FirstSun Capital Bancorp (FSUN) Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Adjusted Net Income: $23.7 million

Adjusted Diluted Earnings Per Share (EPS): $0.84

Adjusted Return on Assets (ROA): 1.14%

Loan Growth: 16% annualized, with an increase of approximately $267 million in loan balances.

Net Interest Margin (NIM): Expanded to 4.25%, marking the 14th consecutive quarter above 4%.

Noninterest Income: Represented 24.7% of total revenue, with significant growth in mortgage and treasury service fee revenues.

Provision for Credit Losses: Increased to $8.3 million due to loan growth and portfolio downgrades.

Net Charge-Offs: Totaled $10.5 million, primarily from two specific loans.

2Strategic Updates and Business Highlights

Acquisition of First Foundation: Closed on April 1, 2026, with ongoing integration efforts showing positive momentum.

Balance Sheet Repositioning: Aimed at derisking the acquired balance sheet, with significant progress made in reducing loan balances by approximately $1 billion (44% of the planned $2.3 billion).

Market Focus: Emphasis on high-growth markets in Southern California and Southwest Florida, enhancing deposit-gathering capabilities and expanding the wealth management platform.

Team Integration: Positive collaboration across teams is driving new business opportunities.

3Forward Guidance and Outlook

2026 Financial Outlook:

Expecting stable loan and deposit balances post-repositioning, with a return to growth in 2027.

NIM projected to be in the mid-3.80s for the year, with a drop expected in Q2 and a recovery to the 3.90s by Q4.

Anticipated adjusted efficiency ratio to operate in the mid-60s range for the next couple of quarters, improving to approximately 60% in Q4.

Net charge-offs expected to stabilize around mid-20s basis points for the year.

4Bad News, Challenges, or Points of Concern

Increased Provision for Credit Losses: Reflects higher risk due to loan growth and portfolio downgrades, with specific charge-offs impacting Q1 results.

Declining Deposit Balances: Slight decrease in overall deposits, particularly in brokered deposits, which may affect liquidity.

Credit Quality Concerns: Notable charge-offs from specific loans, indicating potential vulnerabilities in the portfolio, although no broad-based issues were reported.

Integration Risks: Challenges associated with the integration of First Foundation and the need to successfully execute system conversions and realize cost synergies.

5Notable Q&A Insights

Balance Sheet Size Impact: Management indicated that the smaller balance sheet from repositioning would not significantly alter the previously projected EPS run rate.

Long-Term Growth Rates: While loan growth is expected to stabilize in 2026 due to remixing efforts, management is optimistic about a return to growth in 2027.

Credit Performance Confidence: Despite lumpiness in credit due to the C&I mix, management expressed confidence in maintaining charge-offs in the mid-20s basis points range moving forward.

CET1 Ratio and Buybacks: The CET1 ratio is expected to be around 11%, with potential for near-term share repurchases as capital positions improve. Overall, FSUN demonstrated strong performance in Q1 2026, driven by robust loan growth and a successful acquisition strategy, while also addressing challenges related to credit quality and deposit balances. The company remains focused on executing its integration plans and enhancing long-term shareholder value.