Financial Data and Key Metrics Changes - The company reported adjusted net income of $17.3 million or $0.35 per share for Q1 2023, with GAAP net income at $16.1 million or $0.33 per share, reflecting an increase in net interest income partially offset by higher non-interest expenses [53][60] - Average earning assets increased by $521 million compared to the prior quarter, and the yield on loans increased by 63 basis points [7][61] - The net interest margin (NIM) expanded by four basis points to 3.65% compared to the prior quarter, with expectations for NIM to narrow to a range of 3.40% to 3.55% for the remainder of the year [61][68] Business Line Data and Key Metrics Changes - Total loan growth for the quarter was $270 million, with C&I increasing by $59 million and commercial real estate increasing by $198 million [57] - Non-interest income was reported at $4.4 million for the quarter, with increases across several categories including gain on sale of loans [62] - The company reported net charge-offs of $1.6 million, resulting in a charge-off rate of 8 basis points on an annualized basis [5] Market Data and Key Metrics Changes - Average deposits increased by 8.3% to $5.7 billion, up $439 million from the previous quarter [58] - The percentage of demand deposits decreased to 17% of total deposits, down from 25% at the end of 2022, attributed to clients deploying funds that were previously parked in non-interest bearing accounts [46][99] - The company has significant liquidity of approximately $2.3 billion and has expanded its borrowing capacity at both the FHLB and Federal Reserve [78][105] Company Strategy and Development Direction - The company aims to manage growth with a focus on core deposit growth and has a theme of optimization for 2023, focusing on maximizing investments made to benefit clients and shareholders [67][85] - The company is strategically balancing capital deployment for growth while considering share buybacks, maintaining a conservative approach in light of recent market changes [86][87] - The company continues to focus on maintaining asset quality and adhering to credit standards amidst economic uncertainty [55][98] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning and ability to navigate the dynamic economic environment, emphasizing the importance of maintaining strong relationships with clients [70][97] - The management acknowledged the potential for increased loan spreads due to decreased liquidity in the markets and less competition [98] - The company is closely monitoring economic trends and has minimal exposure in higher impacted areas, with positive job creation and population migration in core markets [100] Other Important Information - The company reported a provision expense of $4.4 million, resulting in a provision to charge-off ratio of 269%, driven primarily by loan growth [59] - The company has a diversified balance sheet with significant liquidity to withstand market volatility and is well-capitalized under all ratios [68][78] - The company was recognized by GALLUP as a 2023 Don Clifton Strengths-Based Culture Award Winner, highlighting its commitment to employee development [96] Q&A Session Summary Question: What is the outlook for loan growth and deposit growth? - Management indicated that loan growth will be managed based on deposit growth, with expectations for both to grow at a rate of 8% to 10% [110] Question: How does the company view share buybacks given the stock's trading below tangible book value? - Management stated that while share buybacks are attractive, the focus will be on maintaining enough capital for growth opportunities [86][112] Question: What are the expectations for NIM and expenses for the remainder of the year? - Management clarified that the NIM guidance of 3.40% to 3.55% and expenses of $35 million to $36 million per quarter are for the remainder of the year [113][115]
CrossFirst Bankshares(CFB) - 2023 Q1 - Earnings Call Transcript