FirstSun Capital Bancorp in Denver warned that two commercial credits will ding its quarterly results.
The company disclosed in a regulatory filing that its plans to record a loan-loss provision of $40 million to $41 million during the second quarter. Chargeoffs will range from $42 million to $43 million.
The first lending relationship is an asset-based loan to a materials distributor with an outstanding principal balance of about $23.6 million with no previous specific reserve. “We believe the borrower made fraudulent misrepresentations about its accounts receivable, collateral, and historical financial results,” the filing said.
FirstSun said it initiated legal proceedings seeking the appointment of a receiver over the borrower and its assets, and a receiver has been appointed. The bank expects a $22 million chargeoff tied to the loan.
The relationship is a commercial-and-industrial loan to a technology company with an outstanding principal balance of about $16.0 million with no previous specific reserve. The bank expects to record a $12.9 million chargeoff for the loan “based on recent developments impacting the borrower’s business, including deterioration in the borrower’s financial performance in the second quarter.”