CROSSFIRST BANKSHARES, INC. TM Q3 2021Earnings Presentation October 19, 2021 Mike Maddox, President & CEOBen Clouse, CFORandy Rapp, CCO & CROHeather Worley, Director of IR 1
Legal disclaimer FORWARDLOOKING STATEMENTS. The financial results in this presentation reflect preliminary, unaudited results, which are not final until the Company’s Quarterly Reporton Form 10Q is filed.This presentation and oral statements made during this meeting contain forwardlooking 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 forwardlooking 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 forwardlooking 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 theresultsexpressed or implied by the forwardlooking statements. There are or will be important factors that could cause our actual results to differ materially from those indicated in these forwardlooking statements, including, but not limited to, the following:risks relating to the COVID19 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 maintai
n effective internal control over financial reporti
ng; 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 infor
mation about our clients and coun
terparties; 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 w
ith go
vernmental and regulatory requirements; changes in the laws, rules, regulations, interpretations or policies relating to fina
ncial institutions, accounting, tax, trade, monetary and fiscal matters; compliance with requirements associated with being a
publi
c 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 s
tatement, whether as a result of new information, future developments or otherwise, except as required by law.
NON
GAAP FINANCIAL INFORMATION.
This
presentation contains certain nonGAAP measures. These nonGAAP measures, as calculated by CrossFirst, are not necessarily comparable to similarly titled measures reported by other companies.Additionally, these nonGAAP measures are not measures of financial performance or liquidity under GAAP and should not be considered alternatives to the Company’sother financial information determined under GAAP. See reconciliations of certain nonGAAP 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 ofindustry 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. Althoughwe 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.CROSSFIRST BANKSHARES, INC. 2
Experienced Management TeamMike Maddox President, CEO and DirectorJoined CrossFirst in 2008 after serving as Kansas City regional president for Intrust BankPracticing lawyer for more than six years before joining Intrust Bank Appointed to CEO June 1, 2020 after 12 years of serviceB.S. Business, University of Kansas; J.D. Law, University of Kansas; Graduate School of Banking at the University of Wisconsin MadisonBen Clouse –Chief Financial Officer25 years of experience in financial services, asset and wealth management, banking, retail and transportation, including public company CFO experienceJoined CrossFirst in July 2021 after serving as CFO of Waddell & Reed Financial, Inc. (formerly NYSE: WDR) until its acquisitio n in 2021Significant experience leading financial operations as well as driving operational changeB.S. Business, Kansas State University; Master of Accountancy, Kansas State University Obtained CPA designation and FINRA Series 27 licenseRandy Rapp Chief Risk Officer and Chief Credit OfficerMore than 33 years of commercial banking experience in Texas in various credit, production, risk and executive roles.Joined CrossFirst in March 2019 after a 19 year career at Texas Capital Bank (NASDAQ:TCBI) serving as Executive Vice President and Chief Credit Officer from
May 2015 until March 2019.B.B.A. Accounting, The University of Texas at Austin and M.B.A. Finance, Texas Christian UniversityObtained CPA designation Heather Worley Director of Investor Relations More than 15 years of experience in marketing, communications and investor relations in banking and financeJoined CrossFirst inSeptember 2021. Previously, SVP & Director of IR for Texas Capital Bancshares, Inc. (NASDAQ: TCBI) Recognized by Institutional Investor magazine AllAmerica Executive Team 2017 | Top Investor Relations Professional & AllAmerica Executive Team 2019 | Top Investor Relations ProgramB.A. Communications, Mississippi State UniversityOther Senior Executives Steve PetersonChief Banking Officerof CrossFirst Bank21+ years of banking experienceJoined CrossFirst in 2011 Amy FaussChief Operating &Chief Human Relations Officer of CrossFirst Bank 28+ years of banking experienceJoined CrossFirst in 2009 Jana Merfen Chief Technology Officerof CrossFirst Bank12+ years of technology experienceJoined CrossFirst in 2021CROSSFIRST BANKSHARES, INC. 3
Q3 2021 and YTD 2021Highlights and Summary FinancialPerformance Strong net income during Q3 2021 of $21 million and YTD net income of $48.6 millionNet interest margin fully tax equivalent (FTE) of 3.20% compared to 3.12% in Q2 2021 Continued improvementin YTD efficiency ratioBalance Sheet 8.2% (annualized) growth in total loans, ex PPP, during Q3 202117% demand deposits growth from June 30, 2021 which now account for 22% of total deposits$1.7 billion in unfunded loan commitments as of September 30, 2021Strategic Initiatives $30 million share repurchase authorizationFocus on hiring and recruiting experienced revenue generators Continue strong earnings momentum Enhance digital products to better serve our clientsGrow lending verticals * Represents a NonGAAP financial measure, see NonGAAP reconciliation slides at the end of the presentation for more detail. CROSSFIRST BANKSHARES, INC. 4
Our Road to Success ONE TEAMFocusing on:Elevating our Strong Corporate Culture by Living our CrossFirst Values Attracting and Retaining High Performing TalentWellbeing of our Employees ONE BANKFocusing on:Targeting Businesses and ProfessionalsBranchLite Technology FocusedDelivering Extraordinary Service and Customer ExperienceSHARED VISIONFocusing on:Performance & ProfitabilitySeizing Growth OpportunitiesStrong Credit QualityEnhancing Products and ServicesManaging Enterprise RiskContributing to our Communities 3rd Largest Bank Headquarteredin Kansas City MSA Total Assets $5.4 billion GrossLoans $4.2 billion TotalDeposits $4.4 billion Book Value/Share $12.79 Note: As of 9/30/21. CROSSFIRST BANKSHARES, INC. 5
2020 Impact ReportWe are committed to our employees, clients, and communities, which is why we created our first ever Impact Report to show our commitment to being a force for good in our communities.Highlights the meaningful difference we are making in the lives of our employees, our clients and in our communities Benchmark of where we are today and a baseline to measure our continued success in the future COMMUNITYIMPACTWe build strong relationships within our communities and support the passions of our employees.Supported over 100 organizations in 2020 with donations and sponsorships Employees donated $25,000, which was matched by CrossFirst for a total philanthropic investment of $50,000 in the communities where we live and work through our Generous Giving program DIVERSITY, EQUITY AND INCLUSION We believe that an equitable and inclusive environment with diverse teams supports our core values.IDEA (Inclusion, Diversity, Equity, and Accountability) Champions enhance an inclusive culture through company events andparticipation in our recruitment effortsIn 2020, we employed 328 individuals across a diverse representation of 58% female, 42% male and 13% of whom are ethnically diverseBESTINCLASSCULTUREWe embrace and encourage our employees’
strengths and talents to deliver on our extraordinary service promise. Long partnered with the GALLUP® organization in the administration of its CliftonStrengths® assessment for each employee and Q12 Survey to measure employee engagementMaintained a consistent employee engagement score in 2020CROSSFIRST BANKSHARES, INC. 6
EXPANDING OUR FOOTPRINT
AREAS OF FOCUS
Continue to execut
e our organic growth strategy in existing markets
Focus on new expansion in target markets where we currently have client business
Evaluate expansion strategies in key target markets:
De Novo Expansi
on:
Hire experienced talent to expand in key growth marke
Strategic Acquisition:
Provides operational scale and synergies
Adds new lines of business
Adds fee income opportunities POTENTIAL TARGET MARKETS Fort Worth, Texas
Austin, Texas
Denver, Colorado
Omaha, Nebraska Houston, Texas
San Antonio, Texas
Nashville, Tennessee
CROSSFIRST BANKSHARES, INC. 7
Earnings Growth Net Income $8.0 Q3 2020 $8.1 Q4 2020 $12.0 Q1 2021 $15.6 Q2 2021 $21.0 Q3 2021 Diluted EPS $0.15 Q3 2020 $0.15 Q4 2020 $0.23 Q1 2021 $0.30 Q2 2021 $0.41 Q3 2021 Consistently growing netincome and earnings per share Q3 2021 $6.2 million unrealized loss on an equity securityQ3 2021 $10 million release from reserves reverses the majority of the 2021 provisioning due to improved credit quality, econ omic recovery in the markets we serve, and relatively static loan balance As of June 30, 2021, the Company had provisioned $11 million for loan losses YTDYTDCROSSFIRST BANKSHARES, INC. 8
Third Quarter2021 Summary & Highlights Net Income $21.0M ROAA 1.54% NIM (FTE) 3.20% Diluted EPSA $0.41 ROE 12.92% Balance Sheet Update 2%NonGAAPLoan growthQoQ2%(1) (2)Deposit growthQoQ 17%DDA Deposit growthQoQ 2%TBV / Share growth QoQ Credit Performance 0.92%NPAs /Asset 0.13%NCOs /Avg Loans 1.56%NonGAAPReserves /Loans (1) (2) 17%Classified Loans /Capital + ALLL Capital & Liquidity 12.61%CET 1 CapitalRatio 13.88% Total RiskBased Capital 95% Loans /Deposits 19% Cash and Securities /Assets Efficiency 59.1% Q3 2021GAAPEfficiency Ratio 50.5% Q3 2021NonGAAP Efficiency Ratio 1.76%NonInterest Expense /Avg Assets $15.3MAssets /Employee Note: Interim periods are annualized.Gross loans net of unearned income; excludes PPP loans.Represents a nonGAAP financial measure. See Non-GAAP Reconciliation slides at the end of this presentation for additional detail. CROSSFIRST BANKSHARES, INC. 9
Commentary
Fully tax
equivalent net interest margin increased 8bps to 3.20% from Q2 2021, primarily due to improved cost of funds
Reduced time deposits and wholesale funding
Increased no
interest
bearing deposits
Loan yield increased 1bps compared to Q2 2
021 due to a decrease in PPP loan balance and nonaccrual changes offsetting lower loan fees
Loan to deposit ratio decreased to 95% from 97% in Q2 2021 and decreased from 100% in Q3 2020
Yield on Loans & Cost of Deposits 4.89% 0.99% 2017 5.34% 1.44% 2018 5.52% 1.89% 2019 4.26% 0.85% 2020 3.90% 0.67% Q3 2020 4.0
0% 0.38% Q3 2021
Yield on loans Cost of Total Deposits
Net Interest Margin
-
Fully Tax Equivalent (FTE)
3.40% 2017 3.39% 2018
3.31%
2019 3.13% 2020 3.12% Q4 2020 3.00% Q1 2021 3.12% Q2 2021 3.20% Q3 20
21
CROSSFIRST BANKSHARES, INC. 10
Operating Revenue Growth Operating Revenue(1)
$78.5 $3.7 $74.8 201
7
$116.5 $6.1
$110.4 2018 $150.2 $8.7 $141.5 2019 $172.0 $11.7 $160.3 2020 $127.5
$8.8 $118.7 YTD 2020 $127.5 $8.8 $118.7 YTD 2020 $134.1 $8.9 $125.2 $138.4 $13.2 $125.2 YTD 2021 Non
GAAP No
GAAP
Non
GAAP Non
GAAP Net Interest Income (2) Non
Interest Income (2) Historically, our balance sheet growth combined with a relatively stable ne
t interest margin has enabled robust operating revenue growth
Q3 2021 Non
Interest Income was impacted by a $6.2 million impairment of an investment in a business acquired as part of a loan restructu
ring Operating Revenue (1) Q3 2021 QoQ YoY FY 2020 YoY 2017
2020 CAGR
Net income Interest
1% 6% 13% 29% Non
GAAP Non
nterest Income (2) 28% 25%
Non
GAAP Total
Revenue (2) 1% 8%
Operating Revenue (1) Q3 2021 QoQ YoY FY 2020 YoY 2017
2020 CAGR Non
Interest Income
119%
127% 35% 47% Total Revenue
15%
6% 15% 30%
Note: Dollars are in millions.
Defined as Net Intere
st Income plus Non
Interest income
Represents a non
GAAP financial measure. See Non
GAAP Reconciliation slides at the end of this presentation for additional detail.
CROSSFIRST BANKSHARES, INC. 11
Growth and expense management$2,961 2017 $4,107 2018 $4,931 2019 $5,659 2020 2.53% 2.45% 1.95% 1.84% Total Assets Non interest expense / Average Assets Q3 YTD’20 YTD ’21 NonInterest Expense $76.2$14.7 $7.4 $4.8 $5.3 $43.0 YTD 2020 $72.7 $15.6 $5.2 $7.3 $44.6 YTD 2021 Other Technology Salaries & Benefits Goodwill Impairment Occupancy Note: Dollars are in millions and amounts shown are as of the end of the period unless otherwise specified. * Includes $7.4 million goodwill impairmentCROSSFIRST BANKSHARES, INC. 12
Improving Efficiency while Growing Assets79.1% 73.6% 58.4% 58.1% 54.2% 74.0% 67.8% 57.4% 53.0% 51.2% % $2,961 $4,107 $4,931 $5,659 $5,401 2017 2018 2019 2020 YTD 2021Total Assets Efficiency Ratio NonGAAP Efficiency RatioNote: Dollars are in millions and amounts shown are as of the end of the period unless otherwise specified. * Represents a nonGAAP financial measure. See NonGAAP Reconciliation slides at the end of this presentation for additional detail.CROSSFIRST BANKSHARES, INC. 13
Capital Ratios CommentaryMaintained strong capital levels to support future growthAnticipates remaining well capitalized while utilizing capital for the share buyback programExecution of our profitable growth strategy further strengthened capital ratiosCapital ratios 16% 14% 12% 10% 8% 6% 4% 2% 0% 11.95% 11.97% 13.23% Q3 2020 11.93% 11.94% 13.20% Q4 2020 12.00% 12.02% 13.27% Q1 2021 12.40% 12.42% 13.67% Q2 2021 12.61% 12.63% 13.88% Q3 2021 Common Equity Tier 1 Tier 1 Risk Based Total RiskBased CapitalCROSSFIRST BANKSHARES, INC. 14
Asset Qua
lity Performance
Commentary
NPAs continue to improve as economic and business outlooks improve
Reduction in NPAs mostly related to upgrades in commercial and industrial loans adversely effected by the pandemic
51% of the nonperforming asset balanc
e in Q3 2
021 relates to energy credits
OREO balances reduced to $1.1 million
Commentary
Classified loans continue to trend down due primarily to higher energy prices, improvements in customers’ businesses, and imp
roved economic conditions
37% of classifieds in Q3 2
021 relate to Energy, down from 43% in Q2 2021 and 46% in Q3 2020
Energy classifieds decreased 37% during the quarter and 67% from Q3 2020
Asset Quality Performance Nonperforming Assets / Assets 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 0.18% 2
017 0.43%
2018 0.97% 2019 1.39% 2020 1.39% Q4 2020 1.15% Q1 2021 1.09% Q2 2021 0.92% Q3 2021 Classified Loans / (Total Capital + ALLL)
$350 $300 $250 $200 $150 $100 $50 $
$299.9 43.2% Q3 2020 $286.1 40.9% Q4 2020 $268.9 38.2% Q1 2021 $170.7 24.0% Q2 2021 $124.1 17
.3% Q3 2021
Classified
Loans Ratio Note: Dollar amounts are in millions. CROSSFIRST BANKSHARES, INC. 15
Asset Quality PerformanceCommentaryQ3 2021 had $1.3 million of net charge offs related to one energy and two commercial and industrial credits Q2 2021 had $2.6 million of net chargeoffs related to two commercial and industrial creditsQ1 2021 had $8.2 million of net charge -offs related to several commercial and industrial credits Commentary Prudently reduced ALLL/Total Loans to 1.51%, or1.56% excluding PPP loans(2), at end of Q3 2021 by releasing $10 million in reserves$3.5 million of provisions were added to the reserves in Q2 2021$7.5 million of provisions were added to the reserves in Q1 2021Net ChargeOffs / Average Loans(1) 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 0.44% 2017 0.07% 2018 0.51% 2019 0.89% 2020 1.05% Q4 2020 0.74% Q1 2021 0.23% Q2 2021 0.13% Q3 2021 Allowance for Loan Losses / Total Loans $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 1.70% 1.70% 1.65% 1.78% 1.51% $76.0 $75.3 $74.6 $75.5 $64.2 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 ALLL ALLL/LoansNote: Dollar amounts are in millions. Ratio is annualized for interim periods.Represents a nonGAAP financial measure. See NonGAAP Reconciliation slides at the end of this presentation for additional detail. CROSSFIRST BANKSHARES, INC. 16
Supplemental InformationCROSSFIRST BANKSHARES, INC. 17
$30 MILLIONCOMMON STOCKBUYBACK BENEFITS Return of accumulated capital and earnings to shareholdersFacilitated by consistency in core earningsAnticipate enhanced earnings per share with little tangible book value dilution and a short earnback period Expect improved ROE by deploying accumulated capital BALANCE SHEETEFFECTS AS OF 9/30/21 Key capital ratios remain wellcapitalizedRetain strategic growth capabilities Organic expansionM&A opportunitiesIncreases diluted EPS by ~$0.05 or ~4.4% Increases ROATCE by ~38bps Buying back ~4.4% of outstanding shares* Effects based on share price and outstanding shares as of 9/30/21CROSSFIRST BANKSHARES, INC. 18
Balance Sheet Growth
$1,996 $2,303 $3,061 $3,208 $
3,852 $3,924 $4,442 $4,695 $4,233 $4,437 2017 2018 2019 2020 Q3 2021 Gross loans net of unearned fees Total deposits Balance
Sheet Q3 2021 QoQ YoY FY 2020 YoY 2017
020 CAGR Gross Loans 0%
5% 15% 31% Gross
Loans ex PPP* 2% 0%
7% 24% Total Deposits 2%
1% 20% 27% Total Assets 2%
2% 15% 24%
Annualized loan growth of 8% during Q3 2021, excluding the impact of PPP*
$88 million in PPP loans were forgiven in Q3 2021
Depo
sit growth of 7% annualized during Q3 2021
Includes 17% QoQ increase in non
-
interest
bearing deposits Note: Dollars are in millions.
* Represents a non
GAAP financial measure. See Non
GAAP Reconciliation slides at the end of this presentation for additiona
l detail.
CROSSFIRST BANKSHARES, INC. 19
loan portfolio Details CommentaryThe loan portfolio, excluding PPP loans, at Q3 2021 grew 8.2% annualized from previous quarter* Diversification remains a core tenetGenerally, the Company only buys syndicated loans with borrowers for which the Company could lead the next borrowing opportunityQ3 2021 purchased loan participations totaled $160 million and a combination of shared national credits and syndications purchased totaled $289 millionQ3 2021 loan participations sold of $221 million and syndications sold of $131 million at September 30, 2021$84 million of total shared national credits at September 30, 2021Gross Loans by Type Loan Yield $4,493 $4,455 $4,523 $4,252 $4,246 $47 $618 $369 $588 $1,196 $384 $1,291 Q3 2020 3.90% $4,455 $555 $681 $292 $563 $1,180 $345 $1,339 Q4 2020 4.00% $4,523 $63 $688 $336 $617 $1,192 $342 $1,284 Q1 2021 3.94% $4,252 $67 $642 $197 $623 $1,209 $326 $1,188 Q2 2021 3.99% $4,246 $62 $621 $109 $585 $1,267 $296 $1,306 Q3 2021 4.00% Commercial & Industrial Commercial real estate PPP Consumer Energy Construction & Land Development Residential & Multifamily Real Estate Loan Participations and Syndicati ons Net Purchases and Sales $452 $463 $474 $447 $452 $460 $454 $ 379 $449 $352 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
Purchases Sales Note: Dollars in charts are in millions. Amounts shown are as of the end of the period.* Represents a non-GAAP financial measure. See NonGAAP Reconciliation slides at the end of this presentation for additional detail. CROSSFIRST BANKSHARES, INC. 20
Improving core funding baseCommentary Demand deposits increased +27% compared to Q3 2020+17% compared to Q2 2021Improved the cost of deposits by increasing DDA and lowering time deposit and money market accounts Deposit costs have trended down due to the persistent lowrate environment and management’s balance sheet strategy$4,493 $1,141 $2,090 $508 $754 Q3 2020 $4,695 $1,044 $2,155 $778 $718 Q4 2020 $5,052 $932 $2,484 $ 841 $795 Q1 2021 $4,357$804 $2,075 $659 $819 Q2 2021 $4,437 $701 $2,103 $672 4961 Q3 2021 Cost of Deposits 0.67% 0.58% 0.48% 0.41% 0.38% Noninterest bearing deposits Transaction deposits Savings & MMA Time Deposits Focus on Core Funding 17% 14% 8% 8% 7% 9% 6% 2% 2% 2% Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Wholesale Deposits Brokered Deposits Q3 2021 Deposit Composition Time Deposits 16% Transaction Deposits 15% DDA 22% Savings & MMA 47%Note: Dollars are in millions and amounts shown are as of the end of the period. * As a percentage of Bank assetsCROSSFIRST BANKSHARES, INC. 21
PPP Loan Summary CommentaryWeighted average rate of approximately 5.5%, in Q3 2021$3.0 million in anticipated fees remain from Rounds 1 and 2Round 1 (2020 programs) were 2year programs while Round 2 (2021 program) is a 5year programPPP Loan Summary PPP Timeline$369 ($77) $292 ($67) $336 $111 $225 ($161) $197 $129 $68 ($88) $109 $96 $13 Q3 2020 End Q4 2020 Forgiven Q4 2020 End Q1 2021 Forgiven Q1 2021 End Q2 2021 Forgiven Q2 2021 End Q3 2021Forgiven Q3 2021 End 2020 PPP Loans Loan Forgiveness 2021 PPP Loans Fee Recognition $9.9 $3.2 $2.6 $2.4 $3.7 $2.2 $2.1 $4.2 $0.5 $1.7 $3.0 Q2 2020 Q3 2020 Q4 2020 Q1 2021 (1) Q1 2021 Q2 2021 (2) Q2 2021 Q3 2021 (3) Q3 2021 Round 1 Unrecognized Fees Fee Recognized Round 2 Unrecognized FeesNote: As of end of period; dollars in millions.(1) $2.4 million consists of $1.9 million from Round 1 and $0.5 million from Round 2(2) $2.1 million consists of $1.7 million from Round 1 and $0.4 million from Round 2(3) $1.7 million consists of $0.5 million from Round 1 and $1.2 million from Round 2 CROSSFIRST BANKSHARES, INC. 22
Commentary Continue to exercise caution in the investment portfolio and ma
intain high
quality investment securities
At the end of Q3 2021, the portfolio’s duration was approximately 5.1 years
The fully taxable equivalent yield for Q3 2021 fell 6bps to 2.87
During Q3 2021, $18 million of MBS/CMO paydowns were received and no sec
urities were sold
During Q3 2021, $14 million of Tax
Exempt Municipal bonds were sold with a realized gain of $1 million
The securities portfolio has unrealized gains of approximately $26 million as of September 30, 2021
Securities portfolio
Investment Portfolio Breakout as of September 30, 2021 Municipal
Taxable
MBS (Fixed)
18.8%
Other, 0.6% CMO (Fixed) 3.2% Municipal
Tax
Exempt
76.2% Total: ~$708 million(1) Securities Yield
Fu
lly Tax Equivalent
Securities Yield
Fully Tax Equivalent
3.85% 3.62% 3.35% 3.05% 2.93%
2.96% 2.89% 2.93% 2.87% 2.79% 2.13% 1.45% 2.13% 2.18% 2.31% 2.33%
2.44% 2.41% 2017 2018 2019 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Securities Yield
Cost of Funds Spread Securities Yield
Based on approximate fair value
. CROSSFIRST BANKSHARES, INC. 23
CrossFirst Energy Portfolio
Portfolio Composition
Portfolio Composition
Collateral base is predominately comprised of properties with sufficient production history to establish reliable production
trends
Typically, only lend as a senior secured lender in single bank transactions and as a cash flow lender
Exploration & Production lending only on proven and producing reserves
CrossFirst typically does not lend to shale, oil field services, or midstream energ
y companies.
Have decreased number of energy loans by 9 to 49, or 16%, since Q2 2020
Energy by Composition 9/30/2021
# Loans
Loan Amount
% Total
Avg % Hedged(1)
Hedge Price(2)
Oil
35
$175
59%
38%
$47.60
Natural Gas
13
$121
41%
49%
$2.62
Other Sources
0%
0%
Total
$296
100%
40% (1)
Energy Portfolio and
Tangible Equity(3)
98% 79% 69% 55% 45% $243 $249 2017 $358 $453 2018
$409 $594 2019 $345 $624 2020 $296 $652 Q3 2021 Energy Portfolio Tangible Equity(3) Energy
(3)
Energy Loans by Risk Rating
4.2% of Reserves on Energy Portfolio $399 $15 $371 Q1 2020
13 $390 $108 $72 $210 Q2 2020 $384 $138 $59 $187 Q3 2020 $345 $109 $90 $1
46 Q4 2020 $343 $119 $82 $142 Q1 2021 $326
$73 $102 $151 Q2 2021 $296 $46 $116 $134 Q3 2021 Pass Special Mention Substandard & Doubtful
Note: Data as of 9/30/21.
Note: Loan
dollars in millions;Weighted Average. Hedged rolling 12 month; Oil price in $ per barrel and natural gas price in $ per MMBtu.Represents a nonGAAP financial measure, see nonGAAP reconciliation slides in the supplemental information for more detail.CROSSFIRST BANKSHARES, INC. 24
Diverse loan portfolio Loan Mix by Type ($4.2bn) (1) Residential Real Estate9% Other 1% Commercial & Industrial 31% Owner Occupied Real Estate8%SBA PPP 3% Energy 7% Commercial Real Estate 41%CRE Loan Portfolio by Segment ($1.7bn)(1) Multi-Family 20% Other 18% Senior Living 7% Hotel 11% 14 Family Res Construction 8% Industrial 9% Office 15% Retail 12% Commercial and Industrial Loan Breakdownby Type ($1.3bn) Real Estate Activity 4% Business Loans to Individuals 8% Recreation 5% Health Care 7% Administrative Services 5% Engineering & Contracting 7% Restaurants 4% Financial Management 4% Aircraft & Transportation 5% Merchant Wholesalers 4% 18 Other Industries 35% CRE Loans by Geography ($1.7b)(1) Remaining States 18% AZ 2% FL 4% NC 4% CO 4% MO 8% KS 10% OK13% TX 37%Note: Data as of September 30, 2021.CRE as defined by regulators (including construction and development). CROSSFIRST BANKSHARES, INC. 25
Quarterly Selected Financials
(Dollars in thousands, except per share data)
CrossFirst Bankshares, Inc. Quarterly Financials
For the Three Months Ended
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
Income Statement Data:
Interest income
47,311
48,484
48,153
49,534
48,452
Interest expense
5,510
6,156
7,036
7,997
9,125
Net interest income
41,801
42,328
41,117
41,537
39,327
Provision for loan losses
(10,000)
3,500
7,500
10,875
10,875
Non
interest income
(1,105)
5,825
4,144
2,949
4,06
3
Non
interest expense
24,036
25,813
22,818
23,732
23,011
Net income before taxes
26,660
18,840
14,943
9,879
9,504
Income tax expense
5,660
3,263
2,908
1,785
1,498
Net income
21,000
15,577
12,035
8,094
8,006
Non
GAAP core operating income(1)
25,898
14,245
12,035
8,094
8,006
Balance Sheet Data:
Cash and cash equivalents
$
316,722
220,814
630,787
$
408,810
223,636
Securities
708,106
712,217
685,454
654,588
649,901
Gross loans (net of unearned income)
4,233,117
4,237,944
4,508,600
4,441,897
4,477,809
Allowance
for loan losses
64,152
75,493
74,551
75,295
76,035
Goodwill and intangibles
149
169
188
208
227
Total assets
5,401,151
5,311,434
5,998,074
5,659,303
5,505,696
Non
interest
bearing deposits
960,999
818,887
794,559
718
,459
754,172
Total deposits
4,436,597
4,356,627
5,051,570
4,694,740
4,492,549
Borrowings and repurchase agreements
276,600
283,100
286,394
295,406
349,631
Trust preferred securities, net of fair value adjustments
997
986
974
963
952
Stockholders' Equity
652,407
637,190
628,834
624,428
617,883
Tangible c
ommon stockholders' equity(1)
652,257
637,021
628,646
624,220
617,656
Share and Per Share Data:
Basic earnings per common share
0.41
0.30
$
0.23
0.16
0.15
Diluted e
arning per common share
0.41
0.30
0.23
0.15
0.15
Book value per share
12.79
12.50
12.17
12.08
11.84
Tangible book value per share(1)
12.79
12.50
12.16
12.08
11.83
Basic weighted average common shares outstanding
50,990,113
51,466,885
51,657,204
51,970,116
52,136,286
Diluted weighted average common shares outstanding
51,605,721
52,209,541
52,381,474
52,463,645
52,560,126
Shares outstanding at end of period
51,002,698
50,958,680
51,678,669
51,679,516
52,195,778
(1) Represents a non
GAAP
financial measure. See Non
GAAP Reconciliation slides at the end of this presentation for additional detail.
CROSSFIRST BANKSHARES, INC. 26
Quarterly Selected Financials
CrossFirst Bankshares, Inc. Quarterly Financials
For the Three Months Ended
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
Selected Ratios:
Return on average assets(1)
1.54
%
1.10
%
0.84
%
0.58
%
0.58
%
Non
GAAP core operating return on average assets(1)(2)
1.90
1.01
0.84
0.58
0.58
Return on average common equity
12.92
9.86
7.80
5.19
5.19
Yield on earning assets
3.56
3.51
3.45
3.67
3.61
Yield on earning assets
tax equivalent(3)
3.62
3.57
3.50
3.71
3.66
Yield on securities
2.46
2.52
2.48
2.56
2.55
Yield on securities
tax equivalent(3)
2.87
2.93
2.89
2.96
2.93
Yield on loans
4.0
3.99
3.94
4.00
3.90
Cost of funds
0.46
0.49
0.56
0.65
0.75
Cost of interest
bearing liabilities
0.57
0.59
0.65
0.77
0.88
Cost of interest
bearing deposits
0.47
0.50
0.57
0.69
0.80
Cost of deposits
0.38
0.41
0.48
0.58
0.67
Cost of other
borrowings
1.82
1.79
1.79
1.78
1.50
Net interest margin
tax equivalent(3)
3.20
3.12
3.00
3.12
2.98
Non
interest expense to average assets
1.76
1.82
1.60
1.71
1.67
Efficiency ratio(4)
59.06
53.61
50.41
53.35
53.03
Non
GAAP core operating
efficiency ratio (FTE)(2)(4)
50.45
53.34
49.64
52.54
52.23
non
interest
bearing deposits to total deposits
21.66
18.80
15.73
15.30
16.79
Loans to deposits
95.41
%
97.28
%
89.25
94.61
%
99.67
%
Credit Quality Ratios:
Allowance for loans losses
to total lo
ans
1.51
%
1.78
%
1.65
1.70
1.70
Nonperforming assets to total assets
0.92
1.09
1.15
1.39
1.49
Nonperforming loans to total loans
1.15
1.33
1.48
1.71
1.78
Allowance for loans losses to nonperforming loans
131.76
133.79
112.10
98.98
95.18
et
charge
offs (recoveries) to average loans(1)
0.13
%
0.23
%
0.74
%
1.03
0.54
Capital Ratios:
Total stockholders' equity to total assets
12.08
%
12.00
%
10.48
%
11.03
11.22
Common equity tier 1 capital ratio
12.61
12.40
12.00
11.93
11.95
Tier 1
risk
based capital ratio
12.63
12.42
12.02
11.94
11.97
Total risk
based capital ratio
13.88
13.67
13.27
13.20
13.23
Tier 1 leverage ratio
11.77
10.81
10.51
10.93
%
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.
(3) Tax
exempt income is calculated on a tax
equivalent basis. Tax
exempt income includes municipal securities, which is exempt from federal taxati
on. A tax rate of 21% is used.
(4) Efficiency ratio is non
interest expense divided by the sum of net interest income and non
interest income; non
GAAP core operating efficiency ratio (FTE) is adjusted for non
core or non
recurring items
CROSSFIRST BANKSHAR
ES, INC. 27
Non
Gaap Reconciliation
For the Three Months Ended
(Dollars in thousands)
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
Non
GAAP Core Operating Income:
Net income
21,000
15,577
12,035
8,094
8,006
Add: Unrealized loss on equity
security
6,200
-
Less: Tax effect(2)
1,302
Unrealized loss on equity security, net of tax
4,898
Add: Accelerated employee benefits
719
Less: Tax effect (3)
210
Accelerated employee benefits, net of tax
-
509
Less
: BOLI settlement benefits(1)
-
1,841
-
Non
GAAP core operating income
25,898
14,245
12,035
8,094
8,006
Non
GAAP Core Operating Return on Average Assets:
Net income
21,000
15,577
12,035
8,094
8,006
Non
GAAP core operating
income
25,898
14,245
12,035
8,094
8,006
Average assets
$
5,408,984
5,673,638
5,798,167
$
5,523,196
5,486,252
GAAP return on average assets
1.54
%
1.10
%
0.84
%
0.58
%
0.58
%
Non
GAAP core operating return on average assets
1.90
%
1.01
%
0.84
0.58
0.58
Non
GAAP Core Operating Re
turn on Average Equity:
Net income available to common stockholders
21,000
15,577
12,035
8,094
8,006
Non
GAAP core operating income available to common stockholders
25,898
14,245
12,035
8,094
8,006
Average common equity
644,715
633,417
625,875
620,496
613,910
Less: average goodwill and intangibles
160
179
199
218
238
Average Tangible Equity
644,555
633,238
$
625,676
620,278
613,672
GAAP return on average common equity
12.92
9.86
7.80
19
5.19
%
Non
GAAP core return on average tangible c
ommon equity
15.94
%
9.02
%
7.80
%
5.19
%
5.19
Non
GAAP Core Operating Efficiency Ratio:
Non
interest expense
24,036
25,813
22,818
23,732
23,011
Less: Accelerated employee benefits
719
Non
GAAP non
interest expense (numerator)
24,036
25,094
22,818
23,732
23,011
Net interest income
41,801
42,328
41,117
41,537
39,327
Tax equivalent interest income(4)
748
734
704
683
669
Non
interest income
(1,105)
5,825
4,144
2,949
4,063
Add: Unrealized loss on equity security
6,200
-
Less:
BOLI settlement benefits
1,841
Non
GAAP operating revenue (denominator)
47,644
$
47,046
$
45,965
$
45,169
44,059
GAAP Efficiency Ratio
59.06
%
53.61
%
50.41
%
53.35
53.03
%
Non
GAAP core operating efficiency ratio (FTE)
50.45
%
53.34
49.64
52.54
%
52.23
%
No tax effect.
Represents the tax impact of the adjustments at a tax rate of 21.0%.
Represents the tax impact of the adjustments above at a tax rate of 21.0%, plus a per
manent tax benefit associated with stock
based grants.
Tax exempt income
(tax
free municipal securities) is calculated on a tax equivalent basis. The incremental tax rate used is 21.0%.
CROSSFIRST BANKSHARES, INC. 28
Non
gaap
reconciliations (Cont.)
For the Year Ended
December 31,
Nine Months Ended
September 30,
2017
2018
2019
2020
2021
2020
Non
GAAP core operating income:
Net income
5,849
19,590
$
28,473
12,601
48,612
4,507
Add: Unrealized loss on equity security
6,200
Less: Tax effect(1)
1,302
Unrealized loss on equity security, net of tax
4,898
Add: restructuring charges
4,733
Less: Tax effect(1)
1,381
Restructuring charges, net of tax
3,352
Add: fixed
asset impairments
1,903
171
424
Less: Tax effect(2)
737
44
109
-
Fixed asset impairments, net of tax
1,166
127
315
Add: Goodwill impairment(3)
-
7,397
7,397
Add: State tax credit(3)
(3,129)
(1,361)
-
Add: 2017 Tax Cut and
Jobs Act(3)
2,701
-
Add: Accelerated employee benefits
719
Less: Tax effect (2)
210
Accelerated employee benefits, net of tax
-
-
509
-
Less: BOLI settlement benefits(3)
-
1,841
Non
GAAP core operating income
9,716
19,940
27,427
19,998
52,178
11,904
Non
-
GAAP Core Operating Return on Average Assets:
Net income
5,849
19,590
28,473
12,601
48,612
4,507
Non
GAAP core operating income
9,716
19,940
27,427
19,998
52,178
11,904
Average assets
2,452,797
3,494,655
4,499,764
5,358,479
5,625,504
5,302,970
GAAP Return on average assets
0.24
0.56
0.63
0.24
%
1.16
%
0.11
%
Non
GAAP core operating return on average assets
0.40
%
0.57
%
0.61
%
0.37
1.24
0.30
Non
GAAP Core
Operating Return on Average Equity:
Net income
5,849
$
19,590
$
28,
473
$
12,601
$
48,612
$
4,507
Non
GAAP core operating income
9,716
19,940
27,427
19,998
52,178
11,904
Less: Preferred stock dividends
2,100
2,100
175
Net income available to
common stockholders
3,749
17,490
28,298
12,601
48,612
4,507
Non
GAAP core operating income available to common stockholders
7,616
17,840
27,252
19,998
52,178
11,904
Average common equity
245,193
327,446
526,225
614,726
634,738
612,782
Intangible Assets
7,9
49
7,847
7,746
208
179
5,138
Average Tangible Equity
237,244
319,599
$
5
18,479
614,518
634,559
$
607,644
GAAP return on average common equity
1.53
5.34
5.38
2.05
%
10.24
0.98
Non
GAAP core return on average tangible common equity
3.21
%
5.58
%
5.26
3.25
10.99
2.62
Non
GAAP Core Operating Efficiency Ratio:
Non
interest expense
62,089
85,755
87,640
99,968
72,667
76,244
Less: Accelerated employee benefits
-
719
-
Less: goodwill impairment
-
7,397
-
7,397
Less: restructuring charges
4,733
Non
GAAP non
interest
expense (numerator)
62,089
81,022
87,640
92,571
71,948
68,847
Net interest income
74,818
110,368
141,444
160,249
125,246
118,712
Tax equivalent interest income
5,439
3,099
2,522
2,732
2,186
2,050
Non
interest income
3,679
6,083
8,707
11,733
8,864
8,792
Add: Unrealized loss on equity security
6,200
Add: fixed asset impairments
1,903
171
424
Less: BOLI settlement benefits(1)
1,841
Represents the
tax impact of the adjustments above at a tax rate of 25.73% from 2015 through 2020 and at 21% for 2021, plus a permanent tax
benefit associated with stock
based grants.
Represents the tax impact of the adjustments above at a tax rate of 25.73% for fiscal y
ears 2018 and after; 38.73% for fiscal years prior to 2018.
No tax effect associated with the 2017 Tax Act adjustment or state tax credit or the goodwill impairment.
.
CROSSFIRST BANKSHARES, INC. 29
Non
Gaap ReconciliationS (CONT.)
For the Three Months
Ended
(Dollars in thousands, except per share data)
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
Tangible common stockholders' equity:
Stockholders' equity
652,407
637,190
628,834
624,428
617,883
Less: goodwill and other intangible assets
149
169
188
208
227
Tangible Stockholders' Equity
652,258
637,021
628,646
624,220
617,656
Shares outstanding at end of period
51,002,698
50,958,680
51,678,669
51,679,516
52,195,778
Book value per share
12.79
12.50
12.17
12.08
11.84
Tangible book value per share
12.79
12.50
$
12.16
12.08
11.83
For the Three Months Ended
9/30/2021
6/30/2021
3/31/2021
12/31/2020
9/30/2020
Gross loans, net of unearned income
$4,233,117 $4,237,944 $4,508,600 $4,441,897 $4,477,809
Less: PPP loans,
net of unearned income
109,465 197,084 336,355 292,230 369,260
Non
PPP gross loans, net of unearned income
$4,123,652 $4,040,860 $4,172,245 $4,149,667 $4,108,549
Year
over
year loan growth
(5.46)%
Non
GAAP year
over
year loan growth excluding PPP loans
0.0
Linked quarter loan growth
(0.11)
Non
GAAP linked quarter loan growth excluding PPP loans
2.05%
Allowance for loan losses
$64,152 $75,493 $74,551 $75,295 $76,035 Allowance for loan losses to gross loans, net of
unearned income 1.51% 1.78% 1.65% 1.70% 1.70% Allowance for loan losses to non-PPP gross loans, net of unearned income1.56% 1.87% 1.79% 1.81% 1.85%