FirstSun Capital (FSUN +1.61%), owner of the regional lender Sunflower Bank, had two pieces of news for the market to digest on Tuesday. After market close the previous day, the company disseminated its latest quarterly earnings report and announced a merger with a peer.
Investors didn't react well to the pair, though, and FirstSun's stock price plummeted by nearly 17% in the Tuesday session.
A pair of narrow misses
FirstSun booked total revenue of $107.3 million in its third quarter, an improvement over the $98.2 million it earned in the same period of 2024. Net income not under generally accepted accounting principles (GAAP) was slightly under $23.2 million, or $0.84 per share. This was down from the year-ago, non-GAAP (adjusted) profit of $22.4 million.
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That meant a mixed quarter for FirstSun, as analysts tracking the financial stock were collectively modeling only $106.7 million for revenue but $0.89 for adjusted profitability.
The company had to contend with higher credit costs. However, this was offset by certain positive developments in the fundamentals, such as a year-over-year rise of nearly 11% in total loans.
NASDAQ: FSUN
Key Data Points
A merger of Firsts
FirstSun also provided details of that merger, stating that it will be joining forces with financial services company First Foundation. This is to be effected in an all-stock transaction in which holders of First Foundation common and preferred stock will be given slightly more than 0.16 of a share of FirstSun for every share in their possession.
On top of that, First Foundation's warrant holders will exercise their warrants early, receiving FirstSun stock.
All told, FirstSun said, the aggregate transaction value of the deal amounts to roughly $785 million. After this closes, current FirstSun investors will own just under 60% of the merged company, which will retain the FirstSun name.
The deal is subject to approval by the shareholders of both companies and by the relevant regulatory bodies. FirstSun said it should close early in the second quarter of next year.
