FirstSun Capital Bancorp, the Denver-based parent of Sunflower Bank, says it uncovered alleged fraud at a commercial borrower, alerted law enforcement, and is bracing for roughly a $22 million loss tied to the relationship. Company filings say the hit stems from an asset-based loan backed by misstated accounts receivable, collateral, and historical financial statements. Bank managers have started legal proceedings, and a receiver has been appointed over the borrower's assets.
The company laid out the situation in a regulatory disclosure, noting that the loan carried an outstanding principal balance of about $23.6 million and that the borrower "made fraudulent misrepresentations" about its books and collateral, according to a SEC Form 8-K. The filing says FirstSun initiated proceedings to appoint a receiver, expects "an approximate $22.0 million charge-off" in the second quarter, and has notified appropriate law enforcement authorities.
"We expect our second quarter 2026 financial results to be adversely affected by charge-offs," the filing states. It also flags a second troubled lending relationship, a commercial-and-industrial loan to a technology company with roughly $16 million outstanding, where the bank anticipates about a $12.9 million charge-off. Taken together, FirstSun now expects second-quarter charge-offs in the $42 million to $43 million range and a provision for credit losses of roughly $40 million to $41 million. Management plans to report second-quarter results on July 27 and host a conference call on July 28, according to the SEC filing.
Balance Sheet Reshuffle After A Big Merger
The disclosure lands as FirstSun continues to reshape its balance sheet after closing its April merger with First Foundation and making related portfolio moves. In early June, Sunflower Bank closed the sale of approximately $890 million of performing multifamily loans to entities affiliated with Brookfield Asset Management, according to BusinessWire. Local coverage earlier this spring tracked the merger and regulatory approvals when the lender secured Fed OK For $785 Million SoCal Takeover, as per Hoodline.
FirstSun told investors it will pursue legal remedies to recover funds and has "initiated legal proceedings" against the borrower, as reported by the Denver Business Journal. Summaries of the company's 8-K filing, replicated on financial reporting sites, also note the bank expects "minimal recovery" on the exposure even as a receiver works to secure assets, according to StockTitan.
Investors will be watching FirstSun's second-quarter release and the July 28 call for details on recoveries and any shift in the bank's updated credit outlook. The company described the alleged fraud as an isolated incident in its filing, but the looming charge-offs highlight the risks banks shoulder when underwriting asset-based credits and integrating large, newly acquired loan portfolios.
