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FirstSun Capital Bancorp Reports Third Quarter 2023 Results

Third Quarter 2023 Highlights:

  • Net income of $25.2 million, $1.00 per diluted share
  • Net interest margin of 4.23%
  • Return on average total assets of 1.34%
  • Return on average stockholders’ equity of 12.03%
  • Average deposit growth of 24.0% annualized
  • Loan growth of 1.6% annualized
  • 20.3% noninterest income to total revenue1

FirstSun Capital Bancorp (“FirstSun”) (OTCQX: FSUN) reported net income of $25.2 million for the third quarter of 2023 compared to net income of $26.5 million for the third quarter of 2022. Earnings per diluted share were $1.00 for the third quarter of 2023 compared to $1.04 for the third quarter of 2022.

Neal Arnold, FirstSun’s President and Chief Executive Officer, commented, “We are pleased to deliver another strong quarter as our focus on growing our C&I and consumer relationships across all of our Southwest markets continues to yield favorable results. Among the highlights this quarter were our strong deposit growth and a stable net interest margin of 4.23%, amidst sharply declining trends in the banking industry as a whole. We believe our balanced business mix, our consistent focus on carefully growing our C&I and consumer businesses as well as our service fee businesses, along with our strong capital base and loan portfolio credit quality, provides us with the flexibility to continue to be opportunistic in this environment adding business relationships across the footprint. I want to thank all of our hard-working employees across all of our markets as their dedication to customer service has continued to drive our business growth and success this year.”

Third Quarter 2023 Results

Net income totaled $25.2 million, or $1.00 per diluted share, during the third quarter of 2023, compared to $28.0 million, or $1.11 per diluted share, during the prior quarter. The return on average total assets was 1.34% in the third quarter of 2023, compared to 1.49% in the prior quarter, and the return on average stockholders’ equity was 12.03% in the third quarter of 2023, compared to 13.54% in the prior quarter.

Net Interest Income and Net Interest Margin

Net interest income totaled $73.4 million during the third quarter of 2023, a decrease of $0.4 million compared to the prior quarter. Our net interest margin decreased one basis point to 4.23% compared to the prior quarter. Results in the third quarter of 2023, compared to the prior quarter, were driven by an increase of 42 basis points in the cost of interest-bearing liabilities, partially offset by an increase of 29 basis points in yield on earning assets.

Average loans, including loans held-for-sale, decreased by $40.1 million in the third quarter of 2023, compared to the prior quarter. Loan yield increased by 31 basis points to 6.44% in the third quarter of 2023, compared to the prior quarter, primarily due to the rising interest rate environment and its impact on variable rate loans in the loan portfolio and higher yields on new originations. Average interest-bearing deposits increased $0.4 billion in the third quarter of 2023, compared to the prior quarter. Total cost of deposits increased by 70 basis points to 2.64% in the third quarter of 2023, compared to the prior quarter, primarily due to rising deposit costs as a result of the elevated interest rate environment and an increasing mix of certificates of deposits. Average FHLB borrowings decreased $0.4 billion in the third quarter of 2023, compared to the prior quarter. The cost of FHLB borrowings increased by 21 basis points to 5.40% in the third quarter of 2023, compared to the prior quarter, primarily due to the rising interest rate environment.

Asset Quality and Provision for Credit Losses

The provision for credit losses totaled $3.9 million during the third quarter of 2023, a decrease of $0.5 million from $4.4 million in the prior quarter, primarily due to slower loan growth.

Net charge-offs during the third quarter of 2023 were $2.3 million, resulting in an annualized ratio of net charge-offs to average loans of 0.15%, compared to net charge-offs of $0.7 million, resulting in an annualized ratio of net-charge offs to average loans of 0.05% in the prior quarter. The allowance for credit losses as a percentage of total loans was 1.27% at September 30, 2023, an increase of one basis point from the prior quarter.

The ratio of nonperforming assets to total assets was 0.63% at September 30, 2023, compared to 1.00% at June 30, 2023.

Noninterest Income

Noninterest income totaled $18.7 million during the third quarter of 2023, a decrease of $5.6 million from the prior quarter. Mortgage banking income decreased $4.2 million during the third quarter of 2023, primarily due to lesser fair value gains on our mortgage servicing rights portfolio, net of derivative activity. Other noninterest income decreased $1.4 million during the third quarter of 2023, primarily due to a write-down of an other real estate owned property and a decrease in customer accommodation swap transaction fees. Noninterest income as a percentage of total revenue1 was 20.3%, a decrease of 4.5% from the prior quarter.

Noninterest Expense

Noninterest expense totaled $56.2 million during the third quarter of 2023, a decrease of $1.9 million from the prior quarter. Amortization of intangible assets decreased $1.2 million from the prior quarter. Other noninterest expense decreased $0.9 million primarily due to lower legal and professional fees.

The efficiency ratio for the third quarter of 2023 was 61.02% compared to 59.15% in the prior quarter.

Tax Rate

The effective tax rate was 21.1% in the third quarter of 2023, compared to 21.5% in the prior quarter.

Loans

Loans were $6.2 billion at September 30, 2023, compared to $6.2 billion at June 30, 2023, an increase of $24.4 million in the third quarter of 2023, or 1.6% on an annualized basis.

Deposits

Average deposits were $6.3 billion for the third quarter of 2023, compared to $6.0 billion for the prior quarter, an increase of $358.7 million in the third quarter of 2023, or 24.0% on an annualized basis. Noninterest-bearing deposit accounts represented 25.4% of total deposits at September 30, 2023 and the loan-to-deposit ratio was 97.5% at September 30, 2023.

The ratio of total uninsured deposits to total deposits was estimated to be 32.0% at September 30, 2023, compared to 32.5% at June 30, 2023. The ratio of total uninsured and uncollateralized deposits to total deposits was estimated to be 25.4% at September 30, 2023, compared to 24.1% at June 30, 2023.2

Capital

Capital ratios remain strong and above “well-capitalized” thresholds. As of September 30, 2023, our common equity tier 1 risk-based capital ratio was 10.79%, total risk-based capital ratio was 12.93% and tier 1 leverage ratio was 10.37%. Book value per common share was $33.83 at September 30, 2023, an increase of $0.81 from June 30, 2023. Tangible book value per common share, a non-GAAP financial measure, was $29.60 at September 30, 2023, an increase of $0.84 from June 30, 2023.

Non-GAAP Financial Measures

This press release (including the tables within the “Non-GAAP Financial Measures and Reconciliations” section) contains financial 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 non-GAAP financial measures, however, 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 non-GAAP measures used in this press release:

  • Tangible common stockholders’ equity;
  • Tangible assets;
  • Tangible common stockholders’ equity to tangible assets;
  • Tangible common stockholders’ equity to tangible assets, reflecting net unrealized losses on HTM securities, net of tax;
  • 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; and
  • Fully tax equivalent (“FTE”) net interest income and net interest margin on FTE basis.

The tables beginning within the “Non-GAAP Financial Measures and Reconciliations” section provide a reconciliation of each non-GAAP financial measure contained in this press release 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 $7.8 billion as of September 30, 2023.

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.

1

Total revenue is net interest income plus noninterest income.

2

Uninsured deposits and uninsured and uncollateralized deposits are reported for our wholly-owned subsidiary Sunflower Bank, N.A.
 
Summary Data:
 

As of and for the quarter ended

 

As of and for the nine months ended

($ in thousands, except per share amounts)

September 30,

2023

 

June 30,

2023

 

September 30,

2022

 

September 30,

2023

 

September 30,

2022

Net interest income

$

73,410

 

$

73,835

 

$

68,486

 

$

221,362

 

$

168,356

 

Provision for credit losses

 

3,890

 

 

4,422

 

 

3,750

 

 

11,672

 

 

12,450

 

Noninterest income

 

18,650

 

 

24,290

 

 

24,953

 

 

61,871

 

 

70,948

 

Noninterest expense

 

56,176

 

 

58,043

 

 

55,548

 

 

170,485

 

 

183,683

 

Income before income taxes

 

31,994

 

 

35,660

 

 

34,141

 

 

101,076

 

 

43,171

 

Provision for income taxes

 

6,762

 

 

7,654

 

 

7,628

 

 

21,557

 

 

8,559

 

Net income

 

25,232

 

 

28,006

 

 

26,513

 

 

79,519

 

 

34,612

 

Net income, excluding merger costs (1)

 

25,232

 

 

28,006

 

 

26,513

 

 

79,519

 

 

51,643

 

Diluted earnings per share

$

1.00

 

$

1.11

 

$

1.04

 

$

3.13

 

$

1.49

 

Diluted earnings per share, excluding merger costs (1)

$

1.00

 

$

1.11

 

$

1.04

 

$

3.13

 

$

2.22

 

Return on average total assets

 

1.34

%

 

1.49

%

 

1.52

%

 

1.42

%

 

0.70

%

Return on average total assets, excluding merger costs (1)

 

1.34

%

 

1.49

%

 

1.52

%

 

1.42

%

 

1.04

%

Return on average stockholders' equity

 

12.03

%

 

13.54

%

 

14.50

%

 

12.97

%

 

6.90

%

Return on average stockholders’ equity, excluding merger costs (1)

 

12.03

%

 

13.54

%

 

14.50

%

 

12.97

%

 

10.29

%

Net interest margin

 

4.23

%

 

4.24

%

 

4.26

%

 

4.28

%

 

3.66

%

Net interest margin (FTE basis) (1)

 

4.30

%

 

4.32

%

 

4.31

%

 

4.36

%

 

3.75

%

Efficiency ratio

 

61.02

%

 

59.15

%

 

59.45

%

 

60.19

%

 

76.76

%

Efficiency ratio, excluding merger related expenses (1)

 

61.02

%

 

59.15

%

 

59.45

%

 

60.19

%

 

68.92

%

Noninterest income to total revenue (2)

 

20.3

%

 

24.8

%

 

26.7

%

 

21.8

%

 

29.6

%

Total assets

$

7,756,875

 

$

7,797,344

 

$

7,052,917

 

$

7,756,875

 

$

7,052,917

 

Total loans held-for-sale

 

51,465

 

 

56,350

 

 

67,535

 

 

51,465

 

 

67,535

 

Total loans held-for-investment

 

6,179,522

 

 

6,155,090

 

 

5,556,686

 

 

6,179,522

 

 

5,556,686

 

Total deposits

 

6,339,847

 

 

6,150,418

 

 

5,760,418

 

 

6,339,847

 

 

5,760,418

 

Total stockholders' equity

 

843,719

 

 

823,635

 

 

750,653

 

 

843,719

 

 

750,653

 

Loan to deposit ratio

 

97.5

%

 

100.1

%

 

96.5

%

 

97.5

%

 

96.5

%

Book value per common share

$

33.83

 

$

33.02

 

$

30.14

 

$

33.83

 

$

30.14

 

Tangible book value per common share (1)

$

29.60

 

$

28.76

 

$

25.67

 

$

29.60

 

$

25.67

 

(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)

Total revenue is net interest income plus noninterest income.
 

Condensed Consolidated Statements of Income (Unaudited):

 

 

As of and for the quarter ended

 

As of and for the nine months ended

($ in thousands, except per share amounts)

September 30,

2023

 

June 30,

2023

 

September 30,

2022

 

September 30,

2023

 

September 30,

2022

Total interest income

$

106,775

$

102,032

$

73,763

$

303,710

$

181,652

Total interest expense

 

33,365

 

28,197

 

5,277

 

82,348

 

13,296

Net interest income

 

73,410

 

73,835

 

68,486

 

221,362

 

168,356

Provision for credit losses

 

3,890

 

4,422

 

3,750

 

11,672

 

12,450

Net interest income after provision for credit losses

 

69,520

 

69,413

 

64,736

 

209,690

 

155,906

Noninterest income:

 

 

 

 

 

Service charges on deposits

 

5,475

 

5,358

 

4,807

 

15,848

 

13,111

Credit and debit card fees

 

2,996

 

3,057

 

3,103

 

9,034

 

8,508

Trust and investment advisory fees

 

1,398

 

1,478

 

1,552

 

4,337

 

5,408

Mortgage banking income, net

 

7,413

 

11,659

 

13,785

 

26,501

 

40,017

Other noninterest income

 

1,368

 

2,738

 

1,706

 

6,151

 

3,904

Total noninterest income

 

18,650

 

24,290

 

24,953

 

61,871

 

70,948

Noninterest expense:

 

 

 

 

 

Salaries and benefits

 

33,968

 

34,056

 

32,508

 

103,073

 

101,981

Occupancy and equipment

 

8,216

 

7,948

 

8,216

 

24,338

 

22,802

Amortization of intangible assets

 

899

 

2,050

 

935

 

3,993

 

2,197

Merger related expenses

 

 

 

 

 

18,751

Other noninterest expenses

 

13,093

 

13,989

 

13,889

 

39,081

 

37,952

Total noninterest expense

 

56,176

 

58,043

 

55,548

 

170,485

 

183,683

Income before income taxes

 

31,994

 

35,660

 

34,141

 

101,076

 

43,171

Provision for income taxes

 

6,762

 

7,654

 

7,628

 

21,557

 

8,559

Net income

$

25,232

$

28,006

$

26,513

$

79,519

$

34,612

Earnings per share - basic

$

1.01

$

1.12

$

1.07

$

3.19

$

1.53

Earnings per share - diluted

$

1.00

$

1.11

$

1.04

$

3.13

$

1.49

Condensed Consolidated Balance Sheets as of (Unaudited):

 

($ in thousands)

September 30,

2023

June 30,

2023

September 30,

2022

Assets

 

 

 

Cash and cash equivalents

$

443,887

 

$

492,735

 

$

325,039

 

Securities available-for-sale, at fair value

 

495,992

 

 

515,956

 

 

551,165

 

Securities held-to-maturity

 

37,410

 

 

37,883

 

 

39,148

 

Loans held-for-sale, at fair value

 

51,465

 

 

56,350

 

 

67,535

 

Loans

 

6,179,522

 

 

6,155,090

 

 

5,556,686

 

Allowance for credit losses

 

(78,666

)

 

(77,362

)

 

(59,678

)

Loans, net

 

6,100,856

 

 

6,077,728

 

 

5,497,008

 

Mortgage servicing rights, at fair value

 

81,036

 

 

78,390

 

 

73,850

 

Premises and equipment, net

 

83,733

 

 

84,483

 

 

88,490

 

Other real estate owned and foreclosed assets, net

 

8,395

 

 

10,139

 

 

5,391

 

Goodwill

 

93,483

 

 

93,483

 

 

93,483

 

Intangible assets, net

 

11,813

 

 

12,712

 

 

17,825

 

All other assets

 

348,805

 

 

337,485

 

 

293,983

 

Total assets

$

7,756,875

 

$

7,797,344

 

$

7,052,917

 

 

Liabilities and Stockholders' Equity

 

 

 

Liabilities:

 

 

 

Deposits:

 

 

 

Noninterest-bearing demand deposit accounts

$

1,610,650

 

$

1,667,247

 

$

1,946,215

 

Interest-bearing deposit accounts:

 

 

 

Interest-bearing demand accounts

 

440,845

 

 

379,779

 

 

160,082

 

Savings and money market accounts

 

2,476,097

 

 

2,441,349

 

 

3,008,433

 

NOW accounts

 

35,686

 

 

48,270

 

 

46,128

 

Certificate of deposit accounts

 

1,776,569

 

 

1,613,773

 

 

599,560

 

Total deposits

 

6,339,847

 

 

6,150,418

 

 

5,760,418

 

Securities sold under agreements to repurchase

 

25,868

 

 

32,861

 

 

51,256

 

Federal Home Loan Bank advances

 

330,000

 

 

570,585

 

 

310,872

 

Other borrowings

 

75,180

 

 

80,511

 

 

80,097

 

Other liabilities

 

142,261

 

 

139,334

 

 

99,621

 

Total liabilities

 

6,913,156

 

 

6,973,709

 

 

6,302,264

 

Stockholders' equity:

 

 

 

Preferred stock

 

 

 

 

 

 

Common stock

 

2

 

 

2

 

 

2

 

Additional paid-in capital

 

462,507

 

 

461,856

 

 

460,530

 

Retained earnings

 

433,508

 

 

408,276

 

 

333,227

 

Accumulated other comprehensive loss, net

 

(52,298

)

 

(46,499

)

 

(43,106

)

Total stockholders' equity

 

843,719

 

 

823,635

 

 

750,653

 

Total liabilities and stockholders' equity

$

7,756,875

 

$

7,797,344

 

$

7,052,917

 

 

Share Data:

 

 

As of and for the quarter ended

 

As of and for the nine months ended

 

September 30,

2023

 

June 30,

2023

 

September 30,

2022

 

September 30,

2023

 

September 30,

2022

Weighted average common shares outstanding, basic

 

24,942,389

 

 

24,933,664

 

 

24,877,607

 

 

24,933,168

 

 

22,685,496

Weighted average common shares outstanding, diluted

 

25,357,807

 

 

25,206,359

 

 

25,494,315

 

 

25,365,297

 

 

23,281,933

Period end common shares outstanding

 

24,942,645

 

 

24,941,468

 

 

24,906,032

 

 

24,942,645

 

 

24,906,032

Book value per common share

$

33.83

 

$

33.02

 

$

30.14

 

$

33.83

 

$

30.14

Tangible book value per common share (1)

$

29.60

 

$

28.76

 

$

25.67

 

$

29.60

 

$

25.67

 

Consolidated Capital Ratios as of:

 

 

September 30,

2023

 

June 30,

2023

 

September 30,

2022

Stockholders' equity to total assets

10.88

%

 

10.56

%

 

10.64

%

Tangible common stockholders' equity to tangible assets (1)

9.65

%

 

9.33

%

 

9.21

%

Tangible common stockholders' equity to tangible assets reflecting net unrealized losses on HTM securities, net of tax (1) (2)

9.59

%

 

9.28

%

 

9.16

%

Tier 1 leverage ratio

10.37

%

 

10.00

%

 

9.55

%

Common equity tier 1 risk-based capital ratio

10.79

%

 

10.40

%

 

9.99

%

Tier 1 risk-based capital ratio

10.79

%

 

10.40

%

 

9.99

%

Total risk-based capital ratio

12.93

%

 

12.52

%

 

12.06

%

(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)

Tangible common stockholders’ equity and tangible assets have been adjusted to reflect net unrealized losses on held-to-maturity securities, net of tax.

 

Summary of Net Interest Margin:

 

 

 

For the quarter ended

September 30, 2023

 

For the quarter ended

June 30, 2023

 

For the quarter ended

September 30, 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)

 

 

6,180,684

 

 

99,565

 

 

6.44

%

 

 

6,220,833

 

 

95,320

 

 

6.13

%

 

 

5,512,846

 

 

68,270

 

 

4.95

%

Investment securities

 

 

545,257

 

 

4,226

 

 

3.10

%

 

 

563,902

 

 

4,227

 

 

3.00

%

 

 

613,325

 

 

3,644

 

 

2.38

%

Interest-bearing cash and other assets

 

 

221,559

 

 

2,984

 

 

5.39

%

 

 

176,672

 

 

2,485

 

 

5.63

%

 

 

308,482

 

 

1,849

 

 

2.40

%

Total earning assets

 

 

6,947,500

 

 

106,775

 

 

6.15

%

 

 

6,961,407

 

 

102,032

 

 

5.86

%

 

 

6,434,653

 

 

73,763

 

 

4.59

%

Other assets

 

 

557,988

 

 

 

 

 

 

556,105

 

 

 

 

 

 

519,663

 

 

 

 

Total assets

 

$

7,505,488

 

 

 

 

 

$

7,517,512

 

 

 

 

 

$

6,954,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand and NOW deposits

 

$

466,837

 

$

3,813

 

 

3.27

%

 

$

332,695

 

$

2,124

 

 

2.55

%

 

$

202,290

 

$

495

 

 

0.98

%

Savings deposits

 

 

439,172

 

 

680

 

 

0.62

%

 

 

448,059

 

 

491

 

 

0.44

%

 

 

506,548

 

 

227

 

 

0.18

%

Money market deposits

 

 

2,026,028

 

 

7,997

 

 

1.58

%

 

 

2,107,379

 

 

5,874

 

 

1.11

%

 

 

2,617,452

 

 

1,632

 

 

0.25

%

Certificates of deposits

 

 

1,748,515

 

 

18,406

 

 

4.21

%

 

 

1,392,847

 

 

12,240

 

 

3.52

%

 

 

593,479

 

 

920

 

 

0.62

%

Total deposits

 

 

4,680,552

 

 

30,896

 

 

2.64

%

 

 

4,280,980

 

 

20,729

 

 

1.94

%

 

 

3,919,769

 

 

3,274

 

 

0.33

%

Repurchase agreements

 

 

26,549

 

 

65

 

 

0.98

%

 

 

33,673

 

 

68

 

 

0.80

%

 

 

51,264

 

 

51

 

 

0.40

%

Total deposits and repurchase agreements

 

 

4,707,101

 

 

30,961

 

 

2.63

%

 

 

4,314,653

 

 

20,797

 

 

1.93

%

 

 

3,971,033

 

 

3,325

 

 

0.33

%

FHLB borrowings

 

 

84,332

 

 

1,139

 

 

5.40

%

 

 

472,105

 

 

6,121

 

 

5.19

%

 

 

160,310

 

 

761

 

 

1.90

%

Other long-term borrowings

 

 

78,680

 

 

1,265

 

 

6.44

%

 

 

80,440

 

 

1,279

 

 

6.36

%

 

 

80,031

 

 

1,191

 

 

5.95

%

Total interest-bearing liabilities

 

 

4,870,113

 

 

33,365

 

 

2.74

%

 

 

4,867,198

 

 

28,197

 

 

2.32

%

 

 

4,211,374

 

 

5,277

 

 

0.50

%

Noninterest-bearing deposits

 

 

1,654,090

 

 

 

 

 

 

1,694,961

 

 

 

 

 

 

1,924,055

 

 

 

 

Other liabilities

 

 

142,027

 

 

 

 

 

 

128,118

 

 

 

 

 

 

87,338

 

 

 

 

Stockholders' equity

 

 

839,258

 

 

 

 

 

 

827,235

 

 

 

 

 

 

731,549

 

 

 

 

Total liabilities and stockholders' equity

 

$

7,505,488

 

 

 

 

 

$

7,517,512

 

 

 

 

 

$

6,954,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

73,410

 

 

 

 

 

 

$

73,835

 

 

 

 

 

 

$

68,486

 

 

 

Net interest spread

 

 

 

 

3.41

%

 

 

 

 

 

 

3.54

%

 

 

 

 

 

 

4.09

%

 

 

Net interest margin

 

 

 

 

4.23

%

 

 

 

 

 

 

4.24

%

 

 

 

 

 

 

4.26

%

 

 

Net interest margin (on FTE basis) (2)

 

 

 

 

4.30

%

 

 

 

 

 

 

4.32

%

 

 

 

 

 

 

4.31

%

 

 

(1)

Includes loans held-for-investment, including nonaccrual loans, and loans held-for-sale.

(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 nine months ended

 

September 30, 2023

 

September 30, 2022

(In thousands)

Average

Balance

 

Interest

 

Average

Yield/Rate

 

Average

Balance

 

Interest

 

Average

Yield/Rate

Interest Earning Assets

 

 

 

 

 

 

Loans (1)

 

6,144,057

 

283,486

 

6.15

%

 

5,015,680

 

168,713

 

4.48

%

Investment securities

 

559,855

 

12,617

 

3.00

%

 

615,726

 

9,252

 

2.00

%

Interest-bearing cash and other assets

 

187,468

 

7,607

 

5.41

%

 

496,349

 

3,687

 

0.99

%

Total earning assets

 

6,891,380

 

303,710

 

5.88

%

 

6,127,755

 

181,652

 

3.95

%

Other assets

 

553,628

 

 

 

473,909

 

 

Total assets

$

7,445,008

 

 

$

6,601,664

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

Demand and NOW deposits

$

343,112

$

7,171

 

2.79

%

$

214,862

$

848

 

0.53

%

Savings deposits

 

452,298

 

1,616

 

0.48

%

 

497,240

 

451

 

0.12

%

Money market deposits

 

2,142,301

 

18,939

 

1.18

%

 

2,567,406

 

3,644

 

0.19

%

Certificates of deposits

 

1,407,264

 

38,078

 

3.61

%

 

498,753

 

2,077

 

0.56

%

Total deposits

 

4,344,975

 

65,804

 

2.02

%

 

3,778,261

 

7,020

 

0.25

%

Repurchase agreements

 

29,953

 

163

 

0.73

%

 

59,572

 

74

 

0.17

%

Total deposits and repurchase agreements

 

4,374,928

 

65,967

 

2.01

%

 

3,837,833

 

7,094

 

0.25

%

FHLB borrowings

 

335,485

 

12,576

 

5.00

%

 

128,654

 

1,680

 

1.74

%

Other long-term borrowings

 

79,801

 

3,805

 

6.36

%

 

82,768

 

4,522

 

7.28

%

Total interest-bearing liabilities

 

4,790,214

 

82,348

 

2.29

%

 

4,049,255

 

13,296

 

0.44

%

Noninterest-bearing deposits

 

1,705,392

 

 

 

1,805,982

 

 

Other liabilities

 

131,628

 

 

 

77,436

 

 

Stockholders' equity

 

817,774

 

 

 

668,991

 

 

Total liabilities and stockholders' equity

$

7,445,008

 

 

$

6,601,664

 

 

 

 

 

 

 

 

 

Net interest income

 

$

221,362

 

 

 

$

168,356

 

 

Net interest spread

 

 

3.59

%

 

 

 

3.51

%

 

Net interest margin

 

 

4.28

%

 

 

 

3.66

%

 

Net interest margin (on FTE basis) (2)

 

 

4.36

%

 

 

 

3.75

%

 

(1)

Includes loans held-for-investment, including nonaccrual loans, and loans held-for-sale.

(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.

 

Deposits:

 

($ in thousands)

September 30,

2023

 

June 30,

2023

 

September 30,

2023

vs

June 30, 2023

% change

 

September 30,

2022

 

September 30,

2023

vs

September 30,

2022

% change

Consumer

 

 

 

 

 

Noninterest bearing deposit accounts

$

366,366

$

375,583

(2.45

)%

$

419,977

(12.77

)%

Interest-bearing deposit accounts:

 

 

 

 

 

Demand and NOW deposits

 

33,340

 

34,731

(4.01

)%

 

26,612

25.28

%

Savings deposits

 

356,890

 

378,193

(5.63

)%

 

445,956

(19.97

)%

Money market deposits

 

1,149,365

 

1,174,883

(2.17

)%

 

1,538,567

(25.30

)%

Certificates of deposits

 

1,366,255

 

1,095,754

24.69

%

 

531,400

157.10

%

Total interest-bearing deposit accounts

 

2,905,850

 

2,683,561

8.28

%

 

2,542,535

14.29

%

Total consumer deposits

$

3,272,216

$

3,059,144

6.97

%

$

2,962,512

10.45

%

Business

 

 

 

 

 

Noninterest bearing deposit accounts

$

1,244,284

$

1,291,664

(3.67

)%

$

1,526,238

(18.47

)%

Interest-bearing deposit accounts:

 

 

 

 

 

Demand and NOW deposits

 

443,191

 

393,318

12.68

%

 

179,598

146.77

%

Savings deposits

 

85,234

 

30,904

175.80

%

 

34,490

147.13

%

Money market deposits

 

859,516

 

832,279

3.27

%

 

964,386

(10.87

)%

Certificates of deposits

 

77,228

 

77,604

(0.48

)%

 

49,670

55.48

%

Total interest-bearing deposit accounts

 

1,465,169

 

1,334,105

9.82

%

 

1,228,144

19.30

%

Total business deposits

$

2,709,453

$

2,625,769

3.19

%

$

2,754,382

(1.63

)%

Wholesale deposits (1)

$

358,178

$

465,505

(23.06

)%

$

43,524

722.94

%

Total deposits

$

6,339,847

$

6,150,418

3.08

%

$

5,760,418

10.06

%

(1)

Wholesale deposits consist of brokered deposits included in our condensed consolidated balance sheets within certificates of deposits and savings and money market accounts.

 

Balance Sheet Ratios:

 

 

September 30,

2023

 

June 30,

2023

 

September 30,

2022

Cash to total assets (1)

5.60

%

 

6.20

%

 

2.10

%

Loan to deposit ratio

97.5

%

 

100.1

%

 

96.5

%

Uninsured deposits to total deposits (2)

32.0

%

 

32.5

%

 

42.7

%

Uninsured and uncollateralized deposits to total deposits (2)

25.4

%

 

24.1

%

 

31.8

%

Wholesale deposits and borrowings to total liabilities (3)

10.0

%

 

14.9

%

 

5.6

%

(1)

Cash consists of cash and amounts due from banks and interest-bearing deposits with other financial institutions.

(2)

Uninsured deposits and uninsured and uncollateralized deposits are reported for our wholly-owned subsidiary Sunflower Bank, N.A.

(3)

Wholesale deposits consist of brokered deposits included in our condensed consolidated balance sheets within certificates of deposits and savings and money market accounts. Wholesale borrowings consist of FHLB overnight and term advances.

 

Loan Portfolio:

 

($ in thousands)

September 30,

2023

 

June 30,

2023

 

September 30,

2023

vs

June 30,

2023

% change

 

September 30,

2022

 

September 30,

2023

vs

September 30,

2022

% change

Commercial and industrial

$

2,459,358

 

$

2,474,531

 

(0.6

)%

 

$

2,049,294

 

20.0

%

Commercial real estate:

 

 

 

 

 

 

 

 

 

Non-owner occupied

 

767,135

 

 

723,365

 

6.1

%

 

 

821,262

 

(6.6

)%

Owner occupied

 

631,352

 

 

643,191

 

(1.8

)%

 

 

657,853

 

(4.0

)%

Construction and land

 

329,433

 

 

316,399

 

4.1

%

 

 

293,201

 

12.4

%

Multifamily

 

114,535

 

 

100,464

 

14.0

%

 

 

90,380

 

26.7

%

Total commercial real estate

 

1,842,455

 

 

1,783,419

 

3.3

%

 

 

1,862,696

 

(1.1

)%

Residential real estate

 

1,059,074

 

 

1,082,991

 

(2.2

)%

 

 

912,776

 

16.0

%

Public Finance

 

602,844

 

 

611,748

 

(1.5

)%

 

 

591,171

 

2.0

%

Consumer

 

37,681

 

 

39,909

 

(5.6

)%

 

 

43,146

 

(12.7

)%

Other

 

178,110

 

 

162,492

 

9.6

%

 

 

97,603

 

82.5

%

Total loans, net of deferred costs, fees, premiums, and discounts

$

6,179,522

 

$

6,155,090

 

0.4

%

 

$

5,556,686

 

11.2

%

 

Asset Quality:

 

 

As of and for the quarter ended

 

As of and for the nine months ended

($ in thousands)

September 30,

2023

 

June 30,

2023

 

September 30,

2022

 

September 30,

2023

 

September 30,

2022

Net charge-offs (recoveries)

$

2,296

 

 

$

717

 

 

$

149

 

 

$

3,067

 

 

$

319

 

Allowance for credit losses

$

78,666

 

 

$

77,362

 

 

$

59,678

 

 

$

78,666

 

 

$

59,678

 

Nonperforming loans, including nonaccrual loans, and accrual loans greater than 90 days past due (1)

$

40,743

 

 

$

67,840

 

 

$

34,031

 

 

$

40,743

 

 

$

34,031

 

Nonperforming assets (1)

$

49,138

 

 

$

77,979

 

 

$

39,422

 

 

$

49,138

 

 

$

39,422

 

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

 

0.15

%

 

 

0.05

%

 

 

0.01

%

 

 

0.07

%

 

 

0.01

%

Allowance for credit losses to total loans outstanding

 

1.27

%

 

 

1.26

%

 

 

1.07

%

 

 

1.27

%

 

 

1.07

%

Allowance for credit losses to total nonperforming loans (1)

 

193.08

%

 

 

114.04

%

 

 

175.36

%

 

 

193.08

%

 

 

175.36

%

Nonperforming loans to total loans (1)

 

0.66

%

 

 

1.10

%

 

 

0.61

%

 

 

0.66

%

 

 

0.61

%

Nonperforming assets to total assets (1)

 

0.63

%

 

 

1.00

%

 

 

0.56

%

 

 

0.63

%

 

 

0.56

%

(1)

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.

 

Non-GAAP Financial Measures and Reconciliations:

 

 

As of and for the quarter ended

 

As of and for the nine months ended

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

September 30,

2023

 

June 30,

2023

 

September 30,

2022

 

September 30,

2023

 

September 30,

2022

Tangible common stockholders’ equity:

Total common stockholders' equity (GAAP)

$

843,719

 

$

823,635

 

$

750,653

 

$

843,719

 

$

750,653

 

Less: Goodwill and other intangible assets:

 

 

 

 

 

Goodwill

 

(93,483

)

 

(93,483

)

 

(93,483

)

 

(93,483

)

 

(93,483

)

Other intangible assets

 

(11,813

)

 

(12,712

)

 

(17,825

)

 

(11,813

)

 

(17,825

)

Total tangible common stockholders' equity (non-GAAP) (1)

$

738,423

 

$

717,440

 

$

639,345

 

$

738,423

 

$

639,345

 

Tangible assets:

Total assets (GAAP)

$

7,756,875

 

$

7,797,344

 

$

7,052,917

 

$

7,756,875

 

$

7,052,917

 

Less: Goodwill and other intangible assets:

 

 

 

 

 

Goodwill

 

(93,483

)

 

(93,483

)

 

(93,483

)

 

(93,483

)

 

(93,483

)

Other intangible assets

 

(11,813

)

 

(12,712

)

 

(17,825

)

 

(11,813

)

 

(17,825

)

Total tangible assets (non-GAAP)

$

7,651,579

 

$

7,691,149

 

$

6,941,609

 

$

7,651,579

 

$

6,941,609

 

Tangible common stockholders’ equity to tangible assets:

Common stockholders' equity to total assets (GAAP)

 

10.88

%

 

10.56

%

 

10.64

%

 

10.88

%

 

10.64

%

Less: Impact of goodwill and other intangible assets

 

(1.23

)%

 

(1.23

)%

 

(1.43

)%

 

(1.23

)%

 

(1.43

)%

Tangible common stockholders' equity to tangible assets (non-GAAP) (1)

 

9.65

%

 

9.33

%

 

9.21

%

 

9.65

%

 

9.21

%

Tangible common stockholders’ equity to tangible assets, reflecting net unrealized losses on HTM securities, net of tax:

Total tangible common stockholders' equity (non-GAAP)

$

738,423

 

$

717,440

 

$

639,345

 

$

738,423

 

$

639,345

 

Less: Net unrealized losses on HTM securities, net of tax

 

(5,001

)

 

(3,821

)

 

(3,810

)

 

(5,001

)

 

(3,810

)

Total tangible common stockholders’ equity less net unrealized losses on HTM securities, net of tax (non-GAAP)

$

733,422

 

$

713,619

 

$

635,535

 

$

733,422

 

$

635,535

 

Total tangible assets (non-GAAP)

$

7,651,579

 

$

7,691,149

 

$

6,941,609

 

$

7,651,579

 

$

6,941,609

 

Less: Net unrealized losses on HTM securities, net of tax

 

(5,001

)

 

(3,821

)

 

(3,810

)

 

(5,001

)

 

(3,810

)

Total tangible assets less net unrealized losses on HTM securities, net of tax (non-GAAP)

$

7,646,578

 

$

7,687,328

 

$

6,937,799

 

$

7,646,578

 

$

6,937,799

 

Tangible common stockholders’ equity to tangible assets (non-GAAP)

 

9.65

%

 

9.33

%

 

9.21

%

 

9.65

%

 

9.21

%

Less: Net unrealized losses on HTM securities, net of tax

 

(0.06

)%

 

(0.05

)%

 

(0.05

)%

 

(0.06

)%

 

(0.05

)%

Tangible common stockholders’ equity to tangible assets reflecting net unrealized losses on HTM securities, net of tax (non-GAAP)

 

9.59

%

 

9.28

%

 

9.16

%

 

9.59

%

 

9.16

%

 

 

 

 

 

 

Tangible book value per common share:

Stockholders' equity (GAAP)

$

843,719

 

$

823,635

 

$

750,653

 

$

843,719

 

$

750,653

 

Tangible stockholders' equity (non-GAAP) (1)

$

738,423

 

$

717,440

 

$

639,345

 

$

738,423

 

$

639,345

 

Total common shares outstanding

 

24,942,645

 

 

24,941,468

 

 

24,906,032

 

 

24,942,645

 

 

24,906,032

 

Book value per common share (GAAP)

$

33.83

 

$

33.02

 

$

30.14

 

$

33.83

 

$

30.14

 

Tangible book value per common share (non-GAAP)

$

29.60

 

$

28.76

 

$

25.67

 

$

29.60

 

$

25.67

 

Net income excluding merger costs:

Net income (GAAP)

$

25,232

 

$

28,006

 

$

26,513

 

$

79,519

 

$

34,612

 

Add: Merger costs

 

 

 

 

 

Merger related expenses

 

 

 

 

 

 

 

 

 

18,751

 

Income tax effect on merger related expenses

 

 

 

 

 

 

 

 

 

(4,083

)

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

 

Net income excluding merger costs (non-GAAP)

$

25,232

 

$

28,006

 

$

26,513

 

$

79,519

 

$

51,643

 

Return on average total assets excluding merger costs:

Return on average total assets (ROAA) (GAAP)

 

1.34

%

 

1.49

%

 

1.52

%

 

1.42

%

 

0.70

%

Add: Impact of merger costs, net of tax

 

%

 

%

 

%

 

%

 

0.34

%

ROAA excluding merger costs (non-GAAP)

 

1.34

%

 

1.49

%

 

1.52

%

 

1.42

%

 

1.04

%

Return on average stockholders’ equity excluding merger costs:

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

 

12.03

%

 

13.54

%

 

14.50

%

 

12.97

%

 

6.90

%

Add: Impact of merger costs, net of tax

 

%

 

%

 

%

 

%

 

3.39

%

ROAE excluding merger costs (non-GAAP)

 

12.03

%

 

13.54

%

 

14.50

%

 

12.97

%

 

10.29

%

Efficiency ratio excluding merger related expenses:

Efficiency ratio (GAAP)

 

61.02

%

 

59.15

%

 

59.45

%

 

60.19

%

 

76.76

%

Less: Impact of merger related expenses

 

%

 

%

 

%

 

%

 

(7.84

)%

Efficiency ratio excluding merger related expenses (non-GAAP)

 

61.02

%

 

59.15

%

 

59.45

%

 

60.19

%

 

68.92

%

Diluted earnings per share excluding merger costs:

Diluted earnings per share (GAAP)

$

1.00

 

$

1.11

 

$

1.04

 

$

3.13

 

$

1.49

 

Add: Impact of merger costs, net of tax

 

 

 

 

 

 

 

 

 

0.73

 

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

$

1.00

 

$

1.11

 

$

1.04

 

$

3.13

 

$

2.22

 

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

Net interest income (GAAP)

$

73,410

 

$

73,835

 

$

68,486

 

$

221,362

 

$

168,356

 

Gross income effect of tax exempt income

 

1,286

 

 

1,288

 

 

1,236

 

 

3,816

 

 

3,841

 

FTE net interest income (non-GAAP)

$

74,696

 

$

75,123

 

$

69,722

 

$

225,178

 

$

172,197

 

Average earning assets

$

6,947,500

 

$

6,961,407

 

$

6,434,653

 

$

6,891,380

 

$

6,127,755

 

Net interest margin

 

4.23

%

 

4.24

%

 

4.26

%

 

4.28

%

 

3.66

%

Net interest margin on FTE basis (non-GAAP)

 

4.30

%

 

4.32

%

 

4.31

%

 

4.36

%

 

3.75

%

(1)

For all periods presented tangible stockholders’ equity is the same as tangible common stockholders’ equity.

 

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