FIRSTSUN CAPITAL BANCORP Management’s Discussion and Analysis of Financial Condition and Results of Operations of FirstSun (form 10-Q)

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, Logia Portfolio Management, LLC and Sunflower Bank (the “Bank”).


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, 2021 included in the
2021 Form 10-K that we filed with the SEC on March 25, 2022. 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.

Comments regarding our business that are not historical facts are considered
forward-looking statements that involve inherent risks and uncertainties. Actual
results may differ materially from those contained in these forward-looking
statements. For additional information regarding our cautionary disclosures, see
the "  Cautionary Note Regarding Forward-Looking Statements  " beginning on page
  3   of this report.

General Overview

FirstSun Capital Bancorp, headquartered in Denver, Colorado, is the financial
holding company for Sunflower Bank, National Association, which operates as
Sunflower Bank, First National 1870 and Guardian Mortgage. We conduct a full
service community banking and trust business through our wholly-owned
subsidiaries-Sunflower Bank and Logia Portfolio Management, LLC.

We offer a full range of relationship-focused services to meet our clients'
personal, business and wealth management financial objectives, with a branch
network in Texas, Colorado, Arizona, New Mexico, and Kansas and mortgage
capabilities in 43 states. Our product line includes commercial loans,
commercial real estate loans, residential mortgage and other consumer loans, and
a variety of commercial and consumer deposit products, including
noninterest-bearing accounts, interest-bearing demand products, savings
accounts, money market accounts and certificates of deposit. We also offer
wealth management and trust products including personal trust and agency
accounts, employee benefit and retirement related trust and agency accounts,
investment management and advisory agency accounts, and foundation and endowment
trust and agency accounts. We also offer online banking and bill payment
services, online cash management, safe deposit box rentals, debit card and ATM
card services and the availability of a network of ATMs for our customers.

We operate FirstSun through two operating segments: Banking and Mortgage
Operations. We also allocate certain expenses to Corporate, which is not an
operating segment. The expenses included in Corporate are not deemed to be
allocable to our operating segments. The operating segments have been determined
based on the products and services we offer and reflect the manner in which our
financial information is evaluated by management. Each of the operating segments
is complementary to each other and because of the interrelationship of the
segments, the information presented is not indicative of how the segments would
perform if they operated as independent entities. For additional information on
our segments, see   Note 16 - Segment Information   included in our consolidated
financial statements included elsewhere in this report.
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Completion of Merger with Pioneer Bancshares, Inc.


On April 1, 2022, we completed our previously announced merger with Pioneer
Bancshares, Inc. ("Pioneer"), pursuant to which Pioneer was merged with and into
FirstSun, with FirstSun continuing as the surviving entity, and Pioneer's
wholly-owned subsidiary, Pioneer Bank, SSB, a Texas state savings bank, was
merged with and into Sunflower Bank, with Sunflower Bank continuing as the
surviving bank. With the acquisition, we acquired 19 branches in Texas. The
results for Pioneer are reflected in our results of operations and financial
condition beginning April 1, 2022. Further information is presented in Note 2 -
Merger with Pioneer Bancshares, Inc. included in our consolidated financial
statements included elsewhere in this report.

For the second quarter of 2022, we incurred $18.4 million ($0.57 diluted
earnings per share) of expenses relating to the merger. For the six months ended
June 30, 2022, we incurred $18.8 million ($0.66 diluted earnings per share) of
expenses relating to the merger. For the three and six months ended June 30,
2021, we incurred $1.3 million ($0.06 diluted earnings per share) of expenses
relating to the merger.

Additionally, for the three and six months ended June 30, 2022, we incurred $2.9
million ($0.09 and $0.11 diluted earnings per share, respectively) of provision
for loan losses related to certain non-impaired loans acquired from Pioneer at a
premium upon the closing of the merger. The premium on certain of the acquired
loans was due to the higher contractual interest rates of such loans, compared
to market interest rates on the closing date of the merger. While we recorded a
net discount on the entire Pioneer loan portfolio acquired, due to the premium
recorded on certain of the acquired loans, we were required to record a
provision for loan losses subsequent to closing. This provision, however, was
not due to credit deterioration on these loans since the closing of the merger.

Pandemic Update


Our business has been, and continues to be, impacted by the effects of the
COVID-19 pandemic. There remains many uncertainties related to COVID-19
including, among other things, the ongoing impact to our customers, employees
and vendors; the impact to the financial services and banking industry; and the
impact to the economy as a whole as well as the effect of actions taken, or that
may yet be taken, or inaction by governmental authorities to mitigate both the
economic and health-related effects of COVID-19.

Financial Summary


Net income totaled $0.4 million, or $0.02 per diluted share, for the second
quarter of 2022, compared to $11.3 million, or $0.60 per diluted share, for the
second quarter of 2021. The return on average assets was 0.02% for the second
quarter of 2022, compared to 0.82% for the second quarter of 2021, and the
return on average equity was 0.23% for the second quarter of 2022, compared to
8.82% for the second quarter of 2021.

Net income, return on average assets and return on average equity were reduced
by merger-related expenses and the provision for loan losses related to certain
non-impaired loans acquired from Pioneer at a premium upon the closing of the
merger. The reduction to net income, return on average assets and return on
average equity for the second quarter of 2022, resulting from the aggregate of
merger-related expenses and the provision for loan losses related to certain
non-impaired loans acquired from Pioneer at a premium, were $16.8 million,
0.94%, and 8.96% respectively. The reduction to net income, return on average
assets and return on average equity for the second quarter of 2021, resulting
from merger-related expenses, were $1.1 million, 0.08%, and 0.83%, respectively.

Net income totaled $8.1 million, or $0.36 per diluted share, for the six months
ended June 30, 2022, compared to $25.6 million, or $1.37 per diluted share, for
the same period in 2021. The return on average assets was 0.25% for the six
months ended June 30, 2022, compared to 0.97% for the same period in 2021, and
the return on average equity was 2.54% for the six months ended June 30, 2022,
compared to 10.12% for the same period in 2021.

Net income, return on average assets and return on average equity were reduced
by merger-related expenses and the provision for loan losses related to certain
non-impaired loans acquired from Pioneer at a premium upon the closing of the
merger. The reduction to net income, return on average assets and return on
average equity for the six months ended June 30, 2022, resulting from the
aggregate of merger-related expenses and the provision for loan losses related
to certain non-impaired loans acquired from Pioneer at a premium, were $17.0
million, 0.53%, and 5.35% respectively. The reduction to net income, return on
average assets and return on average equity for the six months ended June 30,
2021, resulting from merger-related expenses, were $1.1 million, 0.04%, and
0.42%, respectively.


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

                                    For the three months                                                        For the year ended
                                       ended June 30,              For the six months ended June 30,               December 31,
($ in thousands, except share and
per share amounts)                       2022                          2021                    2022                    2021                    2021
Income Statement:
Net interest income                 $    58,585                $         36,400           $    99,870          $          74,817          $   

155,233

Taxable equivalent adjustment             1,284                           1,704                 2,605                      3,495                5,755
Net interest income - fully tax
equivalent ("FTE") basis (non-GAAP)
(3)                                 $    59,869                $         38,104           $   102,475          $          78,312          $   

160,988

Provision for (reversal of) loan
losses                              $     5,000                $         (1,400)          $     8,700          $          (1,750)         $     3,000
Noninterest income                  $    22,302                $         32,283           $    45,995          $          66,164          $   124,244
Noninterest expense                 $    75,668                $         56,624           $   128,135          $         111,804          $   224,635
Net income                          $       430                $         11,281           $     8,099          $          25,619          $    43,164
Per Common Share Data:
Weighted average diluted common
shares                               25,458,311                      18,761,034            22,195,814                 18,722,828           18,770,785
Net income (basic)                  $      0.02                $           0.62           $      0.38          $            1.40          $      2.36
Net income (diluted)                $      0.02                $           0.60           $      0.36          $            1.37          $      2.30
Cash dividends                      $         -                $              -           $         -          $               -          $         -
Dividend payout ratio                         -  %                            -   %                 -  %                       -  %                 -  %
Book value                          $     29.28                $          27.87           $     29.28          $           27.87          $     28.56
Tangible common book value
(non-GAAP) (3)                      $     24.76                $          25.57           $     24.76          $           25.57          $     26.31
Performance Ratios:
Return on average assets                   0.02  %                         0.82   %              0.25  %                    0.97  %              0.79  %
Return on average stockholders'
equity                                     0.23  %                         8.82   %              2.54  %                   10.12  %              8.37  %
Return on tangible common equity
(non-GAAP) (3)                             0.76  %                         9.87   %              2.96  %                   11.17  %              9.17  %
Return on average tangible common
equity (non-GAAP) (3)                      0.74  %                         9.85   %              3.25  %                   11.29  %              9.35  %
Net interest margin                        3.56  %                         2.81   %              3.34  %                    3.00  %              3.08  %
Efficiency ratio (1)                      93.55  %                        82.44   %             87.84  %                   79.30  %             80.38 

%

Net charge-offs to average loans
outstanding                               (0.04) %                         0.30   %              0.01  %                    0.16  %              0.09  %
Allowance for loan losses to loans         1.04  %                         1.13   %              1.04  %                    1.13  %              1.18  %
Nonperforming loans to total loans
(2)                                        0.71  %                         1.27   %              0.71  %                    1.27  %              0.86  %
Balance Sheet:
Total loans, excluding loans
held-for-sale                       $ 5,387,928                $      3,794,355           $ 5,387,928          $       3,794,355          $ 4,037,123
Total assets                        $ 7,060,692                $      5,563,076           $ 7,060,692          $       5,563,076          $ 5,666,814
Total deposits                      $ 5,933,022                $      4,748,698           $ 5,933,022          $       4,748,698          $ 4,854,948
Total borrowed funds                $   239,927                $        108,910           $   239,927          $         108,910          $   

109,458

Total stockholders' equity          $   727,542                $        510,582           $   727,542          $         510,582          $   

524,038

Capital Ratios:
Total risk-based capital to
risk-weighted assets                      11.60  %                        12.44   %             11.60  %                   12.44  %             11.76 

%

Tier 1 risk-based capital to
risk-weighted assets                       9.59  %                        10.28   %              9.59  %                   10.28  %              9.70 

%

Common Equity Tier 1 (CET 1) to
risk-weighted assets                       9.59  %                        10.28   %              9.59  %                   10.28  %              9.70 

%

Tier 1 leverage capital to average
assets                                     8.89  %                         8.21   %              8.89  %                    8.21  %              8.24  %
Average equity to average assets          10.45  %                         9.34   %              9.92  %                    9.59  %              9.43  %
Tangible common equity to tangible
assets (non-GAAP) (3)                      8.86  %                         8.49   %              8.86  %                    8.49  %              8.58  %
Nonfinancial Data:
Full-time equivalent employees            1,144                           1,026                 1,144                      1,026                1,042
Banking branches                             72                              52                    72                         52                   53
(1) The efficiency ratio is one measure of profitability in the banking industry. This ratio measures the cost of generating one
dollar of revenue. That is, the ratio is designed to reflect the percentage of one dollar which must be expended to generate that
dollar of revenue. We calculate this ratio by dividing noninterest expense by the sum of net interest income and noninterest
income.
(2) Nonperforming loans include nonaccrual loans, accrual troubled debt restructurings ("TDR"), and accrual loans greater than 90
days past due.
(3) See section entitled "Non-GAAP Financial Measures and Reconciliations" for information regarding these non-GAAP financial
measures and a reconciliation to the most comparable GAAP equivalent.


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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 six months
ended June 30, 2022, 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:

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