The process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits.
The process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits.
We face substantial competition in all areas of our operations from a variety of different competitors, both within and beyond our principal markets, many of which are larger and may have more financial resources than us. Such competitors primarily include national, super-regional, and internet banks within the various markets in which we operate.
We could experience a loss due to competition with other financial institutions. We face substantial competition in all areas of our operations from a variety of different competitors, both within and beyond our principal markets, many of which are larger and may have more financial resources than us.
We recognize premiums paid on mortgage-backed securities as an adjustment from interest income over the expected life of the security based on the rate of repayment of the securities. Acceleration of prepayments on the loans underlying a mortgage-backed security shortens the life of the security, increases the rate at which premiums are expensed and further reduces interest income.
We recognize premiums paid on mortgage-backed securities as an adjustment from interest income over the expected life of the security based on the rate of repayment of the securities.
We may issue stock or equity derivative securities in connection with mergers and acquisitions that will dilute the percentage ownership and voting percentage interest of our existing stockholders and result in our existing stockholders exercising less influence over management, and such issuances may reduce the book value or earnings per share of our common stock, cause the price of our common stock to decline and adversely affect the terms on which we may obtain additional capital.
If we do not successfully manage these risks, our merger and acquisition activities could have a material adverse effect on our business, financial condition, and results of operations, including short-term and long‑term liquidity, our ability to successfully implement our strategic plan and our stock price. 42 Table of Contents We may issue stock or equity derivative securities in connection with mergers and acquisitions that will dilute the percentage ownership and voting percentage interest of our existing stockholders and result in our existing stockholders exercising less influence over management, and such issuances may reduce the book value or earnings per share of our common stock, cause the price of our common stock to decline and adversely affect the terms on which we may obtain additional capital.
At the same time, the marketability of the property securing a loan may be adversely affected by any reduced demand resulting from higher interest rates. An increase (or decrease) in interest rates may also require us to increase (or decrease) the interest rates that we pay on our deposits.
At the same time, the marketability of the property securing a loan may be adversely affected by any reduced demand resulting from higher interest rates.
In addition, as customer preferences and expectations continue to evolve, technology has lowered barriers to entry and made it possible for nonbanks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and may have lower cost structures.
The financial services industry could become even more competitive as a result of legislative and regulatory changes and continued consolidation. In addition, as customer preferences and expectations continue to evolve, technology has lowered barriers to entry and made it possible for nonbanks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse our systems or information. The structure of our information security program is designed around the Federal Financial Institutions Examination Council (“FFIEC”) regulatory guidance, and other industry standards such as the Center for Internet Security (“CIS”).
Biggest changeThe structure of our information security program is designed around the Federal Financial Institutions Examination Council (“FFIEC”) regulatory guidance, and other industry standards such as the Center for Internet Security (“CIS”) and the National Institute of Standards and Technology (NIST) Cybersecurity Framework (“CSF”).
In addition, we leverage certain industry and government associations, third-party benchmarking, audits, and threat intelligence feeds to facilitate and promote program effectiveness. Our Chief Information Security Officer and our Chief Information Officer regularly collaborate with industry groups to discuss cybersecurity trends and issues and identify best practices.
In addition, we leverage certain industry and government associations, third-party benchmarking, audits, and threat intelligence to facilitate and promote program effectiveness. Our Chief Information Security Officer, Chief Technology Officer, and our Chief Information Officer regularly collaborate with industry groups to discuss cybersecurity trends and issues and identify best practices.
The information security program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions. We leverage people, processes, and technology with an in-depth, layered, defensive strategy as part of our efforts to manage and maintain cybersecurity controls.
The information security program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions. 52 Table of Contents We leverage people, processes, and technology with an in-depth, layered, defensive strategy as part of our efforts to manage and maintain cybersecurity controls.
The department, as a whole, consists of information security professionals with varying degrees of education and experience. Individuals within the department are generally subject to professional education and certification requirements. In particular, our Chief Information Security Officer has substantial relevant expertise and formal training in the areas of information security and cybersecurity risk management.
The department consists of information security professionals with varying degrees of education and experience. Individuals within the department are generally subject to professional education and certification requirements. In particular, our Chief Information Security Officer has substantial relevant expertise and formal training in the areas of information security and cybersecurity risk management.
Risk Factors . Governance Our Chief Information Security Officer is accountable for managing our enterprise information security department and delivering our information security program. The responsibilities of this department include cybersecurity risk assessment, threat intelligence, control evaluation and assessment, incident response, vulnerability assessment, threat intelligence, third-party risk management, change management, and business resilience.
Risk Factors . Governance Our CISO is accountable for managing our enterprise information security department and delivering our information security program. The responsibilities of this department include cybersecurity risk assessment, threat intelligence, control evaluation and assessment, monitoring and incident response, vulnerability assessment, third-party risk management, change management, and business resilience.
We also actively monitor our email gateways for malicious phishing email campaigns and monitor remote 56 Table of Contents connections as a significant portion of our workforce has the option to work remotely.
We also actively monitor our email gateways for malicious phishing email campaigns and monitor remote connections as a significant portion of our workforce has the option to work remotely.
The Risk Committee of our Bank’s Board of Directors is responsible for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
The Risk Committee of the Board of Directors is responsible for overseeing our information security program, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
Our Chief Information Security Officer is primarily responsible for this cybersecurity component and is a member of the information technology organization, reporting directly to the Chief Information Officer and regularly reports on the state of the program to the Risk Committee of our Bank’s Board of Directors.
Our Chief Information Security Officer (“CISO”) is primarily responsible for this cybersecurity component and is a member of the enterprise risk management organization, reporting directly to the Chief Risk Officer and regularly reports on the state of the program to the Information Security Committee and the Risk Committee of the Board of Directors.
Various management committees exist including the Information Technology Steering Committee, which focuses on technology impact. This committee provides oversight and governance of the technology program and the information security program. This committee is chaired by the Chief Information Officer and includes other executives across the Bank and the Chief Information Security Officer is a part of this committee.
Various management committees exist including the Information Security Committee, which focuses on technology risk, controls and the information security program. This committee provides oversight and governance of the information security program and technology risks. This committee is chaired by the Chief Information Security Officer and includes other executives across the Bank, including the Chief Information Officer and Chief Technology Officer.
Therefore, we will experience risk to potential vulnerabilities now and in the future but have built a program to recognize and respond to these vulnerabilities for the purposes of identification and remediation of those vulnerabilities and the impact they can have on our business. Our internal systems, processes, and controls are designed to mitigate loss from cyber-attacks.
Therefore, we will experience risk to potential vulnerabilities now and in the future but have built a program to recognize and respond to these threats and/or vulnerabilities for the purposes of identification and remediation of those threats and/or vulnerabilities and the impact they can have on our business.
Additionally, we maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to the appropriate management and/or executives.
Our internal systems, processes, and controls are designed to mitigate loss from cyber-attacks. Additionally, we maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to the appropriate management and/or executives.
Our Chief Information Security Officer and our Chief Information Officer provide quarterly reports to the Risk Committee of our Bank’s Board of Directors regarding the information security program and the 57 Table of Contents technology program, key enterprise cybersecurity initiatives, and other matters relating to cybersecurity processes.
Our Chief Information Security Officer provides quarterly reports to the Risk Committee of the Board of Directors regarding the information security program, key enterprise cybersecurity initiatives and other matters relating to cybersecurity processes. The Risk Committee of the Board of Directors reviews and approves our information security policies and strategies.
The Chief Information Security Officer reports summaries of key issues, including significant cybersecurity and/or privacy incidents, discussed at the meeting and the actions taken to the Risk Committee of our Board of Directors on a quarterly basis (or more frequently as may be required by the Incident Response Plan).
This committee meets quarterly to provide oversight of information security projects and services including strategy, standards, policies, practices, controls, and mitigation and prevention efforts employed to manage security risks. 53 Table of Contents The Chief Information Security Officer reports summaries of key issues, including significant cybersecurity and/or privacy incidents, discussed at the meeting and the actions taken to the Risk Committee of the Board of Directors on a quarterly basis (or more frequently as may be required by the Incident Response Plan).
The Risk Committee of our Bank’s Board of Directors reviews and approves our information security policies and strategies. The Risk Committee of our Bank’s Board of Directors provides a report of their activities to the full Board of Directors at each board meeting.
The Risk Committee of the Board of Directors provides a report of their activities to the full Board of Directors at each board meeting.
Removed
This committee meets quarterly to provide oversight of technology projects and services including strategy, standards, policies, practices, controls, and mitigation and prevention efforts employed to manage security risks.
Added
In addition, the CISO works in conjunction with the Chief Information Officer (“CIO”) and Chief Technology Officer (“CTO”) to address technology strategy, controls, and processes to ensure the security of the network, data, and services for the Bank. The CIO reports Information Technology activities through the Information Technology Steering Committee and the Bank’s Board of Directors.
Removed
Vendor Incident As disclosed in our Form 8-K filed on July 14, 2023 , on or about May 31, 2023, we were informed by a third-party vendor of a zero-day vulnerability in the vendor’s managed file transfer software MOVEit (the “Vendor Incident”).
Added
Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse our systems or information.
Removed
The Bank utilizes MOVEit for securely transferring sensitive and confidential information and other data, including for its First National 1870 and Guardian Mortgage divisions. We publicly disclosed this breach and provided appropriate notifications to potentially impacted customers.
Removed
We now understand that the SEC is conducting an investigation into data breaches resulting from the failures in the Progress software and on or about February 26, 2024, we received a request from the SEC to preserve and provide various documents and information relating to the SEC’s investigation.
Removed
The fact that the SEC has begun an investigation does not mean that the SEC believes that anyone (including FirstSun) has violated federal securities laws, nor does it mean that the SEC has a negative opinion of any person, entity, or security. It is a non-public fact-finding inquiry, with which we intend to fully cooperate.
Removed
The costs associated with the Vendor Incident have not had, and neither it nor the SEC’s investigation (including responding to any information requests from the SEC) are expected to have a material adverse impact on the Company’s financial condition or results of operation.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe own 43 of our banking branches and lease our other 26 banking branches. In addition, we also lease our executive office. Our mortgage banking offices are typically leased for shorter-terms. We believe that our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future.
Biggest changeWe believe that our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future.
Item 2. Properties Our principal executive office is located at 1400 16th Street, Suite 250, Denver, Colorado 80202. Sunflower Bank’s main office was relocated from Denver, Colorado to 8117 Preston Road, Suite 220, Dallas, Texas 75225 in November 2023.
Item 2. Properties Our principal executive office is located at 1400 16th Street, Suite 250, Denver, Colorado 80202. Sunflower Bank’s main office is located at 8117 Preston Road, Suite 220, Dallas, Texas 75225.
In addition, we currently operate 23 branches located in Texas, 21 branches located in Kansas, 11 branches located in Colorado, nine branches located in New Mexico, four branches located in Arizona and one branch located in Washington. We also operate 11 mortgage offices located in Arizona, Idaho, Michigan, New Mexico, Oregon, Texas and Washington.
In addition, we currently operate 23 branches located in Texas, 21 branches located in Kansas, 11 branches located in Colorado, nine branches located in New Mexico, four branches located in Arizona and one branch located in Washington. In February 2025 we received the necessary regulatory approval to open a new branch in each of San Diego and Los Angeles, California.
Added
We also operate 14 mortgage offices located in Arizona, Idaho, Michigan, New Mexico, Oregon, Texas and Washington. We own 43 of our banking branches and lease our other 26 banking branches. In addition, we also lease our executive office. Our mortgage banking offices are typically leased for shorter-terms.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor further information regarding legal proceedings, see Note 24 - Commitments and Contingencies in our audited consolidated financial statements contained elsewhere in this report. Item 4. Mine Safety Disclosures Not Applicable. 58 Table of Contents Part II
Biggest changeFor further information regarding legal proceedings, see Note 22 - Commitments and Contingencies in our audited consolidated financial statements contained elsewhere in this report. Item 4. Mine Safety Disclosures Not Applicable. 54 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThere was no public trading market for the common stock before that date. Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Dividends We have not declared or paid any cash dividends on our common stock since we converted from an S corporation to a C corporation in 2016.
Biggest changeDividends We have not declared or paid any cash dividends on our common stock since we converted from an S corporation to a C corporation in 2016. For the foreseeable future, we do not intend to declare cash dividends and instead we plan to retain earnings to grow our business.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity" and Note 16 - Stockholders’ Equity included in our consolidated financial statements included elsewhere in this report.
“Business –Supervision and Regulation—Bank Holding Company Regulation—Dividend Payments”, and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity" and Note 14 - Stockholders’ Equity included in our consolidated financial statements included elsewhere in this report.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for FirstSun Common Stock As of December 31, 2023, we had 24,960,639 shares of common stock outstanding and approximately 369 stockholders of record.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for FirstSun Common Stock The Company’s common stock is traded on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “FSUN”. As of December 31, 2024, we had 27,709,679 shares of common stock outstanding and approximately 341 stockholders of record.
For the foreseeable future, we do not intend to declare cash dividends and instead we plan to retain earnings to grow our business. Although we have no current expectations to pay dividends, any future determination relating to our dividend policy will be made by our board of directors and will depend on a number of factors.
Although we have no current expectations to pay dividends, any future determination relating to our dividend policy will be made by our board of directors and will depend on a number of factors. As a Delaware corporation and a bank holding company, dividend payments are subject to numerous limitations. For additional information, see Item 1.
Removed
On January 17, 2024 we issued an additional 2,461,538 shares of our common stock at $32.50 per share in conjunction with the proposed merger with HomeStreet and related investment agreements. In August 2022, our common stock began trading on the OTCQX® Best Market under the ticker symbol “FSUN”.
Added
Stockholder Return Performance The following graph sets forth the cumulative total stockholder return for the Company’s common stock from July 12, 2024 (the date the stock first began trading on the Nasdaq) to December 31, 2024, compared to an overall stock market index (Nasdaq composite) and two of the Company’s peer group indexes (Nasdaq Bank Index and KBW Bank Index).
Removed
As a Delaware corporation and a bank holding company, dividend payments are subject to numerous limitations. For additional information, see Item 1. “Business –Supervision and Regulation—Bank Holding Company Regulation—Dividend Payments”, and Item 7.
Added
The Nasdaq (Bloomberg: CCMP), Nasdaq Bank Index (Bloomberg: CBNK) and KBW Bank Index (Bloomberg: BKX) are based on total returns assuming reinvestment of dividends. The graph assumes an investment of $100 on July 12, 2024. The performance graph represents past performance and should not be considered to be an indication of future performance. 55 Table of Contents Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table presents GAAP to non-GAAP reconciliations as of and for the year ended December 31,: ($ in thousands, except share and per share amounts) 2023 2022 2021 Tangible common stockholders’ equity and tangible book value per common share: Total common stockholders' equity (GAAP) $ 877,197 $ 774,536 $ 524,038 Less: Goodwill and other intangible assets Goodwill (93,483) (93,483) (33,050) Other intangible assets (10,984) (15,806) (8,250) Tangible common stockholders' equity (non-GAAP) $ 772,730 $ 665,247 $ 482,738 Total common shares outstanding 24,960,639 24,920,984 18,346,288 Tangible book value per common share (non-GAAP) $ 30.96 $ 26.69 $ 26.31 Tangible net income: Net Income (GAAP) $ 103,533 $ 59,182 $ 43,164 Add: Intangible amortization, net of tax 3,809 3,330 1,119 Tangible net income (non-GAAP) $ 107,342 $ 62,512 $ 44,283 Return on average tangible common stockholders’ equity: Tangible net income (non-GAAP) (see above) $ 107,342 $ 62,512 $ 44,283 Total average common stockholders' equity (GAAP) $ 828,102 $ 692,524 $ 515,773 Less: Average goodwill and other intangible assets Average goodwill (93,483) (78,582) (33,050) Average other intangible assets (13,178) (15,811) (8,964) Total average tangible common stockholders' equity (non-GAAP) $ 721,441 $ 598,131 $ 473,759 Return on average tangible common stockholders’ equity (non-GAAP) 14.88 % 10.45 % 9.35 % Net interest margin - FTE basis: Net interest income (GAAP) $ 293,431 $ 241,632 $ 155,233 Taxable equivalent adjustment 5,086 5,059 5,755 Net interest income - FTE basis (non-GAAP) $ 298,517 $ 246,691 $ 160,988 Average earning assets $ 6,935,567 $ 6,244,221 $ 5,180,650 Net interest margin - FTE basis (non-GAAP) 4.29 % 3.95 % 3.11 % Tangible common stockholders’ equity to tangible assets: Total assets (GAAP) $ 7,879,724 $ 7,430,322 $ 5,666,814 Less: Goodwill and other intangible assets Goodwill (93,483) (93,483) (33,050) Other intangible assets (10,984) (15,806) (8,250) Total tangible assets (non-GAAP) $ 7,775,257 $ 7,321,033 $ 5,625,514 Tangible common stockholders’ equity (non-GAAP) (see above) $ 772,730 $ 665,247 $ 482,738 Tangible common stockholders’ equity to tangible assets (non-GAAP) 9.94 % 9.09 % 8.58 % 63 Table of Contents ($ in thousands, except share and per share amounts) 2023 2022 2021 Tangible common stockholders’ equity to tangible assets, reflecting net unrealized losses on HTM securities, net of tax: Total tangible common stockholders' equity (non-GAAP) (see above) $ 772,730 $ 665,247 $ 482,738 Less: Net unrealized losses on HTM securities, net of tax (3,629) (4,295) 447 Total tangible common stockholders’ equity less net unrealized losses on HTM securities, net of tax (non-GAAP) $ 769,101 $ 660,952 $ 483,185 Total tangible assets (non-GAAP) (see above) $ 7,775,257 $ 7,321,033 $ 5,625,514 Less: Net unrealized losses on HTM securities, net of tax (3,629) (4,295) 447 Total tangible assets less net unrealized losses on HTM securities, net of tax (non-GAAP) $ 7,771,628 $ 7,316,738 $ 5,625,961 Tangible common stockholders’ equity to tangible assets (non-GAAP) 9.94 % 9.09 % 8.58 % Tangible common stockholders’ equity to tangible assets reflecting net unrealized losses on HTM securities, net of tax (non-GAAP) 9.90 % 9.03 % 8.59 % Net income excluding merger costs: Net income (GAAP) $ 103,533 $ 59,182 $ 43,164 Add: Merger costs Merger related expenses — 18,751 3,085 Income tax effect on merger related expenses — (4,083) (509) Provision for loan loss on Pioneer loans marked at a premium — 2,884 — Income tax effect on provision for loan loss on Pioneer loans marked at a premium — (521) — Total merger costs — 17,031 2,576 Net income excluding merger costs (non-GAAP) $ 103,533 $ 76,213 $ 45,740 Return on average total assets excluding merger costs: Return on average total assets (ROAA) (GAAP) 1.38 % 0.88 % 0.79 % Add: Impact of merger costs, net of tax — % 0.25 % 0.05 % ROAA excluding merger costs (non-GAAP) 1.38 % 1.13 % 0.84 % Return on average stockholders’ equity excluding merger costs: Return on average stockholders' equity (ROAE) (GAAP) 12.50 % 8.55 % 8.37 % Add: Impact of merger costs, net of tax — % 2.46 % 0.50 % ROAE excluding merger costs (non-GAAP) 12.50 % 11.01 % 8.87 % Efficiency ratio excluding merger related expenses: Efficiency ratio (GAAP) 59.81 % 72.20 % 80.38 % Less: Impact of merger related expenses — % (5.66) % (1.11) % Efficiency ratio excluding merger related expenses (non-GAAP) 59.81 % 66.54 % 79.27 % Diluted earnings per share excluding merger costs: Diluted earnings per share (GAAP) $ 4.08 $ 2.48 $ 2.30 Add: Impact of merger costs, net of tax — 0.72 0.14 Diluted earnings per share excluding merger costs (non-GAAP) $ 4.08 $ 3.20 $ 2.44 Segments Our operations are conducted through two operating segments: Banking and Mortgage Operations.
Biggest changeThe following table presents GAAP to non-GAAP reconciliations as of and for the years ended December 31,: ($ in thousands, except share and per share amounts) 2024 2023 2022 Tangible stockholders’ equity to tangible assets: Total stockholders' equity (GAAP) $ 1,041,366 $ 877,197 $ 774,536 Less: Goodwill and other intangible assets Goodwill (93,483) (93,483) (93,483) Other intangible assets (7,434) (10,984) (15,806) Tangible stockholders' equity (non-GAAP) $ 940,449 $ 772,730 $ 665,247 Total assets (GAAP) $ 8,097,387 $ 7,879,724 $ 7,430,322 Less: Goodwill and other intangible assets Goodwill (93,483) (93,483) (93,483) Other intangible assets (7,434) (10,984) (15,806) Tangible assets (non-GAAP) $ 7,996,470 $ 7,775,257 $ 7,321,033 Total stockholders' equity to total assets (GAAP) 12.86 % 11.13 % 10.42 % Less: Impact of goodwill and other intangible assets (1.10) % (1.19) % (1.33) % Tangible stockholders' equity to tangible assets (non-GAAP) 11.76 % 9.94 % 9.09 % Tangible stockholders’ equity to tangible assets, reflecting net unrealized losses on HTM securities, net of tax: Tangible stockholders' equity (non-GAAP) $ 940,449 $ 772,730 $ 665,247 Less: Net unrealized losses on HTM securities, net of tax (4,292) (3,629) (4,295) Tangible stockholders’ equity less net unrealized losses on HTM securities, net of tax (non-GAAP) $ 936,157 $ 769,101 $ 660,952 Tangible assets (non-GAAP) $ 7,996,470 $ 7,775,257 $ 7,321,033 Less: Net unrealized losses on HTM securities, net of tax (4,292) (3,629) (4,295) Tangible assets less net unrealized losses on HTM securities, net of tax (non-GAAP) $ 7,992,178 $ 7,771,628 $ 7,316,738 Tangible stockholders’ equity to tangible assets (non-GAAP) 11.76 % 9.94 % 9.09 % Less: Net unrealized losses on HTM securities, net of tax (0.05) % (0.04) % (0.06) % Tangible stockholders’ equity to tangible assets reflecting net unrealized losses on HTM securities, net of tax (non-GAAP) 11.71 % 9.90 % 9.03 % Tangible book value per share: Total stockholders' equity (GAAP) $ 1,041,366 $ 877,197 $ 774,536 Tangible stockholders' equity (non-GAAP) $ 940,449 $ 772,730 $ 665,247 Total shares outstanding 27,709,679 24,960,639 24,920,984 Book value per share (GAAP) $ 37.58 $ 35.14 $ 31.08 Tangible book value per share (non-GAAP) $ 33.94 $ 30.96 $ 26.69 59 Table of Contents ($ in thousands, except share and per share amounts) 2024 2023 2022 Adjusted net income: Net income (GAAP) $ 75,628 $ 103,533 $ 59,182 Add: Non-recurring adjustments Terminated merger / Merger related expenses, net of tax 9,949 — 14,668 Provision for loan loss on acquired loans marked at a premium, net of tax — — 2,363 Write-off of Guardian Mortgage trade name, net of tax 625 — — Disposal of ATMs, net of tax 1,542 — — Total adjustments, net of tax 12,116 — 17,031 Adjusted net income (non-GAAP) $ 87,744 $ 103,533 $ 76,213 Adjusted diluted earnings per share: Diluted earnings per share (GAAP) $ 2.69 $ 4.08 $ 2.48 Add: Impact of non-recurring adjustments Terminated merger / Merger related expenses, net of tax 0.36 — 0.62 Provision for loan loss on acquired loans marked at a premium, net of tax — — 0.10 Write-off of Guardian Mortgage trade name, net of tax 0.02 — — Disposal of ATMs, net of tax 0.06 — — Adjusted diluted earnings per share (non-GAAP) $ 3.13 $ 4.08 $ 3.20 Adjusted return on average total assets: Return on average total assets (ROAA) (GAAP) 0.96 % 1.38 % 0.88 % Add: Impact of non-recurring adjustments Terminated merger / Merger related expenses, net of tax 0.13 % — % 0.21 % Provision for loan loss on acquired loans marked at a premium, net of tax — % — % 0.04 % Write-off of Guardian Mortgage trade name 0.01 % — % — % Disposal of ATMs 0.02 % — % — % Adjusted ROAA (non-GAAP) 1.12 % 1.38 % 1.13 % Adjusted return on average stockholders’ equity: Return on average stockholders' equity (ROACE) (GAAP) 7.56 % 12.50 % 8.55 % Add: Impact of non-recurring adjustments Terminated merger / Merger related expenses, net of tax 1.00 % — % 2.12 % Provision for loan loss on acquired loans marked at a premium, net of tax — % — % 0.34 % Write-off of Guardian Mortgage trade name 0.06 % — % — % Disposal of ATMs 0.15 % — % — % Adjusted ROACE (non-GAAP) 8.77 % 12.50 % 11.01 % Return on average tangible stockholders’ equity Return on average stockholders’ equity (ROACE) 7.56 % 12.50 % 8.55 % Add: Impact from goodwill and other intangible assets Goodwill 0.87 % 1.85 % 1.34 % Other intangible assets 0.31 % 0.53 % 0.56 % Return on average tangible stockholders’ equity (ROATCE) 8.74 % 14.88 % 10.45 % Adjusted return on average tangible stockholders’ equity: Return on average tangible stockholders' equity (ROATCE) 8.74 % 14.88 % 10.45 % Add: Impact of non-recurring adjustments Terminated merger / Merger related expenses, net of tax 1.11 % — % 2.45 % Provision for loan loss on acquired loans marked at a premium, net of tax — % — % 0.40 % Write-off of Guardian Mortgage trade name 0.07 % — % — % Disposal of ATMs 0.17 % — % — % Adjusted ROATCE (non-GAAP) 10.09 % 14.88 % 13.30 % Adjusted total noninterest expense: Total noninterest expense (GAAP) $ 264,040 $ 222,793 $ 239,126 Less: Non-recurring adjustments Terminated merger / Merger related expenses (13,178) — (18,751) Write-off of Guardian Mortgage trade name (828) — — Disposal of ATMs (2,042) — — Total adjustments, net of tax (16,048) — (18,751) Adjusted total noninterest expense (non-GAAP) $ 247,992 $ 222,793 $ 220,375 60 Table of Contents ($ in thousands, except share and per share amounts) 2024 2023 2022 Adjusted efficiency ratio: Efficiency ratio (GAAP) 68.28 % 59.81 % 72.20 % Less: Impact of non-recurring adjustments Terminated merger related expenses / Merger related expenses (3.41) % — % (5.66) % Write-off of Guardian Mortgage trade name (0.21) % — % — % Disposal of ATMs (0.53) % — % — % Adjusted efficiency ratio (non-GAAP) 64.13 % 59.81 % 66.54 % Fully tax equivalent (“FTE”) net interest income and net interest margin: Net interest income (GAAP) $ 296,910 $ 293,431 $ 241,632 Gross income effect of tax exempt income 4,767 5,086 5,059 FTE net interest income (non-GAAP) $ 301,677 $ 298,517 $ 246,691 Average earning assets $ 7,320,696 $ 6,935,567 $ 6,244,221 Net interest margin 4.06 % 4.23 % 3.87 % Net interest margin on FTE basis (non-GAAP) 4.12 % 4.29 % 3.95 % Segments Our operations are conducted through two operating segments: Banking and Mortgage Operations.
Each of the operating segments is complementary to each other and because of the interrelationship of the segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. For additional information on our segments, see Note 23 - Segment Information included in our audited consolidated financial statements included elsewhere in this report.
Each of the operating segments is complementary to each other and because of the interrelationship of the segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. For additional information on our segments, see Note 21 - Segment Information included in our audited consolidated financial statements included elsewhere in this report.
Since the derivative liabilities recorded on the balance sheet change frequently and do not represent the amounts that may ultimately be paid under these contracts, these liabilities are not included in the table of contractual obligations presented above. Further discussion of derivative instruments is included in Note 8 - Derivative Financial Instruments to the consolidated financial statements.
Since the derivative liabilities recorded on the balance sheet change frequently and do not represent the amounts that may ultimately be paid under these contracts, these liabilities are not included in the table of contractual obligations presented above. Further discussion of derivative instruments is included in Note 7 - Derivative Financial Instruments to the consolidated financial statements.
Our net interest income can be significantly influenced by a variety of factors, including overall loan demand, economic conditions, credit risk, the amount of non-earning assets including nonperforming loans and OREO, the amounts of and 67 Table of Contents rates at which assets and liabilities reprice, variances in prepayment of loans and securities, exercise of call options on borrowings or securities, a general rise or decline in interest rates, changes in the slope of the yield-curve, and balance sheet growth or contraction.
Our net interest income can be significantly influenced by a variety of factors, including overall loan demand, economic conditions, credit risk, the amount of non-earning assets including nonperforming loans and OREO, the amounts of and rates at which assets and liabilities reprice, variances in prepayment of loans and securities, exercise of call options on borrowings or securities, a general rise or decline in interest rates, changes in the slope of the yield-curve, and balance sheet growth or contraction.
Accordingly, this financial information should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2023, included elsewhere in this report. Non-GAAP financial measures exclude certain items that are included in the financial results presented in accordance with GAAP.
Accordingly, this financial information should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2024, included elsewhere in this report. Non-GAAP financial measures exclude certain items that are included in the financial results presented in accordance with GAAP.
There were no trading securities in our investment portfolio as of December 31, 2023 and 2022. All available-for sale securities are carried at fair value and may be used for liquidity purposes should management consider it to be in our best interest.
There were no trading securities in our investment portfolio as of December 31, 2024 and 2023. All available-for sale securities are carried at fair value and may be used for liquidity purposes should management consider it to be in our best interest.
FirstSun (Parent Company) FirstSun has routine funding requirements consisting primarily of operating expenses, debt service, and funds used for acquisitions. FirstSun can obtain funding to meet its obligations from dividends collected from its subsidiaries, primarily the Bank, and through the issuance of varying forms of debt.
FirstSun (Parent Company) FirstSun has routine funding requirements consisting primarily of operating expenses, debt service, and funds used for acquisitions. FirstSun can obtain funding to meet its obligations from dividends collected from its subsidiaries, primarily the Bank, and through the issuance of FirstSun common stock and varying forms of debt.
In the normal course of business, various legal actions and proceedings are pending against us and our affiliates which are incidental to the business in which they are engaged. Further discussion of contingent liabilities is included in Note 24 - Commitments and Contingencies to the consolidated financial statements.
In the normal course of business, various legal actions and proceedings are pending against us and our affiliates which are incidental to the business in which they are engaged. Further discussion of contingent liabilities is included in Note 22 - Commitments and Contingencies to the consolidated financial statements.
For information concerning the hypothetical sensitivity of the key assumptions under adverse changes on our MSRs, see 66 Table of Contents the table under “Noninterest Income” elsewhere in the Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report.
For information concerning the hypothetical sensitivity of the key assumptions under adverse changes on our MSRs, see the table under “Noninterest Income” elsewhere in the Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report.
Government and its agencies, in an amount greater than 10% of stockholders’ equity. 74 Table of Contents Loans Our loan portfolio represents a broad range of borrowers primarily in our markets in Texas, Kansas, Colorado, New Mexico and Arizona, primarily comprised of commercial and industrial, commercial real estate, residential real estate, public finance and consumer financing loans.
Government and its agencies, in an amount greater than 10% of stockholders’ equity. 70 Table of Contents Loans Our loan portfolio represents a broad range of borrowers primarily in our markets in Texas, Kansas, Colorado, New Mexico, Arizona and California primarily comprised of commercial and industrial, commercial real estate, residential real estate, public finance and consumer financing loans.
Our total loans held-for-investment, net of deferred fees, costs, premiums and discounts were $6.3 billion at December 31, 2023, an increase of $0.4 billion from 2022, which was due to organic growth. Investment Securities Our securities portfolio is used to make various term investments, maintain a source of liquidity and serve as collateral for certain types of deposits and borrowings.
Our total loans held-for-investment, net of deferred fees, costs, premiums and discounts were $6.4 billion at December 31, 2024, an increase of $0.1 billion from 2023, which was due to organic growth. Investment Securities Our securities portfolio is used to make various term investments, maintain a source of liquidity and serve as collateral for certain types of deposits and borrowings.
Additionally, as an “emerging growth company” under Section 107 of the JOBS Act, we did not to adopt ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) (CECL) until January 1, 2023. As such, our allowance for credit losses for years prior to 2023 may not be comparable to other public financial institutions that adopted CECL in an earlier year.
Additionally, as an “emerging growth company” under Section 107 of the JOBS Act, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) (CECL) on January 1, 2023. As such, our allowance for credit losses for years prior to 2023 may not be comparable to other public financial institutions that adopted CECL in an earlier year.
Financial Statements .” We have omitted discussion of 2021 results where it would be redundant to the discussion previously included in “ Management’s Discussion and Analysis of Financial Condition and Results of Operations of FirstSun ” section of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 16, 2023.
Financial Statements .” We have omitted discussion of 2022 results where it would be redundant to the discussion previously included in “ Management’s Discussion and Analysis of Financial Condition and Results of Operations of FirstSun ” section of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 7, 2024.
The following discussion is an analysis of our consolidated results of operations for the years ended December 31, 2023, 2022 and 2021, and financial condition for the years ended December 31, 2023 and 2022.
The following discussion is an analysis of our consolidated results of operations for the years ended December 31, 2024, 2023 and 2022, and financial condition for the years ended December 31, 2024 and 2023.
See Note 5 - Mortgage Servicing Rights included in our audited consolidated financial statements included elsewhere in this report for our assumptions used in valuing the MSRs.
See Note 4 - Mortgage Servicing Rights included in our audited consolidated financial statements included elsewhere in this report for our assumptions used in valuing the MSRs.
For purposes of the ACL for lending commitments, such allowance is determined using the same 65 Table of Contents methodology as the ACL for loans, while also taking into consideration the probability of drawdowns or funding, and whether such commitments are cancellable by us.
For purposes of the ACL for lending commitments, such allowance is determined using the same methodology as the ACL for loans, while also taking into consideration the probability of drawdowns or funding, and whether such commitments are cancellable by us.
Further, the current fair value of collateral is utilized to assess the expected credit losses when a financial asset is considered to be collateral dependent. Our process for determining ACL is further discussed in “Note 1- Basis of Presentation, Description of Business and Summary of Significant Accounting Policies” included in Item 8 of this Form 10-K.
Further, the current fair value of collateral is utilized to assess the expected credit losses when a financial asset is considered to be collateral dependent. Our process for determining ACL is further discussed in “ Note 1- Basis of Presentation, Description of Business and Summary of Significant Accounting Policies ” included in Item 8 of this Form 10-K.
See the impact of changes to our key MSR valuation assumptions in the table below. 71 Table of Contents The following table shows the hypothetical effect on the fair value of our MSRs when applying certain unfavorable variations of key assumptions to these assets as of December 31, 2023.
See the impact of changes to our key MSR valuation assumptions in the table below. 67 Table of Contents The following table shows the hypothetical effect on the fair value of our MSRs when applying certain unfavorable variations of key assumptions to these assets as of December 31, 2024.
The qualitative factors applied on January 1, 2023, and December 31, 2023, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management’s assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of ACL calculated by the model.
The qualitative factors applied on 62 Table of Contents December 31, 2024, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management’s assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of ACL calculated by the model.
Owner occupied CRE loans associated with office space were $149.4 million, or 2.4% of total loans as of December 31, 2023. Residential real estate loans represent loans to consumers collateralized by a mortgage on a residence and include purchase money, refinancing, secondary mortgages, and home equity loans and lines of credit.
Owner occupied CRE loans associated with office space were $186.3 million, or 2.9% of total loans as of December 31, 2024. Residential real estate loans represent loans to consumers collateralized by a mortgage on a residence and include purchase money, refinancing, secondary mortgages, and home equity loans and lines of credit.
Credit and debit card fees represent interchange income from credit and debit card activity and referral fees earned from processing fees on card transactions by our business customers. Credit and debit card fees increased $0.5 million for the year ended December 31, 2023 compared to 2022, primarily due to increased card transaction volumes.
Credit and debit card fees represent interchange income from credit and debit card activity and referral fees earned from processing fees on card transactions by our business customers. Credit and debit card fees decreased $0.5 million for the year ended December 31, 2024 compared to 2023, primarily due to a decrease in card transaction volumes.
Further discussion of contingent liabilities is included in Note 24 - Commitments and Contingencies to the consolidated financial statements. 82 Table of Contents
Further discussion of contingent liabilities is included in Note 22 - Commitments and Contingencies to the consolidated financial statements. 78 Table of Contents
Trust and investment advisory fees represent fees we receive in connection with our investment advisory and custodial management services of investment accounts. Trust and investment advisory fees decreased $1.1 million for the year ended December 31, 2023 compared to 2022 primarily due to lower average assets under management.
Trust and investment advisory fees represent fees we receive in connection with our investment advisory and custodial management services of investment accounts. Trust and investment advisory fees increased $0.1 million for the year ended December 31, 2024 compared to 2023, primarily due to higher average assets under management.
We offer a full range of relationship-focused services to meet our clients’ personal, business and wealth management financial objectives, with a branch network in Texas, Kansas, Colorado, New Mexico, and Arizona and mortgage capabilities in 43 states.
We offer a full range of relationship-focused services to meet our clients’ personal, business and wealth management financial objectives throughout Texas, Kansas, Colorado, New Mexico, Arizona, California and Washington and a mortgage lending platform with capabilities in 43 states.
Deposits in the ICS / CDARS program totaled $0.6 billion, or 9.2% of all deposits as of December 31, 2023, and $0.2 billion, or 4.1% of all deposits as of December 31, 2022.
Deposits in the ICS / CDARS program totaled $0.7 billion, or 11.1% of all deposits as of December 31, 2024, and $0.6 billion, or 9.2% of all deposits as of December 31, 2023.
This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as events change. 76 Table of Contents The following table presents, by loan type, the changes in the allowance for credit losses for the years ended December 31,: (In thousands) 2023 2022 2021 Balance, beginning of period $ 65,917 $ 47,547 $ 47,766 Impact of adopting ASC 326 5,256 — — Adjusted beginning balance $ 71,173 $ 47,547 $ 47,766 Loan charge-offs: Commercial and industrial (9,242) (2,321) (4,296) Commercial real estate (83) — (375) Residential real estate (13) (122) (42) Public finance — — — Consumer (334) (144) (148) Other — — — Total loan charge-offs (9,672) (2,587) (4,861) Recoveries of loans previously charged-off: Commercial and industrial 1,118 2,236 1,547 Commercial real estate 12 388 28 Residential real estate 682 221 24 Public finance — — — Consumer 50 62 43 Other — — — Total loan recoveries 1,862 2,907 1,642 Net (charge-offs) recoveries (7,810) 320 (3,219) Provision for credit losses (1) 17,035 18,050 3,000 Balance, end of period $ 80,398 $ 65,917 $ 47,547 Allowance for credit losses to total loans 1.28 % 1.12 % 1.18 % Ratio of net charge-offs (recoveries) to average loans outstanding 0.13 % (0.01) % 0.09 % (1) For the years ended December 31, 2023, 2022 and 2021 we recorded a provision for credit losses on unfunded commitments of $1,212, $525 and $300, respectively.
This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as events change. 72 Table of Contents The following table presents, by loan type, the changes in the allowance for credit losses for the years ended December 31,: (In thousands) 2024 2023 2022 Balance, beginning of period $ 80,398 $ 65,917 $ 47,547 Impact of adopting ASC 326 — 5,256 — Adjusted beginning balance $ 80,398 $ 71,173 $ 47,547 Loan charge-offs: Commercial and industrial (20,743) (9,242) (2,321) Commercial real estate (475) (83) — Residential real estate (38) (13) (122) Public finance — — — Consumer (438) (334) (144) Other — — — Total loan charge-offs (21,694) (9,672) (2,587) Recoveries of loans previously charged-off: Commercial and industrial 1,181 1,118 2,236 Commercial real estate 9 12 388 Residential real estate 8 682 221 Public finance — — — Consumer 119 50 62 Other — — — Total loan recoveries 1,317 1,862 2,907 Net (charge-offs) recoveries (20,377) (7,810) 320 Provision for credit losses 1 28,200 17,035 18,050 Balance, end of period $ 88,221 $ 80,398 $ 65,917 Allowance for credit losses to total loans 1.38 % 1.28 % 1.12 % Ratio of net charge-offs to average loans outstanding 0.32 % 0.13 % (0.01) % 1 For the years ended December 31, 2024, 2023 and 2022 we recorded a provision for credit losses on unfunded commitments of $(650), $1,212 and $525, respectively.
At December 31, 2023, our liquid assets, which consist of cash and amounts due from banks and interest-bearing deposits in other financial institutions, amounted to $473.0 million, or 6.0% of total assets, compared to $307.9 million, or 4.1% of total assets, at December 31, 2022.
At December 31, 2024, our liquid assets, which consist of cash and amounts due from banks and interest-bearing deposits in other financial institutions, amounted to $607.6 million, or 7.5% of total assets, compared to $473.0 million, or 6.0% of total assets, at December 31, 2023.
For additional information on our income taxes, see Note 17 - Income Tax es included in our audited consolidated financial statements included elsewhere in this report. 72 Table of Contents Financial Condition Balance Sheet Our total assets were $7.9 billion at December 31, 2023, compared to $7.4 billion at December 31, 2022.
For additional information on our income taxes, see Note 15 - Income Taxes included in our audited consolidated financial statements included elsewhere in this report. 68 Table of Contents Financial Condition Balance Sheet Our total assets were $8.1 billion at December 31, 2024, compared to $7.9 billion at December 31, 2023.
The following table presents net charge-offs (recoveries) to average loans outstanding by loan category for the years ended December 31,: (In thousands) 2023 2022 2021 Commercial and industrial 0.30 % — % 0.19 % Commercial real estate — % (0.03) % 0.03 % Residential real estate (0.07) % (0.01) % — % Public finance — % — % — % Consumer 0.70 % 0.21 % 0.65 % Other — % — % — % 77 Table of Contents Allocation of Allowance for Credit Losses The following table presents the allocation of the allowance for credit losses by category and the percentage of the allocation of the allowance for credit losses by category to total loans listed as of December 31,: 2023 2022 (In thousands) Allowance Amount % of loans in each category to total loans Allowance Amount % of loans in each category to total loans Commercial and industrial $ 29,523 39.4 % $ 40,785 39.1 % Commercial real estate 27,546 30.3 % 19,754 31.2 % Residential real estate 16,345 17.7 % 2,963 17.0 % Public finance 5,337 9.6 % 1,664 10.0 % Consumer 717 0.6 % 352 0.7 % Other 930 2.4 % 399 2.0 % Total $ 80,398 100.0 % $ 65,917 100.0 % Nonperforming Assets We have established policies and procedures to guide us in originating, monitoring and maintaining the credit quality of our loan portfolio.
The following table presents net charge-offs (recoveries) to average loans outstanding by loan category for the years ended December 31,: (In thousands) 2024 2023 2022 Commercial and industrial 0.69 % 0.30 % — % Commercial real estate 0.03 % — % (0.03) % Residential real estate — % (0.07) % (0.01) % Public finance — % — % — % Consumer 0.79 % 0.70 % 0.21 % Other — % — % — % 73 Table of Contents Allocation of Allowance for Credit Losses The following table presents the allocation of the allowance for credit losses by category and the percentage of the allocation of the allowance for credit losses by category to total loans listed as of December 31,: 2024 2023 (In thousands) Allowance Amount % of loans in each category to total loans Allowance Amount % of loans in each category to total loans Commercial and industrial $ 37,912 39.2 % $ 29,523 39.4 % Commercial real estate 28,323 30.0 % 27,546 30.3 % Residential real estate 15,450 18.5 % 16,345 17.7 % Public finance 4,750 8.7 % 5,337 9.6 % Consumer 750 0.6 % 717 0.6 % Other 1,036 3.0 % 930 2.4 % Total $ 88,221 100.0 % $ 80,398 100.0 % Nonperforming Assets We have established policies and procedures to guide us in originating, monitoring and maintaining the credit quality of our loan portfolio.
For further information, see Note 4 - Loans .
For further information, see Note 3 - Loans .
The components of income from mortgage banking services, net, were as follows for the year ended December 31,: (In thousands) 2023 2022 2021 Net sale gains and fees from mortgage loan originations, including loans held-for-sale changes in fair value and hedging $ 14,275 $ 18,924 $ 63,468 Mortgage servicing income 15,674 15,088 12,525 MSR capitalization and changes in fair value, net of derivative activity 1,435 12,273 10,417 Income from mortgage banking services, net $ 31,384 $ 46,285 $ 86,410 For the year ended December 31, 2023, income from mortgage banking services decreased $14.9 million, compared to 2022.
The components of income from mortgage banking services, net, were as follows for the year ended December 31,: (In thousands) 2024 2023 2022 Net sale gains and fees from mortgage loan originations, including loans held-for-sale changes in fair value and hedging $ 18,855 $ 14,275 $ 18,924 Mortgage servicing income 16,973 15,674 15,088 MSR capitalization and changes in fair value, net of derivative activity 3,186 1,435 12,273 Income from mortgage banking services, net $ 39,014 $ 31,384 $ 46,285 Income from mortgage banking services increased $7.6 million in 2024, compared to 2023.
Total loans, net of deferred origination fees, premiums and discounts, as of December 31, 2023 and 2022 were $6.3 billion and $5.9 billion, respectively.
Total loans, net of deferred fees, costs, premiums and discounts, as of December 31, 2024 and 2023 were $6.4 billion and $6.3 billion, respectively.
Certain policies inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported.
Actual results could result in material changes to our consolidated financial condition or consolidated results of operations. Certain policies inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported.
These critical accounting estimates and their application are reviewed at least annually by our audit committee. The following is a description of our critical accounting estimates and an explanation of the methods and assumptions underlying their application.
Therefore, we consider these policies to be critical accounting estimates and discuss them directly with the Audit Committee of our board of directors. These critical accounting estimates and their application are reviewed at least annually by our audit committee. The following is a description of our critical accounting estimates and an explanation of the methods and assumptions underlying their application.
(In thousands) 10% 20% Discount rate $ (3,451) $ (6,265) Total prepayment speeds (2,982) (5,394) Cost of servicing each loan (1,324) (2,193) These hypothetical sensitivities should be evaluated with care.
(In thousands) 10% 20% Discount rate $ (3,656) $ (6,709) Total prepayment speeds (3,091) (5,623) Cost of servicing each loan (1,330) (2,215) These hypothetical sensitivities should be evaluated with care.
GAAP,” and conform to general practices within the banking industry. Estimates that are susceptible to significant changes include accounting for the allowance for credit losses and fair value measurements, both of which require significant judgments by management. Actual results could result in material changes to our consolidated financial condition or consolidated results of operations.
Our accounting and reporting estimates are in accordance with generally accepted accounting principles, or “U.S. GAAP,” and conform to general practices within the banking industry. Estimates that are susceptible to significant changes include accounting for the allowance for credit losses and fair value measurements, both of which require significant judgments by management.
For example, the timing of maturities of our investment portfolio is fairly predictable and subject to a high degree of control when we make investment decisions. Net deposit inflows and outflows, however, are far less predictable and are not subject to the same degree of certainty.
For example, the timing of maturities of our investment portfolio is fairly predictable and subject to a high degree of control when we make investment decisions.
Results of Operations Comparison of fiscal years 2023 and 2022 The follow table sets forth our results of operations as of and for the year ended December 31,: ($ in thousands, except per share amounts) 2023 2022 2021 Net interest income $ 293,431 $ 241,632 $ 155,233 Provision for credit losses 18,247 18,050 3,000 Noninterest income 79,092 89,566 124,244 Noninterest expense 222,793 239,126 224,635 Income before income taxes 131,483 74,022 51,842 Provision for income taxes 27,950 14,840 8,678 Net income 103,533 59,182 43,164 Diluted earnings per share $ 4.08 $ 2.48 $ 2.30 Return on average total assets 1.38 % 0.88 % 0.79 % Return on average stockholders' equity 12.50 % 8.55 % 8.37 % Net interest margin 4.23 % 3.87 % 3.00 % Net interest margin (FTE basis) (1) 4.29 % 3.95 % 3.11 % Efficiency ratio 59.81 % 72.20 % 80.38 % Noninterest income to total revenue (2) 21.2 % 27.0 % 44.5 % (1) See section entitled “ Non-GAAP Financial Measures and Reconciliations ” for information regarding these non-GAAP financial measures and a reconciliation to the most comparable GAAP equivalent.
Results of Operations Comparison of fiscal years 2024 and 2023 The follow table sets forth our results of operations as of and for the year ended December 31,: ($ in thousands, except per share amounts) 2024 2023 2022 Net interest income $ 296,910 $ 293,431 $ 241,632 Provision for credit losses 27,550 18,247 18,050 Noninterest income 89,792 79,092 89,566 Noninterest expense 264,040 222,793 239,126 Income before income taxes 95,112 131,483 74,022 Provision for income taxes 19,484 27,950 14,840 Net income 75,628 103,533 59,182 Diluted earnings per share $ 2.69 $ 4.08 $ 2.48 Return on average total assets 0.96 % 1.38 % 0.88 % Return on average stockholders' equity 7.56 % 12.50 % 8.55 % Net interest margin 4.06 % 4.23 % 3.87 % Net interest margin (FTE basis) 1 4.12 % 4.29 % 3.95 % Efficiency ratio 68.28 % 59.81 % 72.20 % Noninterest income to total revenue 2 23.2 % 21.2 % 27.0 % 1 See section entitled “ Non-GAAP Financial Measures and Reconciliations ” for information regarding these non-GAAP financial measures and a reconciliation to the most comparable GAAP equivalent. 2 Total revenue is net interest income plus noninterest income. 63 Table of Contents General Our results of operations depend significantly on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans and investment securities and interest expense on interest-bearing liabilities, consisting primarily of deposits and borrowings.
Liquidity sources available to us for immediate funding at December 31, 2023, are as follows: FHLB borrowings available $ 706,367 Fed Funds lines 2,028,410 Unused lines with other financial institutions 309,917 Immediate funding availability $ 3,044,694 81 Table of Contents Management believes the Bank has the ability to generate and obtain adequate amounts of liquidity to meet its requirements in the short-term and the long-term.
Liquidity sources available to us for immediate funding at December 31, 2024, are as follows: FHLB borrowings available $ 1,385,345 Fed Funds lines 1,973,407 Unused lines with other financial institutions 160,000 Immediate funding availability $ 3,518,752 Management believes the Bank has the ability to generate and obtain adequate amounts of liquidity to meet its requirements in the short-term and the long-term.
The following table sets forth the composition of our loan portfolio, as of December 31,: 2023 2022 (In thousands) Amount % of total loans Amount % of total loans Commercial and industrial $ 2,467,688 39.4 % $ 2,310,929 39.1 % Commercial real estate: Non-owner occupied 812,235 13.0 % 779,546 13.2 % Owner occupied 635,365 10.2 % 636,272 10.8 % Construction and land 345,430 5.5 % 327,817 5.5 % Multifamily 103,066 1.6 % 102,068 1.7 % Total commercial real estate 1,896,096 30.3 % 1,845,703 31.2 % Residential real estate 1,110,610 17.7 % 1,003,931 17.0 % Public finance 602,913 9.6 % 590,284 10.0 % Consumer 36,371 0.6 % 42,588 0.7 % Other 153,418 2.4 % 118,397 2.0 % Total loans $ 6,267,096 100.0 % $ 5,911,832 100.0 % Commercial and industrial loans include loans to commercial customers for use in normal business operations to finance working capital needs, equipment and inventory purchases, and other expansion projects.
The following table sets forth the composition of our loan portfolio, as of December 31,: 2024 2023 (In thousands) Amount % of total loans Amount % of total loans Commercial and industrial $ 2,497,772 39.2 % $ 2,467,688 39.4 % Commercial real estate: Non-owner occupied 752,861 11.8 % 812,235 13.0 % Owner occupied 702,773 11.0 % 635,365 10.2 % Construction and land 362,677 5.7 % 345,430 5.5 % Multifamily 94,355 1.5 % 103,066 1.6 % Total commercial real estate 1,912,666 30.0 % 1,896,096 30.3 % Residential real estate 1,180,610 18.5 % 1,110,610 17.7 % Public finance 554,784 8.7 % 602,913 9.6 % Consumer 41,345 0.6 % 36,371 0.6 % Other 189,180 3.0 % 153,418 2.4 % Total loans $ 6,376,357 100.0 % $ 6,267,096 100.0 % Commercial and industrial loans include loans to commercial customers for use in normal business operations to finance working capital needs, equipment and inventory purchases, and other expansion projects.
Public finance loans include loans to our charter school and municipal based customers. Consumer loans include direct consumer installment loans, credit card accounts, overdrafts and other revolving loans. Other loans consist of loans to nondepository financial institutions, lease financing receivables and loans for agricultural production.
Public finance loans include loans to our charter school and municipal based customers. Consumer loans include direct consumer installment loans, credit card accounts, overdrafts and other revolving loans.
Non-owner occupied CRE loans were 85.2% of the Company’s risk-based capital, or 13.0% of total loans as of December 31, 2023. Non-owner occupied CRE loans associated with office space were $109.3 million, or 1.7% of total loans as of December 31, 2023.
Non-owner occupied CRE loans were 66.7% of the Company’s risk-based capital, or 11.8% of total loans as of December 31, 2024. Non-owner occupied CRE loans associated with office space were $88.8 million, or 1.4% of total loans as of December 31, 2024.
The Bank may declare dividends without prior regulatory approval that do not exceed the total of retained net income for the current year combined with its retained net income for the preceding two years, subject to maintenance of minimum capital requirements. Prior regulatory approval to pay dividends was not required in 2022 or 2023 and is not currently required.
Federal banking laws regulate the amount of dividends that may be paid by banking subsidiaries without prior approval. The Bank may declare dividends without prior regulatory approval that do not exceed the total of retained net income for the current year combined with its retained net income for the preceding two years, subject to maintenance of minimum capital requirements.
Income Taxes We had income tax expense for the year ended December 31, 2023 of $28.0 million, compared to $14.8 million in 2022. The increase in income tax expense was primarily due to our increased income during 2023. Our effective tax rate was 21.3% for the year ended December 31, 2023, compared to 20.0% in 2022.
Income Taxes We had income tax expense in 2024 of $19.5 million, compared to $28.0 million in 2023. The decrease in income tax expense was primarily due to our decreased income during 2024. Our effective tax rate was 20.5% in 2024, compared to 21.3% in 2023.
These liquidity requirements are met primarily through our deposits, FHLB advances and the principal and interest payments we receive on loans and investment securities. Cash, interest-bearing deposits in third-party banks, securities available for sale and maturing or prepaying balances in our investment and loan portfolios are our most liquid assets.
Cash, interest-bearing deposits in third-party banks, securities available for sale and maturing or prepaying balances in our investment and loan portfolios are our most liquid assets.
For a further discussion of the allowance for credit losses, refer to the “Allowance for Credit Losses” section of this financial review. 70 Table of Contents Noninterest Income The following table presents noninterest income for the year ended December 31,: (In thousands) 2023 2022 2021 Service charges on deposit accounts $ 21,345 $ 18,211 $ 12,504 Credit and debit card fees 12,000 11,511 9,596 Trust and investment advisory fees 5,693 6,806 7,795 Income from mortgage banking services, net 31,384 46,285 86,410 Other 8,670 6,753 7,939 Total noninterest income $ 79,092 $ 89,566 $ 124,244 Our noninterest income decreased $10.5 million to $79.1 million for the year ended December 31, 2023 from $89.6 million in 2022, primarily due to a decrease in income from mortgage banking services, net.
For a further discussion of the allowance for credit losses, refer to the “Allowance for Credit Losses” section of this financial review. 66 Table of Contents Noninterest Income The following table presents noninterest income for the year ended December 31,: (In thousands) 2024 2023 2022 Service charges on deposit accounts $ 9,495 $ 9,940 $ 9,857 Treasury management service fees 14,829 11,724 8,827 Credit and debit card fees 11,153 11,681 11,038 Trust and investment advisory fees 5,787 5,693 6,806 Income from mortgage banking services, net 39,014 31,384 46,285 Other 9,514 8,670 6,753 Total noninterest income $ 89,792 $ 79,092 $ 89,566 Noninterest income totaled $89.8 million in 2024, an increase of $10.7 million from 2023, primarily due to increases in treasury management service fees and income from mortgage banking services, net.
Each of the operating segments is complementary to each other and because of the interrelationship of the segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. For additional information on our segments, see Note 23 - Segment Information included in our consolidated financial statements included elsewhere in this report.
Each of the operating segments is complementary to each other and because of the interrelationship of the segments, the information presented is not indicative of how the segments would perform if they operated as independent entities.
Further discussion of each obligation or commitment is included in the referenced note to the consolidated financial statements.
The following table summarizes our material contractual obligations as of December 31, 2024. Further discussion of each obligation or commitment is included in the referenced note to the consolidated financial statements.
We experienced a decline 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 activity, which decreased $4.6 million for the year ended December 31, 2023, compared to 2022.
We experienced an increase of $4.6 million in 2024, compared to 2023, 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 activity. Total loan originations for sale were $1.1 billion in 2024, an increase of $0.3 billion from $0.8 billion in 2023.
(3) Nonperforming loans include nonaccrual loans and accrual loans greater than 90 days past due. Deposits Deposits represent our primary source of funds. Total deposits increased by $0.6 billion to $6.4 billion at December 31, 2023, compared to December 31, 2022. We are focused on growing our core deposits through relationship-based banking with our business and consumer clients.
Total deposits increased by $0.3 billion to $6.7 billion at December 31, 2024, compared to December 31, 2023. We are focused on growing our core deposits through relationship-based banking with our business and consumer clients.
We actively participate in the IntraFi Cash Service (“ICS”) / Certificate of Deposit Account Registry Service (“CDARS”) program which provides FDIC insurance coverage for clients that maintain larger deposit balances.
The uninsured and uninsured and uncollateralized amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements. 75 Table of Contents We actively participate in the IntraFi Cash Service (“ICS”) / Certificate of Deposit Account Registry Service (“CDARS”) program which provides FDIC insurance coverage for clients that maintain larger deposit balances.
Mortgage Operations Loss before income taxes increased to $6.5 million in 2023, compared to a loss of $4.6 million in 2022, primarily due to a $16.3 million decrease in mortgage banking services revenue, net, partially offset by a $13.1 million decrease in salary and employee benefits expenses from the decline in mortgage loan originations and reductions in staffing levels.
Mortgage Operations Income before income taxes increased to $9.7 million in 2024, compared to a loss of $6.5 million in 2023, primarily due to a $12.7 million increase in net interest income and a $8.4 million increase in mortgage banking services revenue, net, partially offset by a $6.3 million increase in salary and employee benefits.
As of and for the year ended December 31,: 2023 2022 2021 (In thousands) Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate Interest Earning Assets Loans (1) $ 6,178,414 $ 385,637 6.24 % $ 5,216,212 $ 247,988 4.75 % $ 3,906,458 $ 159,303 4.08 % Investment securities 554,433 17,032 3.07 % 605,119 13,185 2.18 % 531,803 7,979 1.50 % Interest-bearing cash and other assets 202,720 11,015 5.43 % 422,890 5,644 1.33 % 742,389 2,072 0.28 % Total earning assets 6,935,567 413,684 5.96 % 6,244,221 266,817 4.27 % 5,180,650 169,354 3.27 % Other assets 556,083 494,065 288,617 Total assets $ 7,491,650 $ 6,738,286 $ 5,469,267 Interest-bearing liabilities Demand and NOW deposits $ 385,424 $ 11,574 3.00 % $ 214,516 $ 1,775 0.83 % $ 254,679 $ 756 0.30 % Savings deposits 453,654 2,676 0.59 % 496,131 799 0.16 % 455,451 460 0.10 % Money market deposits 2,122,410 28,301 1.33 % 2,528,308 6,770 0.27 % 2,208,498 4,292 0.19 % Certificates of deposits 1,512,638 58,804 3.89 % 536,325 3,810 0.71 % 344,224 3,036 0.88 % Total deposits 4,474,126 101,355 2.27 % 3,775,280 13,154 0.35 % 3,262,852 8,544 0.26 % Repurchase agreements 28,316 225 0.80 % 54,335 119 0.22 % 125,867 59 0.05 % Total deposits and repurchase agreements 4,502,442 101,580 2.26 % 3,829,615 13,273 0.35 % 3,388,719 8,603 0.25 % FHLB borrowings 269,613 13,621 5.05 % 215,166 6,221 2.89 % 42,527 909 2.14 % Other long-term borrowings 78,654 5,052 6.42 % 82,111 5,691 6.93 % 68,918 4,609 6.69 % Total interest-bearing liabilities 4,850,709 120,253 2.48 % 4,126,892 25,185 0.61 % 3,500,164 14,121 0.40 % Noninterest-bearing deposits 1,678,240 1,835,578 1,376,968 Other liabilities 134,599 83,292 76,362 Stockholders’ equity 828,102 692,524 515,773 Total liabilities and stockholders’ equity $ 7,491,650 $ 6,738,286 $ 5,469,267 Net interest income $ 293,431 $ 241,632 $ 155,233 Net interest spread 3.48 % 3.66 % 2.87 % Net interest margin 4.23 % 3.87 % 3.00 % Net interest margin (on a FTE basis) (2) 4.29 % 3.95 % 3.11 % (1) Includes loans held-for-investment, including nonaccrual loans, and loans held-for-sale.
As of and for the year ended December 31,: 2024 2023 2022 (In thousands) Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate Interest Earning Assets Loans 1 $ 6,410,520 $ 421,959 6.58 % $ 6,178,414 $ 385,637 6.24 % $ 5,216,212 $ 247,988 4.75 % Investment securities 529,209 18,468 3.49 % 554,433 17,032 3.07 % 605,119 13,185 2.18 % Interest-bearing cash and other assets 380,967 19,113 5.02 % 202,720 11,015 5.43 % 422,890 5,644 1.33 % Total earning assets 7,320,696 459,540 6.28 % 6,935,567 413,684 5.96 % 6,244,221 266,817 4.27 % Other assets 543,650 556,083 494,065 Total assets $ 7,864,346 $ 7,491,650 $ 6,738,286 Interest-bearing liabilities Demand and NOW deposits $ 633,123 $ 23,013 3.63 % $ 385,424 $ 11,574 3.00 % $ 214,516 $ 1,775 0.83 % Savings deposits 412,941 2,834 0.69 % 453,654 2,676 0.59 % 496,131 799 0.16 % Money market deposits 2,161,618 45,643 2.11 % 2,122,410 28,301 1.33 % 2,528,308 6,770 0.27 % Certificates of deposits 1,756,755 79,161 4.51 % 1,512,638 58,804 3.89 % 536,325 3,810 0.71 % Total deposits 4,964,437 150,651 3.03 % 4,474,126 101,355 2.27 % 3,775,280 13,154 0.35 % Repurchase agreements 15,557 188 1.21 % 28,316 225 0.80 % 54,335 119 0.22 % Total deposits and repurchase agreements 4,979,994 150,839 3.03 % 4,502,442 101,580 2.26 % 3,829,615 13,273 0.35 % FHLB borrowings 124,833 6,836 5.48 % 269,613 13,621 5.05 % 215,166 6,221 2.89 % Other long-term borrowings 75,586 4,955 6.55 % 78,654 5,052 6.42 % 82,111 5,691 6.93 % Total interest-bearing liabilities 5,180,413 162,630 3.14 % 4,850,709 120,253 2.48 % 4,126,892 25,185 0.61 % Noninterest-bearing deposits 1,542,808 1,678,240 1,835,578 Other liabilities 140,529 134,599 83,292 Stockholders’ equity 1,000,596 828,102 692,524 Total liabilities and stockholders’ equity $ 7,864,346 $ 7,491,650 $ 6,738,286 Net interest income $ 296,910 $ 293,431 $ 241,632 Net interest spread 3.14 % 3.48 % 3.66 % Net interest margin 4.06 % 4.23 % 3.87 % Net interest margin (on a FTE basis) 2 4.12 % 4.29 % 3.95 % 1 Includes loans held-for-investment, including nonaccrual loans, and loans held-for-sale. 2 See section entitled “ Non-GAAP Financial Measures and Reconciliations ” for information regarding these non-GAAP financial measures and a reconciliation to the most comparable GAAP equivalent. 65 Table of Contents Rate-Volume Analysis The tables below present the effect of volume and rate changes on interest income and expense.
(In thousands) Note Reference Total Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years Deposits: Deposits without a stated maturity 10 $ 4,597,534 $ 4,597,534 $ — $ — $ — Certificates of deposit 10 1,776,569 1,347,310 418,262 8,038 2,959 Securities sold under agreements to repurchase 11 24,693 24,693 — — — Short-term debt: FHLB LOC 12 389,468 389,468 — — — Long-term debt: Subordinated debt 12 78,919 — — — 78,919 Operating leases 25 28,122 7,146 10,531 5,158 5,287 We are party to various derivative contracts as a means to manage the balance sheet and our related exposure to changes in interest rates, to manage our residential real estate loan origination and sale activity, and to provide derivative contracts to our clients.
(In thousands) Note Reference Total Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years Deposits: Deposits without a stated maturity 9 $ 5,106,685 $ 5,106,685 $ — $ — $ — Certificates of deposit 9 1,565,575 1,501,442 56,508 5,377 2,248 Securities sold under agreements to repurchase 10 14,699 14,699 — — — Short-term debt: FHLB term advances 11 135,000 135,000 — — — Long-term debt: Subordinated debt 11 78,919 — — — 78,919 Operating leases 23 26,112 7,339 9,035 5,899 3,839 We are party to various derivative contracts as a means to manage the balance sheet and our related exposure to changes in interest rates, to manage our residential real estate loan origination and sale activity, and to provide derivative contracts to our clients.
The unfavorable impact in 2022 of merger costs, net of tax, to return on average total assets was 0.25% and to return on average stockholders’ equity was 2.46%. 1 Total revenue is net interest income plus noninterest income. 61 Table of Contents Financial Highlights The following table sets forth certain financial highlights of FirstSun as of and for the year ended December 31,: ($ in thousands, except share and per share amounts) 2023 2022 2021 Income Statement: Net interest income $ 293,431 $ 241,632 $ 155,233 Taxable equivalent adjustment 5,086 5,059 5,755 Net interest income - fully tax equivalent ("FTE") basis (non-GAAP) (3) $ 298,517 $ 246,691 $ 160,988 Provision for credit losses $ 18,247 $ 18,050 $ 3,000 Noninterest income $ 79,092 $ 89,566 $ 124,244 Noninterest expense $ 222,793 $ 239,126 $ 224,635 Net income $ 103,533 $ 59,182 $ 43,164 Per Common Share Data: Weighted average diluted common shares 25,387,196 23,838,471 18,770,785 Net income (basic) $ 4.15 $ 2.55 $ 2.36 Net income (diluted) $ 4.08 $ 2.48 $ 2.30 Cash dividends $ — $ — $ — Dividend payout ratio — % — % — % Book value $ 35.14 $ 31.08 $ 28.56 Tangible book value (non-GAAP) (3) $ 30.96 $ 26.69 $ 26.31 Performance Ratios: Return on average total assets 1.38 % 0.88 % 0.79 % Return on average stockholders' equity 12.50 % 8.55 % 8.37 % Return on average tangible common stockholders' equity (non-GAAP) (3) 14.88 % 10.45 % 9.35 % Net interest margin 4.23 % 3.87 % 3.00 % Net interest margin (on FTE basis) (3) 4.29 % 3.95 % 3.11 % Efficiency ratio (1) 59.81 % 72.20 % 80.38 % Net charge-offs (recoveries) to average loans outstanding 0.13 % (0.01) % 0.09 % Allowance for credit losses to loans 1.28 % 1.12 % 1.18 % Nonperforming loans to total loans (2) 1.01 % 0.49 % 0.70 % Balance Sheet: Total loans, excluding loans held-for-sale $ 6,267,096 $ 5,911,832 $ 4,037,123 Total assets $ 7,879,724 $ 7,430,322 $ 5,666,814 Total deposits $ 6,374,103 $ 5,765,062 $ 4,854,948 Total borrowed funds $ 464,781 $ 724,120 $ 109,458 Total stockholders' equity $ 877,197 $ 774,536 $ 524,038 Capital Ratios: Total risk-based capital to risk-weighted assets 13.25 % 11.99 % 11.76 % Tier 1 risk-based capital to risk-weighted assets 11.10 % 9.94 % 9.70 % Common Equity Tier 1 (CET 1) to risk-weighted assets 11.10 % 9.94 % 9.70 % Tier 1 leverage capital to average assets 10.52 % 9.71 % 8.24 % Average stockholders' equity to average total assets 11.05 % 10.28 % 9.43 % Tangible common stockholders' equity to tangible assets (non-GAAP) (3) 9.94 % 9.09 % 8.58 % Tangible common stockholders’ equity to tangible assets reflecting net unrealized losses on HTM securities, net of tax (non-GAAP) (3) 9.90 % 9.03 % 8.59 % Nonfinancial Data: Full-time equivalent employees 1,110 1,149 1,042 Banking branches 69 72 53 (1) The efficiency ratio is one measure of profitability in the banking industry.
The following table sets forth certain financial highlights of FirstSun as of and for the years ended December 31,: ($ in thousands, except per share amounts) 2024 2023 2022 Income Statement: Net interest income $ 296,910 $ 293,431 $ 241,632 Provision for credit losses 27,550 18,247 18,050 Noninterest income 89,792 79,092 89,566 Noninterest expense 264,040 222,793 239,126 Income before income taxes 95,112 131,483 74,022 Provision for income taxes 19,484 27,950 14,840 Net income 75,628 103,533 59,182 Adjusted net income 2 87,744 103,533 76,213 Balance Sheet: Total assets $ 8,097,387 $ 7,879,724 $ 7,430,322 Total loans held-for-sale 61,825 54,212 57,323 Total loans held-for-investment 6,376,357 6,267,096 5,911,832 Total deposits 6,672,260 6,374,103 5,765,062 Total borrowed funds 210,841 464,781 724,120 Total stockholders' equity 1,041,366 877,197 774,536 Per Common Share Data: Period end common shares outstanding 27,709,679 24,960,639 24,920,984 Weighted average common shares outstanding, basic 27,433,865 24,938,359 23,245,598 Basic earnings per share $ 2.76 $ 4.15 $ 2.55 Weighted average common shares outstanding, diluted 28,067,273 25,387,196 23,838,471 Diluted earnings per share $ 2.69 $ 4.08 $ 2.48 Adjusted diluted earnings per share 2 3.13 4.08 3.20 Cash dividends $ — $ — $ — Dividend payout ratio — % — % — % Book value per share $ 37.58 $ 35.14 $ 31.08 Tangible book value per share 2 33.94 30.96 26.69 1 Total revenue is net interest income plus noninterest income. 2 See section entitled “ Non-GAAP Financial Measures and Reconciliations ” for information regarding these non-GAAP financial measures and a reconciliation to the most comparable GAAP equivalent. 57 Table of Contents ($ in thousands, except per share amounts) 2024 2023 2022 Performance Ratios: Return on average total assets 0.96 % 1.38 % 0.88 % Adjusted return on average total assets 2 1.12 % 1.38 % 1.13 % Return on average stockholders' equity 7.56 % 12.50 % 8.55 % Adjusted return on average stockholders’ equity 2 8.77 % 12.50 % 11.01 % Return on average tangible stockholders' equity 2 8.74 % 14.88 % 10.45 % Adjusted return on average tangible stockholders' equity 2 10.09 % 14.88 % 13.30 % Net interest margin 4.06 % 4.23 % 3.87 % Net interest margin (FTE basis) 2 4.12 % 4.29 % 3.95 % Efficiency ratio 68.28 % 59.81 % 72.20 % Adjusted efficiency ratio 2 64.13 % 59.81 % 66.54 % Noninterest income to total revenue 1 23.2 % 21.2 % 27.0 % Balance Sheet Ratios: Loan to deposit ratio 95.6 % 98.3 % 102.5 % Net charge-offs (recoveries) to average loans outstanding 0.32 % 0.13 % (0.01) % Allowance for credit losses to loans 1.38 % 1.28 % 1.12 % Nonperforming loans to total loans 3 1.08 % 1.01 % 0.49 % Capital Ratios: Total risk-based capital to risk-weighted assets 15.42 % 13.25 % 11.99 % Tier 1 risk-based capital to risk-weighted assets 13.18 % 11.10 % 9.94 % Common Equity Tier 1 (CET 1) to risk-weighted assets 13.18 % 11.10 % 9.94 % Tier 1 leverage capital to average assets 12.11 % 10.52 % 9.71 % Average stockholders' equity to average total assets 12.72 % 11.05 % 10.28 % Tangible stockholders' equity to tangible assets 2 11.76 % 9.94 % 9.09 % Tangible stockholders' equity to tangible assets reflecting net unrealized losses on HTM securities, net of tax 2 11.71 % 9.90 % 9.03 % Nonfinancial Data: Full-time equivalent employees 1,127 1,110 1,149 Banking branches 69 69 72 1 Total revenue is net interest income plus noninterest income. 2 See section entitled “ Non-GAAP Financial Measures and Reconciliations ” for information regarding these non-GAAP financial measures and a reconciliation to the most comparable GAAP equivalent. 3 Nonperforming loans include nonaccrual loans and accrual loans greater than 90 days past due.
Actual repayments of loans may differ from the maturities reflected below because 75 Table of Contents borrowers have the right to prepay obligations with or without prepayment penalties.
Renewal of these loans is subject to review and credit approval, as well as modification of terms upon maturity. Actual repayments of loans may differ from the maturities reflected below because borrowers have the right to prepay obligations with or without prepayment penalties.
Service charges on deposit accounts includes overdraft and non-sufficient funds charges, treasury management services provided to our business customers, and other maintenance fees on deposit accounts. For the year ended December 31, 2023, service charges on deposit accounts increased $3.1 million, primarily due to growth in treasury management services provided to our business customers, as compared to 2022.
Service charges on deposit accounts includes overdraft and non-sufficient funds charges, and other maintenance fees on deposit accounts. Service charges on deposit accounts decreased $0.4 million for the year ended December 31, 2024 compared to 2023, primarily due to a decrease in insufficient funds and overdraft fees.
(2) Nonperforming loans include nonaccrual loans and accrual loans greater than 90 days past due. On January 1, 2023, we adopted ASU 2022-02, whereby we no longer recognize or account for TDRs. The loans previously classified as accrual TDRs are no longer considered nonperforming. We have adjusted prior periods to reflect this change in accounting.
On January 1, 2023, we adopted ASU 2022-02, whereby we no longer recognize or account for TDRs. The loans previously classified as accrual TDRs are no longer considered nonperforming.
Maturities of certificates of deposit that are in excess of the FDIC insurance limit of $250,000, by remaining time to maturity are summarized as follows as of December 31,: (In thousands) 2023 2022 Three months or less $ 87,640 $ 22,451 Over three months through twelve months 396,834 310,694 Over twelve months through three years 36,673 75,804 Over three years 592 961 Total $ 521,739 $ 409,910 The following table sets forth the portion of the Bank's time deposits, by account, that are in excess of the FDIC insurance limit, by remaining time until maturity, as of December 31,: (In thousands) 2023 Three months or less $ 54,875 Over three months through six months 30,141 Over six through twelve months 173,642 Over twelve months through three years 20,957 Over three years 439 Total $ 280,054 Liquidity Liquidity refers to our ability to maintain cash flow that is adequate to fund operations, support asset growth, maintain reserve requirements and meet present and future obligations of deposit withdrawals, lending obligations and other contractual obligations.
The following table sets forth the portion of the Bank's certificates of deposit, by account, that are in excess of the FDIC insurance limit, by remaining time until maturity, as of December 31, 2024: (In thousands) Three months or less $ 51,948 Over three months through six months 122,659 Over six through twelve months 51,536 Over twelve months through three years 7,609 Over three years 1,307 Total $ 235,059 Liquidity Liquidity refers to our ability to maintain cash flow that is adequate to fund operations, support asset growth, maintain reserve requirements and meet present and future obligations of deposit withdrawals, lending obligations and other contractual obligations.
The allowance for credit losses is increased by the provision for credit losses and is decreased by charge-offs, net of recoveries on prior loan charge-offs We had a provision for credit losses of $18.2 million for the year ended December 31, 2023, compared to a provision for credit losses of $18.1 million for 2022.
The allowance for credit losses is increased by the provision for credit losses and is decreased by charge-offs, net of recoveries on prior loan charge-offs.
General Overview FirstSun Capital Bancorp, headquartered in Denver, Colorado, is the financial holding company for Sunflower Bank, National Association, which is headquartered in Dallas, Texas and operates as Sunflower Bank, First National 1870 and Guardian Mortgage. We conduct a full-service community banking and trust business through our wholly-owned subsidiaries—Sunflower Bank, Logia Portfolio Management, LLC, and FEIF Capital Partners, LLC.
General Overview FirstSun Capital Bancorp, headquartered in Denver, Colorado, is the financial holding company for Sunflower Bank, National Association, which is headquartered in Dallas, Texas and operates as Sunflower Bank, First National 1870 and Guardian Mortgage, which we are in the process of rebranding as Sunflower Bank Mortgage Lending.
Financial Highlights For 2023 We delivered strong financial results in 2023, which included: • Net income of $103.5 million, $4.08 per diluted share • Net interest margin of 4.23% • Return on average total assets of 1.38% • Return on average stockholders’ equity of 12.50% • Loan growth of 6.0% • Average deposit growth of 9.7% • 21.2% fee revenue to total revenue 1 Net income totaled $103.5 million, or $4.08 per diluted share, in 2023, compared to $59.2 million, or $2.48 per diluted share, in 2022.
For additional information on our segments, see Note 21 - Segment Information included in our consolidated financial statements included elsewhere in this report. 56 Table of Contents Financial Highlights For 2024 We delivered strong financial results in 2024, which included: • 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 revenue 1 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.
Maturities and Sensitivity of Loans to Changes in Interest Rates The information in the following tables is based on the contractual maturities of individual loans, including loans that may be subject to renewal at their contractual maturity. Renewal of these loans is subject to review and credit approval, as well as modification of terms upon maturity.
Other loans consist of loans to nondepository financial institutions, lease financing receivables and loans for agricultural production. 71 Table of Contents Maturities and Sensitivity of Loans to Changes in Interest Rates The information in the following tables is based on the contractual maturities of individual loans, including loans that may be subject to renewal at their contractual maturity.
(3) See section entitled “ Non-GAAP Financial Measures and Reconciliations ” for information regarding these non-GAAP financial measures and a reconciliation to the most comparable GAAP equivalent. 62 Table of Contents Non-GAAP Financial Measures and Reconciliations The non-GAAP financial measures presented below are used by our management and our board of directors on a regular basis in addition to our GAAP results to facilitate the assessment of our financial performance.
We have adjusted December 31, 2022 to reflect this change in accounting. 58 Table of Contents Non-GAAP Financial Measures and Reconciliations The non-GAAP financial measures presented below are used by our management and our board of directors on a regular basis in addition to our GAAP results to facilitate the assessment of our financial performance.
At December 31, 2023, the Bank could pay dividends to FirstSun of approximately $199.0 million without prior regulatory approval. During the year ended December 31, 2023, the Bank paid dividends totaling $26.0 million to FirstSun. During the year ended December 31, 2023, Logia paid dividends totaling $0.6 million to FirstSun.
Prior regulatory approval to pay dividends was not required in 2023 or 2024 and is not currently required. At December 31, 2024, the Bank could pay dividends to FirstSun of approximately $226.6 million without prior regulatory approval. During the year ended December 31, 2024, the Bank did not pay a dividend to FirstSun.
Critical Accounting Estimates In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Our accounting and reporting estimates are in accordance with generally accepted accounting principles, or “U.S.
Salary and employee benefits increased due to higher levels of variable compensation associated with an increase in mortgage loan originations. 61 Table of Contents Critical Accounting Estimates In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period.
Changes in fair value of the derivative instruments used to economically hedge the MSRs are also included as a component of income from mortgage banking services.
Changes in fair value of the derivative instruments used to economically hedge the MSRs are also included as a component of income from mortgage banking services. Other noninterest income increased $0.8 million for the year ended December 31, 2024 compared to 2023, primarily due to an increase in the cash surrender value of BOLI.
We retain servicing rights on the majority of mortgage loans that we sell, which drove the increase in servicing income of $0.6 million to $15.7 million for the year ended December 31, 2023, from $15.1 million for 2022.
We retain servicing rights on the majority of mortgage loans that we sell, which drove the increase in servicing income of $1.3 million to $17.0 million in 2024, from $15.7 million in 2023. MSR capitalization and changes in fair value, net of derivative activity, increased $1.8 million in 2024, compared to 2023.
The following table presents our deposits by customer type as of December 31,: ($ in thousands) December 31, 2023 December 31, 2022 Consumer Noninterest bearing deposit accounts $ 360,168 $ 416,709 Interest-bearing deposit accounts: Demand and NOW deposits 36,162 25,940 Savings deposits 343,291 418,101 Money market deposits 1,196,645 1,375,671 Certificates of deposits 1,437,537 662,831 Total interest-bearing deposit accounts 3,013,635 2,482,543 Total consumer deposits $ 3,373,803 $ 2,899,252 Business Noninterest bearing deposit accounts $ 1,170,338 $ 1,403,781 Interest-bearing deposit accounts: Demand and NOW deposits 555,197 236,641 Savings deposits 80,802 33,753 Money market deposits 825,811 907,379 Certificates of deposits 87,407 40,874 Total interest-bearing deposit accounts 1,549,217 1,218,647 Total business deposits $ 2,719,555 $ 2,622,428 Wholesale deposits (1) $ 280,745 $ 243,382 Total deposits $ 6,374,103 $ 5,765,062 (1) Wholesale deposits consist of brokered deposits included in our consolidated balance sheets within interest-bearing accounts and in Note 10 - Deposits within certificates of deposits and savings and money market accounts. 79 Table of Contents 2023 2022 (Dollars in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid Noninterest-bearing demand deposit accounts $ 1,678,240 — % $ 1,835,578 — % Interest-bearing deposit accounts: Interest-bearing demand accounts 344,242 3.26 % 171,009 0.96 % Savings accounts and money market accounts 2,576,064 1.20 % 3,024,439 0.25 % NOW accounts 41,182 0.82 % 43,507 0.32 % Certificate of deposit accounts 1,512,638 3.89 % 536,325 0.71 % Total interest-bearing deposit accounts 4,474,126 2.27 % 3,775,280 0.35 % Total deposits $ 6,152,366 1.65 % $ 5,610,858 0.23 % As of December 31, 2023 and December 31, 2022, approximately $2.0 billion or 31.2% and $2.4 billion or 41.6%, respectively, of our deposit portfolio was uninsured.
The following table presents our deposits by customer type as of December 31,: ($ in thousands) 2024 2023 Consumer Noninterest bearing deposit accounts $ 410,303 $ 360,168 Interest-bearing deposit accounts: Demand and NOW deposits 61,987 36,162 Savings deposits 326,916 343,291 Money market deposits 1,516,577 1,196,645 Certificates of deposits 1,069,704 1,437,537 Total interest-bearing deposit accounts 2,975,184 3,013,635 Total consumer deposits $ 3,385,487 $ 3,373,803 Business Noninterest bearing deposit accounts $ 1,130,855 $ 1,170,338 Interest-bearing deposit accounts: Demand and NOW deposits 669,417 555,197 Savings deposits 75,422 80,802 Money market deposits 915,208 825,811 Certificates of deposits 51,131 87,407 Total interest-bearing deposit accounts 1,711,178 1,549,217 Total business deposits $ 2,842,033 $ 2,719,555 Wholesale deposits 1 $ 444,740 $ 280,745 Total deposits $ 6,672,260 $ 6,374,103 1 Wholesale deposits consist of brokered deposits included in our consolidated balance sheets within interest-bearing accounts and in Note 9 - Deposits within certificates of deposits and savings and money market accounts. 2024 2023 (Dollars in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid Noninterest-bearing demand deposit accounts $ 1,542,808 — % $ 1,678,240 — % Interest-bearing deposit accounts: Interest-bearing demand accounts 592,381 3.79 % 344,242 3.26 % Savings accounts and money market accounts 2,574,559 1.88 % 2,576,064 1.20 % NOW accounts 40,742 1.34 % 41,182 0.82 % Certificate of deposit accounts 1,756,755 4.51 % 1,512,638 3.89 % Total interest-bearing deposit accounts 4,964,437 3.03 % 4,474,126 2.27 % Total deposits $ 6,507,245 2.32 % $ 6,152,366 1.65 % As of December 31, 2024 and December 31, 2023, approximately $2.3 billion or 34.8% and $2.0 billion or 31.2%, respectively, of our deposit portfolio was uninsured.
As of December 31, 2023 and December 31, 2022, approximately $1.6 billion or 25.1% and $1.7 billion or 28.7%, respectively, of our deposit portfolio was uninsured and uncollateralized. The uninsured and uninsured and uncollateralized amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.
As of December 31, 2024 and December 31, 2023, approximately $1.7 billion or 25.2% and $1.6 billion or 25.1%, respectively, of our deposit portfolio was uninsured and uncollateralized.
Our securities available-for-sale decreased by $20.2 million to $516.8 million at December 31, 2023, compared to December 31, 2022. The decrease was primarily due to amortization of the portfolio and a decrease in fair value due to the rising interest rate environment.
Our securities available-for-sale decreased by $47.7 million to $469.1 million at December 31, 2024, compared to December 31, 2023. The decrease was primarily due to amortization of the portfolio. Securities held-to-maturity decreased $1.7 million to $35.2 million at December 31, 2024, compared to December 31, 2023, due to amortization of the portfolio.
Material Contractual Obligations, Commitments, and Contingent Liabilities We have entered into contractual obligations in the normal course of business that involve elements of credit risk, interest rate risk and liquidity risk. The following table summarizes our material contractual obligations as of December 31, 2023.
For further information on capital adequacy see Note 17 - Regulatory Capital Matters to the consolidated financial statements. 77 Table of Contents Material Contractual Obligations, Commitments, and Contingent Liabilities We have entered into contractual obligations in the normal course of business that involve elements of credit risk, interest rate risk and liquidity risk.
Capital Stockholders’ equity at December 31, 2023 was $877.2 million, compared to $774.5 million at 2022, an increase of $102.7 million, or 13.3%. The increase in stockholders’ equity relates primarily to net income for the year ended December 31, 2023. We did not pay a dividend to our common shareholders during the years ended December 31, 2023 or 2022.
Capital Stockholders’ equity at December 31, 2024 was $1,041.4 million, compared to $877.2 million at 2023, an increase of $164.2 million, or 18.7%. The increase in stockholders’ equity relates primarily to net income for the year ended December 31, 2024 and issuance of FirstSun common stock in January 2024.
Noninterest Expense The following table presents noninterest expense for the year ended December 31,: (In thousands) 2023 2022 2021 Salary and employee benefits $ 133,231 $ 134,359 $ 151,926 Occupancy and equipment 33,426 31,344 27,628 Amortization of intangible assets 4,822 4,215 1,417 Merger related expenses — 18,751 3,085 Other ( Note 18 - Other noninterest expenses ) 51,314 50,457 40,579 Total noninterest expenses $ 222,793 $ 239,126 $ 224,635 Our noninterest expenses decreased $16.3 million to $222.8 million for the year ended December 31, 2023, from $239.1 million for 2022.
Noninterest Expense The following table presents noninterest expense for the year ended December 31,: (In thousands) 2024 2023 2022 Salary and employee benefits $ 154,985 $ 133,231 $ 134,359 Occupancy and equipment 36,282 33,426 31,344 Amortization of intangible assets 3,549 4,822 4,215 Terminated merger related expenses 13,178 — — Merger related expenses — — 18,751 Other ( Note 16 - Other noninterest expenses ) 56,046 51,314 50,457 Total noninterest expenses $ 264,040 $ 222,793 $ 239,126 Noninterest expenses 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.
For the year ended December 31, For the year ended December 31, 2023 Versus 2022 Increase (Decrease) Due to: 2022 Versus 2021 Increase (Decrease) Due to: (In thousands) Rate Volume Total Rate Volume Total Interest Earning Assets Loans (1) $ 86,596 $ 51,053 $ 137,649 $ 34,316 $ 54,369 $ 88,685 Investment securities 4,835 (988) 3,847 4,106 1,100 5,206 Interest-bearing cash 6,788 (1,417) 5,371 4,464 (892) 3,572 Total earning assets 98,219 48,648 146,867 42,886 54,577 97,463 Interest-bearing liabilities Demand and NOW deposits 7,520 2,279 9,799 1,138 (119) 1,019 Savings deposits 1,939 (62) 1,877 298 41 339 Money market deposits 22,436 (905) 21,531 1,857 621 2,478 Certificates of deposits 39,086 15,908 54,994 (920) 1,694 774 Total deposits 70,981 17,220 88,201 2,373 2,237 4,610 Repurchase agreements 130 (24) 106 93 (33) 60 Total deposits and repurchase agreements 71,111 17,196 88,307 2,466 2,204 4,670 FHLB borrowings 5,528 1,872 7,400 1,621 3,691 5,312 Other long-term borrowings (406) (233) (639) 200 882 1,082 Total interest-bearing liabilities 76,233 18,835 95,068 4,287 6,777 11,064 Net interest income $ 21,986 $ 29,813 $ 51,799 $ 38,599 $ 47,800 $ 86,399 Provision for Credit Losses We established an allowance for credit losses through a provision for credit losses charged as an expense in our consolidated statements of income.
For the year ended December 31, For the year ended December 31, 2024 Versus 2023 Increase (Decrease) Due to: 2023 Versus 2022 Increase (Decrease) Due to: (In thousands) Rate Volume Total Rate Volume Total Interest Earning Assets Loans 1 $ 21,512 $ 14,810 $ 36,322 $ 86,596 $ 51,053 $ 137,649 Investment securities 2,158 (722) 1,436 4,835 (988) 3,847 Interest-bearing cash (773) 8,871 8,098 6,788 (1,417) 5,371 Total earning assets 22,897 22,959 45,856 98,219 48,648 146,867 Interest-bearing liabilities Demand and NOW deposits 2,822 8,617 11,439 7,520 2,279 9,799 Savings deposits 350 (192) 158 1,939 (62) 1,877 Money market deposits 16,810 532 17,342 22,436 (905) 21,531 Certificates of deposits 10,107 10,250 20,357 39,086 15,908 54,994 Total deposits 30,089 19,207 49,296 70,981 17,220 88,201 Repurchase agreements (280) 243 (37) 130 (24) 106 Total deposits and repurchase agreements 29,809 19,450 49,259 71,111 17,196 88,307 FHLB borrowings 1,257 (8,042) (6,785) 5,528 1,872 7,400 Other long-term borrowings 109 (206) (97) (406) (233) (639) Total interest-bearing liabilities 31,175 11,202 42,377 76,233 18,835 95,068 Net interest income $ (8,278) $ 11,757 $ 3,479 $ 21,986 $ 29,813 $ 51,799 1 Includes loans held-for-investment, including nonaccrual loans, and loans held-for-sale.
Our liquidity position is supported by management of our liquid assets and liabilities and access to alternative sources of funds. Our short-term and long-term liquidity requirements are primarily to fund on-going operations, including payment of interest on deposits and debt, extensions of credit to borrowers and capital expenditures.
Our short-term and long-term liquidity requirements are primarily to fund on-going operations, including payment of interest on deposits and debt, extensions of credit to borrowers and capital expenditures. These liquidity requirements are met primarily through our deposits, FHLB advances and the principal and interest payments we receive on loans and investment securities.
We are also a member of the FHLB and FRB, from which we can borrow for leverage or liquidity purposes. The FHLB and FRB requires that securities and qualifying loans be pledged to secure any advances.
The FHLB and FRB requires that securities and qualifying loans be pledged to secure any advances.
Total loan originations for sale were $0.8 billion in 2023, a decline of $0.3 billion from $1.1 billion in 2022.
Total mortgage loan originations for sale were $1.1 billion in 2024, an increase of $0.3 billion from $0.8 billion in 2023. The unpaid principal balance of mortgage loans serviced for others were $5.8 billion in 2024, an increase of $0.4 billion from $5.4 billion in 2023.
Net income in 2022 included merger costs, net of tax, of $17.0 million, or $0.72 per diluted share. There were no merger costs recorded in 2023. The return on average total assets was 1.38% in 2023, compared to 0.88% in 2022, and the return on average stockholders’ equity was 12.50% in 2023, compared to 8.55% in 2022.
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.
The year over year decline in capitalized servicing value for MSRs was $5.0 million. We recognize fair value adjustments to our MSR asset, which includes changes in assumptions to the valuation model and pay-offs and pay-downs of the MSR portfolio.
Revenue was higher in 2024, compared to 2023 due to an increase in MSR capitalization of $3.0 million partially offset by a decrease in MSR fair value, net of derivative activity of $1.2 million. We recognize fair value adjustments to our MSR asset, which includes changes in assumptions to the valuation model and pay-offs and pay-downs of the MSR portfolio.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed11 unchanged
Biggest changeAll rates, short-term and long-term, are changed by the same amount (e.g., plus or minus 100 basis points) resulting in the shape of the yield curve remaining unchanged. % Change in Net Interest Income As of December 31, % Change in Economic Value of Equity As of December 31, Changes in Interest Rate (Basis Points) 2023 2022 2023 2022 +300 4.3 % 6.8 % (13.2) % (10.3) % +200 2.9 % 4.6 % (8.9) % (6.8) % +100 1.3 % 2.2 % (4.7) % (3.5) % Base — % — % — % — % -100 0.3 % (0.3) % 3.5 % 2.8 % -200 0.7 % (4.9) % 6.4 % 3.4 % -300 (0.9) % (10.5) % 8.0 % 3.6 % 83 Table of Contents
Biggest changeAll rates, short-term and long-term, are changed by the same amount (e.g., plus or minus 100 basis points) resulting in the shape of the yield curve remaining unchanged. % Change in Net Interest Income As of December 31, % Change in Economic Value of Equity As of December 31, Changes in Interest Rate (Basis Points) 2024 2023 2024 2023 +300 5.4 % 4.3 % (8.9) % (13.2) % +200 3.6 % 2.9 % (5.8) % (8.9) % +100 1.6 % 1.3 % (2.7) % (4.7) % Base — % — % — % — % -100 1.2 % 0.3 % 2.8 % 3.5 % -200 1.0 % 0.7 % 3.4 % 6.4 % -300 (0.7) % (0.9) % 2.0 % 8.0 % 79 Table of Contents

Other FSUN 10-K year-over-year comparisons