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CB

CROSSFIRST BANKSHARES, INC. (CFB)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 delivered solid results: net income $18.2M and diluted EPS $0.36, with ROAA 1.00% and ROCE 10.36% .
  • Loans grew 2.0% (+$121M) to $6.2B and deposits rose 1.5% (+$96M) to $6.6B; NIM was stable at 3.20% (down 3 bps QoQ; hedge impact ~7 bps) while loan yields increased and deposit cost pressure moderated .
  • Noninterest income expanded to $5.6M (+26% YoY) on treasury, credit card and SBA contributions; management reaffirmed 2024 guidance (NIM 3.20–3.25%, 8–10% loan and deposit growth, adjusted OpEx $36–37M/quarter, ACL/Loans 1.25–1.35%, tax 20–22%) .
  • Credit remained resilient: NPAs/Assets fell to 0.27% (from 0.34% in Q4); ACL/Loans held at 1.20% and net charge-offs were 0.10% annualized .
  • Capital build continues with total risk-based 11.4% and CET1 10.2%; buybacks restarted with 112K shares repurchased at $13.10 (below TBV $13.70), a potential catalyst for investor sentiment .

What Went Well and What Went Wrong

What Went Well

  • “Strong organic loan and deposit growth, stable credit quality, expansion of noninterest income and an increase in earnings” (CEO prepared remarks) .
  • New loan production yield was 8.58%, supporting asset-yield expansion; loan growth was broad-based across markets and lines of business .
  • Noninterest income grew 26% YoY led by treasury, credit card and SBA; management expects sustained momentum via pricing actions and scaling of fee platforms .

What Went Wrong

  • Deposit costs rose 13 bps QoQ to 3.87%; NIM slipped 3 bps to 3.20%, with a 7 bps drag from the hedge becoming effective .
  • Classified loans increased modestly to 15.8% of capital plus reserves; NIB deposits declined to $954M (14.5% of deposits) versus 15% in Q4 .
  • ORE rose to $5.3M due to foreclosure on previously identified nonperforming loan; past dues ticked up on administrative timing but expected to revert .

Financial Results

MetricQ3 2023Q4 2023Q1 2024
Operating Revenue (FTE, $USD Millions)$61.8 $63.2 $62.7
Net Interest Income ($USD Millions)$55.1 $57.0 $56.6
Noninterest Income ($USD Millions)$6.0 $4.5 $5.6
Diluted EPS ($)$0.34 $0.35 $0.36
NIM (FTE, %)3.19% 3.23% 3.20%
Yield on Loans (%)6.96% 7.12% 7.19%
Cost of Total Deposits (%)3.59% 3.74% 3.87%
ROAA (%)0.94% 0.97% 1.00%
ROCE (%)10.19% 10.71% 10.36%
Deposits ($USD Millions)$6,332 $6,491 $6,587
DDA (% of Deposits)16% 15% 14%
NPAs / Total Assets (%)0.50% 0.34% 0.27%
Net Charge-offs / Avg Loans (%)0.09% 0.12% 0.10%

YoY snapshot (Q1 2024 vs Q1 2023)

MetricQ1 2023Q1 2024
Diluted EPS ($)$0.33 $0.36
NIM (FTE, %)3.65% 3.20%
Yield on Loans (%)6.56% 7.19%
Cost of Total Deposits (%)2.57% 3.87%
Noninterest Income ($USD Millions)$4.4 $5.6
Deposits ($USD Millions)$5,837 $6,587
DDA (% of Deposits)17% 14%
NPAs / Total Assets (%)0.16% 0.27%
Net Charge-offs / Avg Loans (%)0.12% 0.10%

Segment/KPIs

KPIQ1 2024
Loan Portfolio Mix: CRE – Non-Owner-Occupied44% of total loans
Loan Portfolio Mix: Commercial35% of total loans
Energy4% of total loans
Office Exposure$291M; 4.7% of total loans; WA LTV 61%; ~98% Class A/B; ~75% floating rate
Avg C&I Line Utilization51% (vs. 52% in Q4; 47% in Q3)
Loan-to-Deposit Ratio95% (vs. 94% in Q4)
Liquidity~33% of assets; ~$2.5B on/off balance sheet

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core Loan GrowthFY 20248–10% (Q4 2023 call) 8–10% (Q1 slides) Maintained
NIM (FTE)FY 20243.20–3.25% (Q4 2023 call) 3.20–3.25% (Q1 slides) Maintained
Adjusted Noninterest ExpenseQuarterly 2024$36–37M/quarter (Q4 2023 call) $36–37M/quarter (Q1 slides) Maintained
Combined ACL / LoansFY 20241.25–1.35% (Q4 2023 deck/call) 1.25–1.35% (Q1 slides) Maintained
Effective Tax RateFY 202420–22% (Q4 2023 call) 20–22% (Q1 call/slides) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023)Previous Mentions (Q4 2023)Current Period (Q1 2024)Trend
NIM trajectoryCalled bottom around low-3.20s; stability expected Stable in low 3.20s; guide 3.20–3.25 3.20%; slight hedge drag; stability with potential modest expansion if rates cut Stable to modestly improving with cuts
Deposit pricing/mixCompetition persists; NIB growth QoQ Cost of deposits up 15 bps; mix stable; L/D ~94% Cost up 13 bps; 26% indexed deposits; NIB 14.5%; L/D 95% Pressure moderating; mix stabilizing
Credit qualityNPAs spike but resolved; conservative posture NPAs down to 0.34%; ACL 1.2% NPAs down to 0.27%; ACL 1.2%; classifieds 15.8% Generally stable; vigilant
Fee income/SBA/treasuryBuilding SBA/treasury; $6.0M fees +26% YoY ex bond loss; pricing actions $5.6M; +26% YoY; focus on scaling w/o incremental cost Positive momentum
CRE/office exposureOffice ~$294M; LTV ~61%; mainly suburban; floating repricing Office ~$292M; similar profile Office $291M; ~98% Class A/B; ~75% floating Stable; manageable
Capital/buybacksTarget 11% TRBC/10% CET1 by YE23 Achieved; buybacks on table TRBC 11.4%/CET1 10.2%; buybacks restarted (112K shares) Returning capital prudently
Rate hedgeNot yet effectiveModest drags early 2024 anticipated Collar linked to SOFR now effective; ~7 bps NIM impact In run-rate; manageable

Management Commentary

  • “Our company had a solid first quarter with strong organic loan and deposit growth, stable credit quality, expansion of noninterest income and an increase in earnings.” — Michael Maddox, CEO .
  • “The average loan yield on new production in the quarter was a strong 8.58%… growth was broad-based across our markets.” — Randy Rapp, President, CrossFirst Bank .
  • “Noninterest income was $5.6 million for the quarter… on a year-over-year basis, noninterest income grew 26% with contributions from treasury, credit card and SBA.” — Ben Clouse, CFO .
  • “Fully tax equivalent net interest margin was down 3 basis points… We expect our NIM to improve modestly with any rate cuts this year, and we remain slightly liability sensitive.” — Ben Clouse, CFO .
  • “We restarted share buybacks… 112,000 shares at a weighted average cost of $13.10 compared to tangible book value per share of $13.70.” — Ben Clouse, CFO .

Q&A Highlights

  • Credit comfort and underwriting: Management emphasized conservative grading, frequent third‑party reviews, strong sponsors and resilient Midwest footprint; ACL/Loans 1.20% and classifieds at 15.8% were described as acceptable levels .
  • Margin sensitivity and hedge: Deposit cost pressure ebbing; loan yields keeping pace; SOFR‑linked collar effective, taken into run‑rate; margin stability expected even in static rates; modest expansion with cuts .
  • Fee income trajectory vs expenses: Year‑over‑year fee growth near 30%; investments in card/treasury/SBA largely made; management sees operating leverage with $37M quarterly OpEx run‑rate .
  • CRE churn outlook: Expect higher churn as stabilized properties move to permanent markets; recent rate moves may pause timing, but guidance intact and potential NIM benefit from recycling into higher‑yield opportunities .
  • Liquidity and funding: Liquidity ~33% of assets with ~$2.5B capacity; brokered funding kept flat; cash balances managed with deposit growth mainly organic .

Estimates Context

  • S&P Global consensus estimates for EPS and revenue were not available due to missing CIQ mapping for CFB, so we cannot assess beats/misses versus Wall Street consensus at this time [SpgiEstimatesError].
  • Management’s commentary indicates results were in line with internal expectations (NIM range, loan/deposit growth, fee momentum); however, we cannot anchor any estimate comparison without SPGI consensus .

Key Takeaways for Investors

  • Earnings quality improving: EPS up sequentially to $0.36 with ROAA 1.00% and ROCE 10.36%; fee engines (treasury, SBA, card) add diversification and are scaling without material incremental cost .
  • NIM durability: Despite a modest hedge drag, loan repricing/new production yields (8.58%) and moderating deposit betas support NIM stability in the low‑3.20s, with optionality to expand if rate cuts materialize .
  • Credit resilient: NPAs/Assets fell to 0.27%; ACL/Loans steady at 1.20%; classifieds modestly higher but described as acceptable and diversified; watch administrative past‑due normalization .
  • Capital deployment: With TRBC 11.4% and CET1 10.2%, modest buybacks below TBV resumed—balanced approach to capital build and shareholder return can support valuation .
  • Deposit-led growth: Management will pace loan growth to core deposit generation; deposit growth was organic in Q1, a positive signal for funding and margin defense .
  • CRE churn is a lever: Anticipated churn can recycle capital into higher‑yielding assets, potentially aiding NIM and risk-weight optimization; monitor permanent market activity and cap rate trends .
  • Execution focus: 2024 guidance maintained across NIM, growth, OpEx, ACL and tax rate; continued efficiency initiatives (core renegotiation) targeted to sustain operating leverage .

Notes:

  • We read the full Q1 2024 earnings call transcript and the Q1 2024 earnings slide deck; no separate Q1 2024 8‑K 2.02 press release was available in the document catalog during the specified window, so quantitative details reference slides and call remarks .
  • Prior‑quarter context was taken from Q4 2023 and Q3 2023 earnings call transcripts and the Q1 2024 slide historical series .