Fourth Quarter Highlights:

• Net income of $8.8 million, $0.47 per diluted share
• Return on average assets of 0.62%
• Return on average equity of 6.69%
• Loan growth of 24.5% annualized (excluding PPP loan balances, 30.3% annualized)
• Average deposit balance growth of 9.0% annualized

FirstSun Capital Bancorp (“FirstSun”) reported net income of $8.8 million for the fourth quarter of 2021, compared to net income of $8.7 million in the prior quarter and $11.3 million in the fourth quarter of 2020. Earnings per diluted share was $0.47 for the fourth quarter 2021, compared to $0.46 in the prior quarter and $0.60 in the fourth quarter of 2020. Net income for the full year of 2021 was $43.2 million, or $2.30 per diluted share, compared to $47.6 million, or $2.58 per diluted share, for the full year of 2020.

Mollie Carter, FirstSun’s Chairman and Chief Executive Officer, commented, “We are very pleased with the strong results we delivered in our fourth quarter and the quality of our continued growth year over year. While we await regulatory approval of our merger with Pioneer Bancshares, Austin, Texas, our teams continued to deliver on our primary organic growth strategy. The targeted investments we have made in our relationship banking model, especially in our Southwest markets, have enabled us to continue our trajectory of growth in the loan, deposit and non-interest income categories that we believe are key to delivering what we refer to as sustainable growth, and we have achieved this while maintaining our historically strong asset quality. We are grateful to our teams who maintained their commitment to building lasting customer relationships again in 2021 after working so hard to deliver an exceptional year in 2020.”

Fourth Quarter 2021 Results

Net income totaled $8.8 million, or $0.47 per diluted share, during the fourth quarter of 2021, compared to $8.7 million, or $0.46 per diluted share, during the prior quarter. The return on average assets was 0.62% in the fourth quarter of 2021, compared to 0.62% in the prior quarter, and the return on average equity was 6.69% in the fourth quarter of 2021, compared to 6.68% in the prior quarter.

Net Interest Income and Net Interest Margin

Net interest income totaled $40.5 million during the fourth quarter of 2021, an increase of $0.5 million compared to the prior quarter. Our net interest margin declined two basis points to 2.99% compared to the prior quarter. Results in the fourth quarter of 2021, compared to the prior quarter, were driven by an increase in average earning assets of $94.9 million, and a decrease of one basis point in the cost of interest bearing liabilities, partially offset by a decrease of three basis points in yield on earning assets. Average loans grew by $59.4 million and investment securities grew by $68.4 million, while interest bearing cash balances declined by $8.8 million in the fourth quarter of 2021, compared to the prior quarter. Loan yield decreased by five basis points in the fourth quarter of 2021, compared to the prior quarter, primarily due to a reduction in fees from loan prepayments and a reduction in fees resulting from PPP loan forgiveness. Our total cost of deposits decreased by two basis points to 0.22% in the fourth quarter of 2021, compared to the prior quarter.

Asset Quality and Provision for Loan Losses

The provision for loan losses totaled $1.3 million during the fourth quarter of 2021, a decrease of $2.3 million compared to the prior quarter. Net charge-offs during the fourth quarter of 2021 were $1.6 million, or a ratio of net charge-offs to average loans of 0.16% annualized, compared to net recoveries of $1.4 million, or a ratio of net charge-offs (recoveries) to average loans of (0.15)% annualized, in the prior quarter. The full year net charge-off ratio for 2021 was 0.09%, down two basis points, from 0.11% for the full year 2020. The allowance for loan losses as a percentage of total loans totaled 1.18% at December 31, 2021, compared to 1.26% at September 30, 2021. The allowance for loan losses as a percentage of total loans, excluding PPP loans, a non-GAAP financial measure, totaled 1.20% at December 31, 2021, compared to 1.30% at September 30, 2021. The ratio of nonperforming assets to total assets was 0.60% at December 31, 2021, compared to 0.63% at September 30, 2021, and 0.79% at December 31, 2020.

Noninterest Income

Noninterest income totaled $29.4 million during the fourth quarter of 2021, an increase of $0.7 million from the prior quarter. Service charges on deposits increased $0.4 million during the fourth quarter of 2021 from the prior quarter, due to increases in both commercial and consumer deposit fees. Mortgage banking income decreased $1.9 million during the fourth quarter of 2021 from the prior quarter, due primarily to margin compression and its impact on loan sale gains and the pipeline valuation. Total mortgage loan originations declined by $0.9 million, or 0.2%, in the fourth quarter of 2021 from the prior quarter, with mortgage loan refinance volumes declining by $15.8 million. In the fourth quarter of 2021, other noninterest income increased $2.3 million from the prior quarter, to $2.9 million, primarily due to increases in customer accommodation interest rate swap fees and loan syndication fee income. Noninterest income as a percentage of total revenue totaled 42.1% in the fourth quarter of 2021, compared to 41.8% in the prior quarter.

Noninterest Expense

Noninterest expense totaled $58.3 million during the fourth quarter of 2021, an increase of $3.7 million from the prior quarter, primarily driven by higher salaries and benefits expense in our banking segment. Noninterest expenses for the fourth quarter of 2021 also included $1.1 million in merger expenses related to the pending transaction with Pioneer Bancshares, Inc., compared to $0.7 million in the prior quarter. Merger expenses reduced diluted earnings per share by $0.05 for the fourth quarter compared to an impact of $0.04 in the prior quarter.

Tax Rate

The effective tax rate was 14.7% in the fourth quarter of 2021, compared to 17.5% in the prior quarter.

Loans

Total loans were $4.0 billion at December 31, 2021, compared to $3.8 billion at September 30, 2021. Excluding PPP loan balances, loans grew $279.8 million in the fourth quarter of 2021, or 30.3% on an annualized basis from the prior quarter, resulting primarily from growth in commercial and industrial balances.

Deposits

Average deposits increased $107.8 million in the fourth quarter of 2021, or 9.0% on an annualized basis, to $4.9 billion, compared to the prior quarter, with growth in both business and consumer deposits. Noninterest bearing deposit accounts represented 32.3% of total deposits at December 31, 2021 and the loan to deposit ratio was 85.3% at December 31, 2021.

Capital

Capital ratios remain strong and above “well capitalized” thresholds. As of December 31, 2021, the common equity tier 1 risk based capital ratio was 9.70%, the total risk based capital ratio was 11.76% and tier 1 leverage ratio was 8.24%. Book value per common share was $28.56 at December 31, 2021, an increase of $0.18 from September 30, 2021. Tangible book value per common share, a non-GAAP financial measure, was $26.31 at December 31, 2021, an increase of $0.21 from September 30, 2021.

Full Year 2021 Results

Full Year Highlights:

• Net income of $43.2 million, $2.30 per diluted share
• Return on average assets of 0.79%
• Return on average equity of 8.37%
• Loan growth of 5.0% (excluding PPP loan balances, 10.4%)
• Average deposit balance growth of 20.0%

Net income totaled $43.2 million, or $2.30 per diluted share, during 2021, compared to $47.6 million, or $2.58 per diluted share, in 2020. The return on average assets was 0.79% during 2021, compared to 1.02% in 2020, and the return on average equity was 8.37% during 2021, compared to 10.20% in 2020.

Net Interest Income and Net Interest Margin

Net interest income totaled $155.2 million during 2021, an increase of $19.3 million compared to 2020. Our net interest margin declined ten basis points to 3.00% in 2021, compared to 2020. Results in 2021, compared to 2020, were driven by an increase in average earning assets of $798.5 million, a decrease of 31 basis points in yield on earning assets and a decrease of 27 basis points in the cost of interest bearing liabilities. Average loans grew by $254.8 million, investment securities declined by $23.2 million and interest bearing cash balances grew by $563.1 million in 2021, compared to 2020. Loan yield increased by ten basis points in 2021, compared to 2020, due to a combination of an improving loan mix, fees from loan prepayments and a decline of $69.3 million in average PPP loan balances, net of deferred fees. The decline in yield on earning assets in 2021, compared to 2020, was primarily due to the increase in average interest bearing cash balances and a decline of 55 basis points in the yield on these cash balances. Our total cost of deposits decreased by 28 basis points to 0.26% in 2021, compared to 2020.

Noninterest Income

Noninterest income totaled $124.2 million during 2021, a decrease of $24.1 million from 2020, primarily driven by lower mortgage banking income. Service charges on deposits increased $2.9 million during 2021, compared to 2020, due to increases in both commercial and consumer deposit fees. Trust and investment advisory fees increased $2.6 million during 2021, compared to 2020, primarily due to the revenues associated with our September 2020 acquisition of certain trust and wealth advisory client relationships. Mortgage banking income decreased $35.8 million during 2021, compared to 2020, due primarily to margin compression and its impact on loan sale gains and the pipeline valuation, along with a decline in mortgage servicing asset and hedging valuation impacts. Total mortgage loan originations declined by $192.3 million, or 7.6%, in 2021, compared to 2020, with mortgage loan refinance volumes declining by $387.1 million. Noninterest income as a percentage of total revenue totaled 44.5% in 2021, compared to 52.2% in 2020.

Noninterest Expense

Noninterest expense totaled $224.6 million during 2021, an increase of $20.6 million from 2020, primarily driven by higher salaries and benefits expense in our banking and mortgage banking segments, merger expenses and other administrative costs related to our continued growth. Merger expenses for 2021 were $3.1 million related to our pending transaction with Pioneer Bancshares, Inc. There were no merger expenses incurred in 2020. Merger expenses reduced diluted earnings per share by $0.14 for 2021.

Tax Rate

The effective tax rate was 16.7% in 2021, compared to 16.8% in 2020.

Loans

Total loans were $4.0 billion at December 31, 2021 compared to $3.8 billion at December 31, 2020. Excluding PPP loan balances, loans grew $375.1 million in 2021, or 10.4% from 2020, resulting primarily from growth in commercial and industrial balances.

Deposits

Average deposits increased $814.4 million during 2021, or 20.0%, to $4.9 billion, compared to 2020, with growth in both business and consumer deposits. Noninterest bearing deposit accounts represented 32.3% of total deposits at December 31, 2021 an increase from 25.4% at December 31, 2020. The loan to deposit ratio was 85.3% at December 31, 2021 compared to 97.3% at December 31, 2020.

Non-GAAP Financial Measures

This press release contains financial information and performance measures determined by methods other than in accordance with principles generally accepted in the United States (“GAAP”). FirstSun management uses these non-GAAP financial measures in their analysis of FirstSun’s performance and the efficiency of its operations. Management believes these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results with prior periods and demonstrate the effects of significant items in the current period. FirstSun believes a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. FirstSun management believes investors may find these non-GAAP financial measures useful. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Below is a listing of the types of non-GAAP measures used in this press release:

• Tangible stockholders’ equity
• Tangible assets
• Tangible stockholders’ equity to tangible assets
• Tangible book value per common share
• Total loans, excluding PPP loans
• Allowance for loan losses to total loans outstanding, excluding PPP loans
• Fully tax equivalent (FTE) net interest income
• Net interest margin on an FTE basis

See the tables within the “Non-GAAP Financial Measures and Reconciliations” section for a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

About FirstSun Capital Bancorp

FirstSun Capital Bancorp, headquartered in Denver, Colorado, is the financial holding company for Sunflower Bank, N.A., which operates as Sunflower Bank, First National 1870 and Guardian Mortgage. Sunflower Bank provides a full range of relationship-focused services to meet personal, business and wealth management financial objectives, with a branch network in five states and mortgage capabilities in 43 states. FirstSun had total consolidated assets of $5.7 billion as of December 31, 2021.

First National 1870 and Guardian Mortgage are divisions of Sunflower Bank, N.A. To learn more, visit SunflowerBank.com, FirstNational1870.com or GuardianMortgageOnline.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains ”forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and the future performance of FirstSun. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” “would,” “could” and other similar expressions are intended to identify these forward-looking statements. Forward-looking statements are not based on historical facts but instead represent management's expectations and assumptions regarding FirstSun’s business, the economy and other future conditions. Such statements involve inherent uncertainties, risks and changes in circumstances that are difficult to predict. As such, FirstSun’s actual results may differ materially from those contemplated by forward-looking statements. While there can be no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those contemplated by forward-looking statements include the following, without limitation, as well as the risks and uncertainties more fully discussed under the “Risk Factors” section in our proxy statement/prospectus dated August 10, 2021 that we filed with the SEC pursuant to Securities Act Rule 424(b)(3) in connection with our proposed merger with Pioneer Bancshares, Inc. on August 12, 2021 and in FirstSun’s subsequent filings with the Securities and Exchange Commission:

• the failure to obtain necessary regulatory approvals for the merger (the “merger”) of Pioneer Bancshares, Inc. (“Pioneer”) with and into FirstSun when expected or at all (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction);
• the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement with respect to the merger;
• the possibility that the anticipated benefits of the merger, including anticipated cost savings and strategic gains, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy, competitive factors in the areas where FirstSun and Pioneer do business or as a result of other unexpected factors or events;
• the continuing impact of COVID-19 and its variants on FirstSun’s business or Pioneer’s business, including the impact of the actions taken by governmental authorities to try and contain the virus or address the impact of the virus on the economy, and the resulting effect of these items on each party’s operations, liquidity and capital position, and on the financial condition of each party’s borrowers and other customers;
• the inability to sustain revenue and earnings growth;
• the inability to efficiently manage operating expenses;
• the impact of competition with other financial institutions, including pricing pressures and the resulting impact on FirstSun’s results, including as a result of compression to net interest margin;
• deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses;
• changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; and
• adverse changes in asset quality and credit risk.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by applicable law or regulation, FirstSun undertakes no obligation to revise or update any forward-looking statements.

Summary Data:

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¹ Represents a non-GAAP financial measure. See the tables within the “Non-GAAP Financial Measures and Reconciliations” section for a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

² Loans are inclusive of loans held-for-sale and loans held-for-investment.

Consolidated Condensed Statements of Income (Unaudited):

Consolidated Condensed Balance Sheets as of (Unaudited):

Share Data as of and for the periods ended:

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³ Represents a non-GAAP financial measure. See the tables within the “Non-GAAP Financial Measures and Reconciliations” section for a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

Consolidated Capital Ratios as of:

Summary of Net Interest Margin:

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⁴ Includes nonaccrual loans.

⁵ Represents a non-GAAP financial measure. See the tables within the “Non-GAAP Financial Measures and Reconciliations” section for a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

Summary of Net Interest Margin (continued):

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⁶ Includes nonaccrual loans.

⁷ Represents a non-GAAP financial measure. See the tables within the “Non-GAAP Financial Measures and Reconciliations” section for a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

Loan Portfolio