CROSSFIRST BANKSHARES, INC. (CFB)·Q3 2024 Earnings Summary

Executive Summary

• Q3 delivered higher earnings with net income of $19.6M ($0.39) and adjusted net income of $21.9M ($0.43) on merger-related costs of $2.4M; operating revenue rose to $67.1M as NIM-FTE expanded to 3.29% and efficiency improved to 57.5% .
• Management now expects full‑year NIM at the high end of the prior 3.20–3.25% range, while Q4 non‑interest expense is guided to $36–37M ex‑merger costs; full‑year loan growth outlook was trimmed to 3–5% .
• Credit remained solid though mixed: NPAs increased to 0.34% of assets and provision rose to $3.5M QoQ, while annualized net charge‑offs remained low at 0.10% and classified loans improved to 10.7% of capital+ACL .
• Pending all‑stock merger with First Busey (announced Aug 27) is the primary catalyst; the combined franchise targets ~$20B assets with pro forma benefits across commercial banking and wealth, with closing targeted in 1H25 (subsequently completed Mar 1, 2025) .

What Went Well and What Went Wrong

• What Went Well

  • Operating leverage improved: adjusted efficiency ratio-FTE fell to 52.3% from 57.4% in Q2, aided by core processing savings; NIM-FTE increased to 3.29% on asset yield outpacing funding costs following the September rate cut .
  • Non‑GAAP profitability expanded: adjusted EPS rose to $0.43 (from $0.37) and adjusted ROCE to 11.75% (from 10.59%) .
  • CEO tone constructive: “expanded earnings and continued advancement of our operating leverage while maintaining strong credit quality…trough in our NIM behind us” .

• What Went Wrong

  • Deposits decreased $100M QoQ to $6.63B (largely two large money‑market clients), while non‑interest‑bearing deposits fell 6% QoQ; average deposits did rise sequentially, but period‑end mix pressure persisted .
  • NPAs increased $9.1M to 0.34% of assets, and loans 90+ DPD & ORE rose; provision increased to $3.5M (from $2.4M) on charge‑offs, macro factors and specific reserves in smaller C&I credits .
  • No Q3 earnings call due to pending merger, limiting real‑time Q&A and guidance color relative to prior quarters .

Financial Results

KPIs and balance sheet

Notes: Q3 included $2.4M merger-related costs; adjusted metrics exclude these (see non‑GAAP reconciliation) .

Guidance Changes

Earnings Call Themes & Trends

Note: CFB did not host a Q3 call due to the pending merger; current-period themes reflect the press release .

Management Commentary

• CEO (Mike Maddox): “With expanded earnings and continued advancement of our operating leverage while maintaining strong credit quality, CrossFirst delivered another great quarter… We remained focused on scaling our markets and verticals, continuing to reduce our CRE concentration and driving operating leverage with the trough in our NIM behind us.”
• Q2 CFO (Ben Clouse) on core savings and NIM: restructuring core system “expected annual run rate savings of approximately $2 million per year,” and expected NIM “in a range of 3.20% to 3.25% for the year” with benefit from potential cuts .
• Q3 outlook signals: NIM uplift benefited from September cut; full‑year NIM expected high end of range; loan growth moderated as clients awaited Fed actions .

Q&A Highlights

(From Q2 call; no Q3 call due to merger)

• Deposits: Mix stabilizing with potential for deposits to outpace loans near term; Nimbus yet to launch (planned Q4 2024) .
• NIM: Expect modest expansion with rate cuts; positioned to benefit; cost of deposits increases moderating .
• Credit: Classified loans improved across portfolios; ACL stable near 1.20% with strong coverage vs NPLs .
• CRE concentration: Plan to reduce below 300% of capital over several quarters; office exposure manageable (suburban mix, LTVs ~low 60s) .
• Capital: Opportunistic buybacks used when stock below TBV; priority also on funding high-quality growth .

Estimates Context

• We attempted to retrieve S&P Global consensus for Q3 2024 EPS and revenue but could not due to a data mapping issue for this ticker in the estimates system. As a result, beat/miss versus Wall Street consensus cannot be shown here. Management did not host a Q3 call due to the pending Busey transaction, limiting external estimate color this quarter .

Key Takeaways for Investors

• Adjusted earnings strength with operating leverage: adjusted EPS $0.43 vs $0.37 YoY; adjusted efficiency ratio improved notably to 52.3% .
• Margin momentum: NIM-FTE up 9 bps QoQ to 3.29% with guidance bias to the top of the 3.20–3.25% FY range, supported by asset‑liability repricing dynamics post rate cut .
• Credit remains manageable: NPAs ticked up to 0.34% but net charge‑offs annualized at 0.10% and ACL/loans increased to 1.23% with improved classified loans ratio .
• Funding: Period‑end deposits dipped 1% QoQ on two large customers, but average deposits improved; focus on core growth, fee expansion continues .
• Cost discipline: Q4 opex ex‑merger costs guided to $36–$37M, reflecting realized core processing savings and ongoing efficiency initiatives .
• Strategy: Continued CRE de‑risking and disciplined loan growth (FY guidance lowered to 3–5%) to prioritize profitability and risk‑adjusted returns .
• Catalyst: Pending (now completed) Busey merger provides scale benefits across commercial banking, wealth, and payments; integration execution and synergy realization are the next stock drivers .

Appendix: Additional Data Points

• Q3 Provision for credit losses: $3.53M vs $2.38M in Q2 and $3.33M in Q3’23 .
• Book value per share: $15.65 (GAAP) and TBVPS $14.92; both up 6% QoQ on earnings and AOCI improvement .
• Capital: CET1 ~10.6%, Total risk‑based ~11.8%; well‑capitalized .
• No Q3 earnings call due to pending Busey transaction .