Financial Performance - Total assets reached $5.5 billion, a 12% increase from December 31, 2019[140] - Loan growth of $64 million from the previous quarter and $854 million or 23% over the last twelve months[140] - Deposit growth of $188 million from the previous quarter and $834 million or 23% over the last twelve months[140] - Efficiency ratio improved to 53% for Q3 2020 due to optimized staffing and controlled spending[140] - Book value per share increased to $11.84 at September 30, 2020, compared to $11.59 at the same date in 2019[140] - Net interest income for 2020 was $39,996 thousand, an increase from $36,409 thousand in 2019, reflecting a growth of approximately 7%[154] - Total assets increased to $5,486,252 thousand in 2020 from $4,610,958 thousand in 2019, representing a growth of about 19%[154] - Gross loans, net of unearned income, rose to $4,477,211 thousand in 2020, up from $3,540,707 thousand in 2019, indicating an increase of approximately 27%[154] - Total interest-earning assets for 2020 were $5,341,940 thousand, compared to $4,456,624 thousand in 2019, marking an increase of approximately 20%[154] - Total non-interest income for the three months ended September 30, 2020, was $4,063,000, a 26% increase compared to $3,212,000 for the same period in 2019[166] Loan and Deposit Activity - The company’s gross loans increased by $631 million or 16% from December 31, 2019, driven primarily by PPP loans, which represented 58% of the net loan growth[181] - The residential real estate loan portfolio saw a $219 million or 55% increase, attributed to new loan funding of approximately $113 million and strengthened relationships with key developers[182] - The commercial real estate portfolio increased by $172 million or 17%, with significant activity in the Dallas and Kansas City markets[183] - Deposits totaled $4 billion, an increase of $569 million or 14% from December 31, 2019, driven by noninterest-bearing deposits from PPP loans[205] Asset Quality and Loan Losses - Total loan modifications due to COVID-19 amounted to $317.7 million, representing 7% of gross loans[145] - The allowance for loan losses increased to $75,970 thousand in 2020 from $43,327 thousand in 2019, representing a rise of approximately 76%[154] - Nonperforming assets include non-accrual loans, loans past due 90 days or more, and foreclosed assets, impacting overall asset quality metrics[195] - Nonaccrual loans increased by $38 million during the quarter ended September 30, 2020, primarily due to a commercial loan restructuring and loans impacted by the COVID-19 pandemic and low oil prices[196] - Total nonperforming loans reached $79.884 million as of September 30, 2020, compared to $37.754 million on June 30, 2020[198] Interest Rate and Funding - The net interest margin decreased to 2.98% in 2020 from 3.24% in 2019, showing a decline of about 8%[154] - The average yield on gross loans was 3.90% in 2020, down from 5.53% in 2019, reflecting a decrease of about 29%[154] - The cost of funds for 2020 was $9,125 thousand, compared to $19,743 thousand in 2019, indicating a decrease of about 54%[154] - The company anticipates net interest margin to improve to around 3.05% during the fourth quarter of 2020 if nonaccrual loans are maintained and cost of funds is reduced[163] - The company expects the cost of funds to remain flat or slightly decline in the fourth quarter of 2020 as time deposits and other borrowings mature[162] Non-Interest Income and Expenses - Service charges and fees on customer accounts increased by 1,000% for the three months ended September 30, 2020, compared to the same period in 2019, reaching $792,000[166] - Gain on sale of available-for-sale debt securities increased to $1,012,000 for the three months ended September 30, 2020, compared to $34,000 for the same period in 2019, reflecting a 2,876% increase[167] - Total non-interest expense for the three months ended September 30, 2020, was $23,011,000, a 9% increase compared to $21,172,000 for the same period in 2019[172] - Professional fees increased by 165% for the three months ended September 30, 2020, reaching $1,132,000, compared to $427,000 for the same period in 2019[172] - Salary and employee benefits increased by 3% for the three months ended September 30, 2020, totaling $14,628,000, compared to $14,256,000 for the same period in 2019[172] Strategic Initiatives and Market Conditions - The Company opened its second full-service bank in the Dallas metropolitan area[140] - A $20 million common stock buyback program was announced[140] - The company performed a goodwill impairment review resulting in a $7 million impairment for the Tulsa market reporting unit[177] - The company expects further declines in the energy portfolio, which decreased by $24 million or 6% from December 31, 2019, as part of a strategy to reduce oil and gas loan concentrations[183] - The Company had approximately $39 million of potential problem loans as of September 30, 2020, which may result in disclosure as impaired loans next quarter[204] Risk Management - Interest rate risk management is crucial for the Company, with the objective to maximize income while minimizing interest rate risk[221] - The Funds Management Committee (FMC) utilizes gap reports, earnings simulation, and economic value of equity to measure interest rate risk[222] - A hypothetical +100 basis point shock as of September 30, 2020 would result in a 0.3% increase in net interest income, primarily due to 70% of earning assets repricing or maturing within the next 12 months[228] - The mix of adjustable loans or loans maturing in one year or less to total loans was 71%, contributing to the increase in net interest income in a rising rate environment[228] - The Company excluded the down rate environment from its analysis for the period ended September 30, 2020, due to the already low interest rate environment[223]
CrossFirst Bankshares(CFB) - 2020 Q3 - Quarterly Report