DENVER--(BUSINESS WIRE)--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,
| June 30,
| September 30,
| September 30,
| September 30,
| |||||||||||||||
| 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,
| June 30,
| September 30,
| September 30,
| September 30,
| |||||||||||||||
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,
| June 30,
| September 30,
| |||||||||
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,
| June 30,
| September 30,
| September 30,
| September 30,
| |||||||||||
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,
| June 30,
| September 30,
| |||||||
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
| For the quarter ended
| For the quarter ended
| ||||||||||||||||||||||||||||
(In thousands) | Average
| Interest | Average
| Average
| Interest | Average
| Average
| Interest | Average
| |||||||||||||||||||||
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
| Interest | Average
| Average
| Interest | Average
| ||||||||||||||
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,
| June 30,
| September 30,
| September 30,
| September 30,
| ||||||||||
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,
| June 30,
| September 30,
| |||||||
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,
| June 30,
| September 30,
| September 30,
| September 30,
| ||||||||||
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,
| June 30,
| September 30,
| September 30,
| September 30,
| |||||||||||||||
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,
| June 30,
| September 30,
| September 30,
| September 30,
| |||||||||||||||
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. | ||||||||||
Contacts
Investor Relations:
Kelly C. Rackley
Corporate Secretary & Stockholder Relations Manager
303.962.0150 | stockholder.relations@sunflowerbank.com
