FIRSTSUN CAPITAL BANCORP (FSUN)·Q2 2025 Earnings Summary

Executive Summary

• EPS of $0.93 and ROAA of 1.28% with NIM stable at 4.07%; total revenue of $105.6M grew 9.7% q/q as service-fee mix rose to 25.6% .
• EPS beat consensus by ~$0.045, while revenue was modestly below S&P Global’s consensus; 4 covering estimates for EPS and revenue (details in Estimates Context)*.
• Deposits expanded 13.2% annualized and loan balances rose 1.4% annualized; mix shifted away from CDs into savings/MMDA and DDA, supporting lower wholesale reliance and improved LDR to 91.6% .
• Credit costs were elevated on two C&I credits (telecom and public finance), driving net charge-offs to 0.83% annualized; CET1 improved 52 bp to 13.78% and NPL ratio fell 37 bp q/q .
• Management maintained most FY 2025 guidance (NIM stable >4%, mid-single-digit growth), but raised full-year net charge-off outlook to high-30s/low-40s bps; margin likely “pretty consistent” with slight pressure absent rate cuts .

What Went Well and What Went Wrong

What Went Well

• Strong deposit growth and favorable mix shift: deposits +$226M q/q (+13.2% annualized), CDs down and savings/MMDA and DDA up; wholesale reliance down to ~6% of liabilities, LDR improved to 91.6% .
• Fee income strength led total revenue higher: noninterest income +$5.3M q/q (mortgage banking +$4.2M) and service-fee mix to 25.6% of revenue, driving operating leverage .
• CEO tone confident on strategy and deposit momentum: “Performance… highlighted by exceptional deposit growth, a stable net interest margin… and 12.0% EPS growth” .

What Went Wrong

• Elevated credit costs: net charge-offs of $13.5M (0.83% annualized) on two specific C&I/public finance credits; provision increased to $4.5M; ACL-to-loans decreased to 1.28% from 1.42% .
• Deposit pricing pressure persists: CFO noted deposit growth “comes at a price” and limited pricing leverage absent macro rate moves; near-term deposit beta ~40% .
• Margin upside limited: management expects NIM to be “pretty consistent… maybe a little pressure,” staying north of 4% absent additional rate cuts .

Financial Results

Headline Metrics vs Prior Year and Prior Quarter

Note: Total revenue is net interest income plus noninterest income .

Credit and Balance Sheet

Noninterest Income Breakdown

Loan Portfolio Composition (EOP)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “Performance this quarter was highlighted by exceptional deposit growth, a stable net interest margin, an increase in service fees to revenue mix to 25.6% and 12.0% earnings per share growth.”
• CEO on credit: Elevated charge-offs driven by a telecom C&I and a public finance credit; no pervasive issues across sectors/geographies .
• CFO: NIM strong at 4.07% for 11 straight quarters; NII up ~8% y/y; deposit mix improved; near-term deposit beta ~40% .
• CFO on margin: “Pretty consistent with Q2… maybe a little pressure” absent macro rate moves; maintain NIM north of 4% .
• CCO: Valuation deterioration in telecom credit drove higher realized charge-offs vs initial reserves .

Q&A Highlights

• Credit detail: Two specific C&I credits drove most charge-offs; one ~80% of total; not full charge-offs; ACL expected to normalize in the 120s bps with specific reserves rolling off .
• NCO outlook: Raised to high-30s/low-40s bps due to a shorter workout period on a classified C&I loan and market pricing deterioration .
• Deposits: Growth robust but comes at cost; continued favorable mix shift; limited pricing changes absent rate cuts; spot cost ~2.14–2.15% at June-end .
• Margin: Expect NIM to remain north of 4%, “pretty consistent” with slight pressure without cuts .
• Southern California: ~40% q/q deposit growth to ~$200M; loans ~$200M; effectively self-funded .
• Capital priorities: Focus on organic growth; buybacks considered but not prioritized; strong CET1 .

Estimates Context

Values retrieved from S&P Global.*

Context: Company-reported total revenue was $105.6M, which differs from S&P’s “Revenue” actual definition; EPS nonetheless beat, while revenue was modestly below consensus .

Implications: Expect upward EPS estimate revisions; revenue forecasts may be tempered by fee vs. NII mix and outlook for deposit beta and slight NIM pressure .

Key Takeaways for Investors

• Deposit momentum and mix shift are supportive of funding costs and LDR improvement; watch sustainability as certain client events were episodic .
• NIM resilience north of 4% with slight pressure absent further cuts; deposit beta near 40% implies careful pricing discipline .
• Fee income diversification (mortgage, treasury management, syndication) is a key lever; mortgage banking outpaced industry in Q2 .
• Credit is the swing factor: raised NCO guidance and specific telecom/public finance exposures; offset by improved NPL metrics and strong capital (CET1 13.78%) .
• Southern California growth is self-funded and scaling, offering organic runway without stressing liquidity .
• Operating efficiency tracked mid-60s; variable comp tied to fee growth pushed opex higher q/q; focus remains on positive operating leverage .
• Near-term trading: EPS beat vs revenue miss plus credit narrative may drive mixed reaction; medium-term thesis rests on deposit franchise strength, fee diversification, and disciplined growth in high-growth Southwest/Western markets .