CrossFirst Bankshares, Inc (NASDAQ:CFB) Q4 2019 Earnings Conference Call - Final Transcript

Jan 23, 2020 • 05:00 pm ET


CrossFirst Bankshares, Inc (NASDAQ:CFB) Q4 2019 Earnings Conference Call - Final Transcript


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George F. Jones

balance sheet growth, as our assets are approaching the $5 billion mark. Our year-over-year loan and deposit growth reached 26% and 22% respectively. And our overall loan portfolio remains diversified with credit metrics that are similar to third quarter 2019 results. We are continuing to work through our previously identified non-performing asset, which is the reason for the elevated charge-offs for the quarter.

The management team was highly focused on the IPO in 2019. And as we move into 2020, we will consider new market expansions and assess possible acquisitions. In addition, we're excited about opening a location in Frisco, Texas, during the first quarter of 2020, and we have submitted an application for approval with our primary regulators. We also look forward to opening our new Kansas City, Missouri office location on the Plaza later in 2020.

Our capital position remains strong, and we expect our growth strategy will allow us to leverage our capital in an efficient manner to drive shareholder value. As with 2019, we will continue executing on a strategy of prudent cost management with a measured approach to hiring and managing expenses. But, we will continue investing and adding resources in key areas that will allow us to build an organization with great bankers. The combination of responsible growth, and creating additional efficiencies, should translate into higher earnings per share in 2020.Well, with that I'd like to turn the call over to our Chief Financial Officer, Dave O'Toole, for a more detailed discussion of the financial results. Dave?

David O'Toole

Thank you, George, and good afternoon to everyone. I am happy to report continued improvement and profitability, despite the headwinds of declining interest rates.

For the year, we reached 0.90% return on average assets, and are focused on achieving 1% in the near term after a reported fourth quarter return on average assets of 0.94%. We achieved an efficiency for the year of 58.4%, which is a substantial improvement from prior year's 73.6%.

In general, our core operating return on average assets and efficiency ratios continue to trend in the right direction. You may recall that we had a boost in third quarter earnings from a one-time credit that lowered our FDIC insurance expense, and a one-time adjustment from a change in our back-to-back swap valuation methodology. As you can see in our supplemental earnings presentation, we had a strong GAAP return on average assets in Q4 2018 because of a one-time tax credit related to the relocation of our corporate headquarters in Leawood.

As George mentioned, in general, we continue making progress towards enhancing our core income quarter-over-quarter. Not surprisingly, we experienced some net interest margin compression during the quarter. But we continued to have strong growth in earning assets, which helped mitigate the impact of declining rates. Net interest income continues to grow, reaching $37.2 million for the quarter, representing an approximate 4% increase on a linked quarter basis, and a 15% increase from the same quarter in 2018.

During the fourth quarter, our tax