Yahoo Finance CrossFirst Bankshares Inc (CFB) Q1 2024 Earnings Call Transcript Highlights: Strategic Growth ...
Total Assets: Grew to a record $7.5 billion.
Loan Growth: 8% on an annualized basis.
Net Income: $18.2 million.
Earnings Per Share (EPS): $0.36 per share.
Non-Interest Income: Year-over-year growth, driven by SBA and treasury fees.
Deposit Growth: Notable in Kansas City, Oklahoma, and Phoenix markets.
Commercial Real Estate (CRE) Portfolio: Increase due to strategic acquisitions, focus on reducing CRE concentration.
Net Interest Margin (NIM): 3.20%, expected to improve with potential rate cuts.
Provision for Credit Losses: $1.65 million, lower than previous quarter.
Non-Performing Asset Ratio: Decreased to 27 basis points from 34 basis points in Q4.
Release Date: April 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Woody Lay from KBW asked about the increase in the 30 to 89-day past due bucket and whether it was related to just one relationship. A: Randy Rapp, President of CrossFirst Bank, clarified that the increase involved a couple of larger transactions that were in the process of renewing. He mentioned that these were administrative issues, including one where a strong guarantor was out of the country but has since returned and executed documents. He expects the number to return to historical levels in the current quarter.
Q: Michael Rose from Raymond James inquired about the increase in classified loans year over year and sought reassurance about the bank's credit underwriting and reserve levels. A: Randy Rapp responded by expressing confidence in the bank's credit metrics and quality, highlighting the bank's adherence to underwriting standards and the quality of their sponsors and markets. Michael Maddox, CEO, added that the bank has historically low classified loans to capital, strong non-performing numbers, and consistent third-party validation of their portfolio.
Q: Michael Rose also asked about the outlook for expenses and fee income, particularly in relation to the bank's focus areas. A: Michael Maddox indicated a focus on fee income and expense management, noting investments in card, treasury, and SBA services that should scale without incremental costs. Ben Clouse, CFO, added that they expect to be at the upper end of their expense guidance but see opportunities for revenue scaling in their focus areas.
Q: Andrew Liesch from Piper Sandler asked for details about a hedge that became effective this quarter and its impact on the second quarter margin. A: Ben Clouse explained that the hedge is a three-year collar linked to SOFR, which started affecting the first quarter. He anticipates stability in the margin, even in a static rate environment, due to the alignment of asset yield and cost of funds changes.
Q: Matt Olney from Stephens inquired about the potential for higher churn in the loan portfolio due to interest rates and its impact on loan growth. A: Randy Rapp acknowledged several factors influencing churn, including project maturity and market conditions. He noted ongoing discussions with clients about their intentions to sell or refinance, which could lead to $50 million to $100 million in churn in the near term.
Q: Matt Olney also asked about the outlook for the net interest margin, particularly the impact of securities yields and potential for further restructuring. A: Ben Clouse noted improvements in securities yields due to higher rate reinvestments and the potential for further yield enhancements through restructuring. He emphasized ongoing efforts to optimize yields across the portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
