Financial Data and Key Metrics Changes - The company reported net income of $18.6 million, or $0.37 per diluted share, representing a 2% increase from the previous quarter [16][52] - Total assets grew to $7.6 billion, an increase of 2% from the previous quarter [17] - The return on average assets was 1.0% and return on average common equity was 10.6% [53] - The total cost of deposits was 3.92%, increasing by 5 basis points [54] - The fully tax equivalent net interest margin remained stable at 3.20% [55] Business Line Data and Key Metrics Changes - Total loan growth for the quarter was $95 million, resulting in a growth rate of 6% on an annualized basis, primarily driven by C&I, energy, and commercial real estate [8][20] - Non-interest income increased to $5.7 million, expanding 2% from the previous quarter, with service charges and credit card revenues being the main contributors [57] - The allowance for credit loss to total loan loss ratio was 1.42%, consistent with the prior quarter [11] Market Data and Key Metrics Changes - The company reported a 2% increase in deposits to $6.7 billion, up $147 million from the previous quarter [51] - Non-interest bearing deposits increased slightly to $958 million, representing 14% of total deposits [51] - The commercial real estate exposure as a percentage of capital was approximately 320% at the end of the quarter, with a goal to reduce it below 300% [74] Company Strategy and Development Direction - The company is focused on scaling its markets and verticals, driving operating leverage across its expense base, and enhancing franchise value [5][17] - There is a strategic emphasis on maintaining credit quality while moderating loan growth and adhering to credit underwriting standards [17][20] - The company plans to continue leveraging earnings power to build capital while being opportunistic with share buybacks [18][59] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about credit quality metrics, noting improvements in past dues, non-accruals, and classified assets [6][24] - The company anticipates continued solid growth in deposits and loans, with a focus on maintaining a balanced portfolio [20][45] - Management expects some headwinds in net interest income growth due to the dynamic rate environment but remains positioned for potential rate cuts [29][55] Other Important Information - The company completed a successful negotiation of its core services contract, expected to generate significant savings [25][45] - The average yield on new loans for the quarter was 8.93%, indicating strong loan production [47] Q&A Session Summary Question: Thoughts on deposit growth and NIB mix stabilization - Management believes the deposit mix has stabilized and continues to focus on improving non-interest bearing deposits, with growth driven by core deposits from their markets [35] Question: Potential for deposit growth to outpace loan growth - Management indicated that they see opportunities for deposit growth to potentially outpace loan growth, especially with clarity on the economy [36] Question: Drivers of classified asset improvement - The improvement in classified assets was attributed to overall portfolio performance, including refinanced transactions and restructuring with additional equity [95] Question: Update on commercial real estate exposure - The commercial real estate exposure was approximately 320% of capital at the end of the quarter, with efforts underway to reduce it below 300% [74] Question: Capital deployment thoughts given recent market movements - Management expressed a preference for deploying capital into high-quality growth opportunities in their markets, given the recent positive movement in stock price [86]
CrossFirst Bankshares(CFB) - 2024 Q2 - Earnings Call Transcript