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Introduction & Market Context
FirstSun Capital Bancorp (NASDAQ:CBNK) (NASDAQ:FSUN) released its second quarter 2025 earnings presentation on July 28, showing a marked improvement from the previous quarter with net income of $26.4 million and diluted earnings per share of $0.93. The regional bank, which operates primarily in the Southwest and Western United States, demonstrated strong deposit growth and maintained a stable net interest margin despite ongoing economic uncertainties.
The Q2 results represent a significant recovery from the first quarter, when the bank missed analyst expectations with an EPS of $0.83 against a forecast of $0.85. FirstSun’s stock closed at $38.84 on July 28, representing a 1.06% increase on the day, and has shown resilience since its Q1 earnings release when it traded at $36.04.
Quarterly Performance Highlights
FirstSun reported solid financial performance for the second quarter of 2025, with key metrics showing improvement over both the previous quarter and year-over-year comparisons.
As shown in the following quarterly results summary:
Net income reached $26.4 million for Q2 2025, translating to diluted earnings per share of $0.93. Return on average assets (ROAA) stood at 1.28%, while pre-tax pre-provision (PTPP) ROAA was 1.82%. The bank maintained a strong return on average tangible common equity (ROATCE) of 10.91%.
Total (EPA:TTEF) revenue increased by 9.7% compared to Q1, driven by both net interest income growth and strong fee income. Average deposit growth was particularly impressive at 18.3% annualized, while average loan growth reached 10.7% annualized. The efficiency ratio remained stable at 64.52%.
For the first half of 2025, the bank has accumulated solid year-to-date results:
Detailed Financial Analysis
FirstSun’s loan portfolio maintained its commercial and industrial (C&I) focus, which aligns with the bank’s strategic emphasis on relationship-based business banking. The loan composition shows a disciplined approach to commercial real estate exposure.
The following chart illustrates the bank’s loan portfolio composition and trends:
C&I loans represent the largest segment at 40.8% of the total portfolio, followed by residential real estate at 18.9%. Commercial real estate loans (both owner-occupied and non-owner-occupied) together account for 21% of the portfolio. The bank highlighted that loan balances increased 3% from Q2 2024, while maintaining a low regulatory CRE to capital level of 115%.
Deposit growth has been a particular bright spot for FirstSun, with strong performance both quarter-over-quarter and year-over-year:
Deposits increased 7% from Q2 2024 and rose 13% on an annualized basis from Q1 2025. The bank continues to see a favorable mix shift, with savings and money market accounts increasing to 44.6% of total deposits from 43.3% previously. This deposit growth provides a solid foundation for the bank’s lending activities while maintaining a healthy loan-to-deposit ratio.
Net interest income and margin trends have remained stable despite the challenging interest rate environment:
Net interest income grew 7.7% compared to Q2 2024, while the net interest margin held steady at 4.07%. The bank’s loan repricing mix shows a balanced approach with 50% fixed-rate loans, 35% SOFR-based, and 12% Prime-based, providing some insulation against interest rate volatility.
Asset quality metrics showed improvement in the second quarter:
Nonperforming loans decreased by 30%, reflecting improved credit conditions. However, net charge-offs to average loans were elevated at 0.83% for Q2, though the year-to-date figure stands at a more moderate 0.44%. This increase in charge-offs represents a potential area of concern, though management indicated they expect the net charge-off ratio to normalize in the high 30s to low 40s basis points range going forward.
Strategic Initiatives & Outlook
FirstSun continues to position itself as a unique high-growth franchise focused on key Southwest and Western markets. The bank operates in five of the top 10 fastest-growing Metropolitan Statistical Areas (MSAs) and has a presence in seven of the 10 largest MSAs in the Southwest and Western United States.
The bank’s C&I-focused commercial banking strategy, combined with its vertical lending expertise, provides an alternative to larger banks for middle-market businesses. This specialized approach, along with a strong fee income component (service fees represent 25.6% of revenue), differentiates FirstSun from many regional banking peers.
FirstSun provided a detailed outlook for the full year 2025:
The bank expects mid-single-digit growth rates for both loans and deposits, while net interest income is projected to grow at a mid-single-digit rate. Noninterest income is anticipated to grow at a high single to low double-digit rate, reflecting the bank’s strong fee-based businesses. The efficiency ratio is expected to remain in the mid-60s, while net charge-offs are projected to normalize in the high 30s to low 40s basis points range.
Forward-Looking Statements
FirstSun’s management expressed confidence in the bank’s strategic direction and growth prospects. The presentation highlighted the bank’s "scarcity value" as a core deposit-funded franchise with the ability to deliver organic growth in attractive markets.
The bank’s capital position remains strong with a Common Equity Tier 1 (CET1) ratio of 13.78%, providing flexibility for continued organic growth and potential strategic opportunities. Liquidity metrics are also favorable, with wholesale funding reliance of just 6% and cash to total assets of 9%.
Looking ahead, FirstSun appears well-positioned to capitalize on its presence in high-growth markets with its relationship-based banking model. The improvement in Q2 results compared to Q1 suggests the bank is successfully navigating the current economic environment, though investors should monitor asset quality metrics, particularly the elevated charge-off rates, in coming quarters.
The bank’s focus on C&I lending, which is diversified across multiple industries as shown below, provides some insulation against sector-specific downturns:
With its improved Q2 performance, strong deposit growth, and stable net interest margin, FirstSun has demonstrated resilience following its Q1 earnings miss. The bank’s strategic focus on high-growth markets and specialized commercial banking appears to be yielding positive results, positioning it well for continued growth in the competitive regional banking landscape.
Full presentation:
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