cfb-20210630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number 001-39028

CROSSFIRST BANKSHARES, INC.

(Exact Name of Registrant as Specified in its Charter)

Kansas

26-3212879

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

11440 Tomahawk Creek Parkway

Leawood,

66211

(Address of principal executive offices)

(Zip Code)

(913) 312-6822

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 4, 2021, the registrant had 50,987,973 shares of common stock, par value $0.01, outstanding.

CrossFirst Bankshares, Inc.

Form 10-Q for the Quarter Ended June 30, 2021

Index


Part I. Financial Information
Item 1. Financial Statements
Forward-Looking Information			3
Consolidated Balance Sheets - Unaudited			4
Consolidated Statements of Operations - Unaudited			5
Consolidated Statements of Comprehensive Income (Loss) - Unaudited			6
Consolidated Statements of Stockholders’ Equity - Unaudited			7
Consolidated Statements of Cash Flows - Unaudited			9
Notes to Consolidated Financial Statements (unaudited)

Note 1: Nature of Operations and Summary of Significant Accounting Policies			10
Note 2: Earnings Per Share			12
Note 3: Securities			13
Note 4: Loans and Allowance for Loan Losses (“ALLL ”)			16

Note 5: Derivatives and Hedging			26

Note 6: Time Deposits and Borrowings			27
Note 7: Change in Accumulated Other Comprehensive Income (“AOCI”)			27
Note 8: Regulatory Matters			28

Note 9: Stock-Based Compensation			29
Note 10: Income Tax			30
Note 11: Disclosures about Fair Value of Financial Instruments			31
Note 12: Commitments and Credit Risk			35
Note 13: Legal and Regulatory Proceedings			35
Note 14: Subsequent Events			35
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			36



Second Quarter 2021 Highlights			36

Results of Operations			38

Net Interest Income			38

Non-Interest Income			41
Non-Interest Expense			42
Income Taxes			43
Analysis of Financial Condition			44

Securities Portfolio			44
Loan Portfolio			44
Provision and Allowance for Loan Losses (‘‘ALLL’’)			45
Nonperforming Assets and Other Asset Quality Metrics			46
Deposits and Other Borrowings			48
Liquidity			48
Contractual Obligations			48
Capital Resources and Off-Balance Sheet Arrangements			49
Critical Accounting Policies and Estimates			49

Item 3. Quantitative and Qualitative Disclosures about Market Risk			49
Item 4. Controls and Procedures			50

Part II. Other Information
Item 1. Legal Proceedings			51
Item 1A. Risk Factors			51
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			51



Item 6. Exhibits			52

Signatures

Table of Contents

Forward-Looking Information

This report may contain forward-looking statements that 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. Such possible events or factors include: risks associated with the current outbreak of the novel coronavirus, or the COVID-19 pandemic, changes in economic conditions in the Company’s market area, changes in policies by regulatory agencies, governmental legislation and regulation, fluctuations in interest rates, changes in liquidity requirements, demand for loans in the Company’s market area, changes in accounting and tax principles, estimates made on income taxes, competition with other entities that offer financial services, cybersecurity threats, and such other factors as discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2021, any subsequent quarterly report on Form 10-Q as well as in our other filings with the SEC.

We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CROSSFIRST BANKSHARES, INC.

CONSOLIDATED BALANCE SHEETS


	June 30, 2021		December 31, 2020

	(Unaudited)
	(Dollars in thousands)
Assets



Cash and cash equivalents	$	220,814	$	408,810
Available-for-sale securities - taxable	187,553		177,238
Available-for-sale securities - tax-exempt	524,664		477,350



Loans, net of allowance for loan losses of $75,493 and $75,295 at June 30, 2021 and December 31, 2020, respectively	4,162,451		4,366,602
Premises and equipment, net	67,918		70,509
Restricted equity securities	13,329		15,543
Interest receivable	15,816		17,236
Foreclosed assets held for sale	1,718		2,347


Bank-owned life insurance	66,676		67,498
Other	50,495		56,170
Total assets	$	5,311,434	$	5,659,303
Liabilities and stockholders’ equity
Deposits
Noninterest-bearing	$	818,887	$	718,459
Savings, NOW and money market	2,733,693		2,932,799
Time	804,047		1,043,482
Total deposits	4,356,627		4,694,740
Federal funds purchased and repurchase agreements	—		2,306
Federal Home Loan Bank advances	283,100		293,100

Other borrowings	986		963
Interest payable and other liabilities	33,531		43,766
Total liabilities	4,674,244		5,034,875
Stockholders’ equity




Common stock, $0.01 par value:


authorized - 200,000,000 shares, issued - 52,532,486 and 52,289,129 shares at June 30, 2021 and December 31, 2020, respectively	525		523
Treasury stock, at cost:
1,573,806 and 609,613 shares held at June 30, 2021 and December 31, 2020, respectively	(20,000)		(6,061)
Additional paid-in capital	524,637		522,911
Retained earnings	105,299		77,652

Accumulated other comprehensive income	26,729		29,403
Total stockholders’ equity	637,190		624,428
Total liabilities and stockholders’ equity	$	5,311,434	$	5,659,303

See Notes to Consolidated Financial Statements (unaudited)

Table of Contents

CROSSFIRST BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
	(Dollars in thousands except per share data)
Interest Income
Loans, including fees	$	43,846	$	46,323	$	87,604	$	94,662

Available-for-sale securities - taxable	869		1,358		1,620		3,132
Available-for-sale securities - tax-exempt	3,497		3,260		6,848		6,572
Deposits with financial institutions	110		45		238		536
Dividends on bank stocks	162		268		327		560

Total interest income	48,484		51,254		96,637		105,462
Interest Expense
Deposits	4,850		8,405		10,578		22,677
Fed funds purchased and repurchase agreements	2		46		3		108
Federal Home Loan Bank Advances	1,280		1,620		2,563		3,231
Other borrowings	24		26		48		61
Total interest expense	6,156		10,097		13,192		26,077
Net Interest Income	42,328		41,157		83,445		79,385
Provision for Loan Losses	3,500		21,000		11,000		34,950
Net Interest Income after Provision for Loan Losses	38,828		20,157		72,445		44,435
Non-Interest Income
Service charges and fees on customer accounts	1,177		647		2,134		1,155
Realized gain (loss) on available-for-sale securities	(13)		320		(3)		713



Income from bank-owned life insurance	2,245		453		2,661		909
Swap fees and credit valuation adjustments, net	(30)		(32)		125		(41)
ATM and credit card interchange income	1,506		896		3,834		1,381
Other non-interest income	940		350		1,218		612
Total non-interest income	5,825		2,634		9,969		4,729
Non-Interest Expense
Salaries and employee benefits	15,660		14,004		29,213		28,394
Occupancy	2,397		2,045		4,891		4,130
Professional fees	1,138		1,295		1,920		1,966
Deposit insurance premiums	917		1,039		2,068		2,055
Data processing	720		721		1,436		1,413
Advertising	435		223		738		723
Software and communication	1,034		937		2,099		1,813

Foreclosed assets, net	665		1,135		715		1,154
Goodwill impairment	—		7,397		—		7,397
Other non-interest expense	2,847		2,214		5,551		4,188
Total non-interest expense	25,813		31,010		48,631		53,233
Net Income (Loss) Before Taxes	18,840		(8,219)		33,783		(4,069)
Income tax expense (benefit)	3,263		(863)		6,171		(570)
Net Income (Loss)	$	15,577	$	(7,356)	$	27,612	$	(3,499)
Basic Earnings (Loss) Per Share	$	0.30	$	(0.14)	$	0.54	$	(0.07)
Diluted Earnings (Loss) Per Share	$	0.30	$	(0.14)	$	0.53	$	(0.07)

See Notes to Consolidated Financial Statements (unaudited)

Table of Contents

CROSSFIRST BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - UNAUDITED


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
	(Dollars in thousands)
Net Income (Loss)	$	15,577	$	(7,356)	$	27,612	$	(3,499)
Other Comprehensive Income (Loss)
Unrealized gain (loss) on available-for-sale securities	5,527		3,618		(3,543)		12,150
Less: income tax expense (benefit)	1,354		884		(867)		2,968
Unrealized gain (loss) on available-for-sale securities, net of income tax	4,173		2,734		(2,676)		9,182
Reclassification adjustment for realized gains (losses) included in income	(13)		320		(3)		713
Less: income tax expense (benefit)	(3)		78		(1)		174
Less: reclassification adjustment for realized gains (losses) included in income, net of income tax	(10)		242		(2)		539
Other comprehensive income (loss)	4,183		2,492		(2,674)		8,643
Comprehensive Income (Loss)	$	19,760	$	(4,864)	$	24,938	$	5,144

See Notes to Consolidated Financial Statements (unaudited)

Table of Contents

CROSSFIRST BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - UNAUDITED



	Common Stock		Additional Paid-in Capital			Retained Earnings				Accumulated Other Comprehensive Income	Treasury Stock		Total
		Shares			Amount
		(Dollars in thousands)
Balance at March 31, 2020		52,098,062	$	521		$	520,134	$	68,689		$	22,602	$	—	$	611,946
Net loss		—	—			—		(7,356)			—		—		(7,356)
Change in unrealized appreciation on available-for-sale securities		—	—			—		—			2,492		—		2,492

Issuance of shares from equity-based awards		69,511	—			(83)		—			—		—		(83)


Employee receivables from sale of stock		—	—			—		11			—		—		11
Stock-based compensation		—	—			1,082		—			—		—		1,082



Balance at June 30, 2020		52,167,573	$	521		$	521,133	$	61,344		$	25,094	$	—	$	608,092


	Common Stock		Additional Paid-in Capital			Retained Earnings				Accumulated Other Comprehensive Income	Treasury Stock		Total
		Shares			Amount
		(Dollars in thousands)
Balance at March 31, 2021		51,678,669	$	523		$	523,156	$	89,722		$	22,546	$	(7,113)	$	628,834
Net income		—	—			—		15,577			—		—		15,577

Change in unrealized appreciation on available-for-sale securities		—	—			—		—			4,183		—		4,183

Issuance of shares from equity-based awards		155,707	2			(94)		—			—		—		(92)
Open market common share repurchases		(875,696)	—			—		—			—		(12,887)		(12,887)


Stock-based compensation		—	—			1,575		—			—		—		1,575



Balance at June 30, 2021		50,958,680	$	525		$	524,637	$	105,299		$	26,729	$	(20,000)	$	637,190


	Common Stock		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income		Treasury Stock		Total
		Shares			Amount
		(Dollars in thousands)
Balance at December 31, 2019		51,969,203	$	520		$	519,870	$	64,803	$	16,451	$	—	$	601,644
Net loss		—	—			—		(3,499)		—		—		(3,499)
Change in unrealized appreciation on available-for-sale securities		—	—			—		—		8,643		—		8,643

Issuance of shares from equity-based awards		198,370	1			(754)		—		—		—		(753)


Employee receivables from sale of stock		—	—			1		40		—		—		41
Stock-based compensation		—	—			2,016		—		—		—		2,016



Balance at June 30, 2020		52,167,573	$	521		$	521,133	$	61,344	$	25,094	$	—	$	608,092

See Notes to Consolidated Financial Statements (unaudited)

Table of Contents


	Common Stock		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income		Treasury Stock		Total
		Shares			Amount
		(Dollars in thousands)
Balance at December 31, 2020		51,679,516	$	523		$	522,911	$	77,652	$	29,403	$	(6,061)	$	624,428
Net income		—	—			—		27,612		—		—		27,612
Change in unrealized depreciation on available-for-sale securities		—	—			—		—		(2,674)		—		(2,674)

Issuance of shares from equity-based awards		243,357	2			(498)		—		—		—		(496)
Open market common share repurchases		(964,193)	—			—		—		—		(13,939)		(13,939)

Employee receivables from sale of stock		—	—			—		35		—		—		35
Stock-based compensation		—	—			2,224		—		—		—		2,224

Balance at June 30, 2021		50,958,680	$	525		$	524,637	$	105,299	$	26,729	$	(20,000)	$	637,190

See Notes to Consolidated Financial Statements (unaudited)

Table of Contents

CROSSFIRST BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED


	Six Months Ended
	June 30,
	2021		2020
	(Dollars in thousands)
Operating Activities
Net income (loss)	$	27,612	$	(3,499)
Items not requiring (providing) cash
Depreciation and amortization	2,715		2,587
Provision for loan losses	11,000		34,950
Accretion of discounts and amortization of premiums on securities	2,624		3,063
Equity based compensation	2,224		2,016

Foreclosed asset impairment	630		1,117

Deferred income taxes	1,235		(3,853)
Net increase in bank owned life insurance	(2,661)		(909)

Net realized (gains) losses on available-for-sale securities	3		(713)

Goodwill impairment	—		7,397




Changes in


Interest receivable	1,420		(3,683)
Other assets	(2,160)		(375)
Other liabilities	(3,151)		(2,130)
Net cash provided by operating activities	41,491		35,968
Investing Activities
Net change in loans	193,151		(581,641)
Purchases of available-for-sale securities	(124,570)		(27,312)
Proceeds from maturities of available-for-sale securities	60,773		58,974
Proceeds from sale of available-for-sale securities	—		19,052

Purchase of premises and equipment	(152)		(1,658)
Proceeds from the sale of premises and equipment	108		—
Purchase of restricted equity securities	—		(2,839)

Proceeds from death benefit on bank owned life insurance	3,483		—
Proceeds from sale of restricted equity securities	2,539		—

Net cash provided by (used in) investing activities	135,332		(535,424)




Financing Activities

Net increase (decrease) in demand deposits, savings, NOW and money market accounts	(98,678)		459,589
Net decrease in time deposits	(239,435)		(79,205)

Net increase (decrease) in fed funds purchased and repurchase agreements	(2,306)		34,960





Proceeds from Federal Home Loan Bank advances	—		118,000
Repayment of Federal Home Loan Bank advances	(10,000)		(26,126)




Issuance of common shares, net of issuance cost	2		3
Proceeds from employee stock purchase plan	172		—

Repurchase of common stock	(13,939)		—
Acquisition of common stock for tax withholding obligations	(670)		(754)
Net decrease in employee receivables	35		40

Net cash provided by (used in) financing activities	(364,819)		506,507
Increase (Decrease) in Cash and Cash Equivalents	(187,996)		7,051
Cash and Cash Equivalents, Beginning of Period	408,810		187,320
Cash and Cash Equivalents, End of Period	$	220,814	$	194,371

Supplemental Cash Flows Information
Interest paid	$	13,687	$	27,818
Income taxes paid	$	4,270	$	—

See Notes to Consolidated Financial Statements (unaudited)


Table of Contents			Notes to Consolidated Financial Statements (unaudited)

Note 1:Nature of Operations and Summary of Significant Accounting Policies

Organization and Nature of Operations

CrossFirst Bankshares, Inc. (the “Company”) is a bank holding company whose principal activities are the ownership and management of its wholly-owned subsidiary, CrossFirst Bank (the “Bank”). In addition, the Bank has three subsidiaries including CrossFirst Investments, Inc. (“CFI”) that holds investments in marketable securities, CFBSA I, LLC that holds foreclosed assets and CFBSA II, LLC that holds foreclosed assets.

The Bank is primarily engaged in providing a full range of banking and financial services to individual and corporate customers through its branches in: (i) Leawood, Kansas; (ii) Wichita, Kansas; (iii) Kansas City, Missouri; (iv) Oklahoma City, Oklahoma; (v) Tulsa, Oklahoma; (vi) Dallas, Texas; and (vii) Frisco, Texas. During the quarter ended June 30, 2021, the Company entered the Phoenix, Arizona market.

Basis of Presentation

The Company’s accounting and reporting policies conform to accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include the accounts of the Company, the Bank, CFI, CFBSA I, LLC and CFBSA II, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.

The consolidated interim financial statements are unaudited and certain information and footnote disclosures presented in accordance with GAAP have been condensed or omitted and should be read in conjunction with the Company’s consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”), filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2021.

In the opinion of management, the interim financial statements include all adjustments which are of a normal, recurring nature necessary for the fair presentation of the financial position, results of operations, and cash flows of the Company and the disclosures made are adequate to make the interim financial information not misleading. The consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q adopted by the SEC.

No significant changes in the accounting policies of the Company occurred since December 31, 2020, the most recent date financial statements were provided within the Company’s 2020 Form 10-K. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

Use of Estimates

The Company identified accounting policies and estimates that, due to the difficult, subjective or complex judgments and assumptions inherent in those policies and estimates and the potential sensitivity of the Company’s financial statements to those judgments and assumptions, are critical to an understanding of the Company’s financial condition and results of operations. Actual results could differ from those estimates. In particular, the novel coronavirus (“COVID-19”) pandemic and resulting impacts to economic conditions, as well as adverse impacts to the Company’s operations, may impact future estimates. The allowance for loan losses, deferred tax asset, and fair value of financial instruments are particularly susceptible to significant change.

Cash Equivalents

The Company had $182 million of cash and cash equivalents at the Federal Reserve Bank of Kansas City as of June 30, 2021. The reserve required at June 30, 2021 was $0.

Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)

The CARES Act gave financial institutions the right to elect to suspend GAAP principles and regulatory determinations for loan modifications relating to COVID-19 that would otherwise be categorized as Troubled Debt Restructurings (“TDRs”) from March 1, 2020, through December 31, 2020. On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law, which extended the period during which the Company may suspend GAAP principles and regulatory determinations for loan modifications relating to COVID-19 that would otherwise be categorized as TDRs through January 1, 2022 or 60 days after the date when the national emergency concerning COVID-19 terminates. The Company elected to apply the guidance starting in the first quarter of 2020.


Table of Contents			Notes to Consolidated Financial Statements (unaudited)

Changes Affecting Comparability

Beginning with the quarter ended March 31, 2021, the Company consolidated the “Goodwill and other intangible assets, net” into “Other assets” within the Consolidated Balance Sheets. The consolidation was due to the immateriality of the remaining intangible assets. The change had no impact on net income.

Emerging Growth Company (“EGC”)

The Company is currently an EGC. An EGC may take advantage of reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. Among the reductions and reliefs, the Company elected to extend the transition period for complying with new or revised accounting standards affecting public companies. This means that the financial statements the Company files or furnishes, will not be subject to all new or revised accounting standards generally applicable to public companies for the transition period for so long as the Company remains an EGC or until the Company affirmatively and irrevocably opts out of the extended transition period under the JOBS Act.

Recent Accounting Pronouncements

The following table provides information about Accounting Standard Updates (“ASUs”) the Company anticipates to adopt in the future:

Standard

Anticipated Date of Adoption

Description

Effect on Financial Statements or Other Significant Matters

ASU 2016-13

Financial Instruments-Credit Losses

If the Company maintains its EGC status, the Company is not required to implement this standard until January 2023. The Company anticipates an adoption date of January 2022.

Requires an entity to utilize a new impairment model known as the current expected credit loss model to estimate its lifetime expected credit loss and record an allowance that, when deducted from amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset.

The Company established a committee of individuals from applicable departments to oversee the implementation process. The Company completed the third-party software implementation phase that included data capture and portfolio segmentation amongst other items.

The Company completed parallel runs in 2019. During the fiscal year ended December 31, 2020, the Company continued to perform parallel runs using 2020 data and continued to recalibrate inputs as necessary. The Company is evaluating the internal control changes that will be necessary to transition to the third-party platform and third-party testing is anticipated later in 2021.

At this time, an estimate of the impact cannot be established as the Company continues to evaluate the inputs into the model. The actual impact could be significantly affected by the composition, characteristics, and quality of the underlying loan portfolio at the time of adoption.

ASU 2016-02

Leases (Topic 842)

The Company expects to implement this standard on January 1, 2022.

Requires lessees and lessors to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements.

The update requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach with the option to elect certain practical expedients. The update will also increase disclosures around leases, including qualitative and specific quantitative measures.

The Company expects to apply the update as of the beginning of the period of adoption and the Company does not plan to restate comparative periods. The Company expects to elect certain optional practical expedients.

The Company gathered all potential lease and embedded lease agreements and is evaluating the applicability and impact to the financial statements.

The Company’s current operating leases relate primarily to four branch locations. Based on the current leases, the Company anticipates recognizing a lease liability and related right-to-use asset on its balance sheet, with an immaterial impact to its income statement compared to the current lease accounting model. However, the ultimate impact of the standard will depend on the Company's lease portfolio as of the adoption date.


Table of Contents			Notes to Consolidated Financial Statements (unaudited)

Note 2:Earnings Per Share

The following table presents the computation of basic and diluted earnings per share:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
	(Dollars in thousands except per share data)
Earnings (Loss) per Share


Net income (loss) available to common stockholders	$	15,577	$	(7,356)	$	27,612	$	(3,499)
Weighted average common shares	51,466,885		52,104,994		51,561,519		52,088,239
Earnings (loss) per share	$	0.30	$	(0.14)	$	0.54	$	(0.07)
Diluted Earnings (Loss) Per Share


Net income (loss) available to common stockholders	$	15,577	$	(7,356)	$	27,612	$	(3,499)
Weighted average common shares	51,466,885		52,104,994		51,561,519		52,088,239
Effect of dilutive shares	742,656		—		733,463		—
Weighted average dilutive common shares	52,209,541		52,104,994		52,294,982		52,088,239
Diluted earnings (loss) per share	$	0.30	$	(0.14)	$	0.53	$	(0.07)

Stock-based awards not included because to do so would be antidilutive	417,950		2,417,205		639,887		2,417,205


Table of Contents			Notes to Consolidated Financial Statements (unaudited)

Note 3:Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of period-end available-for-sale securities consisted of the following:


	June 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(Dollars in thousands)
Available-for-sale securities
Mortgage-backed - GSE residential	$	144,087	$	2,519	$	902	$	145,704
Collateralized mortgage obligations - GSE residential	28,435		627		32		29,030
State and political subdivisions	500,051		33,509		358		533,202
Corporate bonds	4,250		87		56		4,281
Total available-for-sale securities	$	676,823	$	36,742	$	1,348	$	712,217


	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(Dollars in thousands)
Available-for-sale securities
Mortgage-backed - GSE residential	$	104,839	$	4,277	$	—	$	109,116
Collateralized mortgage obligations - GSE residential	52,070		984		42		53,012
State and political subdivisions	454,486		33,642		31		488,097
Corporate bonds	4,259		104		—		4,363
Total available-for-sale securities	$	615,654	$	39,007	$	73	$