FSUN

FirstSun is a soundly run community bank that delivered a strong FY2025: net income of $97.9M (+29.5%) and diluted EPS of $3.47 (+29.0%), on a 4.10% net interest margin, 1.18% return on average assets and 4.7% loan / 6.6% average-deposit growth (per the MD&A Financial Highlights). The balance sheet is healthy — equity grew 10.8% to $1.15B, retained earnings rose 18.4% to $631M, and the ~6.36x liabilities/equity ratio is unremarkable for a bank. At $38.78 the stock trades on just 11.2x earnings and, against ~$41 of book value per share (equity $1.15B / 27.9M shares), below book — a discount that looks attractive for a franchise compounding earnings.

The catch is quality and the deal. ROE of 8.5% (management cites 8.88% on average equity) is mediocre for a bank — a strong franchise earns low-double-digits — and the sub-book multiple is the market correctly pricing that middling return, not a free lunch. More important, the MD&A discloses a transformative, already-approved merger with First Foundation Inc. that was expected to close early in Q2 2026 and so is likely now complete. This is not a bolt-on: it expands FirstSun into California, Texas and new Florida, Nevada and Hawaii markets and roughly reshapes the company. First Foundation is a known troubled, CRE/multifamily-heavy lender, and the deal brings share issuance (dilution), integration execution risk and credit risk that simply cannot be assessed from the standalone FY2025 numbers above.