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FirstSun Capital Bancorp Reports Second Quarter 2022 Results

Second Quarter 2022 Highlights:

  • Completed previously announced merger with Pioneer Bancshares, Inc. (“Pioneer”), acquiring loans of $0.8 billion, total assets of $1.5 billion, and total deposits of $1.2 billion net of purchase accounting adjustments
  • Net income of $0.4 million, $0.02 per diluted share (excluding merger costs, $17.2 million, $0.68 per diluted share, see the “Non-GAAP Financial Measures and Reconciliations” below)
  • Return on average assets of 0.02% (excluding merger costs, 0.96%, see the “Non-GAAP Financial Measures and Reconciliations” below)
  • Return on average equity of 0.22% (excluding merger costs, 8.88%, see the “Non-GAAP Financial Measures and Reconciliations” below)
  • Organic loan growth, which excludes acquired Pioneer loans, 24.2% annualized
  • 27.6% fee revenue to total revenue mix
  • Increase in net interest margin of 48 basis points to 3.56%

FirstSun Capital Bancorp (“FirstSun”) reported net income of $0.4 million for the second quarter of 2022, compared to net income of $7.7 million in the prior quarter and $11.3 million in the second quarter of 2021. Earnings per diluted share was $0.02 for the second quarter of 2022, compared to $0.41 in the prior quarter and $0.60 in the second quarter of 2021. Earnings for the second quarter of 2022 were impacted by the completion of our previously announced merger with Pioneer and the $16.8 million in merger costs, net of tax or $0.66 per diluted share.

Neal Arnold, FirstSun’s President and Chief Executive Officer, commented, “We are pleased with our continued progress this quarter, including organic loan growth and our growth in core returns, which excludes merger related expenses. The macro rate environment continues to impact our overall mortgage banking trends; however, we believe the strength of our diversified revenue mix will continue to position us well moving forward. Our loan portfolio continues to perform well and we remain focused on our credit quality. We expanded our business with the April 1st closing of the Pioneer merger and look forward to introducing all of our products and services to our new customers. We are actively working on the full integration of the Pioneer business following our successful completion of the system conversion during the second quarter. Our Southwest markets have exhibited strong economic growth and we look forward to our future growth across each of our markets.”

Second Quarter 2022 Results

Net income totaled $0.4 million, or $0.02 per diluted share, during the second quarter of 2022, compared to $7.7 million, or $0.41 per diluted share, during the prior quarter. Net income in the second quarter of 2022 included $16.8 million in merger costs, net of tax. The return on average assets was 0.02% in the second quarter of 2022, compared to 0.54% in the prior quarter and 0.82% in the second quarter of 2021, and the return on average equity was 0.22% in the second quarter of 2022, compared to 5.85% in the prior quarter and 8.82% in the second quarter of 2021. The negative impact in the second quarter of 2022 of merger costs to return on average assets was 0.94% and to return on average equity was 8.66%.

Net Interest Income and Net Interest Margin

Net interest income totaled $58.6 million during the second quarter of 2022, an increase of $17.3 million compared to the prior quarter. Our net interest margin increased 48 basis points to 3.56% compared to the prior quarter. Results in the second quarter of 2022, compared to the prior quarter, were driven by an increase of 52 basis points in yield on earning assets, and an increase of four basis points in the cost of interest-bearing liabilities, primarily due to the rising interest rate environment. Driven primarily by the completion of the Pioneer merger, average loans grew by $1.1 billion, and average investment securities grew $68.8 million in the second quarter of 2022, compared to the prior quarter. Total loan yield including loans held-for-sale increased by 39 basis points in the second quarter of 2022, compared to the prior quarter, primarily due to the rising interest rate environment, and to a lesser extent, the impact of the accretion of net loan discounts related to our Pioneer merger. Investment securities yield increased by 49 basis points in the second quarter of 2022, compared to the prior quarter, primarily due to higher yielding acquired securities from the Pioneer merger and the slowing prepayment speeds on the existing portfolio. Our total cost of deposits increased by two basis points to 0.21% in the second quarter of 2022, compared to the prior quarter.

Asset Quality and Provision for Loan Losses

The provision for loan losses totaled $5.0 million during the second quarter of 2022, an increase of $1.3 million compared to the prior quarter. During the second quarter of 2022, $2.9 million of the provision for loan losses was related to certain non-impaired acquired loans marked at a premium valuation upon the closing of the Pioneer merger. The premium valuation on certain of the acquired loans was due to higher contractual interest rates compared to market interest rates upon closing of the Pioneer merger. In total, we realized a net discount valuation on the entire acquired portfolio. Due to the premium on certain of the loans, a provision for loan losses was required; however, it was not due to credit deterioration since closing of the Pioneer merger. Net recoveries during the second quarter of 2022 were $0.6 million, or a ratio of net charge-offs (recoveries) to average loans of (0.04)% annualized, compared to net charge-offs of $0.7 million, or a ratio of net charge-offs to average loans of 0.07% annualized, in the prior quarter. The allowance for loan losses as a percentage of total loans was 1.04% at June 30, 2022, compared to 1.17% at March 31, 2022. The decrease in the allowance for loan losses as a percentage of total loans relates to the acquired Pioneer loans. The ratio of nonperforming assets to total assets was 0.62% at June 30, 2022, compared to 0.64% at March 31, 2022, and 0.94% at June 30, 2021.

Noninterest Income

Noninterest income totaled $22.3 million during the second quarter of 2022, a decrease of $1.4 million from the prior quarter. Mortgage banking income decreased $2.9 million during the second quarter of 2022 from the prior quarter, primarily due to lesser sold volume and associated loan sale gains and a decline in the rate lock pipeline valuation in a rising interest rate environment. Total originations of mortgage loans held-for-sale decreased by $19.0 million, or 5.9%, in the second quarter of 2022 from the prior quarter. Noninterest income as a percentage of total revenue totaled 27.6% in the second quarter of 2022, compared to 36.5% in the prior quarter.

Noninterest Expense

Noninterest expense totaled $75.7 million during the second quarter of 2022, an increase of $23.2 million from the prior quarter, primarily driven by the Pioneer merger and the merger related expenses. Noninterest expenses for the second quarter of 2022 included $18.4 million in merger related expenses compared to $0.3 million in the prior quarter.

Tax Rate

The effective tax rate was (96.3)% in the second quarter of 2022, compared to 13.0% in the prior quarter. The effective tax rate was not meaningful due to the breakeven nature of income before income taxes in the second quarter of 2022.

Loans

Total loans were $5.4 billion at June 30, 2022, compared to $4.3 billion at March 31, 2022, an increase of $1.1 billion in the second quarter of 2022, or 99.5% on an annualized basis. Total loans, excluding impact from acquired Pioneer loans, increased $261.6 million in the second quarter of 2022, or 24.2% on an annualized basis from the prior quarter, resulting primarily from growth in commercial and industrial and residential real estate balances. See the “Non-GAAP Financial Measures and Reconciliations” below.

Deposits

Average deposits increased $1.1 billion in the second quarter of 2022, or 92.9% on an annualized basis to $5.9 billion, compared to the prior quarter. Average deposits, excluding impact from acquired Pioneer deposits, decreased $58.6 million in the second quarter of 2022, or (4.8)% on an annualized basis, compared to the prior quarter. See the “Non-GAAP Financial Measures and Reconciliations” below. Noninterest-bearing deposit accounts represented 32.7% of total deposits at June 30, 2022 and the loan-to-deposit ratio was 90.8% at June 30, 2022.

Capital

Capital ratios remain strong and above “well-capitalized” thresholds. As of June 30, 2022, our common equity tier 1 risk-based capital ratio was 9.59%, total risk-based capital ratio was 11.60% and tier 1 leverage ratio was 8.89%. Book value per common share was $30.34 at June 30, 2022, an increase of $2.24 from March 31, 2022. Tangible book value per common share, a non-GAAP financial measure, was $24.76 at June 30, 2022, a decrease of $1.11 from March 31, 2022. The decline in the tangible book value per common share at June 30, 2022 relates to the increases in our intangible assets as a result of the Pioneer merger, and the impact of the decline in accumulated other comprehensive income (loss), net, for unrealized losses in our available-for-sale securities portfolio resulting from the rising interest rate environment.

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
  • Net income excluding merger costs
  • Return on average total assets excluding merger costs
  • Return on average stockholders’ equity excluding merger costs
  • Efficiency ratio excluding merger related expenses
  • Diluted earnings per share excluding merger related costs
  • Fully tax equivalent (FTE) net interest income and net interest margin on FTE basis
  • Total loan growth, excluding Pioneer acquired loans, annualized
  • Total average deposit growth, excluding Pioneer acquired deposits, annualized

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 $7.1 billion as of June 30, 2022. On April 1, 2022, we completed our merger with Pioneer Bancshares, Inc.

First National 1870 and Guardian Mortgage are divisions of Sunflower Bank, N.A. To learn more, visit ir.firstsuncb.com, 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,” “focused,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” “would,” “could,” “look forward” 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, without limitation, the following:

  • the possibility that the anticipated benefits of the merger with Pioneer, which closed on April 1, 2022, 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 does business or as a result of other unexpected factors or events;
  • the COVID-19 pandemic and its continuing effects on the economic and business environments in which we operate;
  • potential fluctuations or unanticipated changes in the interest rate environment, including interest rate changes made by the Federal Reserve, the discontinuation of LIBOR as an interest rate benchmark, and cash flow reassessments, may reduce net interest margin and/or the volumes and values of loans made or held as well as the value of other financial assets;
  • 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;
  • adverse changes in asset quality and credit risk; and
  • the potential effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, such as epidemics and pandemics, war or terrorist activities, disruptions in our customers’ supply chains, disruptions in transportation, essential utility outages or trade disputes and related tariffs.

Further information regarding additional factors which could affect the forward-looking statements contained in this press release can be found in the cautionary language included under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in FirstSun’s Annual Report on Form 10-K for the year ended December 31, 2021, and other documents subsequently filed by FirstSun with the United States Securities and Exchange Commission (“SEC”). 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:

 

 

As of and for the quarter ended

 

As of and for the six months ended

($ in thousands, except per share amounts)

 

June 30,

2022

 

March 31,

2022

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

58,585

 

 

$

41,285

 

 

$

36,400

 

 

$

99,870

 

 

$

74,817

 

Provision for (benefit from) loan losses

 

 

5,000

 

 

 

3,700

 

 

 

(1,400

)

 

 

8,700

 

 

 

(1,750

)

Noninterest income

 

 

22,302

 

 

 

23,693

 

 

 

32,283

 

 

 

45,995

 

 

 

66,164

 

Noninterest expense

 

 

75,668

 

 

 

52,467

 

 

 

56,624

 

 

 

128,135

 

 

 

111,804

 

Income before income taxes

 

 

219

 

 

 

8,811

 

 

 

13,459

 

 

 

9,030

 

 

 

30,927

 

Provision for income taxes

 

 

(211

)

 

 

1,142

 

 

 

2,178

 

 

 

931

 

 

 

5,308

 

Net income

 

 

430

 

 

 

7,669

 

 

 

11,281

 

 

 

8,099

 

 

 

25,619

 

Net income, excluding merger costs (1)

 

 

17,208

 

 

 

7,922

 

 

 

12,349

 

 

 

25,130

 

 

 

26,687

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.02

 

 

$

0.41

 

 

$

0.60

 

 

$

0.36

 

 

$

1.37

 

Diluted earnings per share, excluding merger costs (1)

 

$

0.68

 

 

$

0.42

 

 

$

0.66

 

 

$

1.13

 

 

$

1.43

 

Return on average assets

 

 

0.02

%

 

 

0.54

%

 

 

0.82

%

 

 

0.25

%

 

 

0.97

%

Return on average assets, excluding merger costs (1)

 

 

0.96

%

 

 

0.56

%

 

 

0.90

%

 

 

0.78

%

 

 

1.01

%

Return on average equity

 

 

0.22

%

 

 

5.85

%

 

 

8.82

%

 

 

2.49

%

 

 

10.12

%

Return on average equity, excluding merger costs (1)

 

 

8.88

%

 

 

6.04

%

 

 

9.65

%

 

 

7.73

%

 

 

10.54

%

Net interest margin

 

 

3.56

%

 

 

3.08

%

 

 

2.81

%

 

 

3.34

%

 

 

3.00

%

Net interest margin (FTE basis) (1)

 

 

3.64

%

 

 

3.17

%

 

 

2.93

%

 

 

3.43

%

 

 

3.13

%

Efficiency ratio

 

 

93.55

%

 

 

80.75

%

 

 

82.44

%

 

 

87.84

%

 

 

79.30

%

Efficiency ratio, excluding merger related expenses (1)

 

 

70.74

%

 

 

80.28

%

 

 

80.58

%

 

 

74.99

%

 

 

78.40

%

Fee revenue to total revenue

 

 

27.57

%

 

 

36.46

%

 

 

47.00

%

 

 

31.53

%

 

 

46.93

%

Total assets

 

$

7,087,184

 

 

$

5,733,748

 

 

$

5,563,076

 

 

$

7,087,184

 

 

$

5,563,076

 

Total loans held-for-sale

 

 

61,253

 

 

 

57,700

 

 

 

136,999

 

 

 

61,253

 

 

 

136,999

 

Total loans held-for-investment

 

 

5,387,928

 

 

 

4,315,031

 

 

 

3,794,355

 

 

 

5,387,928

 

 

 

3,794,355

 

Total deposits

 

 

5,933,022

 

 

 

4,946,482

 

 

 

4,748,698

 

 

 

5,933,022

 

 

 

4,748,698

 

Total stockholders' equity

 

 

754,034

 

 

 

515,541

 

 

 

510,582

 

 

 

754,034

 

 

 

510,582

 

Period end loan-to-deposit ratio

 

 

90.81

%

 

 

87.23

%

 

 

79.90

%

 

 

90.81

%

 

 

79.90

%

Book value per common share

 

$

30.34

 

 

$

28.10

 

 

$

27.87

 

 

 

30.34

 

 

 

27.87

 

Tangible book value per common share (1)

 

$

24.76

 

 

$

25.87

 

 

$

25.57

 

 

 

24.76

 

 

 

25.57

 

_______________________________

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.

Condensed Consolidated Statements of Income (Unaudited):

 

 

As of and for the quarter ended

 

As of and for the six months ended

($ in thousands, except per share amounts)

 

June 30,

2022

 

March 31,

2022

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Total interest income

 

$

63,228

 

 

$

44,661

 

$

40,069

 

 

$

107,889

 

$

82,515

 

Total interest expense

 

 

4,643

 

 

 

3,376

 

 

3,669

 

 

 

8,019

 

 

7,698

 

Net interest income

 

 

58,585

 

 

 

41,285

 

 

36,400

 

 

 

99,870

 

 

74,817

 

Provision for (benefit from) loan losses

 

 

5,000

 

 

 

3,700

 

 

(1,400

)

 

 

8,700

 

 

(1,750

)

Net interest income after provision for loan losses

 

 

53,585

 

 

 

37,585

 

 

37,800

 

 

 

91,170

 

 

76,567

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

4,379

 

 

 

3,925

 

 

2,645

 

 

 

8,304

 

 

5,188

 

Credit and debit card fees

 

 

2,990

 

 

 

2,415

 

 

2,544

 

 

 

5,405

 

 

4,668

 

Trust and investment advisory fees

 

 

1,909

 

 

 

1,947

 

 

1,992

 

 

 

3,856

 

 

3,897

 

Mortgage banking income, net

 

 

11,671

 

 

 

14,561

 

 

22,936

 

 

 

26,232

 

 

47,993

 

Other noninterest income

 

 

1,353

 

 

 

845

 

 

2,166

 

 

 

2,198

 

 

4,418

 

Total noninterest income

 

 

22,302

 

 

 

23,693

 

 

32,283

 

 

 

45,995

 

 

66,164

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

35,248

 

 

 

34,225

 

 

38,449

 

 

 

69,473

 

 

77,068

 

Occupancy and equipment

 

 

7,753

 

 

 

6,833

 

 

6,527

 

 

 

14,586

 

 

13,224

 

Amortization of intangible assets

 

 

935

 

 

 

327

 

 

354

 

 

 

1,262

 

 

708

 

Merger related expenses

 

 

18,448

 

 

 

303

 

 

1,279

 

 

 

18,751

 

 

1,279

 

Other noninterest expenses

 

 

13,284

 

 

 

10,779

 

 

10,015

 

 

 

24,063

 

 

19,525

 

Total noninterest expense

 

 

75,668

 

 

 

52,467

 

 

56,624

 

 

 

128,135

 

 

111,804

 

Income before income taxes

 

 

219

 

 

 

8,811

 

 

13,459

 

 

 

9,030

 

 

30,927

 

(Benefit) provision for income taxes

 

 

(211

)

 

 

1,142

 

 

2,178

 

 

 

931

 

 

5,308

 

Net income

 

$

430

 

 

$

7,669

 

$

11,281

 

 

$

8,099

 

$

25,619

 

Earnings per share - basic

 

$

0.02

 

 

$

0.42

 

$

0.62

 

 

$

0.38

 

$

1.40

 

Earnings per share - diluted

 

$

0.02

 

 

$

0.41

 

$

0.60

 

 

$

0.36

 

$

1.37

 

Condensed Consolidated Balance Sheets as of (Unaudited):

($ in thousands)

 

June 30,

2022

 

March 31,

2022

 

June 30,

2021

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

510,701

 

 

$

487,689

 

 

$

840,600

 

Securities available-for-sale, at fair value

 

 

578,751

 

 

 

556,723

 

 

 

508,975

 

Securities held-to-maturity

 

 

39,803

 

 

 

16,799

 

 

 

21,894

 

Loans held-for-sale, at fair value

 

 

61,253

 

 

 

57,700

 

 

 

136,999

 

Loans

 

 

5,387,928

 

 

 

4,315,031

 

 

 

3,794,355

 

Allowance for loan losses

 

 

(56,077

)

 

 

(50,509

)

 

 

(42,978

)

Loans, net

 

 

5,331,851

 

 

 

4,264,522

 

 

 

3,751,377

 

 

 

 

 

 

 

 

Mortgage servicing rights, at fair value

 

 

66,047

 

 

 

60,481

 

 

 

40,844

 

Premises and equipment, net

 

 

89,674

 

 

 

52,198

 

 

 

54,304

 

Other real estate owned and foreclosed assets, net

 

 

5,391

 

 

 

5,162

 

 

 

4,013

 

Goodwill

 

 

119,975

 

 

 

33,050

 

 

 

33,050

 

Intangible assets, net

 

 

18,760

 

 

 

7,923

 

 

 

8,959

 

All other assets

 

 

264,978

 

 

 

191,501

 

 

 

162,061

 

Total assets

 

$

7,087,184

 

 

$

5,733,748

 

 

$

5,563,076

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing demand deposit accounts

 

$

1,942,078

 

 

$

1,662,980

 

 

$

1,359,112

 

Interest-bearing deposit accounts:

 

 

 

 

 

 

Interest-bearing demand accounts

 

 

165,287

 

 

 

155,388

 

 

 

194,840

 

Savings accounts and money market accounts

 

 

3,204,704

 

 

 

2,742,393

 

 

 

2,746,373

 

NOW accounts

 

 

50,126

 

 

 

74,106

 

 

 

101,749

 

Certificate of deposit accounts

 

 

570,827

 

 

 

311,615

 

 

 

346,624

 

Total deposits

 

 

5,933,022

 

 

 

4,946,482

 

 

 

4,748,698

 

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

 

70,838

 

 

 

69,627

 

 

 

113,786

 

Federal Home Loan Bank advances

 

 

159,968

 

 

 

40,000

 

 

 

40,000

 

Other borrowings

 

 

79,959

 

 

 

87,799

 

 

 

68,910

 

Other liabilities

 

 

89,363

 

 

 

74,299

 

 

 

81,100

 

Total liabilities

 

 

6,333,150

 

 

 

5,218,207

 

 

 

5,052,494

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

Common stock

 

 

2

 

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

486,755

 

 

 

262,071

 

 

 

260,516

 

Treasury stock

 

 

 

 

 

(38,148

)

 

 

(38,148

)

Retained earnings

 

 

306,714

 

 

 

306,284

 

 

 

281,070

 

Accumulated other comprehensive (loss) income, net

 

 

(39,437

)

 

 

(14,668

)

 

 

7,142

 

Total stockholders' equity

 

 

754,034

 

 

 

515,541

 

 

 

510,582

 

Total liabilities and stockholders' equity

 

$

7,087,184

 

 

$

5,733,748

 

 

$

5,563,076

 

Share Data as of and for the periods ended:

 

As of and for the quarter ended

 

June 30,

2022

 

March 31,

2022

 

June 30,

2021

 

 

 

 

 

 

Weighted average common shares outstanding, basic

 

24,760,282

 

 

18,346,288

 

 

18,321,659

Weighted average common shares outstanding, diluted

 

25,458,311

 

 

18,899,852

 

 

18,761,034

Period end common shares outstanding

 

24,850,954

 

 

18,346,288

 

 

18,321,659

Book value per common share

$

30.34

 

$

28.10

 

$

27.87

Tangible book value per common share (1)

$

24.76

 

$

25.87

 

$

25.57

Consolidated Capital Ratios as of:

 

June 30,

2022

 

March 31,

2022

 

June 30,

2021

 

 

 

 

 

 

Stockholders' equity to total assets

10.64

%

 

8.99

%

 

9.18

%

Tangible equity to tangible assets (1)

8.86

%

 

8.34

%

 

8.49

%

Tier 1 leverage ratio

8.89

%

 

8.42

%

 

8.21

%

Common equity tier 1 risk-based capital ratio

9.59

%

 

9.27

%

 

10.28

%

Tier 1 risk-based capital ratio

9.59

%

 

9.27

%

 

10.28

%

Total risk-based capital ratio

11.60

%

 

11.74

%

 

12.44

%

_______________________________

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.

Summary of Net Interest Margin:

 

 

For the quarter ended

June 30, 2022

 

For the quarter ended

March 31, 2022

 

For the quarter ended

June 30, 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 held-for-sale

 

$

70,430

 

$

1,269

 

 

7.21

%

 

$

60,895

 

$

694

 

 

4.56

%

 

$

133,592

 

$

1,168

 

 

3.50

%

Loans held-for-investment (1)

 

 

5,264,355

 

 

57,316

 

 

4.35

%

 

 

4,123,920

 

 

41,164

 

 

3.99

%

 

 

3,736,120

 

 

36,557

 

 

3.91

%

Investment securities

 

 

651,180

 

 

3,333

 

 

2.05

%

 

 

582,333

 

 

2,275

 

 

1.56

%

 

 

514,248

 

 

1,877

 

 

1.46

%

Interest-bearing cash and other assets

 

 

591,208

 

 

1,310

 

 

0.89

%

 

 

592,478

 

 

528

 

 

0.36

%

 

 

800,851

 

 

467

 

 

0.23

%

Total earning assets

 

 

6,577,173

 

 

63,228

 

 

3.85

%

 

 

5,359,626

 

 

44,661

 

 

3.33

%

 

 

5,184,811

 

 

40,069

 

 

3.09

%

Other assets

 

 

612,253

 

 

 

 

 

 

314,043

 

 

 

 

 

 

294,765

 

 

 

 

Total assets

 

$

7,189,426

 

 

 

 

 

$

5,673,669

 

 

 

 

 

$

5,479,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand and NOW deposits

 

$

219,502

 

$

229

 

 

0.42

%

 

$

223,020

 

$

124

 

 

0.22

%

 

$

317,651

 

$

286

 

 

0.36

%

Savings deposits

 

 

516,045

 

 

133

 

 

0.10

%

 

 

468,713

 

 

91

 

 

0.08

%

 

 

452,537

 

 

142

 

 

0.10

%

Money market deposits

 

 

2,774,713

 

 

1,172

 

 

0.17

%

 

 

2,306,638

 

 

840

 

 

0.15

%

 

 

2,233,460

 

 

1,120

 

 

0.21

%

Certificates of deposits

 

 

581,803

 

 

638

 

 

0.44

%

 

 

317,948

 

 

519

 

 

0.65

%

 

 

351,350

 

 

801

 

 

0.91

%

Total deposits

 

 

4,092,063

 

 

2,172

 

 

0.21

%

 

 

3,316,319

 

 

1,574

 

 

0.19

%

 

 

3,354,998

 

 

2,349

 

 

0.28

%

Repurchase agreements

 

 

56,247

 

 

15

 

 

0.11

%

 

 

71,425

 

 

8

 

 

0.04

%

 

 

144,421

 

 

18

 

 

0.05

%

Total deposits and repurchase agreements

 

 

4,148,310

 

 

2,187

 

 

0.21

%

 

 

3,387,744

 

 

1,582

 

 

0.19

%

 

 

3,499,419

 

 

2,367

 

 

0.27

%

FHLB borrowings

 

 

184,100

 

 

771

 

 

1.67

%

 

 

40,229

 

 

148

 

 

1.48

%

 

 

40,000

 

 

150

 

 

1.50

%

Other long-term borrowings

 

 

82,154

 

 

1,685

 

 

8.21

%

 

 

86,191

 

 

1,646

 

 

7.63

%

 

 

68,760

 

 

1,152

 

 

6.70

%

Total interest-bearing liabilities

 

 

4,414,564

 

 

4,643

 

 

0.42

%

 

 

3,514,164

 

 

3,376

 

 

0.38

%

 

 

3,608,179

 

 

3,669

 

 

0.41

%

Noninterest-bearing deposits

 

 

1,923,870

 

 

 

 

 

 

1,566,088

 

 

 

 

 

 

1,283,536

 

 

 

 

Other liabilities

 

 

75,768

 

 

 

 

 

 

68,999

 

 

 

 

 

 

76,080

 

 

 

 

Stockholders' equity

 

 

775,224

 

 

 

 

 

 

524,418

 

 

 

 

 

 

511,781

 

 

 

 

Total liabilities and stockholders' equity

 

$

7,189,426

 

 

 

 

 

$

5,673,669

 

 

 

 

 

$

5,479,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

58,585

 

 

 

 

 

 

$

41,285

 

 

 

 

 

 

$

36,400

 

 

 

Net interest spread

 

 

 

 

3.43

%

 

 

 

 

 

 

2.95

%

 

 

 

 

 

 

2.68

%

 

 

Net interest margin

 

 

 

 

3.56

%

 

 

 

 

 

 

3.08

%

 

 

 

 

 

 

2.81

%

 

 

Net interest margin (on a FTE basis) (2)

 

 

 

 

3.64

%

 

 

 

 

 

 

3.17

%

 

 

 

 

 

 

2.93

%

 

 

_______________________________

1 Includes nonaccrual loans.

2 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.

 

 

For the six months ended

 

 

June 30, 2022

 

June 30, 2021

(In thousands)

 

Average Balance

 

Interest

 

Average Yield/Rate

 

Average Balance

 

Interest

 

Average Yield/Rate

Interest Earning Assets

 

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

 

$

65,689

 

$

1,963

 

 

5.98

%

 

$

141,909

 

$

2,271

 

 

3.20

%

Loans held-for-investment (1)

 

 

4,697,288

 

 

98,480

 

 

4.19

%

 

 

3,751,632

 

 

75,713

 

 

4.04

%

Investment securities

 

 

616,947

 

 

5,608

 

 

1.82

%

 

 

506,109

 

 

3,692

 

 

1.46

%

Interest-bearing cash and other assets

 

 

591,839

 

 

1,838

 

 

0.62

%

 

 

591,436

 

 

839

 

 

0.28

%

Total earning assets

 

 

5,971,763

 

 

107,889

 

 

3.61

%

 

 

4,991,086

 

 

82,515

 

 

3.31

%

Other assets

 

 

463,972

 

 

 

 

 

 

287,590

 

 

 

 

Total assets

 

$

6,435,735

 

 

 

 

 

$

5,278,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Demand and NOW deposits

 

$

221,251

 

$

353

 

 

0.32

%

 

$

287,440

 

$

497

 

 

0.35

%

Savings deposits

 

 

492,510

 

 

224

 

 

0.09

%

 

 

454,719

 

 

262

 

 

0.12

%

Money market deposits

 

 

2,541,968

 

 

2,012

 

 

0.16

%

 

 

2,142,197

 

 

2,251

 

 

0.21

%

Certificates of deposits

 

 

450,604

 

 

1,157

 

 

0.51

%

 

 

356,474

 

 

1,743

 

 

0.98

%

Total deposits

 

 

3,706,333

 

 

3,746

 

 

0.20

%

 

 

3,240,830

 

 

4,753

 

 

0.29

%

Repurchase agreements

 

 

63,795

 

 

23

 

 

0.07

%

 

 

137,255

 

 

36

 

 

0.05

%

Total deposits and repurchase agreements

 

 

3,770,128

 

 

3,769

 

 

0.20

%

 

 

3,378,085

 

 

4,789

 

 

0.28

%

FHLB borrowings

 

 

112,562

 

 

919

 

 

1.63

%

 

 

45,096

 

 

607

 

 

2.69

%

Other long-term borrowings

 

 

84,161

 

 

3,331

 

 

7.91

%

 

 

68,665

 

 

2,302

 

 

6.71

%

Total interest-bearing liabilities

 

 

3,966,851

 

 

8,019

 

 

0.40

%

 

 

3,491,846

 

 

7,698

 

 

0.44

%

Noninterest-bearing deposits

 

 

1,745,967

 

 

 

 

 

 

1,200,921

 

 

 

 

Other liabilities

 

 

72,403

 

 

 

 

 

 

79,706

 

 

 

 

Stockholders' equity

 

 

650,514

 

 

 

 

 

 

506,203

 

 

 

 

Total liabilities and stockholders' equity

 

$

6,435,735

 

 

 

 

 

$

5,278,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

99,870

 

 

 

 

 

 

$

74,817

 

 

 

Net interest spread

 

 

 

 

3.21

%

 

 

 

 

 

 

2.87

%

 

 

Net interest margin

 

 

 

 

3.34

%

 

 

 

 

 

 

3.00

%

 

 

Net interest margin (on a FTE basis) (2)

 

 

 

 

3.43

%

 

 

 

 

 

 

3.13

%

 

 

_______________________________

1 Includes nonaccrual loans.

2 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

($ in thousands)

 

June 30,

2022

 

March 31,

2022

 

June 30, 2022

vs

March 31, 2022

% change

 

June 30,

2021

 

June 30, 2022

vs

June 30, 2021

% change

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

2,674,043

 

$

2,515,203

 

6.3

%

 

$

2,211,084

 

20.9

%

Commercial real estate

 

 

1,750,882

 

 

1,214,505

 

44.2

%

 

 

1,124,131

 

55.8

%

Residential real estate

 

 

918,580

 

 

567,342

 

61.9

%

 

 

444,491

 

106.7

%

Consumer

 

 

44,423

 

 

17,981

 

147.1

%

 

 

14,649

 

203.2

%

Total loans held-for-investment

 

$

5,387,928

 

$

4,315,031

 

24.9

%

 

$

3,794,355

 

42.0

%

Asset Quality:

 

 

As of and for the quarter ended

 

As of and for the six months ended

($ in thousands)

 

June 30,

2022

 

March 31,

2022

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

 

 

 

 

 

 

 

 

 

 

 

Net (recoveries) charge-offs

 

$

(568

)

 

$

738

 

 

$

2,836

 

 

$

170

 

 

$

3,038

 

Allowance for loan losses

 

$

56,077

 

 

$

50,509

 

 

$

42,978

 

 

$

56,077

 

 

$

42,978

 

Nonperforming loans, including nonaccrual loans, accrual TDR’s, and accrual loans greater than 90 days past due

 

$

38,283

 

 

$

31,367

 

 

$

48,203

 

 

$

38,283

 

 

$

48,203

 

Nonperforming assets

 

$

43,674

 

 

$

36,529

 

 

$

52,216

 

 

$

43,674

 

 

$

52,216

 

Ratio of net (recoveries) charge-offs to average loans outstanding

 

 

(0.04

)%

 

 

0.07

%

 

 

0.30

%

 

 

0.01

%

 

 

0.16

%

Allowance for loan losses to total loans outstanding

 

 

1.04

%

 

 

1.17

%

 

 

1.13

%

 

 

1.04

%

 

 

1.13

%

Allowance for loan losses to total nonperforming loans

 

 

146.48

%

 

 

161.03

%

 

 

89.16

%

 

 

146.48

%

 

 

89.16

%

Nonperforming loans to total loans

 

 

0.71

%

 

 

0.73

%

 

 

1.27

%

 

 

0.71

%

 

 

1.27

%

Nonperforming assets to total assets

 

 

0.62

%

 

 

0.64

%

 

 

0.94

%

 

 

0.62

%

 

 

0.94

%

Non-GAAP Financial Measures and Reconciliations:

 

As of and for the quarter ended

 

As of and for the six months ended

($ in thousands, except share and per share amounts)

June 30,

2022

 

March 31,

2022

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Tangible stockholders’ equity:

Total stockholders' equity (GAAP)

$

754,034

 

 

$

515,541

 

 

$

510,582

 

 

$

754,034

 

 

$

510,582

 

Less: Goodwill and other intangible assets

 

 

 

 

 

 

 

 

 

Goodwill

 

(119,975

)

 

 

(33,050

)

 

 

(33,050

)

 

 

(119,975

)

 

 

(33,050

)

Other intangible assets

 

(18,760

)

 

 

(7,923

)

 

 

(8,959

)

 

 

(18,760

)

 

 

(8,959

)

Total tangible stockholders' equity (non-GAAP)

$

615,299

 

 

$

474,568

 

 

$

468,573

 

 

$

615,299

 

 

$

468,573

 

Tangible assets:

Total assets (GAAP)

$

7,087,184

 

 

$

5,733,748

 

 

$

5,563,076

 

 

$

7,087,184

 

 

$

5,563,076

 

Less: Goodwill and other intangible assets

 

 

 

 

 

 

 

 

 

Goodwill

 

(119,975

)

 

 

(33,050

)

 

 

(33,050

)

 

 

(119,975

)

 

 

(33,050

)

Other intangible assets

 

(18,760

)

 

 

(7,923

)

 

 

(8,959

)

 

 

(18,760

)

 

 

(8,959

)

Total tangible assets (non-GAAP)

$

6,948,449

 

 

$

5,692,775

 

 

$

5,521,067

 

 

$

6,948,449

 

 

$

5,521,067

 

Tangible stockholders’ equity to tangible assets:

Common equity to total assets (GAAP)

 

10.64

%

 

 

8.99

%

 

 

9.18

%

 

 

10.64

%

 

 

9.18

%

Less: Impact of goodwill and other intangible assets

 

1.78

%

 

 

0.65

%

 

 

0.69

%

 

 

1.78

%

 

 

0.69

%

Tangible common equity to tangible assets (non-GAAP)

 

8.86

%

 

 

8.34

%

 

 

8.49

%

 

 

8.86

%

 

 

8.49

%

Tangible book value per common share:

Stockholders' equity (GAAP)

$

754,034

 

 

$

515,541

 

 

$

510,582

 

 

$

754,034

 

 

$

510,582

 

Tangible stockholders' equity (non-GAAP)

$

615,299

 

 

$

474,568

 

 

$

468,573

 

 

$

615,299

 

 

$

468,573

 

Total common shares outstanding

 

24,850,954

 

 

 

18,346,288

 

 

 

18,321,659

 

 

 

24,850,954

 

 

 

18,321,659

 

Book value per common share (GAAP)

$

30.34

 

 

$

28.10

 

 

$

27.87

 

 

$

30.34

 

 

$

27.87

 

Tangible book value per common share (non-GAAP)

$

24.76

 

 

$

25.87

 

 

$

25.57

 

 

$

24.76

 

 

$

25.57

 

Net income excluding merger costs:

Net income (GAAP)

$

430

 

 

$

7,669

 

 

$

11,281

 

 

$

8,099

 

 

$

25,619

 

Add: Merger costs

 

 

 

 

 

 

 

 

 

Merger related expenses

 

18,448

 

 

 

303

 

 

 

1,279

 

 

 

18,751

 

 

 

1,279

 

Income tax effect on merger related expenses

 

(4,033

)

 

 

(50

)

 

 

(211

)

 

 

(4,083

)

 

 

(211

)

Provision for loan loss on Pioneer loans marked at a premium

 

2,884

 

 

 

 

 

 

 

 

 

2,884

 

 

 

 

Income tax effect on provision for loan loss on Pioneer loans marked at a premium

 

(521

)

 

 

 

 

 

 

 

 

(521

)

 

 

 

Total merger costs

 

16,778

 

 

 

253

 

 

 

1,068

 

 

 

17,031

 

 

 

1,068

 

Net income excluding merger costs (non-GAAP)

$

17,208

 

 

$

7,922

 

 

$

12,349

 

 

$

25,130

 

 

$

26,687

 

 

 

 

 

 

 

 

 

 

 

Return on average total assets excluding merger costs:

Return on average total assets (ROAA) (GAAP)

 

0.02

%

 

 

0.54

%

 

 

0.82

%

 

 

0.25

%

 

 

0.97

%

Add: Impact of merger costs, net of tax

 

0.94

%

 

 

0.02

%

 

 

0.08

%

 

 

0.53

%

 

 

0.04

%

ROAA excluding merger costs (non-GAAP)

 

0.96

%

 

 

0.56

%

 

 

0.90

%

 

 

0.78

%

 

 

1.01

%

Return on average stockholders’ equity excluding merger costs:

Return on average stockholders' equity (ROAE) (GAAP)

 

0.22

%

 

 

5.85

%

 

 

8.82

%

 

 

2.49

%

 

 

10.12

%

Add: Impact of merger costs, net of tax

 

8.66

%

 

 

0.19

%

 

 

0.83

%

 

 

5.24

%

 

 

0.42

%

ROAE excluding merger costs (non-GAAP)

 

8.88

%

 

 

6.04

%

 

 

9.65

%

 

 

7.73

%

 

 

10.54

%

Efficiency ratio excluding merger related expenses:

Efficiency ratio (GAAP)

 

93.55

%

 

 

80.75

%

 

 

82.44

%

 

 

87.84

%

 

 

79.30

%

Less: Impact of merger related expenses

 

22.81

%

 

 

0.47

%

 

 

1.86

%

 

 

12.85

%

 

 

0.90

%

Efficiency ratio excluding merger related expenses (non-GAAP)

 

70.74

%

 

 

80.28

%

 

 

80.58

%

 

 

74.99

%

 

 

78.40

%

Diluted earnings per share excluding merger costs:

Diluted earnings per share (GAAP)

$

0.02

 

 

$

0.41

 

 

$

0.60

 

 

$

0.36

 

 

$

1.37

 

Add: Impact of merger costs, net of tax

 

0.66

 

 

 

0.01

 

 

 

0.06

 

 

 

0.77

 

 

 

0.06

 

Diluted earnings per share excluding merger costs (non-GAAP)

$

0.68

 

 

$

0.42

 

 

$

0.66

 

 

$

1.13

 

 

$

1.43

 

Fully tax equivalent (FTE) net interest income and net interest margin on FTE basis:

Net interest income (GAAP)

$

58,585

 

 

$

41,285

 

 

$

36,400

 

 

$

99,870

 

 

$

74,817

 

Gross income effect of tax exempt income

 

1,284

 

 

 

1,321

 

 

 

1,704

 

 

 

2,605

 

 

 

3,495

 

FTE net interest income (non-GAAP)

$

59,869

 

 

$

42,606

 

 

$

38,104

 

 

$

102,475

 

 

$

78,312

 

Average earning assets

$

6,577,173

 

 

$

5,359,626

 

 

$

5,184,811

 

 

$

5,971,763

 

 

$

4,991,086

 

Net interest margin

 

3.56

%

 

 

3.08

%

 

 

2.81

%

 

 

3.34

%

 

 

3.00

%

Net interest margin on FTE basis (non-GAAP)

 

3.64

%

 

 

3.17

%

 

 

2.93

%

 

 

3.43

%

 

 

3.13

%

 

 

 

 

 

 

 

 

 

 

($ in thousands)

As of

June 30,

2022

 

 

Total loan growth, excluding Pioneer acquired loans, annualized:

 

Total loans for the quarter ended:

 

June 30, 2022

$

5,387,928

 

March 31, 2022

 

4,315,031

 

Total loan growth for the quarter ended June 30, 2022

 

1,072,897

 

Less: Acquired loans at date of merger, net of purchase accounting adjustments

 

(811,300

)

Total loan increase for the quarter ended June 30, 2022

$

261,597

 

Total loan growth, annualized (GAAP)

 

99.5

%

Total loan growth, excluding Pioneer acquired loans, annualized (non-GAAP)

 

24.2

%

Total average deposit growth, excluding Pioneer acquired deposits, annualized:

 

Total average deposits for the quarter ended:

 

June 30, 2022

$

6,015,933

 

March 31, 2022

 

4,882,407

 

Total average deposit growth for the quarter ended June 30, 2022

 

1,133,526

 

Less: Acquired deposits at date of merger, net of purchase accounting adjustments

 

(1,192,081

)

Total average deposit decrease for the quarter ended June 30, 2022

$

(58,555

)

Total average deposit growth, annualized (GAAP)

 

92.9

%

Total average deposit growth, excluding Pioneer acquired deposits, annualized (non-GAAP)

 

(4.8

)%

 

Contacts

Investor Relations:

Kelly C. Rackley

Corporate Secretary & Sr. Paralegal

303.962.0150 | stockholder.relations@sunflowerbank.com

Media Relations:

Jeanne Lipson

Vice President, Marketing

915.881.6785

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