Crossfirst Bankshares Inc.
01/24/2022 | Press release | Distributed by Public on 01/24/2022 16:09
Press Release Issued January 24, 2022 - Form 8-K
1
INVESTOR CONTACT
January 24, 2022
Heather Worley
[email protected] | (214) 676-4666
https://investors.crossfirstbankshares.com
CrossFirst Bankshares, Inc. Reports Fourth Quarterand Full Year 2021
Results
Fourth Quarter 2021 Key FinancialPerformance Metrics
Net Income
ROAA
Net Interest Margin
(FTE)
Diluted EPS
ROE
$20.8 million
1.50%
3.28%
$0.40
12.57%
LEAWOOD, Kan., January 24, 2022 (GLOBE NEWSWIRE) -- CrossFirst Bankshares, Inc. (Nasdaq: CFB), the bank holding company for
CrossFirst Bank, today reported operating results for the fourth quarter and full year 2021, with fourth quarter net income of $20.8 million,
or $0.40 per diluted share, and full year net income of $69.4 million, or $1.33 per diluted share.
CEO Commentary:
"We built significant momentum in 2021 with solid earnings, operating revenue at an all-timehigh and a return to loan growth in the last
half of the year.We also made meaningful progress this past year in deposit mix and growing fee income while making investments in
talent and technology to drive growth, serve our clients in extraordinary ways and deliver value to our shareholders," said CrossFirst's
CEO and President, Mike Maddox. "Our fourth quarter was a great capstone to the year with continued loan growth and significant
improvement in credit quality."
2021 Fourth Quarterand Full YearHighlights:
•
$5.6 billion of assets with net income for the fiscal year ended December 31, 2021 of $69 million,an increase of $57 million
or 451% from the prior year ended December 31, 2020
•
Improvement in credit quality during 2021 as evidenced by the decrease in nonperforming assets to total assets ratio from
1.39% at December 31, 2020 to 0.58% at December 31, 2021
•
Return on AverageAssets of 1.24% and a Return on Equity of 10.84% for the fiscal year ended December 31, 2021
•
Net Interest Margin (Fully Tax-Equivalent) of 3.15% for thefiscal year ended December 31, 2021, compared to 3.13% for
the prior year ended December 31, 2020
•
Annualized loan growth of 7% for the fourth quarter of 2021, excluding PPP loans
•
Non-interest-bearing deposit growth of 62% from December 31, 2020 which represented 25% of total deposits at December
31, 2021
Quarter-to-Date
Full Year
December 31,
December 31,
(Dollars in millions except per share data)
2021
2020
2021
2020
Operating revenue
(1)
$
48.2
$
44.5
$
182.4
$
172.0
Net income
$
20.8
$
8.1
$
69.4
$
12.6
Diluted earnings per share
$
0.40
$
0.15
$
1.33
$
0.24
Return on average assets
1.50
%
0.58
%
1.24
%
0.24
%
Return on average common equity
12.57
%
5.19
%
10.84
%
2.05
%
Non-GAAP core return on average tangible commonequity
(2)
12.57
%
5.19
%
11.40
%
3.27
%
Net interest margin
3.22
%
3.07
%
3.09
%
3.08
%
Net interest margin, fully tax-equivalent
(3)
3.28
%
3.12
%
3.15
%
3.13
%
Efficiency ratio
55.38
%
53.35
%
54.50
%
58.13
%
Non-GAAP core operating efficiency ratio, fully tax-equivalent
(2)(3)
54.52
%
52.54
%
52.02
%
52.98
%
(1)
Net interest income plus non-interest income.
(2)
Represents a non-GAAP measure. See "Table 5. Non-GAAP Financial Measures" for a reconciliation of these measures.
(3)
Tax exempt income is calculated on a tax-equivalentbasis. Tax-free municipal securities are exempt from federal income taxes. Theincremental federal income tax rate used
is 21.0%.
CROSSFIRST BANKSHARES,INC.
2
Income from Operations
Net Interest Income
Interest income was $49.2 million for the fourth quarter of 2021, a decreaseof 1% from the fourth quarter of 2020 and an increase of 4%
from the previous quarter.Interest income was slightly down from the fourth quarter of 2020 as a result of lower average loans
outstanding and a reduction of $4.5 million in PPP fee income. Average earning assets totaled $5.4 billion for thefourth quarter of 2021, a
decrease of $23 million or 1% from the same quarter in 2020.The tax-equivalent yield on earning assets increased from 3.62% to 3.70%
during the fourth quarter of 2021 compared to the previous quarter, mostly driven by loans moving off nonaccrualstatus. For full year
2021, interest income was $193.2 million, which declined compared to full year 2020 primarily due to the yield movements on earning
assets.
Interest expense for the fourth quarter of 2021 was $5.8 million, or 28% lower than the fourth quarter of 2020 and 4% higher thanthe
previous quarter.Average interest-bearing deposits decreased to $3.5 billion in the fourth quarter of 2021, or a 9% decrease from the same
prior year period.Cost of funds for the quarter was 0.48%, compared to 0.46% for the third quarter of 2021. During the fourth quarter of
2021, $40 million of FHLB advances were paid off early, which drove the cost of funds increase. Excluding the prepayment penalty, cost
of funds would have decreased 0.05% compared to the third quarter of 2021. For full year 2021, interest expense was $24.5 million, a
decrease of 43% compared to full year 2020 due to lower market rates.
Net interest income totaled $43.4 million for the fourth quarter of 2021 or 4% higher than the third quarter of 2021, and 5% higher thanthe
fourth quarter of 2020.Tax-equivalent net interest margin increased to 3.28% in the current quarter, from 3.20%in the previous quarter,
and increased from 3.12% in the same quarter in 2020.During the fourth quarter of 2021, CrossFirst realized $1.3 million in fees from the
forgiveness of $44 million of PPP loans. The Company will continue to recognize feesover the life of the loans or as the loans are
forgiven.The tax-equivalent adjustment,which accounts for income taxes saved on the interest earned on nontaxable securities and loans,
was $0.8 million for the fourth quarter of 2021.Full year 2021 net interest income grew to $168.7 million, an increase of 5% compared to
full year 2020, while tax-equivalent net interest margin increased to 3.15% from 3.13%for the prior year.
Non-Interest Income
Non-interest income increased $1.8 million in the fourth quarter of 2021 or 63% compared to thesame quarter of 2020 and increased $5.9
million compared to the third quarter of 2021. The increase in non-interest income compared to the previous quarter was due to the $6.2
million impairment loss recorded in the previous quarter. The increase innon-interest income compared to the same quarter of 2020, was
primarily due to increases of $0.9 million in credit card fees and $0.4 million in service charge income.Full year 2021 non-interest income
was up $1.9 million or 16% compared to full year 2020. The main drivers of the increase wereincreases in service charges and fees on
customer accounts of $1.8 million, $1.7 million in income from bank-owned lifeinsurance and a $3.6 million increase in ATM and credit
card interchange income.
Non-Interest Expense
Non-interest expense for the fourth quarter of 2021 was $26.7 million, which increased 13% compared to the fourthquarter of 2020 and
increased 11% from the third quarter of 2021.Salaries and benefit costs were higher in the current quarter by $1.1 million compared to the
prior quarter and $1.7 million higher than the same quarter in the prior year mainly due to increased hiring for marketexpansion and
increased incentive expenses.Full year 2021 non-interest expense decreased $0.6 million or 1% compared to full year 2020 primarily due
to a $7.4 million goodwill impairment recorded in the second quarter of 2020. This decrease was partly offset by a $3.3 million increase in
salary and employee benefits, $1.0 million increase in occupancy, and $2.8 million increase inother non-interest expense as compared to
the prior year. The other non-interestexpense increase was primarily due to increases in commercial card costs as a result of our growing
customer base and increased use as a result of the COVID-19 pandemic. In addition, insured cash sweep ("ICS") deposits increased in
2021 from 2020, which drove related fees higher.
CrossFirst's effective tax rate for the fourth quarter of 2021 was 22% as compared to 18% for the fourth quarter of 2020.The 2021 tax
rate for the quarter increased due to a greater mix of taxable income to tax-exempt income.For both comparable periods, the Company
continued to benefit from the tax-exempt municipal bond portfolio and bank-owned life insurance.The tax-exempt benefit diminishes as
the Company's ratio of taxable income to tax-exempt income increases.
CROSSFIRST BANKSHARES,INC.
3
Balance Sheet Performance &Analysis
During the fourth quarter of 2021, total assets increased by $220 million or 4% compared to September 30, 2021, and decreased $38
million or 1% compared to December 31, 2020.Total assets increased on a linked quarter basis primarily due to a $166 million increase in
cash and cash equivalents and decreased year-over-year primarily due to a $186 million decline in loans driven by the PPP loan
forgiveness program.The year-over-year decrease was partly offset by increases in cash and cash equivalents and securities of $74 million
and $91 million, respectively. Non-interest-bearing depositsincreased $202 million compared to September 30, 2021, and increased $445
million from December 31, 2020.During the fourth quarter of
2021
, available-for-sale investment securities increased $38 million to $746
million compared to September 30, 2021.The securities yields increased
2
basis points to a tax equivalent yield of 2.89% for the fourth
quarter of
2021
compared to the prior quarter.
Loan Results
During the fourth quarter of 2021, the Company experienced a decrease in average loans of $10 million compared to September 30, 2021,
and a decrease of $273 million or 6% compared to December 31, 2020.The year-over-year reduction in average loans was primarily a
result of PPP loan forgiveness. Net of PPP loans, average loans grew 1% compared to September30, 2021. Loan yields increased 17 basis
points to 4.17% during the fourth quarter of 2021 and increased 17 basis points over the last twelve months.
4Q21
3Q21
2Q21
1Q21
4Q20
QoQ
Growth
($)
QoQ
Growth
(%)
(1)
YoY
Growth
($)
YoY
Growth
(%)
(1)
(Dollars in millions)
Average loans (gross)
Commercial
$
1,328
$
1,233
$
1,221
$
1,329
$
1,367
$
95
8
%
$
(39)
(3)
%
Energy
290
311
341
351
381
(21)
(7)
(91)
(24)
Commercial real estate
1,272
1,213
1,203
1,183
1,194
59
5
78
7
Construction and land development
579
611
633
598
585
(32)
(5)
(6)
(1)
Residential and multifamily real estate
612
659
659
688
664
(47)
(7)
(52)
(8)
Paycheck Protection Program
84
147
296
308
258
(63)
(43)
(174)
(67)
Consumer
56
57
56
50
45
(1)
(2)
11
24
Total
$
4,221
$
4,231
$
4,409
$
4,507
$
4,494
$
(10)
(0)
%
$
(273)
(6)
%
Yield on average loans for the period
ending
4.17
%
4.00
%
3.99
%
3.94
%
4.00
%
(1)
Actual unrounded values are used to calculate the reportedpercent disclosed. Accordingly,recalculations using the amounts in millions as disclosed in this release may not
produce the same amounts.
Deposit & Other Borrowing Results
During the fourth quarter of 2021, the Company experienced an increase in average deposits of2% compared to September 30, 2021, and
a less than 1% decline in average deposits compared to December 31, 2020. The deposit growth for the quarter was driven by a continued
increase in non-interest-bearing deposits, which represented 25% of total deposits at December 31, 2021.In addition, the Company
continued to improve the overall cost of deposits, which declined 5 basis points during the fourth quarter of 2021. The cost of interest-
bearing deposits has declined 26 basis points over the last twelve months primarily as a result of the lower interest rate environment.
4Q21
3Q21
2Q21
1Q21
4Q20
QoQ
Growth
($)
QoQ
Growth
(%)
(1)
YoY
Growth
($)
YoY
Growth
(%)
(1)
(Dollars in millions)
Average deposits
Non-interest bearing deposits
$
1,058
$
910
$
802
$
731
$
732
$
148
16
%
$
326
45
%
Transaction deposits
543
511
665
717
575
32
6
(32)
(6)
Savings and money market deposits
2,272
2,276
2,385
2,422
2,158
(4)
(0)
114
5
Time deposits
662
752
869
972
1,087
(90)
(12)
(425)
(39)
Total
$
4,535
$
4,449
$
4,721
$
4,842
$
4,552
$
86
2
%
$
(17)
(0)
%
Cost of deposits for the period ending
0.33
%
0.38
%
0.41
%
0.48
%
0.58
%
Cost of interest-bearing deposits for the
period ending
0.43
%
0.47
%
0.50
%
0.57
%
0.69
%
(1)
Actual unrounded values are used to calculate the reportedpercent disclosed. Accordingly,recalculations using the amounts in millions as disclosed in this release may
not produce the same amounts.
At December 31, 2021, other borrowings totaled $238 million, as comparedto $278 million at September 30, 2021, and $296 million at
December 31, 2020.
CROSSFIRST BANKSHARES,INC.
4
Asset Quality Position
Credit quality metrics continued to improve during the fourth quarter of 2021 as classified assets decreased $45 million and the ratio of
nonperforming assets to total assets decreased to 0.58% from 0.92% in the previous quarter.The improvements in credit metrics were
primarily driven by upgrades in COVID-19 impacted segments and the Energy portfolio.Net charge-offs were $0.8 million for the fourth
quarter of 2021 as compared to $1.3 million for the third quarter of 2021.The charge-offs for the current quarter were related to energy
and commercial and industrial credits.
The overall decrease in the allowance for loan losses for the current quarter reflects some stabilization inthe Company's economic outlook
and improved credit performance.These factors resulted in a $5 million release of reserves during the fourth quarter of 2021.The
following table provides information regarding asset quality.
Asset quality
(Dollars in millions)
4Q21
3Q21
2Q21
1Q21
4Q20
Non-accrual loans
$
31.4
$
48.1
$
54.7
$
63.3
$
75.1
Other real estate owned
1.1
1.1
1.7
2.3
2.3
Nonperforming assets
32.7
49.8
58.1
68.9
78.4
Loans 90+ days past due and stillaccruing
0.1
0.5
1.8
3.2
1.0
Loans 30 - 89 days past due
3.5
37.6
18.8
11.0
18.1
Net charge-offs (recoveries)
0.8
1.3
2.6
8.2
11.6
Asset quality metrics
(%)
4Q21
3Q21
2Q21
1Q21
4Q20
Nonperforming assets to total assets
0.58
%
0.92
%
1.09
%
1.15
%
1.39
%
Allowance for loan loss to total loans
1.37
1.51
1.78
1.65
1.70
Allowance for loan loss to nonperforming loans
185
132
134
112
99
Net charge-offs (recoveries) to average loans
(1)
0.07
0.13
0.23
0.74
1.03
Provision to average loans
(1)
(0.47)
(0.94)
0.32
0.67
0.96
Classified Loans / (Total Capital + ALLL)
10.8
17.3
24.0
38.2
40.9
(1)
Interim periods annualized.
Capital Position
At December 31, 2021, stockholders' equity totaled $668 million, or $13.23 per share, compared to $624 million, or $12.08per share, at
December 31, 2020. During the fourth quarter of 2021, CrossFirst continued its $30million share repurchase program by purchasing
566,164 shares or 1% of common stock outstanding.
The ratio of common equity Tier 1 capital to risk-weighted assets was approximately 12% and the total capitalto risk-weighted assets was
approximately 14% at December 31, 2021. The Company remains well-capitalized.
CROSSFIRST BANKSHARES,INC.
5
Conference Call and Webcast
CrossFirst will hold a conference call to review fourth quarter and full-year 2021 financial results on Tuesday, January 25, 2022, at 10 a.m.
CT / 11 a.m. ET. The results are scheduled to be released after the market closes on Monday, January 24, 2022. The conference calland
webcast may also include discussion of Company developments, forward-looking statements and other material information about
business and financial matters. To access the event by telephone, please dial (877) 621-5851 atleast fifteen minutes prior to the start of the
call and provide conference number 9688475. International callers should dial +1 (470) 495-9492 and enter the same conference number.
The call will also be broadcast live over the internet and can be accessed via the following link:https://edge.media-
server.com/mmc/p/rienoizn. Please visit the site atleast 15 minutes prior to the call to allow time for registration.
For those unable to join the presentation, a replay of the call will beavailable two hours after the conclusion of the live call. To access the
replay, dial (855) 859-2056 and provide conference number 9688475, passcode 9067. International callers should dial +1 (404) 537-3406
and enter the same confirmation number.A replay of the webcast will also be available for 90 days on the company's website
https://investors.crossfirstbankshares.com/.
Cautionary Notice about Forward-Looking Statements
The financial results in this press release reflect preliminary, unaudited results, which are not final until the Company'sAnnual Report on
Form 10-K is filed. This earnings release contains forward-looking statements. These forward-looking statements reflect the Company's
current views with respect to, among other things, future events and its financial performance.Any statements about management's
expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical factsand may
be forward-looking. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believes,"
"can," "could," "may," "predicts," "potential," "should," "will," "estimate," "plans," "projects," "continuing," "ongoing," "expects,"
"intends" and similar words or phrases. Any forward-looking statements in this earnings release may turn outto be inaccurate. The
inclusion of forward-looking information in this earnings release should not be regarded as a representation by us or anyother person that
the future plans, estimates or expectations contemplated by us will be achieved.The Company has based these forward-looking statements
largely on its current expectations and projections aboutfuture events and financial trends that it believes may affect its financial
condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in
such forward-looking statements.
Accordingly, the Company cautions you that any such forward-looking statements are not a guarantee of future performance and that
actual results may prove to be materially different from the results expressed or implied by theforward-looking statements due to a
number of factors. Such factors include, without limitation, those listed from time to time in reports that the Company files with the
Securities and Exchange Commission as well as the uncertain impact of the COVID-19 pandemic. These forward-lookingstatements are
made as of the date of this communication, and the Company does not intend, and assumes no obligation, to update any forward-looking
statement to reflect events or circumstances after the date on which the statement is made or to reflectthe occurrence of unanticipated
events or circumstances, except as required by law.
About CrossFirst Bank
CrossFirst Bankshares, Inc. (Nasdaq: CFB) is a Kansas corporation and a registered bank holding company for its wholly owned
subsidiary CrossFirst Bank, which is headquartered in Leawood, Kansas.CrossFirst has nine full-service banking locations in Kansas,
Missouri, Oklahoma, Texas, and Arizona that offerproducts and services to businesses, professionals, individuals, and families.
CROSSFIRST BANKSHARES,INC.
6
Unaudited Financial Tables
◦
◦
◦
◦
◦
CROSSFIRST BANKSHARES,INC.
7
TABLE 1. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of December 31,
2021
2020
(Dollars in thousands)
Assets
Cash and cash equivalents
$
482,727
$
408,810
Available-for-sale securities - taxable
192,146
177,238
Available-for-sale securities - tax-exempt
553,823
477,350
Loans, net of allowance for loan losses of $58,375 and $75,295 at December31, 2021 and 2020,
respectively
4,197,838
4,366,602
Premises and equipment, net
66,069
70,509
Restricted equity securities
11,927
15,543
Interest receivable
16,023
17,236
Foreclosed assets held for sale
1,148
2,347
Bank-owned life insurance
67,498
67,498
Other
32,258
56,170
Total assets
$
5,621,457
$
5,659,303
Liabilities and stockholders' equity
Deposits
Noninterest-bearing
$
1,163,224
$
718,459
Savings, NOW and money market
2,895,986
2,932,799
Time
624,387
1,043,482
Total deposits
4,683,597
4,694,740
Federal funds purchased and repurchase agreements
-
2,306
Federal Home Loan Bank advances
236,600
293,100
Other borrowings
1,009
963
Interest payable and other liabilities
32,678
43,766
Total liabilities
4,953,884
5,034,875
Stockholders' equity
Common stock, $0.01 par value:
authorized - 200,000,000 shares, issued - 52,590,015 and 52,289,129 shares at December
31, 2021 and 2020, respectively
526
523
Treasury stock, at cost:
2,139,970 and 609,613 shares held at December 31, 2021 and 2020, respectively
(28,347)
(6,061)
Additional paid-in capital
526,806
522,911
Retained earnings
147,099
77,652
Accumulated other comprehensive income
21,489
29,403
Total stockholders' equity
667,573
624,428
Total liabilities and stockholders' equity
$
5,621,457
$
5,659,303
CROSSFIRST BANKSHARES,INC.
8
TABLE 2. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
2021
2020
(Dollars in thousands except per share data)
Interest Income
Loans, including fees
$
44,392
$
45,147
$
174,660
$
183,738
Available-for-sale securities - taxable
850
899
3,273
5,073
Available-for-sale securities - tax-exempt
3,623
3,255
14,033
13,013
Deposits with financial institutions
143
56
502
639
Dividends on bank stocks
194
177
682
985
Total interest income
49,202
49,534
193,150
203,448
Interest Expense
Deposits
3,734
6,610
18,523
36,585
Fed funds purchased and repurchase agreements
-
2
3
164
Federal Home Loan Bank Advances
1,999
1,361
5,837
6,341
Other borrowings
24
24
96
109
Total interest expense
5,757
7,997
24,459
43,199
Net Interest Income
43,445
41,537
168,691
160,249
Provision for Loan Losses
(5,000)
10,875
(4,000)
56,700
Net Interest Income after Provision for Loan Losses
48,445
30,662
172,691
103,549
Non-Interest Income
Service charges and fees on customer accounts
1,250
856
4,580
2,803
Realized gains on available-for-sale securities
(20)
(21)
1,023
1,704
Gain on sale of loans
-
44
-
44
Gains (losses), net on equity securities
(82)
(6)
(6,325)
47
Income from bank-owned life insurance
395
436
3,483
1,809
Swap fees and credit valuation adjustments, net
119
(284)
275
(204)
ATM and credit card interchange income
2,427
1,516
7,996
4,379
Other non-interest income
707
408
2,628
1,151
Total non-interest income
4,796
2,949
13,660
11,733
Non-Interest Expense
Salaries and employee benefits
16,468
14,725
61,080
57,747
Occupancy
2,381
2,427
9,688
8,701
Professional fees
981
1,120
3,519
4,218
Deposit insurance premiums
710
1,150
3,705
4,301
Data processing
742
654
2,878
2,719
Advertising
756
349
2,090
1,219
Software and communication
1,136
978
4,234
3,750
Foreclosed assets, net
17
74
697
1,239
Goodwill impairment
-
-
-
7,397
Other non-interest expense
3,524
2,255
11,491
8,677
Total non-interest expense
26,715
23,732
99,382
99,968
Net Income Before Taxes
26,526
9,879
86,969
15,314
Income tax expense
5,725
1,785
17,556
2,713
Net Income
$
20,801
$
8,094
$
69,413
$
12,601
Basic Earnings Per Share
$
0.41
$
0.16
$
1.35
$
0.24
Diluted Earnings Per Share
$
0.40
$
0.15
$
1.33
$
0.24
CROSSFIRST BANKSHARES,INC.
9
TABLE 3. YEAR-TO-DATEANALYSIS OF CHANGES IN NET INTEREST
INCOME
(UNAUDITED)
Twelve Months Ended
December 31,
2021
2020
Average
Balance
Interest
Income /
Expense
Average
Yield /
Rate
(3)
Average
Balance
Interest
Income /
Expense
Average
Yield /
Rate
(3)
(Dollars in thousands)
Interest-earning assets:
Securities - taxable
$
204,889
$
3,955
1.93
%
$
267,715
$
6,058
2.26
%
Securities - tax-exempt
(1)
518,058
16,981
3.28
447,324
15,745
3.52
Federal funds sold
-
-
-
1,020
18
1.73
Interest-bearing deposits in other banks
389,893
502
0.13
179,978
621
0.35
Gross loans, net of unearned income
(2)
4,340,791
174,660
4.02
4,310,345
183,738
4.26
Total interest-earning assets
(1)
5,453,631
$
196,098
3.60
%
5,206,382
$
206,180
3.96
%
Allowance for loan losses
(73,544)
(68,897)
Other non-interest-earning assets
211,384
220,994
Total assets
$
5,591,471
$
5,358,479
Interest-bearing liabilities
Transaction deposits
$
608,063
$
1,152
0.19
%
$
447,777
$
1,696
0.38
%
Savings and money market deposits
2,338,315
8,225
0.35
1,993,964
14,033
0.70
Time deposits
812,774
9,146
1.13
1,155,492
20,856
1.80
Total interest-bearing deposits
3,759,152
18,523
0.49
3,597,233
36,585
1.02
FHLB and short-term borrowings
279,379
5,840
2.09
417,956
6,508
1.56
Trust preferred securities, net of fair value
adjustments
982
96
9.76
939
106
11.34
Non-interest-bearing deposits
876,309
-
-
684,294
-
-
Cost of funds
4,915,822
$
24,459
0.50
%
4,700,422
$
43,199
0.92
%
Other liabilities
35,447
43,331
Stockholders' equity
640,202
614,726
Total liabilities and stockholders' equity
$
5,591,471
$
5,358,479
Net interest income
(1)
$
171,639
$
162,981
Net interest spread
(1)
3.10
%
3.04
%
Net interest margin
(1)
3.15
%
3.13
%
(1)
Tax exempt income is calculated on a tax-equivalent basis. Tax-free municipal securitiesare exempt from federal income taxes. The incremental income tax rateused is 21.0%.
(2)
Average loan balances include nonaccrual loans.
(3)
Actual unrounded values are used to calculate the reportedyield or rate disclosed. Accordingly, recalculationsusing the amounts in thousands as disclosed in this release may
not produce the same amounts.
CROSSFIRST BANKSHARES,INC.
10
YEAR-TO-DATE VOLUME & RATE VARIANCE TO NET INTEREST INCOME (UNAUDITED)
Twelve Months Ended
December 31, 2021 over 2020
Average Volume
Yield/Rate
Net Change
(2)
(Dollars in thousands)
Interest Income
Securities - taxable
$
(1,297)
$
(806)
$
(2,103)
Securities - tax-exempt
(1)
2,364
(1,128)
1,236
Federal funds sold
(18)
-
(18)
Interest-bearing deposits in other banks
437
(556)
(119)
Gross loans, net of unearned income
1,294
(10,372)
(9,078)
Total interest income
(1)
2,780
(12,862)
(10,082)
Interest Expense
Transaction deposits
483
(1,027)
(544)
Savings and money market deposits
2,092
(7,900)
(5,808)
Time deposits
(5,193)
(6,517)
(11,710)
Total interest-bearing deposits
(2,618)
(15,444)
(18,062)
FHLB and short-term borrowings
(2,518)
1,850
(668)
Trust preferred securities, net of fair value adjustments
5
(15)
(10)
Total interest expense
(5,131)
(13,609)
(18,740)
Net interest income
(1)
$
7,911
$
747
$
8,658
(1)
Tax exempt income is calculated on a tax-equivalent basis. Tax-free municipal securitiesare exempt from federal income income taxes. Theincremental income income tax
rate used is 21.0%.
(2)
The change in interest not due solely to volume or rate has been allocated in proportion tothe respective absolute dollar amounts of the change in volume or rate.
CROSSFIRST BANKSHARES,INC.
11
TABLE 4. 2020 - 2021 QUARTERLY ANALYSIS OF CHANGES IN NET INTEREST INCOME
(UNAUDITED)
Three Months Ended
December 31,
2021
2020
Average
Balance
Interest
Income /
Expense
Average
Yield /
Rate
(3)
Average
Balance
Interest
Income /
Expense
Average
Yield /
Rate
(3)
(Dollars in thousands)
Interest-earning assets:
Securities - taxable
$
196,576
$
1,044
2.11
%
$
215,348
$
1,075
1.99
%
Securities - tax-exempt
(1)
547,948
4,385
3.17
458,651
3,939
3.42
Federal funds sold
-
-
-
-
-
-
Interest-bearing deposits in other banks
387,828
143
0.15
208,650
56
0.11
Gross loans, net of unearned income
(2)
4,220,842
44,392
4.17
4,493,806
45,147
4.00
Total interest-earning assets
(1)
5,353,194
$
49,964
3.70
%
5,376,455
$
50,217
3.71
%
Allowance for loan losses
(64,102)
(80,770)
Other non-interest-earning assets
201,390
227,511
Total assets
$
5,490,482
$
5,523,196
Interest-bearing liabilities
Transaction deposits
$
543,088
$
216
0.16
%
$
574,811
$
306
0.21
%
Savings and money market deposits
2,272,307
1,824
0.32
2,158,044
2,344
0.43
Time deposits
661,978
1,694
1.02
1,086,825
3,960
1.45
Total interest-bearing deposits
3,477,373
3,734
0.43
3,819,680
6,610
0.69
FHLB and short-term borrowings
261,600
1,999
3.03
304,923
1,363
1.78
Trust preferred securities, net of fair value
adjustments
1,000
24
9.67
954
24
9.97
Non-interest-bearing deposits
1,058,462
-
-
732,028
-
-
Cost of funds
4,798,435
$
5,757
0.48
%
4,857,585
$
7,997
0.65
%
Other liabilities
35,632
45,115
Stockholders' equity
656,415
620,496
Total liabilities and stockholders' equity
$
5,490,482
$
5,523,196
Net interest income
(1)
$
44,207
$
42,220
Net interest spread
(1)
3.22
%
3.06
%
Net interest margin
(1)
3.28
%
3.12
%
(1)
Tax exempt income is calculated on a tax-equivalent basis. Tax-free municipal securitiesare exempt from federal income taxes. The incremental income tax rateused is 21.0%.
(2)
Average gross loan balances include non-accrualloans.
(3)
Actual unrounded values are used to calculate the reportedyield or rate disclosed. Accordingly, recalculationsusing the amounts in thousands as disclosed in this release may
not produce the same amounts.
CROSSFIRST BANKSHARES,INC.
12
QUARTER-TO-DATE VOLUME & RATE VARIANCE TO NET INTEREST INCOME (UNAUDITED)
Three Months Ended
December 31, 2021 over 2020
Average Volume
Yield/Rate
Net Change
(2)
(Dollars in thousands)
Interest Income
Securities - taxable
$
(95)
$
64
$
(31)
Securities - tax-exempt
(1)
745
(299)
446
Federal funds sold
-
-
-
Interest-bearing deposits in other banks
61
26
87
Gross loans, net of unearned income
(2,710)
1,955
(755)
Total interest income
(1)
(1,999)
1,746
(253)
Interest Expense
Transaction deposits
(17)
(73)
(90)
Savings and money market deposits
116
(636)
(520)
Time deposits
(1,289)
(977)
(2,266)
Total interest-bearing deposits
(1,190)
(1,686)
(2,876)
FHLB and short-term borrowings
(216)
852
636
Trust preferred securities, net of fair value adjustments
1
(1)
-
Total interest expense
(1,405)
(835)
(2,240)
Net interest income
(1)
$
(594)
$
2,581
$
1,987
(1)
Tax exempt income is calculated on a tax-equivalent basis. Tax-free municipal securitiesare exempt from federal income taxes. The incremental income tax rateused is 21.0%.
(2)
The change in interest not due solely to volume or rate has been allocated in proportion tothe respective absolute dollar amounts of the change in volume or rate.
CROSSFIRST BANKSHARES,INC.
13
TABLE 5. NON-GAAP FINANCIAL MEASURES
Non-GAAP Financial Measures
In addition to disclosing financial measures determined in accordance with GAAP, the Company discloses non-GAAP financial measures
in this release. The Company believes that the non-GAAP financial measures presented in this release reflectindustry conventions, or
standard measures within the industry, and provide useful information to the Company's management, investors and other parties
interested in the Company's operating performance. These measurements should be considered in addition to, but not as a substitute for,
financial information prepared in accordance with GAAP. We have defined below each of the non-GAAP measures we usein this release,
but these measures may not be synonymous to similar measurement terms used by other companies.
CrossFirst provides reconciliations of these non-GAAP measures below. The measures used in this release include the following:
•
We calculate ''non-GAAP core operating income'' as net income adjusted to remove non-recurring or non-core income and
expense items related to:
▪
Goodwill impairment - We performed an interim review of goodwill as of June 30, 2020. The book value of goodwill
exceeded its fair market value and resulted in a full $7.4 million impairment.
▪
Charges and adjustments associated with the full vesting of a former executive - We incurred additional charges in the second
quarter of 2021 related to the acceleration of $0.7 million of certain cash, stock-based compensation, and employee costs.
▪
Bank Owned Life Insurance - We obtain bank owned life insurance on key employees throughout the organizationand
received a $1.8 million benefit in the second quarter of 2021.
▪
Unrealized loss on equity security - During the quarter ended September 30, 2021, the Company recorded a $6.2 million
impairment loss related to an equity investment that was received as part of a restructured loan agreement.
The most directly comparable GAAP financial measure for non-GAAP core operating incomeis net income.
•
We calculate "core return on average tangible common equity" as non-GAAPcore operating income (as defined above)
divided by average tangible common equity. Average tangible common equity is calculated as averagecommon equity less
average goodwill and intangibles and average preferred equity. The most directly comparable GAAP measure is return on
average common equity.
•
We calculate "non-GAAP core operating return on average assets" asnon-GAAP core operating income (as defined above)
divided by average assets. The most directly comparable GAAP financial measure is return on average assets, which is
calculated as net income divided by average assets.
•
We calculate ''non-GAAP core operating return on average common equity'' as non-GAAP core operatingincome (as
defined above) less preferred dividends divided by average common equity. The most directly comparable GAAP financial
measure is return on average common equity, which is calculated as net income less preferred dividends divided by average
common equity.
•
We calculate "tangible common stockholders' equity" as total stockholders' equity less goodwill and intangibles and
preferred equity. The most directly comparable GAAP measure is total stockholders' equity.
•
We calculate ''tangible book value per share'' as tangible common stockholders' equity(as defined above) divided by the
total number of shares outstanding. The most directly comparable GAAP measure is book valueper share.
•
We calculate "non-GAAP core operating efficiency ratio - fully tax equivalent (FTE)" as non-interest expenseadjusted to
remove non-recurring, or non-core, non-interest expenses as defined above under non-GAAP core operating income divided
by net interest income on a fully tax-equivalent basis plus non-interest income adjusted to remove non-recurring, or non-
core, non-interest income as defined above under non-GAAP core operating income. The most directly comparable financial
measure is the efficiency ratio.
•
We calculate "non-GAAP pre-tax pre-provision profit"as net income before taxes plus the provision for loan losses.
CROSSFIRST BANKSHARES,INC.
13
Quarter Ended
Twelve Months Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
12/31/2021
12/31/2020
(Dollars in thousands)
Non-GAAP core operating income:
Net income
$
20,801
$
21,000
$
15,577
$
12,035
$
8,094
$
69,413
$
12,601
Add: Unrealized loss on equity security
-
6,200
-
-
-
6,200
-
Less: Tax effect
(2)
-
1,302
-
-
-
1,302
-
Unrealized loss on equity security, net oftax
-
4,898
-
-
-
4,898
-
Add: Goodwill impairment
(1)
-
-
-
-
-
-
7,397
Add: Accelerated employee benefits
-
-
719
-
-
719
-
Less: Tax effect
(3)
-
-
210
-
-
210
-
Accelerated employee benefits, net oftax
-
-
509
-
-
509
-
Less: BOLI settlement benefits
(1)
-
-
1,841
-
-
1,841
-
Non-GAAP core operating income
$
20,801
$
25,898
$
14,245
$
12,035
$
8,094
$
72,979
$
19,998
(1)
No tax effect.
(2)
Represents the tax impact of the adjustmentsat a tax rate of 21.0%.
(3)
Represents the tax impact of the adjustmentsabove at a tax rate of 21.0%,plus a permanent tax benefit associated withstock-based grants.
Quarter Ended
Twelve Months Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
12/31/2021
12/31/2020
(Dollars in thousands)
Non-GAAP core return on average tangible common equity:
Net income available to common stockholders
$
20,801
$
21,000
$
15,577
$
12,035
$
8,094
$
69,413
$
12,601
Non-GAAP core operating income
20,801
25,898
14,245
12,035
8,094
72,979
19,998
Average common equity
656,415
644,715
633,417
625,875
620,496
640,202
614,726
Less: average goodwill and intangibles
140
160
179
199
218
170
3,898
Average tangible common equity
$
656,275
$
644,555
$
633,238
$
625,676
$
620,278
$
640,032
$
610,828
Return on average common equity
12.57
%
12.92
%
9.86
%
7.80
%
5.19
%
10.84
%
2.05
%
Non-GAAP core return on average tangible common
equity
12.57
%
15.94
%
9.02
%
7.80
%
5.19
%
11.40
%
3.27
%
Quarter Ended
Twelve Months Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
12/31/2021
12/31/2020
(Dollars in thousands)
Non-GAAP core operating return on average assets:
Net income
$
20,801
$
21,000
$
15,577
$
12,035
$
8,094
$
69,413
$
12,601
Non-GAAP core operating income
20,801
25,898
14,245
12,035
8,094
72,979
19,998
Average assets
$
5,490,482
$
5,408,984
$
5,673,638
$
5,798,167
$
5,523,196
$
5,591,471
$
5,358,479
Return on average assets
1.50
%
1.54
%
1.10
%
0.84
%
0.58
%
1.24
%
0.24
%
Non-GAAP core operating return on average assets
1.50
%
1.90
%
1.01
%
0.84
%
0.58
%
1.31
%
0.37
%
CROSSFIRST BANKSHARES,INC.
14
Quarter Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
(Dollars in thousands except per share data)
Tangible common stockholders' equity:
Total stockholders' equity
$
667,573
$
652,407
$
637,190
$
628,834
$
624,428
Less: goodwill and other intangible assets
130
149
169
188
208
Tangible common stockholders' equity
$
667,443
$
652,258
$
637,021
$
628,646
$
624,220
Tangible book value per share:
Tangible common stockholders' equity
$
667,443
$
652,257
$
637,021
$
628,646
$
624,220
Shares outstanding at end of period
50,450,045
51,002,698
50,958,680
51,678,669
51,679,516
Book value per share
$
13.23
$
12.79
$
12.50
$
12.17
$
12.08
Tangible book value per share
$
13.23
$
12.79
$
12.50
$
12.16
$
12.08
Quarter Ended
Twelve Months Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
12/31/2021
12/31/2020
(Dollars in thousands)
Non-GAAP Core Operating Efficiency Ratio - Fully Tax
Equivalent (FTE)
Non-interest expense
$
26,715
$
24,036
$
25,813
$
22,818
$
23,732
$
99,382
$
99,968
Less: Accelerated employee benefits
-
-
719
-
-
719
-
Less: goodwill impairment
-
-
-
-
-
-
7,397
Adjusted Non-interest expense (numerator)
$
26,715
$
24,036
$
25,094
$
22,818
$
23,732
$
98,663
$
92,571
Net interest income
43,445
41,801
42,328
41,117
41,537
168,691
160,249
Tax equivalent interest income
(1)
762
748
734
704
683
2,948
2,732
Non-interest income (loss)
4,796
(1,105)
5,825
4,144
2,949
13,660
11,733
Add: Unrealized loss on equity security
-
6,200
-
-
-
6,200
-
Less: BOLI settlement benefits
-
-
1,841
-
-
1,841
-
Total tax-equivalent income (denominator)
$
49,003
$
47,644
$
47,046
$
45,965
$
45,169
$
189,658
$
174,714
Efficiency Ratio
55.38
%
59.06
%
53.61
%
50.41
%
53.35
%
54.50
%
58.13
%
Non-GAAP Core Operating Efficiency Ratio - Fully Tax
Equivalent (FTE)
54.52
%
50.45
%
53.34
%
49.64
%
52.54
%
52.02
%
52.98
%
(1)
Tax exempt income (tax-free municipal securities) iscalculated on a tax equivalent basis. The incremental taxrate used is 21.0%.
Quarter Ended
Twelve Months Ended
12/31/2021
9/30/2021
6/30/2021
3/31/2021
12/31/2020
12/31/2021
12/31/2020
(Dollars in thousands)
Non-GAAP Pre-Tax Pre-Provision Profit
Net income before taxes
$
26,526
$
26,660
$
18,840
$
14,943
$
9,879
$
86,969
$
15,314
Add: Provision for loan losses
(5,000)
(10,000)
3,500
7,500
10,875
(4,000)
56,700
Non-GAAP Pre-Tax Pre-Provision Profit
$
21,526
$
16,660
$
22,340
$
22,443
$
20,754
$
82,969
$
72,014