Firstsun Capital Bancorp: Form 10-Q for the period ended Sep 30, 2025

General Overview

In this section, unless the context suggests otherwise, references to “we,” “us,” and “our” mean the combined business of FirstSun and its wholly-owned subsidiaries, Sunflower Bank, Sunflower Wealth Advisors, LLC, and FEIF Capital Partners, LLC.

FirstSun Capital Bancorp, headquartered in Denver, Colorado, is the financial holding company for Sunflower Bank, National Association, which is headquartered in Dallas, Texas and operates as Sunflower Bank and First National 1870. We conduct a full-service community banking and trust business through our wholly-owned subsidiaries—Sunflower Bank, Sunflower Wealth Advisors, LLC, and FEIF Capital Partners, LLC. The following discussion and analysis of FirstSun’s consolidated financial condition and results of operations should be read in conjunction with the unaudited consolidated financial statements and accompanying footnotes included in Item 1 of this Form 10-Q as well as our audited consolidated financial statements and footnotes for the year ended December 31, 2024 included in our 2024 Annual Report that we filed with the SEC on March 7, 2025. Historical results of operations and the percentage relationships among any amounts included, and any trends that may appear, may not indicate trends in operations or results of operations for any future periods.

Annualized ratios are presented utilizing the Actual/Actual day-count convention. Prior period annualized ratios have been recalculated to conform to the current presentation.

Recent Development - Pending Merger with First Foundation Inc.

On October 27, 2025, FirstSun and First Foundation Inc. (“First Foundation”), the holding company of Irvine, California-based First Foundation Bank (“First Foundation Bank’) entered into a definitive merger agreement. Under the merger agreement, FirstSun will continue as the surviving entity and Sunflower Bank will continue as the surviving bank. The combined holding company and bank will operate, respectively, under the FirstSun and Sunflower Bank names and brands following closing of the transaction.

Under the terms of the merger agreement, the companies will merge and the First Foundation common and preferred stockholders will receive 0.16083 of a share of FirstSun common stock for each share of First Foundation common stock on a fully converted basis. Additionally, First Foundation’s warrant holders will exercise their warrants and receive FirstSun common stock in the merger and also receive additional cash consideration totaling $17.5 million in the aggregate. The combined entity is expected to have total assets of approximately $17 billion and operate in markets that are among the nation’s best in terms of growth.

The parties anticipate that the merger will close early in the second quarter of 2026.

Financial Summary

Third Quarter 2025 Highlights:

• Net income of $23.2 million, $0.82 per diluted share
• Net interest margin of 4.07%
• Return on average total assets of 1.09%
• Return on average stockholders’ equity of 8.22%
• Loan growth of 10.6% annualized
• Deposit growth of 0.3% annualized
• 24.5% noninterest income to total revenue1

Net income totaled $23.2 million for the third quarter of 2025 compared to net income of $22.4 million for the third quarter of 2024. Earnings per diluted share were $0.82 for the third quarter of 2025 compared to $0.79 for the third quarter of 2024. Adjusted net income, a non-GAAP financial measure, was $23.7 million or $0.84 per diluted share for the third quarter of 2024.

Net income totaled $73.1 million for the nine months ended September 30, 2025, compared to net income of $59.3 million for the same period in 2024. Earnings per diluted share were $2.59 for the nine months ended September 30, 2025 compared to $2.12 for the same period in 2024. Adjusted net income, a non-GAAP financial measure, was $63.4 million or $2.27 per diluted share for the nine months ended September 30, 2024. Net income for the nine months ended September 30, 2024 was negatively impacted by a $10.6 million provision for credit loss on a specific customer in our commercial and industrial loan portfolio, net of tax, or $0.38 per diluted share.

The following table sets forth certain summary financial and other information of FirstSun:

($ in thousands, except per share amounts)

1 Total revenue is net interest income plus noninterest income.

($ in thousands, except per share amounts)

54

Non-GAAP Financial Measures and Reconciliations

The non-GAAP financial measures presented below are used by our management and our Board of Directors on a regular basis in addition to our GAAP results to facilitate the assessment of our financial performance. Management believes these non-GAAP financial measures enhance an investor’s understanding of our financial results by providing a meaningful basis for period-to-period comparisons, assisting in operating results analysis, and predicting future performance. This information supplements our GAAP reported results, and should not be viewed in isolation from, or as a substitute for, our GAAP results. Accordingly, this financial information should be read in conjunction with our consolidated financial statements and notes thereto for the three and nine months ended September 30, 2025, included elsewhere in this report. Non-GAAP financial measures exclude certain items that are included in the financial results presented in accordance with GAAP. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. These non-GAAP measures are not necessarily comparable to similar measures that may be represented by other companies.

The following table presents GAAP to non-GAAP reconciliations:

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

Tangible stockholders’ equity to tangible assets:

55

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

Adjusted net income:

56

Segments

Banking

Three months ended September 30, 2025 and 2024

Income before income taxes decreased $2.9 million to $25.7 million for the third quarter of 2025, from $28.6 million for the same period in 2024. The period over period decrease was primarily due to an increase in provision for credit losses and an increase in salary and employee benefits, partially offset by an increase in net interest income. Provision for credit losses increased $4.2 million to $10.5 million for the third quarter of 2025, compared to $6.4 million for the same period in 2024, primarily due to deterioration in a specific commercial and industrial customer relationship, impacts from net changes in loan portfolio balances, and impacts from net portfolio downgrades. Salary and employee benefits increased $4.0 million to $34.5 million for the third quarter of 2025, from $30.5 million for the same period in 2024, primarily due to an increase in headcount of C&I bankers and support personnel and higher medical insurance costs. Net interest income increased $3.6 million to $76.0 million for the third quarter of 2025, compared to $72.4 million for the same period in 2024, primarily due to a decrease in the cost of interest-bearing liabilities. Identifiable assets for our Banking segment increased $0.2 billion to $7.2 billion at September 30, 2025 from $7.0 billion at September 30, 2024. The growth in identifiable assets was primarily driven by organic growth in our loan portfolio.

Nine months ended September 30, 2025 and 2024

Income before income taxes increased $9.3 million to $86.1 million for the nine months ended September 30, 2025, from $76.7 million for the same period in 2024. The period over period increase was primarily due to a decrease in provision for credit losses and an increase in net interest income, partially offset by an increase in salary and employee benefits. Provision for credit losses decreased $5.3 million to $19.1 million for the nine months ended September 30, 2025, compared to $24.4 million for the same period in 2024, primarily due to a $14.1 million provision for credit loss on a specific customer in our commercial and industrial loan portfolio during the nine months ended September 30, 2024. Net interest income increased $9.2 million to $219.8 million for the nine months ended September 30, 2025 compared to $210.6 million for the same period in 2024, primarily due to a decrease in the cost of interest-bearing liabilities, relative to a decrease in the yield on interest earning assets, as a result of a declining interest rate environment and mix shift away from higher rate certificates of deposits. Salary and employee benefits increased $7.3 million to $98.5 million for the nine months ended September 30, 2025, compared to $91.3 million for the same period in 2024, primarily due to increased headcount, including the hiring of commercial and industrial bankers in Southern California.

Mortgage Operations

Three months ended September 30, 2025 and 2024

Income before income taxes increased $2.6 million to $5.2 million for the third quarter of 2025, compared to $2.7 million for the same period in 2024. The period over period increase was primarily due to an increase in revenue from mortgage banking services and increase in net interest income, partially offset by an increase in salary and employee benefits. Revenue from mortgage banking services increased $3.8 million to $13.3 million for the third quarter of 2025, compared to $9.4 million for the same period in 2024, primarily due to an increase in loan originations sold and higher margins, and higher net MSR capitalization. Net interest income increased $1.6 million to $6.5 million for the third quarter of 2025, compared to $5.0 million for the same period in 2024, primarily due to higher average balance and higher average yield on residential real estate loans. Salary and employee benefits increased $1.4 million to $9.7 million for the third quarter of 2025, compared to $8.3 million for the same period in 2024, primarily due to higher levels of variable compensation associated with an increase in mortgage loan originations. Identifiable assets for our Mortgage Operations segment increased $0.1 billion to $1.2 billion at September 30, 2025 from $1.0 billion at September 30, 2024. The growth in identifiable assets was primarily driven by organic growth in our residential mortgage portfolio.

Nine months ended September 30, 2025 and 2024

Income before income taxes increased $4.7 million to $12.1 million for the nine months ended September 30, 2025, compared to $7.5 million for the same period in 2024. The period over period increase was primarily due to an increase in net interest income and increase in revenue from mortgage banking services, partially offset by an increase in salary and employee benefits. Net interest income increased $5.1 million to $18.1 million for the nine months ended September 30, 2025, compared to $13.0 million for the same period in 2024, primarily due to higher average balance and higher average yield on residential real estate loans. Revenue from mortgage banking services increased $5.7 million to $36.9 million for the nine months ended September 30, 2025, compared to $31.2 million for the same period in 2024, primarily due to an increase in loan originations sold, partially offset by slightly lower margins, and an increase in mortgage servicing income. Salary and employee benefits increased $4.0 million to $27.9 million for the nine months ended September 30, 2025, compared to $23.9 million for the same period in 2024, primarily due to higher levels of variable compensation associated with an increase in mortgage loan originations.

Critical Accounting Estimates

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Our accounting and reporting estimates are in accordance with generally accepted accounting principles, or “U.S. GAAP,” and conform to general practices within the banking industry. Estimates that are susceptible to significant changes include accounting for the allowance for credit losses and fair value measurements of MSRs, both of which require significant judgments by management. Actual results could result in material changes to our consolidated financial condition or consolidated results of operations.

Certain policies inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. We have identified the determination of the allowance for credit losses and fair value measurements of MSRs to be the accounting areas that require the most subjective or complex judgments and, as such, could be most subject to revision as new or additional information becomes available or circumstances change, including overall changes in the economic climate and/or market interest rates. Therefore, we consider the estimates underlying these policies to be critical accounting estimates and we discuss them directly with the Audit Committee of our Board of Directors at least annually.

The following is a description of our critical accounting estimates and an explanation of the methods and assumptions underlying their application.

Allowance for Credit Losses - Management maintains an ACL for loans based upon management’s estimate of the lifetime expected credit losses in the loan portfolio as of the balance sheet date, excluding loans held for sale. Additionally, management maintains an ACL for held-to-maturity or available-for-sale debt securities, and other off-balance sheet credit exposures (e.g., unfunded loan commitments). For loans and unfunded loan commitments, the estimate of lifetime credit losses includes the use of quantitative models that incorporate forward-looking macroeconomic scenarios that are applied over the contractual lives of the portfolios, adjusted, as appropriate, for prepayments and permitted extension options using historical experience. For purposes of the ACL for lending commitments, such allowance is determined using the same methodology as the ACL for loans, while also taking into consideration the probability of drawdowns or funding, and whether such commitments are cancellable by us. The ACL for held-to-maturity and available-for-sale debt securities is measured using a risk-adjusted discounted cash flow approach that also considers relevant current and forward-looking economic variables and the ACL is limited to the difference between the fair value of the security and its amortized cost. Judgment is specifically applied in the determination of economic assumptions, length of the initial loss forecast period, the reversion of losses beyond the initial forecast period, usage of macroeconomic scenarios, probabilities of default, losses given default, amortization and prepayment rates, and qualitative factors, which may not be adequately captured in the loss model, as further discussed below.

The macroeconomic scenarios utilized by management include variables that have historically been key drivers of increases and decreases in credit losses. These variables include, but are not limited to, unemployment rates, housing and commercial real estate prices, gross domestic product levels, corporate bond spreads and changes in equity market prices. Management derives the economic forecasts it uses in its ACL model from Moody’s Analytics. The latter has a large team of economics, database managers and operational engineers with a history of producing monthly economic forecasts for over 25 years.

Management has currently set an initial forecast period (“reasonable and supportable period”) of four years and a reversion period of one year, utilizing a straight-line approach and reverting back to the historical macroeconomic mean. After the reversion period, a historical loss forecast period covering the remaining contractual life, adjusted for prepayments, is used based on changes in key historical economic variables during representative historical expansionary and recessionary periods. Changes in economic forecasts impact the probability of default (“PD”), loss-given default (“LGD”), and exposure at default (“EAD”) for each instrument, and therefore influence the amount of future cash flows for each instrument that management does not expect to collect.

Further, management periodically considers the need for qualitative adjustments to the ACL. Qualitative adjustments may be related to and include, but not limited to, factors such as the following: (i) management’s assessment of economic forecasts used in the model and how those forecasts align with management’s overall evaluation of current and expected economic conditions; (ii) organization specific risks such as credit concentrations, collateral specific risks, nature, and size of the portfolio and external factors that may ultimately impact credit quality, and (iii) other limitations associated with factors such as changes in underwriting and loan resolution strategies, among others. The qualitative factors applied on September 30, 2025, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management’s assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of ACL calculated by the model. The evaluation of qualitative factors is inherently imprecise and requires significant management judgment.

The ACL can also be impacted by factors outside of management’s control, which include unanticipated changes in asset quality of the portfolio, such as deterioration in borrower delinquencies, or credit scores in our residential real estate and consumer portfolio. Further, the current fair value of collateral is utilized to assess the expected credit losses when a financial asset is considered to be collateral dependent.

Our process for determining the ACL is further discussed in “Note 1 - Basis of Presentation, Description of Business and Summary of Significant Accounting Policies” in our 2024 Annual Report.

Fair Value Measurement of MSRs - Our residential mortgage servicing rights are measured at fair value on a recurring basis. We estimate the fair value of our MSRs using a process that utilizes a discounted cash flow model and analysis of current market data to arrive at the estimate. The cash flow assumptions used in the model are based on numerous factors, with the key assumptions being mortgage prepayment speeds, discount rates and cost to service that management believes are consistent with the assumptions that other similar market participants use in valuing MSRs. The change of any of these key assumptions due to market conditions or other factors could materially affect the fair value of our MSRs. We also utilize a third-party consulting firm to assist us with the valuation. Because of the nature of the valuation inputs, we classify the valuation of our MSRs as Level 3 in the fair value hierarchy. See Note 4 - Mortgage Servicing Rights for our assumptions used in valuing the MSRs. For information concerning the hypothetical sensitivity of the key assumptions under adverse changes on our MSRs, see the table under “Noninterest Income” elsewhere in the Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report.

Results of Operations

The following table sets forth components of our results of operations:

($ in thousands, except per share amounts)

General

Our results of operations depend significantly on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans and investment securities and interest expense on interest-bearing liabilities, consisting primarily of deposits and borrowings. Our results of operations are also dependent on our generation of noninterest income, consisting primarily of income from mortgage banking services, treasury management service fees, service charges on deposit accounts, trust and investment advisory fees and credit and debit card fees. Other factors contributing to our results of operations include our provisions for credit losses, income taxes, and noninterest expenses, such as salaries and employee benefits, occupancy and equipment, amortization of intangible assets and other operating costs.

Net Interest Income

Net interest income, representing interest income less interest expense, is a significant contributor to our revenues and earnings. We generate interest income from interest and dividends on interest-earning assets, which are principally comprised of loans and investment securities. We incur interest expense from interest owed or paid on interest-bearing liabilities, including interest-bearing deposits, FHLB advances and other borrowings. Net interest income and margin are shaped by the characteristics of the underlying products, including volume, term and structure of each product. We measure and monitor yields on our loans and other interest-earning assets, the costs of our deposits and other funding sources, our net interest spread and our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as net interest income divided by average interest-earning assets.

Interest earned on our loan portfolio is the largest component of our interest income. Our loan portfolios are presented at the principal amount outstanding net of deferred origination fees and unamortized discounts and premiums. Interest income is recognized based on the principal balance outstanding and the stated rate of the loan. Loan origination fees and certain direct origination costs are capitalized and recognized as an adjustment of the yield on the related loan. Non-PCD loans acquired are initially recorded at fair value and the resulting discount or premium are recognized as an adjustment of the yield on the related loans.

Our net interest income can be significantly influenced by a variety of factors, including overall loan demand, economic conditions, credit risk, the amount of non-earning assets including nonperforming loans and OREO, the amounts of and rates at which assets and liabilities reprice, variances in prepayment of loans and securities, exercise of call options on borrowings or securities, a general rise or decline in interest rates, changes in the slope of the yield-curve, and balance sheet growth or contraction.

Three months ended September 30, 2025 and 2024

Our net interest income was $81.0 million for the third quarter of 2025, an increase of $4.8 million, or 6.3%, compared to the same period in 2024. Interest income on loans increased by $0.7 million for the third quarter of 2025, compared to the same period in 2024. Interest income on investment securities decreased by $0.4 million for the third quarter of 2025, compared to the same period in 2024. Interest income on interest-bearing cash and other assets increased by $1.9 million for the third quarter of 2025, compared to the same period in 2024. Interest expense from total interest-bearing liabilities decreased by $2.6 million for the third quarter of 2025, compared to the same period in 2024.

Our net interest margin was 4.07% for the third quarter of 2025, compared to 4.08% for the same period in 2024, a decrease of one basis point. We experienced a 28 basis point decrease in yield from earning assets while our total cost of interest-bearing liabilities decreased by 36 basis points, for the third quarter of 2025 as compared to the same period in 2024. Total earning assets increased $0.5 billion while total interest-bearing liabilities increased $0.3 billion, for the third quarter of 2025 as compared to the same period in 2024.

Total average loans grew to $6.7 billion at September 30, 2025, an increase of $0.2 billion or 3.2%, compared to September 30, 2024, due to organic growth in our loan portfolio. Yield on loans decreased 19 basis points for the third quarter of 2025, compared to the same period in 2024, primarily due to the declining interest rate environment and its impact on variable rate loans in the portfolio. Interest-bearing cash and other assets increased $0.3 billion, or 61.5%, for the third quarter of 2025, compared to the same period in 2024. Yield on interest-bearing cash and other assets decreased 89 basis points for the third quarter of 2025, compared to the same period in 2024, primarily due to the declining interest rate environment.

Average interest-bearing liabilities increased $0.3 billion, or 5.5%, for the third quarter of 2025, compared to the same period in 2024, primarily to support the growth in our loan portfolio. Average interest-bearing deposits increased $0.4 billion, or 8.5%, for the third quarter of 2025, compared to the same period in 2024, which included a decrease of $0.4 billion, or 22.4%, in average certificates of deposit balances. Cost of interest-bearing deposits decreased 33 basis points for the third quarter of 2025, compared to the same period in 2024, primarily due to the declining interest rate environment and change in deposit product mix, particularly the decrease in certificates of deposit balances. Average FHLB borrowings decreased $0.1 billion, or 100.0%, for the third quarter of 2025, compared to the same period in 2024. Cost of FHLB borrowings decreased 558 basis points, for the third quarter of 2025, compared to the same period in 2024.

Nine months ended September 30, 2025 and 2024

Our net interest income was $233.9 million for the nine months ended September 30, 2025, an increase of $14.1 million, or 6.4%, compared to the same period in 2024. Interest income on loans was unchanged for the nine months ended September 30, 2025, compared to the same period in 2024. Interest income on investment securities decreased by $0.8 million for the nine months ended September 30, 2025, compared to the same period in 2024. Interest income on interest-bearing cash and other assets increased by $5.8 million for the nine months ended September 30, 2025, compared to the same period in 2024. Interest expense from total interest-bearing liabilities decreased by $9.1 million for the nine months ended September 30, 2025, compared to the same period in 2024.

Our net interest margin was 4.07% for the nine months ended September 30, 2025, compared to 4.04% for the same period in 2024, an increase of three basis points. We experienced a 25 basis point decrease in yield from earning assets and our total cost of interest-bearing liabilities decreased by 36 basis points for the nine months ended September 30, 2025, compared to the same period in 2024. Total earning assets increased $0.4 billion while total interest-bearing liabilities increased $0.2 billion, for the nine months ended September 30, 2025, compared to the same period in 2024.

Total average loans grew to $6.6 billion at September 30, 2025, an increase of $0.2 billion, compared to September 30, 2024, primarily due to organic growth in our loan portfolio. Yield on loans decreased 18 basis points for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to the declining interest rate environment and its impact on variable rate loans in the portfolio. Interest-bearing cash and other assets increased $0.3 billion, or 75.9%, for the nine months ended September 30, 2025, compared to the same period in 2024. Yield on interest-bearing cash and other assets decreased 98 basis points for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to the declining interest rate environment.

Average interest-bearing liabilities increased $0.2 billion, or 4.7%, for the nine months ended September 30, 2025, compared to the same period in 2024. Average interest-bearing deposits increased $0.4 billion, or 7.4%, for the nine months ended September 30, 2025, compared to the same period in 2024. Cost of interest-bearing deposits decreased 32 basis points for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to the declining interest rate environment and change in deposit product mix, particularly the decrease in certificates of deposit balances. Average FHLB borrowings decreased $0.1 billion, or 91.7%, for the nine months ended September 30, 2025, compared to the same period in 2024. Cost of FHLB borrowings decreased 101 basis points, for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to the declining interest rate environment.

The following tables set forth information related to our average balance sheet, average yields on assets, and average costs of liabilities for the periods presented. We derived these yields by dividing income or expense by the average balance of the corresponding assets or liabilities. We derived average balances from the daily balances throughout the periods indicated.

As of and for the three months ended September 30,:

(In thousands)

62

As of and for the nine months ended September 30,:

(In thousands)

63

Rate-Volume Analysis

The tables below present the effect of volume and rate changes on interest income and expense. Changes due to volume are changes in the average balance multiplied by the previous period’s average rate. Changes due to rate are changes in the average rate multiplied by the average balance from the prior period. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate.

(In thousands)

(In thousands)

64

Provision for Credit Losses

We established an allowance for credit losses through a provision for credit losses charged as an expense in our consolidated statements of income. The provision for credit losses is the amount of expense that, based on our judgment, is required to maintain the allowance for credit losses at an adequate level to absorb expected losses in the loan portfolio at the balance sheet date and that, in management’s judgment, is appropriate under GAAP. Our determination of the amount of the allowance for credit losses and corresponding provision for credit losses considers ongoing evaluations of the credit quality and level of credit risk inherent in our loan portfolio, levels of nonperforming loans and charge-offs, statistical trends and economic and other relevant factors. The allowance for credit losses is increased by the provision for credit losses and is decreased by charge-offs, net of recoveries on prior loan charge-offs.

We recorded a provision for credit losses of $10.1 million for the third quarter of 2025, compared to $5.0 million for the same period in 2024. The provision for credit losses for the third quarter of 2025 was primarily due to deterioration in a specific commercial and industrial customer relationship, impacts from net changes in loan portfolio balances, and impacts from net portfolio downgrades.

We recorded a provision for credit losses of $18.4 million for the nine months ended September 30, 2025, compared to $22.7 million for the same period in 2024. The provision for credit losses for the nine months ended September 30, 2025 was primarily due to deterioration in a couple of C&I customer relationships, impacts from net changes in loan portfolio balances, and impacts from net portfolio downgrades.

Noninterest Income

The following table presents noninterest income:

(In thousands)

Three months ended September 30, 2025 and 2024

Our noninterest income increased $4.3 million to $26.3 million for the third quarter of 2025 from $22.1 million for the same period in 2024.

Service charges on deposit accounts includes overdraft and non-sufficient funds charges, and other service fees on deposit accounts. Service charges on deposit accounts decreased $0.4 million for the third quarter of 2025, compared to the same period in 2024, primarily due to a decrease in non-sufficient funds and overdraft fees.

Treasury management service fees include financial information management, accounts receivable management, accounts payable services, fraud mitigation services, and cash flow management. Treasury management service fees increased $0.7 million for the third quarter of 2025 compared to the same period in 2024, primarily due to an overall increase in our business customer base as well as an increase in products and services provided to our existing customer base.

Credit and debit card fees represent interchange income from credit and debit card activity and referral fees earned from processing fees on card transactions by our business customers. Credit and debit card fees decreased $0.1 million for the third quarter of 2025 compared to the same period in 2024, as card transaction volumes decreased slightly.

Trust and investment advisory fees represent fees we receive in connection with our investment advisory and custodial management services of investment accounts. Trust and investment advisory fees increased $0.1 million for the third quarter of 2025 compared to the same period in 2024, as assets under management increased slightly.

The components of income from mortgage banking services were as follows:

(In thousands)

For the third quarter of 2025, income from mortgage banking services increased $3.8 million, compared to the same period in 2024. Total loan originations for sale were $371.5 million for the third quarter of 2025, an increase of $66.4 million from $305.2 million for the same period in 2024. The increase in loan originations sold and higher margins resulted in the increase in revenue related to net sale gains and fees from loan originations, including fair value changes in the held-for-sale portfolio and hedging activity. We retain servicing rights on the majority of mortgage loans that we sell, which drove the increase in servicing income of $0.4 million to $4.7 million for the third quarter of 2025, from $4.3 million for the same period in 2024. Net MSR capitalization and changes in fair value, net of derivative activity, increased $1.7 million in the third quarter of 2025, compared to the same period in 2024. The increase in revenue related to our MSRs was due to higher net MSR capitalization and a slight increase in the fair value of our MSRs, net of hedging.

The following table shows the hypothetical effect on the fair value of our MSRs when applying certain unfavorable variations of key assumptions to these assets as of September 30, 2025.

These hypothetical sensitivities should be evaluated with care. The effect on fair value of an adverse change in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors, which could impact the above hypothetical effects.

Other noninterest income increased $0.1 million for the third quarter of 2025 compared to the same period in 2024, primarily due to an increase in interest rate swap fair value and fee revenue, increase in the fair value of investments related to our deferred compensation plan, and increase in credit line fees, partially offset by a decrease in loan syndication and agency fees.

Nine months ended September 30, 2025 and 2024

Our noninterest income increased $7.0 million to $75.1 million for the nine months ended September 30, 2025 from $68.2 million for the same period in 2024.

Service charges on deposit accounts decreased $1.1 million for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to a decrease in non-sufficient funds and overdraft fees.

Credit and debit card fees decreased $0.5 million for the nine months ended September 30, 2025 compared to the same period in 2024, as card transaction volumes decreased.

Trust and investment advisory fees were largely unchanged for the nine months ended September 30, 2025 as compared to the same period in 2024.

The components of income from mortgage banking services were as follows:

(In thousands)

For the nine months ended September 30, 2025, income from mortgage banking services increased $5.6 million, compared to the same period in 2024. Total loan originations for sale were $1.0 billion for the nine months ended September 30, 2025, an increase of $205.6 million from $797.6 million for the same period in 2024. The increase in loan originations sold, partially offset by slightly lower margins resulted in the increase in revenue related to net sale gains and fees from loan originations, including fair value changes in the held-for-sale portfolio and hedging activity. We retain servicing rights on the majority of mortgage loans that we sell, which drove the increase in servicing income of $1.3 million to $13.9 million for the nine months ended September 30, 2025, from $12.6 million for the same period in 2024. The increase in revenue related to our MSRs was due to higher net MSR capitalization and an increase in the fair value of our MSRs, net of hedging.

Other noninterest income increased $0.8 million for the nine months ended September 30, 2025 compared to the same period in 2024, primarily due to an increase in interest rate swap and loan syndication revenue.

Noninterest Expense

The following table presents noninterest expense:

(In thousands)

Three months ended September 30, 2025 and 2024

Our noninterest expenses increased $4.2 million to $68.9 million for the third quarter of 2025, from $64.7 million for the same period in 2024.

Salary and employee benefits increased $5.5 million to $44.8 million for the third quarter of 2025, from $39.3 million for the same period in 2024, primarily due to an increase in headcount of commercial and industrial bankers and support personnel, higher levels of variable compensation associated with an increase in residential mortgage loan originations, and higher medical insurance costs.

Occupancy and equipment increased $0.5 million to $9.6 million for the third quarter of 2025, from $9.1 million for the same period in 2024, primarily due to higher software subscriptions and license fees.

Other noninterest expense was largely unchanged for the third quarter of 2025 as compared to the same period in 2024.

Nine months ended September 30, 2025 and 2024

Our noninterest expenses increased $9.4 million to $199.7 million for the nine months ended September 30, 2025, from $190.4 million for the same period in 2024.

Salary and employee benefits increased $11.8 million to $128.3 million for the nine months ended September 30, 2025, from $116.5 million for the same period in 2024, primarily due to an increase in headcount of commercial and industrial bankers and support personnel, higher levels of variable compensation associated with an increase in residential mortgage loan originations, and higher medical insurance costs.

Occupancy and equipment increased $2.3 million to $28.7 million for the nine months ended September 30, 2025, from $26.4 million for the same period in 2024, primarily due to higher software subscriptions and license fees.

Other noninterest expense increased $0.8 million to $41.0 million for the nine months ended September 30, 2025, from $40.2 million for the same period in 2024, primarily due to higher data processing expenses.

Income Taxes

Three months ended September 30, 2025 and 2024

We recorded income tax expense for the third quarter of 2025 of $5.1 million, compared to income tax expense of $6.1 million for the same period in 2024. The decrease in income tax expense was due to an increase in tax benefit related to low income housing tax credit investments during the third quarter of 2025, compared to the same period in 2024. Our effective tax rate was 18.1% for the third quarter of 2025, compared to 21.5% for the same period in 2024.

Nine months ended September 30, 2025 and 2024

We recorded income tax expense for the nine months ended September 30, 2025 of $17.8 million, compared to $15.7 million for the same period in 2024. The increase in income tax expense was primarily due to our increased income during the nine months ended September 30, 2025. Our effective tax rate was 19.6% for the nine months ended September 30, 2025, compared to 20.9% for the same period in 2024.

Financial Condition

Balance Sheet

Our total assets were $8.5 billion and $8.1 billion, total liabilities were $7.4 billion and $7.1 billion, and total stockholders’ equity was $1.1 billion and $1.0 billion at September 30, 2025 and December 31, 2024, respectively.

Investment Securities

Our securities portfolio is used to make various term investments, maintain a source of liquidity and serve as collateral for certain types of deposits and borrowings. We manage our investment portfolio according to written investment policies approved by our board of directors. Investment in our securities portfolio may change over time based on our funding needs and interest rate risk management objectives. Our liquidity levels take into account anticipated future cash flows and other available sources of funds, and are maintained at levels that we believe are appropriate to provide the necessary flexibility to meet our anticipated funding requirements.

Our investment securities portfolio consists of securities classified as available-for-sale and held-to-maturity. All available-for sale securities are carried at fair value and may be used for liquidity purposes should management consider it to be in our best interest.

Our securities available-for-sale increased by $7.0 million to $476.1 million at September 30, 2025, compared to December 31, 2024. During the period ended September 30, 2025, the securities held-to-maturity decreased $1.0 million to $34.2 million.

The following table is a summary of our investment portfolio as of:

(In thousands)

The following table shows the weighted average yield to average life, which considers expected prepayments, of each category of investment securities as of September 30, 2025:

(In thousands)

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Loans

Our loan portfolio represents a broad range of borrowers primarily in our markets in Texas, Kansas, Colorado, New Mexico, Arizona, California and Washington primarily comprised of commercial and industrial, commercial real estate, residential real estate, and public finance loans. We have a diversified portfolio across a variety of industries, and the portfolio is generally centered in the states in which we have branch offices. Our lending focus continues to be on operating companies, including commercial and industrial loans and lines-of-credit, as well as owner occupied commercial real estate loans.

Total loans held-for-investment, net of deferred fees, costs, premiums and discounts were $6.7 billion at September 30, 2025 and $6.4 billion at December 31, 2024.

The following table sets forth the composition of our loan portfolio, as of:

(In thousands)

Commercial and industrial loans include loans to commercial customers for use in normal business operations to finance working capital needs, equipment and inventory purchases, other expansion projects and loans to nondepository financial institutions. These loans are made primarily in our market areas and are underwritten on the basis of the borrower’s ability to service the debt from revenue, and are generally extended under our normal credit standards, controls and monitoring systems.

Commercial real estate (“CRE”) loans include owner occupied and non-owner occupied commercial real estate mortgage loans to operating commercial and agricultural businesses, and include both loans for long-term financing of land and buildings and loans made for the initial development or construction of a commercial real estate project. Non-owner occupied CRE loans were 60.8% of the Company’s risk-based capital, or 10.9% of total loans as of September 30, 2025. Non-owner occupied CRE loans associated with office space were $45.1 million, or 0.7% of total loans as of September 30, 2025. Owner occupied CRE loans associated with office space were $160.8 million, or 2.4% of total loans as of September 30, 2025.

Residential real estate loans represent loans to consumers collateralized by a mortgage on a residence and include purchase money, refinancing, secondary mortgages, and home equity loans and lines of credit.

Public finance loans include loans to our charter school and municipal based customers.

Consumer loans include direct consumer installment loans, credit card accounts, overdrafts and other revolving loans.

Other loans consist of lease financing receivables and loans for agricultural production.

Maturities and Sensitivity of Loans to Changes in Interest Rates

The information in the following tables is based on the contractual maturities of individual loans, including loans that may be subject to renewal at their contractual maturity. Renewal of these loans is subject to review and credit approval, as well as modification of terms upon maturity. Actual repayments of loans may differ from the maturities reflected below because borrowers have the right to prepay obligations with or without prepayment penalties. The following tables summarize the loan maturity distribution by type and related interest rate characteristics as of September 30, 2025:

(In thousands)

(In thousands)

Allowance for Credit Losses

We maintain the allowance for credit losses at a level we believe is sufficient to absorb expected losses in our loan portfolio given the conditions at the time and our estimates of future economic conditions. Events that are not within our control, such as changes in economic factors, could change subsequent to the reporting date and could cause increases or decreases to the allowance. The amount of the allowance is affected by loan charge-offs, which decrease the allowance; recoveries on loans previously charged off, which increase the allowance; and the provision for credit losses charged to earnings, which increases the allowance.

In determining the provision for credit losses, management monitors fluctuations in the allowance resulting from actual charge-offs and recoveries and reviews the size and composition of the loan portfolio in light of current and anticipated economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as events change.

The following table presents, by loan type, the changes in the allowance for credit losses:

(In thousands)

The following table presents net charge-offs (recoveries) to average loans outstanding by loan category:

(In thousands)

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Allocation of Allowance for Credit Losses

The following table presents the allocation of the allowance for credit losses by category and the percentage of loans by category to total loans as of:

(In thousands)

Nonperforming Assets

We have established policies and procedures to guide us in originating, monitoring and maintaining the credit quality of our loan portfolio. These policies and procedures are expected to be followed by our bankers and underwriters and exceptions to these policies require elevated levels of approval and are reported to our board of directors.

Nonperforming assets include all loans categorized as nonaccrual, accrual loans greater than 90 days past due, and other real estate owned and other repossessed assets. The accrual of interest on loans is discontinued, or the loan is placed on nonaccrual, when the full collection of principal and interest is in doubt. We do not generally accrue interest on loans that are 90 days or more past due. When a loan is placed on nonaccrual, previously accrued but unpaid interest is reversed and charged against interest income and future accruals of interest are discontinued. Payments by borrowers for loans on nonaccrual are applied to loan principal. Loans are returned to accrual status when, in our judgment, the borrower’s ability to satisfy principal and interest obligations under the loan agreement has improved sufficiently to reasonably assure recovery of principal and the borrower has demonstrated a sustained period of repayment performance. In general, we require a minimum of six consecutive months of timely payments in accordance with the contractual terms before returning a loan to accrual status.

The following table sets forth our nonperforming assets as of:

(In thousands)

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Deposits

Deposits represent our primary source of funds. Total deposits increased by $0.4 billion to $7.1 billion at September 30, 2025, compared to December 31, 2024.

We are focused on growing our core deposits through relationship-based banking with our business and consumer clients. The following table presents our deposits by customer type as of:

($ in thousands)

The following table sets forth the average balance amounts and the average rates paid on deposits held by us:

(Dollars in thousands)

As of September 30, 2025 and December 31, 2024, approximately $2.6 billion or 36.2% and $2.3 billion or 34.8%, respectively, of our deposit portfolio was uninsured. As of September 30, 2025 and December 31, 2024, approximately $2.0 billion or 28.3% and $1.7 billion or 25.2%, respectively, of our deposit portfolio was uninsured and uncollateralized.

The uninsured, and uninsured and uncollateralized amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.

We actively participate in the IntraFi Cash Service (“ICS”) / Certificate of Deposit Account Registry Service (“CDARS”) program which provides FDIC insurance coverage for clients that maintain larger deposit balances. Deposits in the ICS / CDARS program totaled $0.9 billion, or 12.2% of all deposits as of September 30, 2025, and $0.7 billion, or 11.1% of all deposits as of December 31, 2024.

The following table sets forth the portion of the Bank's time deposits, by account, that are in excess of the FDIC insurance limit, by remaining time until maturity, as of September 30,:

(In thousands)

Liquidity

Liquidity refers to our ability to maintain cash flow that is adequate to fund operations, support asset growth, maintain reserve requirements and meet present and future obligations of deposit withdrawals, lending obligations and other contractual obligations.

FirstSun (Parent Company)

FirstSun has routine funding requirements consisting primarily of operating expenses, debt service, and funds used for acquisitions. FirstSun can obtain funding to meet its obligations from dividends collected from its subsidiaries, primarily the Bank, and through the issuance of varying forms of debt. At September 30, 2025, FirstSun had available cash and cash equivalents of $102.1 million and debt outstanding of $78.9 million. On October 1, 2025, FirstSun redeemed $40.0 million of outstanding subordinated notes using available cash and cash equivalents. Management believes FirstSun has the ability to generate and obtain adequate amounts of liquidity to meet its requirements in the short-term and the long-term.

Federal banking laws regulate the amount of dividends that may be paid by banking subsidiaries without prior approval. The Bank may declare dividends without prior regulatory approval that do not exceed the total of retained net income for the current year combined with its retained net income for the preceding two years, subject to maintenance of minimum capital requirements. Prior regulatory approval to pay dividends was not required in 2024 and is not currently required. At September 30, 2025, the Bank could pay dividends to FirstSun of approximately $247.6 million without prior regulatory approval. During the three and nine months ended September 30, 2025, the Bank did not pay dividends to FirstSun.

Bank

As more fully discussed in our 2024 Annual Report, we regularly monitor our liquidity position and make adjustments to the balance between sources and uses of funds as we deem appropriate. At September 30, 2025, our liquid assets, which consist of cash and amounts due from banks and interest-bearing deposits in other financial institutions, amounted to $650.5 million, or 7.7% of total assets, compared to $607.6 million, or 7.5% of total assets, at December 31, 2024. The increase in our liquid assets was primarily due to an increase in cash held at the Federal Reserve. At September 30, 2025, approximately 73% of the investment securities portfolio was pledged as collateral to secure public deposits and repurchase agreements. Our unencumbered available-for-sale securities at September 30, 2025 were $128.3 million, or 1.5% of total assets, compared to $34.5 million, or 0.4% of total assets, at December 31, 2024.

The liability portion of our balance sheet serves as a primary source of liquidity. We plan to meet our future cash needs primarily through the generation of deposits. Customer deposits have historically provided a sizable source of relatively stable and low-cost funds. At September 30, 2025, loans as a percentage of customer deposits were 94.0%, compared with 95.6% at December 31, 2024. For additional information related to our deposits, see Deposits section above. We are also a member of the FHLB and FRB, from which we can borrow for leverage or liquidity purposes. The FHLB and FRB requires that securities and qualifying loans be pledged to secure any advances. Liquidity sources available to us for immediate funding at September 30, 2025, are as follows:

(In thousands)

Management believes the Bank has the ability to generate and obtain adequate amounts of liquidity to meet its requirements in the short-term and the long-term.

Capital

Stockholders’ equity at September 30, 2025 was $1.1 billion, compared to $1.0 billion at December 31, 2024, an increase of $86.1 million, or 8.3%.

We did not pay a dividend to our common shareholders for the three and nine months ended September 30, 2025 and 2024.

Capital Adequacy

We are subject to various regulatory capital requirements administered by the federal banking agencies. Management routinely analyzes our capital to seek to ensure an optimized capital structure. For further information on capital adequacy see Note 11 - Regulatory Capital Matters to the consolidated financial statements.

Material Contractual Obligations, Commitments, and Contingent Liabilities

We have entered into contractual obligations in the normal course of business that involve elements of credit risk, interest rate risk and liquidity risk.

The following table summarizes our material contractual obligations as of September 30, 2025. Further discussion of each obligation or commitment is included in the referenced note to the consolidated financial statements.

(In thousands)

We are party to various derivative contracts as a means to manage the balance sheet and our related exposure to changes in interest rates, to manage our residential real estate loan origination and sale activity, and to provide derivative contracts to our clients. Since the derivative liabilities recorded on the balance sheet change frequently and do not represent the amounts that may ultimately be paid under these contracts, these liabilities are not included in the table of contractual obligations presented above. Further discussion of derivative instruments is included in Note 5 - Derivative Financial Instruments to the consolidated financial statements.

In the normal course of business, various legal actions and proceedings are pending against us and our affiliates which are incidental to the business in which they are engaged. Further discussion of contingent liabilities is included in Note 14 - Commitments and Contingencies to the consolidated financial statements.

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit, commercial letters of credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. The contractual or notional amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments. Further discussion of contingent liabilities is included in Note 14 - Commitments and Contingencies to the consolidated financial statements.

Market risk is the risk of reduced earnings and/or declines in the net market value of the balance sheet due to changes in market rates. Our primary market risk is interest rate risk which impacts our net interest income, fee income related to interest sensitive activities such as mortgage origination and servicing income and loan and deposit demand.

We are subject to interest rate risk due to:

• the maturity or repricing of assets and liabilities at different times or for different amounts;
• differences in short-term and long-term market interest rate changes; and
• the remaining maturity of various assets or liabilities may shorten or lengthen as interest rates change.

Our Asset Liability Committee, or ALCO, which is composed of our executive officers and certain other members of management, monitors interest rate risk on an ongoing basis in accordance with policies approved by our board of directors. The ALCO reviews interest rate positions and considers the impact projected interest rate scenarios have on earnings, liquidity, business strategies and other factors. However, management has the latitude to change interest rate positions within certain limits if, in management’s judgment, the change will enhance profitability or minimize risk.

To assess and manage interest rate risk, sensitivity analysis is used to determine the impact on earnings and the net market value of the balance sheet across various interest rate scenarios, balance sheet trends, and strategies.

Management uses a simulation model to analyze the sensitivity of net interest income to changes in interest rates across various interest rate scenarios, which seeks to demonstrate the level of interest rate risk inherent in the existing balance sheet. The analysis holds the current balance sheet values constant and does not take into account management intervention.

Additionally our simulation model incorporates various key assumptions, which we believe are reasonable, but may have an impact on the results such as: (1) we assume certain correlation rates, often referred to as “deposit beta,” for interest-bearing deposits, wherein the rates paid to customers change relative to changes in benchmark interest rates, (2) cash flows and maturities of interest sensitive assets and liabilities, (3) re-pricing characteristics for market rate sensitive instruments, (4) prepayment rates and product mix of assets and liabilities, and (5) simulations do not contemplate any actions management may undertake in response to changes in interest rates. Because of limitations in any approach used to measure interest rate risk, simulation results are not intended to forecast actual results driven by the effect of a change in market rates but to better plan and execute appropriate asset-liability management strategies and manage our interest rate risk.

The primary impact of inflation on operations is reflected in increasing operating costs and non-interest expense. Our interest-bearing assets and liabilities are monetary in nature and changes in interest rates will impact our performance on net interest margin more than changes in the general rate of inflation.

The effect on net interest income over a 12-month time horizon due to hypothetical changes in market interest rates is presented in the table below. In this interest rate shock simulation, as of the periods presented, interest rates have been adjusted by instantaneous parallel changes rather than in a ramp simulation, which applies interest rate changes over time. All rates, short-term and long-term, are changed by the same amount (e.g., plus or minus 100 basis points) resulting in the shape of the yield curve remaining unchanged.

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a. Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934 (the “Exchange Act”)) as of September 30, 2025. Based on that evaluation, our principal executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

b. Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) occurred during the fiscal quarter ended September 30, 2025, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Except with respect to the additional risk factors related to the proposed First Foundation merger, which are set forth below, there have been no material changes to the risk factors previously disclosed in our 2024 Annual Report.

Risks With Regard to Merger with First Foundation

Combining FirstSun and First Foundation may be more difficult, costly or time-consuming than expected, and the anticipated benefits and cost savings of the merger and the bank merger may not be realized.

FirstSun and First Foundation have operated and, until the completion of the merger, must continue to operate, independently. The success of the merger and the bank merger, including anticipated benefits and cost savings, will depend, in part, on FirstSun’s ability to successfully combine and integrate the businesses of FirstSun and First Foundation in a manner that permits growth opportunities and does not materially disrupt the existing customer relations or result in decreased revenues due to loss of customers. If FirstSun is unable to successfully achieve these objectives, the anticipated benefits of the merger and the bank merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings of the merger and the bank merger could be less than anticipated, and integration may result in additional and unforeseen expenses.

An inability to realize the full extent of the anticipated benefits of the merger, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, levels of expenses and operating results of the combined company, which may adversely affect the value of FirstSun common stock after the completion of the merger.

It is possible that the integration process could result in the loss of key employees, the disruption of either company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger and the bank merger. If FirstSun experiences difficulties with the integration process, the anticipated benefits of the merger and the bank merger may not be realized fully or at all, or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that cause FirstSun and/or First Foundation to lose customers or cause customers to remove their accounts from FirstSun and/or First Foundation and move their business to competing financial institutions. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of FirstSun and First Foundation during this transition period and for an undetermined period after completion of the merger on the combined company.

Furthermore, the board of directors and executive leadership of the combined companies following the merger will consist of former directors and executive officers from each of FirstSun and First Foundation, as described in the merger agreement. Combining the boards of directors and management teams of each company into a single board and a single management team could require the reconciliation of differing priorities and philosophies.

Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the merger.

Before the merger and the bank merger may be completed, various approvals, consents and non-objections must be obtained from the Office of the Comptroller of the Currency, the Federal Reserve Board and various other bank regulatory, antitrust, insurance and other authorities in the United States. Other approvals, waivers or consents from regulators may also be required. In determining whether to grant these approvals, the regulators consider a variety of factors, including the regulatory standing of each party. These approvals could be delayed or not obtained at all, including due to: an adverse development in either party’s regulatory standing or in any other factors considered by regulators when granting such approvals; governmental, political or community group inquiries, investigations or opposition; or changes in legislation or the political environment generally. These regulators also could impose conditions on the completion of the merger or the bank merger or require changes to the terms of the merger or the bank merger. Such conditions or changes could have the effect of delaying or preventing completion of the merger or the bank merger or imposing additional costs on or limiting the revenues of the combined company following the merger and the bank merger, any of which might have an adverse effect on the combined company following the merger.

Additionally, the completion of the merger is conditioned on the absence of certain orders, injunctions or decrees by any court or regulatory agency of competent jurisdiction that would prohibit or make illegal the completion of any of the transactions contemplated by the merger agreement.

In addition, despite the parties’ commitments to use their reasonable best efforts to comply with conditions imposed by regulators, under the terms of the merger agreement, neither FirstSun nor First Foundation will be required, and neither party will be permitted without the prior written consent of the other party, to take actions or agree to conditions that would reasonably be expected to have a material adverse effect on the combined company, after giving effect to the merger.

The success of the merger and the bank merger and integration of FirstSun and First Foundation will depend on a number of uncertain factors.

The success of the merger and the bank merger will depend on a number of factors, including, without limitation:

• FirstSun’s ability to integrate the branches acquired from First Foundation in the merger, which we refer to as the acquired branches, into FirstSun’s current operations;
• FirstSun’s ability to limit the outflow of deposits held by its new customers in the acquired branches and to successfully retain and manage interest-earning assets (i.e., loans) acquired in the merger;
• FirstSun’s ability to control the incremental non-interest expense from the acquired branches in a manner that enables it to maintain a favorable overall efficiency ratio;
• FirstSun’s ability to retain and attract the appropriate personnel to staff and manage the acquired branches;
• FirstSun’s ability to retain the customer relationships from the acquired branches; and
• FirstSun’s ability to earn acceptable levels of interest and non-interest income, including fee income, from the acquired branches.

Integrating the acquired branches will be an operation of substantial size and expense, and may be affected by general market and economic conditions or government actions affecting the financial industry generally. Integration efforts will also likely divert FirstSun’s management’s attention and resources. No assurance can be given that FirstSun will be able to integrate the acquired branches successfully, and the integration process could result in the loss of key employees, the disruption of ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect FirstSun’s ability to maintain relationships with clients, customers, depositors and employees, or to achieve the anticipated benefits of the merger and the bank merger. FirstSun may also encounter unexpected difficulties or costs during the integration that could adversely affect its earnings and financial condition, perhaps materially. Additionally, no assurance can be given that the operation of the acquired branches will not adversely affect FirstSun’s existing profitability, that FirstSun will be able to achieve results in the future similar to those achieved by its existing banking business or that FirstSun will be able to manage any growth resulting from the merger and the bank merger effectively.

The merger agreement may be terminated in accordance with its terms and the merger and other transactions contemplated by the merger agreement may not be completed. If the merger is not completed, FirstSun will have incurred substantial expenses without realizing the expected benefits of the merger.

The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger. Those conditions include, among others: (i) the approval of the merger by the stockholders of FirstSun and First Foundation; (ii) the receipt of all required regulatory approvals which are necessary to close the merger and the bank merger without the imposition of any materially burdensome regulatory condition; (iii) the absence of any order, injunction, decree or other legal restraint preventing the completion of the merger or any of the other transactions contemplated by the merger agreement or making the completion of the merger illegal; (iv) the effectiveness of the registration statement on Form S-4 registering the shares of FirstSun common stock to be issued in the merger, and the absence of a stop order or proceeding initiated or threatened by the SEC for that purpose; (v) authorization for listing on Nasdaq of the shares of FirstSun common stock to be issued in the merger; (vi) receipt by each party of an opinion from its counsel to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code; (vii) subject to certain exceptions, the accuracy of the representations and warranties of each party to the merger agreement; and (viii) the prior performance in all material respects by each party of its obligations under the merger agreement.

These conditions to the closing may not be fulfilled in a timely manner or at all, and, accordingly, the merger may not be completed. In addition, the parties can mutually decide to terminate the merger agreement at any time, before or after stockholder approval, or FirstSun or First Foundation may elect to terminate the merger agreement in certain other circumstances.

Each of FirstSun and First Foundation has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement. If the merger is not completed, FirstSun and First Foundation would have to recognize these expenses without realizing the expected benefits of the merger.

If the merger agreement is not completed for any reason, including as a result of either FirstSun stockholders failing to approve the FirstSun merger proposal or First Foundation stockholders failing to approve the First Foundation merger proposal, there may be various adverse consequences and FirstSun may experience negative reactions from the financial markets and from their customers and employees. Additionally, if the merger agreement is terminated, the market price of FirstSun common stock could decline to the extent that the current market prices reflect a market assumption that the merger will be completed. FirstSun also could be subject to litigation related to any failure to complete the merger or to proceedings commenced against FirstSun to perform its obligations under the merger agreement. If the merger agreement is terminated under certain circumstances, either FirstSun or First Foundation may be required to pay a termination fee of $45,089,000 or $31,390,000, respectively, to the other party.

Stockholder litigation could prevent or delay the completion of the merger or otherwise negatively impact the business and operations of FirstSun.

Stockholders of FirstSun and/or First Foundation may file lawsuits against FirstSun, First Foundation and/or the directors and officers of either company in connection with the merger and/or the other transactions contemplated by the merger agreement. Although First Foundation and FirstSun are not aware of any pending lawsuits relating to the merger or any of the transactions contemplated by the merger agreement as of the date of this Quarterly Report on Form 10-Q, lawsuits arising out of the merger or any of the transactions contemplated by the merger agreement could be filed in the future. One of the conditions to the closing is that no order, injunction or decree issued by any court or governmental entity of competent jurisdiction or other legal restraint preventing the consummation of the merger or any of the other transactions contemplated by the merger agreement be in effect. If any plaintiff were successful in obtaining an injunction prohibiting FirstSun or First Foundation defendants from completing the merger or other transactions contemplated by the merger agreement, then such injunction may delay or prevent the effectiveness of the merger or such other transactions and could result in significant costs to FirstSun and/or First Foundation, including any cost associated with the indemnification of directors and officers of each company. If a lawsuit is filed, FirstSun and First Foundation may incur costs in connection with the defense or settlement of any stockholder lawsuits filed in connection with the merger or any of the transactions contemplated by the merger agreement. Such litigation could have an adverse effect on the financial condition and results of operations of FirstSun and First Foundation and could prevent or delay the completion of the merger or the transactions contemplated by the merger agreement.