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FirstSun Capital Bancorp Reports Second Quarter 2023 Results

Second Quarter 2023 Highlights:

  • Net income of $28.0 million, $1.11 per diluted share
  • Net interest margin of 4.24%
  • Return on average total assets of 1.49%
  • Return on average stockholders’ equity of 13.54%
  • Average deposit growth of 9.7% annualized
  • Loan growth of 6.2% annualized
  • 24.8% noninterest income to total revenue

FirstSun Capital Bancorp (“FirstSun”) (OTCQX: FSUN) reported net income of $28.0 million for the second quarter of 2023 compared to net income of $0.4 million for the second quarter of 2022. Earnings per diluted share were $1.11 for the second quarter of 2023 compared to $0.02 for the second quarter of 2022. Earnings for the second quarter of 2022 were impacted by $16.8 million of merger costs, net of tax, or $0.66 per diluted share.

Neal Arnold, FirstSun’s President and Chief Executive Officer, commented, “We are very pleased with our record earnings this quarter and our continued strong results driven by our well diversified business mix. Highlights this quarter include a net interest margin of 4.24%, along with growth in both loans and deposits. We believe our growth amidst the difficult banking environment, including declining deposit trends and rising funding costs, will position us uniquely among our peers. Additionally, with growing concern about economic uncertainty and rising commercial real estate pressures, we are heartened by the vitality of the Southwest region that we operate in and our lower exposure to commercial real estate relative to our peers. Further, we believe our strong capital base, our granular deposit base, our securities portfolio positioning, our loan portfolio credit quality and our overall asset sensitive profile provides us with the flexibility to continue to deliver responsible growth in this slowing economic environment.”

Second Quarter 2023 Results

Net income totaled $28.0 million, or $1.11 per diluted share, during the second quarter of 2023, compared to $26.3 million, or $1.03 per diluted share, during the prior quarter. The return on average total assets was 1.49% in the second quarter of 2023, compared to 1.44% in the prior quarter, and the return on average stockholders’ equity was 13.54% in the second quarter of 2023, compared to 13.37% in the prior quarter.

Net Interest Income and Net Interest Margin

Net interest income totaled $73.8 million during the second quarter of 2023, a decrease of $0.3 million compared to the prior quarter. Our net interest margin decreased 15 basis points to 4.24% compared to the prior quarter. Results in the second quarter of 2023, compared to the prior quarter, were driven by an increase of 52 basis points in the cost of interest-bearing liabilities, partially offset by an increase of 24 basis points in yield on earning assets.

Average loans increased by $0.2 billion in the second quarter of 2023, compared to the prior quarter. Loan yield increased by 25 basis points to 6.13% in the second 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 $0.2 billion in the second quarter of 2023, compared to the prior quarter. Total cost of deposits increased by 55 basis points to 1.94% in the second quarter of 2023, compared to the prior quarter, primarily due to an increase in deposit pricing as a result of the elevated interest rate environment and higher mix of certificates of deposits. Average FHLB borrowings increased $18.0 million in the second quarter of 2023, compared to the prior quarter. The cost of FHLB borrowings increased by 51 basis points to 5.19% in the second 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 $4.4 million during the second quarter of 2023, an increase of $1.1 million from $3.4 million in the prior quarter, primarily due to loan growth and deterioration on a specific customer relationship in our loan portfolio.

Net charge-offs during the second quarter of 2023 were $0.7 million, resulting in an annualized ratio of net charge-offs to average loans of 0.05%, compared to net charge-offs of $0.1 million, resulting in an annualized ratio of net-charge offs to average loans of 0.00% in the prior quarter. The allowance for credit losses as a percentage of total loans was 1.26% at June 30, 2023, an increase of three basis points from the prior quarter.

The ratio of nonperforming assets to total assets was 1.00% at June 30, 2023, compared to 0.51% at March 31, 2023.

Noninterest Income

Noninterest income totaled $24.3 million during the second quarter of 2023, an increase of $5.4 million from the prior quarter. Mortgage banking income increased $4.2 million during the second quarter of 2023, primarily due to an increase in fair value of our mortgage servicing rights portfolio. Total originations of mortgage loans held-for-sale were $236.2 million in the second quarter of 2023, or an increase of $38.4 million from the prior quarter. Other noninterest income increased $0.7 million during the second quarter of 2023, primarily due to an increase in loan syndication fees and customer accommodation swap fees. Noninterest income as a percentage of total revenue was 24.8%, an increase of 4.4% from the prior quarter.

Noninterest Expense

Noninterest expense totaled $58.0 million during the second quarter of 2023, an increase of $1.8 million from the prior quarter. Amortization of intangible assets increased $1.0 million from the prior quarter. Data processing and insurance expenses increased by $0.9 million and $0.7 million, respectively. These increases were partially offset by a $1.0 million decrease in salaries and employee benefits from the prior quarter primarily due to higher benefit costs generally incurred in the first quarter of each year.

The efficiency ratio for the second quarter of 2023 was 59.15% compared to 60.47% in the prior quarter.

Tax Rate

The effective tax rate was 21.5% in the second quarter of 2023, compared to 21.4% in the prior quarter.

Loans

Total loans were $6.2 billion at June 30, 2023, compared to $6.1 billion at March 31, 2023, an increase of $94.1 million in the second quarter of 2023, or 6.2% on an annualized basis, resulting primarily from growth in commercial and industrial and residential real estate balances.

Deposits

Average deposits were $6.0 billion for the second quarter of 2023, compared to $5.8 billion for the prior quarter, an increase of $140.9 million in the second quarter of 2023, or 9.7% on an annualized basis. Noninterest-bearing deposit accounts represented 27.1% of total deposits at June 30, 2023 and the loan-to-deposit ratio was 100.1% at June 30, 2023.

The ratio of total uninsured deposits to total deposits was estimated to be 32.5% at June 30, 2023, compared to 35.8% at March 31, 2023. The ratio of total uninsured and uncollateralized deposits to total deposits was estimated to be 24.1% at June 30, 2023, compared to 26.4% at March 31, 2023.1

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

Capital

Capital ratios remain strong and above “well-capitalized” thresholds. As of June 30, 2023, our common equity tier 1 risk-based capital ratio was 10.40%, total risk-based capital ratio was 12.52% and tier 1 leverage ratio was 10.00%. Book value per common share was $33.02 at June 30, 2023, an increase of $0.96 from March 31, 2023. Tangible book value per common share, a non-GAAP financial measure, was $28.76 at June 30, 2023, an increase of $1.04 from March 31, 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 June 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.

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,

2023

 

March 31,

2023

 

June 30,

2022

 

June 30,

2023

 

June 30,

2022

Net interest income

$

73,835

 

 

$

74,117

 

 

$

58,585

 

 

$

147,952

 

 

$

99,870

 

Provision for credit losses

 

4,422

 

 

 

3,360

 

 

 

5,000

 

 

 

7,782

 

 

 

8,700

 

Noninterest income

 

24,290

 

 

 

18,931

 

 

 

22,302

 

 

 

43,221

 

 

 

45,995

 

Noninterest expense

 

58,043

 

 

 

56,266

 

 

 

75,668

 

 

 

114,309

 

 

 

128,135

 

Income before income taxes

 

35,660

 

 

 

33,422

 

 

 

219

 

 

 

69,082

 

 

 

9,030

 

Provision for income taxes

 

7,654

 

 

 

7,141

 

 

 

(211

)

 

 

14,795

 

 

 

931

 

Net income

 

28,006

 

 

 

26,281

 

 

 

430

 

 

 

54,287

 

 

 

8,099

 

Net income, excluding merger costs (1)

 

28,006

 

 

 

26,281

 

 

 

17,208

 

 

 

54,287

 

 

 

25,130

 

Diluted earnings per share

$

1.11

 

 

$

1.03

 

 

$

0.02

 

 

$

2.14

 

 

$

0.36

 

Diluted earnings per share, excluding merger costs (1)

$

1.11

 

 

$

1.03

 

 

$

0.68

 

 

$

2.14

 

 

$

1.13

 

Return on average total assets

 

1.49

%

 

 

1.44

%

 

 

0.02

%

 

 

1.46

%

 

 

0.25

%

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

 

1.49

%

 

 

1.44

%

 

 

0.96

%

 

 

1.46

%

 

 

0.78

%

Return on average stockholders' equity

 

13.54

%

 

 

13.37

%

 

 

0.23

%

 

 

13.46

%

 

 

2.54

%

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

 

13.54

%

 

 

13.37

%

 

 

9.19

%

 

 

13.46

%

 

 

7.89

%

Net interest margin

 

4.24

%

 

 

4.39

%

 

 

3.56

%

 

 

4.31

%

 

 

3.34

%

Net interest margin (FTE basis) (1)

 

4.32

%

 

 

4.46

%

 

 

3.64

%

 

 

4.39

%

 

 

3.43

%

Efficiency ratio

 

59.15

%

 

 

60.47

%

 

 

93.55

%

 

 

59.79

%

 

 

87.84

%

Efficiency ratio, excluding merger related expenses (1)

 

59.15

%

 

 

60.47

%

 

 

70.74

%

 

 

59.79

%

 

 

74.99

%

Noninterest income to total revenue

 

24.8

%

 

 

20.3

%

 

 

27.6

%

 

 

22.6

%

 

 

31.5

%

Total assets

$

7,797,344

 

 

$

7,610,456

 

 

$

7,060,692

 

 

$

7,797,344

 

 

$

7,060,692

 

Total loans held-for-sale

 

56,350

 

 

 

66,255

 

 

 

61,253

 

 

 

56,350

 

 

 

61,253

 

Total loans held-for-investment

 

6,155,090

 

 

 

6,060,975

 

 

 

5,387,928

 

 

 

6,155,090

 

 

 

5,387,928

 

Total deposits

 

6,150,418

 

 

 

5,994,266

 

 

 

5,933,022

 

 

 

6,150,418

 

 

 

5,933,022

 

Total stockholders' equity

 

823,635

 

 

 

799,050

 

 

 

727,542

 

 

 

823,635

 

 

 

727,542

 

Period end loan-to-deposit ratio

 

100.1

%

 

 

101.1

%

 

 

90.8

%

 

 

100.1

%

 

 

90.8

%

Book value per common share

$

33.02

 

 

$

32.06

 

 

$

29.28

 

 

$

33.02

 

 

$

29.28

 

Tangible book value per common share (1)

$

28.76

 

 

$

27.72

 

 

$

24.76

 

 

$

28.76

 

 

$

24.76

 

(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.

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,

2023

 

March 31,

2023

 

June 30,

2022

 

June 30,

2023

 

June 30,

2022

Total interest income

$

102,032

 

$

94,903

 

$

63,228

 

$

196,935

 

$

107,889

Total interest expense

 

28,197

 

 

 

20,786

 

 

 

4,643

 

 

 

48,983

 

 

 

8,019

 

Net interest income

 

73,835

 

 

 

74,117

 

 

 

58,585

 

 

 

147,952

 

 

 

99,870

 

Provision for credit losses

 

4,422

 

 

 

3,360

 

 

 

5,000

 

 

 

7,782

 

 

 

8,700

 

Net interest income after provision for credit losses

 

69,413

 

 

 

70,757

 

 

 

53,585

 

 

 

140,170

 

 

 

91,170

 

Noninterest income:

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

5,358

 

 

 

5,015

 

 

 

4,379

 

 

 

10,373

 

 

 

8,304

 

Credit and debit card fees

 

3,057

 

 

 

2,981

 

 

 

2,990

 

 

 

6,038

 

 

 

5,405

 

Trust and investment advisory fees

 

1,478

 

 

 

1,461

 

 

 

1,909

 

 

 

2,939

 

 

 

3,856

 

Mortgage banking income, net

 

11,659

 

 

 

7,429

 

 

 

11,671

 

 

 

19,088

 

 

 

26,232

 

Other noninterest income

 

2,738

 

 

 

2,045

 

 

 

1,353

 

 

 

4,783

 

 

 

2,198

 

Total noninterest income

 

24,290

 

 

 

18,931

 

 

 

22,302

 

 

 

43,221

 

 

 

45,995

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

34,056

 

 

 

35,049

 

 

 

35,248

 

 

 

69,105

 

 

 

69,473

 

Occupancy and equipment

 

7,948

 

 

 

8,174

 

 

 

7,753

 

 

 

16,122

 

 

 

14,586

 

Amortization of intangible assets

 

2,050

 

 

 

1,044

 

 

 

935

 

 

 

3,094

 

 

 

1,262

 

Merger related expenses

 

 

 

 

 

 

 

18,448

 

 

 

 

 

 

18,751

 

Other noninterest expenses

 

13,989

 

 

 

11,999

 

 

 

13,284

 

 

 

25,988

 

 

 

24,063

 

Total noninterest expense

 

58,043

 

 

 

56,266

 

 

 

75,668

 

 

 

114,309

 

 

 

128,135

 

Income before income taxes

 

35,660

 

 

 

33,422

 

 

 

219

 

 

 

69,082

 

 

 

9,030

 

Provision (benefit) for income taxes

 

7,654

 

 

 

7,141

 

 

 

(211

)

 

 

14,795

 

 

 

931

 

Net income

$

28,006

 

 

$

26,281

 

 

$

430

 

 

$

54,287

 

 

$

8,099

 

Earnings per share - basic

$

1.12

 

 

$

1.05

 

 

$

0.02

 

 

$

2.18

 

 

$

0.38

 

Earnings per share - diluted

$

1.11

 

 

$

1.03

 

 

$

0.02

 

 

$

2.14

 

 

$

0.36

 

Condensed Consolidated Balance Sheets as of (Unaudited):

($ in thousands)

June 30,

2023

 

March 31,

2023

 

June 30,

2022

Assets

 

 

 

 

 

Cash and cash equivalents

$

492,735

 

 

$

388,349

 

 

$

510,701

 

Securities available-for-sale, at fair value

 

515,956

 

 

 

532,650

 

 

 

578,751

 

Securities held-to-maturity

 

37,883

 

 

 

38,470

 

 

 

39,803

 

Loans held-for-sale, at fair value

 

56,350

 

 

 

66,255

 

 

 

61,253

 

Loans

 

6,155,090

 

 

 

6,060,975

 

 

 

5,387,928

 

Allowance for credit losses

 

(77,362

)

 

 

(74,459

)

 

 

(56,077

)

Loans, net

 

6,077,728

 

 

 

5,986,516

 

 

 

5,331,851

 

Mortgage servicing rights, at fair value

 

78,390

 

 

 

73,424

 

 

 

66,047

 

Premises and equipment, net

 

84,483

 

 

 

86,430

 

 

 

89,674

 

Other real estate owned and foreclosed assets, net

 

10,139

 

 

 

6,358

 

 

 

5,391

 

Goodwill

 

93,483

 

 

 

93,483

 

 

 

93,483

 

Intangible assets, net

 

12,712

 

 

 

14,762

 

 

 

18,760

 

All other assets

 

337,485

 

 

 

323,759

 

 

 

264,978

 

Total assets

$

7,797,344

 

 

$

7,610,456

 

 

$

7,060,692

 

Liabilities and Stockholders' Equity

 

 

 

 

 

Liabilities:

 

 

 

 

 

Deposits:

 

 

 

 

 

Noninterest-bearing demand deposit accounts

$

1,667,247

 

 

$

1,764,440

 

 

$

1,942,078

 

Interest-bearing deposit accounts:

 

 

 

 

 

Interest-bearing demand accounts

 

379,779

 

 

 

238,658

 

 

 

165,287

 

Savings accounts and money market accounts

 

2,441,349

 

 

 

2,705,315

 

 

 

3,204,704

 

NOW accounts

 

48,270

 

 

 

45,192

 

 

 

50,126

 

Certificate of deposit accounts

 

1,613,773

 

 

 

1,240,661

 

 

 

570,827

 

Total deposits

 

6,150,418

 

 

 

5,994,266

 

 

 

5,933,022

 

Securities sold under agreements to repurchase

 

32,861

 

 

 

31,645

 

 

 

70,838

 

Federal Home Loan Bank advances

 

570,585

 

 

 

577,285

 

 

 

159,968

 

Other borrowings

 

80,511

 

 

 

80,373

 

 

 

79,959

 

Other liabilities

 

139,334

 

 

 

127,837

 

 

 

89,363

 

Total liabilities

 

6,973,709

 

 

 

6,811,406

 

 

 

6,333,150

 

Stockholders' equity:

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

Common stock

 

2

 

 

 

2

 

 

 

2

 

Additional paid-in capital

 

461,856

 

 

 

461,174

 

 

 

460,263

 

Retained earnings

 

408,276

 

 

 

380,270

 

 

 

306,714

 

Accumulated other comprehensive loss, net

 

(46,499

)

 

 

(42,396

)

 

 

(39,437

)

Total stockholders' equity

 

823,635

 

 

 

799,050

 

 

 

727,542

 

Total liabilities and stockholders' equity

$

7,797,344

 

 

$

7,610,456

 

 

$

7,060,692

 

Share Data as of and for the periods ended:

 

As of and for the quarter ended

 

As of and for the six months ended

 

June 30,

2023

 

March 31,

2023

 

June 30,

2022

 

June 30,

2023

 

June 30,

2022

Weighted average common shares outstanding, basic

 

24,933,664

 

 

24,923,259

 

 

24,760,282

 

 

24,928,485

 

 

21,570,924

Weighted average common shares outstanding, diluted

 

25,206,359

 

 

 

25,487,582

 

 

 

25,458,311

 

 

 

25,368,702

 

 

 

22,195,814

 

Period end common shares outstanding

 

24,941,468

 

 

 

24,920,984

 

 

 

24,850,954

 

 

 

24,941,468

 

 

 

24,850,954

 

Book value per common share

$

33.02

 

 

$

32.06

 

 

$

29.28

 

 

$

33.02

 

 

$

29.28

 

Tangible book value per common share (1)

$

28.76

 

 

$

27.72

 

 

$

24.76

 

 

$

28.76

 

 

$

24.76

 

Consolidated Capital Ratios as of:

 

June 30,

2023

 

March 31,

2023

 

June 30,

2022

Stockholders' equity to total assets

10.56

%

 

10.50

%

 

10.30

%

Tangible common stockholders' equity to tangible assets (1)

9.33

%

 

9.21

%

 

8.86

%

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

9.28

%

 

9.16

%

 

8.82

%

Tier 1 leverage ratio

10.00

%

 

9.86

%

 

8.89

%

Common equity tier 1 risk-based capital ratio

10.40

%

 

10.11

%

 

9.59

%

Tier 1 risk-based capital ratio

10.40

%

 

10.11

%

 

9.59

%

Total risk-based capital ratio

12.52

%

 

12.19

%

 

11.60

%

(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

June 30, 2023

 

For the quarter ended

March 31, 2023

 

For the quarter ended

June 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 held-for-sale

 

$

63,988

 

$

969

 

6.06

%

 

$

50,129

 

$

654

 

5.22

%

 

$

70,430

 

$

1,269

 

7.21

%

Loans held-for-investment (1)

 

 

6,156,845

 

 

 

94,351

 

 

6.13

%

 

 

5,978,860

 

 

 

87,947

 

 

5.88

%

 

 

5,264,355

 

 

 

57,316

 

 

4.35

%

Investment securities

 

 

563,902

 

 

 

4,227

 

 

3.00

%

 

 

570,682

 

 

 

4,164

 

 

2.92

%

 

 

651,180

 

 

 

3,333

 

 

2.05

%

Interest-bearing cash and other assets

 

 

176,672

 

 

 

2,485

 

 

5.63

%

 

 

156,262

 

 

 

2,138

 

 

5.47

%

 

 

591,208

 

 

 

1,310

 

 

0.89

%

Total earning assets

 

 

6,961,407

 

 

 

102,032

 

 

5.86

%

 

 

6,755,933

 

 

 

94,903

 

 

5.62

%

 

 

6,577,173

 

 

 

63,228

 

 

3.85

%

Other assets

 

 

556,105

 

 

 

 

 

 

 

553,961

 

 

 

 

 

 

 

585,760

 

 

 

 

 

Total assets

 

$

7,517,512

 

 

 

 

 

 

$

7,309,894

 

 

 

 

 

 

$

7,162,933

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand and NOW deposits

 

$

332,695

 

 

$

2,124

 

 

2.55

%

 

$

227,170

 

 

$

1,234

 

 

2.17

%

 

$

219,502

 

 

$

229

 

 

0.42

%

Savings deposits

 

 

448,059

 

 

 

491

 

 

0.44

%

 

 

470,000

 

 

 

445

 

 

0.38

%

 

 

516,045

 

 

 

133

 

 

0.10

%

Money market deposits

 

 

2,107,379

 

 

 

5,874

 

 

1.11

%

 

 

2,296,469

 

 

 

5,068

 

 

0.88

%

 

 

2,774,713

 

 

 

1,172

 

 

0.17

%

Certificates of deposits

 

 

1,392,847

 

 

 

12,240

 

 

3.52

%

 

 

1,073,006

 

 

 

7,432

 

 

2.77

%

 

 

581,803

 

 

 

638

 

 

0.44

%

Total deposits

 

 

4,280,980

 

 

 

20,729

 

 

1.94

%

 

 

4,066,645

 

 

 

14,179

 

 

1.39

%

 

 

4,092,063

 

 

 

2,172

 

 

0.21

%

Repurchase agreements

 

 

33,673

 

 

 

68

 

 

0.80

%

 

 

29,672

 

 

 

30

 

 

0.41

%

 

 

56,247

 

 

 

15

 

 

0.11

%

Total deposits and repurchase agreements

 

 

4,314,653

 

 

 

20,797

 

 

1.93

%

 

 

4,096,317

 

 

 

14,209

 

 

1.39

%

 

 

4,148,310

 

 

 

2,187

 

 

0.21

%

FHLB borrowings

 

 

472,105

 

 

 

6,121

 

 

5.19

%

 

 

454,081

 

 

 

5,317

 

 

4.68

%

 

 

184,100

 

 

 

771

 

 

1.67

%

Other long-term borrowings

 

 

80,440

 

 

 

1,279

 

 

6.36

%

 

 

80,300

 

 

 

1,260

 

 

6.28

%

 

 

82,154

 

 

 

1,685

 

 

8.21

%

Total interest-bearing liabilities

 

 

4,867,198

 

 

 

28,197

 

 

2.32

%

 

 

4,630,698

 

 

 

20,786

 

 

1.80

%

 

 

4,414,564

 

 

 

4,643

 

 

0.42

%

Noninterest-bearing deposits

 

 

1,694,961

 

 

 

 

 

 

 

1,768,381

 

 

 

 

 

 

 

1,923,870

 

 

 

 

 

Other liabilities

 

 

128,118

 

 

 

 

 

 

 

124,543

 

 

 

 

 

 

 

75,768

 

 

 

 

 

Stockholders' equity

 

 

827,235

 

 

 

 

 

 

 

786,272

 

 

 

 

 

 

 

748,731

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

7,517,512

 

 

 

 

 

 

$

7,309,894

 

 

 

 

 

 

$

7,162,933

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

73,835

 

 

 

 

 

 

$

74,117

 

 

 

 

 

 

$

58,585

 

 

 

Net interest spread

 

 

 

 

3.54

%

 

 

 

 

 

 

3.82

%

 

 

 

 

 

 

3.43

%

 

 

Net interest margin

 

 

 

 

4.24

%

 

 

 

 

 

 

4.39

%

 

 

 

 

 

 

3.56

%

 

 

Net interest margin (on FTE basis) (2)

 

 

 

 

4.32

%

 

 

 

 

 

 

4.46

%

 

 

 

 

 

 

3.64

%

 

 

(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, 2023

 

June 30, 2022

(In thousands)

 

Average

Balance

 

Interest

 

Average

Yield/Rate

 

Average

Balance

 

Interest

 

Average

Yield/Rate

Interest Earning Assets

 

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

 

$

57,097

 

$

1,623

 

5.68

%

 

$

65,689

 

$

1,963

 

5.98

%

Loans held-for-investment (1)

 

 

6,068,344

 

 

 

182,298

 

 

6.01

%

 

 

4,697,288

 

 

 

98,480

 

 

4.19

%

Investment securities

 

 

567,273

 

 

 

8,391

 

 

2.96

%

 

 

616,947

 

 

 

5,608

 

 

1.82

%

Interest-bearing cash and other assets

 

 

166,523

 

 

 

4,623

 

 

5.55

%

 

 

591,839

 

 

 

1,838

 

 

0.62

%

Total earning assets

 

 

6,859,237

 

 

 

196,935

 

 

5.74

%

 

 

5,971,763

 

 

 

107,889

 

 

3.61

%

Other assets

 

 

555,040

 

 

 

 

 

 

 

450,652

 

 

 

 

 

Total assets

 

$

7,414,277

 

 

 

 

 

 

$

6,422,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Demand and NOW deposits

 

$

280,224

 

 

$

3,358

 

 

2.40

%

 

$

221,251

 

 

$

353

 

 

0.32

%

Savings deposits

 

 

458,969

 

 

 

936

 

 

0.41

%

 

 

492,510

 

 

 

224

 

 

0.09

%

Money market deposits

 

 

2,201,401

 

 

 

10,942

 

 

0.99

%

 

 

2,541,968

 

 

 

2,012

 

 

0.16

%

Certificates of deposits

 

 

1,233,810

 

 

 

19,672

 

 

3.19

%

 

 

450,604

 

 

 

1,157

 

 

0.51

%

Total deposits

 

 

4,174,404

 

 

 

34,908

 

 

1.67

%

 

 

3,706,333

 

 

 

3,746

 

 

0.20

%

Repurchase agreements

 

 

31,683

 

 

 

98

 

 

0.62

%

 

 

63,795

 

 

 

23

 

 

0.07

%

Total deposits and repurchase agreements

 

 

4,206,087

 

 

 

35,006

 

 

1.66

%

 

 

3,770,128

 

 

 

3,769

 

 

0.20

%

FHLB borrowings

 

 

463,142

 

 

 

11,438

 

 

4.94

%

 

 

112,562

 

 

 

919

 

 

1.63

%

Other long-term borrowings

 

 

80,370

 

 

 

2,539

 

 

6.32

%

 

 

84,161

 

 

 

3,331

 

 

7.91

%

Total interest-bearing liabilities

 

 

4,749,599

 

 

 

48,983

 

 

2.06

%

 

 

3,966,851

 

 

 

8,019

 

 

0.40

%

Noninterest-bearing deposits

 

 

1,731,468

 

 

 

 

 

 

 

1,745,967

 

 

 

 

 

Other liabilities

 

 

126,343

 

 

 

 

 

 

 

72,403

 

 

 

 

 

Stockholders' equity

 

 

806,867

 

 

 

 

 

 

 

637,194

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

7,414,277

 

 

 

 

 

 

$

6,422,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

147,952

 

 

 

 

 

 

$

99,870

 

 

 

Net interest spread

 

 

 

 

3.68

%

 

 

 

 

 

 

3.21

%

 

 

Net interest margin

 

 

 

 

4.31

%

 

 

 

 

 

 

3.34

%

 

 

Net interest margin (on FTE basis) (2)

 

 

 

 

4.39

%

 

 

 

 

 

 

3.43

%

 

 

(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.

Deposits:

($ in thousands)

June 30,

2023

 

March 31,

2023

 

June 30,

2023

vs

March 31,

2023

% change

 

June 30,

2022

 

June 30,

2023

vs

June 30,

2022

% change

Consumer

 

 

 

 

 

 

 

 

 

Noninterest bearing deposit accounts

$

375,583

 

$

399,008

 

(5.87

)%

 

$

397,354

 

(5.48

)%

Interest-bearing deposit accounts:

 

 

 

 

 

 

 

 

 

Demand and NOW deposits

 

34,731

 

 

 

25,284

 

 

37.36

%

 

 

27,183

 

 

27.77

%

Savings deposits

 

378,193

 

 

 

407,173

 

 

(7.12

)%

 

 

453,051

 

 

(16.52

)%

Money market deposits

 

1,174,883

 

 

 

1,296,099

 

 

(9.35

)%

 

 

1,667,482

 

 

(29.54

)%

Certificates of deposits

 

1,095,754

 

 

 

759,726

 

 

44.23

%

 

 

491,945

 

 

122.74

%

Total interest-bearing deposit accounts

 

2,683,561

 

 

 

2,488,282

 

 

7.85

%

 

 

2,639,661

 

 

1.66

%

Total consumer deposits

$

3,059,144

 

 

$

2,887,290

 

 

5.95

%

 

$

3,037,015

 

 

0.73

%

Business

 

 

 

 

 

 

 

 

 

Noninterest bearing deposit accounts

$

1,291,664

 

 

$

1,365,432

 

 

(5.40

)%

 

$

1,544,724

 

 

(16.38

)%

Interest-bearing deposit accounts:

 

 

 

 

 

 

 

 

 

Demand and NOW deposits

 

393,318

 

 

 

258,566

 

 

52.12

%

 

 

188,230

 

 

108.96

%

Savings deposits

 

55,994

 

 

 

59,308

 

 

(5.59

)%

 

 

58,293

 

 

(3.94

)%

Money market deposits

 

832,279

 

 

 

942,735

 

 

(11.72

)%

 

 

1,025,878

 

 

(18.87

)%

Certificates of deposits

 

518,019

 

 

 

480,935

 

 

7.71

%

 

 

78,882

 

 

556.70

%

Total interest-bearing deposit accounts

 

1,799,610

 

 

 

1,741,544

 

 

3.33

%

 

 

1,351,283

 

 

33.18

%

Total business customer deposits

$

3,091,274

 

 

$

3,106,976

 

 

(0.51

)%

 

$

2,896,007

 

 

6.74

%

Total deposits

$

6,150,418

 

 

$

5,994,266

 

 

2.61

%

 

$

5,933,022

 

 

3.66

%

Balance Sheet Ratios:

 

June 30,

2023

 

March 31,

2023

 

June 30,

2022

Cash to total assets (1)

6.20

%

 

4.10

%

 

4.40

%

Loan to deposit ratio

100.08

%

 

101.11

%

 

90.81

%

Uninsured deposits to total deposits (2)

32.5

%

 

35.8

%

 

41.4

%

Uninsured and uncollateralized deposits to total deposits (2)

24.1

%

 

26.4

%

 

33.9

%

Wholesale borrowings to total liabilities (3)

8.2

%

 

8.5

%

 

2.5

%

Wholesale deposits and borrowings to total liabilities (3) (4)

14.9

%

 

15.4

%

 

3.2

%

(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. and are estimated.

(3) Wholesale borrowings consists of FHLB overnight borrowings and term advances.

(4) Wholesale deposits consists of brokered deposits included in our condensed consolidated balance sheets within certificate of deposit balances.

Loan Portfolio:

($ in thousands)

June 30,

2023

 

March 31,

2023

 

June 30,

2023

vs

March 31,

2023

% change

 

June 30,

2022

 

June 30,

2023

vs

June 30,

2022

% change

Commercial and industrial

$

2,474,531

 

$

2,418,771

 

2.3

%

 

$

1,972,681

 

25.4

%

Commercial real estate:

 

 

 

 

 

 

 

 

 

Non-owner occupied

 

723,365

 

 

 

709,977

 

 

1.9

%

 

 

863,664

 

 

(16.2

)%

Owner occupied

 

643,191

 

 

 

659,999

 

 

(2.5

)%

 

 

624,433

 

 

3.0

%

Construction and land

 

316,399

 

 

 

320,193

 

 

(1.2

)%

 

 

262,785

 

 

20.4

%

Multifamily

 

100,464

 

 

 

103,767

 

 

(3.2

)%

 

 

78,316

 

 

28.3

%

Total commercial real estate

 

1,783,419

 

 

 

1,793,936

 

 

(0.6

)%

 

 

1,829,198

 

 

(2.5

)%

Residential real estate

 

1,082,991

 

 

 

1,046,047

 

 

3.5

%

 

 

840,264

 

 

28.9

%

Public Finance

 

611,748

 

 

 

597,850

 

 

2.3

%

 

 

602,905

 

 

1.5

%

Consumer

 

39,909

 

 

 

40,806

 

 

(2.2

)%

 

 

44,423

 

 

(10.2

)%

Other

 

162,492

 

 

 

163,565

 

 

(0.7

)%

 

 

98,457

 

 

65.0

%

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

$

6,155,090

 

 

$

6,060,975

 

 

1.6

%

 

$

5,387,928

 

 

14.2

%

Asset Quality:

 

As of and for the quarter ended

 

As of and for the six months ended

($ in thousands)

June 30,

2023

 

March 31,

2023

 

June 30,

2022

 

June 30,

2023

 

June 30,

2022

Net charge-offs (recoveries)

$

717

 

 

$

54

 

 

$

(568

)

 

$

771

 

 

$

170

 

Allowance for credit losses

$

77,362

 

 

$

74,459

 

 

$

56,077

 

 

$

77,362

 

 

$

56,077

 

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

$

67,840

 

 

$

32,833

 

 

$

29,621

 

 

$

67,840

 

 

$

29,621

 

Nonperforming assets (1)

$

77,979

 

 

$

39,191

 

 

$

35,012

 

 

$

77,979

 

 

$

35,012

 

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

 

0.05

%

 

 

%

 

 

(0.04

)%

 

 

0.03

%

 

 

0.01

%

Allowance for credit losses to total loans outstanding

 

1.26

%

 

 

1.23

%

 

 

1.04

%

 

 

1.26

%

 

 

1.04

%

Allowance for credit losses to total nonperforming loans (1)

 

114.04

%

 

 

226.78

%

 

 

189.32

%

 

 

114.04

%

 

 

189.32

%

Nonperforming loans to total loans (1)

 

1.10

%

 

 

0.54

%

 

 

0.55

%

 

 

1.10

%

 

 

0.55

%

Nonperforming assets to total assets (1)

 

1.00

%

 

 

0.51

%

 

 

0.50

%

 

 

1.00

%

 

 

0.50

%

(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 six months ended

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

June 30,

2023

 

March 31,

2023

 

June 30,

2022

 

June 30,

2023

 

June 30,

2022

Tangible common stockholders’ equity:

Total common stockholders' equity (GAAP)

$

823,635

 

 

$

799,050

 

 

$

727,542

 

 

$

823,635

 

 

$

727,542

 

Less: Goodwill and other intangible assets:

 

 

 

 

 

 

 

 

 

Goodwill

 

(93,483

)

 

 

(93,483

)

 

 

(93,483

)

 

 

(93,483

)

 

 

(93,483

)

Other intangible assets

 

(12,712

)

 

 

(14,762

)

 

 

(18,760

)

 

 

(12,712

)

 

 

(18,760

)

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

$

717,440

 

 

$

690,805

 

 

$

615,299

 

 

$

717,440

 

 

$

615,299

 

Tangible assets:

Total assets (GAAP)

$

7,797,344

 

 

$

7,610,456

 

 

$

7,060,692

 

 

$

7,797,344

 

 

$

7,060,692

 

Less: Goodwill and other intangible assets:

 

 

 

 

 

 

 

 

 

Goodwill

 

(93,483

)

 

 

(93,483

)

 

 

(93,483

)

 

 

(93,483

)

 

 

(93,483

)

Other intangible assets

 

(12,712

)

 

 

(14,762

)

 

 

(18,760

)

 

 

(12,712

)

 

 

(18,760

)

Total tangible assets (non-GAAP)

$

7,691,149

 

 

$

7,502,211

 

 

$

6,948,449

 

 

$

7,691,149

 

 

$

6,948,449

 

Tangible common stockholders’ equity to tangible assets:

Common stockholders' equity to total assets (GAAP)

 

10.56

%

 

 

10.50

%

 

 

10.30

%

 

 

10.56

%

 

 

10.30

%

Less: Impact of goodwill and other intangible assets

 

(1.23

)%

 

 

(1.29

)%

 

 

(1.44

)%

 

 

(1.23

)%

 

 

(1.44

)%

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

 

9.33

%

 

 

9.21

%

 

 

8.86

%

 

 

9.33

%

 

 

8.86

%

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

Total tangible common stockholders' equity (non-GAAP)

$

717,440

 

 

$

690,805

 

 

$

615,299

 

 

$

717,440

 

 

$

615,299

 

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

 

(3,821

)

 

 

(3,754

)

 

 

(2,977

)

 

 

(3,821

)

 

 

(2,977

)

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

$

713,619

 

 

$

687,051

 

 

$

612,322

 

 

$

713,619

 

 

$

612,322

 

Total tangible assets (non-GAAP)

$

7,691,149

 

 

$

7,502,211

 

 

$

6,948,449

 

 

$

7,691,149

 

 

$

6,948,449

 

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

 

(3,821

)

 

 

(3,754

)

 

 

(2,977

)

 

 

(3,821

)

 

 

(2,977

)

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

$

7,687,328

 

 

$

7,498,457

 

 

$

6,945,472

 

 

$

7,687,328

 

 

$

6,945,472

 

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

 

9.33

%

 

 

9.21

%

 

 

8.86

%

 

 

9.33

%

 

 

8.86

%

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

 

0.05

%

 

 

0.05

%

 

 

0.04

%

 

 

0.05

%

 

 

0.04

%

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

 

9.28

%

 

 

9.16

%

 

 

8.82

%

 

 

9.28

%

 

 

8.82

%

Tangible book value per common share:

Stockholders' equity (GAAP)

$

823,635

 

 

$

799,050

 

 

$

727,542

 

 

$

823,635

 

 

$

727,542

 

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

$

717,440

 

 

$

690,805

 

 

$

615,299

 

 

$

717,440

 

 

$

615,299

 

Total common shares outstanding

 

24,941,468

 

 

 

24,920,984

 

 

 

24,850,954

 

 

 

24,941,468

 

 

 

24,850,954

 

Book value per common share (GAAP)

$

33.02

 

 

$

32.06

 

 

$

29.28

 

 

$

33.02

 

 

$

29.28

 

Tangible book value per common share (non-GAAP)

$

28.76

 

 

$

27.72

 

 

$

24.76

 

 

$

28.76

 

 

$

24.76

 

Net income excluding merger costs:

Net income (GAAP)

$

28,006

 

 

$

26,281

 

 

$

430

 

 

$

54,287

 

 

$

8,099

 

Add: Merger costs

 

 

 

 

 

 

 

 

 

Merger related expenses

 

 

 

 

 

 

 

18,448

 

 

 

 

 

 

18,751

 

Income tax effect on merger related expenses

 

 

 

 

 

 

 

(4,033

)

 

 

 

 

(4,083

)

Total merger costs

 

 

 

 

 

 

 

16,778

 

 

 

 

 

 

17,031

 

Net income excluding merger costs (non-GAAP)

$

28,006

 

 

$

26,281

 

 

$

17,208

 

 

$

54,287

 

 

$

25,130

 

Return on average total assets excluding merger costs:

Return on average total assets (ROAA) (GAAP)

 

1.49

%

 

 

1.44

%

 

 

0.02

%

 

 

1.46

%

 

 

0.25

%

Add: Impact of merger costs, net of tax

 

%

 

 

%

 

 

0.94

%

 

 

%

 

 

0.53

%

ROAA excluding merger costs (non-GAAP)

 

1.49

%

 

 

1.44

%

 

 

0.96

%

 

 

1.46

%

 

 

0.78

%

Return on average stockholders’ equity excluding merger costs:

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

 

13.54

%

 

 

13.37

%

 

 

0.23

%

 

 

13.46

%

 

 

2.54

%

Add: Impact of merger costs, net of tax

 

%

 

 

%

 

 

8.96

%

 

 

%

 

 

5.35

%

ROAE excluding merger costs (non-GAAP)

 

13.54

%

 

 

13.37

%

 

 

9.19

%

 

 

13.46

%

 

 

7.89

%

Efficiency ratio excluding merger related expenses:

Efficiency ratio (GAAP)

 

59.15

%

 

 

60.47

%

 

 

93.55

%

 

 

59.79

%

 

 

87.84

%

Less: Impact of merger related expenses

 

%

 

 

%

 

 

22.81

%

 

 

%

 

 

12.85

%

Efficiency ratio excluding merger related expenses (non-GAAP)

 

59.15

%

 

 

60.47

%

 

 

70.74

%

 

 

59.79

%

 

 

74.99

%

Diluted earnings per share excluding merger costs:

Diluted earnings per share (GAAP)

$

1.11

 

 

$

1.03

 

 

$

0.02

 

 

$

2.14

 

 

$

0.36

 

Add: Impact of merger costs, net of tax

 

 

 

 

 

 

 

0.66

 

 

 

 

 

 

0.77

 

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

$

1.11

 

 

$

1.03

 

 

$

0.68

 

 

$

2.14

 

 

$

1.13

 

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

Net interest income (GAAP)

$

73,835

 

 

$

74,117

 

 

$

58,585

 

 

$

147,952

 

 

$

99,870

 

Gross income effect of tax exempt income

 

1,288

 

 

 

1,242

 

 

 

1,284

 

 

 

2,530

 

 

 

2,605

 

FTE net interest income (non-GAAP)

$

75,123

 

 

$

75,359

 

 

$

59,869

 

 

$

150,482

 

 

$

102,475

 

Average earning assets

$

6,961,407

 

 

$

6,755,933

 

 

$

6,577,173

 

 

$

6,859,237

 

 

$

5,971,763

 

Net interest margin

 

4.24

%

 

 

4.39

%

 

 

3.56

%

 

 

4.31

%

 

 

3.34

%

Net interest margin on FTE basis (non-GAAP)

 

4.32

%

 

 

4.46

%

 

 

3.64

%

 

 

4.39

%

 

 

3.43

%

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

 

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