Financial Data and Key Metrics Changes - The company reported a record net income of $12 million for Q1 2021, resulting in earnings per share of $0.23, despite a provision of $7.5 million [7][23] - Operating revenue increased by 12% year-over-year to $45.3 million, with a 2% increase compared to the previous quarter [24] - The efficiency ratio improved to 50.4%, down from 55.1% in Q1 2020 and 58.1% for the entire 2020 year [30] Business Line Data and Key Metrics Changes - The loan portfolio, excluding PPP loans, grew by 4% compared to Q1 2020 and 1% from the previous quarter [8] - Non-interest income for the quarter was $4.1 million, a 41% increase from the previous quarter, with credit card fees being the largest contributor [24] - Non-interest expenses decreased to $22.8 million, reflecting efficiencies achieved from staff reductions made in Q3 2020 [29] Market Data and Key Metrics Changes - The company experienced strong deposit growth of 8%, with DDA accounts growing by 11% [8] - The allowance for loan and lease losses to total loans ended Q1 at 1.79%, excluding PPP loans [34] - Non-performing assets decreased by 12% during Q1 to $68.9 million, or 1.15% of total assets [35] Company Strategy and Development Direction - The company is focused on improving earnings, reducing risk, and enhancing credit metrics post-pandemic [5] - A strategic emphasis is placed on technology investments to remain competitive in the banking landscape [16] - The company plans to continue evaluating new market expansions and potential acquisitions to supplement growth [21] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the economic outlook, anticipating improvements as vaccinations roll out and fiscal stimulus fuels growth [19] - The company expects loan provisioning to moderate through the remainder of 2021 based on current loan portfolio trends [9] - Management highlighted the importance of attracting and retaining high-quality talent as a strategic focus [11] Other Important Information - The company is undergoing a leadership transition with the planned retirement of the CFO, who will remain until a successor is identified [11][12] - The company has executed a stock repurchase plan, repurchasing 88,497 shares at an average price of $11.86 [31] Q&A Session Summary Question: Loan demand and competition outlook - Management noted a pickup in loan demand and a competitive environment for high-quality credit, particularly in real estate and commercial sectors [40] Question: Expectations for net charge-off levels - Management expects charge-off levels to normalize below 30 basis points, following unique charge-off activity in specific portfolio areas [46] Question: Cost of deposits and margin protection - Management indicated potential for further reductions in the cost of funds, estimating a 5 to 10 basis point reduction in the upcoming quarter [48] Question: Future loan growth expectations - Management anticipates a loan growth rate of 10% to 15% in a normal environment, with hopes for market expansion [50] Question: Fee income growth sustainability - Management expects continued solid growth in fee income, although some recent increases were attributed to specific customer activity related to pandemic services [55] Question: Operating expenses outlook - Management indicated that a run rate of $23 million to $24 million for operating expenses is reasonable, with potential investments impacting future expenses [56]
CrossFirst Bankshares(CFB) - 2021 Q1 - Earnings Call Transcript