Crossfirst Bankshares (CFB) Q2 Earnings call transcript Jul 16, 2024

In the latest earnings call, CrossFirst Bankshares Inc. highlighted a robust second quarter performance, underscoring its strategic growth initiatives and credit improvements. With solid earnings growth, strong credit quality, and a focus on capital allocation, CrossFirst Bankshares is poised for continued success.

Earnings Growth and Credit Quality

CrossFirst Bankshares reported a strong earnings growth of $18.6 million, or $0.37 per diluted share. This growth can be attributed to the strategic expansion of markets and verticals, leading to increased net interest income and fee income. The company's focus on operating leverage has also contributed to this growth, as well as its ability to maintain credit quality. Notably, credit quality improved in the quarter, with a decrease in non-performing assets to total assets ratio, reflecting the company's prudent risk management strategies.

Strategic Growth and Market Expansion

CrossFirst Bankshares continues to focus on strategic expansion, particularly in its dynamic Texas, Colorado, and Arizona markets. The company's disciplined approach to loan growth, coupled with a focus on quality relationships, has resulted in a loan growth of $95 million, or 6% on an annualized basis. This growth was primarily driven by C&I, energy, and commercial real estate sectors, highlighting the company's diversified portfolio.

Deposit Growth and Efficiency

Deposit growth remains a priority for CrossFirst Bankshares, with a 2% increase in total deposits to $6.7 billion. Despite the challenges posed by tax payments and a highly competitive deposit market, the company has made progress in driving net growth in client deposits, particularly in Texas and its energy group. CrossFirst Bankshares has also made significant strides in improving its efficiency ratio, successfully negotiating a core services contract that is expected to result in meaningful savings.

Financial Highlights and Outlook

The company's financial highlights include a decrease in past-due transactions to historical levels, an increase in fee income, and a solid growth in year-to-date operating revenue and adjusted net income. CrossFirst Bankshares continues to focus on initiatives to drive profitable growth, leveraging investments in new markets, technology, and talent. The company's strong earnings growth has enabled it to build capital while also returning capital to shareholders through its share buyback program.

Credit Metrics and Future Outlook

The earnings call also shed light on CrossFirst Bankshares' credit metrics, which indicate a strong focus on risk management. The company reported a decrease in its non-performing assets to total assets ratio, reflecting its prudent credit management strategies. Despite market pressures, CrossFirst Bankshares remains optimistic about its future, with a focus on reducing its total CRE exposure below 300% of capital and maintaining a diversified loan portfolio.

Conclusion

In conclusion, CrossFirst Bankshares' second quarter earnings call underscores its strong financial performance and strategic growth initiatives. With a focus on credit quality, market expansion, and operational efficiency, CrossFirst Bankshares is well-positioned for continued success. The company's disciplined approach to risk management, combined with its strategic growth initiatives, positions it for a bright future in the financial services sector.