$23.80
$74.90
bear $23.80
base $52.30
bull $74.90
margin of safety $30.00
market price* $37.95
Business condition attached to the margin of safety
Two more quarterly reports of the merged bank (the quarters ending September 30 and December 31, 2026) show earnings before merger costs running at or above the level of the second quarter of 2026, with credit-loss provisions falling back toward the roughly $6 million a quarter average the bank booked in 2025 ($24.6 million for the year), and with deposits holding near the $13.4 billion reported at June 30, 2026.
FirstSun Capital Bancorp is the holding company for Sunflower Bank, a commercial and consumer bank with branches in Kansas, Texas, Colorado, New Mexico, Arizona, California and Washington and a mortgage business that originates and sells home loans. This analysis looks at the bank as it exists now, after it absorbed First Foundation on April 1, 2026 by issuing about 18.7 million new shares. That deal took total assets from $8.5 billion at the end of 2025 to $15.7 billion at June 30, 2026 and lifted the share count from about 28 million to about 46.8 million. Because the share count and the size of the business changed so much, everything below is stated per share on the enlarged count. How we measure earnings. We start from cash generated by operations, remove the swings caused by mortgage loans waiting to be sold and other working-capital timing, subtract stock compensation, and subtract the part of capital spending needed just to stand still. On that basis the legacy FirstSun earned about $86 million in 2022, $133 million in 2023, $113 million in 2024 and $144 million in 2025. We use 2022 through 2025 because the bank acquired Pioneer Bancshares, Inc. on April 1, 2022 and earlier years describe a smaller bank; 2022 includes only nine months of Pioneer and $18.8 million of merger costs, so it is a conservative year to include, and the middle of the four years is about $123 million. Cash flow adds back the provision for credit losses, but loan losses are a real recurring cost of lending: net charge-offs were $20.4 million in 2024 and $28.3 million in 2025. We therefore deduct about $19 million a year in every case (the average of those two years, about $24.4 million, after an assumed 21% tax rate). We also did not credit any recent-quarter improvement to the level; legacy earnings are held at the multi-year anchor. Growth. Owner earnings grew about 27% in 2025. We assume no growth in any case: bank earnings here have swung between years rather than compounding steadily, the merger integration is unfinished, and management's cost-savings targets are not something we can verify. Earnings are simply held flat, which is what a long-established deposit franchise supports without needing any forecast. What the merger adds. In the second quarter of 2026 the bank reported a net loss of $22.9 million, but that quarter carried $57.6 million of merger costs and a $40.4 million credit-loss provision that reflects the acquired loan portfolio. Comparing the quarter with the second quarter of 2025, revenue (net interest income plus fee income) rose by about $78.6 million and operating expenses excluding merger costs rose by about $46.0 million, a gain of roughly $32.5 million a quarter before provisions. After tax and a normal level of loan-loss cost on roughly $5 billion of acquired loans (using the 0.43% charge-off rate of 2025), that suggests about $85 million a year. This rests on one quarter that also includes purchase-accounting effects we cannot separate from the filings, so the base case credits only half of it. Bear case, $23.8 per share. Legacy earnings fall back to the 2022 level of about $86 million (the weakest year since the Pioneer deal), less the $19 million loan-loss cost, and the acquired First Foundation business adds nothing. The filings name the risks behind this: the company itself warns that deposits held by First Foundation customers may leave and that cost savings may fall short. About $67 million of yearly earnings over 46.8 million shares is $1.43 per share, valued as a flat stream at a 6% discount rate. Base case, $52.3 per share. Legacy earnings at the $123 million anchor less $19 million, plus about $42.5 million from the acquisition (half of the estimate above), for roughly $147 million or $3.14 per share, held flat. Bull case, $74.9 per share. Legacy earnings return to the 2025 level of $144 million less $19 million, and the full $85 million acquisition contribution is realized, for about $210 million or $4.49 per share, held flat. We did not add cost savings, a share repurchase (the board authorized $150 million) or interest-rate relief, because none of these is yet demonstrated in results. Value beyond ten years. The holding company traces to a Kansas bank holding company organized in 1981, and its deposit-funded lending model is the structural feature we rely on; we treat the earnings as continuing at the same level and do not add growth to it. What could make this wrong. Most of the value rests on the legacy business continuing to earn what it has earned in the past four years, and the credit for half the acquisition's contribution rests on the single quarter reported since the merger closed, which was a loss. Our estimate of the acquisition's contribution could prove too high or too low once purchase-accounting effects run off. Credit losses in 2025 were the highest of the last three years, and the acquired loan book has not yet been tested through a downturn. We also could not separate the acquired bank's own historical results from the filings we used, so the acquisition estimate rests on the combined bank's second quarter alone. Margin-of-safety price. The margin-of-safety price is well below the base case because the lower case is close to $24 and the merger is unproven: $30 per share, applicable only once later quarters confirm the earnings run rate described in the business condition.