CrossFirst Bankshares (CFB) 10-K 2022 FY Annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-K

☒

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

For the fiscal year ended

December 31, 2022

or

☐

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

KS

66211

(Address of principal executive offices)

(Zip Code)

(

913

)

901-4516

(Registrant’s telephone number, including area code)

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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasonedissuer, as defined in Rule 405 of the Securities Act.Yes

☐

No

☒

Indicate by check mark if the registrant is not required to file reports pursuantto Section 13 or Section 15(d) of the Act. Yes

☐

No

☒

Indicate by check mark whether the registrant (1) has filed all reports requiredto 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 wasrequired 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 electronicallyevery 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 (orfor 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, anaccelerated 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 notto use the extended transition period for complying with

any new or revised financial accounting standards provided pursuantto Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant has filed a report on andattestation to its management’s assessment of the effectiveness of its

internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting

firm that prepared or issued its audit report.

☐

If securities are registered pursuant to Section 12(b) of the Act, indicated by check mark whether the financial statementsof the registrant

included in the filing reflect the correction of an error to previously issued financialstatements.

☐

Indicate by check mark whether any of those error corrections are restatementsthat required a recovery analysis of incentive-based compensation

received by any of the registrant’s executive officer during the relevant recoveryperiod pursuant to §240.10D-1(b).

☐

Indicate by check mark whether the registrant is a shell company (as definedin Rule 12b-2 of the Exchange Act). Yes

☐

No

☒

As of June 30, 2022, the aggregate market value of voting stock held by nonaffiliatesof the Registrant was $

598,256,894

(based on the June 30,

2022, closing price of CrossFirst Bankshares, Inc. Common Shares of $13.20as reported on the NASDAQ Global Select Market).

As of February 23, 2023, the registrant had

48,494,877

shares of common stock, par value $0.01, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Part III of this Annual Report on Form 10-K incorporates by reference certain

information from the registrant’s definitive proxy statement with respect to its 2023annual meeting of stockholders, which will be filed with the

Securities and Exchange Commission within 120 days after the end of the fiscalyear to which this Annual Report on Form 10-K relates.

2

CAUTIONARY NOTEABOUT FORWARD-LOOKING STATEMENTS

Statements made in this report, the annual report to shareholders of which this reportis made a part, other reports and proxy

statements filed with the SEC, communications to shareholders, press releases andoral statements made by representatives of the Company

that are not historical in nature, or that state the Company's or management's intentions,hopes, beliefs, expectations, plans, goals or

predictions of future events or performance, may constitute "forward-looking statements" within the meaning of Private Securities Litigation

Reform Act of 1995. 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,” “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-lookingstatements are not historical facts, and are based on current

expectations, estimates and projections about our industry, management’sbeliefs and certain assumptions made by management, many of

which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution that any such forward-lookingstatements

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-lookingstatements are reasonable as of the date made, actual results

may prove to be materially different from the results expressed orimplied by the forward-looking statements.

There are or will be important factors that could cause our actual results to differmaterially from those indicated in these forward-

looking statements, including, but not limited to, the following:

• our ability to effectively execute our expansion strategy and manage ourgrowth, including identifying and consummating suitable

mergers and acquisitions and integrating merged and acquired companies;

• uncertain or unfavorable general economic or market conditions, includingpossible slowing or recessionary economic conditions

and continuing or increasing inflation, and other conditions affecting our marketareas in Kansas, Missouri, Oklahoma, Texas,

Arizona, Colorado and New Mexico, including a decrease in or the volatilityof oil and gas prices or agricultural commodity

prices within the region;

• changes in the anticipated rate hikes by the Federal Open Market Committee;

• fluctuations in interest rates and the fair value of our investment securities,which could have an adverse effect on our profitability;

• the geographic concentration of our markets in Kansas, Missouri, Oklahoma, Texas, Arizona, Colorado and New Mexico;

• concentrations of loans secured by real estate and energy located inour market areas;

• risks associated with our commercial loan portfolio, including the risk fordeterioration in value of the general business assets that

secure such loans;

• borrower and depositor concentration risks;

• risks associated with the continued outbreak of COVID-19 andits variants;

• our ability to maintain our reputation;

• our ability to successfully manage our credit risk and the sufficiency of our allowance;

• reinvestment risks associated with a significant portion of our loan portfoliomaturing in one year or less;

• our ability to attract, hire and retain qualified management personnel;

• our dependence on our management team, including our ability to retain executiveofficers and key employees and their client and

community relationships;

• competition from banks, credit unions and other financial services providers;

• our ability to maintain sufficient liquidity and capital;

• system failures, service denials, cyber-attacks and security breaches;

• our ability to maintain effective internal control over financial reporting;

• employee error, fraudulent activity by employees or clients and inaccurate or incompleteinformation about our clients and

counterparties;

• increased capital requirements imposed by banking regulators,which may require us to raise capital at a time when capital is not

available on favorable terms or at all;

• costs and effects of litigation, investigations or similar matters to which we may besubject, including any effect on our reputation;

• severe weather, acts of god, acts of war or terrorism;

3

• compliance with governmental and regulatory requirements, includingthe Dodd-Frank and Wall Street Consumer Protection Act

(“Dodd-Frank Act”) and other regulations relating to banking, consumer protection, securities and tax matters;

• changes in the laws, rules, regulations, interpretations or policies relating to financialinstitutions, accounting, tax, trade, monetary

and fiscal matters, including the policies of the Federal Reserve and as a result ofinitiatives of the current administration;

• risks associated with our common stock; and

• those factors set forth below under the heading "Part I, Item 1A. Risk Factors," in this Annual Report on Form 10-K

The foregoing factors should not be construed as exhaustive and shouldbe read together with the other cautionary statements included

in this report. Because of these risks and other uncertainties, our actual futureresults, performance or achievements, or industry results, may

be materially different from the results indicated by the forward-lookingstatements in this report. In addition, our past results of operations

are not necessarily indicative of our future results. Accordingly, no forward-looking statements shouldbe relied upon, which represent our

beliefs, assumptions and estimates only as of the dates on which such forward-lookingstatements were made. Any forward-looking

statement speaks only as of the date on which it is made, and we do not undertakeany obligation to update or review any forward-looking

statement, whether as a result of new information, future developmentsor otherwise, except as required by law.

4

CrossFirst Bankshares, Inc.

2022 Form 10-K Annual Report

Table of Contents

Part

Item

Number

Section

Page

Number

I

1

5

1A

16

1B

29

2

29

3

29

4

29

29

II

5

30

6

32

7

32

7A

54

8

55

56

Consolidated Financial Statements and Related Notes

58

59

60

61

62

63

9

107

9A

107

9B

107

9C

107

III

10

108

11

108

12

108

13

109

14

109

IV

15

109

(a) (1) Financial Statements - See listing in Item 8 above

(a) (2) Financial Statement Schedules - None required

(a) (3) Exhibits

16

111

112

5

Part I

ITEM 1.BUSINESS

Our Company

CrossFirst Bankshares, Inc., a Kansas corporation and registered bankholding company (the “Company”), is the holding company for

CrossFirst Bank (the “Bank”). The Company was initially formed as a limited liabilitycompany, CrossFirst Holdings, LLC, on September 1,

2008,to become the holding company for the Bank and converted to a corporation in 2017. The Bank was establishedas a Kansas state-

chartered bank in 2007 and provides a full suite of financial services to businesses, businessowners, professionals, and their personal

networks through our branch offices located in Kansas, Missouri, Oklahoma, Texas,Arizona,Colorado and New Mexico.

Unless we state otherwise or the context otherwise requires, referencesin the below section to “we,” “our,” “us,” “ourselves,” “our

company,” and the “Company” refer to CrossFirst Bankshares, Inc.,a Kansas corporation, its predecessors and its consolidated subsidiaries.

References to “CrossFirst Bank” and the “Bank” refer to CrossFirst Bank, a Kansas charteredbank and our wholly owned consolidated

subsidiary.

Since opening our first branch in 2007, we have grown organically primarily byestablishing new branches, attracting new clients and

expanding our relationships with existing clients, as well as through threestrategic acquisitions.Since inception, our strategy has been to be a

trusted partner providing customized financial solutions for our clients,which we believe has driven value for our stockholders.We are

committed to a culture of serving our clients and communities in extraordinaryways by providing personalized, relationship-based banking.

We believe that success is achieved through establishing and growing the trust ofour clients, employees, stockholders,and communities. We

remain focused on growth and are equally focused on building stockholdervalue through greater efficiency and increased profitability. We

intend to execute our strategic plan through the following:

•Continue organic growth;

•Selectively pursue opportunities to expand through acquisitionsor new market development;

•Improve financial performance;

•Attract, retain and develop talent;

•Maintain a branch-light business model with strategically placed locations;and

•Leverage technology to enhance the client experience and improve profitability.

Developments during the Fiscal Year ended December 31, 2022

In May of 2022, the Company announced a new share repurchase program underwhich we could repurchase up to $30 million of

Company common stock. This program remains in effect. The Company completed the share repurchaseprogram previously announced in

October 2021 during the third quarter of 2022. During 2022, the Companyrepurchased $36 million, representing 2,448,428 common shares,

at an average price per share of $14.61 under both repurchase programs.

The Company announced on June 13, 2022, an agreement underwhich CrossFirst Bank would acquire Central Bancorp, Inc.’s bank

subsidiary, Farmers & Stockmens Bank (“Central”),in an all-cash transaction. The transaction was closed on November 22, 2022.

In June 2022, Amy Abrams was appointed as the Company’s General Counsel and Corporate Secretary.

In June of 2022, the Company announced the promotion of W. Randall Rapp, the Bank's currentChief Risk and Credit Officer, to the

position of President of the Bank, to be effective July 1, 2022.In his new role, Mr. Rapp has responsibility for production, credit, operations,

risk and technology of the Bank and reports to the Chief Executive Officer ofthe Bank and the Company.In connection with his promotion,

Mr. Rapp relinquished the position of Chief Risk and Credit Officer of theBank. With this promotion, the roles of President and Chief

Executive Officer of the Bank, formerly held by Michael J. Maddox, weresplit, and Mr. Maddox continues as the Chief Executive Officer of

the Bank and President and Chief Executive Officer of the Company.Jenny Payne was named Chief Risk Officer of the Bank, and Tom

Robinson was named Chief Credit Officer of the Bank.

We continued our expansion into high growth metro markets such as: Frisco, Phoenix,Denver, and Colorado Springs, and we added

and expanded industry verticals including Sponsor Finance,Financial Institutions, SBA, ResidentialMortgage and Franchise Finance.

6

We launched our new digital banking platform in the fourth quarter, providingenhanced online tools and resources for our clients. The

Q2 platform provides a responsive design with features and functionality paritybetween online and mobile banking and gives the Company

the ability to enhance our digital client experience with additional revenuegenerating opportunities.

Products and Services

The Bank operates as a regional bank providing a broad offering of deposit andlending products to commercial and consumer clients.

The Bank’s branches are strategically located in Kansas, Missouri,Oklahoma, Texas, Arizona, Colorado and New Mexico.Our approach to

banking starts with our extraordinary service commitment. Our approachis highly tailored to our clients with the ability to customize

products and services to meet our clients’ individual needs. In addition to our branch locations, we also offer private bankingsolutions and

commercial banking solutions.Private banking services offer clients an enhanced level of service throughthe support of a dedicated Private

Banker. Our commercial banking teams are run by experienced business leaders whounderstand the unique challenges and opportunities that

come from running and growing a business. Our commercial banking solutionsacross lending, deposits and treasury management are

designed to meet the needs of our client regardless of size or industry. We serve consumerclients though our branch network as well as our

digital banking products.

We focus on the following loan categories: (i) commercial and industrial loans,including enterprise value lending; (ii) commercial real

estate loans; (iii) construction and development loans, including home builderlending; (iv) residential real estate loans; (v) multifamily real

estate loans; (vi) energy loans; (vii) Small Business Administration (“SBA”) loans; (viii) consumer loans;and (ix) secondary market

mortgage loans.

We also offer deposit banking products including: (i) personal and business checkingand savings accounts; (ii) international banking

services; (iii) treasury management services; (iv) money market accounts;(v) certificates of deposits; (vi) negotiable order of withdrawal

accounts; (vii) automated teller machine access; and (viii) mobile banking.

Competition

The banking and financial services industry is highly competitive, and we compete witha wide range of financial institutions within

our markets, including local, regional and national commercial banks andcredit unions. We also compete with mortgage companies, trust

companies, brokerage firms, consumer finance companies, securities firms,insurance companies, third-party payment processors, financial

technology (“Fintech”) companies, and other financial intermediaries.Some of our competitors are not subject to the regulatory restrictions

and level of regulatory supervision applicable to us.

Human Capital Resources

Employee Profile

As of December 31, 2022, the Company had 465 full-time equivalentemployees primarily in locations across the states of Kansas,

Missouri, Oklahoma, Texas,Arizona,Colorado and New Mexico; however, technology has allowed us to expand our reach to includea larger

demographic with more remote employees working outside of our physical locationsand throughout the country. None of our employees are

parties to a collective bargaining agreement, and we consider our relationshipwith our employees to be good.During fiscal year 2022 we

hired 212 employees (including as part of the acquisition of Farmers & StockmensBank). Our regretted turnover rate was 14.6% in fiscal

year 2022, which we believe was due primarily to a competitive labor marketand a shortage of talent.

We believe a diverseworkforce is critical to long-term success and seek to build and maintain a diverseand inclusive environment.As of

December 31, 2022, approximately 61% of our current workforceself-identifies as female and 39% as male.As of December 31, 2022, 45%

of our executive and senior leadership team self-identifies as female.

Culture

We strive to attract, retain, and develop top talent with diverse knowledge, perspectives,and experience to achieve our strategic

objectives.Our Chief Human Resources Officer, reporting directly to our Chief Executive Officer,oversees our human capital management

strategies. In addition, our Board of Directors is actively involved in our humancapital management in its oversight of our long-term strategy

and through its committees and engagement with management.

We have a strengths-based culture where our employees utilize their strengthsto set the course and are empowered to deliver

extraordinary services for our clients. We strive to maintain our high-performingculture and be an “employer of choice” by creating an

inclusive environment that attracts and retains high-quality, engagedemployees who embody our core values of character, competence,

7

commitment and connection. We are focused on sourcing and hiring talent that will be acultural fit to our core values and have backgrounds

that are as diverse as the clients we serve.

Pay Equity

We believe ouremployees should be compensated on their experience and performance for the roles they fulfill,and our goal is to

attract, retain and develop top-quality talent. Todeliver on that commitment, we set pay ranges based on banking market dataand consider

factors such as an employee’s roleand experience, the location of their job, and their performance. Wealso regularly review our

compensation practices, both in terms of our overall workforce andindividual employees, to ensure our pay is fair and equitable.

Diversity, Equity and Inclusion

We believe that an equitable and inclusive environment with diverse teams supportsour core values and strategic initiatives.We are

focused on maintaining and enhancing our inclusive culture throughour CrossFirst Cares program, which represents our initiatives and

efforts to support the diverse thoughts, ideas and perspectives of our employees andtheir wellbeing. Our IDEA Champions employee

resource group is focused on promoting diversity, equity and inclusion,while supporting CrossFirst’s core values and strengths-based

culture. These groups enhance an inclusive culture through company events, participationin our recruitment efforts, training opportunities,

and input into our development strategies. During 2022, we providedunconscious bias training for all employees.

Compensation and Benefits Program

As part of our compensation philosophy, we offer and maintain competitivetotal rewards programs to attract and retain superior talent

throughout our market footprint. In addition to competitive basepay, we also offer annual incentive opportunities, long-term incentive

opportunities, a Company-augmented Employee Stock Ownership Plan,Company-matched 401(k) Plan, healthcare and insurance benefits,

health savings and flexible spending accounts, paid time off, parentalleave, a Volunteer Time Off (“VTO”) program, flexible work

schedules, and employee assistance programs.

Community Involvement

We build strong relationships within the communities we serve, andwe support the passions of our employees. We encourage our

employees to volunteer their time and talent by serving on boards and supportingthe communities where they live and work.

We understand that helping our employees devote their energies to causes that matterto them, to their communities and to those

individuals who are most in need makes a broader impact. Our CrossFirst VTO program providespaid leave for these volunteer activities.

Our spirit of employee giving is also championed through our GenerousGiving Program.Through this program, we offer every

employee the opportunity to provide financial support for others bymatching up to $500 per employee gift, per year. Our Generous Giving

Program is designed to give our employees additional resources to makea difference in people’s lives. Since its inception in 2017, our

Generous Giving Program donations total approximately $490thousand.

We focus on giving back to the communities we serve and providing opportunitiesto our employees to share in that effort.At the

same time, we recognize that participating in these activities enriches all ourlives.

Workplace Health, Safety and Wellness

The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committedto the health,

safety and wellness of our employees. We provide our employees and their families withaccess to a variety of flexible and convenient health

and welfare programs. This includes offering benefits to support their physicaland mental well-being; providing tools and resources to help

improve or maintain their health status; and offering choices where possiblefor employees to customize their benefits to meet their needs and

the needs of their families. The COVID-19 pandemic led us to evaluate our operatingenvironment to ensure our employees were able to

continue working safely.As a result, we implemented significant changes including providing flexiblework from home options for a large

percentage of our employees, while implementing additional safety measuresfor employees continuing critical on-site work. We have

continued to offer these for the benefit of our employees, clients and communities.

Annually, we conduct an all-employee engagement and satisfactionsurvey. We consistently have 90% participation in our engagement

survey, scoring in the top third of companies compared to other Gallup organizations,with over 67% of our employees who are classified by

Gallup as highly engaged.

8

During 2022, the Company received the WELL Health-Safety Rating through the International WELL Building Institute. This rating is

an evidence-based, third-party verified rating for all new and existing buildingsfocused on operational policies, maintenance protocols,

stakeholder engagement, and emergency plans to address a post COVID-19environment.

Talent Development

We prioritize and invest in creating opportunities to help our employees growand build their careers through a variety of training and

development programs. These include online, classroom and on-the-job learning formatspaired with an individualized development

approach.

A core tenet of our talent system is to both develop talent from within and supplement with external candidates. This approach has

yielded loyalty and commitment in our employee base which benefits our business,our products, and our clients.In 2022, over 17% of our

current employees were promoted into roles with increased responsibilities. The additionof new employees and external ideas supports our

culture of continuous improvement and a diverse and inclusive workforce.

Our performance management framework includes monthly business and functionalreviews, along with one-on-one and quarterly

forward-looking goal setting and development discussions, followed by annualopportunities for pay differentiation based on overall

employee performance distinction.

Supervision and Regulation

The following is a general summary of the material aspects of certain statutes andregulations that are applicable to us. These

summary descriptions are not complete. Please refer to the full text of the statutes, regulations,and corresponding guidance for more

information. These statutes and regulations are subject to change, and additionalstatutes, regulations, and corresponding guidance may be

adopted. We are unable to predict future changes or the effects, if any, that these changes could have on our business or our revenues.

General

We are extensively regulated under U.S. federal and state law. As a result, our growth and earnings performancemay be affected not

only by management decisions and general economic conditions,but also by federal and state statutes and by the regulations and policies of

various bank regulatory agencies, including the Office of the State Bank Commissionerof Kansas, the Federal Reserve, the Federal Deposit

Insurance Corporation (“FDIC”) and the Consumer Financial ProtectionBureau (“CFPB”). Furthermore, tax laws administered by the

Internal Revenue Service (“IRS”) and state and local taxing authorities, accountingrules developed by the Financial Accounting Standards

Board (“FASB”), securities laws administered by the Securities and ExchangeCommission (“SEC”) and state securities authorities and Anti-

Money Laundering (“AML”) laws enforced by the U.S. Department ofthe Treasury also impact our business. The effect of these statutes,

regulations, regulatory policies and rules are significant to our financial conditionand results of operations. Further, the nature and extent of

future legislative, regulatory or other changes affecting financial institutions areimpossible to predict with any certainty.

Federal and state banking laws impose a comprehensive system ofsupervision, regulation, and enforcement on the operations of

banks, their holding companies and their affiliates. These laws are intended primarilyfor the protection of depositors, clients and the Deposit

Insurance Fund of the FDIC (“DIF”) rather than for stockholders.

This supervisory and regulatory framework subjects banks and bankholding companies to regular examination by their respective

regulatory agencies, which results in examination reports andratings that, while not publicly available, can affect the conduct and growth of

their businesses.

Regulatory Capital Requirements

The federal banking agencies require that banking organizations meet severalrisk-based capital adequacy requirements known as the

“Basel III Capital Rules.” The Basel III Capital Rules implement the Basel Committee’s December2010 framework for strengthening

international capital standards and certain provisions of the Dodd-Frank Act.

The Basel III Capital Rules require the Company and the Bank to comply with four minimumcapital standards: (i) a tier 1 leverage

ratio of at least 4.0%; (ii) a CET1 to risk-weighted assets of at least 4.5%; (iii) a tier 1capital to risk-weighted assets of at least 6.0%; and (iv)

a total capital to risk-weighted assets of at least 8.0%. CET1 capital is generallycomprised of common stockholders’ equity and retained

earnings subject to applicable regulatory adjustments. Tier 1 capital is generallycomprised of CET1 and additional tier 1 capital. Additional

tier 1 capital generally includes certain noncumulative perpetual preferredstock and related surplus and minority interests in equity accounts

of consolidated subsidiaries. We are permitted to include qualifying trust preferredsecurities issued prior to May 19, 2010 as additional tier 1

capital. Total capital includes tier 1 capital (CET1 capital plus additional tier 1 capital) and tier 2capital. Tier 2 capital is generally comprised

of capital instruments and related surplus meeting specified requirements,and may include cumulative preferred stock and long-term

perpetual preferred stock, mandatory convertible securities, intermediatepreferred stock, and subordinated debt. Also included in tier 2

9

capital is the allowance for credit losses (“ACL”), formerly known as the allowancefor loan and lease losses (“ALLL”), limited to a

maximum of 1.25% of risk-weighted assets. The calculation of all types of regulatorycapital is subject to deductions and adjustments

specified in the regulations.

The Basel III Capital Rules also establish a “capital conservation buffer” of 2.5%above the regulatory minimum risk-based capital

requirements. An institution is subject to limitations on certain activities, including payment of dividends, share repurchasesand

discretionary bonuses to executive officers, if its capital level is below the bufferedratio.

The Basel III minimum capital ratios as applicable to the Bank and to the Companyare summarized in the table below:

Basel III

Minimum For

Capital Adequacy

Purposes

Basel III

Additional

Capital

Conservation

Buffer

Basel III Ratio

With Capital

Conservation

Buffer

Total risk based capital (total capital to risk-weighted assets)

8.00%

2.50%

10.50%

Tier 1 risk based capital (tier 1 to risk-weighted assets)

6.00

2.50

8.50

Common equity tier 1 risk based capital (CET1 to risk-weightedassets)

4.50

2.50

7.00

Tier 1 leverage ratio (tier 1 to average assets)

4.00%

—%

4.00%

In determining the amount of risk-weighted assets for purposes of calculatingrisk-based capital ratios, a banking organization’s assets,

including certain off-balance sheet assets are multiplied by a risk weight factorassigned by the regulations based on perceived risks inherent

in the type of asset. As a result, higher levels of capital are required for asset categories believed to present greater risk.

As of December 31, 2022, the Company’s and the Bank’s capital ratios exceededthe minimum capital adequacy guideline percentage

requirements under the Basel III Capital Rules.

Prompt Corrective Action

The Federal Deposit Insurance Act requires federal banking agencies to take “prompt corrective action” with respectto depository

institutions that do not meet minimum capital requirements. For purposesof prompt corrective action, the law establishes five capital tiers:

“well-capitalized,” “adequately-capitalized,” “under-capitalized,”“significantly under-capitalized,” and “critically under-capitalized.” A

depository institution’s capital tier depends on its capital levels and certain other factors establishedby regulation. In order to be a “well-

capitalized” depository institution, a bank must maintain a CET1 risk-basedcapital ratio of 6.5% or more, a tier 1 risk-based capital ratio of

8% or more, a total risk-based capital ratio of 10% or more and a leverage ratio of5% or more (and is not subject to any order or written

directive specifying any higher capital ratio). At each successively lower capital category, a bankis subject to increased restrictions on its

operations.

As of December 31, 2022, the Bank met the requirements for being deemed“well-capitalized” for purposes of the prompt corrective

action regulations and was not otherwise subject to any order or written directivespecifying any higher capital ratios.

Enforcement Powers of Federal and State BankingAgencies

The federal banking regulatory agencies have broad enforcement powers,including the power to terminate deposit insurance, impose

substantial fines and other civil and criminal penalties, and appoint aconservator or receiver for financial institutions. Failure to comply with

applicable laws and regulations could subject us and our officers and directors toadministrative sanctions and potentially substantial civil

money penalties.

The Company

General

As a bank holding company, the Company is subject to regulation and supervisionby the Federal Reserve under the Bank Holding

Company Act of 1956, as amended (“BHCA”). Under the BHCA, the Company is subject to periodic examinationby the Federal Reserve.

The Company is required to file with the Federal Reserve periodic reports ofits operations and such additional information as the Federal

Reserve may require.

10

Acquisitions, Activities andChange in Control

The BHCA generally requires the prior approval by the Federal Reserve for any merger involving a bank holdingcompany or a bank

holding company’s acquisition of more than 5% of a class of voting securities ofany additional bank or bank holding company or to acquire

all or substantially all the assets of any additional bank or bank holdingcompany.

Federal law also prohibits any person or company from acquiring “control”of an FDIC-insured depository institution or its holding

company without prior notice to the appropriate federal bank regulator.“Control” is conclusively presumed to exist upon the acquisition of

25% or more of the outstanding voting securities of a bank or bank holding company, butmay arise under certain circumstances between 5%

and 24.99% ownership.

Permitted Activities

The BHCA generally prohibits the Company from controlling or engaging in any business other than that of banking,managing and

controlling banks or furnishing services to banks and their subsidiaries. This generalprohibition is subject to a number of exceptions. The

principal exception allows bank holding companies to engage in, and toown shares of companies engaged in, certain businesses found by the

Federal Reserve prior to November 11, 1999 to be “so closely related to bankingas to be a proper incident thereto.”

Additionally, bank holding companies that meet certain eligibility requirementsprescribed by the BHCA and elect to operate as

financial holding companies may engage in, or own shares in companies engagedin, a wider range of nonbanking activities, including

securities and insurance underwriting and sales, merchant bankingand any other activity that the Federal Reserve, in consultation with the

Secretary of the Treasury, determines by regulation or order is financial in nature orincidental to any such financial activity or that the

Federal Reserve determines by order to be complementary to any such financialactivity and does not pose a substantial risk to the safety or

soundness of depository institutions or the financial system generally. The Companyhas not elected to be a financial holding company, and

we have not engaged in any activities determined by the Federal Reserve to be financialin nature or incidental or complementary to activities

that are financial in nature.

Source of Strength

Bank holding companies, such as the Company, are required by statute to serveas a source of financial strength for their subsidiary

depository institutions, by providing financial assistance to their insured depositoryinstitution subsidiaries in the event of financial distress.

Under the source of strength requirement, the Company could be required to provide financialassistance to the Bank should it experience

financial distress. Furthermore, the Federal Reserve has the right to ordera bank holding company to terminate any activity that the Federal

Reserve believes is a serious risk to the financial safety, soundness or stability ofany subsidiary bank. The regulators may require these and

other actions in support of controlled banks even if such action is not in the best interests ofthe bank holding company or its stockholders.

Safe and Sound Banking Practices

Bank holding companies and their nonbanking subsidiaries are prohibitedfrom engaging in activities that represent unsafe and

unsound banking practices or that constitute a violation of law or regulations.Under certain conditions the Federal Reserve may conclude

that certain actions of a bank holding company, such as a payment of a cash dividend,would constitute an unsafe and unsound banking

practice. The Federal Reserve also has the authority to regulate the debt of bank holding companies,including the authority to impose

interest rate ceilings and reserve requirements on such debt. Under certaincircumstances the Federal Reserve may require a bank holding

company to file written notice and obtain its approval prior to purchasing or redeemingits equity securities, unless certain conditions are met.

Dividend Payments, Stock Redemptions and Repurchases

The Company’s ability to pay dividends to its stockholders is affected byboth general corporate law considerations and the

regulations and policies of the Federal Reserve applicable to bank holding companies,including the Basel III Capital Rules. Generally, a

Kansas corporation may declare and pay dividends upon the shares ofits capital stock either out of its surplus, as defined in and computed in

accordance with K.S.A. 17-6404 and 17-6604, and amendments thereto,or in case there is not any surplus, out of its net profits for the fiscal

year in which the dividend is declared or the preceding fiscal year, or both.If the capital of the corporation, computed in accordance with

K.S.A. 17-6404 and 17-6604, and amendments thereto, is diminishedby depreciation in the value of its property, or by losses, or otherwise,

to an amount less than the aggregate amount of the capital represented by the issuedand outstanding stock of all classes having a preference

upon the distribution of assets, then no dividends may be paid out of such net profitsuntil the deficiency in the amount of capital represented

by the issued and outstanding stock of all classes having a preference upon the distributionof assets shall have been repaired.

It is the Federal Reserve’s policy that bank holding companies should generallypay dividends on common stock only out of income

available over the past year, and only if prospective earnings retention is consistentwith the organization’s expected future needs and

financial condition. It is also the Federal Reserve’s policy that bank holdingcompanies should not maintain dividend levels that undermine

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their ability to be a source of strength to its banking subsidiaries. Additionally, the Federal Reserve has indicated that bankholding

companies should carefully review their dividend policy and has discouragedpayment ratios that are at maximum allowable levels unless

both asset quality and capital are very strong.

Bank holding companies must consult with the Federal Reserve beforeredeeming any equity or other capital instrument included in

tier 1 or tier 2 capital prior to stated maturity, if such redemption could have a materialeffect on the level or composition of the

organization’s capital base. In addition, bank holding companies are unableto repurchase shares equal to 10% or more of their net worth if

they would not be well-capitalized (as defined by the Federal Reserve) aftergiving effect to such repurchase. Bank holding companies

experiencing financial weaknesses, or that are at significant risk of developingfinancial weaknesses, must consult with the Federal Reserve

before redeeming or repurchasing common stock or other regulatorycapital instruments.

Other Regulation

As a company whose stock is publicly traded, the Company is subject to variousfederal and state securities laws, including the

Securities Act of 1933, as amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the

Sarbanes-Oxley Act of 2002, and the Company files periodic reports with the Securities and Exchange Commission. Inaddition, because the

Company’s common stock is listed with The Nasdaq Stock Market LLC, the Companyis subject to the listing rules of that exchange.

The Bank

General

The Bank is a Kansas state-chartered bank and is not a member bank of the FederalReserve. As a Kansas state-chartered bank, the

Bank is subject to the examination, supervision and regulation bythe Office of the State Bank Commissioner of Kansas (“OSBCK”), the

chartering authority for Kansas banks, and by the FDIC. The Bank is also subject to certain regulationsof the CFPB.

The OSBCK supervises and regulates all areas of the Bank’s operations including,without limitation, the making of loans, the

issuance of securities, the conduct of the Bank’s corporate affairs, the satisfaction ofcapital adequacy requirements, the payment of

dividends, and the establishment or closing of banking offices. The FDIC is the Bank’s primaryfederal regulatory agency, and periodically

examines the Bank’s operations and financial condition and compliancewith federal law. In addition, the Bank’s deposit accounts are insured

by the DIF to the maximum extent provided under federal law and FDIC regulations,and the FDIC has certain enforcement powers over the

Bank.

Depositor Preference

In the event of the ‘‘liquidation or other resolution’’ of an insured depository institution, the claims of depositors of the institution,

including the claims of the FDIC as subrogee of insured depositors, andcertain claims for administrative expenses of the FDIC as a receiver,

will have priority over other general unsecured claims against the institution. Ifan insured depository institution fails, insured and uninsured

depositors, along with the FDIC, will have priority in payment ahead ofunsecured, non-deposit creditors including the parent bank holding

company with respect to any extensions of credit they have made to thatinsured depository institution.

Brokered Deposit and Deposit Rate Restrictions

In December of 2020, the FDIC finalized revisions to its regulations relatingto brokered deposits and interest rate restrictions that

apply to less than well-capitalized insured depository institutions. The final rule becameeffective April 1, 2021 and full compliance with the

revised brokered deposit regulation was extended to January 1, 2022.

Well-capitalized institutions are not subject to limitations on brokereddeposits, while adequately-capitalized institutions are able to

accept, renew or roll over brokered deposits, only with a waiver from theFDIC and subject to certain restrictions on the yield paid on such

deposits. Under-capitalized institutions are generally not permitted toaccept, renew, or roll over brokered deposits and are subject to a

deposit rate cap, pursuant to which the institutions would be prohibited frompaying in excess of the higher of (1) 75 basis points above

published national deposit rates or (2) for maturity deposits, 120percent of the current yield on similar maturity U.S. Treasury obligations

and, for non-maturity deposits, the federal funds rate plus 75 basis points, unless theFDIC determined that the institutions’ local market rate

was above the national rate. As of December 31, 2022, the Bank was eligible to accept brokered deposits without a waiver fromthe FDIC

and was not subject to the deposit rate cap.

Deposit Insurance

As an FDIC-insured institution, the Bank is required to pay deposit insurance premiumsto the FDIC. The FDIC has adopted a risk-

based assessment system whereby FDIC-insured depositoryinstitutions pay insurance premiums at rates based on their risk classification. An

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institution’s risk classification is assigned based on its capital levels andthe level of supervisory concern the institution poses to the

regulators. For deposit insurance assessment purposes, an insured depositoryinstitution is placed in one of four risk categories each quarter.

An institution’s assessment is determined by multiplying its assessmentrate by its assessment base. The total base assessment rates range

from 2.5 basis points to 42 basis points. While in the past an insured depository institution’s assessmentbase was determined by its deposit

base, amendments to the Federal Deposit Insurance Act revised the assessment base so that it is calculated using average consolidatedtotal

assets minus average tangible equity.

Additionally, the Dodd-Frank Act altered the minimum designated reserve ratio of the DIF, increasing the minimumfrom 1.15% to

1.35% of the estimated amount of total insured deposits, and eliminatingthe requirement that the FDIC pay dividends to depository

institutions when the reserve ratio exceeds certain thresholds. The FDIC had untilSeptember 3, 2020 to meet the 1.35% reserve ratio target,

but it announced in November 2018that the DIF had reached 1.36%, exceeding the 1.35% reserve ratio target. At least semi-annually, the

FDIC updates its loss and income projections for the DIF and, if needed, may increaseor decrease the assessment rates, following notice and

comment on proposed rule-making. However, as of June 30, 2020,the reserve ratio fell to 1.30%, below the statutory minimum of 1.35%.

On September 15, 2020, the FDIC adopted a Restoration Plan to restore the reserveratio to at least 1.35% within eight years. The FDIC

projects that the reserve ratio will return to 1.35% without further action by theFDIC before the end of that eight-year period, but the FDIC

will closely monitor deposit balance trends, potential losses, and other factors thataffect the reserve ratio. As a result, the Bank’s FDIC

deposit insurance premiums could increase or decrease.

Audit Reports

Since the Bank is an insured depository institution with total assets of $1 billionor more, financial statements are prepared in

accordance with Generally Accepted Accounting Principles (“GAAP”), management’s certifications signed by the Company's and the Bank’s

chief executive officer and chief accounting or financial officer concerningmanagement’s responsibility for the financial statements, and an

attestation by the auditors regarding the Bank’s internal controls must be submittedto the FDIC and OSBCK. The Federal Deposit Insurance

Corporation Improvement Act of 1991 requires that the Bank (or, as explained below, the Company) havean independent audit committee,

consisting of outside directors who are independent of management of theCompany and the Bank. The audit committee must include at least

two members with experience in banking or related financial management,must have access to outside counsel and must not include

representatives of large clients. Certain insured depository institutions with total assets ofless than $5 billion, or $5 billion or more and a

composite CAMELS (i.e., capital adequacy, assets, management capability,earnings, liquidity, sensitivity) rating of 1 or 2, may satisfy these

audit committee requirements if its holding company has an audit committeethat satisfies these requirements. The Company’s audit

committee satisfies these requirements.

Examination Assessments

Pursuant to the Kansas Banking Code, the expense of every regular examination,together with the expense of administering the

banking and savings and loan laws, including salaries, travel expenses,supplies and equipment are paid by the banks and savings and loan

associations of Kansas, which are generally allocated among thembased on total asset size.

Capital Requirements

Banks are generally required to maintain minimum capital ratios. For a discussionof the capital requirements applicable to the Bank,

see “Regulatory Capital Requirements” above.

Bank Reserves

The Federal Reserve requires all depository institutions to maintain reservesagainst some transaction accounts (primarily Negotiable

Order of Withdrawal (“NOW”) and Super NOW checking accounts). The balances maintained to meetthe reserve requirements imposed by

the Federal Reserve may be used to satisfy liquidity requirements. An institution may borrow from the FederalReserve “discount window”

as a secondary source of funds if the institution meets the Federal Reserve’s credit standards. The FederalReserve reduced the reserve

requirement to 0% effective March 26, 2020.

Dividend Payments

A primary source of funds for the Company is dividends from the Bank. The Bank is not permitted to pay a dividend to the Company

under certain circumstances, including if the Bank is under-capitalized underthe prompt corrective action framework or if the Bank fails to

maintain the required capital conservation buffer. The Kansas Banking Codealso places restrictions on the declaration of dividends by the

Bank to the Company. No dividend may be paid from the capital stock account ofthe Bank. The current dividends of the Bank may only be

paid from undivided profits after deducting losses. Before declaring any cash dividendfrom undivided profits, the Bank’s board of directors

must ensure that the surplus fund equals or exceeds the capital stock account. Ifthe surplus fund is less than the capital stock account, the

Bank’s board of directors may transfer 25% of the net profits of the Bank, since thelast preceding dividend from undivided profits, to the

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surplus fund, except no additional transfers are required once the surplus fundequals or exceeds the capital stock account. Any other

dividend (whether in cash or other property) from the Bank to the Companyrequires the prior approval of the OSBCK.

The payment of dividends by any financial institution is affected bythe requirement to maintain adequate capital pursuant to

applicable capital adequacy guidelines and regulations, and a financial institutiongenerally is prohibited from paying any dividends if,

following payment thereof, the institution would be under-capitalized. As described above, the Bank exceededits minimum capital

requirements under applicable regulatory guidelines as of December31, 2022.

Transactions with Affiliates

The Bank is subject to Sections 23A and 23B of the Federal Reserve Act (the “Affiliates Act”) and the Federal Reserve’s

implementation of Regulation W. An affiliate of a bank under the AffiliatesAct is any company or entity that controls, is controlled by or is

under common control with the bank. Accordingly, transactions between the Company, the Bank and any nonbanksubsidiaries will be

subject to a number of restrictions. The amount of loans or extensions of credit which the Bankmay make to nonbank affiliates, or to third

parties secured by securities or obligations of the nonbank affiliates, are substantiallylimited by the Affiliates Act. Such acts further restrict

the range of permissible transactions between a bank and an affiliated company. A bank and its subsidiaries may engage in certain

transactions, including loans and purchases of assets, with an affiliated companyonly if the terms and conditions of the transaction, including

credit standards, are substantially the same as, or at least as favorable to the bank as, those prevailingat the time for comparable transactions

with non-affiliated companies or, in the absence of comparable transactions, onterms and conditions that would be offered to non-affiliated

companies.

Loans to Directors, Executive Officers and Principal Stockholders

The authority of the Bank to extend credit to its directors, executive officersand principal stockholders, including their immediate

family members and corporations and other entities they control, is subject tosubstantial restrictions and requirements under the Federal

Reserve’s Regulation O, as well as the Sarbanes-Oxley Act.

Limits on Loans to One Borrower

As a Kansas state-chartered bank, the Bank is subject to limits on the amountof loans it can make to one borrower. With certain

limited exceptions, loans and extensions of credit from Kansas state-charteredbanks outstanding to any borrower (including certain related

entities of the borrower) at any one time may not exceed 25% of the capital of the bank.Certain types of loans are exempt from the lending

limits, including loans fully secured by segregated deposits held bythe bank or bonds or notes of the United States. A Kansas state-chartered

bank may lend an additional amount if the loan is fully secured by certain types of realestate. In addition to the single borrower limitation

described above, loans to a borrower and its subsidiaries generally may not exceed50% of the capital of the bank. The Bank’s legal lending

limit to any one borrower was $176 million as of December 31, 2022.

Safety and Soundness Standards/Risk Management

The federal banking agencies have adopted guidelines establishingoperational and managerial standards to promote the safety and

soundness of federally insured depository institutions. The guidelines set forth standardsfor internal controls, information systems, internal

audit systems, loan documentation, credit underwriting, interest rate exposure,asset growth, compensation, fees and benefits, asset quality

and earnings. In general, the safety and soundness guidelines prescribe the goals to beachieved in each area, and each institution is

responsible for establishing its own procedures to achieve those goals. If an institutionfails to comply with any of the standards set forth in

the guidelines, the financial institution’s primary federal regulatormay require the institution to submit a plan for achieving and maintaining

compliance. If a financial institution fails to submit an acceptable complianceplan or fails in any material respect to implement a compliance

plan that has been accepted by its primary federal regulator, the regulator is requiredto issue an order directing the institution to cure the

deficiency. Until the deficiency cited in the regulator’s order is cured, the regulatormay restrict the financial institution’s rate of growth,

require the financial institution to increase its capital, restrict the rates the institutionpays on deposits or require the institution to take any

action the regulator deems appropriate under the circumstances. Noncompliancewith the standards established by the safety and soundness

guidelines may also constitute grounds for other enforcement action bythe federal bank regulatory agencies, including cease and desist

orders and civil money penalty assessments.

Community ReinvestmentAct (“CRA”)

The CRA is intended to encourage insured depository institutions, while operating safely and soundly, to help meet the credit needsof

their communities. The CRA specifically directs the federal bank regulatory agencies, in examining insured depository institutions,to assess

their record of helping to meet the credit needs of their entire community, includinglow and moderate income neighborhoods, consistent

with safe and sound banking practices. The CRA further requires the agencies to take a financial institution’s record of meetingits

14

community credit needs into account when evaluating applications for, amongother things, domestic branches, consummating mergers or

acquisitions or holding company formations.

The federal banking agencies have adopted regulations which measurea bank’s compliance with its CRA obligations on a

performance-based evaluation system. This system bases CRA ratings on an institution’s actual lending service andinvestment performance

rather than the extent to which the institution conducts needs assessments, documentscommunity outreach or complies with other procedural

requirements. The ratings range from a high of “outstanding” to a low of “substantial noncompliance.” TheBank had a CRA rating of

“satisfactory” as of its most recent CRA assessment.

Anti-Money Laundering and the Office of ForeignAssets Control Regulation

The Company and the Bank must comply with the requirements of the BankSecrecy Act (“BSA”). The BSAwas enacted to prevent

banks and other financial service providers from being used as intermediariesfor, or to hide the transfer or deposit of money derived from,

drug trafficking, money laundering, and other crimes. Since its passage, the BSA has been amended several times. These amendments

include the Money Laundering Control Act of 1986, which made money laundering a criminal act, as well as the MoneyLaundering

Suppression Act of 1994, which required regulators to develop enhanced examination procedures and increasedexaminer training to improve

the identification of money laundering schemes in financial institutions. The USA Uniting and Strengthening America by Providing

Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“PATRIOT Act”), substantially broadened the scope of U.S.

anti-money laundering laws and regulations by imposing significant newcompliance and due diligence obligations, creating new crimes and

penalties and expanding the extra-territorial jurisdiction of the UnitedStates. The regulations impose obligations on financial institutions to

maintain appropriate policies, procedures and controls to detect, prevent,and report money laundering and terrorist financing. The

regulations include significant penalties for non-compliance. Likewise,Office of Foreign Assets Control (“OFAC”) administers and enforces

economic and trade sanctions against targeted foreign countries and regimesunder authority of various laws, including designated foreign

countries, nationals and others. OFAC publishes lists of specially designatedtargets and countries. Financial institutions are responsible for,

among other things, blocking accounts of and transactions with suchtargets and countries, prohibiting unlicensed trade and financial

transactions with them and reporting blocked transactions after their occurrence.Failure of a financial institution to maintain and implement

adequate anti-money laundering and OFAC programs, or to complywith all of the relevant laws or regulations, could have serious legal and

reputational consequences for the institution.

Concentrations in Commercial Real Estate (“CRE”)

Concentration risk exists when financial institutions deploy too many assets to anyone industry or segment. Concentration stemming

from CRE is one area of regulatory concern. The CRE Concentration Guidance, providessupervisory criteria, including the following

numerical indicators, to assist bank examiners in identifying banks with potentiallysignificant CRE loan concentrations that may warrant

greater supervisory scrutiny: (i) CRE loans exceeding 300% of capital and increasing50% or more in the preceding three years; or (ii)

construction and land development loans exceeding 100% of capital. The CRE ConcentrationGuidance does not limit banks’ levels of CRE

lending activities, but rather guides institutions in developing risk managementpractices and levels of capital that are commensurate with the

level and nature of their CRE concentrations. If a concentration is present,management must employ heightened risk management practices

that address the following key elements: (i) board and management oversightand strategic planning; (ii) portfolio management; (iii)

development of underwriting standards; (iv) risk assessment andmonitoring through market analysis and stress testing; and (v) maintenance

of increased capital levels as needed to support the level of commercial real estate lending.On December 18, 2015, the federal banking

agencies jointly issued a ‘‘statement on prudent risk management for commercialreal estate lending’’ reminding financial institutions of

developing risk management practices. See also “Risk Factors—A concentration in commercial real estate lendingcould cause our regulators

to restrict our ability to grow” in this Form 10-K.

Consumer Financial Services

The Bank is subject to federal and state consumer protection statutes and regulationspromulgated under those laws, including, without

limitation, regulations issued by the CFPB. These laws and regulations could increase or decreasethe cost of doing business, limit or expand

permissible activities or affect the competitive balance among financialinstitutions.

Incentive Compensation Guidance

The federal bank regulatory agencies have issued comprehensive guidanceintended to ensure that the incentive compensation policies

of banking organizations do not undermine the safety and soundnessof those organizations by encouraging excessive risk-taking. The

incentive compensation guidance sets expectations for banking organizationsconcerning their incentive compensation arrangements and

related risk management, control and governance processes. The incentive compensationguidance, which covers all employees that have the

ability to materially affect the risk profile of an organization, either individuallyor as part of a group, is based upon three primary principles:

(i) balanced risk-taking incentives; (ii) compatibility with effective controls andrisk management; and (iii) strong corporate governance. Any

deficiencies in compensation practices that are identified may be incorporatedinto the organization’s supervisory ratings, which can affect its

ability to make acquisitions or take other actions. In addition, under the incentivecompensation guidance, a banking organization’s federal

15

supervisor may initiate enforcement action if the organization’s incentivecompensation arrangements pose a risk to the safety and soundness

of the organization. Further, the Basel III capital rules limit discretionary bonuspayments to bank executives if the institution’s regulatory

capital ratios fail to exceed certain thresholds. Although the federal bank regulatory agencies proposed additional rulesin 2016 related to

incentive compensation for all banks with more than $1 billion in assets, those ruleshave not yet been finalized. The scope and content of the

U.S. banking regulators’ policies on executive compensation are continuing to develop and are likely to continue evolving in the nearfuture.

The Dodd-Frank Act requires public companies to include, at least once every three years, a separate non-binding ‘‘say-on-pay’’ vote

in their proxy statement by which stockholders may vote on the compensationof the public company’s named executive officers. In addition,

if such public companies are involved in a merger, acquisition, or consolidation,or if they propose to sell or dispose of all or substantially all

of their assets, stockholders have a right to an advisory vote on any goldenparachute arrangements in connection with such transaction

(frequently referred to as ‘‘say-on-golden parachute’’ vote). Other provisions of the Dodd-Frank Act may impact our corporate governance.

For instance, the SEC adopted rules prohibiting the listing of any equity security ofa company that does not have a compensation committee

consisting solely of independent directors, subject to certain exceptions.In addition, the SEC adopted rules requiring all exchange-traded

companies to adopt claw-back policies for incentive compensation paid toexecutive officers in the event of accounting restatements based on

material non-compliance with financial reporting requirements,as required under Dodd-Frank. Those rules, however, remain subject tofinal

listing standards to be issued by national securities exchanges. Additionally, the Company is an emerging growthcompany (“EGC”) under

the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and therefore subject to reduced disclosure requirements related to,

among other things, executive compensation.

Financial Privacy

The federal bank regulatory agencies have adopted rules that limit the abilityof banks and other financial institutions to disclose non-

public information about consumers to non-affiliated third parties. These limitations requiredisclosure of privacy policies to consumers and,

in some circumstances, allow consumers to prevent disclosure ofcertain personal information to a nonaffiliated third party. These regulations

affect how consumer information is transmitted through financial services companiesand conveyed to outside vendors. In addition,

consumers may also prevent disclosure of certain information amongaffiliated companies that is assembled or used to determine eligibility

for a product or service, such as that shown on consumer credit reports and asset andincome information from applications. Consumers also

have the option to direct banks and other financial institutions not to shareinformation about transactions and experiences with affiliated

companies for the purpose of marketing products or services.

Impact of Monetary Policy

The monetary policy of the Federal Reserve has a significant effect on the operatingresults of financial or bank holding companies

and their subsidiaries. Among the tools available to the Federal Reserve to affect the money supply are open market transactions inU.S.

government securities, changes in the discount rate on member bank borrowingsand changes in reserve requirements against member bank

deposits. These tools are used in varying combinations to influence overall growth and distributionof bank loans, investments and deposits,

and their use may affect interest rates charged on loans or paid on deposits.

Other Pending and Proposed Legislation

Other legislative and regulatory initiatives which could affect the Company,the Bank and the banking industry in general may be

proposed or introduced before the U.S. Congress, the Kansas Legislature andother governmental bodies in the future. Such proposals, if

enacted, may further alter the structure, regulation and competitive relationshipamong financial institutions, and may subject the Company

or the Bank to increased regulation, disclosure and reporting requirements.In addition, the various banking regulatory agencies often adopt

new rules and regulations to implement and enforce existing legislation.It cannot be predicted whether, or in what form, any such legislation

or regulations may be enacted or the extent to which the business of the Companyor the Bank would be affected thereby.

Website Access to CompanyReports

The Company’s annual reports on Form 10-K, quarterly reports onForm 10-Q, current reports on Form 8-K, and all amendments to

those reports are available free of charge on the Company’s website (investors.crossfirstbankshares.com)as soon as reasonably practicable

after such material is electronically filed with, or furnished to, the SEC. In addition,copies of the Company’s annual report will be made

available, free of charge, upon written request. The Company does not intend for informationcontained in its website to be part of this annual

report on Form 10-K.

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ITEM 1A.RISK FACTORS

In addition to the other information set forth in this report, you should carefully considerthe following factors, which could materially

affect our business, financial condition, results of operations or cash flows infuture periods. While we believe we have identified and

discussed below the key risk factors affecting our business, there may be additionalrisks and uncertainties not currently known to us or that

we currently deem to be immaterial that may adversely affect our business, financialcondition, results of operations, cash flows or share

price in the future.

Risks Relating to Our Business and Market

A decline in general business andeconomic conditions and any regulatory responses to such conditionscould have a

material adverse effect on our business, financial position, resultsof operations and growth prospects.

Our business and operations, which primarily consist of lending moneyto clients in the form of loans and borrowing money from

clients in the form of deposits, are sensitive to general economic conditions,particularly in Kansas, Missouri, Oklahoma, Texas,Arizona,

Colorado and New Mexico.Unfavorable or uncertain economic and market conditions, including slowingor recessionary economic

conditions, may constrain our growth and profitability from our lendingand deposit operations, lead to credit quality concerns related to

borrower repayment ability and collateral protection and reduce demandfor the products and services we offer. Increases in inflation can

adverselyaffect the value of our investment securities, increase the costs of our business operationsand adversely affect the ability of our

clients to repay their loans with us. The annual inflation rate in the United States has increased since 2021.Our business is also significantly

affected by monetary and other regulatory policies, which are influenced bymacroeconomic conditions and other factors beyond our control.

The Federal Reserve Board has increased the target federal funds rate severaltimes beginning in 2022. Uncertainty surrounding the federal

fiscal policymaking process, the medium and long-term fiscal outlook ofthe federal government and future tax rates are concerns for

businesses, consumers and investors. Adverse economic conditions and governmental policy responses tosuch conditions could have a

material adverse effect on our business, financial position, results of operationsand growth prospects.

Our profitability depends on interest rates generally, and we may be adverselyaffected by changes in market interest rates.

Our profitability depends in substantial part on our net interest income, whichdepends on many factors that are partly or completely

outside of our control, including competition, economic conditions andmonetary and fiscal policies. Since March 2022, in response to

inflation, the target range for the federal funds rate has been steadily increasing.As it seeks to control inflation without creating a recession,

the Federal Reserve has indicated further increases are expected.If the targeted federal funds rates are increased, overall interest rates will

likely continue to rise, which will positively impact our net interest incomebut may negatively impact our ability to originate loans and

deposits, reduce the carrying value of assets on our consolidated statements offinancial position, reduce the value and marketability of loan

collateral and create higher payment burdens for our borrowers (which mayincrease potential for default). The ratio of variable- to fixed-rate

loans in our loan portfolio, the ratio of short-term (maturing at a giventime within 12 months) to long-term loans and the ratio of our

demand, money market and savings deposits to certificates of deposit (and theirtime periods) are the primary factors affecting the sensitivity

of our net interest income to changes in market interest rates. Our abilityto attract and maintain deposits, as well as our cost of funds, has

been and will continue to be significantly affected by general economicconditions. In addition, as market interest rates rise, we will continue

to have competitive pressure to increase the rates we pay on deposits. If we continueto increase interest rates paid to retain deposits, our

earnings may be adversely affected. Fluctuations inmarket rates and other market disruptions are neither predictable nor controllableand

may adversely affect our financial condition, earnings and results of operations. Stockholders' equity, specifically accumulated other

comprehensive income (loss) ("AOCI"), is increased or decreased by the amountof change in the estimated fair value of our securities

available-for-sale, net of deferred income taxes. Increases in long terminterest rates generally decrease the fair value of securities available-

for-sale, which adversely impacts stockholders' equity.

We may not be able to implement aspects of our growth strategy, whichmay adversely affect our ability to maintain our

historical earnings trends.

We may not be able to sustain our growth at the rate we have enjoyed duringthe past several years, which has been driven primarily

by new market expansion, the strength of commercial and industrial andreal estate lending in our market areas and our ability to identify and

attract high caliber experienced banking talent. A downturn in local economic market conditions, our failure to attract and retain high

performing personnel and the inability to attract core funding and qualitylending clients, among other factors, could limit our ability to grow

at the rate we have in the past. Additionally, expenses may grow at a greater rate than revenues. Consequently, our historical results of

operations will not necessarily be indicative of our future operations. Any limitation on our ability to growmay have a negative effect on our

business, financial condition and results of operations.

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We may not be able to manage the risks associated with our anticipated growthand expansion through de novo branching,

mergers and acquisitions, new lines of business, or new offeringsof services, products or product enhancements.

If our business continues to grow as anticipated, we may become more susceptibleto risks related to both general growth and specific

areas of growth. Generally, risks are associated with attempting to maintaineffective financial and operational controls as we grow, such as

maintaining appropriate loan underwriting and credit monitoringprocedures, maintaining an adequate allowance for loan losses, controlling

concentrations and complying with regulatory or accounting requirements. Suchrisks may result in, among other effects, increased loan

losses, reduced earnings, potential regulatory penalties and future restrictionson growth. We may also be exposed to certain risks associated

with the specific components of our growth strategy, as discussed in more detailbelow.

Expansion through De Novo Branching

: Our growth strategy includes evaluating opportunities to growthrough de novo branching.

De novo branching carries with it certain potential risks, includingsignificant startup costs and anticipated initial operating losses; an

inability to gain regulatory approval; an inability to hire or retain qualifiedsenior management to successfully operate the branch and

integrate our corporate culture; challenges associated with securing attractivelocations at a reasonable cost; poor market reception in

locations where we do not have a preexisting reputation; unfavorablelocal economic conditions; and the additional strain on management

resources and internal systems and controls.

Mergers and Acquisitions

: As part of our growth strategy, we may continue to pursue mergers and acquisitions of banks and non-

bank financial services companies within or outside our principal marketareas. Mergers and acquisitions, including our recently completed

acquisition of Farmers & Stockmens Bank, involve numerous risks associatedwith entry into new markets or locations; integration and

management of the combined entities; diversion of financial and managementresources from existing operations; assumption of

unanticipated problems, such as non-performing loans and latent liabilities; unanticipatedcosts; and potential future impairments to goodwill

and other intangible assets. If we finance acquisitions by issuing convertible debtor equity securities, our existing stockholders may be

diluted, which could affect the market price of our common stock. As a condition to receiving regulatory approval, we mayalso be required

to sell banking locations, which may not be preferable or may reduce the benefitof the acquisition. The failure to obtain these regulatory

approvals could impact our business plans and restrict our growth.

New Lines of Business, Services, Products or Product Enhancements

: From time to time, we may implement or acquire new lines

of business or offer new services, products or product enhancements. There aresubstantial risks and uncertainties associated with developing,

implementing and marketing such offerings, including significant investmentof financial and other resources, inability to accurately estimate

price and profitability targets, failure to realize expected benefits, regulatorycompliance and shifting market preferences.

Failure to adequately manage any of the preceding risks could have an adverse effecton our business, financial condition and results

of operations.

Phase-out of the London Inter-Bank Offered Rate (“LIBOR”) and uncertaintyrelating to alternative reference rates may

adversely affect our results of operations.

LIBOR is used extensively as a reference rate for various financial contracts,including adjustable-rate loans, asset-backed securities

and interest rate swaps. In July 2017, the United Kingdom's Financial Conduct Authority, which regulates LIBOR, announcedthat it intends

to stop persuading or compelling banks to submit LIBOR rates after 2021,which date was later extended to June 30, 2023. Accordingly,

continuation of LIBOR cannot be guaranteed after June 30, 2023 and alternativereference rates must be established. Regulators, industry

groups and certain committees (e.g., the Alternative Reference Rates Committee) have, among other things,published recommended fallback

language for LIBOR-linked financial instruments, identified recommendedalternatives for certain LIBOR rates (e.g., the Secured Overnight

Financing Rate (“SOFR”) as the recommended alternative to U.S. DollarLIBOR), and proposed implementations of the recommended

alternatives in floating rate instruments. Management continues toevaluate the impact of this transition as it relates to new and existing

contracts and clients and has included fallback language in new loan documentssince 2017. Starting in 2021, we no longer use LIBOR on

new loans.

Uncertainty as to the nature and effect of such reformsand actions may adversely affect our financial condition or results of

operations, including the value of, return on and trading market for ourfinancial assets and liabilities that are based on or are linked to

benchmarks, including any LIBOR-based securities, loans and derivatives.Furthermore, there can be no assurances that we and other market

participants will be adequately prepared for an actual discontinuationof benchmarks, including LIBOR, that may have an unpredictable

impact on contractual mechanics (including, but not limited to, interest ratesto be paid to or by us), which may also result in adversely

affecting our financial condition or results of operations.Such transition may also result in litigation with counterparties impacted bythe

transition as well as increased regulatory scrutiny and other adverseconsequences. In addition, any replacement benchmark ultimately

adopted as a substitute for LIBOR, including SOFR, may behave differentlythan LIBOR in a manner detrimental to our financial

performance. At December 31, 2022, $0.7 billion of our loans were tied toLIBOR.

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The fair value of our investment securities can fluctuate due to factorsoutside of our control.

As of December 31, 2022, 2021 and 2020, the fair value of our investment securitiesportfolio was approximately $687 million,

$746 million and $655 million, respectively. Factors beyond ourcontrol can significantly influence the fair value of securities in our portfolio

and may cause potential adverse changes to the fair value of these securities. These factors include,but are not limited to, rating agency

actions, defaults by the issuer or with respect to the underlying securities, changesin market interest rates and instability in the capital

markets. In addition, our inability to accurately predict the future performanceof an issuer or to efficiently respond to changing market

conditions could result in a decline in the value of our investment securities portfolio.These and other factors could cause realized or

unrealized losses in future periods and declines in other comprehensiveincome and the value of our common stock, any of which could

materially and adversely affect our business, results of operations, financialcondition and prospects.

Our business is highly susceptible to credit risk.

There are risks inherent in making any loan, including risks inherent in dealingwith individual borrowers, risks of non-payment, risks

resulting from uncertainties as to the future value of collateral and risks resulting fromchanges in economic and industry conditions. There is

no assurance that our loan approval and credit risk monitoring proceduresare or will be adequate to reduce the inherent risks associated with

lending. Our credit administration personnel and our policies and proceduresmay not adequately adapt to changes in economic or any other

conditions affecting clients and the quality of our loan portfolio.Similarly, we have credit risk embeddedin our securities portfolio.Adverse

credit factors could result in higher delinquencies and greater charge-offs or losses in future periods which could materially andadversely

impact us.

We have credit exposure to the energy industry.

We have credit exposure to the energy industry in each of our primary markets andacross the United States. Adownturn or lack of

growth in the energy industry and energy-related business could adverselyaffect our clients which may lead to higher delinquencies and

greater charge-offs in future periods. Prolonged or further pricingpressure on oil and gas could lead to increased credit stress in our energy

portfolio, increased losses associated with our energy portfolio, increasedutilization of our contractual obligations to extend credit and

weaker demand for energy lending. Such a decline or general uncertainty resultingfrom continued volatility could have other adverse

impacts that are difficult to isolate or quantify, all of which could have a materialadverse effect on us. Additionally, to the extent that climate

change and responses to climate change negatively impact the businesses andfinancial condition of our clients in the energy industry, the

credit risk associated with loans and other credit exposures to those clients mayincrease.

A concentration in commercial realestate lending could cause our regulators to restrict our ability togrow.

As a part of their regulatory oversight, the federal regulators have issued guidanceon Concentrations in Commercial Real Estate

Lending, Sound Risk Management Practices (the “CRE Concentration Guidance”)with respect to a financial institution’s concentrations in

CRE lending activities. Such guidance identifies certain concentrationlevels that, if exceeded, will expose an institution to additional

supervisory analysisThe guidelines identify the following as preliminary indications of possible CREconcentration risk: (i) the institution’s

total construction, land development and other land loans represent 100% ormore of total capital and reserves; or (ii) total CRE loans as

defined in the guidance, or Regulatory CRE, represent 300% or more of the institution’stotal capital and reserves and the institution’s

Regulatory CRE has increased by 50% or more during the prior 36-month period. We believethat the CRE Concentration Guidance is

applicable to us. Our CRE portfolio was 318%of total capital and reserves at December 31, 2022. The FDIC or other federal regulators may

become concerned about our CRE loan portfolio and they could limit our abilityto grow by restricting approvals of new branches and other

growth opportunities or by requiring us to raise additional capital, reduce ourloan concentrations or undertake other remedial actions.

Many of our loans are to commercial borrowers, which have a higherdegree of risk than other types of loans.

As of December 31, 2022, approximately 87% of our loan portfoliorelated to commercial-based lending. Commercial purpose loans

are often larger and involve greater risks than other types of lending. Repaymentof these loans often depends on the successful operation or

development of the property or business involved and are highly sensitive toadverse conditions in the real estate market or the industry in

which the business operates or the general economy. Accordingly, a downturn in the real estate market or other industryin which the business

operates or the general economy could impair the borrowers’ ability to repay and heightens our risk related to commercial purposeloans,

particularly CRE loans. Losses incurred on a small number of commercialpurpose loans could have a material adverse impact on our

financial condition and results of operations due to the larger-than-averagesize of each commercial purpose loan and collateral that is

generally less readily-marketable.

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Because a portion of our loan portfolio is comprised of real estateloans, negative changes in the economy affecting real

estate values could impair the value of collateral securing our realestate loans and result in loan and other losses.

Adverse changes affecting real estate values or operating cash flows ofreal estate, particularly in the markets in which we operate,

could increase the credit risk associated with our loan portfolio and couldresult in losses that adversely affect credit quality and our financial

condition and results of operation. Market value of real estate can fluctuatesignificantly in a short period of time. Negative changes in the

economy affecting real estate values or operating cash flows in our marketareas could significantly impair the value and marketability of

property pledged loan collateral and may require us to increase our allowancefor loan losses, any of which could have a material adverse

impact on our business, results of operations and growth prospects.

Our largest loan relationships make up a significant percentage ofour total loan portfolio.

As of December 31, 2022, our 25 largest borrowing relationships totaled approximately$1.9 billion in total commitments

(representing, in the aggregate, 24% of our total outstanding commitmentsas of December 31, 2022). Our five largest borrowing

relationships, based on total commitments, accounted for 9% of total commitmentsas of December 31, 2022. This concentration of

borrowers may expose us to material losses if one or more of these relationshipsbecomes delinquent or suffers default. The allowance for

loan losses may not be adequate to cover such losses and any loss or increase in the allowancewould negatively affect our earnings and

capital. Even if these loans are adequately collateralized, an increase in classifiedassets could harm our reputation with our regulators and

inhibit our ability to execute our business plan.

A portion of our loan portfoliois comprised of participation and syndicated transaction interests, whichcould have an

adverse effect on our ability to monitor the lending relationships and leadto an increased risk of loss.

As of December 31, 2022, we had $68 million of purchased loan participationsfrom other financial institutions and a combination of

shared national credits and syndication interests purchased totaling $440million. Although we comply with our general underwriting criteria

on these loan participations and syndicated loans, these loans may havea higher risk of loss than loans we originate and administer.In such

transactions in which we are not the lead lender, we rely in part on the lead lender orthe agent, as the case may be, to monitor the

performance of the loan and provide information that we use to classify the loan andassociated loan loss provisions. If our underwriting or

monitoring of these loans is not sufficient, our non-performing loans may increaseand our earnings may decrease.

Our levels of non-performing assets could increase, which would adverselyaffect our results of operations and financial

condition and could result in losses in the future.

As of December 31, 2022, our non-performing loans (which consist of non-accrualloans, loans past due 90 days or more and still

accruing interest and loans modified under troubled debt restructurings that arenot performing in accordance with their modified terms)

totaled $12 million and our non-performing assets (which includenon-performing loans plus other real estate owned) totaled $13 million.

However, we can give no assurance that our non-performing assets will continueto remain at these levels and we may experience increases

in non-performing assets in the future. Non-performing assets adverselyaffect our management resources, net income, risk profile and

capital maintenance levels, efficiency ratio and returns on assets and equity, anyof which may adversely affect us.

Our allowance may not be adequate to cover actual credit losses onloans.

A significant source of risk arises from the possibility that we could sustain losses due to loan defaults and non-performance onloans.

We maintain an allowance in accordance with GAAP to provide for such defaults and other non-performance. The amount offuture losses is

susceptible to changes in economic, operating and other conditions, includingchanges in interest rates and inflationary or recessionary

trends,many of which are beyond our control. We early adopted the Current Expected Credit Losses(“CECL”) model on January 1, 2022;

under CECL, we are required to use historical information, current conditionsand reasonable forecasts to estimate the expected loss over the

life of the loan. Our underwriting policies, adherence to credit monitoring processes andrisk management systems and controls may not

prevent unexpected losses. Our allowance may not be adequate to coveractual loan losses. Moreover, any increase in our allowance will

adversely affect our net income and regulatory capital.

We rely on our senior management team and may have difficultyidentifying, attracting and retaining necessary personnel,

which may divert resources and limit our ability to execute our businessstrategy and successfully grow our business.

Our continued growth and successful operation of our business depends,in large part, on our ability to hire and retain highly qualified

and motivated personnel at every level. Our senior management team hassignificant industry experience,and their knowledge and

relationships would be difficult to replace in the event of departure or retirement.We must also hire and retain qualified banking personnel to

continue to grow our business. Competition for skilled personnel inthe financial services and banking industry is significant and costs

associated with incenting and retaining skilled personnel may be materialand continue to increase. If we are unable to hire and retain

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qualified personnel or successfully address management succession issues, we maybe unable to successfully execute our business strategy

and manage our growth, which could have a material adverse effect on ourbusiness, financial condition or results of operations.

We rely on short-term funding, which can be adversely affected by local andgeneral economic conditions.

As of December 31, 2022, approximately$5 billion, or 83%, of our deposits consisted of demand, savings, money market and

transaction accounts (including negotiable order of withdrawal accounts). Theapproximately $1 billion remaining balance of deposits

consisted of certificates of deposit, of which approximately $589 million, or10% of our total deposits, was due to mature within one year.

Based on our experience, we believe that our savings, money market andnon-interest-bearing accounts are relatively stable sources of funds.

Our ability to attract and maintain deposits, as well as our cost of funds, has beenand will continue to be significantly affected by general

economic conditions. In addition, as market interest rates rise, we will continueto have competitive pressure to increase the rates we pay on

deposits. If we continue to increase interest rates paid to retain deposits, our earningsmay be adversely affected.

Our largest deposit relationships currently make up a significant percentageof our deposits and the withdrawal of deposits

by our largest depositors could force us to fund our business throughmore expensive and less stable sources.

At December 31, 2022, our 25 largest depositors accounted for 25% of our totaldeposits and our five largest depositors accounted for

12% of our total deposits. Withdrawals of deposits by any one of our largest depositorsor by one of our related client groups could force us

to rely more heavily on borrowings and other sources of funding to meet business andwithdrawal demands, adversely affecting our net

interest margin and results of operations. Such circumstances may requireus raise deposit rates to attract new deposits and rely more heavily

on other funding sources that could be more expensive and less stable. Under applicableregulations, if the Company was no longer “well-

capitalized,” we would be required to obtain FDIC approval to acceptbrokered deposits and could also be subject to a deposit rate cap

prohibiting us from paying in excess of 75 basis points above national deposit rates.

Liquidity risk could impair our ability to fund operations and meet ourobligations as they become due and failure to

maintain sufficient liquidity could materially adversely affect our growth,business, profitability and financial condition.

Liquidity is essential to our business, sufficient levels of which are required tofund asset growth, serve client demand for loans, pay

our debt obligations and meet other cash commitments. Liquidity risk is the potentialthat we will be unable to meet our obligations as they

come due because of an inability to liquidate assets or obtain adequatefunding without adverse conditions or consequences. Liquidity risk

can increase due to a number of factors, including an over-reliance on a particularsource of funding, market-wide phenomena such as market

dislocation and major disasters and a high concentration of large depositors.The Bank’s primary funding source is client deposits. Other

sources of funding may include advances from the Federal Home Loan Bank (“FHLB”),the Federal Reserve Bank of Kansas City (“FRB”)

and our acquisition of brokered deposits, internet subscription certificates of depositand reciprocal deposits through the Intrafi Network.

Although the Bank has historically been able to replace maturing depositsand advances as necessary, it might not be able to replace such

funds in the future. An inability to raise funds through deposits, borrowings, the sale of loans, securities and other sources couldhave a

substantial negative effect on liquidity. Any substantial, unexpected or prolonged change in the level or cost of liquiditycould have a material

adverse effect on our financial condition and results of operations and couldimpair our ability to fund operations and meet our obligations as

they become due and could jeopardize our financial condition.

We may not be able to maintain sufficient capital in the future, whichmay adversely affect our financial condition, liquidity,

results of operations and our ability to maintain regulatory compliance.

Our business strategy calls for continued growth. We may need to raise additional capitalin the future to support our continued

growth and to maintain our required regulatory capital levels. Our abilityto raise additional capital depends on conditions in the capital

markets, economic conditions and a number of other factors, including investorperceptions regarding the banking industry, market

conditions and governmental activities, our financial condition and performanceand competition with other financial institutions for capital

sources. We cannot guarantee that we will be able to raise additional capital in the futureon acceptable terms, which may adversely affect our

liquidity, growth strategy, financial condition and results of operations.

We face strong competition from banks, credit unions, financialtechnology or Fintech companies and other financial

services providers that offer banking services, which may limit our abilityto attract and retain banking clients.

Competition in the banking industry generally, and in our primary marketsspecifically, is intense. Competitors include banks and

other financial services providers, such as savings and loan institutions, brokeragefirms, credit unions, mortgage banks and other financial

intermediaries. In particular, we compete with larger national and regionalfinancial institutions, whose greater resources afford them many

competitive advantages.Such resources may enable our competitors to achieve larger economies ofscale; offer more services; spend more

on advertising and technological investments; offer better lending rates toclients; better diversify their loan portfolio; and have less

vulnerability to downturns in local economies and real estate markets.If we are unable to offer competitive products and services as quickly

as our larger competitors, our business may be negatively affected. We also competeagainst community banks, credit unions and nonbank

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financial services companies with strong local ties to small- andmedium-sized businesses that we target, and we may be unable to attract and

retain such clients as effectively as these smaller competitors.Additionally, we face growing competition from so-called “onlinebusinesses”

with few or no physical locations, including financial technology companies,online banks, lenders and consumer and commerciallending

platforms and automated retirement and investment service providers.New technology and other changes increasingly allow parties to

effectuate online financial transactions with little to no involvement frombanks, including bill payment, funds transfers and maintenance of

funds in brokerage accounts or mutual funds that would have historically beenheld as bank deposits.The process of eliminating banks as

intermediaries, known as “disintermediation,” could reduce ourincome from fees and deposits. Ultimately, we may be unable to compete

successfully against current and future competitors, which may reduceour revenue stream and prevent us from growing our loan and deposit

portfolios, any of which may adversely affect our results of operations and financialcondition.

Our risk management framework may not be effective in mitigatingrisks or losses to us, and we may incur losses due to

ineffective risk management processes and strategies.

Our risk management framework is comprised of various processes, systems andstrategies designed to manage our risk exposure,

including credit, liquidity, interest rate, price, operational, reputation,strategic and compliance risks. Our framework also includes financial

or other modeling methodologies that involve highly subjective managementassumptions and judgment. Our risk management framework

may not be effective under all circumstances and may not adequately mitigaterisks or losses, which could result in adverse regulatory

consequences and unexpected losses and our business, financial condition,results of operations or growth prospects could be materially and

adverselyaffected. We may also be subject to potentially adverse regulatory consequences.

We are required to make significant judgments, assumptions andestimates in the preparation of our financial statements and

our judgments, assumptions and estimates may not be accurate.

The preparation of financial statements and related disclosures in conformitywith GAAP requires us to make judgments, assumptions

and estimates that affect the amounts reported in our consolidated financialstatements and accompanying notes. Our critical accounting

policies and estimates, which are included in the section captioned “Management’sDiscussion and Analysis of Financial Condition and

Results of Operations,” describe those significant accounting policies andestimates used in the preparation of our consolidated financial

statements that we consider “critical” because they require judgments,assumptions and estimates that materially affect our consolidated

financial statements and related disclosures. As a result, if future events or regulatory views concerning such analysis differsignificantly

from the judgments, assumptions and estimates in our critical accountingpolicies and estimates, those events or regulatory views could have

a material impact on our consolidated financial statements and related disclosures,in each case resulting in our need to revise or restate prior

period financial statements, cause damage to our reputation and the priceof our common stock and adversely affect our business, financial

condition and results of operations.

If we fail to maintain effective internal control over financial reporting,we may not be able to report accurate and timely

financial results, which may cause material harm to our business.

Our management team is responsible for establishing and maintainingadequate internal control over financial reporting and for

evaluating and reporting on that system of internal control. Our internalcontrol over financial reporting is a process designed to provide

reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in

accordance with GAAP. As a public company, we are required to comply with the Sarbanes-Oxley Act and other rules that govern public

companies. Unless we remain an emerging growth company, our independentregistered public accounting firm may be required to provide

an attestation report on the effectiveness of our internal control over financial reporting. We will continueto periodically test and update, as

necessary, our internal control systems, including our financial reportingcontrols. Our actions, however, may not be sufficient to result in an

effective internal control environment,and any future failure to maintain effective internal control over financial reporting couldimpair the

reliability of our financial statements which in turn could harm our business, impairinvestor confidence in the accuracy and completeness of

our financial reports and our access to the capital markets, cause the price ofour common stock to decline and subject us to regulatory

penalties.

Failure to keep pace with technological change could adversely affectour business.

Advances and changes in technology could significantly affect our business, financialcondition, results of operations and future

prospects. The financial services industry is continually undergoing rapid technologicalchange with frequent introductions of new

technology-driven products and services. Failure to successfully keep pacewith technological change affecting our industry could harm our

ability to compete effectively. Many of our competitors have substantiallygreater resources to invest in technological improvements. We face

many challenges, including the increased demand to provide clients electronicaccess to their accounts and the cost and implementation of

systems to perform electronic banking transactions. Our ability to competedepends on our ability to continue to adapt technology on a timely

and cost-effective basis to meet these demands. We may not be able to effectively or timelyimplement new technology-driven products and

services or be successful in marketing these products and services to our clients. As these technologies are improvedin the future, we may be

22

required to make significant capital expenditures in order to remain competitive,which may increase our overall expenses and have a

material adverse effect on our business, financial condition, results of operationsand cash flows.

We are exposed to cybersecurity threats and potential security breachesand our efforts to minimize or respond to such

threats may not be effective to prevent significant harm to the Company.

We conduct a portion of our business over the Internet. We rely heavily upon data processing,software, communications and

information systems from a number of third parties to conduct our business. Ourbusiness involves the storage and transmission of clients’

proprietary information and security breaches could expose us to the riskof loss or misuse of such information, litigation and potential

liability. Our operations are vulnerable to disruptions from humanerror, natural disasters, power loss, computer viruses, spam attacks, denial

of service attacks, unauthorized access and other unforeseen events.Undiscovered data corruption could render our client information

inaccurate. Third-party or internal systems and networks may fail to operateproperly or become disabled due to deliberate attacks or

unintentional events. Security breaches and cyberattacksmay cause significant increases in operating costs, including the costs of

compensating clients for any resulting losses they may incur and thecosts and capital expenditures required to correct the deficiencies in and

strengthen the security of data processing and storage systems.

While we believe we are in compliance with all applicable privacy and data securitylaws, an incident could put our client’s

confidential information at risk and expose us to significant liability. Wehave been the target of data and cyber security attacks andmay

experience attacks in the future. While we have not experienced a material cyber-incidentor security breach that has been successful in

compromising our data or systems to date, we can never be certain that all of oursystems are entirely free from vulnerability to breaches of

security or other technological difficulties or failures. Theperpetual evolution of known cyber-threats requires us to devote significant

resources to maintain, regularly update and backup our data securitysystems and processes, as we may not be able to anticipate, or

effectively implement preventative measures against, all cyber-attacks. A security breach or other cyber-incident could have an adverse

impact on, among other things, our revenue, ability to attract and maintainclients and our reputation. In addition, a security breach could also

subject us to additional regulatory scrutiny and expose us to civil litigation andpossible financial liability, all of which could have a material

adverse effect on our business, financial condition, results of operations,system availability and operational support.

We rely on client, counterparty and third-party information, which subjectsus to risks if that information is not accurate or

is incomplete.

In deciding whether to extend credit or enter into other transactions with clients andcounterparties, we rely on information furnished

to us by or on behalf of clients and counterparties, including financial statements andother financial information. We also rely on

representations of clients and counterparties as to the accuracy and completenessof that information and, with respect to financial statements,

on reports of independent auditors. While we have a practice of seeking to independently verifyclient information that we use in deciding

whether to extend credit or to agree to a loan modification, including employment,assets, income and credit score, not all client information

is independently verified and if any of the information that is independentlyverified (or any other information considered in the loan review

process) is misrepresented and such misrepresentation is not detected priorto loan funding, the value of the loan may be significantly lower

than expected. Whether a misrepresentation is made by the applicant, another third partyor one of our employees, we generally bear the risk

of loss associated with the misrepresentation. We may not detect all misrepresented informationin our approval process. Any such

misrepresented information could adversely affect our business, financial conditionand results of operations.

We are subject to certain operating risks related to employee error andclient, employee and third-party misconduct, which

could harm our reputation and business.

Employee error or employee and client misconduct could subject us to financiallosses or regulatory sanctions and seriously harm our

reputation. Misconduct by our employees could include hiding unauthorizedactivities from us, improper or unauthorized activities on behalf

of our clients or improper use of confidential information. It is not always possible toprevent employee error or misconduct and the

precautions we take to prevent and detect this activity may not be effective inall cases. Because the nature of the financial services business

involves a high volume of transactions, certain errors may be repeatedor compounded before they are discovered and successfully rectified.

Our necessary dependence upon processing systems to record and processtransactions and our large transaction volume may further increase

the risk that employee errors, tampering or manipulation of those systems will result in lossesthat are difficult to detect. Employee error or

misconduct could also subject us to financial claims. If our internal controlsystems fail to prevent or detect an occurrence, it could have a

material adverse effect on our business, financial condition and results of operations.

Fraudulent activity could damage our reputation, disrupt our businesses,increase our costs and cause losses.

As a financial institution, we are inherently exposed to operational risk in the form oftheft and other fraudulent activity by employees,

clients and other third parties targeting us and our clients or data. Such activitymay take many forms, including check fraud, electronic fraud,

wire fraud, phishing, social engineering and other dishonest acts. Although the Company devotes substantial resourcesto maintaining

effective policies and internal controls to identify and prevent such incidents,given the increasing sophistication of possible perpetrators, the

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Company may experience financial losses or reputational harm as a result offraud. In addition, we may be required to make significant

capital expenditures in order to modify and enhance our protective measures orto investigate and remediate fraudulent activity. Although we

have not experienced any material business or reputational harm as a result of fraudulentactivities in the past, the occurrence of fraudulent

activity could damage our reputation, disrupt our business, increaseour costs and cause losses in the future.

Our operations could be interrupted if our third-party service providersexperience difficulty, terminate their services or fail

to comply with banking regulations.

We depend, to a significant extent, on a number of relationships with third-partyservice providers. Specifically, we receive core

systems processing, essential web hosting and other internet systems, loanand deposit processing and other processing services from third-

party service providers. If these third-party service providers experiencefinancial, operational or technological difficulties or terminate their

services and we are unable to replace them with other service providers,our operations could be interrupted. If an interruption were to

continue for a significant period of time, our business, financial conditionand results of operations could be adversely affected, perhaps

materially. Even if we are able to replace our service providers, it may be at a highercost to us, which could adversely affect our business,

financial condition and results of operations.

We follow a relationship-based operating model and negative public opinioncould damage our reputation and adversely

impact our earnings.

Reputation risk, or the risk to our business, earnings and capital from negativepublic opinion, is inherent in our business. Negative

public opinion can result from our actual or alleged conduct in any numberof activities, including lending practices, corporate governance,

acquisitions, and from actions taken by government regulators and communityorganizations in response to those activities. Negative public

opinion can adversely affect our ability to keep and attract clients and employeesand can expose us to litigation and regulatory action and

adversely affect our results of operations. Although we take steps to minimize reputation risk in dealing with ourclients and communities,

this risk will always be present given the nature of our business.

If third parties infringe upon our intellectual property or if we wereto infringe upon the intellectual property of third parties,

we may expend significant resources enforcing or defending our rights orsuffer competitive injury.

We rely on a combination of copyright, trademark, trade secret laws and confidentialityprovisions to establish and protect our

intellectual property rights. If we fail to successfully maintain, protect andenforce our intellectual property rights, our competitive position

could suffer. Similarly, if we were to infringe on the intellectual property rights ofothers, our competitive position could suffer. Third parties

may challenge, invalidate, circumvent, infringe or misappropriate ourintellectual property, or such intellectual property may not be sufficient

to permit us to take advantage of current market trends or otherwise to providecompetitive advantages, which could result in costly redesign

efforts, discontinuance of certain product or service offerings or othercompetitive harm.

We may also be required to spend significant resources to monitor and police ourintellectual property rights. Some of our competitors

may independently develop similar technology, duplicate our productsor services or design around our intellectual property and in such

cases we may not be able to assert our intellectual property rights against such parties.Further, our contractual arrangements may not

effectively prevent disclosure of our confidential information or providean adequate remedy in the event of unauthorized disclosure of our

confidential or proprietary information. We may have to litigate to enforce or determinethe scope and enforceability of our intellectual

property rights, trade secrets and know-how, which could be time-consumingand expensive, could cause a diversion of resources and may

not prove successful. The loss of intellectual property protection or the inabilityto obtain rights with respect to third-party intellectual

property could harm our business and ability to compete. In addition, becauseof the rapid pace of technological change in our industry,

aspects of our business and our products and services rely on technologies developedor licensed by third parties and we may not be able to

obtain or continue to obtain licenses and technologies from these third parties on reasonableterms or at all.

We may be exposed to risk of environmental liabilities or failure to comply withregulatory requirements with respect to

properties to which we take title.

In the course of our business, we may foreclose and take title to real estate andthese properties could subject us to environmental

liabilities and other federal, state or local regulatory requirements, such as the Americans with Disabilities Act. We do not know whether

existing requirements will change or whether compliance with future requirementswill involve significant expenditures. We may be held

liable to a governmental entity or to third parties for property damage, personalinjury, investigation and clean-up costs incurred by these

parties in connection with environmental contamination, or we may berequired to investigate or clean up hazardous or toxic substances, or

chemical releases at a property. The costs associated with these investigation or remediationactivities could be substantial. In addition, if we

are the owner or former owner of a contaminated site, we may be subject to claims anddamages from third parties related to environmental

contamination emanating from the property. In addition, we could berequired to cure deficiencies with local building codes, requirements

under the Americans with Disabilities Act, or other federal, state or local property regulation requirements. If we ever become subject to

24

significant environmental liabilities or costs or fail to comply with regulatory requirementswith respect to these properties, our business,

financial condition, liquidity and results of operations could be materiallyand adversely affected.

The costs and effects of litigation, regulatory actions, investigationsor similar matters, or adverse facts and developments

related thereto, could materially affect our business, operating resultsand financial condition.

We may be involved from time to time in a variety of litigation, investigations orsimilar matters arising out of our business. It is

inherently difficult to assess the outcome of these matters and we maynot prevail in proceedings or litigation. Insurance may not cover all

such claims or losses, our indemnification rights may not be honored andwe may suffer damage to our reputation, regardless of the merit or

eventual outcome of a claim. The ultimate judgments or settlements in any litigation or investigationcould have a material adverse effect on

our business, financial condition and results of operations. In addition,premiums for insurance covering the financial and banking sectorsare

rising. We may not be able to obtain appropriate types or levels of insurance in the future, nor maywe be able to obtain adequate replacement

policies with acceptable terms or at historic rates, if at all.

We also participated in the Paycheck Protection Program, or PPP, a governmentlending program implemented to aid individuals and

businesses in connection with the COVID-19 pandemic. As of December 31, 2022, approximately $500 millionhave been forgiven by the

Small Business Administration, and we continued to hold PPP loans receivable of $3 million. We have credit risk on PPP loans if a

determination is made by the Small Business Administration that there is a deficiency in the manner in which a PPP loan was originated,

funded, or serviced by us, such as an issue with the eligibility of a borrower to receivea PPP loan. Since the inception of the PPP, many

banks have been subject to litigation related to agent fees and application processing.We and other banks may also be subject to the risk of

litigation in connection with other aspects of the PPP, including but notlimited to borrowers seeking forgiveness of their loans. As a result of

our ongoing and future participation in the PPP and similar government stimulus and relief programs, we mayexperience losses arising from

fraud, litigation or regulatory action.

Financial counterparties expose the Company to risks.

We maintain correspondent bank relationships, manage certain loanparticipations, engage in securities transactions and engage in

other activities with financial counterparties that are customary to ourindustry. Many of these transactions expose us to counterparty credit,

liquidity and/or reputational risk in the event of default by the counterparty,negative publicity and complaints about the counterparty or the

financial services industry in general. Although we seek to manage these risks through internal controls and procedures,we may experience

loss or interruption of business, damage to our reputation, or incur additionalcosts or liabilities as a result of unforeseen events with these

counterparties. Any financial cost, liability or reputational damage could have a material adverse effect on ourbusiness, which in turn, could

have a material adverse effect on our financial condition and results of operations.

Severe weather, natural disasters, pandemics and other external events couldsignificantly impact our business.

Severe weather, including tornadoes, droughts and hailstorms, as well as wildfiresand other natural disasters, pandemics, acts of war

or terrorism and other adverse external events could have a significant impact onour ability to conduct business. Such events could affect the

stability of our deposit base, impair the ability of borrowers to repay outstandingloans, impair the value of collateral securing loans, cause

significant property damage, result in loss of revenue or cause us to incur additionalexpenses. Operations in our markets could be disrupted

by both the evacuation of large portions of the population as well as damage orlack of access to our banking and operation facilities. Military

and political conflicts, including the current military conflict between Russia andUkraine, may increase volatility in commodity and energy

prices, create supply chain issues and cause instability in financial markets, whichmay adversely affect us and our clients. Other severe

weather or natural disasters, pandemics, acts of war or terrorism or other adverseexternal events may occur in the future. Although

management has established business continuity plans and procedures, theoccurrence of any such events could have a material adverse effect

on our business, financial condition and results of operations.

The further spread of COVID-19 and its variants may adversely impact ourbusiness, financial condition and results of

operations in the short-term and for the foreseeable future.

The COVID-19 pandemic caused significant disruption to economicactivity and financial markets and adversely impacted our

business, financial condition and results of operations. Given the ongoingand dynamic nature of COVID-19 and its variants, the ultimate

effects on the broader economy and the markets in which we serve continue to be uncertainand difficult to predict. Future impacts to our

business and clients could be widespread and material, such as increased unemployment,continued supply-chain interruptions, declines in

demand for loans and other banking services and products, reductionin business activity and financial transactions, increased commercial

property vacancy rates, declines in the value of loan collateral, including energyand real-estate collateral, declines in the credit quality of our

loan portfolio, volatile performance of our investment securities portfolio,and overall economic and financial market instability. In addition,

actions taken by governmental and regulatory authorities in response to thepandemic have impacted, and may continue to impact, the

banking and financial services industries. Additional regulation may be enacted in the future that could furtherimpact our business.

25

Risks Relating to Our Regulatory Environment

We are subject to extensive regulation, which increases the cost andexpense of compliance and could limit or restrict our

activities, which in turn may adversely impact our earnings and abilityto grow.

We operate in a highly regulated environment and are subject to regulation,supervision and examination by a number of governmental

regulatory agencies, including, with respect to the Bank, the FDIC and theOSBCK and, with respect to the Company, the Federal Reserve.

Regulations adopted by these agencies govern a comprehensive range ofmatters relating to ownership and control of our shares, our

acquisition of other companies and businesses, permissible activities forus to engage in, maintenance of adequate capital levels, dividend

payments and other aspects of our operations. Bank regulators possess broad authorityto prevent or remedy unsafe or unsound practices or

violations of law. If, as a result of an examination, a banking agency determinesthat an aspect of our operations is unsatisfactory, or that we

are, or our management is, in violation of any law or regulation, they maytake a number of different remedial actions as they deem

appropriate. These actions include the power to enjoin ‘‘unsafe or unsound’’ practices, to require affirmative action to correct any conditions

resulting from any violation or practice, to issue an administrative order thatcan be judicially enforced, to direct an increase in our capital, to

restrict our growth, to assess civil money penalties against us or our officers or directors,to fine or remove officers and directors and, if it is

concluded that such conditions cannot be corrected or there is an imminentrisk of loss to depositors, to terminate the Bank’s FDIC deposit

insurance and place the Bank into receivership or conservatorship. Any regulatory action against us couldhave a material adverse effect on

our business, financial condition and results of operations.

Government policy, legislation and regulation, particularly monetarypolicy from the Federal Reserve, significantly affect economic

growth and financial operations, including our distribution of credit, bankloans, investments, deposits, product offerings and disclosures,

interest rates and bankruptcy proceedings for consumer residential realestate mortgages. The laws and regulations applicable to the banking

industry could change at any time and we cannot predict the effects of these changeson our business, profitability or growth strategy.

Increased regulation could increase our cost of compliance, adverselyaffect profitability and inhibit our ability to conduct business consistent

with historical performance. If we do not comply with governmental regulations,we may be subject to fines, penalties, lawsuits or material

restrictions on our businesses and growth that may damage our reputationand adversely affect our business operations. Proposed legislative

and regulatory actions may not occur within expected time frames, or at all, whichcreates additional uncertainty for our business and

industry.Accordingly, legislative and regulatory actions taken now or inthe future could have a material adverse impact on our business,

financial condition and results of operation.

Many of our expansion and growth plans require regulatory approvalsand failure to obtain them may restrict our growth.

As part of our growth strategy, we may expand our business by pursuingstrategic acquisitions of financial institutions, adding

branches and pursuing acquisitions of other complementary businesses. Generally,we must receive federal and state regulatory approval

before we can acquire an FDIC-insured depository institution orrelated business. In determining whether to approve a proposed acquisition,

federal and state banking regulators will consider, among other factors,the effect of the acquisition on competition, our financial condition,

our future prospects and the impact of the proposal on U.S. financial stability. The regulators also reviewcurrent and projected capital ratios,

the competence, experience and integrity of management and its recordof compliance with laws and regulations, the convenience and needs

of the communities to be served and the effectiveness of the acquiring institutionin combating money laundering activities.

The Federal Reserve may require the Company to commit capital resourcesto support the Bank.

As a matter of policy, the Federal Reserve expects a bank holding company to actas a source of financial and managerial strength to

its subsidiary banks.The Federal Reserve may charge the bank holding company with engaging in unsafeand unsound practices for failure to

adequately commit resources to a subsidiary bank. Accordingly, we may be required to make capital injectionsinto a troubled subsidiary

bank, even if such contribution creates a detriment to the Company or its stockholders.If we do not have sufficient resources on hand to fund

the capital injection, we may be required to borrow funds or raise capital.Any such loans are subordinate in right of payment to deposits and

to certain indebtedness of the subsidiary bank. In the event of bankruptcy ofthe bank holding company, claims based upon any commitments

to fund capital injections are entitled to a priority of payment over claims made bygeneral unsecured creditors, including holders of

indebtedness. Thus, any borrowing incurred by the Company to make required capitalinjections to the Bank could adversely impact our

financial condition, results of operations and future prospects. Additionally, under the Financial Institutions ReformRecovery and

Enforcement Act of 1989 (“FIRREA”), losses caused by a failing bank subsidiary might be charged to the capital of anaffiliate bank.

Moreover, any bank operating under the Company’s common controlmay also be required to contribute capital to a failing affiliate bank

within the Company’s control group. This is known as FIRREA’s “cross-guarantee”provision. The Company currently has one bank

subsidiary.

The Company and the Bank are subject to stringent capital requirementsthat may limit our operations and potential growth.

The Company and the Bank are subject to various regulatory capital requirements.Failure to meet minimum capital requirements will

result in certain mandatory and discretionary actions by regulators that, if undertaken,could have a direct material effect on our financial

26

statements. Under capital adequacy guidelines and the regulatoryframework for prompt corrective action, the Company and the Bank must

meet specific capital guidelines that involve quantitative measures of ourassets, liabilities and certain off-balance sheet commitments as

calculated under these regulations. In order to be a “well-capitalized” depositoryinstitution under prompt corrective action standards (but

without taking into account the capital conservation buffer requirement describedbelow), a bank must maintain a CET1 risk-based capital

ratio of 6.5% or more, a tier 1 risk-based capital ratio of 8.0% or more, a total risk-basedcapital ratio of 10.0% or more and a leverage ratio

of 5.0% or more (and is not subject to any order or written directive specifyingany higher capital ratio). The failure to meet the established

capital requirements under the prompt corrective action framework could resultin one or more of our regulators placing limitations or

conditions on our activities, including our growth initiatives, or restrictingthe commencement of new activities and such failure could

subject us to a variety of enforcement remedies available to the federalregulatory authorities, including limiting our ability to pay dividends,

issuing a directive to increase our capital and terminating the Bank’s FDIC depositinsurance, which is critical to the continued operation of

the Bank.

Including the capital conservation buffer requirement, the Companyand the Bank must effectively maintain a CET1 capital ratio of

7.0% or more, a tier 1 risk-based capital ratio of 8.5% or more, a total risk-basedcapital ratio of 10.5% or more and, for the Bank, a leverage

ratio of 5.0% or more and for the Company, a leverage ratio of 4.0% or more.Many factors affect the calculation of our risk-based assets and

our ability to maintain the level of capital required to achieve acceptable capitalratios, such as increases to our risk-weighted assets, loan

impairments, loan losses exceeding the amount reserved for such losses andother factors that decrease our capital, thereby reducingthe level

of the applicable ratios. Our failure to remain well-capitalized could affect clientand investor confidence, our ability to grow, our costs of

funds, the interest rates that we pay on deposits, FDIC insurance costs, ourability to pay dividends on common stock, our ability to make

acquisitions and our business, results of operations and financial condition.

Higher FDIC deposit insurance premiums and assessments could adverselyaffect our financial condition.

Our deposits are insured up to applicable limits by the DIF and are subjectto deposit insurance assessments to maintain deposit

insurance. As an FDIC-insured institution, we are required to pay quarterly deposit insurance premium assessments to theFDIC. Growth in

insured deposits at FDIC-insured financial institutions in recent years causedthe ratio of the DIF to total insured deposits to fall below the

current statutory minimum, and the FDIC has approved an increase in the baseassessment rates to increase the likelihood that the reserve

ratio of the DIF reaches the statutory minimum level by the statutory deadline. Although we cannot predict whatthe insurance assessment

rates will be in the future, either a deterioration in our risk-based capital ratios orfurther adjustments to the base assessment rates could have

a material adverse impact on our business, financial condition, results of operationsand cash flows.

We face a risk of noncompliance and enforcement action with respectto the Bank Secrecy Act and other anti-money

laundering statutes and regulations.

The BSA, the PATRIOT Act and other laws and regulations require financial institutions, among other duties, to institute andmaintain

an effective anti-money laundering program and to file reports such as suspiciousactivity reports and currency transaction reports. Violation

of such requirements may result in significant civil money penalties imposedby federal banking agencies and the U.S. Department of the

Treasury's Financial Crimes Enforcement Network, which agencieshave recently engaged in coordinated enforcement efforts against banks

and other financial services providers with the U.S. Department of Justice (“DOJ”), theDrug Enforcement Administration and the IRS. We

are also subject to increased scrutiny of compliance with the rules enforcedby the OFAC, which may require sanctions for dealing with

certain persons or countries. If the policies, procedures and systems of ourcompany, or any of our subsidiaries, are deemed deficient, we

would be subject to fines and regulatory actions, which may include restrictionson our ability to pay dividends and requirements to obtain

regulatory approvals to proceed with certain aspects of our business plan, includingour acquisition plans. Failure to maintain and implement

adequate programs to combat money laundering and terrorist financingcould also have serious reputational consequences for us. Any of

these results could have a material adverse effect on our business, financial condition,results of operations and growth prospects.

Regulations relating to privacy, information security and data protectioncould increase our costs, affect or limit how we

collect and use personal information and adversely affect our businessopportunities.

We are subject to various privacy, information security and data protection laws, includingrequirements concerning security breach

notification and we could be negatively impacted by these laws. For example,our business is subject to the Gramm-Leach-Bliley Act which,

among other things: (i) imposes certain limitations on our ability to share non-publicpersonal information about our clients with non-

affiliated third parties; (ii) requires that we provide certain disclosures to clients aboutour information collection, sharing and security

practices and afford clients the right to “opt out” of any information sharing by us withnon-affiliated third parties (with certain exceptions);

and (iii) requires that we develop, implement and maintain a written comprehensiveinformation security program containing safeguards that

are appropriate based on our size and complexity, the nature and scope ofour activities and the sensitivity of client information we process,

as well as plans for responding to data security breaches. Many state andfederal banking regulators, states and foreign countries have also

enacted data security breach notification requirements with varying levelsof individual, consumer, regulatory or law enforcement

notification in certain circumstances in the event of a security breach. Moreover,legislators and regulators in the United States and other

countries are increasingly adopting or revising privacy, information securityand data protection laws that potentially could have a significant

impact on our current and planned privacy, data protection and informationsecurity-related practices, our collection, use, sharing, retention

27

and safeguarding of client or employee information and some of our currentor planned business activities. This could also increase our costs

of compliance and business operations and could reduce income from certainbusiness initiatives. This includes increased privacy-related

enforcement activity at the federal level by the Federal Trade Commission, as well as at the state level.

Compliance with current or future privacy, data protection and informationsecurity laws (including those regarding security breach

notification) affecting client or employee data to which we are subject could resultin higher compliance and technology costs and could

restrict our ability to provide certain products and services, which could havea material adverse effect on our business, financial conditions

or results of operations. Our failure to comply with privacy, data protection andinformation security laws could result in potentially

significant regulatory or governmental investigations or actions, litigation,fines, sanctions and damage to our reputation, which could have a

material adverse effect on our business, financial condition or results of operations.

We face increased risk under the terms of the CRAas we accept additional deposits in new geographic markets.

Under the terms of the CRA, each appropriate federal bank regulatoryagency is required, in connection with its examination of a

bank, to assess such bank’s record in assessing and meeting the credit needs ofthe communities served by that bank, including low- and

moderate-income neighborhoods. During these examinations, the regulatoryagency rates such bank’s compliance with the CRA as

“Outstanding,” “Satisfactory,” “Needs to Improve” or “Substantial Noncompliance.”The Bank had a CRA rating of “Satisfactory” as of its

most recent CRA assessment. The regulatory agency’s assessment of an institution’s record is part of the regulatory agency’s considerationof

applications to acquire, merge or consolidate with another bankinginstitution or its holding company, or to open or relocate a branch office.

As we accept additional deposits in new geographic markets, we will be requiredto maintain an acceptable CRA rating, which may be

difficult.

We are subject to numerous laws designed to protect consumers, includingthe CRA and fair lending laws andfailure to

comply with these laws could lead to a wide variety of sanctions.

The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose

nondiscriminatory lending requirements on financial institutions. The U.S. Departmentof Justice and other federal agencies are responsible

for enforcing these laws and regulations. A successful regulatory challenge to an institution’s performance under the CRA or fair lending

laws and regulations could result in a wide variety of sanctions, including damagesand civil money penalties, injunctive relief, restrictions

on mergers and acquisitions activity, restrictions on expansion and restrictionson entering new business lines. Private parties also could

challenge an institution’s performance under fair lending laws in private class actionlitigation. Such actions could have a material adverse

effect on our business, financial condition, results of operations andfuture prospects.

Risks Related to Our Common Stock

The price of our common stock could be volatile.

The market price of our common stock may be volatile and couldbe subject to wide price fluctuations in response to various

factors, some of which are beyond our control. These factors include, among otherthings, actual or anticipated variations in our quarterly or

annual results of operations; recommendations by securities analysts; operatingperformance or fluctuations in the stock price performance of

other companies that investors deem comparable to us; news reports relatingto trends, concerns and other issues in the financial services

industry generally; conditions in the banking industry such as credit qualityand monetary policies; domestic and international economic

factors unrelated to our performance; perceptions, general market conditionsand, in particular, developments related to market conditions for

the financial services industry; loss of investor confidence in the marketfor stocks; new technology used, or services offered, by competitors;

loss of investor confidence and changes in government regulations. If any of the foregoingoccurs, it could cause our stock price to fall and

may expose us to lawsuits that, even if unsuccessful, could be costly to defendand be a distraction to management.

Kansas law and the provisions of our articles of incorporation and bylawsmay have an anti-takeover effect and there are

substantial regulatory limitations on changes of control of bank holdingcompanies.

Kansas corporate law and provisions of our articles of incorporation and our bylawscould make it more difficult for a third party to

acquire us, even if doing so would be perceived to be beneficial by our stockholders.Furthermore, with certain limited exceptions, federal

regulations prohibit a person or company or a group of persons deemed to be“acting in concert” from, directly or indirectly, acquiring more

than 10% (5% if the acquirer is a bank holding company) of any class of our votingstock or obtaining the ability to control in any manner the

election of a majority of our directors or otherwise direct the management orpolicies of our Company without prior notice or application to

and the approval of the Federal Reserve. Accordingly, prospective investors need to be aware of and comply withthese requirements, if

applicable, in connection with any purchase of shares of our common stock.Collectively, provisions of our articles of incorporation and

bylaws and other statutory and regulatory provisions may delay, prevent ordeter a merger, acquisition, tender offer, proxy contest or other

transaction that might otherwise result in our stockholders receivinga premium over the market price for their common stock. Moreover, the

28

combination of these provisions effectively inhibits certain business combinations,which, in turn, could adversely affect the market price of

our common stock.

Future equity issuances could result in dilution, which could causethe price of our shares of common stock to decline.

We are generally not restricted from issuing additional shares of stock, upto the 200,000,000 shares of voting common stock and

5,000,000shares of preferred stock authorized in our articles of incorporation. We may issue additionalshares of our common stock in the

future in various transactions, including pursuant to current or futureequity compensation plans, upon conversions of preferred stock or debt,

upon exercise of warrants or in connection with future acquisitions or financings.If we choose to issue additional shares of our common

stock, or securities convertible into shares of our common stock, for any reason,the issuance would have a dilutive effect on the holders of

our common stock and could have a material negative effect on the marketprice of our common stock.

We may issue shares of preferred stock in the future, which couldmake it difficult for another company to acquire us or

could otherwise adversely affect holders of our common stock.

Our articles of incorporation authorize us to issue up to 5,000,000 sharesof one or more series of preferred stock. Our Board of

Directors has the power to set the terms of any series of preferred stockthat may be issued, including voting rights, dividend rights,

conversion rights, preferences over our voting common stock with respectto dividends or in the event of a dissolution, liquidation or winding

up and other terms. If we issue preferred stock in the future that has preference overour common stock with respect to payment of dividends

or upon our liquidation, dissolution or winding up, the rights of the holdersof our common stock or the market price of our common stock

could be adversely affected.

Our dividend policy may change without notice,and our future ability to pay dividends is subject to restrictions.

Holders of our common stock are entitled to receive only such dividends as ourBoard of Directors may declare out of funds legally

available for such payments. The Federal Reserve has indicated that bank holdingcompanies should carefully review their dividend policy in

relation to the organization’soverall asset quality, current andprospective earnings and capital level, composition and quality.Furthermore,

the Federal Reserve may prohibit payment of dividends that are deemedunsafe or unsound practice.Accordingly, any declaration and

payment of dividends on our common stock will depend upon many factors,including our earnings and financial condition, liquidity and

capital requirements, the general economic and regulatory climate, ourability to service any equity or debt obligations senior to our common

stock, our capital management policies and strategic plans; our growthinitiatives; and other factors deemed relevant by our Board of

Directors.Any such factor could adversely affect the amount of dividends, if any, paid to ourcommon stockholders. If declared, dividends

will be payable to the holders of shares of our common stock on a pro rata basis in accordancewith their shares held. If preferred shares are

issued, such shares may be entitled to priority over the common shares as to dividends.Other than the stock dividend provided to our

stockholders pursuant to our two-for-one stock split in 2018, we have no historyof paying dividends to holders of our common stock.

We are a bank holding company and our only source of cash, otherthan further issuances of securities, is distributions from

our wholly owned subsidiaries.

We are a bank holding company with no material activities other than activities incidentalto holding the common stock of the Bank.

Our principal source of funds to pay distributions on our commonstock and service any of our obligations, other than further issuances of

securities, would be dividends received from our wholly owned subsidiaries.Furthermore, our wholly owned subsidiaries are not obligated to

pay dividends to us and any dividends paid to us would depend on the earningsor financial condition of our wholly owned subsidiaries and

various business considerations. As is the case with all financial institutions, the profitability of our wholly ownedsubsidiaries is subject to

the fluctuating cost and availability of money, changes in interest rates and economicconditions in general. In addition, various federal and

state statutes limit the amount of dividends that our wholly owned subsidiariesmay pay to the Company without regulatory approval.

As an emerging growth company, or EGC, we utilize certain exemptionsfrom disclosure requirements which could make our

shares less attractive to investors and make it more difficult to compareour performance with other public companies.

As an “emerging growth company”, we may take advantage of certain exemptions fromvarious reporting requirements including, but

not limited to, not being required to comply with the auditor attestation requirementsof Section 404 of the Sarbanes-Oxley Act of 2002 and

reduced disclosure obligations regarding executive compensation.In addition, as an emerging growth company we are not required to

comply with new or revised financial accounting standards until privatecompanies are required to comply and we have not opted out of this

extended transition period. When a standard is issued or revised and it has different application datesfor public or private companies, we can

adopt the new or revised standard at the time private companies adopt thenew or revised standard. This may make comparison of our

financial statements with another public company which is neither an emerginggrowth company nor an emerging growth company which

has opted out of the extended transition period difficult or impossible because ofthe potential differences in accounting standards used. If

some investors find our shares less attractive as a result of our reliance onthese exemptions, the trading prices of our shares may be lower

than they otherwise would be.

29

ITEM 1B.UNRESOLVEDSTAFF COMMENTS

None.

ITEM 2.PROPERTIES

Our headquarters is located at 11440 Tomahawk Creek Parkway, Leawood, Kansas.Including our headquarters building, we operate

12 full-service banking centers located in: Leawood, Kansas; Wichita, Kansas; Kansas City,Missouri; Oklahoma City, Oklahoma; Tulsa,

Oklahoma; Dallas, Texas; Frisco, Texas; Phoenix, Arizona; Denver, Colorado; Colorado Springs, Colorado; and Clayton, New Mexico. We

own our headquarters building, our banking centers in Leawood, Kansas, Wichita, Kansas, OklahomaCity, Oklahoma and Clayton, New

Mexico and we lease the remainder of our locations. In addition, theCompany signed a second lease agreement in Dallas, Texas and a new

lease in Fort Worth, Texas.We anticipate these additional locations will be open to our clients in 2023. We believe that the leases to which we

are subject are generally on terms consistent with prevailing market terms. We also believe thatour facilities are in good condition and are

adequate to meet our operating needs for the foreseeable future.

ITEM 3.LEGAL PROCEEDINGS

In the normal course of business, we are named or threatened to be namedas defendant in various lawsuits. Management, following

consultation with legal counsel, does not expect the ultimate disposition ofany one matter or a combination of these matters to have a

material adverse effect on our business, financial condition, results of operations,cash flows or growth prospects. However, given the nature,

scope and complexity of the extensive legal and regulatory landscape applicableto our business (including laws and regulations governing

consumer protection, fair lending, fair labor, privacy, information security andanti-money laundering and anti-terrorism laws), we, like all

banking organizations, are subject to heightened legal and regulatorycomplianceand litigation risk.

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

INFORMATION ABOUTOUR EXECUTIVE OFFICERS

The following table sets forth certain information regarding our executiveofficers and the executive officers of the Bank, including

their names, ages and positions:

Name

Age as of March 3, 2023

Position(s)

Michael J. Maddox

53

President and Chief Executive Officer of the Company and

Chief Executive Officer of the Bank

W. Randall Rapp

58

President of the Bank

Benjamin R. Clouse

49

Chief Financial Officer of the Company and the Bank

Amy Fauss

56

Chief Human Resources Officer of the Company and the Bank

Steve Peterson

58

Chief Banking Officer of the Company and the Bank

Jana Merfen

41

Chief Technology Officer of the Company and the Bank

Amy Abrams

40

General Counsel and Corporate Secretary of the Company and

the Bank

Michael J. Maddox

—Mr. Maddox has served as President and Chief Executive Officer of the Companysince June 1, 2020, and as

Chief Executive Officer of the Bank since November 28, 2008. Healso served as President of the Bank from November 2008 until June

2022, when the roles of Chief Executive Officer and President ofthe Bank were split. Prior to joining the Bank, he was a Regional President

for Intrust Bank. In this role, he managed Intrust Bank’s operations in NortheastKansas. Mr. Maddox has over 20 years of banking

experience. Mr. Maddox attended the University of Kansas from which hereceived a Business degree and a law degree. While at KU, Mr.

Maddox was a four-year basketball letterman and a member of theKU team that won the National Championship in 1988. Mr. Maddox

completed the Graduate School of Banking at the University of Wisconsin - Madisonin 2003. Mr. Maddox is a member of the Economic

Development Board of Johnson County and serves on the Kansas City Civic Council.He has served on the board of CrossFirst Bank since

2008 and currently serves as Chairman of the Board of CrossFirst Bank.

W. Randall Rapp

—Mr. Rapp was appointed President of the Bank effective July 1, 2022. Heserved as the Chief Risk and Credit

Officer for the Bank from April 2021 until July 2022, and Chief Credit Officerof the Bank from April 2019 until April 2021. Prior to joining

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the Bank, Mr. Rapp held various positions at Texas Capital Bank, N.A. from March 2000 untilMarch 2019, including serving as Executive

Vice President and Chief Credit Officer from May 2015 until March 2019,and as a Senior Credit Officer from 2013 until May 2015. He has

more than three decades of commercial banking experience, most of whichhas been spent in credit management for private and public banks

in the Dallas/Fort Worthmetroplex. He earned a BBA in Accounting from The University of Texasat Austin and an MBA in Finance from

Texas Christian University.He is also a licensed CPA.Mr. Rapp is a memberof the CrossFirst Bank Board of Directors.

Benjamin R. Clouse

—Mr. Clouse has servedas Chief Financial Officer of the Company since July 2021, leading the financial

organization and overall long-range financial planningand reporting of the Company and the Bank, as well as supporting the execution of

the Bank's growth strategy.He also serves as Chief Financial Officer and Cashier of the Bank. Prior tojoining CrossFirst, Mr. Clouse served

as Chief Financial Officer of Waddell& Reed Financial, Inc., a financial services firm, from 2018 until its acquisitionin 2021. Mr. Clouse

held a variety of other senior leadership roles at Waddell& Reed between March 2016 and February 2018, including VicePresident and

Chief Accounting Officer,Vice President and Principal AccountingOfficer and VicePresident.Prior to joining Waddell & Reed,Mr.

Clouse served as Chief Financial Officer of ExecutiveAirShare Corporation, a private aviation company,from September 2012 to October

2015. From 2006 to 2012 and from 2002 to 2005, he served in variousroles with H&R Block, Inc., a tax preparation company in Kansas

City, Missouri, includingAssistant Vice President—Audit Servicesand Assistant Vice President andController—Tax Services. From2005

to 2006, Mr. Clouse served as VicePresident—Finance and Corporate Controller of Gold Bank Corporation,Inc., a bank holding company.

From September 1996 to January 2002, he served in various roles in the audit practiceof Deloitte. Mr. Clouse obtained a businessdegree and

a Master of Accountancy degree from Kansas State University.

Amy Fauss

—Ms. Fauss has served as Chief Human Resources Officer ofthe Company and the Bank since January 2021 and

previously served as the Chief Operating Officer of the Bank from December2009 until June 2022. Prior to joining CrossFirst, she served as

Executive Vice Presidentand Chief Operating Officer of Solutions Bank, where she directed all aspects ofdaily operations and human

resources. Her experience also includes senior management positionsat Hillcrest Bank and Citizens-Jackson County Bank. Ms. Fauss holds a

Bachelor of Science degree in Finance from Central Missouri State University andan MBA from University of Missouri – Kansas City.She

has also completed the Graduate School of Banking at the University ofWisconsin – Madison.

Steve Peterson—

Mr. Peterson has served as Chief Banking Officer since July 2020.Prior to this role, Mr. Peterson served as the

Wichita Bank President for CrossFirst Bank from August 2011 until his appointment to Chief Banking Officer. Priorto joining CrossFirst

Bank, Mr. Peterson served as Division President of Stillwater National Bankfrom 2004 to August 2011, where he expanded the bank into

new two new major markets in Texas. From 2002 to 2004, Mr. Peterson was the City President at Compass Bank.He served in roles of both

Vice President of Commercial Banking as well as Community Bank President for CommerceBank from 1998-2002. He spent several years

as an entrepreneur, owning and operating several restaurant franchise unitsfrom 1991-1998.From 1987 to 1991, he severed in several roles

at Bank IV, including Commercial Business Development. Mr. Petersonreceived his Bachelor of Science degree in Business Administration

from the University of Kansas.

Jana Merfen

—Ms. Merfen joined CrossFirst in January 2021as Chief Technology Officer. Prior to that she served as Chief

Information Officer of Dickinson Financial Corp. and Academy Bank from April 2017 to January 2021. Prior to working at Dickinson

Financial Corp. and Academy Bank, she worked at CommunityAmerica Credit Union where she was the Directorof Information Systems &

Enterprise Project Manager Officer from July 2016 to April 2017 and was the Director of Enterprise Risk Managementand Business Process

Operations from September 2014 to July 2016. Ms. Merfen has a degreein accounting from Miami University in Ohio.

Amy Abrams

– Ms. Abrams was appointed General Counsel and Corporate Secretary of the Company and the Bank in June 2022.As

General Counsel and Corporate Secretary, Ms. Abrams is responsible for the oversight of CrossFirst’s legal affairs andcorporate governance

matters.Prior to joining the Company and the Bank, Ms. Abrams provided legal assistance to Cerner Corporation and its global affiliates

(“Cerner”) from October 2011 until May 2022, most recently servingas Lead Counsel – SEC & Corporate and Assistant Secretary. Cerner

(recently acquired by Oracle Corporation) was a supplier of healthcareinformation technology services, devices, and hardware. Prior to

Cerner, Ms. Abrams was an attorney at the law firm of Polsinelli P.C. Ms. Abrams earned her Juris Doctoratedegree from Loyola University-

Chicago School of Law and has a business degree from the University ofKansas.

Part II

ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED

STOCKHOLDER MATTERSAND ISSUER PURCHASES OF EQUITYSECURITIES

Our common stock is traded on the Nasdaq Global Select Market under thesymbol “CFB.” We had 374 holders of record at

February 23, 2023.

31

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

$180.00

Total Return Performance

CrossFirst Bankshares, Inc.

Russell 2000 Index

KBW Nasdaq Regional Banking Index

Performance Graph

The following table and graph sets forth the cumulative total stockholder return forthe Company’s common stock from August 15,

2019 (the date that our common stock commenced trading on the NasdaqGlobal Select Market) through December 30, 2022 (the last trading

day of the year), compared to an overall stock market index (Russell 2000 Index)and one peer group index (KBW Nasdaq Regional Banking

Index) for the same period. The indices are based on total returns assuming reinvestmentof dividends. The graph assumes an investment of

$100 on August 15, 2019. The performance graph represents past performanceand should not be considered to be an indication of future

performance.

The performance graph and related text are being furnished to and not filedwith the SEC, and will not be deemed “soliciting

material” or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and will not be

deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent we specifically

incorporate such information by reference into such a filing.

8/15/2019

12/31/2019

12/31/2020

12/31/2021

12/30/2022

CrossFirst Bankshares, Inc.

$

100.00

$

99.45

$

73.63

$

106.92

$

85.00

Russell 2000 Index

$

100.00

$

114.85

$

137.77

$

158.19

$

125.86

KBW Nasdaq Regional Banking Index

$

100.00

$

116.94

$

102.79

$

136.92

$

123.98

Dividends

Historically, CrossFirst has not declared or paid any dividends on its commonstock. Payments of future dividends, if any, will be at

the discretion of our Board of Directors and will depend upon our results of operations,our financial condition, capital requirements, general

economic conditions, regulatory and contractual restrictions, ourbusiness strategy, our ability to service any equity or debt obligationssenior

to our common stock and other factors that our Board of Directors deems relevant. We are not obligatedto pay dividends on our common

stock and are subject to restrictions on paying dividends on our common stock.

Our principal source of funds to pay dividends on our common stock wouldbe dividends received from our wholly-owned

subsidiaries. Furthermore, our wholly-owned subsidiaries are not obligatedto pay dividends to us, and any dividends paid to us would

depend on the earnings or financial condition of our wholly-ownedsubsidiaries and various business considerations. As is the case with all

financial institutions, the profitability of our wholly-owned subsidiariesis subject to the fluctuating cost and availability of money, changes

in interestrates and economic conditions in general. In addition, various federaland state statutes limit the amount of dividends that our

wholly-owned subsidiaries may pay to the Company without regulatory approval.

32

Share Repurchase Program

The following table summarizes our repurchases of our common sharesfor the three months ended December 31, 2022:

Calendar

Month

Total Number of

Shares

Repurchased

Average Price

Paid per Share

Total Number of Shares

Purchased as Part of Publicly

Announced Plans or Programs

Approximate Dollar Value of Shares

that may yet be Purchased as Part

of Publicly Announced Plans or

Programs

October 1 - 31

177,712

$

13.46

177,712

$

18,280,265

November 1 - 30

39,824

$

13.72

39,824

$

17,733,858

December 1 - 31

140,110

$

13.28

140,110

$

15,872,867

Total

357,646

$

13.42

357,646

On October 18, 2021, the Company announced that its Board of Directors approveda share repurchase program under which the

Company may repurchase up to $30 million of its common stock. This program was completedduring the third quarter of 2022.On May 10,

2022, the Company announced that its Board of Directors approveda second share repurchase program under which the Company may

repurchase up to $30 million of its common stock. As of December 31, 2022, approximately $16 million remainsavailable for repurchase

under this share repurchase program. Repurchases under the programmay be made in open market or privately negotiated transactions in

compliance with SEC Rule 10b-18, subject to market conditions, applicablelegal requirements and other relevant factors. The program does

not obligate the Company to acquire any amount of common stock, andit may be suspended at any time at the Company's discretion. No

time limit has been set for completion of the program.

See Part III, Item 12 for information relating to securities authorized forissuance under our equity compensation plans.

ITEM 6.[RESERVED]

ITEM 7.MANAGEMENT’S DISCUSSIONAND ANALYSISOF FINANCIAL

CONDITION ANDRESULTS OF OPERATIONS

Overview

This section includes a discussion of the financial condition and results of operationsof CrossFirst Bankshares, Inc. and its

subsidiaries. Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations

in our 2021 Form 10-K filed

with the SEC on February 28, 2022 for a discussion of the financial condition and resultsof operations of the Company for the period ended

December 31, 2020 and a comparison between the 2021 and 2020 results.

Tables may include additional periods to comply with disclosurerequirements or to illustrate trends in greater depth. You should read

the following financial data in conjunction with the other information containedin this 10-K, including under “Part I, Item 1A. Risk Factors,”

and in the financial statements and related notes included elsewherein this 10-K.

Growth History

We have grown organically primarily by establishing our branchlight network in seven states, attracting new clients and expanding

our relationships with existing clients, as well as through three strategic acquisitions. Thedata below presents the business' growth in key

areas for the past five years and the related compound annual growth rate (“CAGR”):

2018 to 2022

As of December 31,

CAGR

2022

2021

2020

2019

2018

(Dollars in thousands)

Available-for-sale ("AFS") securities

1

%

$

686,901

$

745,969

$

654,588

$

739,473

$

661,628

Gross loans (net of unearned income)

(1)

15

5,372,729

4,256,213

4,441,897

3,852,244

3,060,747

Total assets

13

6,601,086

5,621,457

5,659,303

4,931,233

4,107,214

Non-interest-bearing deposits

30

1,400,260

1,163,224

718,459

521,826

484,284

Total deposits

15

%

$

5,651,308

$

4,683,597

$

4,694,740

$

3,923,759

$

3,208,097

(1)

Includes $3 million, $65 million and $292 million of PPP loans at December 31, 2022, 2021 and 2020, respectively.

33

Performance Measures

As of or for the Year Ended December 31,

2022

2021

2020

(Dollars in thousands, except per share data)

Return on average assets

1.07

%

1.24

%

0.24

%

Adjusted return on average assets

(1)

1.19

%

1.31

%

0.37

%

Return on average common equity

9.97

%

10.84

%

2.05

%

Adjusted return on average common equity

(1)

11.11

%

11.40

%

3.26

%

Earnings per share

$

1.24

$

1.35

$

0.24

Diluted earnings per share

$

1.23

$

1.33

$

0.24

Adjusted diluted earnings per share

(1)

$

1.37

$

1.40

$

0.38

Efficiency ratio

(2)

57.75

%

54.50

%

58.13

%

Adjusted efficiency ratio - FTE

(1)(2)(3)

54.43

%

52.02

%

52.98

%

Ratio of equity to assets

9.22

%

11.88

%

11.03

%

(1)

Represents a non-GAAP financial measure.See "Non-GAAP Financial Measures" in Management Discussion and Analysis for a reconciliation of

these measures.

(2)

We calculate efficiency ratio as non-interest expense divided by the sum of net interest income and non-interest income.

(3)

Tax exempt income (tax-free municipal securities) is calculated on a tax equivalent basis.The incremental tax rate used is 21.0%.

2022 Highlights:

●

Completed the acquisition of Farmers & Stockmens Bank (“Central”) addingliquidity, new production talent, and expanding

into attractive and growing markets

o

Added $389 million of loans and $570 million of deposits

●

Total assets were $6.6 billion primarily made up of $5.4 billion in loans and$687 million in securities

●

Loans grew $1.1 billion for the year or 26%; excluding the Central acquisition,loans grew 17% for the year

●

Deposits grew $968 million for the year or 21%; excluding the Central acquisition,deposits grew 9% for the year

●

Credit quality improved meaningfully with the non-performing assets to totalassets ratio at 0.20% at year end and full year net

charge offs of just 0.08%

●

Purchased 2,448,428 or $36 million of outstanding shares as part ofthe share repurchase programs in 2022 representing 5% of

outstanding shares

●

Launched a new digital banking platform, providing enhanced onlinetools and resources for clients

●

Book value per share decreased to $12.56 compared to $13.23 in the prior year. Tangiblebook value per share

(1)

decreased to

$11.96 compared to $13.23 in the prior year as earnings were more than offsetby an increase in the unrealized losses on our

investment portfolio, the impact of Central and a reduction due to share repurchases

(1)

Represents a non-GAAP financial measure.See “Non-GAAP Financial Measures” in Management Discussion and Analysis for a

reconciliation of these measures.

Update to Net Interest Margin Methodology

The Company modified the yield calculation on the AFS security portfolio to better conform to peer disclosures in thefirst quarter

of 2022. All earning-asset yields and net interest margins presented were retroactively updated for the change in methodology. Thefollowing

changes were made:

●

The average unrealized gain (loss) on AFS securities balance was removed from the security lines and placed in other non-

interest earning assets

34

●

The annualization method was changed from Actual/Actual to 30/360 for the security yields

The Company believes the new calculation provides better insight intowhy the security yields and net interest margin changed

period-to-period.

For the Year Ended December 31,

2021

2020

Previous calculation

Yield on securities - taxable

1.93

%

2.26

%

Yield on securities - tax-exempt

(1)

3.28

3.52

Yield on interest-earning assets

(1)

3.60

3.96

Net interest spread

(1)

3.10

3.04

Net interest margin

(1)

3.15

3.13

As calculated going forward

Yield on securities - taxable

1.96

2.32

Yield on securities - tax-exempt

(1)

3.48

3.74

Yield on interest-earning assets

(1)

3.62

3.98

Net interest spread

(1)

3.12

3.06

Net interest margin

(1)

3.17

3.15

Change

Yield on securities - taxable

0.03

0.06

Yield on securities - tax-exempt

(1)

0.20

0.22

Yield on interest-earning assets

(1)

0.02

0.02

Net interest spread

(1)

0.02

0.02

Net interest margin

(1)

0.02

%

0.02

%

(1)

Tax-exempt income is calculated on a tax-equivalent basis. Tax-free municipal securitiesare exempt from Federal taxes. The incremental

tax rate used is 21%.

Concentrations

As of December 31, 2022, the Company’s top 25 largest borrowing relationshipstotaled approximately $1.9 billion in total

commitments,representing, in the aggregate, 24% of our total outstanding commitments. As of December 31, 2022, the Company’s top25

deposit relationshipsrepresented approximately 25%, or $1.4 billion, of total deposits. The majorityof the $1.4 billion are money market

deposit accounts. The Company believes that there are sufficient funding sources, includingon-balance sheet liquid assets and wholesale

deposit options, so that an immediate reduction in these deposit balances wouldnot be expected to have a detrimental effect on the

Company’s financial position or operations.

For the year ended December 31, 2021, a significant portion of theCompany’s ATM and credit card interchange income was driven by

companies that mobilized their workforce directly impacted by theCOVID-19 pandemic. These companies represented $5 million or 61% of

the $8 million in ATM and credit card interchange income. This activity did not re-occur in 2022 at the same level.

Discussion and Analysis - Resultsof Operations

Net Interest Income

Our profitability depends in substantial part on our net interest income.Net interest income is the difference between the amounts

received on our interest-earning assets and the interest paid on our interest-bearingliabilities. Net interest income is impacted by internal and

external factors including:

•Changes in the volume, rate, and mix of interest-earning assets and interest-bearingliabilities;

•Changes in competition, federal economic, monetary and fiscal policies andeconomic conditions; and

35

•Changes in credit quality.

We present and discuss net interest income on a fully tax-equivalent basis (“FTE”).

For the fiscal year ended December 31, 2022, we operated in an increasinginterest rate environment.Our earning assets repriced

quicker than our cost of funds, resulting in a higher net interest margin in 2022.During 2022, the Company benefited from changes in our

deposit mix, including an increase in non-interest-bearing deposits that helpedmanage cost of funds.

The following table presents, for the periods indicated, average statementof financial condition information, interest income, interest

expense and the corresponding average yield earned and rates paid:

For the YearsEnded December 31,

2022

2021

2020

Average

Balance

Interest

Income /

Expense

Yield / Rate

(4)

Average

Balance

Interest

Income /

Expense

Yield / Rate

(4)

Average

Balance

Interest

Income /

Expense

Yield / Rate

(4)

(Dollars in thousands)

Interest-earning assets:

Securities - taxable

$

220,760

$

5,286

2.39

%

$

201,419

$

3,955

1.96

%

$

261,059

$

6,058

2.32

%

Securities - tax-exempt - FTE

(1)

551,734

18,559

3.36

488,544

16,981

3.48

421,548

15,745

3.74

Federal funds sold

3,139

49

1.56

-

-

—

1,020

18

1.73

Interest-bearing deposits in other banks

239,240

3,702

1.55

389,893

502

0.13

179,978

621

0.35

Gross loans, net of unearned income

(2)(3)

4,603,697

224,138

4.87

4,340,791

174,660

4.02

4,310,345

183,738

4.26

Total interest-earning assets- FTE

(1)

5,618,570

$

251,734

4.48

%

5,420,647

$

196,098

3.62

%

5,173,950

$

206,180

3.98

%

Allowance for loan losses

(57,388)

(73,544)

(68,897)

Other non-interest-earning assets

198,849

244,368

253,426

Total assets

$

5,760,031

$

5,591,471

$

5,358,479

Interest-bearing liabilities

Transaction deposits

$

538,604

$

4,951

0.92

%

$

608,063

$

1,152

0.19

%

$

447,777

$

1,696

0.38

%

Savings and money market deposits

2,475,891

33,599

1.36

2,338,315

8,225

0.35

1,993,964

14,033

0.70

Time deposits

688,095

11,432

1.66

812,774

9,146

1.13

1,155,492

20,856

1.80

Total interest-bearing deposits

3,702,590

49,982

1.35

3,759,152

18,523

0.49

3,597,233

36,585

1.02

FHLB and short-term borrowings

232,018

4,855

2.09

279,379

5,840

2.09

417,956

6,508

1.56

Trust preferred securities, net of fair value

adjustments

1,072

142

13.25

982

96

9.76

939

106

11.34

Non-interest-bearing deposits

1,146,594

—

—

876,309

—

—

684,294

—

—

Cost of funds

5,082,274

$

54,979

1.08

%

4,915,822

$

24,459

0.50

%

4,700,422

$

43,199

0.92

%

Other liabilities

60,175

35,447

43,331

Stockholders’ equity

617,582

640,202

614,726

Total liabilities and stockholders’equity

$

5,760,031

$

5,591,471

$

5,358,479

Net interest income - FTE

(1)

$

196,755

$

171,639

$

162,981

Net interest spread - FTE

(1)

3.40

%

3.12

%

3.06

%

Net interest margin -FTE

(1)

3.50

%

3.17

%

3.15

%

(1)

Calculated on a fully tax-equivalent basis. Tax-free municipal securities are exempt from Federal taxes. The incrementaltax rate used is 21%.

(2)

Loans, net of unearned income includes non-accrual loans of $11million, $31 million and $75 million as of December 31,2022, 2021 and 2020, respectively.

(3)

Loan interest income includes loan fees of $14 million, $18 millionand $14 million for the years ended December 31, 2022,2021 and 2020, respectively.

(4)

Actual unrounded values are used to calculate the reported yield or ratedisclosed. Accordingly, recalculationsusing the amounts in thousands as disclosed in this report maynot produce the same

amounts.

Interest Income -

Interest income increased for the year ended December 31, 2022 compared to the same periodin 2021. The yield on

earning assets increased 86 basis points, led by an 85 basis point increase inloan yields driven by the repricing of existing loans, origination

of new loans and the Central acquisition. The yield on the investment portfolio also increasedfive basis points.Average earning assets

increased$197.9 million due to $262.9 million higher average loans and an $82.5 million increase inthe average investment portfolio. The

increased loan balances were due to strong loan growth, both organicallyand due to the acquisition of Central.

Interest Expense -

Interest expense increased for the year ended December 31, 2022, comparedto the same period in 2021. The cost of

interest-bearing deposits increased due to the higher interest rate environmentand increased competition for deposits. The average volume

for interest-bearing deposits declined primarily because of decreases in timedepositsand transaction deposits, partially offset by increases in

savings and money market deposits. Average FHLB and other borrowings declined compared to 2021; however,the rate paid on these

borrowings remained consistent year over year.The cost of funds increase was partially offset by an increase in average non-interest-bearing

deposits from 2021 to 2022. We currently anticipate our cost of funds will increase in 2023due to continued increases in the interest rate

environment and competition for deposits.

36

36%

38%

9%

1%

(1%)

17%

34%

59%

25%

7%

(46%)

21%

Service charges & fees

ATM & credit card

Bank-owned life

insurance ("BOLI")

AFS gain on sale

Gains (losses) on

equity securities

Other

Breakout of Non-interest Income

2022

2021

Net Interest Income –

Full year 2022 net interest income grew $24.8 million, an increase of 15% comparedto 2021.Full year net interest

income - FTE grew $25.1 million, an increase of 15% compared to 2021, whilethe net interest margin (“NIM”) - FTE increased to 3.50%

from 3.17% in the prior year due to the higher interest rate environment as well as the mix shiftfrom cash into higher earning assets as noted

above.The NIM – FTE also benefited from a 31% increase in non-interest-bearingdeposits which benefited the NIM-FTE 4 basis points. We

currently expect the net interest margin to remain flat or slightly increase in2023 as we currently anticipate a slowdown in the trajectory of

interest rate increases. We currently anticipate that competition for deposits will continueinto 2023 as clients seek higher yields.

Non-interest Income

The components of non-interest income were as follows for the periodsshown:

For the Year Ended December 31,

Change

2022

2021

$

%

(Dollars in thousands)

Service charges and fees on customer accounts

$

6,228

$

4,580

$

1,648

36

%

Realized gains on available-for-sale securities

96

1,023

(927)

(91)

Gain on sale of loans

47

-

47

—

Gains (losses), net on equity securities

(181)

(6,325)

6,144

(97)

Income from bank-owned life insurance

1,602

3,483

(1,881)

(54)

Swap fees and credit valuation adjustments, net

188

275

(87)

(32)

ATM and credit card interchange income

6,523

7,996

(1,473)

(18)

Other non-interest income

2,778

2,628

150

6

Total non-interest income

$

17,281

$

13,660

$

3,621

27

%

Non-interest income to average assets

0.30

%

0.24

%

The changes in non-interest income were driven by the following:

Service charges and fees on customer accounts -

This category includes account analysis fees offset by a customerrebate program. The

increase for the year ended December 31, 2022 compared to 2021was driven by a decline in costs associated with our rebate program. In

addition, customer growth and an increase in outstanding balances improvedaccount analysis fees.

37

62%

9%

3%

4%

4%

18%

61%

10%

4%

4%

4%

17%

Salary & benefits

Occupancy

Deposit insurance

Professional fees

Software &

communication

Other

Breakout of Non-interest Expense

2022

2021

Realized gains on available-for-sale securities –

The Company sells AFS securities for strategic reasons including capitalizing on attractive

market conditions, improving the credit quality of the security portfolio, orfor tax purposes,primarily to offset capital losses. The realized

gains on AFS securities declined from 2021 to 2022primarily due to the Company selling securities for tax purposes and to capitalize on

attractive market conditions in 2021.

Gains (losses), net on equity securities –

During 2021, the Company recorded a $6 million loss related to anequity investment received as

part of a modified loan agreement in 2020. The Company elected to account for this security atcost less impairment, unless an orderly

transaction for an identical or similar investment of the same issuer occurred thatwould result in an updated fair market value. During 2021,

significant adverse changes in market conditions for the investment resulted inthe investment being sold below its book value. Refer to the

“Equity Securities” section in

Note 3: Securities

within the Notes to the Consolidated Financial Statements for additional information.

Income from bank-owned life insurance –

The decrease for the year ended December 31, 2022 comparedto 2021 was due to the Company

recognizing $2 million in tax-free death benefits from a bank-owned life insurance policyin 2021 that did not re-occur in 2022.

ATM and credit card interchange income -

The decrease in ATM and credit card interchange income for the year ended December 31,

2022 compared to 2021 was primarily the result of one large customer that mobilizedtheir workforce directly impacted by the COVID-19

pandemic during 2020 and into 2021.This activity did not re-occur in 2022 and accounts for the lower income.

Non-interest Expense

38

The components of non-interest expense were as follows for the periods indicated:

For the Year Ended December 31,

Change

2022

2021

$

%

(Dollars in thousands)

Salary and employee benefits

$

75,288

$

61,080

$

14,208

23

%

Occupancy

10,663

9,688

975

10

Professional fees

5,275

3,519

1,756

50

Deposit insurance premiums

3,354

3,705

(351)

(9)

Data processing

4,750

2,878

1,872

65

Advertising

3,201

2,090

1,111

53

Software and communication

5,093

4,234

859

20

Foreclosed assets, net

(17)

697

(714)

(102)

Other non-interest expense

14,135

11,491

2,644

23

Total non-interest expense

$

121,742

$

99,382

$

22,360

22

%

Non-interest expense to average assets

2.11

%

1.78

%

Non-interest expense increased $22.4 million and included $4.2million of transaction costs and core deposit intangible amortization

related to the Central acquisition. In addition, the Central acquisition addedapproximately $1.7 million of non-interest expense, the majority

in the salary and employee benefits line as we added employees to ourteams.The ratio of non-interest expense to average assets increased

to 2.11%, in part, due to the Central acquisition as well as increased costs as we continueto invest in new markets, technology, and

personnel.The changes in non-interest expense were driven by the following:

Salary and Employee Benefits -

Salary and employee benefit costs increased due to new market expansion, annual meritincreases, the

addition of employees as part of the Central acquisition and increased performance-based incentive compensation.

Occupancy -

Occupancy costs increased due to the adoption of Accounting Standards Codification (“ASC”) 842,Leases on January 1,

2022 as well as a new lease in our Dallas market resulting from expansion.We currently expect occupancy costs to increase in 2023 related

to our expansion into the Fort Worth, TX market and may increase further as we enter new markets in thefuture.

Professional Fees -

Professional fees increased due to $1.4 million related to the Central Bank acquisition,$0.3 million in lending related

legal fees and $0.1 million due to recruiting fees.

Data Processing

–

Data processing expense increased due to the Central acquisition, accountgrowth and costs related to our digital

banking conversion.

Advertising

-

The increase in advertising costs was driven by increased post-pandemic activities.

Software and Communication -

The increase was driven by our continued investment in best-in-class technologies.In addition to the

growing number of technologies implemented, a portion of the increasein costs was due to our growth.

Foreclosed Assets, net -

The decrease in foreclosed assets, net was due to the Company selling a foreclosed commercial usefacility

during 2021 at a loss.

Other non-interest expense -

The increase was due to employee separation expense of $1.1 million and highertravel and entertainment

costs in 2022 due to an increase in post-pandemic activities.

Our GAAP efficiency ratio for 2022 was 57.75% and our adjusted efficiency ratio – FTE was 54.43%. See belowunder “Non-

GAAP Financial Measures” for a reconciliation. We currently expect to manage the efficiency ratio lower through 2023 as we finishthe

integration of Central and scale investments in new markets.

Income Taxes

Our income tax expense differs from the amount that would be calculatedusing the federal statutory tax rate, primarily from

investments in tax advantaged assets, such as bank-owned life insuranceand tax-exempt municipal securities, state tax credits and permanent

tax differences from equity-based compensation. In addition, 2022included a $0.3 million charge related to certain non-deductible

acquisition costs in connection with the Central acquisition. Detail behindthe differences between the statutory rate and effective tax rate for

39

the years ended December 31, 2022, 2021 and 2020 is provided in

Note 12: Income Taxes

within the Notes to the Consolidated Financial

Statements.

The tax-exempt benefit diminishes as the Company’s ratio of taxable incometo tax-exempt income increases. We currently anticipate

the effective tax rate to remain in the range of 20% to 22% for 2023. A three-year trend of our income tax and effective tax rate is presented

below:

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands)

Income tax expense

$

15,973

$

17,556

$

2,713

Income before income taxes

$

77,572

$

86,969

$

15,314

Effective tax rate

21

%

20

%

18

%

Non-GAAP Financial Measures

In addition to disclosing financial measures determined in accordancewith U.S. generally accepted accounting principles (GAAP), the

Company discloses certain non-GAAP financial measures including “tangible commonstockholders’ equity,” “tangible book value per

share,” “adjusted efficiency ratio – FTE,” “adjusted net income,” “adjusteddiluted earnings per share,” “adjusted return on average assets,”

and “adjusted return on average common equity.”We consider the use of select non-GAAP financial measures and ratios to be useful for

financial and operational decision making and useful in evaluating period-to-periodcomparisons. We believe that these non-GAAP financial

measures provide meaningful supplemental informationto investors regarding our performance by excluding certain expenditures or gains

that we believe are not indicative of our primary business operating results. We believe that managementand investors benefit from referring

to these non-GAAP financial measures in assessing our performance and when planning,forecasting, analyzing and comparing past, present

and future periods.

These non-GAAP financial measures should not be considered a substitute for financial information presentedin accordance with

GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures

we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by

providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliationof the

impact of the components adjusted for in the non-GAAP financial measure so that both measures and theindividual components may be

considered when analyzing our performance.

A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures follows.

For the Year Ended

12/31/2022

12/31/2021

12/31/2020

(Dollars in thousands, except per share data)

Adjusted net income:

Net income

$

61,599

$

69,413

$

12,601

Add: Acquisition costs

3,890

-

-

Add: Acquisition - Day 1 CECL provision

4,400

-

-

Add: Employee separation

1,063

-

-

Add: Unrealized loss on equity security

-

6,200

-

Add: Accelerated employee benefits

-

719

-

Less: BOLI settlement benefits

(1)

-

(1,841)

-

Add: Goodwill impairment

(1)

-

-

7,397

Less: Tax effect

(2)

(2,335)

(1,512)

-

Adjusted net income

$

68,617

$

72,979

$

19,998

Diluted weighted average common shares outstanding

50,002,054

52,030,582

52,548,547

Diluted earnings per share

$

1.23

$

1.33

$

0.24

Adjusted diluted earnings per share

$

1.37

$

1.40

$

0.38

(1)

No tax effect.

(2)

Represents the tax impact of the adjustments at a tax rate of 21.0%, plus permanenttax expense associated with merger related

transactions and permanent tax benefit associated with stock-basedgrants

40

For the Year Ended

12/31/2022

12/31/2021

12/31/2020

(Dollars in thousands)

Adjusted return on average assets:

Net income

$

61,599

$

69,413

$

12,601

Adjusted net income

68,617

72,979

19,998

Average assets

$

5,760,031

$

5,591,471

$

5,358,479

Return on average assets

1.07

%

1.24

%

0.24

%

Adjusted return on average assets

1.19

%

1.31

%

0.37

%

For the Year Ended

12/31/2022

12/31/2021

12/31/2020

(Dollars in thousands)

Adjusted return on common equity:

Net income

$

61,599

$

69,413

$

12,601

Adjusted net income

68,617

72,979

19,998

Average common equity

$

617,582

$

640,202

$

614,276

Return on average common equity

9.97

%

10.84

%

2.05

%

Adjusted return on average common equity

11.11

%

11.40

%

3.26

%

For the Year Ended

12/31/2022

12/31/2021

12/31/2020

(Dollars in thousands, except per share data)

Tangible common stockholders' equity:

Total stockholders' equity

$

608,599

$

667,573

$

624,428

Less: goodwill and other intangible assets

29,081

130

208

Tangible common stockholders' equity

$

579,518

$

667,443

$

624,220

Tangible book value per share:

Tangible common stockholders' equity

$

579,518

$

667,443

$

624,220

Shares outstanding at end of period

48,448,215

50,450,045

51,679,516

Book value per share

$

12.56

$

13.23

$

12.08

Tangible book value per share

$

11.96

$

13.23

$

12.08

41

For the Year Ended

12/31/2022

12/31/2021

12/31/2020

(Dollars in thousands)

Adjusted Efficiency Ratio - FTE

(1)

Non-interest expense

$

121,742

$

99,382

$

99,968

Less: Acquisition costs

(3,890)

-

-

Less: Core deposit intangible amortization

(291)

-

-

Less: Employee separation

(1,063)

-

-

Less: Accelerated employee benefits

-

(719)

-

Less: Goodwill impairment

-

-

(7,397)

Adjusted Non-interest expense (numerator)

$

116,498

$

98,663

$

92,571

Net interest income

193,534

168,691

160,249

Tax equivalent interest income

(1)

3,221

2,948

2,732

Non-interest income

17,281

13,660

11,733

Add: Unrealized loss on equity security

-

6,200

-

Less: BOLI settlement benefits

-

(1,841)

-

Total tax-equivalent income (denominator)

$

214,036

$

189,658

$

174,714

Efficiency Ratio

57.75

%

54.50

%

58.13

%

Adjusted Efficiency Ratio - FTE

(1)

54.43

%

52.02

%

52.98

%

(1)

Tax exempt income (tax-free municipal securities) is calculated on a tax equivalentbasis. The incremental tax rate used is 21.0%.

Discussion and Analysis - FinancialCondition

Loan Portfolio

At December 31, 2022, our loan portfolio was comprised of new loansthat we have originated and loans that were acquired on

November 22, 2022 in the acquisition of Central.Certain of the comparative graphs below are excluding the Central loans andare so noted.

Loans represent our largest portion of earning assets and typically provide higheryields than other assets. The quality and

diversification of the loan portfolio is an important consideration whenreviewing our financial condition. We established an internal loan

policy that outlines a standard lending philosophy and provides consistent directionto achieve goals and objectives, which include

maximizing earnings over the short and long term by managing risks throughthe policy. Internal concentration limits exist on all loans,

including commercial real estate, energy, and land development. We established strongunderwriting practices and procedures to assess our

borrowers, including review of debt service, collateral value and evaluationof guarantors. We also engage third-parties to independently

review our loan portfolio. Appropriate actions are taken when a borrower is no longer able to service its debt.

Our loan portfolio consists of various types of loans, primarily made up of commercialand industrial and commercial real estate loans.

Commercial and industrial loans are generally paid back through normal businessoperations. Commercial real estate loans, which include

both construction and limited term financing are typically paid back throughnormal income from operations, the sale of the underlying

property or refinancing by other institutional sources. Most of our loans are madeto borrowers within the states we operate, which include

Kansas, Missouri, Oklahoma, Arizona, Texas, Colorado and New Mexico. In addition, we occasionally investin syndicated shared national

credits and loan participations.

42

16%

8%

15%

10%

8%

3%

8%

6%

5%

21%

16%

11%

11%

9%

9%

4%

5%

6%

6%

23%

Commercial and Industrial Loan Portfolio by Industry

12/31/2022

12/31/2021

The following table presents the balance and associated percentage ofeach major product type within our portfolio as of the dates

indicated:

As of

December 31, 2022

As of

December 31, 2021

December 31, 2021 vs.

December 31, 2022

% Change

(Dollars in thousands)

Commercial and industrial

(1)

$

1,017,678

$

843,024

20.7

%

Commercial and industrial lines of credit

957,254

617,398

55.0

Energy

173,218

278,579

(37.8)

Commercial real estate

1,718,947

1,278,479

34.5

Construction and land development

794,788

574,852

38.3

Residential real estate

409,124

360,046

13.6

Multifamily real estate

237,984

240,230

(0.9)

Consumer

63,736

63,605

0.2

Total

$

5,372,729

$

4,256,213

26.2

%

(1) Total includes PPP loans of $3.2 million and $64.8 million as of December 31, 2022 and 2021, respectively

For a description of the Company’s loan segments refer to the “Loan PortfolioSegments” section within

Note 4: Loans and Allowance

for Credit Losses

within the Notes to the Consolidated Financial Statements.

Commercial and Industrial Loans

The Company provides a mix of variable- and fixed-rate commercialand industrial loans across various industries. We extend

commercial and industrial loans on an unsecured and secured basis. Unsecuredcommercial and industrial loan balances totaled $271 million

or 5% of the total loan portfolio as of December 31, 2022 compared to $126 million or 3% as ofDecember 31, 2021.

Our commercial and industrial loan portfolio is comprised of diverse industry segments. A breakdown of the Company’s commercial

and industrial loan portfolio by industry, excluding the loans acquired fromCentral, as of December 31, 2022 and 2021 is provided below:

43

16%

6%

6%

3%

6%

5%

2%

3%

5%

5%

5%

25%

13%

16%

5%

8%

3%

4%

6%

3%

2%

4%

4%

5%

25%

15%

Real Estate Loan Portfolio by Segment

12/31/2022

12/31/2021

29%

18%

13%

7%

6%

27%

30%

18%

16%

9%

3%

24%

TX

KS

OK

MO

AZ

Remaining

States

Real Estate Loan Portfolio by Geography

12/31/2022

12/31/2021

Real Estate Loans

Our real estate portfolio is comprised of construction and development loans,residential family and multifamily loans and commercial

real estate loans. Our Real Estate portfolio,excluding Central, is predominately in-market relationships with 73% ofReal Estate loans

located within our footprint of Kansas, Missouri, Texas, Oklahoma and Arizona as of December 31, 2022, based on the geographicallocation

of the collateral.A breakdown of our real estate portfolio by type and geography (based upon location of collateral), excluding the loans

acquired from Central, as of December 31, 2022 and 2021 is presentedbelow:

44

The following table shows the contractual maturities of our gross loans andsensitivity to interest rate changes:

As of December 31, 2022

Due in One Yearor Less

Due in One Yearthrough Five

Years

Due in Five Yearthrough

Fifteen Years

Due after Fifteen Years

Fixed Rate

Adjustable

Rate

Fixed Rate

Adjustable

Rate

Fixed Rate

Adjustable

Rate

Fixed Rate

Adjustable

Rate

Total

(Dollars in thousands)

Commercial and industrial

$

89,571

$

116,378

$

308,284

$

341,195

$

46,807

$

93,496

$

19,589

$

2,358

$

1,017,678

Commercial and industrial lines of credit

47,360

388,302

21,288

464,461

16,101

19,742

-

-

957,254

Energy

-

29,159

916

143,143

-

-

-

-

173,218

Commercial real estate

64,215

221,690

477,324

452,410

179,940

262,030

8,846

52,492

1,718,947

Construction and land development

28,382

81,548

82,146

492,424

30,608

34,787

3,661

41,232

794,788

Residential real estate

4,380

2,630

21,987

4,846

68,818

5,856

377

300,230

409,124

Multifamily real estate

4,379

60,235

61,750

98,023

4,864

8,733

-

-

237,984

Consumer

3,449

12,356

8,669

12,656

371

24,612

-

1,623

63,736

Total

$

241,736

$

912,298

$

982,364

$

2,009,158

$

347,509

$

449,256

$

32,473

$

397,935

$

5,372,729

Provision and Allowance for Credit Losses (“ACL”)

The Company implemented the CECL model as of January 1, 2022. Referto

Note 1: Nature of Operations and Summary of

Significant Accounting Policies

and

Note 4: Loans and Allowance for Credit Losses

within the Notes to Consolidated Financial Statements

for details regarding the transition, including the impact to the financial statements.The CECL model compared to the incurred loss model

may accelerate the provision for credit losses if the Company’sloan portfolio continues to grow.In addition, positive (negative) forward-

looking indicators may decrease (increase) the required provision forcredit losses.

The ACL at December 31, 2022 represents our best estimate of the expected credit losses in the Company’s loan portfolio and off-

balance sheet commitments, measured over the contractual life of the underlyinginstrument.

For the Year Ended December 31,

2022

2021

2020

Asset quality

(Dollars in thousands)

Provision for credit losses

(1)

- loans

$

7,997

$

(4,000)

$

56,700

Provision for credit losses

(1)

- off-balance sheet

3,504

N/A

N/A

Allowance for credit losses

(2)

- loans

61,775

58,375

75,295

Allowance for credit losses

(2)

- off-balance sheet

8,688

N/A

N/A

Net charge-offs

$

3,765

$

12,920

$

38,301

(1)

Prior to 2022, this line represents the provision for loan losses

(2)

Prior to 2022, this line represents the allowance for loan and lease losses

Upon adoption of the CECL model, the Company established a reserve for unfunded commitments (“RUC”) andreduced the ACL

$1.7 million as of January 1, 2022.During 2022, the ACL increased by $3.4 million due to $4.6 million in Central Day 1 CECL provision

on non-PCD loans and a $0.9 million Central Day 1 provision on PCD loans.In addition, the ACL grew $12.8 million due to loan growth

and changes in credit quality and economic factors.These increases were partially offset by the day 1 impact of CECL adoption noted

above of $1.7 million, $3.8 million in net charge-offs, and a reductionin reserves on impaired loans of $9.4 million.

45

January 1, 2022, the adoption date, is presented below instead of December31, 2021 for comparability purposes. The allocation in one

portfolio segment does not preclude its availability to absorb losses in other segments. The table belowpresents the allocation of the

allowance for credit losses as of the dates indicated:

December 31, 2022

January 1, 2022

ACL Amount

ACL Amount

Loans

Off-

Balance

Sheet

Total

Percent of

ACL to

Total ACL

Percent of

Loans to

Total Loans

Loans

Off-

Balance

Sheet

Total

Percent of

ACL to

Total ACL

Percent of

Loans to

Total Loans

(Dollars in thousands)

Commercial and industrial

$

12,272

$

245

$

12,517

18

%

19

%

$

10,139

$

107

$

10,246

17

%

20

%

Commercial and industrial lines of credit

14,531

74

14,605

21

18

8,866

44

8,910

14

14

Energy

4,396

787

5,183

7

3

9,190

265

9,455

15

7

Commercial real estate

19,504

700

20,204

29

32

18,933

711

19,644

32

30

Construction and land development

5,337

6,830

12,167

17

15

3,666

3,914

7,580

12

14

Residential real estate

3,110

35

3,145

4

8

3,046

5

3,051

5

8

Multifamily real estate

2,253

14

2,267

3

4

2,465

137

2,602

4

6

Consumer

372

3

375

1

1

323

1

324

1

1

Gross loans

$

61,775

$

8,688

$

70,463

100

%

100

%

$

56,628

$

5,184

$

61,812

100

%

100

%

Refer to

Note 4: Loans and Allowance for Credit Losses

within the Notes to Consolidated Financial Statements for a summaryof the

changes in the ACL. Provided below is additional information regarding changes to the ACL:

Charge-offs and Recoveries

The below table provides the ratio of net charge-offs (recoveries) to averageloans outstanding based on our loan categories for the

periods indicated:

For the Year Ended December 31,

2022

2021

2020

Commercial and industrial

-

%

0.07

%

2.41

%

Commercial and industrial lines of credit

0.31

2.69

1.21

Energy

1.19

0.32

1.24

Commercial real estate

(0.09)

-

0.14

Residential real estate

0.05

(0.08)

0.11

Multifamily real estate

-

(0.01)

-

Consumer

(0.01)

0.04

0.14

Total net charge-offs to average loans

0.08

%

0.30

%

0.89

%

For the year ended December 31, 2022, charge-offs primarily relatedto three commercial and industrial and commercial and industrial

line of credit borrowers, three energy borrowers and two non-owneroccupied commercial real estate borrowers who were unable to meet

their debt obligations.Recoveries totaled $7.0 million for the year ended December 31, 2022 and were primarilyrelated to six commercial

and industrial loans/lines of credit, two energy loans and two non-owner occupied commercial realestate loans that were previously charged-

off.

Non-performing assets and past due loans

Non-performing assets include: (i) non-performing loans - includes non-accrualloans, loans past due 90 days or more and still

accruing interest, and loans modified under TDRs that are not performing in accordancewith their modified terms; (ii) foreclosed assets held

for sale; (iii) repossessed assets; and (iv) impaired debt securities.

46

The table below summarizes our non-performing assets and related ratios as ofthe dates indicated:

For the Year Ended December 31,

2022

2021

2020

Asset quality

(Dollars in thousands)

Non-accrual loans

$

11,272

$

31,432

$

75,051

Loans 90+ days past due and still accruing

750

90

1,024

Total non-performing loans

12,022

31,522

76,075

Foreclosed assets held-for-sale

1,130

1,148

2,347

Total non-performing assets

$

13,152

$

32,670

$

78,422

Loans 30 - 89 days past due

$

19,519

$

3,529

$

18,078

Asset quality metrics (%)

2022

2021

2020

Non-performing loans to total loans

0.22

%

0.74

%

1.71

%

Non-performing assets to total assets

0.20

0.58

1.39

ACL to total loans

1.15

1.37

1.70

ACLs + RUC to total loans

(1)

1.31

N/A

N/A

ACL to non-performing loans

514

185

99

Classified Loans / (Capital + ACL)

10.1

10.8

40.9

Classified Loans / (Capital + ACL + RUC)

(1)

10.0

N/A

N/A

(1)

Includes the accrual for off-balance sheet credit risk from unfundedcommitments that resulted from CECL adoption on January 1, 2022.

Credit quality metrics were significantly improved compared to the prioryear. Non-performing assets decreased to $13.2 million at

December 31, 2022 entirely due to a $20.2 million decrease in non-accrualloans. The decline is attributable primarily to payments and

payoffs on non-accrual energy, commercial and industrial and commercial realestate loans during the year. The non-performing assets to

total assets ratio decreased to 0.20% at December 31, 2022 from 0.58%at December 31, 2021. Classified loans decreased $11.2 million

during the year but included the addition of $5.7 million from Central. Without Central, classifiedassets decreased $16.9 million due to

reductions in classified energy, commercial and industrial and commercial realestate loans.Loans 30-89 days past due increased $16.0

million primarily due to administrative past dues which were short-termin nature.

Investment Portfolio

Our investment portfolio is governed by our investment policy that sets ourobjectives, limits and liquidity requirements among other

items. The portfolio is maintained to serve as a contingent, on-balance sheet sourceof liquidity. The objective of our investment portfolio is

to optimize earnings, manage credit risk, ensure adequate liquidity, manageinterest rate risk, meet pledging requirements and meet

regulatory capital requirements. Our investment portfolio is generallycomprised of government sponsored entity securities and U.S. state

and political subdivision securities with limits set on all types of securities.

At the date of purchase, all debt securities are classified as AFS securities. Since interest rates move in cycles, having an AFS portfolio

allows management to: (i) protect against additional unrealized market valuationlosses; (ii) provide more liquidity as rates rise, which often

coincideswith increasing loan demand and slower deposit growth; and (iii) generatemore money to reinvest when rates are higher giving the

institution an opportunity to lock in higher yields. In the event the AFS portfolio becomes too large given the constraintsset in the policy,

investments may be classified as held-to-maturity. Held-to-maturityclassification will only be used if we have the intent and ability to hold

the investment to its maturity.

At December 31, 2022, AFS debt securities decreased $59 million or 8% from the prior year-end primarilydue to the $112 million

increase in unrealized losses. During 2022, the Company purchased $50 millionof tax-exempt municipal securities, $48 million of mortgage-

backed securities, $10 million of SBA, and $6 million of corporatesecurities.During 2021, the Company purchased $117 million of tax-

exempt municipal securities and $108 million of mortgage-backedsecurities primarily to deploy liquidity into higher yielding interest-

earning assets.

For information related to the book value and fair value of our AFS securities at December 31, 2022 and 2021refer to the “Available-

for-Sale Securities” segment in

Note 3: Securities

within the Notes to the Consolidated Financial Statements. For informationrelated to the

investment maturity schedule and weighted average yield for each range of maturitiesrefer to the “Maturity Schedule” segment in

Note 3:

Securities

within the Notes to the Consolidated Financial Statements.

47

Bank-Owned Life Insurance

The Company maintains investments in BOLI policies to help control employeebenefit costs, as a protection against loss of certain

employees and as a tax planning strategy. The decrease in yield during 2022 was primarily dueto the Company recognizing $2 million in

tax-free death benefits from a BOLI policy in 2021, coupled with movementsin the insurance carrier’s underlying investments and operating

costs that decreased the overall income on the underlying asset.

The following table provides the balance of BOLI income earned and tax-equivalentyield for the periods indicated:

As of or For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands)

Ending balance

$

69,101

$

67,498

$

67,498

Income earned

$

1,602

$

3,483

$

1,809

Tax-equivalent yield

(1)

2.9

%

6.4

%

3.4

%

(1)

Tax exempt income is calculated on a tax-equivalent basis. BOLI income is exempt from federal and state taxes. The incremental tax rate used is 24.7%

between 2020 and 2022.

Deposits

The following table sets forth deposit balances by certain categories as ofthe dates indicated and the percentage of each deposit

category to total deposits:

As of

December 31, 2022

As of

December 31, 2021

December 31, 2021 vs.

December 31, 2022

% Change

(Dollars in thousands)

Non-interest-bearing deposits

$

1,400,260

$

1,163,224

20.4

%

Transaction deposits

543,801

536,225

1.4

Savings and money market deposits

2,761,680

2,359,761

17.0

Time deposits

(1)

945,567

624,387

51.4

Total deposits

$

5,651,308

$

4,683,597

20.7

%

Total uninsured deposits

(2)

$

2,449,506

$

2,413,533

(1)

Includes $382 million and $91 million of brokered deposits, representing40% and 15% of time deposits for the years ended December

31, 2022 and 2021, respectively.

(2)

Based on estimated amounts of uninsured deposits and are based on thesame methodologies and assumptions used for the Bank’s

regulatory reporting requirements.

Deposits originate from our markets as well as through participation in certain wholesaleprograms. Deposit accounts are added by

loan cross-selling, client referrals and involvement within our community. The Companyoffers a variety of deposit products including non-

interest-bearing demand deposits and interest-bearing deposits that includetransaction accounts (including NOW accounts), savings

accounts, money market accounts, and certificates of deposit. The Bank also acquiresbrokered deposits, internet subscription certificates of

deposit, and reciprocal deposits through the Intrafi Network. The reciprocal deposits includeboth the Certificate of Deposit Account Registry

Service and Insured Cash Sweep program. The Company is a member of the IntrafiNetwork which effectively allows depositors to receive

FDIC insurance on amounts greater than the FDIC insurance limit, which is currently$250 thousand. The Intrafi Network allows institutions

to break large deposits into smaller amounts and place them in a network of otherIntrafi Network institutions to ensure full FDIC insurance

is gained on the entire deposit.

At December 31, 2022, deposits increased $968 million, or 21%, fromthe prior year-end including $570million from the Central

acquisition.Non-interest-bearing deposits increased $237 million or 20% from December31, 2021 to December 31, 2022, including $225

million from the Central acquisition. The increase in non-interest-bearing depositswas driven by approximately $544 million of increased

deposits from current clients and approximately $189 million from newdeposit relationships and $225 million from Central, partially offset

by deposit withdrawals.At both December 31, 2022and 2021, non-interest-bearing deposits represented 25% of total deposits. Transaction

deposits and savings and money market deposits increased $409 millionat December 31, 2022 as compared to December 31, 2021, as a

result of new deposit relationships,increased deposits from current clients and the acquisition of Central. Time deposits increasedby $321

million during 2022. Approximately $489 million of time deposits matured in 2022, offset by $829million of new and renewed time

deposits.Brokered time deposits increased during 2022 to meet short-term liquidity needs.

48

The following table sets forth the maturity of time deposits as of December31, 2022:

As of December 31, 2022

Three Months or

Less

Three to Six

Months

Six to Twelve

Months

After Twelve

Months

Total

(Dollars in thousands)

Time deposits in excess of FDIC insurance limit

$

24,769

$

26,203

$

49,409

$

211,123

$

311,504

Time deposits below FDIC insurance limit

164,871

168,450

155,278

145,464

634,063

Total time deposits

$

189,640

$

194,653

$

204,687

$

356,587

$

945,567

Other Borrowed Funds

Since it may not be possible to achieve the institution’s overall funding needsthrough core deposit funding, other borrowings may be

used to support asset growth. The risks associated with other borrowings are addressed in the samefashion as other financial condition risks

incurred by the Bank. Credit risk, interest rate risk, concentration risk, capitaladequacy and liquidity are measured for the consolidated

statement of financial condition as a whole, including any wholesale fundingstrategies that have been implemented or are expected to be

implemented.

The following table sets forth the amounts outstanding and weightedaverage interest rate of our borrowings as of the dates indicated:

As of December 31,

2022

2021

2020

Amount

Weighted Average

Interest Rate

Amount

Weighted Average

Interest Rate

Amount

Weighted Average

Interest Rate

(Dollars in thousands)

Repurchase agreements

$

—

—

%

$

—

—

%

$

2,306

0.15

%

Federal funds purchased

20,000

4.65

—

—

—

—

FHLB borrowings

(1)

218,111

3.02

236,600

1.92

293,100

1.78

Trust preferred securities

(2)

1,061

6.51

1,009

1.94

963

1.96

TIB line of credit

5,000

7.50

—

—

—

—

SBA loan secured borrowings

9,396

N/A

—

—

—

—

Total other borrowings

$

253,568

3.41

%

$

237,609

1.92

%

$

296,369

1.77

%

(1)

Includes FHLB advances and FHLB line of credit.

(2)

The difference between the interest rate above and the interest ratein the table below is due to the Company assuming a liabilitywith a fair value of $1 million related to

the assumption of trust preferred securities issued by LeawoodBancshares Statutory Trust I for $4 million on September30, 2005. In 2012, the Company settled litigation

related to the trust preferred securities which decreased the principalbalance by $2 million and the recorded balance byapproximately $400 thousand. The difference

between the recorded amount and the contract value of$3 million is being accreted to the maturity date in2035.

For a description and general terms of the other borrowed funds, referto

Note 11: Borrowing Arrangements

within the Notes to the

Consolidated Financial Statements.

49

The following table sets forth the maximum amount at any month end during thereporting period, the weighted average interest rate

and the average balance of other borrowings during the reported periodfor the years indicated:

For the Year EndedDecember 31,

2022

2021

2020

Maximum

Amount

Outstanding at

Any Month End

Average

Amount

Weighted

Average

Interest Rate

Maximum

Amount

Outstanding at

Any Month End

Average

Amount

Weighted

Average

Interest Rate

Maximum

Amount

Outstanding at

Any Month End

Average

Amount

Weighted

Average

Interest Rate

(Dollars in thousands)

Repurchase agreements

$

5,695

$

827

0.13

%

$

6,218

$

1,821

0.15

%

$

57,259

$

32,265

0.49

%

Federal funds purchased

20,000

7,836

1.22

—

—

—

30,000

2,589

0.19

Federal reserve discount

window

—

—

—

—

—

—

15,000

1,055

0.24

FHLB borrowings

(1)

326,600

224,182

2.11

293,100

277,558

2.10

470,659

382,047

1.66

Trust preferred securities

1,061

1,031

8.83

1,009

982

5.05

963

939

11.34

TIB line of credit

5,000

27

—

—

—

—

—

—

—

SBA loan secured borrowings

$

10,897

1,170

N/A

$

—

—

—

$

—

—

—

Total other borrowings

$

235,073

2.10

%

$

280,361

2.10

%

$

418,895

1.58

%

(1)

Includes FHLB advances and FHLB line of credit.

Liquidity and Capital Resources

Contractual Obligations and Off-Balance Sheet Arrangements

The Company is subject to contractual obligations made in the ordinarycourse of business. The obligations include deposit liabilities,

other borrowed funds, and operating leases. Refer to

Note 11: Borrowing Arrangements

within the Notes to the Consolidated Financial

Statements for a listing of our December 31, 2022 significant contractualcash obligations to third parties on debt obligations. Refer to

Note

6: Leases

within the Notes to the Consolidated Financial Statements for asummary of our contractual cash obligations to third parties on

lease obligations.

As a financial services provider, the Company is a party to various financial instrumentswith off-balance sheet risks, such as

commitments to extend credit. Off-balance sheet arrangements represent theCompany’s future cash requirements. However, a portion of

these commitments may expire without being drawn upon. Refer to

Note 21: Commitments and Credit Risk

within the Notes to the

Consolidated Financial Statementsfor a listing of our December 31, 2022 off-balance sheet arrangements.

The Company’s short-term and long-term contractual obligations, including off-balancesheet obligations, may be satisfied through

our on-balance sheet and off-balance sheet liquiditydiscussed below.

Liquidity

Liquidity is the ability to generate adequate amounts of cash from depositors,stockholders, profits or other funding sources, to meet

our needs for funding, including payments to borrowers, operationalcosts, capital requirements and other strategic cash flow needs.

Our liquidity policy governs our approach to our liquidity position. The objective is to maintainadequate, but not excessive, liquidity

to meet the daily cash flow needs of our clients while attempting to achieveadequate earnings for our stockholders. Our liquidity position is

monitored continuously by our finance department.

Liquidity resources can be derived from two sources: (i) on-balancesheet liquidity resources, which represent funds currently on the

consolidated statement of financial condition; and (ii) off-balance sheet liquidityresources, which represent funds available from third-party

sources. On-balance sheet liquidity resources include overnight funds, short-term deposits with other banks, AFS securities, and certain other

sources. Off-balance sheet liquidity resources consist of credit lines, wholesaledeposits and debt funding and certain other sources.

On-balance sheet liquidity resources can be broken down into threesections: (i) primary liquidity resources, which represent liquid

funds that are on the consolidated statement of financial condition; (ii)tertiary liquidity resources, which represent assets that can be sold

into the secondary market; and (iii) public funds, which represent deposits. Primaryliquidity resources include overnight funds plus short-

term, interest-bearing deposits with other banks and unpledged AFS securities. Tertiary liquidity resources include loans that canbe sold into

the secondary market or through participation and unpledged securities classifiedas held-to-maturity. Public funds are another source of

wholesale deposits as they require collateral.

Off-balance sheet liquidity resources require sufficient collateral, inthe form of loans or securities, and have a larger, negative impact

on our capital ratios. As a result, off-balance sheet liquidity has a higher cost on our asset growth compared to deposit growth.Off-balance

sheet liquidity exists in several forms including: (i) internet subscriptioncertificates of deposit; (ii) brokered deposits; (iii) borrowing

capacity; (iv) repurchase agreements; or (v) other sources.

50

Internet subscription certificates of deposit are deposits made through national,wholesale certificates of deposit funding programs.

These programs are designed to provide funding outside of the Bank’s normalmarket or existing client base and allow the Bank to diversify

its wholesale funding resources. This form of funding does not require collateral and generallycannot be redeemed early. Brokered deposits

are deposits funded through various broker-dealer relationships. The marketfor wholesale deposits is well developed. A key feature of this

type of funding is that it is generally unsecured and does not require collateral forpledging.

Borrowing capacity refers to a form of liability-based funding. Repurchaseagreements are another source of short-term funding in

which a bank agrees to sell a security to a counterparty and repurchase the same oran identical security from the counterparty at a specified

future date and price. Public funds are another source of wholesale deposits as theyrequire collateral.

Our short-term and long-term liquidity requirements are primarily metthrough cash flow from operations, redeployment of prepaying

and maturing balances in our loan portfolio and security portfolio, increasesin client deposits and wholesale deposits. Other alternative

sources of funds will supplement these primary sources to the extent necessaryto meet additional liquidity requirements on either a short-

term or long-term basis. The Company believes that its current liquidity and access to suchalternative sources of funds will be sufficient to

meet anticipated cash requirements for the next 12 months and thereafter.

The Consolidated Statements of Cash Flows summarize our sourcesand uses of cash by type of activity for the years ended

December 31, 2022 and 2021. As of December 31, 2022, we had cash and cash equivalents of $300 million comparedto $483 million at

December 31, 2021. The change in cash and cash equivalents was due to an $80 million increase incash provided by operating activities, a

$620 million decrease in cash provided by investing activities primarilydue to strong loan growth and net cash provided by financing

activities of $357 million primarily due to increases in time deposits. During2022, liquid assets decreased as loan growth outpaced deposit

growth. The decrease was partially offset by net cash activity from the Central acquisition of$126 million.

As of December 31, 2022, 2021, and 2020, we had the following availablefunding:

As of December 31,

2022

2021

2020

(Dollars in thousands)

On-balance sheet liquidity

(1)

$

986,482

$

1,224,253

$

1,046,110

Off-balance sheet liquidity

(2)

770,165

732,748

756,325

Total liquidity

$

1,756,647

$

1,957,001

$

1,802,435

On-balance sheet liquidity

(1)

as a percent of assets

15

%

22

%

19

%

Total liquidity as a percent of assets

27

%

35

%

32

%

(1)

On-balance sheet liquidity represents funds currently on the consolidated statements of financial condition. It consists of overnight funds, short-term

deposits with other banks and unpledged AFS securities.

(2)

Off-balance sheet liquidity represents funds available from third-party sources including credit lines, FHLB, and FRB.

Capital Requirements

The Company and the Bank are subject to various regulatory capital requirementsadministered by the federal banking agencies.

Failure to meet minimum capital requirements can initiate certain mandatoryand possibly additional discretionary actions by regulators that,

if undertaken, could have a direct material effect on the Company’s consolidatedfinancial statements. Refer to Item 1. Business under the

“Supervision and Regulation” section for a detailed discussion regardingour capital requirements.

Refer to

Note 14: Regulatory Matters

in the Notes to the Consolidated Financial Statements for the table thatsummarizes the capital

requirements applicable to the Company and the Bank in order to be considered“well-capitalized” from a regulatory perspective, as well as

the Company’s and the Bank’s capital ratios as of December 31, 2022and 2021. The Bank exceeded all regulatory capital requirements

under Basel III, and the Bank was considered to be “well-capitalized” forthe periods ended December 31, 2022 and 2021.

Stockholders’ Equity

For the year ended December 31, 2022, the Company’s stockholders’ equity decreased primarily due to changes to the unrealizedloss

on AFS securities,the impact of Central and share repurchases, partially offset by an increase innet income.

Changes in stockholders’ equity for the fiscal years ended December 31, 2020, 2021, and 2022are provided in the Consolidated

Statements of Stockholders’ Equity. Additional information regarding the Company’s stock activity is provided in

Note 19: Stockholders’

Equity

within the Notes to the Consolidated Financial Statements.

51

Interest Rate Sensitivity

A primary component of market risk is interest rate volatility. Managing interest rate risk is a key element of ourconsolidated

statement of financial condition management. Interest rate risk is the risk that netinterest margins will be eroded over time due to changing

market conditions. Many factors can cause margins to erode including, withoutlimitation, (i) lower loan demand; (ii) increased competition

for funds; (iii) weak pricing policies; (iv) statement of financial conditionmismatches; and (v) changing liquidity demands. We manage our

sensitivity position in accordance with our interest rate risk policy. The managementof interest rate risk is a three-step process and involves:

(i) measuring the interest rate risk position; (ii) policy constraints; and (iii)strategic review and implementation.

Our exposure to interest rate risk is managed by the Bank’s Asset/Liability Committee (“ALCO”) in accordancewith policies

approved by the Bank’s board of directors. ALCO uses a combination of three systems to measure the statement of financialcondition’s

interest rate risk position. Because each system serves a different purpose andprovides a different perspective, the three systems in

combination are expected to provide a better overall result than a single system alone. The three systems include:(i) gap reports; (ii) earnings

simulation; and (iii) economic value of equity (“EVE”).

•A gap report measures the repricing volume of assets and liabilities by time period. The difference between repricing assets and

repricing liabilities for a particular time period is known as the periodic repricinggap. Using this method, it is possible to estimate

the impact on earnings of a given rate change. As a method of evaluating interest rate risk, the gap report is a reasonablyaccurate

method of assessing earnings exposure. However, its reliability diminishesas statement of financial condition complexity increases.

Optionality and other factors complicate the analysis.

•An earnings simulation measures the effect of changing interest rates on net interestincome and earnings. Earnings simulation is

more detailed than gap analysis. Under this approach, the repricing characteristicsof each asset and liability instrument are

programmed into a computer simulation model. This programming allows the Bankto refine important characteristics such as caps,

floors, and time lag. It also allows the Bank to include the impact of new businessactivity in the analysis. Gap reporting only

considers the existing statement of financial condition position.

•EVE is a valuation approach to measuring long-term interest rate risk exposure. This approachconsiders all future time periods,

which provides an advantage over earnings simulation. However, a negativeattribute of EVE is that it assumes a sustained change

in rates, which is never the case in the long-term. This seeks to compute the financial risk of havinga duration mismatch between

assets and funding.

In addition, ALCO compares the current interest rate risk position to policy limits. This procedure is compliance oriented and results

in either a pass or fail outcome. When the statement of financial condition is in compliance, nofurther action is necessary. In instances of

noncompliance, ALCO will develop a plan of action to correct the condition. A summary of the plan and its timing for completion will be

forwarded to the board of directors each quarter until compliance is reestablished.

ALCO also evaluates interest rate risk positioning in light of anticipatedinterest rates. The purpose of this comparison is to determine

whether action steps need to be taken to modify current strategy. The results form adecision-making input for ALCO. If it is determined that

more asset sensitivity is needed, ALCO will either increase rate sensitive assets or reduce rate sensitive liabilities. The oppositewill occur if

less asset sensitivity is desired.

Loan and deposit repricing assumptions are critical in measuring interest rate risk.For loans, management reviews spreads and

prepayment assumptions. For deposits, management reviews betafactors and decay assumptions. ALCO reviews and adjusts repricing

assumptions at least annually. Model assumptions are included in the outputreports and reviewed by ALCO on a periodic basis.

When evaluating statement of financial condition rate sensitivity, a properanalysis of total funding is of critical importance. The

funding side of the statement of financial condition can be segregatedinto three broad categories, as follows: (i) funding with defined

maturity dates; (ii) non-maturity deposits; and (iii) perpetual funding.

•Funding with defined maturity dates includes certificates of deposit andborrowed funds. The repricing analysis requires a twofold

statement of behavior for each statement of financial conditioncategory. It requires a cash flow schedule for principal and interest

payments and a repricing schedule of rate adjustments. Once the cash flowand repricing projections are developed, the category can

be analyzed for interest rate risk exposure.

•Non-maturity deposits tend to be a longer term, less volatile sourceof funds. Non-maturity deposits have very short contractual

lives. The Bank uses historical analysis to develop its decay assumptions, but it looks at aggregateaccount types rather than

individual clients. The review analyzes both non-maturity deposits as a whole and individualdeposit categories.

52

•Perpetual funding is the most stable and least costly source of funding. Its maincomponent is equity capital. It has a zero interest

rate and cannot be withdrawn by stockholders because of a rate change.In effect, it is a perpetual source of free funding.

Periodic independent evaluations are conducted and documented. Eachevaluation consists primarily of: (i) an assessment of internal

controls; (ii) an evaluation of data integrity; (iii) the appropriateness ofthe risk management system; (iv) the reasonableness of validity

scenarios; (v) a review of ALCO’s charter; and (vi) validation of calculations. In addition, to ensure the model is working as expecteda back

test of the model is completed at least annually.

All of the assumptions used in our analysis are inherently uncertain and,as a result, the model cannot precisely measure future net

interest income or precisely predict the impact of fluctuations in market interestrates on net interest income. Actual results may differ from

the model’s simulated results due to timing, magnitude and frequencyof interest rate changes as well as changes in market conditions and the

application and timing of various management strategies.

On a quarterly basis, we run various simulation models including a static statement offinancial condition and dynamic growth

statement of financial condition. These models test the impact on net interest income and fair valueof equity from changes in market interest

rates under various scenarios. Under the static model and dynamic growthmodels, rates are shocked instantaneously and ramped rates

change over a 12-month horizon based upon parallel and nonparallel yieldcurve shifts. Parallel shock scenarios assume instantaneous

parallel movements in the yield curve compared to a flat yield curve scenario. Nonparallelsimulation involves analysis of interest income

and expense under various changes in the shape of the yield curve.

Our internal policy regarding internal rate risk simulations currentlyspecifies that for instantaneous parallel shifts of the yield curve,

estimated net interest income at risk for the subsequent one-year periodshould not decline by more than 10% for a -200 basis point shift,

15% for a -300 basis point shift, 5% for a -100 basis point shift, 5% for a 100 basis pointshift, 10% for a 200 basis point shift, and 15% for a

300 basis point shift.

The Company has several instruments that can be used to manage interest rate risk,including: (i) modifying the duration of interest-

bearing liabilities; (ii) modifying the duration of interest-earning assets, includingour investment portfolio; and (iii) entering into on-balance

sheet derivatives. Based upon the nature of our operations, we are not subject toforeign exchange or commodity price risk.

ALCO evaluates interest rate risk using a rate shock method and rate ramp method.In a rate shock analysis, rates change immediately

and the change is sustained over the time horizon. In a rate ramp analysis, rate changesoccur gradually over time. The following tables

summarize the simulated changes in net interest income and fair value ofequity over a 12-month horizon using a rate shock and rate ramp

method as of the dates indicated:

Hypothetical Change in Interest Rate - Rate Shock

December 31, 2022

December 31, 2021

Change in Interest Rate

(Basis Points)

Percent Change in

Net Interest Income

Percent Change in

Fair Value of Equity

Percent Change in

Net Interest Income

Percent Change in

Fair Value of Equity

+300

7.9

%

(9.9)

%

7.9

%

(7.7)

%

+200

5.3

(6.4)

4.6

(4.7)

+100

2.6

(2.7)

1.5

(2.7)

Base

—

%

—

%

—

%

—

%

-100

(2.7)

2.6

NA

(1)

NA

(1)

-200

(5.4)

5.1

NA

(1)

NA

(1)

-300

(11.2)

6.3

NA

(1)

NA

(1)

(1)

The Company decided to exclude the down rate environment from its analysis due to the already low interest rate environment.

53

Hypothetical Change in Interest Rate - Rate Ramp

December 31, 2022

December 31, 2021

Change in Interest Rate

(Basis Points)

Percent Change in Net Interest Income

Percent Change in Net Interest Income

+300

3.4

%

3.4

%

+200

2.3

1.9

+100

1.1

0.6

Base

—

%

—

%

-100

(1.1)

NA

(1)

-200

(2.3)

NA

(1)

-300

(3.9)

NA

(1)

(1)

The Company decided to exclude the down rate environment from its analysis due to the already low interest rate environment.

The hypothetical positive change in net interest income as of December31, 2022in an up 100 environment is primarily due to

approximately 63% of the Company’s earning assets adjusting withinthe first year. In addition, the Company’s time deposits and other

borrowings will continue to mature. Loans remain the largest portion of ouradjustable earning assets, as the mix of adjustable loans or those

maturing in one year was 69%.

The models the Company uses include assumptions regarding interest ratesand balance changes.These assumptions are inherently

uncertain and, as a result, the model cannot precisely estimate net interest incomeor precisely predict the impact of higher or lower interest

rates on net interest income. Actual results may differ from simulated results due to timing, magnitude and frequencyof interest rate changes

as well as changes in market conditions, client behavior and managementstrategies, among other factors.

Critical AccountingPolicies and Estimates

Our consolidated financial statements are prepared in accordancewith GAAP and with general practices within the financial services

industry. Application of these principles requires management to make complex and subjective estimates and assumptionsthat affect the

amounts reported in the financial statements and accompanying notes. We base ourestimates on historical experience and on various other

assumptions that we believe to be reasonable under current circumstances. These assumptionsform the basis for our judgments about the

carrying values of assets and liabilities that are not readily available from independent,objective sources. We evaluate our estimates on an

ongoing basis. Use of alternative assumptions may have resulted in significantlydifferent estimates. Actual results may differ from these

estimates.

The Company qualifies as an EGC under the JOBS Act. Section 107 of the JOBS Act provides that an EGC can take advantage of the

extended transition period when complying with new or revised accountingstandards. This allows an EGC to delay adoption of certain

accounting standards until those standards would apply to private companies;however, the EGC can still early adopt new or revised

accounting standards, if applicable. We have elected to take advantage of this extendedtransition period, which means the financial

statements in this Form 10-K, as well as financial statements we file in the future,will be subject to all new or revised accounting standards

generally applicable to private companies, unless stated otherwise. This decision will remainin effect until the Company loses its EGC

status.

Our most significant accounting policies are described in

Note 1: Nature of Operations and Summary of Significant Accounting

Policies

within the Notes to the Consolidated Financial Statements. We identified thefollowing accounting policies and estimates that, due to

the difficult, subjective or complex judgments and assumptions inherentin those policies and estimates and the potential sensitivity of our

financial statements to those judgments and assumptions, are critical toan understanding of our financial condition and results of operations.

Allowance for Credit Losses

The determination of the ACL, which represents management’s estimate of expected lifetime credit loss is recognizedat the origination or

purchase of an asset, including those acquired through a business combination,which is then reassessed at each reporting date over the

contractual life of the asset. The calculation of expected credit losses includes considerationof past events, current conditions, and reasonable

and supportable economic forecasts that affect the collectability of thereported amounts. Generally, expected credit losses are determined

through a pooled, collective assessment of loans and leases with similar risk characteristics.However, if the risk characteristics of a loan or

lease change such that it no longer matches that of the collectively assessed pool, it is removedfrom the population and individually assessed

for credit losses. The total ACL on loans and leases recorded by management represents the aggregated estimated credit loss determined

through both the collective and individual assessments.See

Note 4: Loans and Allowance for Credit Losses

in the Notes to the Consolidated

Financial Statements for additional information.

54

Although management believes the levels of the allowance for credit losses at December31, 2022 are adequate to absorb expected credit

losses, if actual results are materially different from the judgments and uncertaintiesmade, the Company would be required to increase

(decrease) its credit losses provision resulting in a decrease (increase) innet income.

Business Combinations

The Company applies the acquisition method of accounting forbusiness combinations in accordance with ASC 805, Business Combinations.

Under the acquisition method, the acquiring entity in a business combinationrecognizes all of the identifiable assets acquired and liabilities

assumed at their acquisition date fair values. Management utilizes prevailingvaluation techniques appropriate for the asset or liability being

measured in determining these fair values. Any excess of the purchase price over amounts allocated to assets acquired,including identifiable

intangible assets, and liabilities assumed is recorded as goodwill. Where amounts allocatedto assets acquired and liabilities assumed is

greater than the purchase price, a bargain purchase gain is recognized. Acquisition-related costs are expensedas incurred.See

Note 2:

Acquisition Activities

in the Notes to the Consolidated Financial Statements for further information.

Recent AccountingPronouncements

Refer to

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

within the Notes to the Consolidated Financial

Statements included elsewhere in this form 10-K.

Item 7A.Quantitative and Qualitative Disclosures about Market Risk

The information included under the caption “Interest Rate Sensitivity” inManagement’s Discussion and Analysis is incorporated

herein by reference.

55

Item 8.Financial Statements and Supplementary Data

Section

Page Number

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56

Report of Independent Registered Public Accounting Firm

To the Shareholders, Board of Directors and Audit Committee

CrossFirst Bankshares, Inc.

Leawood, Kansas

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial condition of CrossFirst Bankshares,

Inc. (the “Company”) as of December 31, 2022 and 2021, the relatedconsolidated statements of operations,

comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year

period ended December 31, 2022, and the related notes (collectively referredto as the “financial statements”).

In our opinion, the consolidated financial statements referred to above presentfairly, in all material respects,

the financial position of the Company as of December 31, 2022and 2021, and the results of its operations and

its cash flows for each of the years in the three-year period ended December31, 2022, in conformity with

accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussedin Note1 tothe consolidatedfinancial statements,the Companychanged itsmethod ofaccountingfor the

recognitionandmeasurementofcreditlossesasofJanuary1,2022,duetotheadoptionof ASU2016-13,

Financial

Instruments-

CreditLosses

(Topic326):

MeasurementofCreditLossesonFinancialInstruments

anditsrelated

amendments.

As discussed in Note 1to the consolidated financial statements,the Company changed its methodof accounting for leases

as of January 1, 2022, due to the adoption of ASU 2016-02

Leases

(Topic 842).

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is toexpress

an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

States) (“PCAOB”) and are required to be independent with respect tothe Company in accordance with the

U.S. federal securities laws and the applicable rules and regulationsof the Securitiesand Exchange

Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we

plan and perform the audits to obtain reasonable assurance about whetherthe consolidated financial

statements are free of material misstatement, whether due to error or fraud.

57

Our audits included procedures to assess the risks of material misstatement,whether due to error or fraud,

and performing procedures that respond to those risks. Such procedures include examining,on a test basis,

evidence supporting the amounts and disclosures in the financial statements.Our audits also included

evaluating the accounting principles used and significant estimates madeby management, as well as

evaluating the overall presentation of the financial statements. We believe that our audits provide a

reasonable basis forour opinion.

(Formerly, BKD, LLP)

We

have served as the Company’s auditor since 2009.

Kansas City, Missouri

March 3, 2023

See Notes to Consolidated Financial Statements

58

CrossFirst Bankshares, Inc.

Consolidated Statements of Financial Condition

As of December 31,

2022

2021

(Dollars in thousands)

Assets

Cash and cash equivalents

$

300,138

$

482,727

Available-for-sale securities - taxable

198,808

192,146

Available-for-sale securities - tax-exempt

488,093

553,823

Loans, net of allowance for credit losses of $

61,775

and $

58,375

at December 31, 2022 and

2021, respectively

5,310,954

4,197,838

Premises and equipment, net

65,984

66,069

Restricted equity securities

12,536

11,927

Interest receivable

29,507

16,023

Foreclosed assets held for sale

1,130

1,148

Goodwill and other intangible assets, net

29,081

130

Bank-owned life insurance

69,101

67,498

Other

95,754

32,128

Total assets

$

6,601,086

$

5,621,457

Liabilities and stockholders’ equity

Deposits

Non-interest-bearing

$

1,400,260

$

1,163,224

Savings, NOW and money market

3,305,481

2,895,986

Time

945,567

624,387

Total deposits

5,651,308

4,683,597

Federal Home Loan Bank advances

218,111

236,600

Other borrowings

35,457

1,009

Interest payable and other liabilities

87,611

32,678

Total liabilities

5,992,487

4,953,884

Stockholders’ equity

Preferred stock, $

0.01

par value:Authorized -

5,000,000

shares, issued -

none

-

-

Common stock, $

0.01

par value:Authorized -

200,000,000

shares, issued -

53,036,613

and

52,590,015

shares at December 31, 2022 and 2021, respectively

530

526

Treasury stock, at cost:

4,588,398

and

2,139,970

shares held at December 31, 2022 and 2021,

respectively

(64,127)

(28,347)

Additional paid-in capital

530,658

526,806

Retained earnings

206,095

147,099

Accumulated other comprehensive (loss) income

(64,557)

21,489

Total stockholders’ equity

608,599

667,573

Total liabilities and stockholders’ equity

$

6,601,086

$

5,621,457

See Notes to Consolidated Financial Statements

59

CrossFirst Bankshares, Inc.

Consolidated Statements of Operations

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands, except per share data)

Interest Income

Loans, including fees

$

224,138

$

174,660

$

183,738

Available-for-sale securities - taxable

4,577

3,273

5,073

Available-for-sale securities - tax-exempt

15,338

14,033

13,013

Deposits with financial institutions

3,751

502

639

Dividends on bank stocks

709

682

985

Total interest income

248,513

193,150

203,448

Interest Expense

Deposits

49,982

18,523

36,585

Fed funds purchased and repurchase agreements

96

3

164

Federal Home Loan Bank Advances

4,759

5,837

6,341

Other borrowings

142

96

109

Total interest expense

54,979

24,459

43,199

Net Interest Income

193,534

168,691

160,249

Provision for Credit Losses

11,501

(4,000)

56,700

Net Interest Income after Provision for Credit Losses

182,033

172,691

103,549

Non-Interest Income

Service charges and fees on customer accounts

6,228

4,580

2,803

Realized gains on available-for-sale securities

96

1,023

1,704

Gain on sale of loans

47

-

44

(Losses) gains, net on equity securities

(181)

(6,325)

46

Income from bank-owned life insurance

1,602

3,483

1,809

Swap fees and credit valuation adjustments, net

188

275

(204)

ATM and credit card interchange income

6,523

7,996

4,379

Other non-interest income

2,778

2,628

1,152

Total non-interest income

17,281

13,660

11,733

Non-Interest Expense

Salaries and employee benefits

75,288

61,080

57,747

Occupancy

10,663

9,688

8,701

Professional fees

5,275

3,519

4,218

Deposit insurance premiums

3,354

3,705

4,301

Data processing

4,750

2,878

2,719

Advertising

3,201

2,090

1,219

Software and communication

5,093

4,234

3,750

Foreclosed assets, net

(17)

697

1,239

Goodwill impairment

-

-

7,397

Other non-interest expense

14,135

11,491

8,677

Total non-interest expense

121,742

99,382

99,968

Net Income Before Taxes

77,572

86,969

15,314

Income tax expense

15,973

17,556

2,713

Net Income

$

61,599

$

69,413

$

12,601

Basic Earnings Per Share

$

1.24

$

1.35

$

0.24

Diluted Earnings Per Share

$

1.23

$

1.33

$

0.24

See Notes to Consolidated Financial Statements

60

CrossFirst Bankshares, Inc.

Consolidated Statements of Comprehensive (Loss) Income

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands)

Net Income

$

61,599

$

69,413

$

12,601

Other Comprehensive (Loss) Income

Unrealized (loss) gain on available-for-sale securities

(111,661)

(8,894)

18,847

Less: income tax (benefit) expense

(26,870)

(2,182)

4,606

Unrealized gain (loss) on available-for-sale securities, net of income tax

(84,791)

(6,712)

14,241

Reclassification adjustment for realized gains included in income

96

1,023

1,704

Less: income tax expense

24

245

415

Reclassification adjustment for realized gains included in income, net ofincome tax

72

778

1,289

Unrealized loss on cash flow hedges

(1,551)

(562)

-

Less: income tax benefit

(368)

(138)

-

Unrealized loss on cash flow hedges, net of income tax

(1,183)

(424)

-

Other comprehensive (loss) income

(86,046)

(7,914)

12,952

Comprehensive (Loss) Income

$

(24,447)

$

61,499

$

25,553

See Notes to Consolidated Financial Statements

61

CrossFirst Bankshares, Inc.

Consolidated Statements of Stockholders’ Equity

Preferred Stock

Common Stock

Treasury

Additional

Paid in

Retained

Accumulated

Other

Comprehensive

Shares

Amount

Shares

Amount

Stock

Capital

Earnings

Income (Loss)

Total

(Dollars in thousands)

December 31, 2019

—

$

—

51,969,203

$

520

$

—

$

519,870

$

64,803

$

16,451

$

601,644

Adoption of ASU 2018-07

—

—

—

—

—

(238)

204

—

(34)

Net income

—

—

—

—

—

—

12,601

—

12,601

Other comprehensive income - available-for-

sale securities

—

—

—

—

—

—

—

12,952

12,952

Issuance of shares from equity-based awards

—

—

319,926

3

—

(1,087)

—

—

(1,084)

Open market common share repurchases

—

—

(609,613)

—

(6,061)

—

—

—

(6,061)

Employee receivables from sale of stock

—

—

—

—

—

3

44

—

47

Stock-based compensation

—

—

—

—

—

4,363

—

—

4,363

December 31, 2020

—

—

51,679,516

523

(6,061)

522,911

77,652

29,403

624,428

Net income

—

—

—

—

—

—

69,413

—

69,413

Other comprehensive loss - available-for-sale

securities

—

—

—

—

—

—

—

(7,490)

(7,490)

Other comprehensive loss - cash flow hedges

—

—

—

—

—

—

—

(424)

(424)

Issuance of shares from equity-based awards

—

—

300,886

3

—

(689)

—

—

(686)

Open market common share repurchases

—

—

(1,530,357)

—

(22,286)

—

—

—

(22,286)

Employee receivables from sale of stock

—

—

—

—

—

—

34

—

34

Stock-based compensation

—

—

—

—

—

4,584

—

—

4,584

December 31, 2021

—

—

50,450,045

526

(28,347)

526,806

147,099

21,489

667,573

Adoption of ASU 2016-13

—

—

—

—

—

—

(2,610)

(2,610)

Net income

—

—

—

—

—

—

61,599

—

61,599

Other comprehensive loss - available-for-sale

securities

—

—

—

—

—

—

—

(84,863)

(84,863)

Other comprehensive loss - cash flow hedges

—

—

—

—

—

—

—

(1,183)

(1,183)

Issuance of shares from equity-based awards

—

—

446,598

4

—

(565)

—

—

(561)

Open market common share repurchases

—

—

(2,448,428)

—

(35,780)

—

—

—

(35,780)

Employee receivables from sale of stock

—

—

—

—

—

—

7

—

7

Stock-based compensation

—

—

—

—

—

4,417

—

—

4,417

December 31, 2022

—

$

—

48,448,215

$

530

$

(64,127)

$

530,658

$

206,095

$

(64,557)

$

608,599

See Notes to Consolidated Financial Statements

62

CrossFirst Bankshares, Inc.

Consolidated Statements of Cash Flows

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands)

Operating Activities

Net income

$

61,599

$

69,413

$

12,601

Adjustments to reconcile net income tonet cash provided by operating activities:

Depreciation and amortization

5,305

5,260

5,252

Provision for loan losses

11,501

(4,000)

56,700

Accretion of discounts on loans

(252)

-

-

Accretion of discounts and amortizationof premiums on securities

4,288

5,067

6,084

Stock-based compensation

4,417

4,584

4,363

(Gain) loss on disposal of fixed assets

(77)

(123)

101

Loss on sale of foreclosed assets and relatedimpairments

(62)

572

1,156

Gain on sale of loans

(47)

-

(44)

Deferred income taxes

(1,970)

2,664

(5,257)

Net increase in bank owned life insurance

(1,602)

(3,483)

(1,809)

Net gains (losses) on equity securities

181

6,325

(46)

Net realized gains on available-for-sale securities

(96)

(1,023)

(1,704)

Goodwill impairment

-

-

7,397

Dividends on FHLB stock

(699)

(679)

(983)

Prepayment penalties on extinguishmentof debt

-

771

-

Changes in:

Interest receivable

(10,970)

1,213

(1,520)

Other assets

1,814

(533)

(103)

Other liabilities

7,023

2,343

(1,735)

Net cash provided by operating activities

80,353

88,371

80,453

Investing Activities

Net change in loans

(732,041)

172,764

(640,029)

Purchases of available-for-sale and equity securities

(116,136)

(225,719)

(76,218)

Proceeds from maturities of available-for-salesecurities

80,091

103,488

142,057

Proceeds from sale of available-for-sale and equitysecurities

20,109

20,867

31,810

Proceeds from the sale of foreclosed assets

237

628

1,045

Purchase of premises and equipment

(2,569)

(1,211)

(6,093)

Proceeds from the sale of premises and equipmentand related insurance claims

147

608

121

Purchase of restricted equity securities

(13,175)

-

(2,839)

Proceeds from sale of restricted equitysecurities

14,352

4,295

5,556

Proceeds from termination of cash flow hedge

3,290

-

-

Proceeds from death benefit on bank ownedlife insurance

-

3,483

-

Net cash activity from acquisition

125,749

-

-

Net cash (used in) provided by investing activities

(619,946)

79,203

(544,590)

Financing Activities

Net increase in demand deposits, savings,NOW and money market accounts

94,529

407,952

967,245

Net increase (decrease) in time deposits

302,889

(419,095)

(196,264)

Net decrease in fed funds purchased andrepurchase agreements

-

(2,306)

(12,615)

Net increase in federal funds sold

20,000

-

-

Proceeds from Federal Home Loan Bank advances

50,000

-

138,000

Repayment of Federal Home Loan Bankadvances

(154,048)

(57,271)

(203,643)

Net proceeds from lines of credit

79,968

-

-

Issuance of common shares, net of issuancecost

4

3

3

Proceeds from employee stock purchaseplan

364

172

151

Repurchase of common stock

(35,780)

(22,286)

(6,061)

Acquisition of common stock for taxwithholding obligations

(929)

(860)

(1,236)

Net decrease in employee receivables

7

34

47

Net cash provided by (used in) financing activities

357,004

(93,657)

685,627

(Decrease) increase in Cash and CashEquivalents

(182,589)

73,917

221,490

Cash and Cash Equivalents, Beginning of Period

482,727

408,810

187,320

Cash and Cash Equivalents, End of Period

$

300,138

$

482,727

$

408,810

Supplemental Cash Flows Information

Interest paid

$

50,604

$

25,287

$

45,619

Income taxes paid

15,499

12,554

9,692

Equity interest assumed in partial satisfactionof loans

-

-

11,189

Foreclosed assets in settlement of loans

$

-

$

-

$

930

63

CrossFirst Bankshares, Inc.

Notes to Consolidated Financial Statements

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

Organization and Nature of Operations

CrossFirst Bankshares, Inc., a Kansas corporation (the “Company”), is a bankholding company whose principal activities are the

ownership and management of its wholly owned subsidiary, CrossFirst Bank (the“Bank”). The Bank has

three

wholly owned subsidiaries:

(i) CrossFirst Investments, Inc., which holds investments in marketablesecurities; (ii) CFBSA I, LLC, which can hold foreclosed assets; and

(iii) CFBSA II, LLC, which can hold foreclosed assets.

The Bank is primarily engaged in providing a full rangeof banking and financial services to individual and corporate clients through

its branches in: (i) Leawood, Kansas; (ii) Wichita, Kansas; (iii) Kansas City, Missouri; (iv) OklahomaCity, Oklahoma; (v) Tulsa, Oklahoma;

(vi) Dallas, Texas; (vii) Frisco, Texas; (viii) Phoenix, Arizona (ix) Colorado Springs, Colorado; (x) Denver, Colorado; and (xi)Clayton, New

Mexico.The Bank is subject to competition from other financial institutions and the regulationof certain federal and state agencies and

undergoes periodic examinations by those regulatory authorities.

The Company’s accounting and reporting policies conform to accountingprinciples generally accepted in the United States

(“GAAP”). The consolidated financial statements include the accounts of the Company; the Bank and its wholly-owned subsidiaries,

CrossFirst Investments, Inc., CFBSA I, LLC and CFBSA II, LLC. All significant intercompany accounts and transactions were eliminated in

consolidation.

The preparation of financial statements in conformity with GAAP requires management to makeestimates and assumptions that

affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements

and the reported amounts of revenues and expenses during the reportingperiod. Actual results could differ from those estimates. Material

estimates that are particularly susceptible to significant change relate tothe determination of the allowance for credit losses, valuation of

deferred tax assets, stock-based compensation, derivatives, and fair valuesof financial instruments.

For the year ended December 31, 2022, the Company broke outthe “Goodwill and other intangible assets, net” that was previously

reported in “other assets” within the consolidated statements of financialcondition.As a result, changes within the consolidated statements of

financial condition in the prior periods were made to conform to the current period presentation. Thechange was due to goodwill and

intangible assets that were added during 2022 related to the acquisition ofFarmers & Stockmens Bank (“Central”). The change had no

impact on net income.

Summary of Significant AccountingPolicies

Cash Equivalents - The Company considers all liquid investments with original maturities ofthree months or less to be cash

equivalents. At December 31, 2022, cash equivalents consisted primarily of both interest-bearing and non-interest-bearingaccounts with

other banks. Approximately $

273

million of the Company’s cash and cash equivalents were held at the Federal Reserve Bankof Kansas City

at December 31, 2022. The Company is required to maintain reserve funds in cash and/or ondeposit with the Federal Reserve Bank. The

reserve required at December 31, 2022 was $

0

. In addition, the Company is required from time to time to place cash collateral with third

parties as part of its back-to-back swap agreements and cash flow hedges. At December 31, 2022,

no

cash collateral was required. At

December 31, 2022, the Company’s cash accounts, excluding funds at theFederal Reserve Bank and funds required as cash collateral,

exceeded federally insured limits by $

9

million.

Securities -

Debt securities for which the Company has no immediate plan to sell but which may besold in the future, are classified

as available-for-sale (“AFS”) and recorded at fair value, with unrealized gainsand losses excluded from earnings and reported in other

comprehensive (loss) income. Purchase premiums and discounts are recognizedin interest income using the interest method over the terms

of the securities. Gains and losses on the sale of debt securities are recorded on thetrade date and are determined using the specific

identification method.

Equity securities are recorded at fair value with unrealized gains andlosses included in earnings. Gains and losses on the sale of

equity securities are recorded on the trade date and are determined usingthe specific identification method.

The Company elected a measurement alternative for three privateequity investmentsthat did not have a readily determinable fair

value and did not qualify for the practical expedient to estimate fair value using thenet asset value per share. A cost basis was calculated for

the equity investments. The recorded balance will adjust for any impairment or any observableprice changes for an identical or similar

investment of the same issuer.

64

For AFS securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is morelikely than not

that it will be required to sell the security before recovery of its amortized cost basis. Ifeither of the criteria regarding intent or requirement

to sell is met, the securities’ amortized cost basis is written down to fair value through income. For AFS securities that do not meet the

criteria above, the Company evaluates whether the decline in fair value has resultedfrom credit losses or other factors. Management

considers the extent to which fair value is less than amortized cost, any changesto the rating of the security by a rating agency, and adverse

conditions specifically related to the security, among other factors. Ifthis assessment indicates that a credit loss exists, the present value of

cash flows expected to be collected from the security is compared tothe amortized cost basis of the security. If the present value of cash

flows expected to be collected is less than the amortized cost basis, a credit loss exists andan allowance for credit losses is recorded for the

credit loss, limited by the amount that the fair value is less than amortized cost basis. The Companyhas elected to exclude accrued interest

receivable (“AIR) from investment securities from the credit loss assessment as interest deemeduncollectible is written off through interest

income.

Prior to the adoption of ASU 2016-13, declines in the fair value of AFS securities below their cost that were deemed to be other-

than-temporarily impaired were reflected in earnings as realized losses.In estimating other-than-temporary-impairment prior to January 1,

2020, the Company considered, among other things, the severity and durationof the unrealized loss position; adverse conditions specifically

related to the security; changes in expected future cash flows; downgradesin the rating of the security by a rating agency; the failure of the

issuer to make scheduled interest or principal payments; whether the Companyhad the intent to sell the security; and whether it was more

likely than not that the Company would be required to sell the security.

Loans -

Loans that management has the intent and ability to hold for the foreseeable future or until maturityor payoff are reported at

their outstanding principal balances adjusted for unearned income,charge-offs, the allowance for loan losses, any unamortized deferred fees

or costs on originated loans and unamortized premiums or discounts on purchasedloans.

For loans amortized at cost, interest income is accrued based on the unpaidprincipal balance. Loan origination fees, net of certain

direct origination costs, as well as premiums and discounts, are deferred andamortized as a level yield adjustment over the respective term of

the loan.

The accrual of interest on mortgage and commercial loans is discontinuedat the time the loan is 90 days past due unless the credit is

well secured and in process of collection. A credit is considered well secured if it is secured by collateral in the form of liens or pledges of

real or personal property, including securities, that have a realizable valuesufficient to discharge the debt (including accrued interest) in full

or is secured by the guaranty of a financially responsible party. A debt is in the process of collection if collection of the debt is proceeding in

due course either through legal action, including enforcement procedures,or in appropriate circumstances, through collection efforts not

involving legal action which are reasonably expected to result in repaymentof the debt or in its restoration to a current status. Past due status

is based on contractual terms of the loan. In all cases, loans are placed on non-accrualor charged off at an earlier date, if collection of

principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on non-accrualor charged off are reversed against interest income.

The interest on these loans is accounted for on the cash basis or cost recovery method,until qualifying for return to accrual. When payments

are received on non-accrual loans, payments are applied to principal unless thereis a clear indication that the quality of the loan has

improved to the point that it can be placed back on accrual status. Loans arereturned to accrual status when all the principal and interest

amounts contractually due are brought current and future payments are reasonablyassured.

Allowance for Credit Losses (“ACL”) - The Company adopted ASU 2016-13,

Measurement of Credit Losses on Financial

Instruments

, effective January 1, 2022. The Current Expected Credit Loss (“CECL”) modelrequires an estimate of expected credit losses,

measured over the contractual life of an instrument, that considers forecasts offuture economic conditions in addition to information about

past events and current conditions.

The Company uses a loss-rate ("cohort") method to estimate the expectedallowance for credit losses ("ACL") for all loan pools.

The cohort method identifies and captures the balance of a pool of loans with similarrisk characteristics, as of a particular point in time to

form a cohort, then tracks the respective losses generated by that cohortof loans over their remaining lives, or until the loans are “exhausted”

(i.e., have reached an acceptable point in time at which a significant majority of all losses areexpected to have been recognized). The

Company has elected to exclude accrued interest receivable fromthe ACL process, because a timely write-off policy exists.

Unfunded loan commitments

In addition to the ACL for funded loans, the Company maintains reserves to coverthe risk of loss associated with off-balance sheet

unfunded loan commitments. The allowance for off-balance sheet creditlosses is maintained within the other liabilities in the statements of

financial condition. Under the CECL framework, adjustments to this liabilityare recorded as provision for credit losses in the statements of

operations. Unfunded loan commitment balances are evaluated by loan class andfurther segregated by revolving and non-revolving

commitments. In order to establish the required level of reserve, theCompany applies average historical utilization rates and ACL loan

model loss rates for each loan class to the outstanding unfunded commitmentbalances.

65

Refer to

Note 4: Loans and Allowance for Credit Losses

for additional information regarding the policies, procedures,and credit

quality indicators used by the Company.

Prior to the adoption of ASU 2016-13, the Company’sdetermination of the allowance took into consideration, among other matters,

periodic review of the ability to collect loans in light of historical experience, thenature and volume of the loan portfolio, adverse situations

that may affect the borrower’s ability to repay,estimated value of any underlying collateral and prevailing economic conditions.

Under the prior incurred loss methodology,the Company routinely evaluated adversely risk-rated credits for impairment.

Impairment, if any, was typicallymeasured for each loan by either (i) the present value of the loan’sexpected future cash flows discounted at

the loan’s effectiveinterest rate, (ii) the loan’s obtainable marketprice or (iii) the estimated fair value of the collateral, if the loan was

collateral dependent. General allowances were established forloans with similar characteristics. In this process, general allowance factors

were based on an analysis of historical loss experience and expected loss given defaultderived from the Company’s internal riskrating

process.Other adjustments may have been made after assessing internal or externalinfluences on credit quality that were not fully reflected

in the historical loss or risk rating data. Tothe extent that the data supporting such factors had limitations, management’sjudgment and

experience played a key role in determining the allowance estimates.

Premises and Equipment -

With the exception of premises and equipment acquired through business combinations,which are

initially measured and recorded at fair value, depreciable assets are stated at cost less accumulateddepreciation. Depreciation is charged to

expense using the straight-line method over the estimated useful lives ofthe assets. Leasehold improvements are capitalized and depreciated

using the straight-line method over the terms of the respective leases or the estimateduseful lives of the improvements, whichever is shorter.

Expected terms include lease option periods to the extent that the exercise ofsuch options is reasonably assured. The Company generally

assigns depreciable lives of

35

to

40

years for buildings and improvements,

5

to

7

years for furniture and fixtures and

3

to

5

years for

equipment. The Company reviews premises and equipment whenever events orchanges in circumstances indicate that the carrying amount

of the asset may not be recoverable. An impairment loss is recognized when the sum of the undiscounted future net cash flows expectedto

result from the use of the asset and its eventual disposal is less than its carrying amount.

Restricted Equity Securities -

Restricted equity securities include investments in FHLB Topeka and Bankers’ Bank of Kansas.

FHLB Topeka is a Federal Home Loan Bank and its stock is a required investment forinstitutions that are members of the Federal Home

Loan System. The required investment in the common stock is based on a predetermined formula. TheBankers’ Bank of Kansas is a

correspondent bank located in Wichita, Kansas and the investment is carried at cost and evaluatedfor impairment.

Bank-Owned Life Insurance -

The Company has purchased life insurance policies on certain keyemployees that are accounted for

under the fair value method. Bank-owned life insurance is recorded at the amountthat can be realized under the insurance contract at the

statement of financial condition date, which is the cash surrender value.Changes in cash surrender value are recorded in earnings in the

period in which the changes occur.

Foreclosed Assets Held-for-Sale -

Assets acquired through, or in lieu of, loan foreclosure are held-for-sale andare initially recorded

at fair value less cost to sell at the date of foreclosure, establishing a new costbasis. Subsequent to foreclosure, valuations are periodically

performed by management and the assets are carried at the lower of carrying amountor fair value less cost to sell. Revenue and expenses

from operations and changes in the valuation allowance are included in net income or expensesfrom foreclosed assets.

Goodwill and intangible assets, net -

Goodwill is established and recorded if the consideration given during an acquisition

transaction exceeds the fair value of the net assets received. Goodwill has anindefinite useful life and is not amortized, but is evaluated

annually for potential impairment, or when events or circumstances indicatethat it is more likely than not that the fair value of the reporting

unit is less than its carrying amount. A qualitative assessment is performed to determine whether the existence of events or circumstances led

to a determination that it was more likely than not the fair value was less than the carryingamount, including goodwill. If, based on the

evaluation, it is determined to be more likely than not that the fair valuewas less than the carrying value, then goodwill is tested further for

impairment. If the implied fair value of goodwill is lower than its carryingamount, a goodwill impairment would be indicated and goodwill

written downto its implied fair value.

Intangible assets that have finite useful lives, such as core deposit intangibles,are amortized over their estimated useful lives. The

Company’s core deposit intangible assets represent the value of the anticipatedfuture cost savings that will result from the acquired core

deposit relationships versus an alternative source of funding. Judgmentmay be used in assessing goodwill and intangible assets for

impairment. Estimates of fair value are based on projections of revenues,operating costs and cash flows of the reporting unit considering

historical and anticipated future results, general economic and marketconditions, as well as the impact of planned business or operational

strategies. The valuations use a combination of present value techniquesto measure fair value considering market factors. Additionally,

judgment is used in determining the useful lives of finite-lived intangibleassets. Adverse changes in the economic environment, operations

of the reporting unit, or changes in judgments and projections could resultin a significantly different estimate of the fair value of the

reporting unit and could result in an impairment of goodwill and/or intangibleassets.

66

Related Party Transactions - The Company extends credit and receives deposits from related parties. Inmanagement’s opinion, the

loans and deposits were made in the ordinary course of business and madeon similar terms as those prevailing at the time with other persons.

Related party loans totaled $

7

million and $

8

million at December 31, 2022 and 2021, respectively. Related party deposits totaled

$

91

million and $

74

million at December 31, 2022 and 2021, respectively.

Stock-Based Compensation - The Company accounts for all stock-based compensationtransactions in accordance with Accounting

Standard Codification (“ASC”) 718, Compensation - Stock Compensation,which requires that stock compensation transactions be

recognized as compensation expense in the consolidated statements of operationsbased on their fair values on the measurement date. The

Company recognizes forfeitures as they occur. New shares are issued upon exerciseof an award. The Company records permanent tax

differences through the income tax provision upon vesting or exerciseof a stock-based award. The various stock-based compensation plans

are described more fully in

Note 17: Stock-Based Compensation

.

Transfers of Financial Assets - Transfers of financial assets are accounted for as sales when control over the assets has been

surrendered. Control over transferred assets is deemed to be surrenderedwhen: (i) the assets have been isolated from the Company and put

presumptively beyond the reach of the transferor and its creditors, evenin bankruptcy or other receivership; (ii) the transferee obtains the

right (free of conditions that constrain it from taking advantage of that right)to pledge or exchange the transferred assets; and (iii) the

Company does not maintain effective control over the transferredassets through an agreement to repurchase them before their maturity or the

ability to unilaterally cause the holder to return specific assets.

Income Taxes - The Company and its subsidiaries file U.S. federal and certain state income taxreturns on a consolidated basis.

Additionally,the Company and its subsidiaries file separate state income tax returns with variousstate jurisdictions. The provision for

income taxes includes the income tax balances of the Company and all ofits subsidiaries.

The Company accounts for income taxes in accordance with ASC 740, Income Taxes. The income tax accounting guidance results

in two components of income tax expense: (i) current; and (ii) deferred. Currentincome tax expense reflects taxes to be paid or refunded for

the current period by applying the provisions of the enacted tax law to the taxable incomeor excess of deductions over revenues. The

Company determines deferred income taxes using the liability or balancesheet method. Under this method, the net deferred tax asset or

liability is based on the tax effects of the differences between the bookand tax bases of assets and liabilities and enacted changes in tax rates

and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities betweenperiods. Deferred tax assets are

recognized if it is more likely than not, based on the technical merits, that the taxposition will be realized or sustained upon examination.

The term, more likely than not, means a likelihood of more than 50 percent; theterms examined and upon examination also include

resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely than not recognition threshold is

initially and subsequently measured as the largest amount of tax benefitthat has a greater than 50 percent likelihood of being realized upon

settlement with a taxing authority that has full knowledge of all relevant information. The determinationof whether or not a tax position has

met the more likely than not recognition threshold considers the facts, circumstancesand information available at the reporting date and is

subject to management’s judgment. Deferred tax assets are reduced bya valuation allowance if, based on the weight of evidence available, it

is more likely than not that some portion or all of a deferred tax asset will not be realized.

The Company recognizes interest and penalties on income taxes as a componentof other non-interest expense.

Earnings Per Share -

Basic earnings per share represent net income available to common stockholders dividedby the weighted

average number of common shares outstanding during each period. Diluted earningsper share reflect additional potential shares that would

have been outstanding if dilutive potential common stock had beenissued, as well as any adjustment to income that would result from the

assumed issuance. Potential common stock that may be issued by the Companyis determined using the treasury stock method.

Derivative Financial Instruments -

The Company records all derivatives on the statement of financial conditionat fair value in

accordance with ASC 815, Derivatives and Hedging. The accounting for changes in the fair value of derivatives depends onthe intended use

of the derivative, whether the Company has elected to designate a derivativein a hedging relationship and apply hedge accounting and

whether the hedging relationship has satisfied the criteria necessary to apply hedgeaccounting. Derivatives designated and qualifying as a

hedge of the exposure to changes in the fair value of an asset, liability, or firm commitmentattributable to a particular risk, such as interest

rate risk, are considered fair value hedges. Derivatives designated and qualifyingas a hedge of the exposure to variability in expected future

cash flows, or other types of forecasted transactions, are considered cash flowhedges. Hedge accounting generally provides for the matching

of the timing of gain or loss recognition on the hedging instrument with the recognitionof the changes in the fair value of the hedged asset or

liability that are attributable to the hedged risk in a fair value hedge or theearnings effect of the hedged forecasted transactions in a cash flow

hedge.

In accordance with the Financial Accounting Standards Board's (“FASB”) fair value measurement guidance in ASU 2011-04, the

Company made an accounting policy election to measure the credit riskof its derivative financial instruments that are subject to master

netting agreements on a net basis by counter-party portfolio.

67

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 areotherwise generally applicable to public companies. Among the

reductions and reliefs, the Company elected to extend the transition periodfor 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 transitionperiod for so long as the Company remains an EGC or until

the Company affirmatively and irrevocably opts out of the extendedtransition period under the JOBS Act.

Acquisition Activities - The Company accounts for business combinations under the acquisition method of accounting. Assets

acquired and liabilities assumed are measured and recorded at fair valueat the date of acquisition, including identifiable intangible assets. If

the fair value of net assets acquired exceeds the fair value of considerationpaid, a bargain purchase gain is recognized at the date of

acquisition. Conversely, if the consideration paid exceeds the fairvalue of the net assets acquired, goodwill is recognized at the acquisition

date. Fair values are subject to refinement for up to a maximum of one yearafter the closing date of an acquisition as information relative to

closing date fair values becomes available. Adjustments recorded to the acquired assets and liabilities assumedare applied prospectively in

accordance with ASC Topic 805. The determination of the fair value of loans acquired takes into account credit quality deteriorationand

probability of loss; therefore, the related ACL is not carried forward at the time of acquisition. Identifiable intangible assets are recognized

separately if they arise from contractual or other legal rights or if they are separable(i.e., capable of being sold, transferred, licensed, rented,

or exchanged separately from the entity). Deposit liabilities and therelated depositor relationship intangible assets, known as the core deposit

intangible assets, may be exchanged in observable exchange transactions. As a result, the core deposit intangible asset is considered

identifiable, because the separability criterion has been met.

Treasury Stock - When the Company acquires treasury stock, the sum of the considerationpaid and direct transaction costs after tax

is recognized as a deduction from equity. The cost basis for the reissuance of treasurystock is determinedusing a first-in, first-out basis. To

the extent that the reissuance price is more than the cost basis (gain), the excess is recordedas an increase to additional paid-in capital in the

consolidated statements of financial condition. If the reissuance priceis less than the cost basis (loss), the difference is recorded to additional

paid-in capital to the extent there is a cumulative treasury stock paid-in capitalbalance. Any loss in excess of the cumulative treasury stock

paid-in capital balance is charged to retained earnings.

Operating Segments - An operating segment is a component of an entity that has separate financial information relatedto its

business activities and is reviewed by the chief operating decision makeron a regular basis to allocate resources and assess performance. The

Company identifies the following markets as operating segments: (i) Kansas City, Missouriand Leawood, Kansas; (ii) Wichita, Kansas; (iii)

Oklahoma City, Oklahoma; (iv) Tulsa, Oklahoma; (v) Energy; (vi) Dallas and Frisco, Texas; (vii) Phoenix, Arizona; (viii) Franchise Finance;

(ix) Financial Institutions; (x) Colorado Springs, Colorado; (xi) Denver,Colorado; (xii) New Mexico; (xiii) Small Business Administration

(“SBA”); (xiv) Residential Mortgage; and (xv) Sponsor Finance. These marketsprovide similar products and services using a similar process

to a similar customer base. Our products and services include, but are not limitedto, loans; checking and savings accounts; time deposits and

credit cards. Loan products include commercial, real estate, consumer, andSBA loans. The regulatory environment is the same for the

markets as well. The chief operating decision maker monitors the revenue andcosts of the markets; however, operations are managed,

including allocation of resources, and financial performance is evaluatedon a Company-wide basis. As a result, the markets are aggregated

into

one

reportable segment.

Recent Accounting Pronouncements

The following ASUs represent changes to current accounting guidance that will be adopted in future years:

ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): TroubledDebt Restructurings and Vintage Disclosures

Background

– ASU 2022-02 provides new guidance on (i) troubled debt restructurings (“TDRs”) and (ii) vintage disclosuresfor

gross write-offs. The update eliminates the accounting guidance for TDRs and requires a company todetermine if a modification

results in a new loan or a continuation of an existing loan. The update enhancesthe required disclosures for certain modifications

made to borrowers experiencing financial difficulty. In addition, the updaterequires disclosure of current-period gross charge-offs

by year of origination for financing receivables. For the Company, theamendments are effective as of January 1, 2023.

Impact of adoption

– The Company expects to adopt the provisions of this guidance as of January 1, 2023. We have concludedthat

the adoption of this ASU will have an immaterial impact on our consolidated financial statements and related disclosures.

The following ASUs represent changes to current accounting guidance that were adopted in the current year:

ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurementof Credit Losses on Financial Instruments:

Background

– ASU 2016-13 and its subsequent amendments provide new guidance on the impairment model for financial assets

measured at amortized cost, including loans held-for-investment andoff-balance sheet credit exposures. The CECL model requires

an estimate of expected credit losses, measured over the contractual lifeof an instrument, that considers forecasts of future

economic conditions in addition to information about past events and currentconditions. ASU 2016-13 requires new disclosures,

including the use of vintage analysis on the Company’s credit quality indicators.In addition, ASU 2016-13 removes the AFS

68

securities other-than-temporary-impairment model that reduced thecost basis of the investment and is replaced with an impairment

model that will recognize an allowance for credit losses on available-for-sale securities.

Impact of adoption

– The Company adopted ASU 2016-13 on January 1, 2022 using the modified retrospective approach. All

disclosures as of December 31, 2022 are presented in accordance with Topic 326. The Companydid not recast comparative financial

periods and has presented those disclosures under previously applicable GAAP. The Companyused the prospective transition

approach for AFS securities for which other-than-temporary-impairment has been recognized prior to January1, 2022. As a result,

the amortized cost basis remains the same before and after the effective date of ASU 2016-13.

The following table illustrates the impact of adopting ASU 2016-13 and details how outstanding loan balances have been

reclassified because of changes made to the Company’s loan segments underCECL:

January 1, 2022

As Reported under ASU

2016-13

Pre-ASU 2016-13

Impact of ASU 2016-13

Adoption

(Dollars in thousands)

Assets:

Loans (outstanding balance)

Commercial and industrial

$

843,024

$

1,401,681

$

(558,657)

Commercial and industrial lines of credit

617,398

-

617,398

Energy

278,579

278,860

(281)

Commercial real estate

1,278,479

1,281,095

(2,616)

Construction and land development

574,852

578,758

(3,906)

Residential real estate

360,046

600,816

(240,770)

Multifamily real estate

240,230

-

240,230

PPP

-

64,805

(64,805)

Consumer

63,605

63,605

-

Gross Loans

4,256,213

4,269,620

(13,407)

Net deferred loan fees and costs

-

13,407

(13,407)

Allowance for credit losses on loans

56,628

58,375

(1,747)

Loans, net of the allowance for credit losses

4,199,585

4,197,838

1,747

Deferred tax asset

$

15,301

$

14,474

$

827

Liabilities

Allowance for credit losses on off-balance sheet

exposures

$

5,184

$

-

$

5,184

Stockholders' equity

Retained earnings

$

144,489

$

147,099

$

(2,610)

In connection with adoption of ASU 2016-13, changes were made to the Company’s loan segments to align with the methodology

applied in determining the allowance under CECL. The commercial and industrial loan portfoliowas separated into term loans and

lines of credit. In addition, the remaining Paycheck Protection Program(“PPP”) loans were consolidated into the commercial and

industrial term loan segment due to their declining outstanding balance. The Companyalso separated the residential and multifamily

real estate loan segments. Refer to

Note 4: Loans and Allowance for Credit Losses

for detail on the loan segments.

ASU 2016-02, Leases (Topic 842):

Background

– In February 2016, the FASB issued ASU 2016-02, Leases. The guidance in ASU 2016-02 supersedes the lease

recognition requirements in ASC Topic 840, Leases. The new standard established a right-of-use (“ROU”) model that requires a

lessee to record a ROU asset and lease liability on the statement of financialcondition for all leases with terms longer than 12

months. Leases are classified as either finance or operating, with classificationaffecting the pattern of expense recognition in the

consolidated statementsof operations.

Impact of Adoption

– The Company adopted ASU 2016-02 on January 1, 2022. In July 2018, the FASB issued ASU 2018-11

which, among other things, provided an additional transition methodthat allows entities to not apply the guidance in ASU 2016-02

in the comparative periods presented in the financial statements and insteadrecognize a cumulative-effect adjustment to the opening

balance of retained earnings in the period of adoption. The Company did not recast comparativefinancial periods and has presented

those disclosures under previously applicable GAAP.We also elected to apply certain practical expedients provided under ASU

2016-02 whereby we combine lease and non-lease components and we will notreassess (i) whether any expired or existing

contracts are or contain leases, (ii) the lease classification for any expired or existingleases and (iii) initial direct costs for any

69

existing leases. We also did not apply the recognition requirements of ASU 2016-02 to any short-term leases (as defined by related

accounting guidance).

The following table illustrates the impact of adopting ASU 2016-02 on the Company’s financial statements:

January 1, 2022

As Reported under ASU

2016-02

Pre-ASU 2016-02

Impact of ASU 2016-02

Adoption

(Dollars in thousands)

Assets:

Right-of-use asset

$

23,589

$

-

$

23,589

Liabilities:

Lease incentive

-

2,125

(2,125)

Accrued rent payable

-

904

(904)

Lease liability

$

26,618

$

-

$

26,618

Note 2:Acquisition Activities

On November 22, 2022, the Company completed its acquisition of Centralwhereupon Central was merged with and into the Bank.

Pursuant to the merger agreement executed in June 2022, the Company paid $

66.2

million of cash consideration and assumed all of the assets

and liabilities of Central by operation of law. The acquisition added three full-servicebranches within Colorado and New Mexico to the

Company’s footprint,adds experienced leaders, in particular in the SBA and Residential Mortgage lending areas, and accelerates our growth

strategy.

Central acquisition-related costs totaled $

8.3

million for the year ended December 31, 2022, including a Day 1 CECL provision

expense of $

4.4

million, which were included in the Company’s consolidated statements of operations. Theresults of Central are included in

the results of the Company subsequent to the acquisition date and reportedin this annual report on Form 10-K.

The Company determined that the acquisition of Central constitutes a business combinationas defined in ASC Topic 805, Business

Combinations. Accordingly, as of the date of the acquisition, the Company recorded the assets acquired andliabilities assumed at fair value.

The Company determined fair values in accordance with the guidanceprovided in ASC Topic 820, Fair Value Measurements and

Disclosures. In many cases, the determination of these fair values requiredmanagement to make estimates about discount rates, future

expected cash flows, market conditions and other future events that are highlysubjective in nature and subject to change. Actual results could

differ materially. The Company has made the determination of fair values usingthe best information available at the time; however, purchase

accounting is not complete and the assumptions used are subject to change and, if changed,could have a material effect on the Company's

financial position and results of operations.

70

The table below summarizes preliminary net assets acquired (at fair value)and consideration transferred in connection with the

Central acquisition:

November 22, 2022

(Dollars in thousands)

Assets:

Cash and cash equivalents

$

191,916

Available-for-sale securities

41,103

Loans, net of unearned fees

388,531

Premises and equipment

2,270

Restricted equity securities

1,087

Interest receivable

2,514

Foreclosed assets held for sale

158

Core deposit intangible

16,465

Other

4,231

Total assets acquired

648,275

Liabilities:

Total deposits

570,275

Federal Home Loan Bank advances

10,559

Other borrowings

10,901

Interest payable and other liabilities

3,209

Total liabilities assumed

594,944

Identifiable net assets acquired

$

53,331

Consideration:

Cash

66,167

Goodwill

$

12,836

In connection with the Central acquisition, the Company recorded $

12.8

million of goodwill, which is deductible for tax purposes.

The amount of goodwill recorded reflects the expanded market presence,synergies and operational efficiencies that are expected to result

from the acquisition. The following is a description of the methods used to determinethe fair values of significant assets and liabilities

presented above:

Cash and cash equivalents

—The carrying amount of these assets was deemed a reasonable estimate of fairvalue based on the short-

term nature of these assets.

Loans, net

—The fair value of loans was based on a discounted cash flow methodology.Inputs and assumptions used in the fair

value estimate of the loan portfolio, includes interest rate, servicing, credit and liquidityrisk, and required equity return. The fair value of

loans was calculated using a discounted cash flow analysis based on the remainingmaturity and repricing terms. Cash flows were adjusted

by estimating future credit losses and the rate of prepayments. Projected monthlycash flows were then discounted to present value using a

risk-adjusted market rate for similar loans.

Core deposit intangibles

—The Company identified customer relationships, in the form of core deposit intangibles,as an identified

intangible asset. Core deposit intangibles derive value fromthe expected future benefits or earnings capacity attributable to the acquired core

deposits. The core deposit intangible was valued by identifying the expected futurebenefits of the core deposits and discounting those

benefits back to present value. The core deposit intangible will be amortized overits estimated useful life of approximately

10

years using

the sum of the years digits accelerated method.

Deposits

—By definition, the fair value of demand and saving deposits equals theamount payable. For time deposits acquired, the

Company utilized an income approach, discounting the contractual cash flowson the instruments over their remaining contractual lives at

prevailing market rates.

FHLB Advances

- FHLB advances are recorded at their fair value as estimated by discounting the contractual future cash flows using

FHLB rates offered on similar maturities as of the acquisition date.

71

The fair value of the acquired assets and liabilities noted in the table may change duringthe provisional period, which may last up to

twelve months subsequent to the acquisition date. The Company may obtain additionalinformation to refine the valuation of the acquired

assets and liabilities and adjust the recorded fair value.

Accounting for acquired loans

Loans acquired are recorded at fair value with no carryover of the related allowancefor credit losses. Purchased-credit deteriorated

loans (“PCD”) are loans that have experienced more than insignificantcredit deterioration since origination and are recorded at the purchase

price. Management determined that any loans which were past due, adversely riskrated, on non-accrual or considered a troubled debt

restructured loan were PCD loans. The allowance for credit losses is determined on a collectivebasis and is allocated to the individual loans.

The sum of the loan’s purchase price and the allowance for credit losses becomes its initialamortized cost basis. The difference between the

initial amortized cost basis and the par value of the loan is a noncredit discountor premium, which is amortized into interest income over the

life of the loan.

Non-PCD loans have not experienced a more than insignificant deteriorationin credit quality since origination. The difference

between the fair value and outstanding balance of the non-PCD loans is recognizedas an adjustment to interest income over the lives of the

loan.

A Day 1 CECL allowance for credit losses on the non-PCD loans was recorded through provision for credit loss expense within the

consolidated statements of operations. At the date of acquisition, of the $

388.5

million of loans acquired from Central, $

20.5

million, or

5

%

of Central’s loan portfolio, were accounted for as PCD loans.

The following table provides a summary of PCD loans purchased as partof the Central acquisition as of the acquisition date:

Total

(Dollars in thousands)

Unpaid principal balance

$

22,005

PCD allowance for credit loss at acquisition

(916)

(Discount) premium on acquired loans

(566)

Purchase price of PCD loans

$

20,523

Pro forma information

The following table presents unaudited pro-forma information as if the acquisitionof Central had occurred on January 1, 2021.This

pro forma information gives effect to certain adjustments, includingpurchase accounting fair value adjustments, amortization of core deposit

intangible and related income tax effects and is based on our historical results for theperiods presented. The Day 1 CECL provision of $

4.4

million is included in the 2021 pro forma results. Transaction-related costs related toeach acquisition are not reflected in the pro forma

amounts. The pro forma information does not necessarily reflect the results of operationsthat would have occurred had the Company

acquired Central at the beginning of fiscal year 2021. Cost savings are alsonot reflected in the unaudited pro forma amounts.

72

The pro forma information is theoretical in nature and not necessarily indicative offuture consolidated results of operations of the

Company or the consolidated results of operations which would have resultedhad the Company acquired Central during the periods

presented.

Pro forma for Years Ended December 31,

Actual from

Acquisition Date

through

December 31, 2022

2022

2021

(Dollars in thousands, except share and per share data)

Net interest income

$

1,906

$

209,957

$

186,824

Non-interest income

142

26,193

23,225

Net income

261

68,846

71,689

Pro-forma earnings per share:

Basic

$

1.39

$

1.40

Diluted

1.38

1.38

Weighted average shares outstanding:

49,489,860

51,291,428

Basic

50,002,054

52,030,582

Diluted

Note 3:Securities

Available-for-Sale Securities

The amortized cost and approximate fair values, together with gross unrealizedgains and losses, of period end available-for-sale

securities consisted of the following:

December 31, 2022

Amortized Cost

Gross

Unrealized

Gains

Gross

Unrealized

Losses

Approximate

Fair Value

(Dollars in thousands)

Mortgage-backed - GSE residential

$

197,243

$

232

$

25,166

$

172,309

Collateralized mortgage obligations - GSE residential

11,629

—

743

10,886

State and political subdivisions

551,007

929

57,440

494,496

Corporate bonds

9,762

—

552

9,210

Total available-for-sale securities

$

769,641

$

1,161

$

83,901

$

686,901

December 31, 2021

Amortized Cost

Gross

Unrealized

Gains

Gross

Unrealized

Losses

Approximate

Fair Value

(Dollars in thousands)

Mortgage-backed - GSE residential

$

161,675

$

1,809

$

1,774

$

161,710

Collateralized mortgage obligations - GSE residential

18,130

311

10

18,431

State and political subdivisions

532,906

29,329

767

561,468

Corporate bonds

4,241

119

—

4,360

Total available-for-sale securities

$

716,952

$

31,568

$

2,551

$

745,969

The carrying value of securities pledged as collateral was $

22

million and $

0

at December 31, 2022 and 2021, respectively.

73

The following table summarizes the gross realized gains and losses from sales or maturitiesof AFS securities:

For the Year Ended December 31, 2022

Gross Realized Gains

Gross Realized Losses

Net Realized Gain

(Dollars in thousands)

Available-for-sale securities

$

146

$

50

$

96

For the Year Ended December 31, 2021

Gross Realized Gains

(1)

Gross Realized Losses

Net Realized Gain

(Dollars in thousands)

Available-for-sale securities

$

1,157

$

134

$

1,023

(1)

Included $

75

thousand related to a previously disclosed OTTI municipal security that was settled in 2020.

The following table shows available-for-sale securities gross unrealized losses, thenumber of securities that are in an unrealized

loss position, and fair value of the Company’s investments with unrealizedlosses, aggregated by investment class and length of time that

individual securities have been in a continuous unrealized loss position atDecember 31, 2022 and 2021:

December 31, 2022

Less than 12 Months

12 Months or More

Total

Fair

Value

Unrealized

Losses

Number

of Securities

Fair

Value

Unrealized

Losses

Number

of Securities

Fair

Value

Unrealized

Losses

Number

of Securities

(Dollars in thousands)

Available-for-Sale Securities

Mortgage-backed - GSE residential

$

91,929

$

10,410

41

$

66,036

$

14,756

16

$

157,965

$

25,166

57

Collateralized mortgage obligations -

GSE residential

10,636

733

18

251

10

1

10,887

743

19

State and political subdivisions

350,884

36,697

266

52,519

20,743

40

403,403

57,440

306

Corporate bonds

9,210

552

5

—

—

—

9,210

552

5

Total temporarily impaired AFS

securities

$

462,659

$

48,392

330

$

118,806

$

35,509

57

$

581,465

$

83,901

387

December 31, 2021

Less than 12 Months

12 Months or More

Total

Fair

Value

Unrealized

Losses

Number

of

Securities

Fair

Value

Unrealized

Losses

Number

of

Securities

Fair

Value

Unrealized

Losses

Number

of

Securities

(Dollars in thousands)

Available-for-Sale Securities

Mortgage-backed - GSE residential

$

87,306

$

1,774

16

$

—

$

—

—

$

87,306

$

1,774

16

Collateralized mortgage obligations -

GSE residential

803

10

2

—

—

—

803

10

2

State and political subdivisions

72,915

762

39

1,310

5

4

74,225

767

43

Corporate bonds

—

—

—

—

—

—

—

—

—

Total temporarily impaired AFS

securities

$

161,024

$

2,546

57

$

1,310

$

5

4

$

162,334

$

2,551

61

Management evaluated all of the available-for-sale securities in an unrealizedloss position at December 31, 2022.The unrealized

losses in the Company’s investment portfolio were caused by interest rate changes. The Companydoes not intend to sell the investments and

it is not more likely than not the Company will be required to sell the investments before recoveryof their amortized cost basis. The

Company recorded no credit loss impairment in 2022 and no other than temporaryimpairment losses on AFS securities in 2021.

74

The amortized cost, fair value, and weighted average yield of available-for-salesecurities by contractual maturity, are shown below:

December 31, 2022

Within

After One to

After Five to

After

One Year

Five Years

Ten Years

Ten Years

Total

(Dollars in thousands)

Available-for-sale securities

Mortgage-backed - GSE residential

(1)

Amortized cost

$

—

$

18

$

105

$

197,120

$

197,243

Estimated fair value

$

—

$

17

$

101

$

172,191

$

172,309

Weighted average yield

(2)

—

%

4.77

%

4.05

%

2.39

%

2.39

%

Collateralized mortgage obligations - GSE residential

(1)

Amortized cost

$

—

$

—

$

2,344

$

9,285

$

11,629

Estimated fair value

$

—

$

—

$

2,229

$

8,657

$

10,886

Weighted average yield

(2)

—

%

—

%

2.77

%

2.25

%

2.36

%

State and political subdivisions

Amortized cost

$

1,076

$

6,310

$

109,771

$

433,850

$

551,007

Estimated fair value

$

1,077

$

6,471

$

109,134

$

377,814

$

494,496

Weighted average yield

(2)

3.54

%

4.60

%

3.08

%

2.70

%

2.80

%

Corporate bonds

Amortized cost

$

—

$

150

$

9,612

$

—

$

9,762

Estimated fair value

$

—

$

146

$

9,064

$

—

$

9,210

Weighted average yield

(2)

—

%

5.43

%

5.70

%

—

%

5.70

%

Total available-for-sale securities

Amortized cost

$

1,076

$

6,478

$

121,832

$

640,255

$

769,641

Estimated fair value

$

1,077

$

6,634

$

120,528

$

558,662

$

686,901

Weighted average yield

(2)

3.54

%

4.62

%

3.28

%

2.60

%

2.74

%

(1)

Actual maturities may differ from contractual maturitiesbecause issuers may have the rights to call or prepay obligationswith or without prepayment penalties.

(2)

Yields are calculated based on amortized cost using a30/360 day basis. Tax-exempt securities are not tax effected.

December 31, 2021

Within

After One to

After Five to

After

One Year

Five Years

Ten Years

Ten Years

Total

(Dollars in thousands)

Available-for-sale securities

Mortgage-backed - GSE residential

(1)

Amortized cost

$

—

$

30

$

148

$

161,497

$

161,675

Estimated fair value

$

—

$

31

$

156

$

161,523

$

161,710

Weighted average yield

(2)

—

%

4.67

%

4.00

%

1.62

%

1.62

%

Collateralized mortgage obligations - GSE residential

(1)

Amortized cost

$

—

$

—

$

2,421

$

15,709

$

18,130

Estimated fair value

$

—

$

—

$

2,559

$

15,872

$

18,431

Weighted average yield

(2)

—

%

—

%

2.77

%

1.61

%

1.77

%

State and political subdivisions

Amortized cost

$

741

$

4,304

$

84,230

$

443,631

$

532,906

Estimated fair value

$

746

$

4,520

$

90,645

$

465,557

$

561,468

Weighted average yield

(2)

3.49

%

4.14

%

3.29

%

2.67

%

2.78

%

Corporate bonds

Amortized cost

$

—

$

604

$

3,637

$

—

$

4,241

Estimated fair value

$

—

$

670

$

3,690

$

—

$

4,360

Weighted average yield

(2)

—

%

5.83

%

4.28

%

—

%

4.50

%

Total available-for-sale securities

Amortized cost

$

741

$

4,938

$

90,436

$

620,837

$

716,952

Estimated fair value

$

746

$

5,221

$

97,050

$

642,952

$

745,969

Weighted average yield

(2)

3.49

%

4.35

%

3.32

%

2.37

%

2.50

%

(1)

Actual maturities may differ from contractual maturitiesbecause issuers may have the rights to call or prepay obligationswith or without prepayment penalties.

(2)

Yields are calculated based on amortized cost using a30/360 day basis. Tax-exempt securities are not tax effected.

75

Equity Securities

Equity securities consist of $

2.9

million of private equity investments. Equity securities are included in other assets on the

consolidated statements of financial condition.

During 2020, the Company acquired an $

11

million privately-held security in partial satisfaction of debts previously contracted. The

Company used a discounted cash flow model, a market transactions model anda public valuation approach to determine the security’s cost

basis. The Company elected a measurement alternative that allows the security to remainat cost until an impairment is identified or an

observable price change for an identical or similar investment of thesame issuer occurs. Impairment is recorded when there is evidence that

the expected fair value of the investment has declined to below the recordedcost. No changes to the cost basis occurred in 2020. During

2021, the Company sold the equity security for $

5

million that resulted in a $

6

million realized loss.

The following is a summary of the recorded fair value and the unrealized andrealized gains and losses recognized in net income on

equity securities:

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands)

Net (losses) gains recognized during the reporting period on equity securities

$

(181)

$

(6,325)

$

46

Less: net losses recognized during the period on equity securities sold duringthe

period

(181)

(6,245)

—

Unrealized (loss) gain recognized during the reporting period onequity securities

still held at the reporting date

$

—

$

(80)

$

46

Note 4:Loans and Allowance for Credit Losses

Categories of loans at December 31, 2022 and 2021 include:

As of December 31,

2022

2021

Amount

% of Loans

Amount

% of Loans

(Dollars in thousands)

Commercial and industrial

$

1,017,678

19

%

$

843,024

20

%

Commercial and industrial lines of credit

957,254

18

617,398

15

Energy

173,218

3

278,579

7

Commercial real estate

1,718,947

32

1,278,479

30

Construction and land development

794,788

15

574,852

14

Residential real estate

409,124

8

360,046

8

Multifamily real estate

237,984

4

240,230

6

Consumer

63,736

1

63,605

1

Loans, net of unearned fees

5,372,729

100

%

4,256,213

100

%

Less: Allowance for credit losses on loans

(1)

(61,775)

(58,375)

Loans, net of the allowance for credit losses on loans

$

5,310,954

$

4,197,838

(1)

As of December 31, 2021, this line represents the allowance forloan and lease losses. See further discussion in

Note 1: Nature of

Operations and Summary of Significant Accounting Policies

.

Accrued interest of $

23

million and $

10

million at December 31, 2022 and December 31, 2021, respectively,presented in “interest

receivable” on the consolidated statements of financial conditionis excluded from the amortized cost basis disclosed in the above table.

76

The Company aggregates the loan portfolio by similar credit risk characteristics. The loansegments are described in additional

detail below:

●

Commercial and Industrial

- The category includes loans to commercial and industrial customers for use in property,

plant, and equipment purchases and expansions. Loan terms typically requireprincipal and interest payments that decrease

the outstanding loan balance. Repayment is primarily from the cash flowof a borrower’s principal business operation.

Credit risk is driven by creditworthiness of a borrower and the economic conditionsthat impact the cash flow stability from

business operations.

The category also includes the remaining PPP loans outstanding. These loans were established by theCoronavirus Aid,

Relief, and Economic Security Act which authorized forgivable loans to small businesses to pay their employees duringthe

COVID-19 pandemic. The loans are

100

percent guaranteed by the SBA and repayment is primarily dependent on the

borrower’s cash flow or SBA repayment approval.

●

Commercial and Industrial Lines of Credit

– The category includes lines of credit to commercial and industrial

customers for working capital needs. The loan terms typically require interest-onlypayments, mature in one year, and

require the full balance paid-off at maturity. Lines of credit allow the borrowerto drawdown and repay the line of credit

based on the customer’s cash flow needs. Repayment is primarily from the operatingcash flow of the business. Credit risk

is driven by creditworthiness of a borrower and the economic conditions thatimpact the cash flow stability from business

operations.

●

Energy

- The category includes loans to oil and natural gas customers for use in financing workingcapital needs,

exploration and production activities, and acquisitions. The loans are repaid primarilyfrom the conversion of crude oil and

natural gas to cash. Credit risk is driven by creditworthiness of a borrower andthe economic conditions that impact the

cash flow stability from business operations. Energy loans are typically collateralizedwith the underlying oil and gas

reserves.

●

Commercial Real Estate

- The category includes loans that typically involve larger principal amounts and repayment of

these loans is generally dependent on the successful operations of the propertysecuring the loan or the business conducted

on the property securing the loan. These are viewed primarily as cash flow loans and secondarilyas loans secured by real

estate. Credit risk may be impacted by the creditworthiness of a borrower,property values and the local economies in the

borrower’s market areas.

●

Construction and Land Development

- The category includes loans that are usually based upon estimates of costs and

estimated value of the completed project and include independent appraisal reviewsand a financial analysis of the

developers and property owners. Sources of repayment include permanentloans, sales of developed property or an interim

loan commitment from the Company until permanent financing is obtained. These loansare higher risk than other real

estate loans due to their ultimate repayment being sensitive to interest ratechanges, general economic conditions, and the

availability of long-term financing. Credit risk may be impacted bythe creditworthiness of a borrower, property values and

the local economies in the borrower’s market areas.

●

Residential Real Estate

- The category includes loans that are generally secured by owner-occupied1-4 family residences.

Repayment of these loans is primarily dependent on the personal income andcredit rating of the borrowers. Credit risk in

these loans can be impacted by economic conditions within or outsidethe borrower’s market areas that might impact either

property values or a borrower’s personal income.

●

Multifamily Real Estate -

The category includes loans that are generally secured by multifamily properties.Repayment of

these loans is primarily dependent on occupancy rates and the personal income ofthe tenants. Credit risk in these loans can

be impacted by economic conditions within or outside the borrower’smarket areas that might impact either property values

or the tenants’ personal income.

77

●

Consumer

- The category includes revolving lines of credit and various term loans such as automobileloans and loans for

other personal purposes. Repayment is primarily dependent on the personalincome and credit rating of the borrowers.

Credit risk is driven by consumer economic factors (such as unemploymentand general economic conditions in the

borrower’s market area) and the creditworthiness of a borrower.

Allowance for Credit Losses

The Company established a CECL committee that meets at least quarterly to oversee the ACL methodology. The committee

estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions, and

reasonable and supportable forecasts. The ACL represents the Company’s current estimate of lifetime credit losses inherent in the loan

portfolio at the statement of financial condition date. The ACL is adjusted for expected prepayments when appropriate and excludes expected

extensions, renewals, and modifications.

The ACL is the sum of three components: (i) asset specific / individual loan reserves; (ii) quantitative (formulaic or pooled)

reserves; and (iii) qualitative (judgmental) reserves.

Asset Specific -

When unique qualities cause a loan’s exposure to loss to be inconsistent with thepool segments, the loan is

individually evaluated. Individual reserves are calculated for loansthat are risk-rated substandard and on non-accrual and loans that are risk-

rated doubtful or loss that are greater than a defined dollar threshold. Inaddition, TDRs are also individually evaluated. Reserves on asset

specific loans may be based on collateral, for collateral-dependent loans, or onquantitative and qualitative factors, including expected cash

flow, market sentiment, and guarantor support.

Quantitative

- The Company used the cohort method, which identifies and captures the balance of a pool of loans with similarrisk

characteristics as of a particular time to form a cohort. For example, the outstandingcommercial and industrial loans and commercial and

industrial lines of credit loan segments as of quarter-end are consideredcohorts. The cohort is then tracked for losses over the remaining life

of loans or until the pool is exhausted. The Company used a lookback period of approximatelysix-years to establish the cohort population.

By using the historical data timeframe, the Company can establish a historical loss factorfor each of its loan segments and adjust the losses

with qualitative and forecast factors

Qualitative

– The Company uses qualitative factors to adjust the historical loss factors for current conditions. The Company

primarily uses the following qualitative factors:

◾

The nature and volume of changes in risk ratings;

◾

The volume and severity of past due loans;

◾

The volume of non-accrual loans;

◾

The nature and volume of the loan portfolio, including the existence, growth, andeffect of any concentrations of credit;

◾

Changes in the Institute of Supply Management’s Purchasing Manager Indices(“PMI”) for services and manufacturing;

◾

Changes in collateral values;

◾

Changes in lending policies, procedures, and quality of loan reviews;

◾

Changes in lending staff; and

◾

Changes in competition, legal and regulatory environments

In addition to the current condition qualitative adjustments, the Company uses theFederal Reserve’s unemployment forecast to

adjust the ACL based on forward looking guidance. The Federal Reserve’s unemployment forecast extends three-years and is eventually

reverted to the mean of six percent by year 10.

Internal Credit Risk Ratings

The Company uses a weighted average risk rating factor to adjust the historicalloss factors for current events. Risk ratings

incorporate the criteria utilized by regulatory authorities to describe criticizedassets, but separate various levels of risk concentrated within

the regulatory “Pass” category. Risk ratings are established for loans at originationand are monitored on an ongoing basis. The rating

assigned to a loan reflects the risks posed by the borrower’s expected performanceand the transaction’s structure. Performance metrics used

78

to determine a risk rating include, but are not limited to, cash flow adequacy,liquidity, and collateral. A description of the loan risk ratings

follows:

Loan Grades

•Pass (risk rating 1-4)

- Considered satisfactory. Includes borrowers that generally maintain good liquidityand financial

condition or the credit is currently protected with sales trends remaining flator declining. Most ratios compare favorably with

industry norms and Company policies. Debt is programmed and timelyrepayment is expected.

•Special Mention (risk rating 5)

- Borrowers generally exhibit adverse trends in operations or an imbalanced positionin their

balance sheet that has not reached a point where repayment is jeopardized.Credits are currently protected but, if left

uncorrected, the potential weaknesses may result in deterioration ofthe repayment prospects for the credit or in the Company’s

credit or lien position at a future date. These credits are not adversely classified and do not exposethe Company to enough risk

to warrant adverse classification.

•

Substandard (risk rating 6)

- Credits generally exhibit well-defined weakness(es) that jeopardize repayment.Credits are

inadequately protected by the current worth and paying capacity ofthe obligor or of the collateral pledged. A distinct possibility

exists that the Company will sustain some loss if deficiencies are not corrected.Loss potential, while existing in the aggregate

amount of substandard assets, does not have to exist in individual assets classified substandard.Substandard loans include both

performing and non-performing loans and are broken out in the table below.

•

Doubtful (risk rating 7)

- Credits which exhibit weaknesses inherent in a substandard credit with the addedcharacteristic that

these weaknesses make collection or liquidation in full highly questionable orimprobable based on existing facts, conditions

and values. Because of reasonably specific pending factors, which maywork to the advantage and strengthening of the assets,

classification as a loss is deferred until its more exact status may be determined.

•

Loss (risk rating 8)

- Credits which are considered uncollectible or of such little value that their continuanceas a bankable

asset is not warranted.

79

The following tables present the credit risk profile of the Company’s loan portfoliobased on an internal rating category and loan

segments:

As of December 31, 2022

Amortized Cost Basis by Origination Yearand Internal Risk Rating

Amortized Cost Basis

2022

2021

2020

2019

2018

2017

LOC

LOC to

Term

Total

(Dollars in thousands)

Commercial and industrial

Pass

$

465,963

$

281,166

$

55,934

$

50,445

$

48,595

$

20,648

$

—

$

19,089

$

941,840

Special mention

2,531

23,055

14,573

2,951

4,947

86

—

41

48,184

Substandard - accrual

290

677

1,647

1,330

740

299

—

21,166

26,149

Substandard - non-accrual

—

104

—

6

1,383

—

—

—

1,493

Doubtful

—

—

—

—

—

—

—

—

—

Loss

—

—

—

—

—

12

—

—

12

Total

$

468,784

$

305,002

$

72,154

$

54,732

$

55,665

$

21,045

$

—

$

40,296

$

1,017,678

Commercial and industrial lines of credit

Pass

$

—

$

—

$

—

$

—

$

—

$

—

$

890,109

$

—

$

890,109

Special mention

—

—

—

—

—

—

49,861

—

49,861

Substandard - accrual

—

—

—

—

—

—

10,805

—

10,805

Substandard - non-accrual

—

—

—

—

—

—

6,479

—

6,479

Doubtful

—

—

—

—

—

—

—

—

—

Loss

—

—

—

—

—

—

—

—

—

Total

$

—

$

—

$

—

$

—

$

—

$

—

$

957,254

$

—

$

957,254

Energy

Pass

$

7,585

$

306

$

228

$

—

$

—

$

—

$

162,834

$

171

$

171,124

Special mention

—

—

—

—

—

—

—

—

—

Substandard - accrual

—

—

—

—

—

—

1,476

—

1,476

Substandard - non-accrual

—

—

—

—

—

—

—

—

—

Doubtful

—

—

—

—

—

—

618

—

618

Loss

—

—

—

—

—

—

—

—

—

Total

$

7,585

$

306

$

228

$

—

$

—

$

—

$

164,928

$

171

$

173,218

Commercial real estate

Pass

$

474,901

$

276,403

$

156,553

$

119,643

$

73,989

$

84,460

$

350,732

$

108,837

$

1,645,518

Special mention

23,223

6,603

566

1,330

6,558

4,339

2,429

12,285

57,333

Substandard - accrual

10,388

—

547

82

60

1,548

—

992

13,617

Substandard - non-accrual

—

2,479

—

—

—

—

—

—

2,479

Doubtful

—

—

—

—

—

—

—

—

—

Loss

—

—

—

—

—

—

—

—

—

Total

$

508,512

$

285,485

$

157,666

$

121,055

$

80,607

$

90,347

$

353,161

$

122,114

$

1,718,947

Construction and land development

Pass

$

346,429

$

266,557

$

93,229

$

19,866

$

1,497

$

9,053

$

49,500

$

—

$

786,131

Special mention

—

7,727

—

—

—

—

—

—

7,727

Substandard - accrual

157

310

463

—

—

—

—

—

930

Substandard - non-accrual

—

—

—

—

—

—

—

—

—

Doubtful

—

—

—

—

—

—

—

—

—

Loss

—

—

—

—

—

—

—

—

—

Total

$

346,586

$

274,594

$

93,692

$

19,866

$

1,497

$

9,053

$

49,500

$

—

$

794,788

Residential real estate

Pass

$

77,416

$

84,158

$

121,078

$

45,265

$

37,395

$

34,852

$

1,649

$

—

$

401,813

Special mention

253

3,272

187

226

—

—

—

—

3,938

Substandard - accrual

34

—

3,148

—

—

—

—

—

3,182

Substandard - non-accrual

—

—

—

—

—

—

—

191

191

Doubtful

—

—

—

—

—

—

—

—

—

Loss

—

—

—

—

—

—

—

—

—

Total

$

77,703

$

87,430

$

124,413

$

45,491

$

37,395

$

34,852

$

1,649

$

191

$

409,124

Multifamily real estate

Pass

$

85,785

$

26,705

$

6,915

$

11,938

$

2,491

$

726

$

86,879

$

16,509

$

237,948

Special mention

—

—

—

—

—

—

—

36

36

Substandard - accrual

—

—

—

—

—

—

—

—

—

Substandard - non-accrual

—

—

—

—

—

—

—

—

—

Doubtful

—

—

—

—

—

—

—

—

—

Loss

—

—

—

—

—

—

—

—

—

Total

$

85,785

$

26,705

$

6,915

$

11,938

$

2,491

$

726

$

86,879

$

16,545

$

237,984

Consumer

Pass

$

7,917

$

1,347

$

2,611

$

265

$

129

$

6

$

51,416

$

—

$

63,691

Special mention

—

—

—

—

8

—

—

—

8

Substandard - accrual

—

—

32

—

5

—

—

—

37

Substandard - non-accrual

—

—

—

—

—

—

—

—

—

Doubtful

—

—

—

—

—

—

—

—

—

Loss

—

—

—

—

—

—

—

—

—

Total

$

7,917

$

1,347

$

2,643

$

265

$

142

$

6

$

51,416

$

—

$

63,736

Total

Pass

$

1,465,996

$

936,642

$

436,548

$

247,422

$

164,096

$

149,745

$

1,593,119

$

144,606

$

5,138,174

Special mention

26,007

40,657

15,326

4,507

11,513

4,425

52,290

12,362

167,087

Substandard - accrual

10,869

987

5,837

1,412

805

1,847

12,281

22,158

56,196

Substandard - non-accrual

—

2,583

—

6

1,383

—

6,479

191

10,642

Doubtful

—

—

—

—

—

—

618

—

618

Loss

—

—

—

—

—

12

—

—

12

Total

$

1,502,872

$

980,869

$

457,711

$

253,347

$

177,797

$

156,029

$

1,664,787

$

179,317

$

5,372,729

80

The following tables present the Company’s loan portfolio aging analysis ofthe recorded investment in loans as of December 31,

2022:

81

As of December 31, 2022

Amortized Cost Basis by Origination Yearand Past Due Status

Amortized Cost Basis

2022

2021

2020

2019

2018

2017 and Prior

Revolving loans

Revolving loans

converted to

term loans

Total

(Dollars in thousands)

Commercial and industrial

30-59 days

$

20

$

4,784

$

—

$

—

$

—

$

1,049

$

—

$

—

$

5,853

60-89 days

—

55

—

—

—

—

—

430

485

Greater than 90 days

—

143

7

6

1,383

12

—

—

1,551

Total past due

20

4,982

7

6

1,383

1,061

—

430

7,889

Current

468,764

300,020

72,147

54,726

54,282

19,984

—

39,866

1,009,789

Total

$

468,784

$

305,002

$

72,154

$

54,732

$

55,665

$

21,045

$

—

$

40,296

$

1,017,678

Greater than 90 days and

accruing

$

—

$

39

$

7

$

—

$

—

$

—

$

—

$

—

$

46

Commercial and industrial

lines of credit

30-59 days

$

—

$

—

$

—

$

—

$

—

$

—

$

2,814

$

—

$

2,814

60-89 days

—

—

—

—

—

—

980

—

980

Greater than 90 days

—

—

—

—

—

—

7,063

—

7,063

Total past due

—

—

—

—

—

—

10,857

—

10,857

Current

—

—

—

—

—

—

946,397

—

946,397

Total

$

—

$

—

$

—

$

—

$

—

$

—

$

957,254

$

—

$

957,254

Greater than 90 days and

accruing

$

—

$

—

$

—

$

—

$

—

$

—

$

584

$

—

$

584

Energy

30-59 days

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

60-89 days

—

—

—

—

—

—

—

—

—

Greater than 90 days

—

—

—

—

—

—

618

—

618

Total past due

—

—

—

—

—

—

618

—

618

Current

7,585

306

228

—

—

—

164,310

171

172,600

Total

$

7,585

$

306

$

228

$

—

$

—

$

—

$

164,928

$

171

$

173,218

Greater than 90 days and

accruing

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

Commercial real estate

30-59 days

$

—

$

—

$

—

$

1,180

$

—

$

—

$

—

$

—

$

1,180

60-89 days

—

—

—

—

—

—

—

—

—

Greater than 90 days

—

—

—

—

—

—

—

—

—

Total past due

—

—

—

1,180

—

—

—

—

1,180

Current

508,512

285,485

157,666

119,875

80,607

90,347

353,161

122,114

1,717,767

Total

$

508,512

$

285,485

$

157,666

$

121,055

$

80,607

$

90,347

$

353,161

$

122,114

$

1,718,947

Greater than 90 days and

accruing

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

Construction and land

development

30-59 days

$

4,293

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

4,293

60-89 days

—

—

—

—

—

—

—

—

—

Greater than 90 days

—

—

—

—

—

—

—

—

—

Total past due

4,293

—

—

—

—

—

—

—

4,293

Current

342,293

274,594

93,692

19,866

1,497

9,053

49,500

—

790,495

Total

$

346,586

$

274,594

$

93,692

$

19,866

$

1,497

$

9,053

$

49,500

$

—

$

794,788

Greater than 90 days and

accruing

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

Residential real estate

30-59 days

$

—

$

3,867

$

—

$

10

$

—

$

—

$

—

$

—

$

3,877

60-89 days

—

—

—

—

—

—

—

—

—

Greater than 90 days

—

120

—

—

—

—

—

—

120

Total past due

—

3,987

—

10

—

—

—

—

3,997

Current

77,703

83,443

124,413

45,481

37,395

34,852

1,649

191

405,127

Total

$

77,703

$

87,430

$

124,413

$

45,491

$

37,395

$

34,852

$

1,649

$

191

$

409,124

Greater than 90 days and

accruing

$

—

$

120

$

—

$

—

$

—

$

—

$

—

$

—

$

120

Multifamily real estate

30-59 days

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

60-89 days

—

—

—

—

—

—

—

—

—

Greater than 90 days

—

—

—

—

—

—

—

—

—

Total past due

—

—

—

—

—

—

—

—

—

Current

85,785

26,705

6,915

11,938

2,491

726

86,879

16,545

237,984

Total

$

85,785

$

26,705

$

6,915

$

11,938

$

2,491

$

726

$

86,879

$

16,545

$

237,984

Greater than 90 days and

accruing

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

Consumer

30-59 days

$

—

$

—

$

—

$

—

$

—

$

—

$

30

$

—

$

30

60-89 days

—

—

2

—

5

—

—

—

7

Greater than 90 days

—

—

—

—

—

—

—

—

—

Total past due

—

—

2

—

5

—

30

—

37

Current

7,917

1,347

2,641

265

137

6

51,386

—

63,699

Total

$

7,917

$

1,347

$

2,643

$

265

$

142

$

6

$

51,416

$

—

$

63,736

Greater than 90 days and

accruing

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

82

As of December 31, 2022

Amortized Cost Basis by Origination Yearand Past Due Status

Amortized Cost Basis

2022

2021

2020

2019

2018

2017 and Prior

Revolving loans

Revolving loans

converted to

term loans

Total

Total

30-59 days

$

4,313

$

8,651

$

—

$

1,190

$

—

$

1,049

$

2,844

$

—

$

18,047

60-89 days

—

55

2

—

5

—

980

430

1,472

Greater than 90 days

—

263

7

6

1,383

12

7,681

—

9,352

Total past due

4,313

8,969

9

1,196

1,388

1,061

11,505

430

28,871

Current

1,498,559

971,900

457,702

252,151

176,409

154,968

1,653,282

178,887

5,343,858

Total

$

1,502,872

$

980,869

$

457,711

$

253,347

$

177,797

$

156,029

$

1,664,787

$

179,317

$

5,372,729

Greater than 90 days and

accruing

$

—

$

159

$

7

$

—

$

—

$

—

$

584

$

—

$

750

Non-accrual Loan Analysis

Non-accrual loans are loans for which the Company does not record interestincome. The accrual of interest on loans is discontinued

at the time the loan is 90 days past due unless the credit is well secured and in process of collection.Past due status is based on contractual

terms of the loan. In all cases, loans are placed on non-accrual or charged off at an earlier date,if collection of principal or interest is

considered doubtful. Loans are returned to accrual status when all the principaland interest amounts contractually due are brought current

and future payments are reasonably assured. The following table presents the Company���snon-accrual loans by loan segments at

December 31, 2022:

As of December 31, 2022

Amortized Cost Basis by OriginationYear and Internal Risk Rating

Amortized Cost Basis

2022

2021

2020

2019

2018

2017 and

Prior

Revolving

loans

Revolving

loans

converted to

term loans

Total Non-

accrual Loans

Non-accrual

Loans with no

related

Allowance

(Dollars in thousands)

Commercial and

industrial

$

—

$

104

$

—

$

6

$

1,383

$

12

$

—

$

—

$

1,505

$

1,505

Commercial and

industrial lines of

credit

—

—

—

—

—

—

6,479

—

6,479

6,479

Energy

—

—

—

—

—

—

618

—

618

618

Commercial real

estate

—

2,479

—

—

—

—

—

—

2,479

2,479

Construction and land

development

—

—

—

—

—

—

—

—

—

—

Residential real estate

—

—

—

—

—

—

—

191

191

191

Multifamily real estate

—

—

—

—

—

—

—

—

—

—

Consumer

—

—

—

—

—

—

—

—

—

—

Total

$

—

$

2,583

$

—

$

6

$

1,383

$

12

$

7,097

$

191

$

11,272

$

11,272

Interest income recognized on non-accrual loans was $

1.5

million for the year ended December 31, 2022.

83

Allowance for Credit Losses

The following table presents the activity in the allowance for credit losses andallowance for credit losses on off-balance sheet credit

exposures by portfolio segment for the year ended December 31, 2022:

For the Year EndedDecember 31, 2022

Commercial

and

industrial

(1)

Commercial

and

Industrial

Lines of

Credit

(1)

Energy

Commercial

Real Estate

Construction and

Land Development

Residential Real

Estate

(2)

Multifamily

Real Estate

(2)

Consumer

Total

(Dollars in thousands)

Allowance for Credit Losses:

Beginning balance, prior to adoption of

ASU 2016-13

$

20,352

$

—

$

9,229

$

19,119

$

3,749

$

5,598

$

—

$

328

$

58,375

Impact of ASU 2016-13 adoption

(10,213)

8,866

(39)

(186)

(83)

(2,552)

2,465

(5)

(1,747)

PCD allowance for credit loss at

acquisition

394

129

—

285

98

4

—

6

916

Charge-offs

(791)

(3,971)

(4,651)

(1,102)

—

(217)

—

(13)

(10,745)

Recoveries

899

1,730

2,008

2,334

—

—

—

8

6,979

Provision (release)

1,105

6,461

(2,151)

(3,230)

1,263

166

(228)

15

3,401

Day 1 CECL provision expense

526

1,316

—

2,284

310

111

16

33

4,596

Ending balance

$

12,272

$

14,531

$

4,396

$

19,504

$

5,337

$

3,110

$

2,253

$

372

$

61,775

Allowance for Credit Losses on Off-Balance Sheet CreditExposures:

Beginning balance, prior to adoption of

ASU 2016-13

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

$

—

Impact of ASU 2016-13 adoption

107

44

265

711

3,914

5

137

1

5,184

Provision (release)

43

8

522

(34)

2,632

(3)

(123)

2

3,047

Day 1 CECL provision expense

95

22

—

23

284

33

—

—

457

Ending balance

$

245

$

74

$

787

$

700

$

6,830

$

35

$

14

$

3

$

8,688

(1)

Prior to the adoption of ASU 2016-13, the Commercial and Industriallines of credit were consolidated under the Commercial andIndustrial segment.

(2)

Prior to the adoption of ASU 2016-13, the Residential RealEstate and Multifamily Real Estate segments were consolidated under theResidential and Multifamily Real Estate segment.

84

Credit quality indicators improved meaningfully during 2022 which influencedthe level of qualitative factors management applied

to the ACL estimate.Other considerations for the ACL as of December 31, 2022 included the strong loan growth, particularly in commercial

and industrial and commercial and industrial line of credit loans.

Collateral Dependent Loans:

Collateral dependent loans are loans for which the repayment is expected to be providedsubstantially through the operation or sale

of the collateral and the borrower is experiencing financial difficulty. The followingtable presents the amortized cost balance of loans

considered collateral dependent by loan segment and collateral type as ofDecember 31, 2022:

As of December 31, 2022

Loan Segment and Collateral Description

Amortized Cost of

Collateral

Dependent Loans

Related Allowance

for Credit Losses

Amortized Cost of

Collateral

Dependent Loans

with no related

Allowance

(Dollars in thousands)

Commercial and industrial

All business assets

$

1,489

$

—

$

1,489

Commercial and industrial lines of credit

All business assets

6,492

—

6,492

Energy

Oil and natural gas properties

618

—

618

Commercial real estate

Commercial real estate properties

92

—

92

Residential real estate

Residential real estate properties

—

—

—

Multifamily real estate

Multifamily real estate properties

—

—

—

Consumer

Vehicles & other personal assets

39

22

—

$

8,728

$

22

$

8,689

Troubled Debt Restructurings

TDRs are those extended to borrowers who are experiencing financialdifficulty and who have been granted a concession, excluding

loan modifications as a result of the COVID-19 pandemic. The modificationof terms typically includes the extension of maturity, reduction

or deferment of monthly payment, or reduction of the stated interest rate.

For the years ended December 31, 2022 and 2021,

no

loans and $

4.8

million in loans, respectively, were restructured under the TDR

guidance. The outstanding balance of TDRs was $

30.5

million and $

40.4

million as of December 31, 2022 and 2021, respectively.

85

Disclosures under Previously ApplicableGAAP

The following disclosures are presented under previously applicable GAAP. The descriptionof the general characteristics of the

loan rating categories is as described above. The following table presents the creditrisk profile of the Company’s loan portfolio based on an

internal rating category and portfolio segment as of December 31, 2021:

As of December 31, 2021

Pass

Special

Mention

Substandard

Performing

Substandard

Non-

performing

Doubtful

Loss

Total

(Dollars in thousands)

Commercial

$

1,356,883

$

16,201

$

23,739

$

4,858

$

—

$

—

$

1,401,681

Energy

184,269

73,196

5,246

13,595

2,554

—

278,860

Commercial real estate

1,172,323

86,768

11,782

10,222

—

—

1,281,095

Construction and land development

578,758

—

—

—

—

—

578,758

Residential and multifamily real

estate

593,847

257

6,508

204

—

—

600,816

PPP

64,805

—

—

—

—

—

64,805

Consumer

63,605

—

—

—

—

—

63,605

Total

$

4,014,490

$

176,422

$

47,275

$

28,879

$

2,554

$

—

$

4,269,620

The following table presents the Company’s loan portfolio aging analysis of therecorded investment in loans as of December 31,

2021:

As of December 31, 2021

30-59 Days

Past Due

60-89 Days

Past Due

90 Days or

More

Total Past Due

Current

Total Loans

Receivable

Loans >= 90

Days and

Accruing

(Dollars in thousands)

Commercial

$

183

$

499

$

1,037

$

1,719

$

1,399,962

$

1,401,681

$

90

Energy

—

—

4,644

4,644

274,216

278,860

—

Commercial real estate

85

992

—

1,077

1,280,018

1,281,095

—

Construction and land development

966

117

—

1,083

577,675

578,758

—

Residential and multifamily real

estate

437

151

—

588

600,228

600,816

—

PPP

—

—

—

—

64,805

64,805

—

Consumer

—

99

—

99

63,506

63,605

—

Total

$

1,671

$

1,858

$

5,681

$

9,210

$

4,260,410

$

4,269,620

$

90

The following table presents the Company’sloans on non-accrual as of December 31, 2021:

As of December 31,

(Dollars in thousands)

Commercial

$

4,858

Energy

16,148

Commercial real estate

10,222

Construction and land development

—

Residential and multifamily real estate

204

PPP

—

Consumer

—

Total non-accrual loans

$

31,432

86

The following table presents the allowance for loan losses by portfolio segmentand disaggregated based on the Company’s

impairment methodology:

As of or For the YearEnded December 31, 2021

Commercial

Energy

Commercial

Real Estate

Construction

and Land

Development

Residential

and

Multifamily

Real Estate

PPP

Consumer

Total

(Dollars in thousands)

Period end allowance for loan losses allocated to:

Individually evaluated for

impairment

$

333

$

2,100

$

3,164

$

—

$

—

$

—

$

—

$

5,597

Collectively evaluated for

impairment

$

20,019

$

7,129

$

15,955

$

3,749

$

5,598

$

—

$

328

$

52,778

Ending balance

$

20,352

$

9,229

$

19,119

$

3,749

$

5,598

$

—

$

328

$

58,375

Allocated to loans:

Individually evaluated for

impairment

$

5,739

$

16,204

$

31,597

$

—

$

3,387

$

—

$

—

$

56,927

Collectively evaluated for

impairment

$

1,395,942

$

262,656

$

1,249,498

$

578,758

$

597,429

$

64,805

$

63,605

$

4,212,693

Ending balance

$

1,401,681

$

278,860

$

1,281,095

$

578,758

$

600,816

$

64,805

$

63,605

$

4,269,620

87

A loan is considered impaired when based on current information andevents, it is probable the Company will be unable to collect

all amounts due from the borrower in accordance with the contractual termsof the loan. Impaired loans include non-performing loans but

also include loans modified in TDRs where concessions have been grantedto borrowers experiencing financial difficulties. The intent of

concessions is to maximize collection. The following table presents loans individuallyevaluated for impairment:

As of or For the Year Ended December 31, 2021

Recorded

Balance

Unpaid

Principal

Balance

Specific

Allowance

Average

Investment

Impaired

Loans

Interest

Income

Recognized

(Dollars in thousands)

Loans without a specific valuation

Commercial

$

4,659

$

4,740

$

—

$

7,155

$

75

Energy

3,509

7,322

—

4,548

5

Commercial real estate

1,729

1,729

—

1,800

18

Construction and land development

—

—

—

—

—

Residential and multifamily real estate

3,387

3,387

—

3,392

86

PPP

—

—

—

—

—

Consumer

—

—

—

—

—

Loans with a specific valuation

Commercial

1,080

1,080

333

496

19

Energy

12,695

17,977

2,100

14,117

14

Commercial real estate

29,868

30,854

3,164

28,876

993

Construction and land development

—

—

—

—

—

Residential and multifamily real estate

—

—

—

—

—

PPP

—

—

—

—

—

Consumer

—

—

—

—

—

Total

Commercial

5,739

5,820

333

7,651

94

Energy

16,204

25,299

2,100

18,665

19

Commercial real estate

31,597

32,583

3,164

30,676

1,011

Construction and land development

—

—

—

—

—

Residential and multifamily real estate

3,387

3,387

—

3,392

86

PPP

—

—

—

—

—

Consumer

—

—

—

—

—

$

56,927

$

67,089

$

5,597

$

60,384

$

1,210

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Company estimates expected credit losses for off-balance sheet creditexposures unless the obligation is unconditionally

cancellable by the Company. The ACL on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate is

calculated for each loan segment and includes consideration of the likelihoodthat funding will occur and an estimate of the expected credit

losses on commitments expected to be funded over its estimated life. Foreach pool of contractual obligations expected to be funded, the

Company uses the reserve rate established for the related loan pools. The $

9

million allowance for credit losses on off-balance sheet credit

exposuresat December 31, 2022 is included in “interest payable and other liabilities” onthe statement of financial condition.

The following categories of off-balance sheet credit exposures have beenidentified:

Loan commitments – include revolving lines of credit, non-revolving linesof credit, and loans approved that are not yet funded.

Risks inherent to revolving lines of credit often are related to the susceptibility ofan individual or business experiencing

unpredictable cash flow or financial troubles, thus leading to paymentdefault. The primary risk associated with non-revolving lines

of credit is the diversion of funds for other expenditures.

Letters of credit – are primarily established to provide assurance to the beneficiarythat the applicant will perform certain obligations

arising out of a separate transaction between the beneficiary and applicant.If the obligation is not met, it gives the beneficiary the

right to draw on the letter of credit.

88

Note 5:Premises and Equipment

Major classifications of premises and equipment, stated at cost, are as follows:

As of December 31,

2022

2021

(Dollars in thousands)

Land

$

7,579

$

7,384

Building and improvements

65,101

62,344

Furniture and fixtures

14,523

14,106

Equipment

10,066

9,596

Construction in progress

1,172

509

Premises and equipment

98,441

93,939

Less: accumulated depreciation

32,457

27,870

Premises and equipment, net

$

65,984

$

66,069

The Company recorded $

4.7

million, $

4.9

million and $

4.9

million of depreciation expense during 2022, 2021 and 2020,

respectively, as a component of other non-interest expense in the consolidatedstatements of operations.

Note 6:Leases

The Company’s leases primarily include bank branches located inKansas City, Missouri; Tulsa, Oklahoma; Dallas, Texas; Frisco

Texas; and Phoenix, Arizona. The Company also acquired several additional leased locations in connectionwith the Central acquisition in

Denver and Colorado Springs, Colorado. The remaining terms on these branchleases range from less than

one year

to

twenty years

with

certain options to renew. Renewal terms can extend the lease term between

five years

and

twenty years

. The exercise of lease renewal options

is at the Company’s sole discretion. When it is reasonably certain that the Companywill exercise its option to renew or extend the lease term,

that option is included in the estimated value of the right of use (“ROU”) asset and lease liability. The Company’slease agreements do not

contain any material residual value guarantees or material restrictive covenants. As of December 31, 2022, theCompany recognized one

finance lease and the remaining Company leases are classified as operating leases.

The ROU asset is included in “Other assets” on the consolidated statement offinancial condition, and was $

30.5

million at

December 31, 2022. Certain adjustments to the ROU asset may berequired for items such as initial direct costs paid or incentives received.

The lease liability is located in “Interest payable and other liabilities” on theconsolidated statement of financial condition and was $

34

million at December 31, 2022.

As of December 31, 2022, the weighted-average remaining lease term is

11.6

years and the weighted-average discount rate was

2.54

% utilizing the Company’s incremental FHLB borrowing rate for borrowings ofa similar term at the date of lease commencement.

The following table presents components of operating lease expense inthe accompanying consolidated statements of operations for

the year ended December 31, 2022:

Year Ended December 31, 2022

(Dollars in thousands)

Finance lease amortization of right-of-use asset

$

231

Finance leases interest on lease liability

185

Operating lease expense

2,577

Variable lease expense

1,222

Short-term lease expense

20

Total lease expense

$

4,235

89

Future minimum lease payments under operating leases were as follows:

Operating Leases

Finance Lease

(Dollars in thousands)

2023

$

3,583

$

490

2024

3,289

490

2025

3,309

490

2026

3,350

490

2027

3,340

528

Thereafter

12,619

8,296

Total lease payments

29,490

10,784

Less: imputed interest

3,262

3,163

Total

$

26,228

$

7,621

Rent expense for the years ended December 31, 2021 and 2020 was $

3.5

million and $

2.9

million, respectively.

Supplemental cash flow information – Operating cash flows paid foroperating lease amounts included in the measurement of lease

liabilities was $

3.0

million for the year ended December 31, 2022. Operating cash flows paid for financelease amounts included in the

measurement of lease liabilities was $

0.4

million for the year ended December 31, 2022. During the year ended December 31,2022, the

Company recorded ROU assets in the amount of $

23.6

million that were exchanged for operating lease liabilities and $

7.8

million that were

exchanged for finance lease liabilities.

Note 7:Goodwill and Core Deposit Intangible

In connection with our acquisition of Central, the Company recordedgoodwill of $

12.8

million. Goodwill is measured as the excess

of the fair value of consideration paid over the fair value of net assets acquired.

No

goodwill impairment was recorded during the years

ended December 31, 2022 or December 31, 2021.

The Company recorded a core deposit intangible (“CDI”) of $

16.5

million as part of the Central acquisition. The Company is

amortizing the CDI over its estimated useful life of approximately

10

years using the sum of the years’ digits accelerated method. The

Company recognized core deposit intangible amortization expenseof $

0.4

million for the year ended December 31, 2022 which is included

in other non-interest expense in the consolidated statement of operations.

The gross carrying amount of goodwill and the gross carrying amountand accumulated amortization of the core deposit intangible

at December 31, 2022 and 2021 were:

Gross Carrying

Amount

Accumulated

Amortization

Net Carrying

Amount

(Dollars in thousands)

December 31, 2022

Goodwill

$

12,836

$

—

$

12,836

Core deposit intangible

17,479

1,234

16,245

Total goodwill and intangible assets

$

30,315

$

1,234

$

29,081

December 31, 2021

Core deposit intangible

$

1,014

$

884

$

130

Total goodwill and intangible assets

$

1,014

$

884

$

130

90

The estimated aggregate future amortization expense over the next five yearsfor the core deposit intangible is as follows at

December 31, 2022:

(Dollars in thousands)

2023

$

3,089

2024

2,762

2025

2,436

2026

2,109

2027

1,783

Note 8:Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations andeconomic conditions.The Company

principally manages its exposures to a wide variety of business and operational risksthrough management of its core business activities. The

Company manages economic risks, including interest rate, liquidity, andcredit risk primarily by managing the amount, sources, and duration

of its assets and liabilities and the use of derivative financial instruments.Specifically, the Company enters into derivative financial

instruments to manage exposures that arise from business activities that result in the receiptor payment of future known and uncertain cash

amounts, the value of which are determined by interest rates.

Cash Flow Hedges of Interest Rate Risk

The Company uses interest rate derivatives to add stability to interest incomeand expense and to manage its exposure to interest

rate movements. To accomplish this objective, the Company uses interest rate swaps and collarsas part of its interest rate risk management

strategy. Interest rate swaps designated as cash flow hedges involvethe receipt of variable amounts from a counterparty in exchange for the

Company making fixed-rate payments over the life of the agreements withoutexchange of the underlying notional amount. Interest rate

collars designated as cash flow hedges involve payments of variable-rateamounts if interest rates rise above the cap strike rate on the

contract and the receipt of variable-rate amounts if interest rates fall below thefloor strike rate on the contract. During 2022, such derivatives

were used to hedge the variable cash flows associated with existing variable-rate loan assets.The five swaps that were entered into in 2021

were terminated during the third quarter of 2022; however, the amortizationof the gains on these instruments will start in 2023 based on the

original effective dates of these swaps.The Company also entered into a new interest rate collar during thethird quarter of 2022. Derivatives

designated and that qualify as cash flow hedges include

one

instrument with a notional value of $

250

million at December 31, 2022, and

five

instruments with an aggregate notional value of $

100

million at December 31, 2021.

For derivatives designated and that qualify as cash flow hedges of interest raterisk, the gain or loss on the derivative is recorded in

Accumulated Other Comprehensive Income (Loss) (“AOCI”) andsubsequently reclassified into interest income or expense in the same

period(s) during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to

interest income and expense as interest payments are received and madeon the Company’s variable-rate assets and liabilities. The derivative

financial instruments did not impact the consolidated statements of operationsfor the years ended December 31, 2022 or 2021. During the

next twelve months, the Company estimates that an $

0.1

million will be reclassified as a reduction to interest expense.

The Company is hedging its exposure to the variability in future cash flows for forecastedtransactions over a maximum period of

6.4

years.

Non-designated Hedges

Derivatives not designated as hedges are not speculative and result froma service provided to clients. The Company executes

interest rate swaps with customers to facilitate their respective risk managementstrategies.Those interest rate swaps are simultaneously

hedged by offsetting derivatives that the Company executes with a third-party,such that the Company minimizes its net risk exposure

resulting from such transactions. Interest rate derivatives associatedwith this program do not meet the strict hedge accounting requirements

and changes in the fair value of both the customer derivatives and the offsettingderivatives are recognized directly in earnings.As of

December 31, 2022 and 2021, the Company had

49

swaps with an aggregate notional amount of $

421

million and

54

swaps with an

aggregate notional amount of $

535

million, respectively.

The Company’s derivative financial instruments that are not designatedas hedging instruments, including swap fees earned upon

origination and credit valuation adjustments (“CVA”) that represent the risk of a counterparty’s default,are reported on the consolidated

statements of operations as swap fee income, net. During 2022,the Company recorded net swap fees of $

171

thousand.During 2021, the

Company recorded a $

342

thousand gain for CVA adjustments primarily related to one swap.

91

Fair Values of Derivative Instruments on the Statement of Financial Condition

The table below presents the fair value of the Company’s derivative financialinstruments and their classification on the consolidated

statements of financial condition as of December 31, 2022 and 2021:

Asset Derivatives

Liability Derivatives

Statement of

Financial

Condition

As of December 31,

Statement of

Financial

Condition

As of December 31,

Location

2022

2021

Location

2022

2021

(Dollars in thousands)

Interest rate products:

Derivatives designated as hedging instruments

Other assets

$

-

$

3

Other

liabilities

$

5,403

$

565

Derivatives not designated as hedging

instruments

Other assets

$

11,038

$

11,305

Other

liabilities

$

11,039

$

11,322

Total

$

11,038

$

11,308

$

16,442

$

11,887

Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive (Loss) Income

The table below presents the effect of cash flow hedge accounting on Accumulated Other Comprehensive(Loss) Income as of

December 31, 2022 and 2021.

December 31, 2022

Gain or (Loss)

Recognized in OCI

on Derivative

Gain or (Loss)

Recognized in OCI

Included Component

Gain or (Loss)

Recognized in OCI

Excluded

Component

Location of Gain

or (Loss)

Recognized from

Accumulated

Other

Comprehensive

(Loss) Income into

Income

Gain or (Loss)

Reclassified from

Accumulated OCI

into Income

Gain or (Loss)

Reclassified from

Accumulated OCI

into Income

Included Component

Gain or (Loss)

Reclassified from

Accumulated OCI

into Income

Excluded

Component

(Dollars in thousands)

Derivatives in Cash Flow Hedging Relationships

Interest Rate Products

$

(5,403)

$

(5,403)

$

—

Interest Income

$

—

$

—

$

—

Interest Rate Products -

terminated

3,852

3,852

—

Interest Expense

—

—

—

Total

$

(1,551)

$

(1,551)

$

—

$

—

$

—

$

—

December 31, 2021

Gain or (Loss)

Recognized in OCI

on Derivative

Gain or (Loss)

Recognized in OCI

Included Component

Gain or (Loss)

Recognized in OCI

Excluded

Component

Location of Gain

or (Loss)

Recognized from

Accumulated

Other

Comprehensive

(Loss) Income into

Income

Gain or (Loss)

Reclassified from

Accumulated OCI

into Income

Gain or (Loss)

Reclassified from

Accumulated OCI

into Income

Included Component

Gain or (Loss)

Reclassified from

Accumulated OCI

into Income

Excluded

Component

(Dollars in thousands)

Derivatives in Cash Flow Hedging Relationships

Interest Rate Products

$

(562)

$

(562)

$

—

Interest Expense

$

—

$

—

$

—

Credit Risk Related Contingent Features

As of December 31, 2022, the fair value of non-designated derivativesin a net asset position, which includes accrued interest but

excludes any adjustment for non-performance risk, related to these agreementswas $

11.0

million. As of December 31, 2022, the Company

has minimum collateral thresholds with certain of its derivative counterpartiesand has received collateral of $

4.9

million.

92

Note 9:Foreclosed Assets

Foreclosed asset activity was as follows:

As of or for the Year Ended December 31,

2022

2021

2020

(Dollars in thousands)

Beginning balance

$

1,148

$

2,347

$

3,619

Transfers from loan portfolio, at fair value

—

—

930

Foreclosed asset acquired

157

—

—

Direct write-downs

—

(629)

(1,118)

Sales or other proceeds from foreclosed assets

(175)

(628)

(1,045)

Gain (loss) on sale of foreclosed assets

—

58

(39)

Ending balance

$

1,130

$

1,148

$

2,347

Foreclosed assets consisted of

two

commercial use facilities at December 31, 2022. For the year ended December31, 2022, the

Company purchased a foreclosed property as part of the Central acquisitionand received proceeds from expired earnest funds on a pre-

existing property.For the year ended December 31, 2021, the Company sold certain raw land foreclosedupon in 2019 and a commercial use

facility foreclosed upon in 2020. During 2020, the Company sold the industrialfacilities that were foreclosed upon in 2019 and impaired the

raw land foreclosed upon in 2019.

Gain (loss) on the sale of foreclosed assets are reported on the consolidatedstatements of operations under the foreclosed assets, net

section.

Note 10:Interest-bearing Time Deposits

Interest-bearing time deposits in denominations of $250 thousand ormore were $

319

million and $

324

million as of December 31,

2022 and 2021, respectively.

The Company acquires brokered deposits in the normal course of business. At December 31, 2022 and 2021, brokereddeposits of

approximately $

382

million and $

91

million, respectively, were included in the Company’s time deposit balance. Reciprocaldeposits, which

includes The Certificate of Deposit Account Registry Services (“CDARS”) discussed below, are treated as core deposits instead ofbrokered

deposits and are not included in the above amounts.

The Company is a member of CDARS that allows depositors to receive FDIC insuranceon amounts greater than the FDIC

insurance limit, which is currently $250,000. CDARS allows institutions to breaklarge deposits into smaller amounts and place them in a

network of other CDARS institutions to ensure full FDIC insurance is gainedon the entire deposit. CDARS totaled approximately $

4

million

and $

50

million as of December 31, 2022 and 2021, respectively.

The scheduled maturities for time deposits are provided in

Note 11: Borrowing Arrangements

below.

93

Note 11:Borrowing Arrangements

The following table summarizes borrowings at December 31, 2022and 2021:

As of and For the Year EndedDecember 31,

2022

2021

(Dollars in thousands)

Balance

Rate

(7)

Maximum Balance at

Any End of Month

Balance

Rate

(7)

Maximum Balance at

Any End of Month

Repurchase agreements

(1)

$

—

NA

%

$

5,695

$

—

NA

%

$

6,218

Federal funds purchased

(2)

20,000

4.65

20,000

—

NA

—

FHLB advances

(3)

143,143

2.27

236,600

236,600

1.92

293,100

FHLB line of credit

(3)

74,968

4.48

140,000

—

NA

—

TIB line of credit

(4)

5,000

7.50

5,000

—

NA

—

SBA secured borrowing

(5)

9,396

NA

10,897

—

NA

—

Trust preferred security

(6)

1,061

6.51

%

$

1,061

1,009

1.94

%

$

1,009

Total borrowings

$

253,568

$

237,609

(1)

Repurchase agreements consist of Bank obligations to other parties payableon demand and generally have one day maturities. The

obligations are collateralized by securities of U.S. government sponsored enterprisesand mortgage-backed securities and such collateral

is held by a third-party custodian. The year-to-date average daily balance was $

0

and $

2

million for the years ended December 31, 2022

and 2021, respectively. The securities, mortgage-backed governmentsponsored residential securities, pledged for customer repurchase

agreements were $

0

at both December 31, 2022 and 2021.

(2)

Federal funds purchased include short-term funds that are borrowed fromanother bank. The Bank is part of a third-party service that

allows us to borrow amounts from another bank if the bank has approvedus for credit. Federal funds purchased generally have one day

maturities.

(3)

FHLB advances and line of credit are collateralized by a blanket floatinglien on certain loans, as well as, unrestricted securities. FHLB

advances are at a fixed rate, ranging from

0.95

% to

4.25

% and are subject to restrictions or penalties in the event of prepayment. The

FHLB line of credit has a variable interest rate that reprices daily based on FHLB’s cost offunds and matures on May 14, 2023.

(4)

TIB line of credit is a general line of credit maintained by the Companyfor short-term liquidity.

(5)

As part of the Central acquisition, the Company acquired certain SBA loans that failed the derecognition criteria of ASC 860 and

therefore are accountedfor as secured borrowings.The secured borrowing was recorded at estimated fair value at the date of acquisition

and reduces over time in connection with the related loan balance.

(6)

On June 30, 2010, the Company assumed a liability with a fair value of $

1

million related to the assumption of trust preferred securities

issued by Leawood Bancshares Statutory Trust I for $

4

million on September 30, 2005. In 2012, the Company settled litigation relatedto

the trust preferred securities which decreased the principal balanceby $

1.5

million and the recorded balance by approximately

$

400

thousand. The difference between the recorded amount and the contract value of $

2.5

million is being accreted to the maturity date

in 2035. Distributions will be paid on each security at a variable annual rateof interest, equal to LIBOR, plus

1.74

%.

(7)

Represents the year-end weighted average interest rate.

The following table summarizes the Company’s other borrowing capacitiesat December 31, 2022 and 2021:

As of December 31,

2022

2021

(Dollars in thousands)

FHLB borrowing capacity relating to loans

$

391,910

$

435,562

FHLB borrowing capacity relating to securities

—

—

Total FHLB borrowing capacity

$

391,910

$

435,562

Unused Federal Reserve borrowing capacity

$

503,899

$

428,786

94

The scheduled maturities, excluding interest, of the Company’s borrowings atDecember 31, 2022 were as follows:

As of December 31, 2022

Within One

Year

One to Two

Years

Two to Three

Years

Three to

Four Years

Four to Five

Years

After Five

Years

Total

(Dollars in thousands)

Time deposits

$

588,981

$

349,734

$

1,997

$

1,586

$

3,269

$

—

$

945,567

Fed funds purchased &

repurchase agreements

20,000

—

—

—

—

—

20,000

FHLB borrowings

37,579

1,610

11,454

—

55,500

37,000

143,143

FHLB line of credit

74,968

—

—

—

—

—

74,968

TIB line of credit

5,000

—

—

—

—

—

5,000

SBA secured borrowing

—

—

—

—

—

9,396

9,396

Trust preferred securities

(1)

—

—

—

—

—

1,061

1,061

Total

$

726,528

$

351,344

$

13,451

$

1,586

$

58,769

$

47,457

$

1,199,135

(1)

The contract value of the trust preferred securities is $

2.6

million and is currently being accreted to the maturity date of 2035.

Note 12:Income Taxes

The provision for income taxes includes these components:

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands)

Current tax expense

$

17,943

$

14,892

$

7,970

Deferred income tax (benefit) expense

(1,970)

2,664

(5,257)

Income tax expense

$

15,973

$

17,556

$

2,713

An income tax reconciliation at the statutory rate to the Company’s actual income taxexpense is shown below:

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands)

Computed at the statutory rate (21%)

$

16,290

$

18,263

$

3,216

Increase (decrease) resulting from

Tax-exempt income

(3,546)

(3,672)

(3,109)

Non-deductible expenses

689

232

194

State income taxes, net of federal benefits

2,785

3,030

679

Stock-based compensation

(190)

(172)

179

Goodwill impairment

—

—

1,553

Other adjustments

(55)

(125)

1

Income tax expense

$

15,973

$

17,556

$

2,713

95

The tax effects of temporary differences related to deferred taxes shownon the consolidated statements of financial condition within

other assets are presented below:

As of December 31,

2022

2021

(Dollars in thousands)

Deferred tax assets

Net unrealized loss on securities available-for-sale

$

20,295

$

—

Allowance for credit losses

16,710

14,051

Lease incentive

451

508

Loan fees

4,048

3,227

Accrued expenses

3,379

2,735

Deferred compensation

2,166

2,418

State tax credit

—

1,033

Other

1,469

2,057

Total deferred tax asset

48,518

26,029

Deferred tax liability

Net unrealized gain on securities available-for-sale

—

(6,967)

FHLB stock basis

(436)

(757)

Premises and equipment

(2,042)

(2,602)

Other

(1,018)

(1,229)

Total deferred tax liability

(3,496)

(11,555)

Net deferred tax asset

$

45,022

$

14,474

The Company had a $

1.0

million deferred tax asset as of December 31, 2021 due to state tax credits, which werecompletely

recognized in 2022.

The Company has approximately $

1.0

million of federal net operating loss carry-forwards, which expireafter 2028. The net

operating loss is subject to annual usage limitations of $

180

thousand per year, but may include unused amounts from prior years.The

Company fully expects to utilize the entire net operating loss carry-forwards beforethey expire. Due to the carry forward of federal net

operating losses, all prior years remain subject to examination by federaltax authorities.

Note 13:Changes in Accumulated Other Comprehensive (Loss) Income

Amounts reclassified from AOCI and the affected line items in the consolidated statements of operations were as follows:

For the Year Ended December 31,

Affected Line Item in the

2022

2021

2020

Statements of Operations

(Dollars in thousands)

Unrealized gains on available-for-sale

securities

$

96

$

1,023

$

1,704

Realized gains on available-

for-sale securities

Less: tax expense effect

24

245

415

Income tax expense

Net reclassified amount

$

72

$

778

$

1,289

Note 14:Regulatory Matters

The Company and the Bank are subject to various regulatory capital requirementsadministered by the federal banking agencies.

The Basel III Capital Rules (“Basel III”) were jointly published by three federalbanking regulatory agencies. Basel III defines the

components of capital, risk weighting and other issues affecting the numeratorand denominator in regulatory capital ratios.

Failure to meet minimum capital requirements can initiate certain mandatoryand possibly additional discretionary actions by

regulators that, if undertaken, could have a direct material effect onthe Company’s consolidated financial statements. The actions may

include dividend payment restrictions, require the adoption ofremedial measures to increase capital, terminate FDIC deposit insurance,and

mandate the appointment of a conservator or receiver in severe cases. Undercapital adequacy guidelines and the regulatory framework for

prompt corrective action, the Company and the Bank must meet specific capital guidelinesthat involve quantitative measures of assets,

liabilities and certain off-balance sheet items as calculated under U.S. GAAP, regulatoryreporting requirements and regulatory capital

96

standards. The capital amounts and classification are also subject to qualitative judgments bythe regulators about components, risk

weightings and other factors. Furthermore, the Company’s regulatorscould require adjustments to regulatory capital not reflected in these

consolidated financial statements.

Quantitative measures established by regulation to ensure capital adequacyrequire the Company and the Bank to maintain

minimum amounts and ratios (set forth in the table below) of total and tier 1 capital (asdefined) to risk-weighted assets (as defined),

common equity tier 1 capital (as defined) to risk-weighted assets (as defined),and of tier 1 capital (as defined) to average assets (as defined).

Management believes, as of December 31, 2022, the Company and the Bankmet all capital adequacy requirements to which they are subject.

As of December 31, 2022, the most recent notification from the applicableregulatory agencies categorized the Bank as

well

capitalized

under the regulatory framework for prompt corrective action. To be categorized as

well capitalized

, the Bank must maintain

minimum total risk-based, tier 1 risk-based, common equity tier 1 risk-basedand tier 1 leverage ratios as set forth in the table below. There

are no conditions or events since that notification that management believeshave changed the Bank’s category. The Company’s and the

Bank’s actual capital amounts and ratios as of December 31, 2022and 2021 are presented in the following table:

Actual

Required to be Considered

Well Capitalized

Required to be Considered

Adequately Capitalized

(1)

Amount

Ratio

Amount

Ratio

Amount

Ratio

(Dollars in thousands)

December 31, 2022

Total Capital to Risk-Weighted Assets

Consolidated

$

715,416

10.5

%

N/A

N/A

$

714,162

10.5

%

Bank

714,300

10.5

$

679,793

10.0

%

713,783

10.5

Tier 1 Capital to Risk-Weighted Assets

Consolidated

644,953

9.5

N/A

N/A

578,131

8.5

Bank

643,837

9.5

543,835

8.0

577,824

8.5

Common Equity Tier 1 to Risk-Weighted Assets

Consolidated

643,892

9.5

N/A

N/A

476,108

7.0

Bank

643,837

9.5

441,866

6.5

475,855

7.0

Tier 1 Capital to Average Assets

Consolidated

644,953

10.3

N/A

N/A

249,270

4.0

Bank

$

643,837

10.3

%

$

311,623

5.0

%

$

249,299

4.0

%

December 31, 2021

Total Capital to Risk-Weighted Assets

Consolidated

$

704,544

13.6

%

N/A

N/A

$

544,060

10.5

%

Bank

681,980

13.2

$

517,817

10.0

%

543,708

10.5

Tier 1 Capital to Risk-Weighted Assets

Consolidated

646,169

12.5

N/A

N/A

440,430

8.5

Bank

623,605

12.0

414,253

8.0

440,144

8.5

Common Equity Tier 1 to Risk-Weighted Assets

Consolidated

645,160

12.5

N/A

N/A

362,707

7.0

Bank

623,605

12.0

336,581

6.5

362,472

7.0

Tier 1 Capital to Average Assets

Consolidated

646,169

11.8

N/A

N/A

218,510

4.0

Bank

$

623,605

11.4

%

$

272,958

5.0

%

$

218,366

4.0

%

(1)

Includes capital conservation buffer of

2.5

%.

Note 15:Employee Benefit Plan

The Company has a retirement savings 401(k) plan covering substantially all employees.Employees may contribute a portion of

their compensation to the plan. During 2022, Company contributionsto the plan were

100

% on the first

5

% of employees’ salary deferral

amounts. During 2021 and 2020, Company contributions to the plan were

100

% on the first

1

% of employees’ salary deferral amounts plus

50

% of employees’ salary deferral amounts over

1

%, but capped at

6

%, of employees’ compensation. Additional contributions are

discretionary and are determined annually by the Board of Directors. Companycontributions to the plan were $

2

million, $

1

million and

$

1

million for 2022, 2021 and 2020, respectively.

97

Note 16:Revenue from Contracts with Clients

Except for gains or losses from the sale of foreclosed assets, the Company’s revenue from contractswith clients within the scope of

ASC 606 is recognized in non-interest income. The revenue categories are selected basedon the nature, amount, timing, and uncertainty of

revenue and cash flows. The following presents descriptions of revenue categories withinthe scope of ASC 606:

Service charges and fees (rebates) on client accounts -

This segment consists of monthly fees for the services rendered on client

deposit accounts, including maintenance charges, overdraft fees, andprocessing fees. The monthly fee structures are typically based on type

of account, volume, and activity. The customer is typically billed monthly and pays thebill from their deposit account. The Company

satisfies the performance obligation related to providing depositoryaccounts monthly as transactions are processed and deposit service

charge revenue is recorded.

ATM and credit card interchange income -

This segment consists of fees charged for use of the Company’s ATMs, as well as, an

interchange fee with credit card and debit card service providers. ATM fees and interchange fees are based on the numberof transactions, as

well as, the underlying agreements. Clients are typically billed monthly. The Companysatisfies the performance obligation related to ATM

and interchange fees monthly as transactions are processed and revenueis recorded.

Internationalfees -

This segment consists of fees earned from foreign exchange transactions andpreparation of international

documentation. International fees are based on underlying agreements thatdescribe the Company’s performance obligation and the related

fee. Clients are typically billed and cash is received once the service or transactionis complete. The Company satisfies the performance

obligation related to international fees monthly as transactions are processedand revenue is recorded.

Other fees -

This segment consists of numerous, smaller fees such as wire transfer fees, checkcashing fees, and check printing fees.

Other fees are typically billed to clients on a monthly basis. Performance obligationsfor other fees are satisfied at the time that the service is

rendered.

Gain or loss on foreclosed assets

– Foreclosed assets are often sold in transactions that may not be considereda contract with a

client because the sale of the asset may not be an output of the Company’s ordinaryactivities. However, sales of nonfinancial assets,

including in-substance nonfinancial assets, should be accounted for inaccordance with ASC 610-20, “Other Income-Gains and Losses from

the Derecognition of Nonfinancial Assets,” which requires the Company to apply certain measurement andrecognition concepts of ASC 606.

Accordingly, the Company recognizes the sale of a foreclosed asset, alongwith any associated gain or loss, when control of the asset

transfers to the buyer. For sales of existing assets, this generally will occurat the point of sale. When the Company finances the sale of the

foreclosed asset to the buyer, the Company must assess whether the buyer is committedto perform their obligations under the contract and

whether collectability of the transaction price is probable. Once these criteriaare met, the repossessed asset is derecognized and the gain or

loss on sale is recorded upon the transfer of control of the asset to the buyer.

The following table disaggregates the non-interest income subjectto ASC 606 by category:

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands)

Non-interest income subject to ASC 606

Service charges and fees on customer accounts

$

6,228

$

4,580

$

2,803

ATM and credit card interchange income

6,523

7,996

4,379

International fees

1,408

1,531

1,091

Other fees

94

134

87

Total non-interest income from contracts with clients

14,253

14,241

8,360

Non-interest income not subject to ASC 606

Other non-interest income

3,028

(581)

3,373

Total non-interest income

$

17,281

$

13,660

$

11,733

Note 17:Stock-Based Compensation

The Company issues stock-based compensation in the form of non-vestedrestricted stock, restricted stock units and stock

appreciation rights (“SSARs”) under the 2018 Omnibus Equity IncentivePlan (“Omnibus Plan”). The Omnibus Plan will expire on the tenth

anniversary of its effective date. The aggregate number of shares authorized for futureissuance under the Omnibus Plan is

1,530,702

shares

as of December 31, 2022. The Company will issue new common shares uponexercise or vesting of stock-based awards.

98

During 2018, awards issued under the Stock Settled Appreciation Right Plan, Equity Incentive Plan, Employee EquityIncentive

Plan and New Market Founder Plan were assumed under the Omnibus Planas agreed upon with participants, impacting all participants who

agreed to the assumption. The awards are called “Legacy Awards.” Material terms and conditions of Legacy Awards remain unchanged;

therefore, no modification to their fair market value was required. Going forward,all awards are issued under the Omnibus Plan.

In addition, the Company has an Employee Stock Purchase Plan (“ESPP”) thatwas suspended effective April 1, 2019 and

reinstituted effective July 1, 2020.

The table below summarizes stock-based compensation expense forthe years ended December 31, 2022, 2021, and 2020:

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands)

Stock appreciation rights

$

325

$

711

$

994

Performance-based stock awards

774

741

249

Restricted stock units and awards

3,200

3,047

3,078

Employee stock purchase plan

118

85

42

Total stock-based compensation

$

4,417

$

4,584

$

4,363

Stock Settled AppreciationRights

SSARs are granted based on the fair market value of the Company’s commonstock. SSARs typically vest in equal amounts over a

seven year

period, commencing on the first anniversary of the effective date of grant and have

fifteen-year

contractual terms for Legacy

Awards and

ten-year

contractual terms for all other SSARs. Legacy Awards include retirement eligibility upon the participant’s 65th birthday,

five years

of participation, and after

one year

holding the grant. The exercise of a SSAR entitles the participant to the excess of the exercise

price over the grant price for each SSAR.Exercise price is based on the fair market value of the Company’s commonshares.

The calculated value of each SSAR is estimated at the grant date using a Black-Scholesoption valuation model. Expected volatility

is primarily based on an internal model that calculates the historical volatility ofthe Company’s stock since the IPO and several peer group

banks’ daily average stock prices before the IPO over the expected term. The expected term of stock granted represents the period thatshares

are expected to be outstanding. The risk-free rate for periods within the contractuallife of the share award is based on the U.S. Treasury yield

curve.

For the expected term, the Company uses the simplified method describedin SAB Topic 14.D.2. This method uses an expected term

based on the midpoint between the vesting date and the end of the contractual term. This methodis used for the majority of SSARs, because

the Company does not have a significant pool of SSARs that have been exercised.For some SSARs that are granted to participants who will

be retirement eligible during the term of the award, a separate analysis is performedthat focuses more on expected retirement date.

The following table provides the range of assumptions used in the Black-Scholesvaluation model, the weighted average grant date

fair value, and information related to SSARs exercised for the following years,as well as, the remaining compensation cost to be recognized

and period over which the amount will be recognized as of the dates indicated:

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands, except per share data)

Assumptions:

Expected volatility

44.1

% -

45.41

%

42.93

% -

43.29

%

20.34

%

Expected dividends

0.00%

0.00%

0.00%

Expected term (in years)

7.00

-

7.01

7.00

-

7.01

6.00

Risk-free rate

2.8

% -

3.62

%

0.94

% -

1.36

%

0.38

%

Weighted average grant date fair value per share

$

6.86

$

6.50

$

1.93

Aggregate intrinsic value of SSARs exercised

$

1,578

$

1,297

$

571

Total fair value of SSARs vested during the year

$

484

$

1,087

$

1,245

Unrecognized compensation information:

Unrecognized compensation cost

$

795

$

1,249

$

1,737

Period remaining (in years)

4.7

4.1

3.3

99

A summary of SSAR activity during and as of December 31, 2022 is presented below:

Stock Settled Appreciation Rights

Units

Weighted Average

Exercise Price

Weighted Average

Remaining

Contractual Term

Outstanding, January 1, 2022

1,473,076

$

11.20

7.13

Granted

26,500

6.86

9.68

Exercised

(284,540)

9.60

Forfeited or expired

(55,796)

11.27

Outstanding, December 31, 2022

1,159,240

$

11.64

6.29

Exercisable, December 31, 2022

961,367

$

11.00

6.03

Performance-Based StockAwards (“PBSAs”)

The Company awards PBSAs to key officers of the Company. The stock settled awardsare typically granted annually as determined

by the Compensation Committee. The performance-based shares typically cliff-vestat the end of

three years

based on attainment of certain

performance metrics developed by the Compensation Committee. The ultimatenumber of shares issuable under each performance-based

award is the product of the award target and the award payout percentage giventhe level of achievement. The award payout percentages by

level of achievement range between

0

% of target and

150

% of target.

During 2016, the Company awarded PBSAs to New Market Founders. A New Market Founder is a non-employee, adviser chosen in

a selected market to facilitate expansion of banking relationships. During2016,

116,960

PBSAs were granted and cliff-vested on

December 31, 2021. The Company adopted ASU 2018-07 in the first quarter of 2019, which set the fair market value forthese awards. The

Company determined that no substantial service existed for these awards,resulting in a cumulative effect adjustment of approximately

$

2

million to retained earnings.

The New Market Founder PBSAs were based upon

four

equally weighted market measures: total assets, total loans, return on assets

and classified assets to capital as of December 31, 2021 that resultedin

139,709

common shares that vested and were issued in 2022. The

119

% payout percentage resulted in $

245

thousand of expense being recognized during the year ended December31, 2021. No expense was

recorded in 2022 related to these awards.

During 2022,

19,328

PBSAs granted in 2019 did not meet the target payout threshold and wereforfeited. Additionally, in 2022, the

vesting dates for one former employee’s PBSA award were accelerated and

1,958

shares were issued at target.

During 2022,

66,667

PBSAs were granted. The performance metrics included a three-year cumulativeearnings per share target and

a cumulative relative total shareholder return target.

The following table summarizes the status of and changes in the performance-basedawards:

Performance-Based Awards

Number of Shares

Weighted Average

Grant Date Fair Value

Unvested, January 1, 2022

98,352

$

13.59

Granted

66,667

16.04

Vested

(1,958)

13.55

Forfeited

(28,775)

14.94

Unvested, December 31, 2022

134,286

$

14.52

Unrecognized stock-based compensation expense related to the performancegrants issued through December 31, 2022 was

$

1.2

million and is expected to be recognized over

1.9

years.

Restricted Stock Units (“RSUs”) and Restricted StockAwards (“RSAs”)

The Company issues RSUs and RSAs to provide additional incentives to key officers,employees, and non-employee directors.

Awards are typically granted annually as determined by the CompensationCommittee. The service based RSUs typically vest in equal

amounts over

three years

. The service based RSAs typically cliff-vest after

one year

.

100

The following table summarizes the status of and changes in the RSUs and RSAs:

Restricted Stock Units and Awards

Number of Shares

Weighted Average

Grant Date Fair Value

Unvested, January 1, 2022

383,630

$

13.52

Granted

306,627

14.75

Vested

(220,356)

13.88

Forfeited

(52,921)

14.35

Unvested, December 31, 2022

416,980

$

14.13

Unrecognized stock-based compensation expense related to restricted stockgrants issued through December 31, 2022 was

$

3.6

million and is expected to be recognized over

1.9

years.

Employee Stock Purchase Plan

The Company has an ESPP whereby employees are eligible for the plan when they have met certainrequirements concerning period

of credited service and minimum hours worked. The price an employee pays for shares is

85.0

% of the fair market value of Company

common stock on the last day of the offering period.The offering periods are the six-month periods commencing on January1 and July 1 of

each year and ending on June 30 and December 31 of each year. There are no vesting or otherrestrictions on the stock purchased by

employees under the ESPP.

The calculated value of each unit award is estimated at the start of the offering periodusing a Black-Scholes option valuation model

that used the assumptions noted in the following table:

For the Year Ended December 31,

2022

2021

2020

Assumptions:

Expected volatility

24.1

% -

28.00

%

5.99

% -

32.00

%

22.50

%

Expected dividends

0.00

%

0.00

%

0.00

%

Expected term (in years)

0.50

0.50

0.50

Risk-free rate

0.19

% -

2.52

%

0.03

% -

0.09

%

0.17

%

Note 18:Stock Warrants

The Company had

80,000

and

113,500

outstanding, fully vested warrants to purchase common stock at a strike priceof $

5.00

per

share as of December 31, 2022 and 2021, respectively, as

33,500

warrants were exercised during 2022. The

113,500

warrants were modified

during 2018 to extend the expiration date from June 30, 2019 to April 26, 2023. The strike price continues to be $

5.00

per share.

101

Note 19:Stockholders’ Equity

Earnings per share

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

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands, except per share data)

Earnings per Share

Net Income

$

61,599

$

69,413

$

12,601

Weighted average common shares

49,489,860

51,291,428

52,070,624

Earnings per share

$

1.24

$

1.35

$

0.24

Diluted Earnings per Share

Net Income

$

61,599

$

69,413

$

12,601

Weighted average common shares

49,489,860

51,291,428

52,070,624

Effect of dilutive shares

512,194

739,154

477,923

Weighted average dilutive common shares

50,002,054

52,030,582

52,548,547

Diluted earnings per share

$

1.23

$

1.33

$

0.24

Stock-based awards not included because to do so would be antidilutive

523,768

658,100

1,014,639

Share repurchases

On October 18, 2021, the Company announced that its Board of Directors adopteda new stock repurchase program. Under the

repurchase program, the Company may repurchase up to $

30

million of the Company’s common stock. As of December 31, 2021, the

Company had repurchased $

8

million, representing

566,164

common shares.This repurchase program was completed in the third quarter of

2022.

On May 10, 2022, the Company announced that its Board of Directors approveda new share repurchase program under which the

Company may repurchase up to $

30

million of its common stock. As of December 31, 2022, $

16

million remains available for repurchase

under this share repurchase program.

During 2022, the Company repurchased $

36

million, representing

2,448,428

common shares, under the repurchase programs.

Note 20:Disclosure about Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liabilityin an orderly transaction between market

participants at the measurement date. Fair value measurements must maximizethe use of observable inputs and minimize the use of

unobservable inputs. There is a hierarchy of three levels of inputs that may be usedto measure fair value:

Level 1

Quoted prices in active markets for identical assets or liabilities

Level 2

Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities,quoted prices in

markets that are not active or other inputs that are observable or can be corroboratedby observable market data for

substantially the full term of the assets or liabilities.

Level 3

Unobservable inputs supported by little or no market activity and significant tothe fair value of the assets or liabilities.

102

Recurring Measurements

The following list presents the assets and liabilities recognized in the accompanyingconsolidated statements of financial condition

measured at fair value on a recurring basis and the level within the fair valuehierarchy in which the fair value measurements fall at

December 31, 2022 and 2021:

Fair Value Description

Valuation

Hierarchy

Level

Where Fair Value

Balance Can Be

Found

Available-for-

sale securities

and equity

security

Where quoted market prices are available in an active market, securities

are classified within Level 1 of the valuation hierarchy. If quoted market

prices are not available, then fair values are estimated by using quoted

prices of securities with similar characteristics or independent asset

pricing services and pricing models, the inputs of which are market-based

or independently sourced market parameters, including, but notlimited

to, yield curves, interest rates, volatilities, prepayments, defaults,

cumulative loss projections and cash flows.

Level 2

Note 3: Securities

Derivatives

Fair value of the interest rate swaps is obtained from independent pricing

services based on quoted market prices for similar derivative contracts.

Level 2

Note 8: Derivatives

Nonrecurring Measurements

The following tables present the fair value measurement of assets measuredat fair value on a nonrecurring basis and the level within

the fair value hierarchy in which the fair value measurements fall:

December 31, 2022

Fair Value Measurements Using

Fair Value

Quoted Prices in

Active Markets for

Identical Assets

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Unobservable

Inputs

(Level 3)

(Dollars in thousands)

Collateral-dependent impaired loans

$

8,728

$

—

$

—

$

8,728

Foreclosed assets held-for-sale

$

1,745

$

—

$

—

$

1,745

December 31, 2021

Fair Value Measurements Using

Fair Value

Quoted Prices in

Active Markets for

Identical Assets

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Unobservable

Inputs (Level 3)

(Dollars in thousands)

Collateral-dependent impaired loans

$

38,046

$

—

$

—

$

38,046

Foreclosed assets held-for-sale

$

1,148

$

—

$

—

$

1,148

Following is a description of the valuation methodologies and inputs used forassets measured at fair value on a nonrecurring basis

and recognized in the accompanying consolidated statements of financialcondition,as well as the general classification of such assets

pursuant to the valuation hierarchy. For assets classified within Level 3 ofthe fair value hierarchy, the process used to develop the reported

fair value is described below.

Collateral-Dependent Impaired Loans, Net of ACL - The estimated fair value of collateral-dependent loans is based on the appraised fair

value of the collateral, less estimated cost to sell. If the fair value of the collateral is below the loan’samortized cost, the ACL is netted

against the loan balance. Collateral-dependent loans are classified withinLevel 3 of the fair value hierarchy.

The Company considers the appraisal or evaluation as the starting point for determiningfair value and then considers other factors

and events in the environment that may affect the fair value.

103

Appraisals are reviewed for accuracy and consistency by management. Appraisers are selected from the list of approved appraisers

maintained by management. The appraised values are reduced by discounts to considerlack of marketability and estimated cost to sell if

repayment or satisfaction of the loan is dependent on the sale of the collateral.

Foreclosed Assets Held-for-Sale - The fair value of foreclosed assets held-for-sale is based on the appraised fair value of the collateral, less

estimated cost to sell.

Unobservable (Level 3) Inputs

The following tables present quantitative information about unobservableinputs used in nonrecurring Level 3 fair value

measurements at December 31, 2022 and 2021:

December 31, 2022

Fair Value

Valuation Techniques

Unobservable

Inputs

Range

(Weighted Average)

(Dollars in thousands)

Collateral-dependent impaired

loans

$

8,728

Market comparable properties

Marketability discount

0

% -

100

%

(13%)

Foreclosed assets held-for-sale

$

1,745

Market comparable properties

Marketability discount

10%

(10%)

December 31, 2021

Fair Value

Valuation Techniques

Unobservable

Inputs

Range

(Weighted Average)

(Dollars in thousands)

Collateral-dependent impaired

loans

$

38,046

Market comparable properties

Marketability discount

7

% -

100

%

(26%)

Foreclosed assets held-for-sale

$

1,148

Market comparable properties

Marketability discount

10%

(10%)

The following tables present the estimated fair values of the Company’s financialinstruments at December 31, 2022 and 2021:

December 31, 2022

Carrying

Fair Value Measurements

Amount

Level 1

Level 2

Level 3

(Dollars in thousands)

Financial Assets

Cash and cash equivalents

$

300,138

$

300,138

$

—

$

—

Available-for-sale securities

769,641

—

686,901

—

Loans, net of ACL

5,310,954

—

—

5,307,607

Restricted equity securities

12,536

—

—

12,536

Interest receivable

29,507

—

29,507

—

Equity securities

2,870

—

—

2,870

Derivative assets

11,038

—

11,038

—

Financial Liabilities

Deposits

$

5,651,308

$

1,400,260

$

—

$

4,142,673

Federal funds purchased and repurchase agreements

74,968

—

74,968

—

Federal Home Loan Bank advances

143,143

—

135,086

—

Other borrowings

35,457

—

36,529

—

Interest payable

5,713

—

5,713

—

Derivative liabilities

16,442

—

16,442

—

104

December 31, 2021

Carrying

Fair Value Measurements

Amount

Level 1

Level 2

Level 3

(Dollars in thousands)

Financial Assets

Cash and cash equivalents

$

482,727

$

482,727

$

—

$

—

Available-for-sale securities

745,969

—

745,969

—

Loans, net of allowance for loan losses

4,197,838

—

—

4,178,268

Restricted equity securities

11,927

—

—

11,927

Interest receivable

16,023

—

16,023

—

Equity securities

2,642

—

2,209

433

Derivative assets

11,308

—

11,308

—

Financial Liabilities

Deposits

$

4,683,597

$

1,163,224

$

—

$

3,482,218

Federal Home Loan Bank advances

236,600

—

241,981

—

Other borrowings

1,009

—

2,318

—

Interest payable

1,336

—

1,336

—

Derivative liabilities

11,887

—

11,887

—

Note 21:Commitments and Credit Risk

The Company had the following commitments at December 31,2022 and 2021:

December 31, 2022

December 31, 2021

(Dollars in thousands)

Commitments to originate loans

$

134,961

$

118,651

Standby letters of credit

66,889

51,114

Unfunded commitments under lines of credit

2,705,730

1,768,231

Future lease commitments

1,888

11,100

Commitment related to investment fund

3,403

2,067

Total

$

2,912,871

$

1,951,163

Commitments to Originate Loans

Commitments to originate loans are agreements to lend to a customer as longas there is no violation of any condition established in

the contract. Commitments generally have fixed expiration dates or othertermination clauses and may require payment of a fee. Since a

portion of the commitments may expire without being drawn upon, the totalcommitment amounts do not necessarily represent future cash

requirements. Each customer’s creditworthiness is evaluated on a case-by-casebasis. The amount of collateral obtained, if deemed necessary,

is based on management’s credit evaluation of the counterparty. Collateral heldvaries, but may include accounts receivable, inventory,

property, plant and equipment, commercial real estate and residential andmultifamily real estate.

Standby Letters of Credit

Standby letters of credit are irrevocable conditional commitments issued bythe Company to guarantee the performance of a

customer to a third-party. Financial standby letters of credit are primarilyissued to support public and private borrowing arrangements,

including commercial paper, bond financing and similar transactions. Performancestandby letters of credit are issued to guarantee

performance of certain clients under nonfinancial contractual obligations. Thecredit risk involved in issuing standby letters of credit is

essentially the same as that involved in extending loans to clients. Fees for letters of credit areinitially recorded by the Company as deferred

revenue and are included in earnings at the termination of the respective agreements.

Should the Company be obligated to perform under the standby letters ofcredit, the Company may seek recourse from the customer

for reimbursement of amounts paid.

Lines of Credit

Lines of credit are agreements to lend to a client as long as there is no violationof any condition established in the contract. Lines of

credit generally have fixed expiration dates. Since a portion of the linemay expire without being drawn upon, the total unused lines do not

105

necessarily represent future cash requirements. Each customer’s creditworthinessis evaluated on a case-by-case basis. The amount of

collateral obtained, if deemed necessary, is based on management’s credit evaluationof the counterparty.

Collateral held varies but may include accounts receivable, inventory, property,plant and equipment, commercial real estate and

residential real estate. Management uses the same credit policies in grantinglines of credit as it does for on-balance sheet instruments.

Commitments related to Investment Fund

During 2022, the Company entered into a subscription agreement with two thirdparties to invest up to $

3.5

million in investment

funds designed to help accelerate technology adoption at community banks.

Lease Commitments

The Company entered into a lease agreement with a third party for office spacelocated in Fort Worth, Texas, which is expected to

commence in the second quarter of 2023. The initial lease term is

10.8

years with

one

,

seven year

renewal option.

Note 22:Parent Company Condensed Financial Statements

The following are the condensed financial statements of CrossFirst Bankshares,Inc. (Parent only) for the periods indicated:

Condensed Statements of Financial Condition

Year Ended December 31,

2022

2021

(Dollars in thousands)

Assets

Investment in consolidated subsidiaries

Banks

$

608,545

$

646,027

Equity method investments

2,597

433

Cash

4,457

23,368

Other assets

8,776

1,596

Total assets

$

624,375

$

671,424

Liabilities and stockholders' equity

Other borrowings

$

5,000

$

—

Trust preferred securities, net

1,061

1,009

Other liabilities

9,715

2,842

Total liabilities

15,776

3,851

Stockholders' equity

Common stock

530

526

Treasury stock at cost

(64,127)

(28,347)

Additional paid-in capital

530,658

526,806

Retained earnings

206,095

147,099

Accumulated other comprehensive (loss) income

(64,557)

21,489

Total stockholders' equity

608,599

667,573

Total liabilities and stockholders' equity

$

624,375

$

671,424

106

Condensed Statements of Operations

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands)

Income

Equity in undistributed earnings of subsidiaries

$

30,267

$

71,528

$

13,682

Distributions from subsidiaries

32,847

—

—

Management fees charged to subsidiaries

8,520

8,520

8,520

Other

153

2

(18)

Total income

71,787

80,050

22,184

Expense

Salaries and employee benefits

4,272

6,111

5,143

Occupancy, net

409

403

405

Other

5,893

4,718

4,220

Total expense

10,574

11,232

9,768

Income tax benefit

(386)

(595)

(185)

Net income

$

61,599

$

69,413

$

12,601

Condensed Statements of Cash Flows

For the Year Ended December 31,

2022

2021

2020

(Dollars in thousands)

Operating Activities

Net income

$

61,599

$

69,413

$

12,601

Adjustments to reconcile net income to net cash provided by operating

activities:

Earnings of consolidated subsidiaries

(30,267)

(71,528)

(13,682)

Share-based incentive compensation

1,511

2,332

1,917

Other adjustments

(256)

(155)

(412)

Net cash provided by operating activities

32,587

62

424

Investing Activities

Decrease in investment in subsidiaries

(18,000)

—

870

Increase in equity investments

(2,164)

(433)

—

Net cash (used in) provided by investing activities

(20,164)

(433)

870

Financing Activities

Proceeds from TIB line of credit

5,000

—

—

Issuance of common stock, net

4

3

3

Open market common share repurchases

(35,780)

(22,286)

(6,061)

Acquisition of common stock for tax withholding obligations

(929)

(860)

(1,236)

Proceeds from employee stock purchase plan

364

172

151

Net decrease in employee receivables

7

34

47

Net cash used in financing activities

(31,334)

(22,937)

(7,096)

Decrease in cash

(18,911)

(23,308)

(5,802)

Cash at beginning of year

23,368

46,676

52,478

Cash at end of year

$

4,457

$

23,368

$

46,676

Note 23.Subsequent Events

Subsequent events have been evaluated through March 3, 2023,which is the date the consolidated financial statements were

available to be issued.

On February 23, 2023, we filed a universal shelf registration statement on FormS-3 with the Securities and Exchange Commission

which became effective on March 2, 2023. The shelf registration statementis intended to provide us with financial flexibility to raise capital

107

from the offering of up to $

250

million of any combination of common stock, preferred stock, debt securities,depositary shares, warrants,

purchase contracts, purchase units, subscription rights and units in one or multipleofferings while the shelf registration statement is effective.

Item 9.Changes in and Disagreements withAccountants on Accountingand Financial

Disclosure

None.

Item 9A.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief ExecutiveOfficer and Chief Financial Officer, has

evaluated the effectiveness of the Company’s disclosure controls andprocedures, as defined in Rules 13a-15(e) and 15d-15(e) of the

Exchange Act, as of December 31, 2022. Based on that evaluation, the Company’s Chief Executive Officer and Chief FinancialOfficer

concluded that the Company’s disclosure controls and procedures were effectivein recording, processing, summarizing and reporting, on a

timely basis, information required to be disclosed by the Companyin the reports that we file or submit under the Exchange Act as of

December 31, 2022.

Management’s Report on Internal Control over Financial Reporting

The management of the Company is responsible for establishing and maintainingadequate internal control over financial reporting

as defined in Rule 13a-15(f) under the Exchange Act. Our systems of internal controls are designed under the supervisionand with the

participation of management, including our Chief Executive Officer andChief Financial Officer, to provide reasonable assurance regarding

the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with GAAP.

Because of its inherent limitations, internal control over financial reportingmay not prevent or detect all misstatements. Also,

projections of any evaluation of effectiveness as to future periods aresubject to the risk that controls may become inadequate because of

changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate. In addition, given the Company’s

size, operations and footprint, lapses or deficiencies in internal controlsmay occur from time to time.

On November 22, 2022, the Company completed the mergerwith Central.The Company is in the process of evaluating the existing

controls and procedures of Central and integrating Central into theinternal control over financial reporting process.In accordance with SEC

Staff guidance permitting a company to exclude an acquiredbusiness from management’s assessmentof the effectiveness of internal control

over financial reporting for the year in which the acquisition is completed,the Company has excluded Central from the assessment of the

effectiveness of internal control over financial reportingas of December 31, 2022. Operations of Central comprised 0.42% ofnet income for

the year ended December 31, 2022.The scope of management’s assessment ofthe effectiveness of the design and operation of the

Company’s disclosurecontrols and procedures as of December 31, 2022 includes all of the Company’sconsolidated operations except for

those disclosurecontrols and procedures of Central that are included in internal control over financialreporting.

Management assessed our internal control over financial reporting as ofDecember 31, 2022. This assessment was based on criteria

established in the 2013 Internal Control - Integrated Framework issuedby the Committee of Sponsoring Organizations of the Treadway

Commission (“COSO”). Based on this assessment, we have concludedthat, as of December 31, 2022, our internal control over financial

reporting was effective.

Our internal control over financial reporting continues to be updatedas necessary to accommodate modifications to our business

processes and accounting procedures. There has been no change in our internalcontrol over financial reporting (as such term is defined in

Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2022 that has materially affected, or is reasonablylikely

to materially affect, our internal control over financial reporting.

Item 9B.Other Information

None.

Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

108

Part III

Item 10.Directors, Executive Officers and Corporate Governance

The information required by this item regarding our directors is incorporatedby reference to the information to be set forth under

the captions “Board & Governance Matters - Proposal 1 - Election of Directors,”“Proxy Summary and Highlights - Information Regarding

the Board and Director Nominees,” “Delinquent Section 16(a) Reports,” “Boardand Committee Structure and Operations - Committee

Matters,” “Board and Committee Structure and Operations – Boardand Committee Meetings,” and “Code of Business Conduct and Ethics”

in our proxy statement for our 2023annual meeting of stockholders (the “2023 Proxy Statement”). The information required bythis item

regarding our executive officers is incorporated by reference to Part I of this Annual Report on Form 10-K under thecaption “Information

About our Executive Officers.”

There have been no material changes to the procedures by which security holdersmay recommend nominees to our Board of

Directors since our last disclosure thereof in our 2022 proxy statement.

Item 11.Executive Compensation

The information required by this item regarding compensationof executive officers and directors is incorporated by reference to the

information to be set forth under the captions (including the subcaptionsfound within these captions) “Director Compensation,” “Executive

Compensation,” “Executive Compensation Tables,” and “CorporateGovernance - Other Matters - Compensation Committee Interlocks and

Insider Participation” in the 2023 Proxy Statement and

Note 17: Stock-Based Compensation

within the Notes to the Consolidated Financial

Statements.

Item 12.Security Ownership of Certain Beneficial Owners and Management and

Related Stockholder Matters

The information required by this item, other than the equity compensationplan information presented below, is incorporated by

reference to the information to be set forth under the caption “Beneficial Ownershipof Company Common Stock” in the 2023 Proxy

Statement and

Note 17: Stock-Based Compensation

within the Notes to the Consolidated Financial Statements.

Securities Authorized for Issuanceunder Equity Compensation Plans

Set forth below is information as of December 31, 2022 regardingequity compensation plans:

Plan Category

Number of securities to

be issued upon exercise

of outstanding options,

warrants and rights

Weighted average exercise

price of outstanding

options, warrants and

rights

Number of securities

remaining available for

future issuance under

equity compensation plans

Equity compensation plans

approved by stockholders

—

—

799,952

(1)

Equity compensation plans not

approved by stockholders

1,239,240

(2)

$

11.21

(3)

1,530,702

(4)

Total

1,239,240

$

11.21

2,330,654

(1)

Represents the number of securities remaining available under the Employee Stock Purchase Plan.

(2)

Includes 100,000 shares issuable upon exercise of stock appreciation rights, 80,000 shares issuable upon exercise of warrants, and 1,059,240 shares

issuable upon exercise of stock appreciation rights granted under the 2018 Omnibus Equity Incentive Plan (the "Omnibus Plan").

(3)

Represents the weighted average exercise price of outstanding stock appreciation rights and warrants. Includes the weighted average exercise price of

$28.50 for stock appreciation rights, $5.00 for shares issuable upon exercise of warrants and $10.05 for stock appreciation rights granted under the

Omnibus Plan.

(4)

Available shares can be granted in the form of stock appreciation rights, options, restricted stock, restricted stock units, or performance awards. The

number of securities remaining available under the Omnibus Plan was 1,530,702.

109

The Omnibus Plan was established to promote the Company’s long-termfinancial success by providing a means for the Company to

attract and retain individuals who can and do contribute to the Company’ssuccess and profitability. All employees and directors of, and

certain other service providers to, the Company and its affiliates are eligible to becomeparticipants in the 2018 Equity Incentive Plan. The

Compensation Committee will determine the specific individuals whowill be granted awards under the Omnibus Plan and the type and

amount of any such awards and may permit awards to be granted or transferredto certain entities related to participants. Pursuant to the

Omnibus Plan, the Compensation Committee is allowed to grant awardsto eligible persons in the form of non-qualified stock options, stock

appreciation rights, restricted stock, restricted stock units, performanceshares, performance units and other stock-based awards. Up to

2,600,000 shares of common stock are reserved for issuance under the OmnibusPlan; however, any shares issued pursuant to or subject to a

Legacy Award do not count against the maximum share limit under the Omnibus Plan. A non-employee director may not be granted any

award under the Omnibus Plan which is denominated in shares in any one calendaryear for which the number of shares granted exceeds a

number equal to the quotient of $200 thousand divided by the grant date fairvalue of the award (determined under applicable accounting

principles), rounded down to the nearest whole share. Awards vest, become exercisable and contain such other terms and conditionsas

determined by the Compensation Committee and set forth in the individualagreements with the participants receiving the awards. The

Omnibus Plan enables the Compensation Committee to set specific performancecriteria that must be met before an award vests under the

Omnibus Plan.See

Note 17: Stock-Based Compensation

for additional information about the Omnibus Plan.

Item 13.Certain Relationships and Related Transactions, and DirectorIndependence

The information required by this item is incorporated by reference tothe information to be set forth under the captions “Policies and

Procedures Regarding Related Person Transactions,” “Certain Transactions,” “CorporateGovernance - Director Nominations, Skills and

Qualifications - Director Independence,” and “Board and CommitteeStructure and Operations - Committee Matters” in the 2023 Proxy

Statement.

Item 14.Principal AccountantFees and Services

The information required by this item is incorporated by reference tothe information to be set forth under the caption “Audit

Matters - Independent Registered Public Accounting Firm Fees” and “Audit Matters - Policy Regarding Pre-Approvalof Independent

Registered Public Accounting Firm Services” in the 2023 Proxy Statement.

The independent Registered Public Accounting Firm is

FORVIS, LLP

(Public Company Accounting Oversight Board Firm ID No.

686

) located in

Kansas City, Missouri

Part IV

Item 15.Exhibits and Financial Statement Schedules

(a) (1) Financial Statements

The following financial statements of CrossFirst Bankshares, Inc. and its subsidiaries, andthe auditor’s report thereon are filed as

part of this report under Item 8. Financial Statements and SupplementaryData:

Page Number

56

58

59

60

61

62

63

(a) (2) Financial Statement Schedules:

All financial statement schedules for CrossFirst Bankshares, Inc. and its subsidiarieshave been included in this Form 10-K in the

consolidated financial statements or the related footnotes, or they areeither inapplicable or not required.

110

(a) (3) Exhibits

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing

Date/Period End

Date

3.1

Articles of Incorporation of CrossFirst Bankshares, Inc.

S-1

3.1

July 18, 2019

3.2

Amendment to Articles of Incorporation of CrossFirst Bankshares, Inc.

S-1

3.2

July 18, 2019

3.3

Bylaws of CrossFirst Bankshares, Inc.

S-1

3.3

July 18, 2019

4.1

Specimen Common Stock Certificate

S-1

4.1

July 18, 2019

4.2

Form of Warrant Agreement

S-1/A

4.2

July 29, 2019

4.3

Description of Securities

10-K

4.3

March 10, 2020

10.1

Employment Agreement with Mike Maddox dated

June 1, 2020

†

10-Q

10.1

August 12, 2020

10.2

Employment Agreement with Benjamin R. Clouse, dated July 12, 2021†

10-Q

10.1

November 2, 2021

10.3

Employment Agreement with Amy Fauss dated July 29, 2016†

S-1

10.8

July 18, 2019

10.4

First Amendment to Employment Agreement with Amy Fauss dated

March 15, 2019†

S-1

10.9

July 18, 2019

10.5

Amended and Restated Employment Agreement with Randy Rapp, dated

effective July 1, 2022†

10-Q

10.1

August 3, 2022

10.6

2018 Omnibus Equity Incentive Plan†

S-1

10.15

July 18, 2019

10.7

Form of Legacy RSU - New Market Founders Award†

S-1

10.16

July 18, 2019

10.8

Form of Legacy EIP 2018 RSU Award Agreement†

S-1

10.17

July 18, 2019

10.9

Form of Legacy SAR Award Agreement†

S-1

10.18

July 18, 2019

10.10

Form of EEIP Legacy RSU Award Agreement†

S-1

10.19

July 18, 2019

10.11

Form of RSU Award Agreement†

S-1

10.20

July 18, 2019

10.12

Form of 2019 RSU Award Agreement†

S-1

10.21

July 18, 2019

10.13*

Omnibus Plan – Form of Time-Based RSU Award Agreement (02.23)†

10.14

Form of Performance Share Award Agreement

†

10-K

10.18

February 28, 2022

10.15*

Omnibus Plan – Form of Performance-Based RSU Award Agreement

(02.23)†

10.16

Form of Director Restricted Stock Award†

S-1

10.23

July 18, 2019

10.17*

Omnibus Plan – Director Restricted Stock Award (02.23)

†

10.18

Form of Indemnification Agreement†

S-1

10.24

July 18, 2019

10.19

Director Deferred Fee Program†

S-1

10.25

July 18, 2019

10.20*

Omnibus Plan – SAR Award Agreement†

10.21

Annual Incentive Plan†

10-Q

10.1

May 14, 2020

10.22

Employment Agreement with Steve Peterson dated July 1, 2020†

10-Q

10.2

August 12, 2020

10.23

Senior Executive Severance Plan†

10-Q

10.3

August 12, 2020

10.24

Employment Agreement with Jana D. Merfen Dated January 27, 2021†

10-Q

10.1

May 6, 2021

21.1*

Subsidiaries of CrossFirst Bankshares, Inc.

23.1*

Consent of Forvis, LLP

31.1*

Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of

the Exchange act, as adopted pursuant to Section 302 of the Sarbanes-

Oxley Act of 2002

31.2*

Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of

the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-

Oxley Act of 2002Oxley Act of 2002

32.1**

Certification Pursuant to 18 U.S.C. Section 1350, as adopted to Section

906 of the Sarbanes-Oxley Act of 2002

101.INS*

XBRL Instance Document - the instance document does not appear in the

Interactive Data File because its XBRL tags are embedded within the Inline

XBRL document.

101.SCH*

Inline XBRL Taxonomy Extension Schema

101.CAL*

Inline XBRL Extension Calculation Linkbase

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase

104*

Cover Page Interactive Data File (formatted in Inline XBRL and contained

in Exhibit 101)

* Filed Herewith

**Furnished Herewith

† Indicates a management contract or compensatory plan

111

Item 16.Form 10-K Summary

Not applicable.

112

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this

report to be signed on its behalf by the undersigned thereunto duly authorized.

CrossFirst Bankshares Inc.

March 3, 2023

/s/ Benjamin R. Clouse

Benjamin R. Clouse

Chief Financial Officer

(Principal Financial Officer and

Principal Accounting Officer)

113

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following personson

behalf of the Registrant and in the capacities and on the date indicated.

Signature

Title

Date

/s/ Rod Brenneman

Director (Chairman)

March 3, 2023

Rod Brenneman

/s/ Michael J. Maddox

Director, President and Chief Executive Officer (Principal Executive Officer)

March 3, 2023

Michael J.Maddox

/s/ Benjamin R. Clouse

Chief Financial Officer (Principal Financial Officer and Principal Accounting

Officer)

March 3, 2023

Benjamin R. Clouse

/s/ George Bruce

Director

March 3, 2023

George Bruce

/s/ Steven W. Caple

Director

March 3, 2023

Steven W.Caple

/s/ Ron Geist

Director

March 3, 2023

Ron Geist

/s/ Jennifer Grigsby

Director

March 3, 2023

Jennifer Grigsby

/s/ George E. Hansen III

Director

March 3, 2023

George E. Hansen III

/s/ Lance Humphreys

Director

March 3, 2023

Lance Humphreys

/s/ Mason King

Director

March 3, 2023

Mason King

/s/ James Kuykendall

Director

March 3, 2023

James Kuykendall

/s/ Kevin Rauckman

Director

March 3, 2023

Kevin Rauckman

/s/ Michael Robinson

Director

March 3, 2023

Michael Robinson

/s/ Grey Stogner

Director

March 3, 2023

Grey Stogner

/s/ Stephen K. Swinson

Director

March 3, 2023

Stephen K. Swinson