FirstSun Capital (FSUN) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $22.4M ($0.79 per diluted share), down from $25.2M ($1.00 per share) in Q3 2023, impacted by $1.2M in merger costs; excluding merger costs, net income was $23.7M ($0.84 per share).

• Loan growth was 6.7% annualized and deposit growth was 1.8% annualized in Q3 2024.

• Return on average assets was 1.13% (1.19% excluding merger costs) and return on equity was 8.79% (9.27% excluding merger costs) for Q3 2024, both lower year-over-year.

• Noninterest income comprised 22.5% of total revenue.

• The pending merger with HomeStreet faces regulatory obstacles, with applications withdrawn and the deal's future uncertain.

Financial highlights

• Net interest income for Q3 2024 was $76.2M, up 3.7% year-over-year and $3.3M sequentially; net interest margin was 4.10%, down 13 bps year-over-year but up sequentially.

• Noninterest income was $22.1M in Q3 2024, driven by higher mortgage banking and deposit service fees, but down $1.2M sequentially.

• Noninterest expense increased to $64.7M in Q3 2024, including $1.6M in merger-related costs.

• Provision for credit losses was $5.0M in Q3 2024, up from $3.9M in Q3 2023 and $1.2M in the prior quarter, mainly due to loan growth and a specific C&I relationship.

• Efficiency ratio was 65.83% in Q3 2024, up from 61.02% year-over-year but improved from 66.42% sequentially.

Outlook and guidance

• Management expects continued pressure on net interest margin due to deposit competition and elevated rates.

• Mortgage banking income is expected to remain below prior years due to high rates, low housing inventory, and reduced refinance volumes.

• The HomeStreet merger is unlikely to close without regulatory approval; alternative structures are being explored but not assured.

• Management remains focused on responsible growth and expanding client relationships across all markets.