Financial Data and Key Metrics Changes - Total assets grew to a record $7.5 billion with loan growth at 8% on an annualized basis [9] - Net income was $18.2 million or $0.36 earnings per share, reflecting a 3% increase from the previous quarter [46] - The total cost of deposits was 3.87% for the quarter, increasing by 13 basis points [21] - The return on average assets was 1.0% and return on average common equity was 10.4% [20] Business Line Data and Key Metrics Changes - Total loan growth was $121 million, resulting in a growth rate of 2% for the quarter or 8% on an annualized basis, primarily driven by commercial real estate, C&I, and owner-occupied real estate [13] - The average loan yield on new production was 8.58% [13] - Noninterest income was $5.6 million for the quarter, expanding from the previous quarter and growing 26% year-over-year [23] Market Data and Key Metrics Changes - Deposits increased by 1.5% to $6.6 billion, up $96 million from the previous quarter [18] - Noninterest-bearing deposits decreased slightly to $954 million, representing 14.5% of total deposits [18] - The classified loans to total capital plus combined reserves ratio ended Q1 at 15.8%, up from 14.8% at the end of Q4 [43] Company Strategy and Development Direction - The company continues to focus on increasing loan yields and optimizing operations while managing expenses [38] - There is a commitment to grow prudently, efficiently, and profitably, with a focus on deposits and noninterest income opportunities [37] - The company plans to continue share buybacks while building capital [51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the evolving financial landscape and optimism about future performance due to strong markets [11] - The company anticipates increased churn in the commercial real estate portfolio, which may lower total CRE exposure in future quarters [42] - Management highlighted the importance of maintaining good credit metrics and the quality of the loan portfolio [44][80] Other Important Information - The company received the Don Clifton Strengths-Based Culture Award for the second consecutive year, reflecting its strong workplace culture [36] - The average C&I line utilization was 51%, slightly above the historical usage percentage [40] Q&A Session Summary Question: Concerns about credit underwriting and reserve levels - Management acknowledged the increase in classified loans but emphasized that it was primarily due to administrative issues and that they expect the number to return to historical levels [75][79] Question: Outlook on fee income and expenses - Management expressed confidence in continued fee income growth, particularly in treasury, credit card, and SBA, while also focusing on controlling expenses [60][83] Question: Impact of interest rates on loan growth and margin - Management indicated that the ability to grow loans is tied to deposit growth and that they expect to maintain stability in net interest margin even in a static rate environment [99][108] Question: Loan portfolio churn and its implications - Management discussed factors influencing churn, including project age and market conditions, and expressed optimism about potential opportunities arising from increased churn [68][93]
CrossFirst Bankshares(CFB) - 2024 Q1 - Earnings Call Transcript