Earnings call transcript Q4 2022

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Operator

Good morning and welcome to the CrossFirst Bankshares' Fourth Quarter and Full Year 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note being recorded. Please

like Worley. Please would to turn Heather to over conference go the I ahead.

Heather Worley

I’m Director, Good morning, year call. full fourth quarter Worley, and welcome to XXXX CrossFirst earnings Relations. Investor Bankshares and Heather Managing conference

and These call our growth Before statements, and include uncertainties future opportunities assumptions plans, impact and including aware of current acquisition performance. business forward-looking of our our materially will the actual to we comments about from Central, subject be on risks begin, could the statements. that please expectations results are this based statements differ expansion to are financial these in and cause

them, as our not risk by law. except Our are of and forward-looking call do date Statements made and assume on of statements other be with the SEC. to this with filings earnings this considered obligation together today's release we revise as call, any should factors the required the or in identified update

adjusted in measures. We be refer non-GAAP to earnings financial for in financial to or measures a measures not be A financial GAAP. prepared non-GAAP superior meant release. may measures our are to measures reconciliation found non-GAAP can of accordance substitute financial with GAAP also or These to financial

the a conclusion At CrossFirst Andrea operator Q&A Bank; will and Bankshares. include Bankshares; prepared year presentation Mike facilitate of President CrossFirst and quarter from our Maddox, of the results Ben This session. President remarks remarks, fourth regarding will Rapp, full and CFO CrossFirst CEO Randy of of our Clouse,

of will to Mike, the begin X turn Slide At the this call who like time, presentation. Mike? to I on would over

Mike Maddox

of results. for XXXX measures. morning, to Good us quarter CrossFirst was a on best everyone, Thank year operating our and number discuss by joining record full you, thank different fourth and you year XXXX Heather.

and turn shape and are in future that growth our build to success will XXXX XXXX, well our we've optimize our we that we expansion. to on positioned investments made As

of to earnings net $X.XX adjusted the income and share the adjusted an adjusted XX.X in million XX.X equates for year. million an quarter in of for per incredible income This net reported We had We the CrossFirst for balance with by year. new and loans that our quarter the XX% platform growth. of organic sheet tremendously was for our Central, being closing launching grew strong digital growth XX% acquisition of the organic. banking year

From the in chain until environment, operating operated made supply dramatic we company. offering XXXX through August lived today, improvements times. all time our largest decades. of the We've initial public inflation have unique and we the have of a unprecedented as rise through a Despite for in pandemic, challenges

We have to grown sheet our funding. $X.X for deposits balance and we reduce strategically our shrank balance X.XX% X.XX% core XXXX XXXX And billion XX% XX% grown from total of This have for or on full to XX%. after NIM even deposits. improve XXXX. year Demand funding our sheet from our our dependence by improved over wholesale is in to has

XX.XX%. than our was ROE in per That revenue has X.XX% of XXXX. operating quality XXX grown That million the with XXXX. increase our from earnings or tremendous to loan revenue substantially from total X.XX% as XXXX to contributed and NPAs taking our growth million XXXX. more But share in declining than had end has credit has a of importantly, XX% most We've an in improved to more increase improvement X.X% XX markets. from across XXX% to of Operating in

sheet and acquisition. IPO hard worked we growth, have organic during raised successful balance a capital through We now the buybacks deploy to the

Our has business and expanded also become model significantly diverse. more

and verticals mortgage Denver we SBA, office, high finance. and and added expanded Colorado We markets industry metro residential as franchise financial such Phoenix, have entered family growth including Springs, Frisco, institutions,

our optimistic that future very for were when plans I a billion we better Lastly, and our to have than a plus today And of to institution. we become management team public. team are short, achieve for In positioned future. young has we and the capability went talented we I'm believe our $XX proud the very

recent and investments we and accomplishments and of we to communities. Turning the most to have clients banking development the had processes to the our several quarter, in technology our meet the help significant make our people, our necessary of continue needs

the welcome We team dedication for commitment their acquisition are the the November. extremely this our Central appreciative very of of partnership. excited successful closing and completing with all to of members from entire I'm to in team

a ability The culture experienced with be team come markets fit the cover for legacy more operate has in scale. of our details key enhanced accretive more of mortgage our capabilities SBA growth transaction deployed will identified seamlessly. is we also shareholders, as and and proven size of immediately transaction our result experienced already that capabilities This new markets. We've and for together shortly. as a to success to delivering this driver a with differentiator We've across Ben the

complete launched successful we but drive we started our did only a This and last to partnerships year for an enhanced quarter, new a our resources clients. the our the we to online initiative marks technology also in evaluate platform banking best-in-class client of tools Not and experience. digital providing acquisition, fourth culmination

people. CrossFirst, what our on reflect starts I defines it As with

growth. we organization for future enhanced during to As XXXX, structure the our we position of the leadership bank previously discussed

that have have for time and experience feel invest This same deliver we a people the possible strong is and we in growth, to continued at strongly our clients. on culture. if We build talent great in maintain sustain and to only organic the place our

QXX to Kansas survey. on as recognized We received our Journal, Gallup scores exemplary the employee were by annual work once engagement place Business City and again best the

available the compromised will to Fed growth us. asset about remain quality Maintaining of continue to and be opportunistic remains in the inflation. priority, growth. their facilitate cognizant it will be not turn XXXX, to we great said pursues number As we opportunities economic Having the that, as to we our uncertainty reining goal of one

We means With becomes as the is it operations to strive class on talent, our next for I'm for and just or of important improvement. optimizing us ensuring we Maintaining future important growth are our of not culture so efficiency but relationships. one pressure to our people. XXXX performance annual and just decade increased CrossFirst being of we about of not ourselves growth, for well as in operate the position where and top At talent. retaining community our team invest the our company. function. location That's regardless excited deepening recruiting world but does our

CrossFirst to Rapp. And like turn now Bank, the over I'd Randy to of our President call

Randy Rapp

good and Mike, morning, Thanks, everyone.

and the our energy Kansas acquisition. our City Page Worth to expansion, Mayer of Mike the of Scott the to Fort [ph] of with making continued to we team strategy Colorado promotion to hiring the QX, President Matt addition the his During President and enhancements our of Central Cody as Mexico Dombroski Kiser hiring Market, our of of with leadership New leadership team and Bank lead team and in serve

and clients efficiency in attract our added We the As company additions we executed continue in generator our maintained experience including drive XX business. our with Central and growth to new leadership quarter technology XX we position mortgage. acquisition, the and being throughout net on and SBA our growth investing client expansion. well top strategy, on for talent from the our We and believe future enhance revenue focus to to residential producers and

one over completed of conversion, successfully phase In users. of our XX% our November, digital migrating banking we

all system new remaining plan clients We and legacy this platform are placing the new to in QX XX% on of the convert of users year.

our of in over will We and XXXX several benefit focus have actively years systems, and that a investments have processes. past optimizing monitoring or made clients the of these significant utilization advancements

highlights, XX%. or the in annualized coming for markets XXX between be was the year, Missouri. XX% also Central fourth continued QX year. Arizona, real geographically growth and basis the loan from in the was with growth and growth XX% reported QX to acquisition, million, the for to quarter our majority Turning in growth C&I and an balanced loan acquired we the the of loans including of Texas, XXX on and from Loan loan Organic for growth larger Central. X.X Kansas, full estate commercial excluding Total million diversified, billion

community Our activity. also markets increased loan reported

$XXX XXX with history bankers of the growth to Total hired. with ended majority million our existing decrease the we significant in which portfolio at the XXXX, loans clients It and that was note XXXX important in have with despite in is year million. borrowers increased and leaders energy or sponsors

During in contributed recent XXXX we presented and QX. pricing especially were year, many significant during growth to more the than seen and favorable in last half which with we of the had periods, opportunities lending our structure with

C&I average consistent was During utilization and and level. the remains quarter line churn slightly quarter, portfolio prior the with average above historical the increased XX%

owner-occupied and not X% change composition total real a the combined The portfolios. XX% with now Our addition and loan in exposure portfolio loan concentration portfolio. significantly estate. remains XX% of the estate concentration C&I did commercial loan of portfolio in Central represents Energy the loan of the diversified real

also CRE within of exposure, good and the largest total XX%. C&I for portfolios at type those being manufacturing with segment remains highest CRE industry the property There each diversity XX% of accounting in

level level rate to and continue the our markets today. transaction economic the We of at underwriting manage adhere concentrations and to uncertainty exists interest higher that reflect standards the in strictly to

For quarter, from billion, XXX excluding deposits previous to X.X million average Central the acquisition. quarter, the the increased X% up

deposits from from increased including XXX during slightly up increased the past million the XX% acquisition. to billion the XX%, QX. of bearing deposits Over at total the X.X have year, and XX% average deposits, non-interest total Central of million represent end Average or quarter XXX

in We technology focused program generation highly new a new strategy. As QX, deposit on and above, remain enhance QX. we incentive banking growth digital DDA our launching our are in discussed growth believe will deposit

to highlights. Moving credit

resulting down is reported of in non-performing capital QX combined Classified end portfolio. to QX, in of down XXXX ended ratio primarily from The asset ratio a X.XX% XX.X% to decrease at X.XX% in end XXXX. X.X%. the X XXXX. from and was million in plus asset XX%, assets energy assets in non-performing This For due at XX.X drop we a the at reserves to QX to total paydowns and million of XX.X% year

net we net For year, X.X of of quarter, rate a points. XXX,XXX the of charge-off reported in charge-offs X and million for resulting the recoveries basis

for loan you and first using loss XX/XX/XX, importance to this and year As remain metrics our January X.XX% combined credit XXXX credit of credit for have portfolio on monitoring We recall, for total of and loss understand allowance maintaining focused allowance methodology. X, on reserve converted reserve and we on strong commitments moving reported of forward. unfunded completed ratio X.XX%. good will we CECL At to the

have economic U.S. local our the our and impact with their clients of to and We interest on closely economies. higher active global dialogue prospects uncertainty monitoring rates, are businesses, continue and inflation about and

continuing states, Our show we're fortunate believe to and consumer migration. and operate portfolio has loan is population for exposure, creation many minimal consumer bank in We profitable deposit and the well direct and positive job positioned to continued markets growth. and

call Ben I details. over more CFO, financial now cover the in Clouse, to results will our turn Ben? to

Ben Clouse

Thanks, Randy, everyone. and good morning,

As expanded Mike $XX.X on November $XX.X share million or XX. million income to $X.XX with related closed that indicated, several diluted GAAP this quarter net diluted income the included $X.XX costs we of which per adjusted per to share, net or acquisition

basis the GAAP XX.X year, a For basis. we adjusted on on million an earned million XX.X or

non-interest like of I'd before XXX we million in opening amortized some impact core in XXX results. few and in that transaction million be The XXX Randy million in XX the the expense loans bearing. in deal XX.X also as digits. financial the of through purchase I over deposit million total deposits for goodwill XX minutes on from a will acquisition spend outlined, The accounting balance years deposit growth Central. and Starting using to years’ sheet, million the purchased with the review of intangibles provided resulted non-interest

will purchase interest non-PCD into part discount of those existing portfolio. loans loans. life We income over deal investment recorded which and X.X FHLB of liquidated be As the million, of the adjustments, the the some expected the a we borrowings added maintained accounting of accreted on from

the was additional one million P&L, of including impact, provision day the to expense. X.X accounting, PCD provision Turning an

performance. purchase million. X.X our by $X.X earnings impact, were results comments including deal reduced where of GAAP which transaction-related the operating rest the accounting the tax to my I'll the provision, is the frame core applicable, around of reflective impacts related of we Net expenses remove non-interest million. Our believe adjusted costs, to

the while and future. We improved achieve are we earnings the our savings on by Quarterly for was invest average and as These accretion were on X.XX% of driven average XX.XX%. balance was with return margin deal. anticipated to ratios cost target core adjusted growth to expanding performance on continuing return sheet track the assets and adjusted result equity

executing we our billion to way our in now sheet, surpassed gain are on as and are X to We billion leverage strategy our have grow performance improve well X and in balance our assets. operations

quarter, We this growth being provisioned purchase X.X primary loan the million accounting, the with excluding driver.

fourth growth in Our prior was by interest by income significant loan quarter in to XX.X XX% quarter million. driven the and the from rate the This increased quarter. increases

the As of for is rate million returning the a reminder, $X third million improvement income pickup to status, from loan which a additional run fourth $X accrual an to quarter interest included a in quarter. the masking

average balances XX for deposit as yield X% deployed up funding were was XX.X rates Our basis loan to up expense million drive loan the up points. and for average Interest we quarter-over-quarter growth. quarter was loan increased

to liquidity the of growth. percentage addition the demand increased noted, quarter, to in deposits added Randy to some As XX% organic acquisition this with related being of our

quarter. cost Our X.XX% the funds for of was

total fourth in line expectations. FOMC remained our against the increases beta XX quarter, Our this year deposit with through about

target assumption near upward will XXXX XX XX in with rates of basis term. elevated will beta that to year remain this We XX by a in points the the and move

margin basis. interest fully was tax up X.XX% Net on equivalent to a

rate the with as will an remain continue of deposits the interest range seek assumed slowdown in competition to increases. that for to margin expect trajectory X.XX% in X.XX% for We clients yields. the anticipate 'XX into XXXX We higher of start of

days. has repricing of with over or first of next much sheet moderate with balance Our being our months, XX in sensitivity the the XX maturing that loans XX%

due XX% higher charge increasing credit to service the Turning on and million volume. quarter, some was to bond income for increased card was X.X focused It Credit income sales. and steady primarily non-interest remain gains this quarter. income, which we card on transaction

expense were quarter QX. and employees, related the million, a driven X.X the footprint We XX for related more in volume with the the incentives, million increase quarter. The for half from modest additional of of range XX anticipate accounts. that million was XX.X higher from to loan of increased costs. headcount million growth non-interest remainder larger by expenses more non-interest some and increased first to be and a Adjusted to client acquisition increase About

expansion and to revenue to continue our amount manage well of our to will within growth continued leverage. be We base operating promote cost earnings

have continue will of systems. We amount we through integrate costs the first quarter and some to elevated as people

closed markets new was ratio continued our the and for invest as to XX% Our quarter, adjusted acquisition we in efficiency and technology.

the integration into markets of XXs that the as scale our manage in and finish outlined. through to expect XXXX We and Central investments lower we new verticals that Mike

tax due QX. was merger for a mix elevated was the a income XX.X% exempt and flat Our being taxable X% rate while tax from operating non-deductible being up with quarter, certain income costs little overall revenue this to higher quarter, of over

to the expect XX% tax remain We of a XXXX. to XX% for in rate range

losses position. shares growth X.X and fourth be with ratio opportunistic share rates remain XX of declined came bolster ratios as to down. well We in We as transaction will for down interest driving the million, a quarter, the to capitalized liquidity deposit capital deposit came the Unrealized quarter our further term repurchased expect robust Even in Our this loan longer XX%, organic our ROE. earnings our in which strong base. due the helped buyback. to portion increased planned, and improvement million quarter the slightly was and we acquisition, the about by loan to XXX,XXX

augmenting deposit our focused We XXXX are on incentives, very mentioned. growth and driving for Randy are as

a being and summary, and year at we for since quarter and its assets historical our significant operating In remain all-time a at highs or we also if our very borrowing fourth below best IPO. strong for capacity We credit with revenue funding wholesale well levels wholesale, and quality successful had needed. have

now Operator, we the ready of portion the call. begin question-and-answer are to

Operator

Please question-and-answer We will now come the Instructions]. ahead. begin question first from session. will KBW. Brady [Operator And our of Gailey go

Brady Gailey

Hi, thanks. guys. morning, Good

Mike Maddox

Brady. morning, Good

Randy Rapp

Good morning.

Brady Gailey

realized yield I comments in know that yield kind wanted for accretable accretable intra-quarter. closed to out your was level quarter a any of -- there Central on of I and material XXXX? fourth sort forecast start the in was of But

Ben Clouse

significant Good in the there not They needle to historically, a answer The for better short little certainly the have NIM morning, bit than in a month. enough but do any Brady. year. It's wasn't we impact no, is Ben. have move

Brady Gailey

Okay. do XXXX then will in And sort yield think for minimal? accretable still or forecast that of any you be

Ben Clouse

I think minimal. pretty

Brady Gailey

look another quarter. thinking great we think growth as Okay. growth about you loan very the range to And then How annualized, acquisition, XXXX? excluding Even are in I the growth guys was loan mid loan XX% so strong.

Mike Maddox

in Brady, to we're growth. the know be at and still those to out saw single growth loan to good that strong. Yes, markets year. obviously that seem of digits another in that going the I have the believe growth be trying we digit be still we that But 'XX. opportunity the expect what's We're But going double we year it's this economy. bullish another with to on happen pretty to have pretty loan high levels we don't markets to figure low to in economies we're

of a and still and scaling, made in couple in a lot in that 'XX Worth we Fort So we're of Phoenix verticals. investments in

The our other numbers over XXX thing portfolio we though million. by shrank we those is, grew in even energy XXXX,

have the had we're And we the energy the that pretty in excited there. don't the that be case We about overcame some So and space XXXX. moderate growth. opportunity and to growth to anticipate

Brady Gailey

right. All -- then And

Ben Clouse

going Brady, it's clarify. Ben. to I was just

in the XX% the the year, I think the of XX% release, have it's the acquisition. Coincidentally, we the quarter. without loan acquisition for XX% for but all details this growth without organic

Brady Gailey

Yes.

X% me, finally then And of guys repurchased year. the last company you almost for Okay.

the How it. should cheap You've used capital is some we buybacks excess -- in some your of the Central notably think of still I used stock up up here. and

in continue So XXXX? should buybacks

Mike Maddox

we'll is expect be the opinion, it values to back stock active fairly value. undervalued if continues in represent to you buying and don't with that stock our our it trade ridiculously should continue believe we The

in So, area. yes, we the active will continue to buyback be

Brady Gailey

Thanks, guys. Okay, great.

Operator

comes of Andrew Piper Liesch Please The question from Sandler. next ahead. go

Andrew Liesch

Hi. Good everybody. morning,

Mike Maddox

Andrew. Hi,

Andrew Liesch

Hi.

Just the like non-interest I'm on was on and on margin yield and a those here? And what some what those CDs. term was quarter? growth it in looks CDs but where yield. and are what's curious in liabilities added here the you I'm blended on question bearing also good in assets curious just [indiscernible] the had coming

Ben Clouse

is say at Sure. the Good have not CD shop. morning, we're course, to focused offering Andrew. rates we're the competitive. looking of would sure really else It's been range. I We're big Ben. and a everybody making what We're, XX-month XX doing in

been really to of haven't -- We potentially that's rates view probably on coming but the some base, money we day-to-day really compete regard likely for the that's and point, where seeking longer XX price we're we we in our months. market funds. that most competitive because most think money your and after the next than in although And down other most on question, our client at where raise

Andrew Liesch

then that And right you. rate now? what's Got

Ben Clouse

Is money On market? that your question?

Andrew Liesch

out market where and Yes. yields then again new to? come Money like loan

Ben Clouse

Okay, yes.

front well second We're Xs. up I have give have the into find a in lot. me, of a this come here Rates loans to new it. point for New upper me Xs loans, at

base which base, loan of have entire presentation. the course we Xs, in the in Our upper the

Andrew Liesch

the Looks from that. just and like the the you. in expenses come a question first the then Got down bit quarter then timing after here a elevated And little deal. saves might be cost on on

run do think will I'm So curious cost you rate? the full be the in when just saves

Ben Clouse

quarter, by which in end of expect that rate. driver those happen will The quarter conversion, we first at second anticipate the Yes, I March. in to our the of systems be we think is biggest run

saves transition the until believe have outlook. of processes we cost that ongoing we'll reached expense some, at people manual then. for And we full have So some and course, point,

year to that in anticipate we savings as For those the my comments, XX some add quarter million to consistent realize through and first million be at I non-interest the relatively into after year, we as XX later staff expense going year the beginning. in mentioned the the will I

Andrew Liesch

back. it. Thanks. I'll step That's Got helpful. really

Mike Maddox

Andrew. Thanks,

Ben Clouse

Sure.

Operator

comes question ahead. Matt Please Olney go next The Stephens. of from

Matt Olney

morning. Good Thanks.

Mike Maddox

Good morning, Matt.

Matt Olney

single, low think Back I said growth, double on the you loan high digits. Michael,

markets. in drivers a you will do newer verticals year? handful the think that or categories newer Any of this loan and growth You're main geography of be some

Mike Maddox

really Well, And of we've continued Kansas of of all to energy Phoenix, Texas. But seen opportunity reasonable think an out I see really has we've growth. some to growth our have out steady City, growth strong markets.

dynamic markets about some are talk in Randy, just that want may to you segments. some we're so providing opportunity. And

Randy Rapp

Yes. Hi, Matt. It's Randy.

look markets, are we we've think Springs that very Fort are at outsized in you seeing Mike platform. Denver really are And referenced you made earlier, you been had excited growth. successful starting across those markets in growth that good said, Frisco, Colorado in As they've the And provide market. to we and growth And the going. get to also and Arizona and and be just referenced investments Worth

the to reported recent Our again, seeing growth has being space. in with opportunities. some energy. markets, sponsor presenting pipeline. very nice real structure good but a period. that nice finance some talked space best estate very they’re we've in He robust really grow we group about And We're energy But estate in our still higher growth pricing that has the very and and our opportunities seen selective continue in real portfolio, of

Matt Olney

you the expect quarter? for curious XQ, margin, competition that weakness us first Okay, I guess the range beyond back intense, below the And X.XX%-X.XX%. the you gave going remains sounds guidance question good. the then that Appreciate if if deposit I color. to think I'm is,

Ben Clouse

with absolutely. sit we a X.XX% big to consistent X.XX% pretty gave factor. Matt, where The That's is range I today. you,

and we you not margin we to can far. deposit balance is that mix. see the change for maintain as rate increases, headwind we're expect XXXX get If couple basis of noted, we potential a our a in So we so being sheet couple do lot a of as anticipating expansion, equal that points it of

very through our focused in comments, As we focused much will on our and have on that mentioned that Randy and we're for year. people incentives I this

Mike Maddox

And 'XX. a environment DDA the with acquisition up in the way mix rapidly we percentage as think ended beta team XXXX. We rising within maintained of our I reasonable proud Matt, growing a a And lived to the I'm deposits. through really our we're range. actually of our able keep deposit rate in fairly

keep 'XX we're grow some incentive is, fighting really things as know, DDA. I we're and standpoint to on and in DDA and really strategy going to really, continue from focused growth, an So everybody to doing standpoint

Matt Olney

XXXX And the on guess growth, single a that to I'm be capital, you to high capital lastly for a accomplished think Thanks I the Okay. growth appreciate like into to thinking external capital. loan with was loan then I to coming about of assuming It of double the just goals of growth, need think here? capital. chunk I buyback, the low year, commentary. a accrete the deploy one from if with last if it expect ratios looks there you digit could your excess for do organic I'm and inorganic. you're trying capital

Ben Clouse

as Michael, outpace out accrete we've will accrete do, Matt. We believe earnings. built modeled them to through we growth growth We year, expect our expect from And it sheet through model. our we our the to earnings. do here balance earnings as I'm sorry,

Mike Maddox

some we Matt, today. growth. have get capital different could our got to support go if levers to pull debt some we any we needed don't additional that We've sub

Matt Olney

Okay. Thanks, guys.

Operator

Rose from go The Michael of next Raymond ahead. question Please James. comes

Michael Rose

Hi. me call Hopefully, Matt, Good don't morning, guys. Ben.

Ben Clouse

you written being anticipation already in of next. down had I name your

Michael Rose

some here been reserve has case. have investors sitting loans. right I assume at and help of trended it untested most often. can But I their is lot we the and credit. XXX direction classifieds those cause kind hear criticized down. worked past general? would whether was the I really verticals The portfolio And some you the estate, of and But, on couple you positive what I you be my questions more both way guys comfortable credit stories that real have growth in then maybe could maybe hear in as What performance? of and just of loan a one doubt I over an about answered. is obviously, I been of think, think say from figured Non-performers there's Thanks. I how I here hear well. that us some have of of think what out kind there is years, with concern, get organic the asked most that the inorganic. what is think And Well, to

Randy Rapp

Yes. question. those and our metrics And there We're last comfortable through is credit a three of COVID We've over years. economic has and Randy. Good said, significant Hi, one our very Michael. some thing metrics. It's the performed improvement well. times in our seen that you and portion with been portfolio portfolio unique

lodging of nothing portfolio And that. in sponsors through supported think and stepped projects and or how that I our has today, criticized classified.

which And so quality. very good recently, our regulatory closely we grading feel about monitoring and confirmed loan had levels. We've portfolio. We're the and exams party reviews the credit accuracy third successful reserve

complete at the our level, different And But So making to CECL, CECL to how continue learn conversion did X.XX. we've And environments. like we CECL don't other when reserve was increase first sure where acts do have reserves We close will total reserve in a unfunded the the is third for we year. the parties reserved our that also same in looking pace. at we year, At those in in of reserve portfolios been commitments that we our area. institutions, we we some saw that adequately feel increase level. And the in at think very closely.

a well at our for growth really basis for some think we at rate XX capital portfolio holds economic the points, and the even we XXX, up positioned as also to not portfolio stress and the again, classified at quite C&I spent of look We is testing future time well, continue non-performings And run to XX portfolio, level our increases. we reserve of so portfolio, our only those uncertainty. the but tests, also bit the estate, real with and additional

underwriting. in underwriting our So think our we're very conservative to we're adhering and being standards

although just So portfolio, of good feel quality we're closely the monitoring it. overall, again, the about

Mike Maddox

had quality I'd add. feel We a our great very the and analysts concentration looked that hospitality. And migration, quality to X% good it an we credit side. at is Randy back to performing credit a today We our we telling three lot there's and performing energy little they from is and that It's years was X% to just there about for grow. about although crisis, now. People that we portfolio, done has would portfolio think Michael, energy the told portfolio we credit and And of get it's come and loss, been We've proving range. had well. very down that talk where for is team everybody and through investors our was us something our performing. at. the out energy that room X% on and have great went job our we

Our And performed not well. hospitality very big. very it's portfolio

I was have the properties overall better There had sponsors, were we and in those are average pre-pandemic. XX portfolio, they have only daily space. we think we there actually and than that rates performing were or higher at strong professional so levels better than operators occupancy, hospitality credits and

team validated they've will proactive we as try the credit testing to So Randy over management. lots spend complementary come six really had said, we the our to to very of we're time back it And our a months. and it, our do they last the what an doing be job lot doing. continue portfolio of eyes and of looking And and in and we've portfolio exam, studying external on they're we and at And stress and that.

to them? really, we what perform going to to going perform, really All your continue hard and quality that can we to we're can do to keep So it. say and improving we're to keep and Michael, is question, work

Michael Rose

little down little term income. But bit a kind add forward, mix. separate come you remind will and interchange explanation appreciate looks place bit. for intermediate Thanks. mix of you to looks Maybe topic, some just have fee a us and of Any looking ATM up, the I just maybe then revenue can And maybe it. income strategies grow one be? like longer that? it has fee like in follow on would your Central income to what It to the credit just

Ben Clouse

Michael. Sure,

in-house concentration significant sized one all And that credit and at it. who headwind reminder, a right We've in in down that to additional end large to clients we've had at and decline they're an a our to fee card to will be come finally have and that near is related portfolio all contributor to and a the big business where moved client growth there. beginning with very tail seen income they platform growth We're As an spike overcome their believe one card of the very COVID. our converting credit on is year. are point concentration, our had the fulfill particular of

where they They clients to portfolio. worked we'll as a mentioned net think card additional used so loans volume that impact So we credit business volume, way lesser holding we've begin which some there sheet. harvested Central for through And fee my that course exclusively almost comments pretty all mortgage without from the to to them Particular now low anything balance I we now. concentration. gains is our a adding to significant those see model is sold and right to the and driving on the probably on SBA our most turn that XXXX in deal, transaction extent for income are of their opportunity of there of most is

will We on current sales depressed. like extent bit same sense the today. the a The makes little at do the it moment SBA gain to is

in likely guaranteed on very those so we loans can. some in those balance portfolio. sheet on because will many of particular double hold near make The digits we'll simply of yields in term, near the our the are attractive, And And what a our future, will which be when that But come significant for changes, opportunity increases as the for fee the levels. back current income us we about cost looks benefit its expect from like in there'll base. we gain decision over we depressed think

Michael Rose

Perfect. Thanks for taking all questions. my

Ben Clouse

Sure. Michael. Thank you,

Mike Maddox

You're welcome.

Operator

This to conference any concludes Maddox over for session. like would turn our closing the Mike to question-and-answer I back remarks.

Mike Maddox

long-term future in we've the thank for I'm enhanced all And the we've our markets. a really, credit team and it shareholder just we're to to to us. improve what great and the our got really growth excited driving great opportunities well quality. proud Very joining 'XX. will for continue I you joining place I We've platform. really continued want And today. of technology XXXX positioned us so team. provide holds. proud to see And very strengthen and and XX% of value. in new our Thank everybody some believe for added focus We've we're really on going

Operator

you today's now concluded. attending disconnect. The may conference for Thank has now presentation and you

CrossFirst Bankshares (CFB) 24 Jan 232022 Q4 Earnings call transcript