CrossFirst Bankshares: Expanding into Promising Tucson Market
2023-07-25
CrossFirst Bankshares, Inc. recently held a call meeting to discuss their second quarter 2023 earnings. During the meeting, key executives presented on the company's financial performance, growth opportunities, and future plans, followed by a Q&A session with participants.
The participants of the call included Mike Daley, Mike Maddox, Randy Rapp, and Ben Clouse. The management highlighted a significant opportunity for expansion within the Tucson market, citing the city's population of one million people as a favorable banking market for the company to compete in. They expressed optimism about the growth potential in Tucson and anticipated exceeding their current growth projections. Despite the challenging macro environment, the management remained confident about the company's performance for the quarter and expressed pride in their continued growth, efficiency, operating leverage, profitability, and credit quality. Overall, they believed that CrossFirst Bankshares, Inc. was well positioned for the third and fourth quarters.
The key drivers of the business discussed during the meeting included operating leverage, margin stability, relationship banking, fee-based revenue, credit quality, and building reserves. These factors were seen as crucial in driving the company's growth and success.
Several important numbers were cited during the meeting. Firstly, the estimated impact on earnings per share (EPS) upon closing of the Canyon deal was projected to be around $0.02 to $0.03 on an annualized basis. Additionally, the balance sheet of Canyon, the company involved in the deal, was described as stable, indicating no significant changes. The meeting also highlighted the potential for growth and expansion within the Tucson market, which boasts a population of one million people and is expected to be a promising banking market.
Regarding funding rates, the meeting revealed that self-funding, specifically brokered deposits, had rates in the low 5s during the quarter. Loan yields were mentioned to be in the low 8s, indicating the interest rates on the loans being offered. Although not explicitly mentioned, the margin was likely a significant number discussed in the meeting.
Based on the information provided, the company's outlook for the quarter and year was positive. They expressed their intention to defend their Net Interest Margin (NIM) by nearing the peak of deposit pricing. Non-interest income had increased, driven by gains on SBA loan sales and fee income growth. The company aimed to drive efficiencies and gain operating leverage, resulting in a decline in non-interest expenses. They anticipated non-interest expenses to fall within a specific range for the back-half of the year.
The company also shared progress on its strategic initiatives during the meeting. They successfully implemented a digital banking platform, completed a system conversion for an acquisition, and entered into a definitive agreement for another acquisition. Additionally, they opened a new bank in the Dallas area. The company's focus remained on driving long-term profitability and shareholder return, optimizing investments, and scaling and optimizing their existing investments. Overall, they reported making progress on their strategic initiatives, including digital banking, acquisitions, and geographic expansion.
In conclusion, CrossFirst Bankshares, Inc.'s second quarter 2023 earnings call meeting provided valuable insights into the company's financial performance, growth opportunities, and future plans. With a positive outlook for the quarter and year, the company expressed confidence in their ability to navigate the challenging macro environment and continue their growth trajectory.