Financial Performance and Capital Management - The Company provided an additional $134 million in Paycheck Protection Program (PPP) funding during 2021, with loans earning interest at 1% and maturing in five years[10]. - The Company completed a $20 million share repurchase program in June 2021, repurchasing 1,573,806 common shares at an average price of $12.68 per share[12]. - As of December 31, 2021, the Company had repurchased 566,164 common shares under a new $30 million share repurchase program at an average price of $14.75 per share[12]. - The Company aims to improve financial performance and attract talent while maintaining a branch-lite business model[9]. - The Company reported a focus on organic growth and selective acquisitions to drive shareholder value[9]. - The Company is required to meet several risk-based capital adequacy requirements under the Basel III Capital Rules, including a total capital to risk-weighted assets ratio of at least 8.0%[17]. - The minimum Common Equity Tier 1 (CET1) capital to risk-weighted assets ratio is set at 4.5%[17]. - The Company must maintain a Tier 1 leverage ratio of at least 4.0%[17]. - A capital conservation buffer of 2.5% is required above the regulatory minimum risk-based capital requirements[17]. - As of December 31, 2021, the Company's capital ratios exceeded the minimum capital adequacy requirements under the Basel III Capital Rules[18]. - The Company is classified as "well-capitalized" with a CET1 risk-based capital ratio of 6.5% or more, a tier 1 risk-based capital ratio of 8% or more, and a total risk-based capital ratio of 10% or more[18]. - The Company may need to raise additional capital in the future to support growth and maintain regulatory capital levels[49]. - Failure to meet capital requirements could result in regulatory actions that may limit the Company's growth initiatives and ability to pay dividends[66]. - The Company is subject to increased FDIC deposit insurance premiums, which could adversely affect its financial condition and results of operations[68]. Employee and Organizational Development - As of December 31, 2021, the Company had 360 full-time equivalent employees, with approximately 59% female and 41% male[12]. - The Company promoted over 19% of current employees into roles with increased responsibilities in 2021[16]. - The Company offers a Generous Giving program that matches employee donations up to $500 per employee per year[13]. - The Company provides paid leave for volunteer activities through its CrossFirst Volunteer Time Off program[13]. - The Company has implemented flexible work-from-home options for a large percentage of employees in response to the COVID-19 pandemic[16]. - The Company focuses on diversity and inclusion initiatives to enhance its inclusive culture and attract key talent[13]. - The Company is committed to attracting, retaining, and developing talent to support its growth initiatives[9]. Regulatory Compliance and Risk Management - The Company is subject to regular examination by regulatory agencies, which can affect its business conduct and growth[16]. - The Company is subject to regulation and supervision by the Federal Reserve under the Bank Holding Company Act of 1956[18]. - The Company is required to provide financial assistance to its depository institution subsidiaries in the event of financial distress[19]. - The Federal Reserve has the authority to regulate the debt of bank holding companies, including interest rate ceilings and reserve requirements[19]. - The Company's ability to pay dividends is affected by both corporate law and Federal Reserve regulations, including the Basel III Capital Rules[19]. - The Bank is subject to examination, supervision, and regulation by the Office of the State Bank Commissioner of Kansas and the FDIC[19]. - The Company faces risks related to compliance with the Bank Secrecy Act and anti-money laundering regulations, which could lead to significant penalties and impact its operations[69]. - Regulatory compliance costs are increasing, and failure to comply could result in fines, penalties, or restrictions on business operations[63]. - The risk management framework may not effectively mitigate risks or losses, potentially leading to adverse regulatory consequences[50]. Business Operations and Expansion - The Company opened a new branch in Phoenix, Arizona, expanding its footprint in June 2021[12]. - The Company is transitioning its credit card services in-house, expected to be completed in 2022, eliminating the third-party service provider[12]. - The Company executed a contract with Q2 to implement a unified digital platform for clients, enhancing the digital client experience[12]. - The Company is evaluating opportunities for expansion through de novo branching, which carries significant startup costs and risks[34]. - Mergers and acquisitions are part of the growth strategy, but they involve risks such as integration challenges and potential dilution of existing stockholders[34]. - The Company anticipates opening an additional banking location in Dallas, Texas, in 2022[77]. - The Company operates nine full-service banking centers across multiple states, including Kansas, Missouri, Oklahoma, Texas, and Arizona[77]. - The company has grown organically by establishing eight branches and through two strategic acquisitions since its inception[9]. Economic and Market Conditions - The ongoing COVID-19 pandemic has caused significant disruptions to economic activity, leading to increased unemployment and declines in loan collateral values[33]. - Changes in interest rates can adversely affect the company's net interest income and overall profitability[33]. - The Federal Reserve's monetary policy significantly impacts the operating results of financial institutions, influencing interest rates on loans and deposits[32]. - The company faces risks related to credit quality concerns and reduced demand for banking products due to unfavorable economic conditions[33]. - The ultimate impacts of the pandemic on the company's business remain uncertain and difficult to predict[33]. - A decline in general business and economic conditions could have a material adverse effect on the company's financial position and growth prospects[33]. - The company's profitability is highly sensitive to changes in market interest rates, which can affect net interest income and the value of loan collateral[33]. - The concentration in commercial real estate lending may lead regulators to restrict the company's growth opportunities if certain thresholds are exceeded[38]. Technology and Cybersecurity - The Company is focused on leveraging technology to improve client experience and profitability[9]. - The Company’s technology strategy was strengthened in 2021 to improve the digital experience for clients[10]. - The company is exposed to cybersecurity threats, which could lead to significant increases in operating costs and potential liability[53]. - The company depends on third-party service providers for essential operations, and any difficulties with these providers could materially affect business continuity[57]. - Failure to keep pace with technological change could adversely affect the company's ability to compete effectively in the financial services industry[52]. Market Competition and Challenges - Competition in the banking industry is intense, with significant pressure from larger national and regional financial institutions[49]. - The market price of the Company's common stock may be volatile due to various factors, including quarterly results and regulatory changes[72]. - The Company may face challenges in acquiring or merging with other institutions due to regulatory limitations on changes of control[73]. - Future equity issuances could result in dilution of existing shares, potentially causing a decline in the stock price[74]. - Negative public opinion and reputation risk could adversely impact the company's ability to attract and retain clients[58].
CrossFirst Bankshares(CFB) - 2021 Q4 - Annual Report