UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
October 20, 2020
Date of Report (date of earliest event reported)
CROSSFIRST BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
Kansas | 001-39028 | 26-3212879 | ||||||||||||||||||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||||||||
11440 Tomahawk Creek Parkway | Leawood | Kansas | ||||||
(Address of Principal Executive Offices) | ||||||||
| 66211 | ||
| (Zip Code) | ||
(913) 312-6822
Registrant's telephone number, including area code
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| Common Stock, par value $0.01 per share | CFB | The Nasdaq Stock Market LLC | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On October 20, 2020, CrossFirst Bankshares, Inc. (the "Company") issued a press release regarding its financial results for its third fiscal quarter ended September 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and its investor presentation is furnished as Exhibit 99.2.
The information in Item 2.02 of this Current Report shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 8.01. Other Events.
On October 20, 2020, the Company announced that its Board of Directors has adopted a new stock repurchase program. Under the repurchase program, the Company may repurchase Company common stock with up to $20 million in value.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: | October 20, 2020 | CROSSFIRST BANKSHARES, INC. | |||||||||||||||
| By: | /s/ David L. O'Toole | ||||||||||||||||
| David L. O'Toole Chief Financial Officer | |||||||||||||||||
Exhibit 99.1
| FOR IMMEDIATE RELEASE | CROSSFIRST BANKSHARES, INC. CONTACT: | |||||||
| October 20, 2020 | Matt Needham, Investor Relations/Media Contact | |||||||
(913) 312-6822
https://investors.crossfirstbankshares.com
CrossFirst Bankshares, Inc. Reports Third Quarter 2020 Results and Announces Share Repurchase Program
LEAWOOD, Kan., October 20, 2020 (GLOBE NEWSWIRE) -- CrossFirst Bankshares, Inc. (Nasdaq: CFB), the bank holding company for CrossFirst Bank, today reported its results for the third quarter of 2020, including net income of $8.0 million, or $0.15 per diluted share, and year-to-date 2020 net income of $4.5 million, or $0.09 per diluted share. In addition, the Company announced today that its Board of Directors also approved a $20 million program to repurchase CrossFirst's common stock.
"As we continue to serve our clients and communities in extraordinary ways, we are maintaining our focus on credit quality and being well capitalized, due to the on-going economic volatility caused by the pandemic and upcoming elections. Our overall operating performance remained strong, while we continued to prudently provision an additional $10.9 million, commensurate with the risk in our portfolio and to strengthen the balance sheet," said CrossFirst’s CEO and President Mike Maddox. "We are continuing to create operational efficiencies in our organization to offset margin compression and increased provisioning so we can emerge from the downturn a much stronger Company. We believe that the Company is well positioned to benefit from an economic recovery, continue increasing earnings power, and deliver long term value to our shareholders."
Third Quarter 2020 Highlights:
•$5.5 billion of assets with 11% operating revenue growth compared to the third quarter of 2019
•Pre-tax, pre-provision profit, a non-GAAP financial measure, for the third quarter of $20.4 million and year-to-date pre-tax, pre-provision profit of $51.3 million
•Efficiency ratio of 53% for the third quarter of 2020 and a non-GAAP core efficiency ratio of 52% after adjusting for nonrecurring or non-core items
•$64 million of loan growth from the previous quarter and $854 million or 23% over the last twelve months
•$188 million of deposit growth from the previous quarter and $834 million or 23% over the last twelve months
•Book value per share of $11.84 at September 30, 2020 compared to $11.59 at September 30, 2019
| Quarter-to-Date | Year-to-Date | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2019 | 2020 | 2019 | 2020 | |||||||||||||||||||||||
| (Dollars in millions except per share data) | ||||||||||||||||||||||||||
Operating revenue(1) | $ | 39.0 | $ | 43.4 | $ | 110.8 | $ | 127.5 | ||||||||||||||||||
| Net income | $ | 10.4 | $ | 8.0 | $ | 29.2 | $ | 4.5 | ||||||||||||||||||
| Diluted earnings per share | $ | 0.21 | $ | 0.15 | $ | 0.61 | $ | 0.09 | ||||||||||||||||||
| Return on average assets | 0.89 | % | 0.58 | % | 0.89 | % | 0.11 | % | ||||||||||||||||||
Non-GAAP core operating return on average assets(2) | 0.89 | % | 0.58 | % | 0.86 | % | 0.30 | % | ||||||||||||||||||
| Return on average common equity | 7.58 | % | 5.19 | % | 7.76 | % | 0.98 | % | ||||||||||||||||||
Non-GAAP return on average tangible common equity(2) | 7.68 | % | 5.19 | % | 7.89 | % | 0.99 | % | ||||||||||||||||||
| Net interest margin | 3.19 | % | 2.93 | % | 3.29 | % | 3.08 | % | ||||||||||||||||||
Net interest margin, fully tax-equivalent(3) | 3.24 | % | 2.98 | % | 3.35 | % | 3.13 | % | ||||||||||||||||||
| Efficiency ratio | 54.29 | % | 53.03 | % | 59.36 | % | 59.44 | % | ||||||||||||||||||
Non-GAAP core operating efficiency ratio, fully tax-equivalent(2)(3) | 53.43 | % | 52.23 | % | 58.16 | % | 53.14 | % | ||||||||||||||||||
(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 this measure. | ||||||||||||||||||||||||||
(3) Tax exempt income is calculated on a tax-equivalent basis. Tax-free municipal securities are exempt from federal income taxes. The incremental federal income tax rate used is 21.0%. | ||||||||||||||||||||||||||
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CROSSFIRST BANKSHARES, INC.
Share Repurchase Program
The Company's Board of Directors has approved up to $20 million in share repurchases. Repurchases under the Company's new program will be made in open market or privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18, subject to market conditions, applicable legal requirements, and other relevant factors. This share repurchase plan does not obligate the Company to acquire any particular amount of common stock, and it may be suspended at any time at the Company's discretion. CrossFirst had 52,195,778 shares of common stock outstanding as of September 30, 2020.
COVID-19 Update
The COVID-19 pandemic and measures taken in response have created economic uncertainty and negatively impacted most of our customers in some capacity. During the third quarter of 2020, we continued to operate in accordance with our comprehensive pandemic plan, which includes social distancing measures for customers and employee interactions. In addition, the Company has continued to support key regulatory relief programs for customers, increased provisions for loan losses, increased monitoring of key loan portfolio segments, modified loans, experienced slower discretionary spending, optimized staffing levels, and elevated its risk management activities. Our branch-lite strategy, technology, and relationship banking model, have allowed us to effectively operate through the pandemic, work remotely, and provide us with the agility to effectively serve our customers when they need it most. The Company continues to assess and monitor the COVID-19 pandemic and federal and local requirements in evaluating the full re-opening of its offices and remains flexible regarding process and timeline.
Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Programs
CrossFirst is committed to helping our local businesses and the communities that we serve during these extremely challenging times and will continue to help customers access regulatory relief and other programs. As of September 30, 2020, the Company still retains $369 million in loans produced through the Paycheck Protection Program ("PPP") and has been working through the forgiveness process for those loans with the Small Business Administration ("SBA"). In addition to the PPP, we have been granting loan modifications and 90/180 day payment deferrals for many customers who have requested additional relief. As of September 30, 2020, the Company continues to have $318 million in loans on modified payments related to COVID-19 on its balance sheet, which, excluding the PPP loans, represents almost 8% of our total loan balances. We are evaluating each modification on a case-by-case basis and assessing the borrowers' willingness and capacity to support the loan until maturity. The Company will continue to implement additional governmental assistance programs as more details become available around the processes and procedures for such programs and grant loan modifications when appropriate.
Income from Operations
Net Interest Income
The Company produced interest income of $48.5 million for the third quarter of 2020, a decrease of 13% from the third quarter of 2019 and a decrease of 5% from the previous quarter. Interest income was down from the third quarter of 2019 primarily due to declining interest rates. Average earning assets totaled $5.3 billion for the third quarter of 2020, an increase of $1 billion or 20% from the same quarter in 2019. The tax-equivalent yield on earning assets declined from 5.00% to 3.66% during the third quarter of 2020, compared to the third quarter of 2019, primarily due to the movement of variable rate assets indexed to declining market rates and the movement of loans to nonaccrual. Year-to-date, the Company produced interest income of $153.9 million as the Company's asset growth was able to mitigate some of the impact of yield declines on earning assets.
Interest expense for the third quarter of 2020 was $9.1 million, or 54% lower than the third quarter of 2019 and 10% lower than the previous quarter. While average interest-bearing deposits increased to $3.6 billion in the third quarter of 2020, an increase of 15% from the same quarter in 2019, overall interest expense on interest-bearing deposits declined as a result of declining interest rates. Non-deposit funding costs increased to 1.50% from 1.35% in the second quarter of 2020 while overall cost of funds for the quarter was 0.75%, compared to 0.85% for the second quarter of 2020. Year-to-date, the Company had interest expense of $35.2 million, a decrease of 38% from the same period in the prior year.
Tax-equivalent net interest margin decreased to 2.98% in the the current quarter, from 3.19% in the previous quarter and declined from 3.24% in the same quarter in 2019, reflecting the impact of the declining rate environment, changes in macro economic conditions, and lower loan yields from having an increased number of loans on non accrual. Year-to-date, the Company had a tax equivalent margin of 3.13% compared to 3.35% over the same period in the prior year. As of September 30, 2020, CrossFirst has realized $3.2 million of the total $9.9 million in fees anticipated from holding the $369 million of PPP loans, which yielded 2.26% for the quarter, and the Company will continue to recognize these fees 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 $0.7 million for the third quarter of 2020. Net interest income totaled $39.3 million for the third quarter of 2020 or 4% lower than the second quarter of 2020, and 10% higher than the third quarter of 2019.
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CROSSFIRST BANKSHARES, INC.
Non-Interest Income
Non-interest income increased $0.9 million in the third quarter of 2020 or 26% compared to the same quarter of 2019 and increased $1.4 million or 54% compared to the second quarter of 2020. While the Company continued to increase overall fee income commensurate with its customer growth, during the third quarter of 2020, it also recorded $1 million of securities gains or $0.7 million more than the previous quarter. The back-to-back swap fee income continued to remain low in the current interest rate environment; however, credit card fees continued to be a major contributor to other non-interest income growth for the quarter. Year-to-date non-interest income increased 35% compared to the same period in the prior year.
Non-Interest Expense
Non-interest expense for the third quarter of 2020 was $23.0 million which increased 9% compared to the third quarter of 2019 and decreased 26% from the second quarter of 2020. The Company recorded a $7.4 million expense related to a non-cash goodwill impairment charge in the previous quarter of 2020 primarily as a result of economic and industry conditions at June 30, 2020. In addition, during the third quarter of 2020, the Company optimized its staffing levels, which is anticipated to generate $4.1 million of annualized savings going forward. The Company expects the full impact of the expense reductions to be realized in the fourth quarter. In addition, the Company continues to realize the benefits from reduced travel, entertainment, and other discretionary spending as a result of the COVID-19 pandemic. Year-to-date non-interest expense increased 16% compared to the same period in the prior year primarily from non reoccurring items reported in previous quarters .
CrossFirst’s effective tax rate for the third quarter of 2020 was 16% as compared to 20% for the third quarter of 2019. The 2020 quarter-to-date income tax was impacted by a $3.5 million decrease in income before income taxes that reduced taxes at the statutory rate by $1 million. For both of the comparable periods, the Company continued to benefit from the tax-exempt municipal bond portfolio and bank-owned life insurance.
Balance Sheet Performance & Analysis
During the third quarter of 2020, total assets increased by $43 million or 1% compared to June 30, 2020 and $854 million or 18% since September 30, 2019. During the third quarter of 2020, total available for sale investment securities decreased $48 million to $652 million compared to June 30, 2020, while the overall average for the third quarter was $698 million. During the third quarter of 2020, tax-exempt municipal securities on average increased $2 million and mortgage-backed securities decreased $32 million compared to June 30, 2020. The securities yields declined 14 basis points to a tax equivalent yield of 2.93% for the third quarter of 2020 compared to the prior quarter as a result of lower reinvestment yields and prepayments on mortgage-backed securities increasing premium amortizations.
Loan Growth Results
The Company experienced average loan growth of 3% during the third quarter of 2020, but has increased average loans 26% year over year from September 30, 2019. Loan yields declined 38 basis points during the third quarter commensurate with the effects from adjustable rate loan movements in LIBOR and Prime during 2020, lower loan yields from the PPP, and the impact of increased loans on nonaccrual.
| (Dollars in millions) | 3Q19 | 4Q19 | 1Q20 | 2Q20 | 3Q20 | % of Total | QoQ Growth ($) | QoQ Growth (%)(1) | YoY Growth ($) | YoY Growth (%)(1) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Average loans (gross) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | $ | 1,284 | $ | 1,315 | $ | 1,339 | $ | 1,381 | $ | 1,308 | 29 | % | $ | (73) | (5) | % | $ | 24 | 2 | % | |||||||||||||||||||||||||||||||||||||||
| Energy | 389 | 400 | 412 | 404 | 393 | 9 | (11) | (3) | 4 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate | 974 | 1,007 | 1,034 | 1,115 | 1,169 | 26 | 54 | 5 | 195 | 20 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Construction and land development | 487 | 599 | 620 | 651 | 617 | 14 | (34) | (5) | 130 | 27 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Residential real estate | 362 | 384 | 455 | 517 | 583 | 13 | 66 | 13 | 221 | 61 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Paycheck Protection Program | — | — | — | 245 | 362 | 8 | 117 | 48 | 362 | NA | |||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | 45 | 45 | 45 | 44 | 45 | 1 | 1 | 1 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 3,541 | $ | 3,750 | $ | 3,905 | $ | 4,357 | $ | 4,477 | 100 | % | $ | 120 | 3 | % | $ | 936 | 26 | % | |||||||||||||||||||||||||||||||||||||||
| Yield on loans for the period ending | 5.53 | % | 5.21 | % | 4.98 | % | 4.28 | % | 3.90 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
(1) Actual unrounded values are used to calculate the reported percent disclosed. Accordingly, recalculations using the amounts in millions as disclosed in this release may not produce the same amounts. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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CROSSFIRST BANKSHARES, INC.
Deposit Growth & Other Borrowings
The Company continues to maintain a traditional deposit mix, with the goal of keeping pace with growth in the loan portfolio. Deposit growth continued to be funded primarily with money market accounts during the third quarter of 2020, which have historically adjusted with movements in Federal Funds rates. The Company has continued to have its transaction deposits increase as a result of more customers utilizing our insured cash sweep products. The Company's cost of interest bearing deposits declined 15 basis points, during the third quarter of 2020, reflective of changes made to deposit pricing in the prior quarter from declines in market rates.
| (Dollars in millions) | 3Q19 | 4Q19 | 1Q20 | 2Q20 | 3Q20 | % of Total | QoQ Growth ($) | QoQ Growth (%)(1) | YoY Growth ($) | YoY Growth (%)(1) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Average deposits | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing deposits | $ | 535 | $ | 522 | $ | 540 | $ | 746 | $ | 714 | 16 | % | $ | (32) | (4) | % | $ | 179 | 33 | % | |||||||||||||||||||||||||||||||||||||||
| Transaction deposits | 135 | 200 | 341 | 414 | 460 | 11 | % | 46 | 11 | % | 325 | 241 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Savings and money market deposits | 1,744 | 1,854 | 1,887 | 1,933 | 1,995 | 46 | % | 62 | 3 | % | 251 | 14 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | 1,277 | 1,226 | 1,166 | 1,195 | 1,175 | 27 | % | (20) | (2) | % | (102) | (8) | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 3,691 | $ | 3,802 | $ | 3,934 | $ | 4,288 | $ | 4,344 | 100 | % | $ | 56 | 1 | % | $ | 653 | 18 | % | |||||||||||||||||||||||||||||||||||||||
| Cost of deposits for the period ending | 1.94 | % | 1.70 | % | 1.46 | % | 0.79 | % | 0.67 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of interest-bearing deposits for the period ending | 2.26 | % | 1.97 | % | 1.69 | % | 0.95 | % | 0.80 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
(1) Actual unrounded values are used to calculate the reported percent disclosed. Accordingly, recalculations using the amounts in millions as disclosed in this release may not produce the same amounts. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
At September 30, 2020, other borrowings totaled $350.6 million, as compared to $501.4 million at June 30, 2020, and $358.5 million as of September 30, 2019.
4
CROSSFIRST BANKSHARES, INC.
Asset Quality Position
Overall credit quality metrics were elevated as the Company added $10.9 million to the allowance for loan loss, during the third quarter of 2020, commensurate with adverse movement of risk classifications and to strengthen the balance sheet as there remains continued economic uncertainty resulting from the COVID-19 pandemic and volatility in energy prices. While the Company currently believes the reserve is reflective of the risk in the portfolio, there may be cases where the borrowers or specific impairments related to COVID-19 may have not yet been identified. The majority of loans that migrated to classified status during the quarter were related to the energy portfolio and one commercial and industrial credit.
Net charge-offs were $6.0 million for the third quarter of 2020 as compared to net charge-offs of $1.3 million for the second quarter in 2020. Nonperforming assets to total assets quarter over quarter increased to 1.49% primarily as a result of several energy loans that moved to non-accrual. The elevated charge-offs and increase in nonperforming assets in the third quarter were primarily from a large commercial and industrial credit that moved to nonperforming as it was being restructured, but was completed subsequent to the quarter end. The following table provides information regarding asset quality.
Asset quality (Dollars in millions) | 3Q19 | 4Q19 | 1Q20 | 2Q20 | 3Q20 | ||||||||||||||||||||||||
| Non-accrual loans | $ | 43.6 | $ | 39.7 | $ | 26.3 | $ | 37.5 | $ | 75.6 | |||||||||||||||||||
| Other real estate owned | 2.5 | 3.6 | 3.6 | 2.5 | 2.3 | ||||||||||||||||||||||||
| Non-performing assets | 46.7 | 47.9 | 29.9 | 40.3 | 82.2 | ||||||||||||||||||||||||
| Loans 90+ days past due and still accruing | 0.6 | 4.6 | — | 0.2 | 4.3 | ||||||||||||||||||||||||
| Loans 30 - 89 days past due | 64.7 | 6.8 | 19.5 | 34.9 | 45.4 | ||||||||||||||||||||||||
| Net charge-offs (recoveries) | 4.7 | 5.5 | 19.4 | 1.3 | 6.0 | ||||||||||||||||||||||||
Asset quality metrics (%) | 3Q19 | 4Q19 | 1Q20 | 2Q20 | 3Q20 | ||||||||||||||||||||||||
| Non-performing assets to total assets | 1.00 | % | 0.97 | % | 0.59 | % | 0.74 | % | 1.49 | % | |||||||||||||||||||
| Allowance for loan loss to total loans | 1.18 | 1.48 | 1.29 | 1.61 | 1.70 | ||||||||||||||||||||||||
| Allowance for loan loss to non-performing loans | 97 | 129 | 196 | 189 | 95 | ||||||||||||||||||||||||
Net charge-offs (recoveries) to average loans(1) | 0.53 | 0.58 | 2.00 | 0.12 | 0.54 | ||||||||||||||||||||||||
Provision to average loans(1) | 0.54 | 2.05 | 1.44 | 1.94 | 0.97 | ||||||||||||||||||||||||
| Classified Loans / (Total Capital + ALLL) | 13.2 | 13.2 | 15.8 | 34.9 | 43.2 | ||||||||||||||||||||||||
(1) Interim periods annualized. | |||||||||||||||||||||||||||||
Depending upon the future impact of the COVID-19 pandemic, we may need to make additional increases to our provision in future periods. The future impact of the pandemic is highly uncertain and cannot be fully predicted. The extent of the impact on our customers and, in turn, on our business and operations, will depend on future developments, including actions taken to contain the pandemic. To the extent the pandemic continues to cause a recession or decreased economic activity for an extended time period, we expect our business and operations will be negatively impacted. Customers may continue to seek additional loan modifications or restructuring, or we may experience additional adverse movement in risk classifications, any of which could potentially result in the need to adjust the total allowances for loan losses.
Capital Position
At September 30, 2020, stockholders' equity totaled $618 million, or $11.84 per share, compared to $602 million, or $11.58 per share, at December 31, 2019. Tangible common equity was $618 million and tangible book value per share was $11.83 at September 30, 2020, compared to tangible common equity of $594 million and tangible book value per common share of $11.43 at December 31, 2019.
The ratio of common equity Tier 1 capital to risk-weighted assets was approximately 12% and the total capital to risk-weighted assets was approximately 13% at September 30, 2020. The Company remains well capitalized.
Conference Call and Webcast
CrossFirst will hold a conference call and webcast to discuss third quarter 2020 results on Tuesday, October 20, 2020, at 4 p.m. CDT / 5 p.m. EDT. The conference call and webcast may also include discussion of Company developments, forward-looking statements and other material information about business and financial matters. Investors, news media, and other participants should register for the call or audio webcast at https://investors.CrossFirstBankshares.com. Participants may dial into the call toll-free at (877) 621-5851 from anywhere in the U.S. or (470) 495-9492 internationally, using conference ID no. 4184367. Participants are encouraged to dial into the call or access the webcast approximately 10 minutes prior to the start time.
A replay of the webcast will be available on the Company's website. A replay of the conference call will be available two hours following the close of the call until October 27, 2020, accessible at (855) 859-2056 with conference ID no. 4184367.
5
Cautionary Notice about Forward-Looking Statements
The financial results in this press release reflect preliminary, unaudited results, which are not final until the Company’s Quarterly Report on Form 10-Q 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 facts and 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 or all of the forward-looking statements in this earnings release may turn out to be inaccurate. The inclusion of forward-looking information in this earnings release should not be regarded as a representation by us or any other 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 about future events and financial trends that it believes may affect our 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 the forward-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-looking statements 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 reflect the occurrence of unanticipated events or circumstances, except as required by law.
About CrossFirst
CrossFirst Bankshares, Inc., is a Kansas corporation and a registered bank holding company for its wholly owned subsidiary CrossFirst Bank, which is headquartered in Leawood, Kansas. CrossFirst Bank has eight full-service banking offices primarily along the I-35 corridor in Kansas, Missouri, Oklahoma and Texas.
Unaudited Financial Tables
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CROSSFIRST BANKSHARES, INC.
TABLE 1. CONSOLIDATED BALANCE SHEETS
| December 31, 2019 | September 30, 2020 | ||||||||||
| (unaudited) | |||||||||||
| (Dollars in thousands) | |||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 187,320 | $ | 223,636 | |||||||
| Available-for-sale securities - taxable | 298,208 | 214,735 | |||||||||
| Available-for-sale securities - tax-exempt | 443,426 | 437,411 | |||||||||
Loans, net of allowance for loan losses of $56,896 and $76,035 at December 31, 2019 and September 30, 2020, respectively | 3,795,348 | 4,401,774 | |||||||||
| Premises and equipment, net | 70,210 | 70,599 | |||||||||
| Restricted equity securities | 17,278 | 20,923 | |||||||||
| Interest receivable | 15,716 | 19,003 | |||||||||
| Foreclosed assets held for sale | 3,619 | 2,349 | |||||||||
| Deferred tax asset | 13,782 | 15,864 | |||||||||
| Goodwill and other intangible assets, net | 7,694 | 227 | |||||||||
| Bank-owned life insurance | 65,689 | 67,063 | |||||||||
| Other | 12,943 | 32,112 | |||||||||
| Total assets | $ | 4,931,233 | $ | 5,505,696 | |||||||
| Liabilities and stockholders’ equity | |||||||||||
| Deposits | |||||||||||
| Noninterest bearing | $ | 521,826 | $ | 754,172 | |||||||
| Savings, NOW and money market | 2,162,187 | 2,597,691 | |||||||||
| Time | 1,239,746 | 1,140,686 | |||||||||
| Total deposits | 3,923,759 | 4,492,549 | |||||||||
| Federal funds purchased and repurchase agreements | 14,921 | 13,531 | |||||||||
| Federal Home Loan Bank advances | 358,743 | 336,100 | |||||||||
| Other borrowings | 921 | 952 | |||||||||
| Interest payable and other liabilities | 31,245 | 44,681 | |||||||||
| Total liabilities | 4,329,589 | 4,887,813 | |||||||||
| Stockholders’ equity | |||||||||||
| Common stock, $0.01 par value: | |||||||||||
authorized - 200,000,000 shares, issued - 51,969,203 and 52,195,778 shares at December 31, 2019 and September 30, 2020, respectively | 520 | 521 | |||||||||
| Additional paid-in capital | 519,870 | 522,226 | |||||||||
| Retained earnings | 64,803 | 69,355 | |||||||||
| Accumulated other comprehensive income | 16,451 | 25,781 | |||||||||
| Total stockholders’ equity | 601,644 | 617,883 | |||||||||
| Total liabilities and stockholders’ equity | $ | 4,931,233 | $ | 5,505,696 | |||||||
7
CROSSFIRST BANKSHARES, INC.
TABLE 2. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2019 | 2020 | 2019 | 2020 | ||||||||||||||||||||
| (Dollars in thousands except per share data) | |||||||||||||||||||||||
| Interest Income | |||||||||||||||||||||||
| Loans, including fees | $ | 49,327 | $ | 43,929 | $ | 142,319 | $ | 138,591 | |||||||||||||||
| Available for sale securities | |||||||||||||||||||||||
| Available for sale securities - Taxable | 1,991 | 1,042 | 6,646 | 4,174 | |||||||||||||||||||
| Available for sale securities - Tax-exempt | 2,969 | 3,186 | 8,820 | 9,758 | |||||||||||||||||||
| Deposits with financial institutions | 970 | 47 | 2,452 | 583 | |||||||||||||||||||
| Dividends on bank stocks | 272 | 248 | 801 | 808 | |||||||||||||||||||
| Total interest income | 55,529 | 48,452 | 161,038 | 153,914 | |||||||||||||||||||
| Interest Expense | |||||||||||||||||||||||
| Deposits | 18,003 | 7,298 | 51,421 | 29,975 | |||||||||||||||||||
| Fed funds purchased and repurchase agreements | 74 | 54 | 501 | 162 | |||||||||||||||||||
| Advances from Federal Home Loan Bank | 1,629 | 1,749 | 4,739 | 4,980 | |||||||||||||||||||
| Other borrowings | 37 | 24 | 112 | 85 | |||||||||||||||||||
| Total interest expense | 19,743 | 9,125 | 56,773 | 35,202 | |||||||||||||||||||
| Net Interest Income | 35,786 | 39,327 | 104,265 | 118,712 | |||||||||||||||||||
| Provision for Loan Losses | 4,850 | 10,875 | 10,550 | 45,825 | |||||||||||||||||||
| Net Interest Income after Provision for Loan Losses | 30,936 | 28,452 | 93,715 | 72,887 | |||||||||||||||||||
| Non-Interest Income | |||||||||||||||||||||||
| Service charges and fees on customer accounts | 72 | 792 | 441 | 1,947 | |||||||||||||||||||
| Gain on sale of available for sale securities | 34 | 1,012 | 467 | 1,725 | |||||||||||||||||||
| Impairment of premises and equipment held for sale | — | — | (424) | — | |||||||||||||||||||
| Gain on sale of loans | 49 | — | 207 | — | |||||||||||||||||||
| Income from bank-owned life insurance | 476 | 464 | 1,416 | 1,373 | |||||||||||||||||||
| Swap fee income, net | 1,879 | 121 | 2,415 | 80 | |||||||||||||||||||
| ATM and credit card interchange income | 476 | 1,482 | 1,312 | 2,863 | |||||||||||||||||||
| Other non-interest income | 226 | 192 | 695 | 804 | |||||||||||||||||||
| Total non-interest income | 3,212 | 4,063 | 6,529 | 8,792 | |||||||||||||||||||
| Non-Interest Expense | |||||||||||||||||||||||
| Salaries and employee benefits | 14,256 | 14,628 | 43,296 | 43,022 | |||||||||||||||||||
| Occupancy | 2,080 | 2,144 | 6,301 | 6,274 | |||||||||||||||||||
| Professional fees | 427 | 1,132 | 1,923 | 3,098 | |||||||||||||||||||
| Deposit insurance premiums | 302 | 1,096 | 2,020 | 3,151 | |||||||||||||||||||
| Data processing | 649 | 652 | 1,868 | 2,065 | |||||||||||||||||||
| Advertising | 580 | 147 | 1,770 | 870 | |||||||||||||||||||
| Software and communication | 900 | 959 | 2,407 | 2,772 | |||||||||||||||||||
| Foreclosed assets, net | 8 | 20 | 33 | 1,174 | |||||||||||||||||||
| Goodwill impairment | — | — | — | 7,397 | |||||||||||||||||||
| Other non-interest expense | 1,970 | 2,233 | 6,145 | 6,421 | |||||||||||||||||||
| Total non-interest expense | 21,172 | 23,011 | 65,763 | 76,244 | |||||||||||||||||||
| Net Income Before Taxes | 12,976 | 9,504 | 34,481 | 5,435 | |||||||||||||||||||
| Income tax expense | 2,592 | 1,498 | 5,308 | 928 | |||||||||||||||||||
| Net Income | 10,384 | 8,006 | $ | 29,173 | $ | 4,507 | |||||||||||||||||
| Basic Earnings Per Share | $ | 0.22 | $ | 0.15 | $ | 0.63 | $ | 0.09 | |||||||||||||||
| Diluted Earnings Share | $ | 0.21 | $ | 0.15 | $ | 0.61 | $ | 0.09 | |||||||||||||||
8
CROSSFIRST BANKSHARES, INC.
TABLE 3. YEAR-TO-DATE ANALYSIS OF CHANGES IN NET INTEREST INCOME
(UNAUDITED)
| Nine Months Ended | |||||||||||||||||||||||||||||||||||
| September 30, | |||||||||||||||||||||||||||||||||||
| 2019 | 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 | $ | 334,272 | $ | 7,447 | 2.98 | % | $ | 285,363 | $ | 4,982 | 2.33 | % | |||||||||||||||||||||||
Securities - tax-exempt(1) | 378,651 | 10,672 | 3.77 | 443,506 | 11,807 | 3.56 | |||||||||||||||||||||||||||||
| Federal funds sold | 18,714 | 345 | 2.46 | 1,364 | 18 | 1.73 | |||||||||||||||||||||||||||||
| Interest-bearing deposits in other banks | 135,030 | 2,107 | 2.09 | 170,316 | 566 | 0.44 | |||||||||||||||||||||||||||||
Gross loans, net of unearned income(2) | 3,373,118 | 142,319 | 5.64 | 4,248,520 | 138,591 | 4.36 | |||||||||||||||||||||||||||||
Total interest-earning assets(1) | 4,239,785 | $ | 162,890 | 5.14 | % | 5,149,069 | $ | 155,964 | 4.05 | % | |||||||||||||||||||||||||
| Allowance for loan losses | (41,329) | (64,896) | |||||||||||||||||||||||||||||||||
| Other non-interest-earning assets | 196,900 | 218,797 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 4,395,356 | $ | 5,302,970 | |||||||||||||||||||||||||||||||
| Interest-bearing liabilities | |||||||||||||||||||||||||||||||||||
| Transaction deposits | $ | 127,785 | $ | 1,139 | 1.19 | % | $ | 404,967 | $ | 1,391 | 0.46 | % | |||||||||||||||||||||||
| Savings and money market deposits | 1,616,558 | 27,326 | 2.26 | 1,938,669 | 11,689 | 0.81 | |||||||||||||||||||||||||||||
| Time deposits | 1,249,219 | 22,956 | 2.46 | 1,178,632 | 16,895 | 1.91 | |||||||||||||||||||||||||||||
| Total interest-bearing deposits | 2,993,562 | 51,421 | 2.30 | 3,522,268 | 29,975 | 1.14 | |||||||||||||||||||||||||||||
| FHLB and short-term borrowings | 366,708 | 5,240 | 1.91 | 456,048 | 5,145 | 1.51 | |||||||||||||||||||||||||||||
| Trust preferred securities, net of fair value adjustments | 895 | 112 | 16.74 | 933 | 82 | 11.81 | |||||||||||||||||||||||||||||
| Non-interest-bearing deposits | 508,888 | — | — | 668,208 | — | — | |||||||||||||||||||||||||||||
| Cost of funds | 3,870,053 | $ | 56,773 | 1.96 | % | 4,647,457 | $ | 35,202 | 1.01 | % | |||||||||||||||||||||||||
| Other liabilities | 22,762 | 42,731 | |||||||||||||||||||||||||||||||||
| Stockholders’ equity | 502,541 | 612,782 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 4,395,356 | $ | 5,302,970 | |||||||||||||||||||||||||||||||
Net interest income(1) | $ | 106,117 | $ | 120,762 | |||||||||||||||||||||||||||||||
Net interest spread(1) | 3.18 | % | 3.04 | % | |||||||||||||||||||||||||||||||
Net interest margin(1) | 3.35 | % | 3.13 | % | |||||||||||||||||||||||||||||||
(1) Tax exempt income is calculated on a tax equivalent basis. Tax-free municipal securities are exempt from federal income taxes. The incremental income tax rate used is 21.0%. | |||||||||||||||||||||||||||||||||||
(2) Average loan balances include nonaccrual loans. | |||||||||||||||||||||||||||||||||||
(3) Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this release may not produce the same amounts. | |||||||||||||||||||||||||||||||||||
9
CROSSFIRST BANKSHARES, INC.
| YEAR-TO-DATE VOLUME & RATE VARIANCE TO NET INTEREST INCOME (UNAUDITED) | |||||||||||||||||
| Nine Months Ended | |||||||||||||||||
| September 30, 2020 over 2019 | |||||||||||||||||
| Average Volume | Yield/Rate | Net Change(2) | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Interest Income | |||||||||||||||||
| Securities - taxable | $ | (993) | $ | (1,472) | $ | (2,465) | |||||||||||
Securities - tax-exempt(1) | 1,759 | (624) | 1,135 | ||||||||||||||
| Federal funds sold | (247) | (80) | (327) | ||||||||||||||
| Interest-bearing deposits in other banks | 443 | (1,984) | (1,541) | ||||||||||||||
| Gross loans, net of unearned income | 32,557 | (36,285) | (3,728) | ||||||||||||||
Total interest income(1) | 33,519 | (40,445) | (6,926) | ||||||||||||||
| Interest Expense | |||||||||||||||||
| Transaction deposits | 1,287 | (1,035) | 252 | ||||||||||||||
| Savings and money market deposits | 4,632 | (20,269) | (15,637) | ||||||||||||||
| Time deposits | (1,236) | (4,825) | (6,061) | ||||||||||||||
| Total interest-bearing deposits | 4,683 | (26,129) | (21,446) | ||||||||||||||
| FHLB and short-term borrowings | 1,135 | (1,230) | (95) | ||||||||||||||
| Trust preferred securities, net of fair value adjustments | 4 | (34) | (30) | ||||||||||||||
| Total interest expense | 5,822 | (27,393) | (21,571) | ||||||||||||||
Net interest income(1) | $ | 27,697 | $ | (13,052) | $ | 14,645 | |||||||||||
(1) Tax exempt income is calculated on a tax equivalent basis. Tax-free municipal securities are exempt from federal income income taxes. The incremental 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 to the respective absolute dollar amounts of the change in volume or rate. | |||||||||||||||||
10
CROSSFIRST BANKSHARES, INC.
TABLE 4. 2019 - 2020 QUARTERLY ANALYSIS OF CHANGES IN NET INTEREST INCOME (UNAUDITED)
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 30, | |||||||||||||||||||||||||||||||||||
| 2019 | 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 | $ | 335,045 | $ | 2,263 | 2.68 | % | $ | 257,637 | $ | 1,290 | 1.99 | % | |||||||||||||||||||||||
Securities - tax-exempt(1) | 392,644 | 3,592 | 3.63 | 440,669 | 3,855 | 3.48 | |||||||||||||||||||||||||||||
| Federal funds sold | 16,315 | 89 | 2.16 | — | — | — | |||||||||||||||||||||||||||||
| Interest-bearing deposits in other banks | 171,913 | 881 | 2.03 | 166,423 | 47 | 0.11 | |||||||||||||||||||||||||||||
Gross loans, net of unearned income(2) (3) | 3,540,707 | 49,327 | 5.53 | 4,477,211 | 43,929 | 3.90 | |||||||||||||||||||||||||||||
Total interest-earning assets(1) | 4,456,624 | $ | 56,152 | 5.00 | % | 5,341,940 | $ | 49,121 | 3.66 | % | |||||||||||||||||||||||||
| Allowance for loan losses | (43,327) | (75,970) | |||||||||||||||||||||||||||||||||
| Other non-interest-earning assets | 197,661 | 220,282 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 4,610,958 | $ | 5,486,252 | |||||||||||||||||||||||||||||||
| Interest-bearing liabilities | |||||||||||||||||||||||||||||||||||
| Transaction deposits | $ | 134,987 | $ | 386 | 1.13 | % | $ | 460,420 | $ | 260 | 0.22 | % | |||||||||||||||||||||||
| Savings and money market deposits | 1,743,575 | 9,553 | 2.17 | 1,995,307 | 2,301 | 0.46 | |||||||||||||||||||||||||||||
| Time deposits | 1,276,571 | 8,064 | 2.51 | 1,174,555 | 4,737 | 1.60 | |||||||||||||||||||||||||||||
| Total interest-bearing deposits | 3,155,133 | 18,003 | 2.26 | 3,630,282 | 7,298 | 0.80 | |||||||||||||||||||||||||||||
| FHLB and short-term borrowings | 345,794 | 1,703 | 1.95 | 479,475 | 1,803 | 1.50 | |||||||||||||||||||||||||||||
| Trust preferred securities, net of fair value adjustments | 904 | 37 | 16.06 | 944 | 24 | 10.19 | |||||||||||||||||||||||||||||
| Non-interest-bearing deposits | 535,467 | — | — | 714,337 | — | — | |||||||||||||||||||||||||||||
| Cost of funds | 4,037,298 | $ | 19,743 | 1.94 | % | 4,825,038 | $ | 9,125 | 0.75 | % | |||||||||||||||||||||||||
| Other liabilities | 29,833 | 47,304 | |||||||||||||||||||||||||||||||||
| Total stockholders' equity | 543,827 | 613,910 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 4,610,958 | $ | 5,486,252 | |||||||||||||||||||||||||||||||
Net interest income(1) | $ | 36,409 | $ | 39,996 | |||||||||||||||||||||||||||||||
Net interest spread(1) | 3.06 | % | 2.91 | % | |||||||||||||||||||||||||||||||
Net interest margin(1) | 3.24 | % | 2.98 | % | |||||||||||||||||||||||||||||||
(1) Tax exempt income is calculated on a tax equivalent basis. Tax-free municipal securities are exempt from federal income taxes. The incremental income tax rate used is 21.0%. | |||||||||||||||||||||||||||||||||||
(2) Average loan balances include non-accrual loans. | |||||||||||||||||||||||||||||||||||
(3) Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this release may not produce the same amounts. | |||||||||||||||||||||||||||||||||||
11
CROSSFIRST BANKSHARES, INC.
| QUARTER-TO-DATE VOLUME & RATE VARIANCE TO NET INTEREST INCOME (UNAUDITED) | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| September 30, 2020 over 2019 | |||||||||||||||||
| Average Volume | Yield/Rate | Net Change(2) | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Interest Income | |||||||||||||||||
| Securities - taxable | $ | (460) | $ | (513) | $ | (973) | |||||||||||
Securities - tax-exempt(1) | 418 | (155) | 263 | ||||||||||||||
| Federal funds sold | (44) | (45) | (89) | ||||||||||||||
| Interest-bearing deposits in other banks | (28) | (806) | (834) | ||||||||||||||
| Gross loans, net of unearned income | 11,169 | (16,567) | (5,398) | ||||||||||||||
Total interest income(1) | 11,055 | (18,086) | (7,031) | ||||||||||||||
| Interest Expense | |||||||||||||||||
| Transaction deposits | 373 | (499) | (126) | ||||||||||||||
| Savings and money market deposits | 1,198 | (8,450) | (7,252) | ||||||||||||||
| Time deposits | (601) | (2,726) | (3,327) | ||||||||||||||
| Total interest-bearing deposits | 970 | (11,675) | (10,705) | ||||||||||||||
| FHLB and short-term borrowings | 553 | (453) | 100 | ||||||||||||||
| Trust preferred securities, net of fair value adjustments | 1 | (14) | (13) | ||||||||||||||
| Total interest expense | 1,524 | (12,142) | (10,618) | ||||||||||||||
Net interest income(1) | $ | 9,531 | $ | (5,944) | $ | 3,587 | |||||||||||
(1) Tax exempt income is calculated on a tax equivalent basis. Tax-free municipal securities are exempt from federal income taxes. The incremental income tax rate used is 21.0% | |||||||||||||||||
(2) The change in interest not due solely to volume or rate has been allocated in proportion to the respective absolute dollar amounts of the change in volume or rate. | |||||||||||||||||
12
CROSSFIRST BANKSHARES, INC.
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 reflect industry 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 use in 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 "return on average tangible common equity" as net income (loss) available to common stockholders divided by average tangible common equity. Average tangible common equity is calculated as average common 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 income (loss)’’ as net income (loss) adjusted to remove non-recurring or non-core income and expense items related to:
▪Impairment charges associated with two buildings that were held-for-sale. We acquired a new, larger corporate headquarters to accommodate our business needs, which eliminated the need for two smaller support buildings. The two smaller support buildings had been acquired recently and were extensively remodeled, which resulted in a difference between book and market value for those assets. We sold one of the buildings in 2018. The remaining building was sold during the second quarter of 2019.
▪State tax credits as a result of the purchase and improvement of our new corporate headquarters.
▪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.
The most directly comparable GAAP financial measure for non-GAAP core operating income (loss) is net income (loss).
•We calculate "Non-GAAP core operating return on average assets" as non-GAAP core operating income (loss) (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 (loss) divided by average assets.
•We calculate ‘‘non-GAAP core operating return on average common equity’’ as non-GAAP core operating income (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 value per share.
•We calculate "non-GAAP core operating efficiency ratio - fully tax equivalent (FTE)" as non-interest expense adjusted to remove non-recurring non-interest expenses as defined above under non-GAAP core operating income (loss) divided by net interest income on a fully tax-equivalent basis plus non-interest income adjusted to remove non-recurring 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 (loss) before taxes plus the provision for loan losses.
13
CROSSFIRST BANKSHARES, INC.
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||
| 09/30/2019 | 12/31/2019 | 03/31/2020 | 06/30/2020 | 09/30/2020 | 09/30/2019 | 09/30/2020 | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
Non-GAAP Return on average tangible common equity: | |||||||||||||||||||||||||||||||||||||||||
Net income (loss) available to common stockholders | $ | 10,384 | $ | (700) | $ | 3,857 | $ | (7,356) | $ | 8,006 | $ | 28,998 | $ | 4,507 | |||||||||||||||||||||||||||
| Average common equity | 543,827 | 605,960 | 612,959 | 611,466 | 613,910 | 499,354 | 612,782 | ||||||||||||||||||||||||||||||||||
| Less: average goodwill and intangibles | 7,733 | 7,708 | 7,683 | 7,576 | 238 | 7,759 | 5,138 | ||||||||||||||||||||||||||||||||||
| Average tangible common equity | 536,094 | 598,252 | 605,276 | 603,890 | 613,672 | 491,595 | 607,644 | ||||||||||||||||||||||||||||||||||
| Return on average common equity | 7.58 | % | (0.46) | % | 2.53 | % | (4.84) | % | 5.19 | % | 7.76 | % | 0.98 | % | |||||||||||||||||||||||||||
| Non-GAAP Return on average tangible common equity | 7.68 | % | (0.46) | % | 2.56 | % | (4.90) | % | 5.19 | % | 7.89 | % | 0.99 | % | |||||||||||||||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||
| 09/30/2019 | 12/31/2019 | 03/31/2020 | 06/30/2020 | 09/30/2020 | 09/30/2019 | 09/30/2020 | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Non-GAAP core operating income (loss): | |||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 10,384 | $ | (700) | $ | 3,857 | $ | (7,356) | $ | 8,006 | $ | 29,173 | $ | 4,507 | |||||||||||||||||||||||||||
| Add: fixed asset impairments | — | — | — | — | — | 424 | — | ||||||||||||||||||||||||||||||||||
Less: tax effect(1) | — | — | — | — | — | 109 | — | ||||||||||||||||||||||||||||||||||
| Fixed asset impairments, net of tax | — | — | — | — | — | 315 | — | ||||||||||||||||||||||||||||||||||
Add: Goodwill impairment(2) | — | — | — | 7,397 | — | — | 7,397 | ||||||||||||||||||||||||||||||||||
Add: state tax credit(2) | — | — | — | — | — | (1,361) | — | ||||||||||||||||||||||||||||||||||
| Non-GAAP core operating income (loss) | $ | 10,384 | $ | (700) | $ | 3,857 | $ | 41 | $ | 8,006 | $ | 28,127 | $ | 11,904 | |||||||||||||||||||||||||||
(1) Represents the tax impact of the adjustments above at a tax rate of 25.73% | |||||||||||||||||||||||||||||||||||||||||
(2) No tax effect | |||||||||||||||||||||||||||||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||
| 09/30/2019 | 12/31/2019 | 03/31/2020 | 06/30/2020 | 09/30/2020 | 09/30/2019 | 09/30/2020 | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
Non-GAAP core operating return on average assets: | |||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 10,384 | $ | (700) | $ | 3,857 | $ | (7,356) | $ | 8,006 | $ | 29,173 | $ | 4,507 | |||||||||||||||||||||||||||
Non-GAAP core operating income (loss) | 10,384 | (700) | 3,857 | 41 | 8,006 | 28,127 | 11,904 | ||||||||||||||||||||||||||||||||||
Average assets | $ | 4,610,958 | $ | 4,809,579 | $ | 4,975,531 | $ | 5,441,513 | $ | 5,486,252 | $ | 4,395,356 | $ | 5,302,970 | |||||||||||||||||||||||||||
Return on average assets | 0.89 | % | (0.06) | % | 0.31 | % | (0.54) | % | 0.58 | % | 0.89 | % | 0.11 | % | |||||||||||||||||||||||||||
Non-GAAP core operating return on average assets | 0.89 | % | (0.06) | % | 0.31 | % | — | % | 0.58 | % | 0.86 | % | 0.30 | % | |||||||||||||||||||||||||||
14
CROSSFIRST BANKSHARES, INC.
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||
| 09/30/2019 | 12/31/2019 | 03/31/2020 | 06/30/2020 | 09/30/2020 | 09/30/2019 | 09/30/2020 | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
Non-GAAP core operating return on common equity: | |||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 10,384 | $ | (700) | $ | 3,857 | $ | (7,356) | $ | 8,006 | $ | 29,173 | $ | 4,507 | |||||||||||||||||||||||||||
Non-GAAP core operating income (loss) | 10,384 | (700) | 3,857 | 41 | 8,006 | 28,127 | 11,904 | ||||||||||||||||||||||||||||||||||
Less: Preferred stock dividends | — | — | — | — | — | 175 | — | ||||||||||||||||||||||||||||||||||
Net income (loss) available to common stockholders | 10,384 | (700) | 3,857 | (7,356) | 8,006 | 28,998 | 4,507 | ||||||||||||||||||||||||||||||||||
Non-GAAP core operating income (loss) available to common stockholders | 10,384 | (700) | 3,857 | 41 | 8,006 | 27,952 | 11,904 | ||||||||||||||||||||||||||||||||||
Average common equity | $ | 543,827 | $ | 605,960 | $ | 612,959 | $ | 611,466 | $ | 613,910 | $ | 499,354 | $ | 612,782 | |||||||||||||||||||||||||||
| Return on average common equity | 7.58 | % | (0.46) | % | 2.53 | % | (4.84) | % | 5.19 | % | 7.76 | % | 0.98 | % | |||||||||||||||||||||||||||
Non-GAAP core operating return on common equity | 7.58 | % | (0.46) | % | 2.53 | % | 0.03 | % | 5.19 | % | 7.48 | % | 2.59 | % | |||||||||||||||||||||||||||
| Quarter Ended | |||||||||||||||||||||||||||||
| 09/30/2019 | 12/31/2019 | 03/31/2020 | 06/30/2020 | 09/30/2020 | |||||||||||||||||||||||||
| (Dollars in thousands except per share data) | |||||||||||||||||||||||||||||
| Tangible common stockholders' equity: | |||||||||||||||||||||||||||||
| Total stockholders' equity | $ | 602,435 | $ | 601,644 | $ | 611,946 | $ | 608,092 | $ | 617,883 | |||||||||||||||||||
| Less: goodwill and other intangible assets | 7,720 | 7,694 | 7,669 | 247 | 227 | ||||||||||||||||||||||||
| Tangible common stockholders' equity | $ | 594,715 | $ | 593,950 | $ | 604,277 | $ | 607,845 | $ | 617,656 | |||||||||||||||||||
| Tangible book value per share: | |||||||||||||||||||||||||||||
| Tangible common stockholders' equity | $ | 594,715 | $ | 593,950 | $ | 604,277 | $ | 607,845 | $ | 617,656 | |||||||||||||||||||
| Shares outstanding at end of period | 51,969,203 | 51,969,203 | 52,098,062 | 52,167,573 | 52,195,778 | ||||||||||||||||||||||||
| Book value per share | $ | 11.59 | $ | 11.58 | $ | 11.75 | $ | 11.66 | $ | 11.84 | |||||||||||||||||||
| Tangible book value per share | $ | 11.44 | $ | 11.43 | $ | 11.60 | $ | 11.65 | $ | 11.83 | |||||||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||
| 09/30/2019 | 12/31/2019 | 03/31/2020 | 06/30/2020 | 09/30/2020 | 09/30/2019 | 09/30/2020 | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Non-GAAP Core Operating Efficiency Ratio - Fully Tax Equivalent (FTE) | |||||||||||||||||||||||||||||||||||||||||
| Non-interest expense | $ | 21,172 | $ | 21,885 | $ | 22,223 | $ | 31,010 | $ | 23,011 | $ | 65,763 | $ | 76,244 | |||||||||||||||||||||||||||
| Less: goodwill impairment | — | — | — | 7,397 | — | — | 7,397 | ||||||||||||||||||||||||||||||||||
| Adjusted Non-interest expense (numerator) | $ | 21,172 | $ | 21,885 | $ | 22,223 | $ | 23,613 | $ | 23,011 | $ | 65,763 | $ | 68,847 | |||||||||||||||||||||||||||
| Net interest income | 35,786 | 37,179 | 38,228 | 41,157 | 39,327 | 104,265 | 118,712 | ||||||||||||||||||||||||||||||||||
Tax equivalent interest income(1) | 624 | 670 | 695 | 685 | 669 | 1,852 | 2,050 | ||||||||||||||||||||||||||||||||||
| Non-interest income | 3,212 | 2,186 | 2,095 | 2,634 | 4,063 | 6,529 | 8,792 | ||||||||||||||||||||||||||||||||||
| Add: fixed asset impairments | — | — | — | — | — | 424 | — | ||||||||||||||||||||||||||||||||||
| Total tax-equivalent income (denominator) | $ | 39,622 | $ | 40,035 | $ | 41,018 | $ | 44,476 | $ | 44,059 | $ | 113,070 | $ | 129,554 | |||||||||||||||||||||||||||
| Efficiency Ratio | 54.29 | % | 55.60 | % | 55.11 | % | 70.81 | % | 53.03 | % | 59.36 | % | 59.44 | % | |||||||||||||||||||||||||||
| Non-GAAP Core Operating Efficiency Ratio - Fully Tax Equivalent (FTE) | 53.43 | % | 54.66 | % | 54.18 | % | 53.09 | % | 52.23 | % | 58.16 | % | 53.14 | % | |||||||||||||||||||||||||||
(1) Tax exempt income (tax-free municipal securities) is calculated on a tax equivalent basis. The incremental tax rate used is 21.0% | |||||||||||||||||||||||||||||||||||||||||
15
CROSSFIRST BANKSHARES, INC.
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||
| 09/30/2019 | 12/31/2019 | 03/31/2020 | 06/30/2020 | 09/30/2020 | 09/30/2019 | 09/30/2020 | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
Non-GAAP Pre-Tax Pre-Provision Profit | |||||||||||||||||||||||||||||||||||||||||
| Net income (loss) before taxes | $ | 12,976 | $ | (1,870) | $ | 4,150 | $ | (8,219) | $ | 9,504 | $ | 34,481 | $ | 5,435 | |||||||||||||||||||||||||||
| Add: Provision for loan losses | 4,850 | 19,350 | 13,950 | 21,000 | 10,875 | 10,550 | 45,825 | ||||||||||||||||||||||||||||||||||
| Non-GAAP Pre-Tax Pre-Provision Profit | $ | 17,826 | $ | 17,480 | $ | 18,100 | $ | 12,781 | $ | 20,379 | $ | 45,031 | $ | 51,260 | |||||||||||||||||||||||||||
16
NASDAQ: CFB | October 20th, 2020
FORWARD-LOOKING STATEMENTS. The financial results in this presentation reflect preliminary, unaudited results, which are not final until the Company’s Quarterly Report on Form 10-Q is filed. This presentation and oral statements made during this meeting contain forward-looking statements. These forward- looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "might," "should," "could," "predict," "potential," "believe," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "strive," "projection," "goal," "target," "outlook," "aim," "would," "annualized" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: risks relating to the COVID-19 pandemic; risks related to general business and economic conditions and any regulatory responses to such conditions; our ability to effectively execute our growth strategy and manage our growth, including identifying and consummating suitable mergers and acquisitions; the geographic concentration of our markets; fluctuation of the fair value of our investment securities due to factors outside our control; our ability to successfully manage our credit risk and the sufficiency of our allowance; regulatory restrictions on our ability to grow due to our concentration in commercial real estate lending; our ability to attract, hire and retain qualified management personnel; interest rate fluctuations; our ability to raise or maintain sufficient capital; competition from banks, credit unions and other financial services providers; the effectiveness of our risk management framework in mitigating risks and losses; our ability to maintain effective internal control over financial reporting; our ability to keep pace with technological changes; system failures and interruptions, cyber-attacks and security breaches; employee error, fraudulent activity by employees or clients and inaccurate or incomplete information about our clients and counterparties; our ability to maintain our reputation; costs and effects of litigation, investigations or similar matters; risk exposure from transactions with financial counterparties; severe weather, acts of god, acts of war or terrorism; compliance with governmental and regulatory requirements; changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters; compliance with requirements associated with being a public company; level of coverage of our business by securities analysts; and future equity issuances. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward- looking statement, whether as a result of new information, future developments or otherwise, except as required by law. NON-GAAP FINANCIAL INFORMATION. This presentation contains certain non-GAAP measures. These non-GAAP measures, as calculated by CrossFirst, are not necessarily comparable to similarly titled measures reported by other companies. Additionally, these non-GAAP measures are not measures of financial performance or liquidity under GAAP and should not be considered alternatives to the Company's other financial information determined under GAAP. See reconciliations of certain non-GAAP measures included at the end of this presentation. MARKET AND INDUSTRY DATA. This presentation references certain market, industry and demographic data, forecasts and other statistical information. We have obtained this data, forecasts and information from various independent, third party industry sources and publications. Nothing in the data, forecasts or information used or derived from third party sources should be construed as advice. Some data and other information are also based on our good faith estimates, which are derived from our review of industry publications and surveys and independent sources. We believe that these sources and estimates are reliable but have not independently verified them. Statements as to our market position are based on market data currently available to us. Although we are not aware of any misstatements regarding the economic, employment, industry and other market data presented herein, these estimates involve inherent risks and uncertainties and are based on assumptions that are subject to change. 2
Mike Maddox – President, CEO and Director of CrossFirst Other Senior Executives • Joined CrossFirst in 2008 after serving as Kansas City regional president for Intrust Bank • Practicing lawyer for more than six years before joining Intrust Bank Aisha Reynolds • Graduate School of Banking at the University of Wisconsin – Madison General Counsel of CrossFirst and • Appointed to CEO June 1, 2020 after 12 years of service CrossFirst Bank 13+ years of experience Joined CrossFirst in 2018 David O’Toole – CFO, Chief Investment Officer and Director of CrossFirst Steve Peterson Chief Banking Officer of CrossFirst • More than 40 years of experience in banking, accounting, valuation and investment banking 21+ years of experience • Founding shareholder and director of CrossFirst Bank and became CFO in 2008 Joined CrossFirst in 2011 • Co-founder and managing partner of a national bank consulting and accounting firm • Served on numerous boards of directors of banks and private companies, including the Continental Airlines, Inc. travel agency advisory board George Jones Vice Chairman of CrossFirst 40+ years of experience Randy Rapp – Chief Credit Officer of CrossFirst Bank Joined CrossFirst in 2016 • More than 30 years of experience in banking, primarily as a credit analyst, commercial relationship manager and credit officer Tom Robinson • Joined CrossFirst in April 2019 after serving as Executive Vice President and Chief Credit Officer of Chief Risk Officer of CrossFirst Texas Capital Bank, National Association from May 2015 until March 2019 35+ years of banking experience • Mr. Rapp joined Texas Capital Bank in 2000 Joined CrossFirst in 2011 Matt Needham – Managing Director of Strategy and Investor Relations of CrossFirst Amy Fauss Chief Operating Officer of CrossFirst Bank • More than 15 years experience in banking, strategy, accounting and investment banking, five with 28+ years of banking experience CrossFirst Joined CrossFirst in 2009 • Deep experience in capital markets including valuation, mergers, acquisitions and divestitures • Provided assurance and advisory services with Ernst & Young • Former Deputy Bank Commissioner in Kansas and has served on several bank boards • MBA Wake Forest University, obtained CFA designation and CPA, Graduate School of Banking at the University of Colorado 3
• $5.5 billion(1) asset banking operation founded in 2007 • Branch-lite structure operating 8 branches in key markets (2) along the I-35 corridor (1) (1) • 3rd largest bank headquartered in the Kansas City MSA (1) (1) • High-growth commercial banking franchise with 332 full time equivalent employees(1) (1) (1) • High quality people, strong culture & relationship-oriented business model • Serving businesses, business owners, professionals and their personal networks • Core focus on improving profitability & operating (Number of Locations) efficiency Financial Performance For Nine Months Ended 9/30/20 (2) Balance Sheet Performance (Year-to-Date) Asset Quality Metrics Assets: $5,506 ROAA: 0.11% NPAs / Assets: 1.49% Gross Loans:( 3) $4,478 ROACE: 0.98% NCOs / Avg. Loans:( 4) 0.84% Deposits: $4,493 Efficiency Ratio: 59.44% Reserves / Loans: 1.70% CET 1 Capital: 11.95% NIM(FTE):( 4) 3.13% Reserves / NPLs: 95% Total Risk-Based Capital: 13.23% Net Income: $4.5 Classified Loans / Capital + ALLL 43.2% (1) As of September 30, 2020. (2) Dollars are in millions. 4 (3) Net of unearned income (4) YTD Interim Periods Annualized
✓ Reported Q3 2020 net income of $8.0 million with lower levels of provision compared to each quarter in the first half of 2020 ✓ Pre-tax, pre-provision net income year-to-date of $51.3 million, an increase of Financial 14% from the same period in 2019 Performance ✓ Achieved an efficiency ratio of 53% for the third quarter of 2020 and a non-GAAP core efficiency ratio of 52% after adjusting for nonrecurring or non-core items ✓ Book value per share of $11.84 at September 30, 2020, compared to $11.59 at September 30, 2019 ✓ $5.5 billion of assets; 18% increase over the last twelve months ✓ Grew loans by $64 million from the previous quarter and $854 million or 23% Balance over the last twelve months, including $369 million in PPP loans Sheet ✓ Grew deposits by $188 million from the previous quarter and $834 million or 23% over the last twelve months ✓ Significant decrease in modified loans ✓ Optimized staffing levels Strategic ✓ Opened Frisco, TX location and relocated Kansas City, MO location to a more prominent office space Initiatives ✓ Board of Directors approved a $20 million program to repurchase shares of CrossFirst Bankshares common stock 5
1. Comprehensive COVID-19 response plan to support our clients, employees, and communities 2. Strong capital position and liquidity provides CrossFirst with financial flexibility to give customers relief and continue to invest for the long term in the business 3. Closely monitoring and engaging clients to mitigate risks and impact from COVID-19 especially customer modifications & energy portfolio; modifications declined 55% in third quarter 2020 compared to second quarter 2020 4. Branch-lite business model and technology strategy provides CrossFirst an advantage for strong business continuity through the pandemic 5. Continued prudent management of expenses, staffing levels, and other discretionary spend; optimized staffing levels in third quarter 2020 6. Strong reserve build of total loan loss reserves / loans of 1.70% including an additional quarterly provision of $10.9 million 7. Stress testing of capital and credit scenarios show CrossFirst as well capitalized under several extreme scenarios 8. Return to work planning remains flexible with safety of employees, clients and other stakeholders as the highest priority 9. Positioned for long term growth 6 6
Commentary SBA / PPP Applications Forgiveness Existing Customers New Customers Totals Requests • CFB is a strong supporter of # of Applications 891 303 1,194 64 local businesses and Approved communities we serve $ Loans Funded (1) $290 $79 $369 $49 • Weighted average fee rate of approximately 2.7% Loans Approved by Industry • Management is working to (Based on $ Funded) PPP Loan Stratification expedite the forgiveness Other Services & Construction Business Support 10% $ % process of the PPP loans 17% Medical/ Healthcare PPP # of Loans SBA Anticipated Hotel & 16% Loans of Loans Held(1) Fee $ Fees(1) • Anticipate roughly half of the Restaurant 12% fees to be recognized in 2020 < $150,000 771 $35 5% $1.7 and the remainder in the first Professional half of 2021 Other Small Businesses Services 26% 19% $150,000 - 189 $44 5% $2.2 • Recognized $3.2 million of $350,000 fees year-to-date Loans Approved by Market (Based on $ Funded) Dallas $350,000 - 12% Kansas 197 $153 3% $4.6 City $2,000,000 53% Wichita 17% $2,000,000+ 37 $137 1% $1.4 Tulsa & Energy 11% Oklahoma City 7% Total 1,194 $369 $9.9 Note: Information as of Sept 30, 2020 7 (1) Dollars in millions
Commentary Yield on Loans and Cost of Total Deposits Q3 2020 net interest margin 6% 5.64% ▪ 5.34% 5.52% decreased 21 basis points to 2.98% 5.01% 4.89% 4.62% 4.60% largely due to the interest rate 4.36% environment, low PPP loan yields, 4% and a large C&I loan moving to nonaccrual as it was being 1.89% 1.96% restructured 2% 1.44% 0.88% 0.91% 0.87% 0.99% 0.96% ▪ Company continued to shorten the duration of deposits and move 0% deposit costs down to capture 2014 2015 2016 2017 2018 2019 YTD 2019 YTD 2020 economics associated with FOMC Yield on Loans Cost of Total Deposits rate cuts Net Interest Margin – Fully Tax Equivalent ▪ Loan to deposit ratio decreased from 102.5 in Q2 2020 to 99.7 in Q3 4% 2020 3.40% 3.40% 3.39% 3.27% 3.31% 3.35% 3.24% 3.13% ▪ Company executed a deleveraging 3% transaction with FHLB borrowing and will consider more in Q4 2020 2% 1% 0% 2014 2015 2016 2017 2018 2019 YTD YTD 2019 2020 8
Investment Portfolio Breakout as of September 30, 2020(1) Q3 2020 Commentary ▪ At the end of Q3 2020, the portfolio’s duration was approximately 4.2 years and the Municipal - fully taxable equivalent (FTE) yield MBS (Fixed) Tax- Exempt 19.4% 67.1% for Q3 2020 declined to 2.93% Total: ~$652 (1) ▪ $11 million of bonds were sold million due to COVID-19 credit risk review, netting $1 million in realized profits CMO (Fixed) 11.2% ▪ The marketable securities Other Municipal - Taxable 0.5% portfolio has unrealized gains of 1.8% approximately $34 million as of September 30, 2020 Average Yield on Securities – Fully Tax Equivalent 5% ▪ Portfolio primarily comprised of 3.85% low risk, investment grade 4% 3.69% 3.72% 3.63% 3.62% securities 3.35% 3.40% 3.08% 3% 2% 1% 0% 2014 2015 2016 2017 2018 2019 YTD 2019 YTD 2020 9 (1) Based on approximate fair value.
Operating Revenue(1) Commentary $180 YTD ‘19 – YTD ‘20 ▪ Historically, our balance sheet $150.2 Growth: 15.1% growth, combined with a $160 $140 $127.5 relatively stable net interest $116.5 margin, has enabled robust $120 $110.8 $100 operating revenue growth $78.5 $80 $57.5 $60 $44.6 ▪ Core earnings power of the $40 $33.0 Company continues to increase $20 $0 ▪ Pretax, pre-provision profit(2) continues to grow and includes a non-cash charge of $7.4 million for goodwill impairment in Q2 2020; Record $20.4 Earnings Performance million in Q3 2020 $70 $62.5 ▪ Year-to-date net income $60 $51.3 improved after lower $50 $45.0 provisioning in Q3 2020 $40 $30.7 $28.5 $29.2 $30 $16.9 $19.6 $20 $14.1 $16.4 $10.3 $8.4 $7.5 $10 $4.1 $5.8 $4.5 $0 (2) Note: Dollars in charts are in millions. Net Income Pretax, Pre-Provision Profit (1) Defined as net-interest income + non-interest income. (2) Represents a Non-GAAP financial measure, see Non-GAAP reconciliation slides at the end of the presentation for more detail. In 10 addition, pre-tax net profits may also be found presented in the supplemental information
Slowing Non-interest Expense Growth $100 $100 $86 $88 $90 $90 $76 $80 $80 $7 $66 $70 $70 $62 $9 $9 $60 $60 $4 $5 $2 $3 $50 $50 $41 $8 $9 $40 $40 $31 $30 $30 $20 $43 $43 $20 $10 $10 $- $- 2015 2016 2017 2018 2019 YTD 2019 YTD 2020 Salaries & Benefits Occupancy Exp. & Professional Fees FDIC Premiums Data Processing, Software & Comm. Advertising & Other Exp. Goodwill Impairment Assets per Employee FTE Lowering Expenses $50.0 2.50% 800 $16.6 $18.0 2.21% $45.0 700 $13.8 $16.0 $40.0 1.82% 1.81% 1.80% 2.00% $14.0 1.67% 600 $11.6 $35.0 $31.0 $10.8 $10.5 $12.0 500 $9.7 $30.0 1.50% $10.0 $25.0 $21.9 $22.2 $23.0 400 353 357 332 $21.2 305 $8.0 $20.0 1.00% 300 203 $6.0 $15.0 200 146 $4.0 $10.0 0.50% 100 $2.0 $5.0 0 $0.0 $0.0 0.00% 2015 2016 2017 2018 2019 Q3 2020 Q3 2019 Q4 2019 Q1 2020 Q2 2020(1) Q3 2020 Employees Assets/Employee(FTE) Non-interest Expense Non-interest expense / Average Assets 11 Dollars are in millions and amounts shown are as of the end of the period. YTD is as of 9/30/20; interim periods are annualized (1) Includes $7.4mm Goodwill Impairment.
Commentary Return on Average Assets / Non-GAAP ROAA(1) ▪ CrossFirst’s branch-lite model is 1.00% 0.89% 0.86% efficient and scalable 0.90% ▪ Core efficiency performance is 0.80% 0.70% 0.63% trending down consistent with 0.56% 0.56% 0.60% 0.53% management’s initiatives 0.50% 0.41% ▪ $7.4 million goodwill impairment in Q2 0.40% 0.30% 0.24% 2020 impacted YTD ROAA and 0.30% Efficiency Ratios 0.20% 0.11% 0.10% ▪ Quarterly ROAA significantly impacted 0.00% 2014 2015 2016 2017 2018 2019 YTD 2019 Non-GAAP YTD YTD 2020 Non-GAAP YTD by COVID-19 with provisioning in 2020 2019 2020 (1) Pre-tax, pre-provision ROAA improving Efficiency Ratio / Non-GAAP Core Efficiency Ratio (FTE)(1) despite inflated balance sheet 100% from $369MM PPP loans 90% 79.10% 80% 74.68% 73.64% 2.00% 68.48% 70.64% 1.53% 70% 1.44% 1.46% 1.48% 58.37% 59.36% 58.16% 59.44% 1.50% 60% 53.14% 0.89% 0.94% 50% 1.00% 0.58% 40% 0.50% 0.31% 30% 0.00% 20% (0.06%) 10% -0.50% (0.54%) 0% 2014 2015 2016 2017 2018 2019 YTD 2019 Non-GAAP YTD YTD 2020 Non-GAAP YTD -1.00% Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 2019 2020 (1) ROAA PTPP ROAA 12 (1) Represents a non-GAAP financial measure, see non-GAAP reconciliation slides in the supplemental information for more detail
Nonperforming Assets / Assets Commentary on NPA’s 2.0% ▪ Increase in NPAs for the quarter primarily from migration of one 1.49% Energy credit and one C&I credit 1.5% temporarily moved due to restructuring 0.97% 0.97% 1.0% ▪ 60% of the nonperforming asset 0.74% balance at Q3 2020 relates to 0.59% Energy and the C&I credit being 0.5% 0.43% restructured 0.27% 0.20% 0.18% 0.08% 0.0% 2014 2015 2016 2017 2018 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Commentary on Charge-Offs ▪ $6.0 million in net charge-offs for Q3 2020 from C&I loans Net Charge-Offs / Average Loans(1) ▪ $1.3 million in net charge-offs for Q2 2.1% 2.00% 2020; includes a $1 million charge- 1.8% off to an Energy loan ▪ $19.4 million in net charge-offs for 1.5% Q1 2020, mostly attributed to the 1.2% $17.9 million previously disclosed NPA 0.9% 0.58% 0.54% ▪ In Q4 2019, $5.5 million of net 0.6% 0.44% charge-offs, included a $5 million 0.31% partial charge-off of the previously 0.3% 0.11% 0.07% 0.12% disclosed loan 0.02% 0.04% 0.0% 2014 2015 2016 2017 2018 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 13 (1) Ratio is annualized.
Loan Modifications by Type (As of June 30, 2020) Migration of Credit by Risk Weighting (in $millions) $5,000 16% $4,493 $4,500 $4,429 $237 $300 $4,011 $177 37% $4,000 $3,862 $105 $170 Loan $87 $3,476 $3,639 $79 Modifications: $3,500 $85 $48 $88 $48 $709 million $57 24% $3,000 $2,500 6% $2,000 $4,022 $4,016 17% $3,827 $3,506 $3,727 $1,500 $3,331 Interest Only - 90 Days Interest Only - 90+ Days Payment Deferral - 90+ Days Payment Deferral - 90 Days $1,000 Other $500 Loan Modifications by Type $0 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 (As of September 30, 2020) % Substandard & Doubtful 3% 2% 2% 3% 5% 7% 26% Pass Special Mention Substandard & Doubtful 33% Loan ~89% of modifications remained in Pass risk rating Modifications: ➢ $318 million ➢ Portfolio increase from Pass to Special Mention and Substandard & 10% Doubtful Risk Weightings primarily due to Energy and C&I 10% 21% 14 Interest Only - 90 Days Interest Only - 90+ Days Payment Deferral - 90+ Days Payment Deferral - 90 Days 14 Other
(in $ millions) $709 First Modifications $133 Second Modifications $318 Loan Deferrals Remain as of June 30, 2020 During Q3 2020 as of Sept 30, 2020 Focus Industries - $456 Focus Industries - $98 Focus Industries - $192 Hotel CRE $114 Hotel CRE $54 Hotel CRE $96 Recreation C&I $80 Recreation C&I $14 Recreation C&I $21 Retail CRE $77 Retail CRE $0 Retail CRE $1 Health Care C&I $53 Health Care C&I $0 Health Care C&I $0 Restaurant C&I $34 Restaurant C&I $9 Restaurant C&I $12 Medical & Sr. Living CRE $41 Medical & Sr. Living CRE $19 Medical & Sr. Living CRE $19 Energy $30 Energy $2 Energy $35* Office CRE $27 Office CRE $0 Office CRE $8 Other $253 Other $35 Other $126 $0 $200 $400 $0 $200 $400 First Modification$0 Second$200 Modification $400 Gross Loan Portfolio Gross Loan Portfolio Remaining Loan Deferrals as of June 30, 2020 as of Sept 30, 2020 as of Sept 30, 2020 First Modification First Second Unmodified 5% First Modification Unmodified Modification Loans Loans Modification 17% *42% 83% 92% Second 58% Modification 3% 15 Note: Identified at-risk industries in supplemental materials and gross loan values exclude PPP loans * Energy portfolio experienced a $3 million increase in first modifications in Q2 2020 15
Recent Credit Quality Allowance for Loan Losses / Total Loans Classified Loans / (Total Capital + LLR) & ALL Trends 1.70% $90 1.61% $400 100.0% ▪ Increase in classified assets primarily 95.0% 1.48% $76.0 90.0% from Energy portfolio and one C&I $80 $350 $71.2 85.0% 1.29% 80.0% loan $70 $299.9 1.18% $300 75.0% 70.0% ▪ Energy portfolio reserves increased $60 $56.9 $51.5 $250 $237.1 65.0% 0.6% to 5.1% at end of Q3 2020 60.0% compared to Q2 2020 $50 $43.0 55.0% $200 50.0% $40 43.2% 45.0% ▪ Provision for loan loss of $10.9 million 40.0% $150 for Q3 2020; 1.84% ALLL / Loans, $30 34.9% 35.0% $104.5 30.0% $85.2 $86.9 excluding PPP loans $100 25.0% $20 20.0% 15.8% 15.0% ▪ The Company has not adopted CECL $50 13.2% 13.2% $10 10.0% at this time and continues to run 5.0% 0.0% parallel scenarios to assess impact on $0 0.00% $0 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q3 Q4 Q1 Q2 Q3 the ALLL and capital 2019 2019 2020 2020 2020 Capital Ratios 20% Capital Analysis 12.93% 12.22% 12.10% 12.01% 11.97% ▪ The Company continues to remain 15% 13.90% 12.91% 13.43% 13.17% 13.27% 13.23% well capitalized with strong liquidity 12.20% 12.08% 11.99% 11.95% ▪ Unfunded commitments totaled $1.4 10% billion as of the end of Q3 2020, 45% of which are commitments to fund C&I loans and 39% to commercial 5% construction loans 0% Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Common Equity Tier 1 Tier 1 Risk Based Total Risk-Based Capital Dollar amounts are in millions. 16
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Industry Total Exposure (1) % of Gross Loans(1) Energy Oil (excludes Natural Gas) $246 6.0% Retail Commercial Real Estate $187 4.5% Hotel & Lodging $171 4.1% Healthcare C&I $112 2.7% Entertainment & Recreation(2) $106 2.6% Restaurant(3) $76 1.8% Industry categories selected based on the following criteria: • Increased volatility from higher oil inventory, lower oil consumption, and geopolitical risks • Implementation of travel, entertainment, and restaurant restrictions • Cancellation of all events and large gatherings • Cessation of revenue due to business being considered “nonessential” (1) Loan values recorded on balance sheet in millions as of September 30, 2020; excludes PPP loans (2) Includes Native American Gaming, Parking Lots and Garages (3) Restaurant information includes both C&I and CRE exposure 18
Energy Portfolio Dynamics Energy by Composition 9/30/2020 ($ in millions) # % Unfunded Average Avg % ▪ Typically only lend as a senior secured Outstanding Loans Total Commitments Size Hedged(1) lender in single bank transactions and as a cash flow lender Oil 40 $246 64% $5 $6 39% Natural ▪ Exploration & Production lending only 14 $138 36% $9 $10 50% on proven and producing reserves Gas Other 3 $0 0% $35 $0 0% ▪ CrossFirst typically does not lend to Sources shale, oil field services, or midstream energy companies Total 57 $384 100% $49 $7 43% (1) ▪ Collateral base is predominately comprised of properties with sufficient production history to establish reliable Energy Loans by Risk Rating ($ in millions) production trends; long-life assets $450.00 39% of the Oil portfolio is hedged for $409 ▪ $7 $399 $390 $384 the next 12 months at $48.25 / $400.00 $9 $15 $13 barrel(1) $350.00 $108 $300.00 $138 ▪ 50% of the Natural Gas portfolio is $250.00 $72 $59 hedged for the next 12 months at $200.00 $393 $371 $2.33 / MMBtu(1) $150.00 $100.00 $210 $187 $50.00 $0.00 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Pass Special Mention Substandard & Doubtful $19.5 million of Reserves are allocated to Energy, representing 5.1% of the total energy portfolio Data as of 9/30/20 (1) Weighted Average 19
Loan Mix by Type ($4.4bn) (1) C&I Loan Breakdown by Type ($1.3bn) Motor Vehicle & Professional & Parts Dealers Technical Services 4% 4% Credit Owner Occupied Engineering & Related Financial Real Estate Other Contracting Restaurants SBA PPP Activities Aircraft Management 6% 1% 6% 5% 8% 4% 5% 3% Residential Real Commercial & Misc. Financial Estate Industrial Rental & Leasing Vehicles 8% 29% Services 2% Energy 3% 9% Education Security Services 2% 5% Other Business Loans to 18% Construction & Individuals Land 7% Development Manufacturing 8% 13% Commercial Real Recreation Health Care Estate 7% Real Estate 9% 26% Activity 8% CRE Loan Portfolio by Segment ($1.7bn)(2) CRE Loans by Geography ($1.7bn)(2) TX Retail 45% 11% Multi-Family Office 12% 23% KS Land Industrial 11% Development (excludes Self- 3% Storage) Self Storage 10% 3% Remaining C-Store States OK 2% 1-4 Family Res 13% 12% Medical Construction WA FL MO 3% Other Senior Living Hotel 9% 2% AZ CO 2% 8% 3% 7% 10% 2% 5% Raw Land 4% Note: Data as of September 30, 2020. 20 (1) Shown as a percentage of loan portfolio, net of unearned income (2) CRE as defined by regulators (including construction and development)
Gross Loans (Net of Unearned Income) Commentary ▪ Historically, loan growth has been $5,000 $4,478 primarily organic and very strong $3,852 $4,000 $3,630 ▪ Loan growth, excluding PPP loans, $3,061 was 1.6% compared to the previous $3,000 quarter $1,996 $2,000 $1,297 ▪ Diversification remains a core tenet $993 $1,000 $785 ▪ Loan yields have trended downward due to the declining rate $0 environment and been impacted 2014 2015 2016 2017 2018 2019 Q3 2019 Q3 2020 from credit challenges ▪ Purchased loan participations totaled $105 million and a combination of Gross Loans by Type shared national credits and $4,700 $4,429 $4,493 Q3 2020 Gross Loan Composition $4,011 syndications purchased totaled $346 $4,200 $3,862 $369 $369 $43 $46 $47 million as of September 30, 2020 $3,639 $45 $3,700 $618 $44 $399 $504 $536 Residential $365 Real Estate Consumer $3,200 Construction & ▪ Generally, we only buy portions $628 $625 $662 $588 14% 1% $528 Land of syndicated loans with $2,700 Development Commercial & borrowers with whom we could 13% $2,200 $993 $1,024 $1,085 $1,141 $1,196 Industrial lead the next lending 29% opportunity $1,700 $396 $409 $399 $390 $384 $1,200 SBA/ ▪ Loan participations sold of PPP $700 $1,313 $1,357 $1,355 $298 million and $165 million $1,285 $1,291 8% Energy $200 9% of syndications sold as of Commercial Real September 30, 2020 -$300 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Estate 26% Loan 5.53% 5.21% 4.98% 4.28% 3.90% Yield Commercial & Industrial Energy Commercial Real Estate Construction & Land Development Residential Real Estate Consumer SBA/ PPP 21 Dollars in charts are in millions. Amounts shown are as of the end of the period.
ALLL / 1.84% Gross Loans 1.48% Adjustments to ALLL (excludes PPP) $80 $3 $0 $76 $1 $1 $5 $70 $10 $4 $60 $57 $18 $0 $3 $15 $50 $3 $8 -$24 $40 $7 $16 $20 -$1 $30 -$2 $20 $36 $28 $10 $0 Dec-19 Net Charge-Offs C&I Energy CRE Construction & Residential RE Consumer Sep-20 Land Commercial & Industrial Energy Commercial Real Estate Construction & Land Development Residential Real Estate Consumer & Line of Credit 22 Note: As of end of period Dollars in millions
Commentary Total Deposits $5,000 $4,493 ▪ CrossFirst has generated $4,500 $3,924 significant growth in core $4,000 $3,658 deposits and maintained $3,500 $3,208 $3,000 wholesale funding to support $2,303 the PPP and securities portfolio $2,500 $2,000 $1,694 $1,295 $1,500 ▪ Company continued to shorten $962 time deposit portfolio which $1,000 typically lags in a declining rate $500 environment $0 2014 2015 2016 2017 2018 2019 Q3 2019 Q3 2020 ▪ Growth continues to come from higher yielding money market Deposit Mix by Type accounts $5,000 $4,493 $4,500 $4,304 Q3 2020 Deposit Composition ▪ Linked quarter increase in $3,973 $4,000 $3,924 $750 transaction deposits due to $3,658 $745 $3,500 $710 $724 $391 utilization of insured cash $753 $416 Time Deposits Time Deposits sweep product $3,000 $530 $379 < $100,000 ≥ $100,000 $469 9% 17% $2,500 $2,090 $1,994 $2,000 $1,765 $1,903 DDA $1,500 $1,776 17% $1,000 $508 $538 $399 $259 Savings $500 $146 $514 $522 $567 $750 $754 & MMA $0 46% Transaction Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Deposits Cost of 11% 1.94% 1.70% 1.46% 0.79% 0.67% Deposits Non-interest bearing deposits Transaction Deposits Savings & MMA Time Deposits < $100,000 Time Deposits ≥ $100,000 23 Dollars are in millions and amounts shown are as of the end of the period.
As of Year or for the Year Ended As of or for the Nine Months Ended (Dollars thousands, except per share data) December 31, September 30, 2015 2016 2017 2018 2019 2019 2020 Income Statement Data Interest income $54,116 $69,069 $97,816 $156,880 $216,218 $161,038 $153,914 Interest expense 11,849 15,016 22,998 46,512 74,774 56,773 35,202 Net interest income 42,267 54,053 74,818 110,368 141,444 104,265 118,712 Provision for loan losses 5,975 6,500 12,000 13,500 29,900 10,550 45,825 Non-interest income 2,365 3,407 3,679 6,083 8,715 6,529 8,792 Non-interest expense 30,562 40,587 62,089 85,755 87,648 65,763 76,244 Income before taxes 8,095 10,373 4,408 17,196 32,611 34,481 5,435 Income tax expense (benefit) 626 62 (1,441) (2,394) 4,138 5,308 928 Net income 7,469 10,311 5,849 19,590 28,473 29,173 4,507 Preferred stock dividends 2,066 2,100 2,100 2,100 175 175 0 Net income available to common stockholders 5,403 8,211 3,749 17,490 28,298 28,998 4,507 Non-GAAP core operating income(1) 7,469 10,311 9,716 19,940 27,427 28,127 11,904 Balance Sheet Data Cash and cash equivalents $79,418 $155,972 $130,820 $216,541 $187,320 $128,126 $223,636 Available-for-sale securities 460,542 593,012 703,581 663,678 741,634 733,093 652,146 Gross loans (net of unearned income) 992,726 1,296,886 1,996,029 3,060,747 3,852,244 3,629,792 4,477,809 Allowance for loan losses (15,526) (20,786) (26,091) (37,826) (56,896) (42,995) (76,035) Goodwill and other intangibles 8,100 7,998 7,897 7,796 7,694 7,720 227 Total assets 1,574,346 2,133,106 2,961,118 4,107,215 4,931,233 4,651,313 5,505,696 Non-interest-bearing deposits 123,430 198,088 290,906 484,284 521,826 513,832 754,172 Total deposits 1,294,812 1,694,301 2,303,364 3,208,097 3,923,759 3,658,108 4,492,549 Borrowings and repurchase agreements 112,430 216,709 357,837 388,391 373,664 357,614 349,631 Trust preferred securities, net of fair value adj. 792 819 850 884 921 912 952 Preferred Stock, liquidation value 30,000 30,000 30,000 30,000 0 0 0 Total Stockholders' Equity 160,004 214,837 287,147 490,336 601,644 602,435 617,883 Tangible Stockholders' Equity(1) 121,904 176,839 249,250 452,540 593,950 594,715 617,656 Share and Per Share Data: Basic earnings per share $0.29 $0.39 $0.12 $0.48 $0.59 $0.63 $0.09 Diluted earnings per share 0.28 0.39 0.12 0.47 0.58 0.61 0.09 Book value per share 6.61 7.34 8.38 10.21 11.58 11.59 11.84 Tangible book value per share(1) 6.20 7.02 8.12 10.04 11.43 11.44 11.83 Wtd. avg. common shares out. - basic 18,640,678 20,820,784 30,086,530 36,422,612 47,679,184 46,239,021 52,104,372 Wtd. avg. common shares out. - diluted 19,378,290 21,305,874 30,963,424 37,492,567 48,576,135 47,081,727 52,567,591 Shares outstanding at end of period 19,661,718 25,194,872 30,686,256 45,074,322 51,969,203 51,969,203 52,195,778 Historic share counts and per share figures reflect 2:1 stock split effected on 12/21/18. 24 (1) Represents a non-GAAP financial measure. See Non-GAAP Reconciliation slides at the end of this presentation for additional detail.
As of Year or for the Year Ended As of or for the Nine Months Ended December 31, September 30, 2015 2016 2017 2018 2019 2019 2020 Selected Ratios: Return on average assets 0.53% 0.56% 0.24% 0.56% 0.63% 0.89% 0.11% Non-GAAP core operating return on average assets(1) 0.53 0.56 0.40 0.57 0.61 0.86 0.30 Return on average common equity 4.60 5.51 1.53 5.34 5.38 7.76 0.98 Non-GAAP core operating return on average common 4.60 5.51 3.11 5.45 5.18 7.89 0.99 equity(1) Yield on earning assets - tax equivalent(2) 4.14 4.08 4.37 4.77 5.04 5.14 4.05 Yield on securities - tax equivalent(2) 3.72 3.63 3.85 3.62 3.35 3.40 3.08 Yield on loans 4.62 4.60 4.89 5.34 5.52 5.64 4.36 Cost of interest-bearing deposits 1.01 0.96 1.12 1.71 2.21 2.30 1.14 Cost of funds 0.94 0.91 1.06 1.49 1,90 1.96 1.01 Cost of total deposits 0.91 0.87 0.99 1.44 1.89 1.96 0.96 Net interest margin - tax equivalent(2) 3.27 3.24 3.40 3.39 3.31 3.35 3.13 Non-interest expense to average assets 2.17 2.21 2.53 2.45 1.95 2.00 1.92 Efficiency ratio(3) 68.48 70.64 79.10 73.64 58.37 59.36 59.44 Non-GAAP core operating efficiency ratio FTE(1)(3) 64.66 66.04 72.33 67.68 57.25 58.16 53.14 Non-interest-bearing deposits to total deposits 9.53 11.69 12.63 15.10 13.30 14.05 16.79 Loans to deposits 76.67 76.54 86.66 95.41 98.18 99.23 99.67 Credit Quality Ratios: Allowance for loans losses to total loans 1.56% 1.60% 1.30% 1.23% 1.48% 1.18% 1.70% Non-performing assets to total assets 0.08 0.20 0.18 0.43 0.97 1.00 1.49 Non-performing loans to total loans 0.12 0.33 0.27 0.58 1.15 1.22 1.78 Allowance for loans losses to non-performing loans 1,336.38 493.14 481.68 212.30 128.54 97.12 95.18 Net charge-offs to average loans 0.04 0.11 0.44 0.07 0.31 0.21 0.84 Capital Ratios: Total stockholders' equity to total assets 10.16% 10.07% 9.70% 11.94% 12.20% 12.95% 11.22% Common equity tier 1 capital ratio 8.50 9.78 8.62 11.75 12.20 12.91 11.95 Tier 1 risk-based capital ratio 10.70 11.38 9.70 12.53 12.22 12.93 11.97 Total risk-based capital ratio 11.82 12.51 10.65 13.51 13.43 13.90 13.23 Tier 1 leverage ratio 9.72 10.48 9.71 12.43 12.06 12.57 10.85 (1) Represents a non-GAAP financial measure. See Non-GAAP Reconciliation slides at the end of this presentation or press release for additional detail. (2) Tax-exempt income is calculated on a tax equivalent basis. Tax-exempt income includes municipal securities, which is exempt from federal taxation. A tax rate of 21% is used for fiscal year 2018 and after and a tax rate of 35% is used for fiscal years 2017 and prior. (3) Efficiency ratio is non-interest expense divided by the sum of net interest income and non-interest income. 25
CrossFirst Bankshares, Inc Quarterly Financials As of or for the Three Months Ended (Dollars thousands, except per share data) 9/30/19 12/31/19 3/31/20 6/30/20 9/30/20 Income Statement Data Interest income $55,529 $55,180 $54,208 $51,254 $48,452 Interest expense 19,743 18,001 15,980 10,097 9,125 Net interest income 35,786 37,179 38,228 41,157 39,327 Provision for loan losses 4,850 19,350 13,950 21,000 10,875 Non-interest income 3,212 2,186 2,095 2,634 4,063 Non-interest expense 21,172 21,885 22,223 31,010 23,011 Income before taxes 12,976 (1,870) 4,150 (8,219) 9,504 Income tax expense (benefit) 2,592 (1,170) 293 (863) 1,498 Net income 10,384 (700) 3,857 (7,356) 8,006 Preferred stock dividends 0 0 0 0 0 Net income available to common stockholders 10,384 (700) 3,857 (7,356) 8,006 Non-GAAP core operating income(1) 10,384 (700) 3,857 41 8,006 Balance Sheet Data Cash and cash equivalents $128,126 $187,320 $158,987 $194,371 $223,636 Securities 733,093 741,634 735,231 700,083 652,146 Gross loans (net of unearned income) 3,629,792 3,852,244 4,002,451 4,413,224 4,477,809 Allowance for loan losses (42,995) (56,896) (51,458) (71,185) (76,035) Goodwill and intangibles 7,720 7,694 7,669 247 227 Total assets 4,651,313 4,931,233 5,067,407 5,462,254 5,505,696 Non-interest bearing deposits 513,832 521,826 567,215 750,333 754,172 Total deposits 3,658,108 3,923,759 3,972,822 4,304,143 4,492,549 Borrowings and repurchase agreements 357,614 373,664 441,626 500,498 349,631 Trust preferred securities, net of fair value adj. 912 921 931 942 952 Preferred Stock 0 0 0 0 0 Stockholders' Equity 602,435 601,644 611,946 608,092 617,883 Tangible Stockholders' Equity(1) 594,715 593,950 604,277 607,845 617,656 Share and Per Share Data: Basic earnings per common share $0.22 ($0.01) $0.07 $ (0.14) $ 0.15 Dilutive earnings per common share 0.21 (0.01) 0.07 (0.14) $ 0.15 Book value per common share 11.59 11.58 11.75 11.66 11.84 Tangible book value per common share(1) $11.44 $11.43 $11.60 $11.65 $11.83 Wtd. avg. common shares out. - basic 48,351,553 51,952,712 52,071,484 52,104,994 52,136,286 Wtd. avg. common shares out. - diluted 49,164,549 52,748,312 52,660,270 52,493,177 52,560,126 Shares outstanding at end of period 51,969,203 51,969,203 52,098,062 52,167,573 52,195,778 (1) Represents a non-GAAP financial measure. See Non-GAAP Reconciliation slides at the end of this presentation for additional detail. 26
CrossFirst Bankshares, Inc Quarterly Financials As of or for the Three Months Ended 9/30/19 12/31/19 3/31/20 6/30/20 9/30/20 Selected Ratios: - - Return on average assets(1) 0.89% (0.06%) 0.31% (0.54%) 0.58% - - Non-GAAP core operating return on average assets(1)(2) 0.89 (0.06) 0.31 - 0.58% Return on average common equity 7.58 - (0.46) - 2.53 (4.84) 5.19 Yield on earning assets 4.94 - 4.71 - 4.52 3.91 3.61 - - Yield on earning assets - tax equivalent(3) 5.00 4.76 4.57 3.96 3.66 Yield on securities 2.85 - 2.86 - 2.85 2.70 2.55 - - Yield on securities - tax equivalent(3) 3.19 3.22 3.21 3.07 2.93 Yield on loans 5.53 - 5.21 - 4.98 4.28 3.90 Costs of interest bearing liabilities 2.24 - 1.96 - 1.70 1.01 0.88 Cost of interest-bearing deposits 2.26 - 1.97 - 1.69 0.95 0.80 Cost of funds 1.94 - 1.71 - 1.49 0.85 0.75 Cost of Deposits 1.94 - 1.70 - 1.46 0.79 0.67 Cost of other borrowings 1.95 - 1.86 - 1.72 1.35 1.50 - - Net interest margin - tax equivalent(3) 3.24 3.23 3.24 3.19 2.98 Noninterest expense to average assets 1.82 - 1.81 - 1.80 2.21 1.67 - - Efficiency ratio(4) 54.29 55.60 55.11 70.81 53.03 - - Non-GAAP core operating efficiency ratio (FTE) (2)(4) 53.43 54.66 54.18 53.09 52.23 Noninterest bearing deposits to total deposits 14.05 - 13.30 - 14.28 17.43 16.79 Loans to deposits 99.23 - 98.18 - 100.75 102.53 99.67 Credit Quality Ratios: Allowance for loans losses to total loans 1.18% 1.48% 1.29% 1.61% 1.70% Nonperforming assets to total assets 1.00 0.97 0.59 0.74 1.49 Nonperforming loans to total loans 1.22 1.15 0.66 0.86 1.78 Allowance for loans losses to nonperforming loans 97.12 128.54 195.99 188.55 95.18 Net charge-offs to average loans(1) 0.53 0.58 2.00 0.12 0.54 Capital Ratios: Total stockholders' equity to total assets 12.95% - 12.20% - 12.08% 11.13% 11.22% Common equity tier 1 capital ratio 12.91 - 12.20 - 12.08 11.99 11.95 Tier 1 risk-based capital ratio 12.93 - 12.22 - 12.10 12.01 11.97 Total risk-based capital ratio 13.90 - 13.43 - 13.17 13.27 13.23 Tier 1 leverage ratio 12.57 - 12.06 - 11.81 10.75 10.85 (1) Interim periods are annualized (2) Represents a non-GAAP financial measure. See Non-GAAP Reconciliation slides at the end of this presentation for additional detail. 27 (3) Tax-exempt income is calculated on a tax equivalent basis. Tax-exempt income includes municipal securities, which is exempt from federal taxation. A tax rate of 21% is used for 2018, 2019 & 2020. (4) Efficiency ratio is non-interest expense divided by the sum of net interest income and non-interest income
As of or for the Year Ended As of or for the Nine Months Ended (Dollars in thousands) December 31, September 30, 2015 2016 2017 2018 2019 2019 2020 Non-GAAP Core Operating Income: Net Income $7,469 $10,311 $5,849 $19,590 $28,473 $29,173 $4,507 Add: restructuring charges 0 0 0 4,733 0 0 0 Less: Tax effect(1) 0 0 0 1,381 0 0 0 Restructuring charges, net of tax 0 0 0 3,352 0 0 0 Add: fixed asset impairments 0 0 1,903 171 424 424 0 Less: Tax effect(2) 0 0 737 44 109 109 0 Fixed asset impairments, net of tax 0 0 1,166 127 315 315 0 Add: Goodwill impairment(3) 0 0 0 0 0 0 7,397 Add: State tax credit(3) 0 0 0 (3,129) (1,361) (1,361) 0 Add: 2017 Tax Cut and Jobs Act(3) 0 0 2,701 0 0 0 0 Non-GAAP core operating income $7,469 $10,311 $9,716 $19,940 $27,427 $28,127 $11,904 Non-GAAP Core Operating Return on Average Assets: Net Income $7,469 $10,311 $5,849 $19,590 $28,473 $29,173 $4,507 Non-GAAP core operating income 7,469 10,311 9,716 19,940 27,427 28,127 11,904 Average Assets 1,410,447 1,839,563 2,452,797 3,494,655 4,499,764 4,395,356 5,302,970 GAAP return on average assets 0.53% 0.56% 0.24% 0.56% 0.63% 0.89% 0.11% Non-GAAP core operating return on average assets 0.53% 0.56% 0.40% 0.57% 0.61% 0.86% 0.30% Non-GAAP Core Operating Return on Average Equity: Net Income $7,469 $10,311 $5,849 $19,590 $28,473 $29,173 $4,507 Non-GAAP core operating income 7,469 10,311 9,716 19,940 27,427 28,127 11,904 Less: Preferred stock dividends 2,066 2,100 2,100 2,100 175 175 0 Net Income available to common stockholders 5,403 8,211 3,749 17,490 28,298 28,998 4,507 Non-GAAP core operating income 5,403 8,211 7,616 17,840 27,252 27,952 11,904 available to common stockholders Average common equity 117,343 149,132 245,193 327,446 526,225 499,354 612,782 Tangible Assets 8,152 8,050 7,949 7,847 7,746 7,759 5,138 Average Tangible Equity 109,191 141,082 237,244 319,599 518,479 491,595 607,644 GAAP return on average common equity 4.60% 5.51% 1.53% 5.34% 5.38% 7.76% 0.98% Non-GAAP core return on average tangible common 4.95% 5.82% 3.21% 5.58% 5.26% 7.60% 2.62% equity Non-GAAP Core Operating Efficiency Ratio: Non-interest expense $30,562 $40,587 $62,089 $85,755 $87,648 $65,763 $76,244 Less: goodwill impairment 0 0 0 4,733 0 0 7,397 Non-GAAP non-interest expense (numerator) 30,562 40,587 62,089 81,022 87,648 65,763 68,847 Net interest income 42,267 54,053 74,818 110,368 141,444 104,265 118,712 Tax-equivalent interest income 2,637 4,001 5,439 3,099 2,522 1,852 2,050 Non-interest income 2,365 3,407 3,679 6,083 8,715 6,529 8,792 Add: fixed asset impairments 0 0 1,903 171 424 424 0 Non-GAAP Operating revenue (denominator) 47,269 61,461 85,839 119,721 153,105 113,070 129,554 GAAP efficiency ratio 68.48% 70.64% 79.10% 73.64% 58.37% 59.36% 59.44% Non-GAAP core operating efficiency ratio (FTE) 64.66% 66.04% 72.33% 67.68% 57.25% 58.16% 53.14% (1) Represents the tax impact of the adjustments above at a tax rate of 25.73%, plus a permanent tax benefit associated with stock-based grants that were exercised prior to our former CEO’s departure. 28 (2) Represents the tax impact of the adjustments above at a tax rate of 25.73% for fiscal years 2018 and after; 38.73% for fiscal years prior to 2018. (3) No tax effect associated with the 2017 Tax Act adjustment or state tax credit or the goodwill impairment.
As of or for the Three Months Ended (Dollars in thousands) September 30, 2019 December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 Non-GAAP Core Operating Income: Net Income (loss) $10,384 ($700) $3,857 ($7,356) $8,006 Add: restructuring charges 0 0 0 0 0 Less: Tax effect(1) 0 0 0 0 0 Restructuring charges, net of tax 0 0 0 0 0 Add: fixed asset impairments 0 0 0 0 0 Less: Tax effect(2) 0 0 0 0 0 Fixed asset impairments, net of tax 0 0 0 0 0 Add: Goodwill Impairment(3) 0 0 0 7,397 0 Add: State tax credit(3) 0 0 0 0 0 Add: 2017 Tax Cut and Jobs Act Non-GAAP core operating income $10,384 ($700) $3,857 $41 $8,006 Non-GAAP Core Operating Return on Average Assets: Net Income $10,384 ($700) $3,857 ($7,356) $8,006 Non-GAAP core operating income 10,384 (700) 3,857 41 8,006 Average Assets 4,610,958 4,809,579 4,975,531 5,441,513 5,486,252 GAAP return on average assets(4) 0.89% (0.06%) 0.31% (0.54%) 0.58% Non-GAAP core operating return on average assets(4) 0.89% (0.06%) 0.31% 0.00% 0.58% Non-GAAP Core Operating Efficiency Ratio: Non-interest expense $21,172 $21,885 $22,223 $31,010 $23,011 Less: Goodwill Impairment $0 $0 $0 $7,397 $0 Less: restructuring charges 0 0 0 0 0 Non-GAAP non-interest expense (numerator) 21,172 21,885 22,223 23,613 23,011 Net interest income 35,786 37,179 38,228 41,157 39,327 Tax-equivalent interest income 624 670 695 685 669 Non-interest income 3,212 2,186 2,095 2,634 4,063 Add: fixed asset impairments 0 0 0 0 0 Non-GAAP operating revenue (denominator) 39,622 40,035 41,018 44,476 44,059 GAAP efficiency ratio 54.29% 55.60% 55.11% 70.81% 53.03% Non-GAAP core operating efficiency ratio (FTE) 53.43% 54.66% 54.18% 53.09% 52.23% (1) Represents the tax impact of the adjustments above at a tax rate of 25.73%, plus a permanent tax benefit associated with stock-based grants that were exercised prior to our former CEO’s departure. (2) Represents the tax impact of the adjustments above at a tax rate of 25.73%. (3) No tax effect associated with the state tax credit or the goodwill impairment (4) Interim periods are annualized. 29
As of or for the Year Ended As of or for the Nine Months Ended (Dollars in thousands, except per share data) December 31, September 30, 2015 2016 2017 2018 2019 2019 2020 Pre-Tax Pre-Provision Profit Income before Taxes 8,095 10,373 4,408 17,196 32,611 34,481 5,435 Provision for Credit loss 5,975 6,500 12,000 13,500 29,900 10,550 45,825 Pre-Tax Pre-Provision Profit 14,070 16,873 16,408 30,696 62,511 45,031 51,260 Average Assets 1,410,447 1,839,563 2,452,797 3,494,655 4,499,764 4,395,356 5,302,970 Pre-Tax Pre-Provision Return on Average Assets 1.00% 0.92% 0.67% 0.88% 1.39% 1.37% 1.30% Tangible Stockholders' Equity: Stockholders' equity $160,004 $214,837 $287,147 $490,336 $601,644 $602,435 $617,883 Less: goodwill and intangible assets 8,100 7,998 7,897 7,796 7,694 7,720 227 Less: preferred stock 30,000 30,000 30,000 30,000 0 0 0 Tangible Stockholders' Equity $121,904 $176,839 $249,250 $452,540 $593,950 $594,715 $617,656 Shares outstanding at end of period 19,661,718 25,194,872 30,686,256 45,074,322 51,969,203 51,969,203 52,195,778 Book value per common share $6.61 $7.34 $8.38 $10.21 $11.58 $11.59 $11.84 Tangible book value per common share $6.20 $7.02 $8.12 $10.04 $11.43 $11.44 $11.83 As of or for the Three Months Ended (Dollars in thousands, except per share data) 9/30/19 12/31/19 3/31/20 6/30/20 9/30/20 Pre-Tax Pre-Provision Profit Income (loss) before Taxes 12,976 (1,870) 4,150 (8,219) 9,504 Provision for Credit loss 4,850 19,350 13,950 21,000 10,875 Pre-Tax Pre-Provision Profit 17,826 17,480 18,100 12,781 20,379 Average Assets 4,610,958 4,809,579 4,975,531 5,441,513 5,486,252 Pre-Tax Pre-Provision Return on Average Assets 1.53% 1.44% 1.46% 0.94% 1.48% Tangible Stockholders' Equity: Stockholders' equity $602,435 $601,644 $611,946 $608,092 $617,883 Less: goodwill and intangible assets 7,720 7,694 7,669 247 227 Less: preferred stock 0 0 0 0 0 Tangible Stockholders' Equity $594,715 $593,950 $604,277 $607,845 $617,656 Shares outstanding at end of period 51,969,203 51,969,203 52,098,062 52,167,573 52,195,778 Book value per common share $11.59 $11.58 $11.75 $11.66 $11.84 Tangible book value per common share $11.44 $11.43 $11.60 $11.65 $11.83 30