CrossFirst Bankshares, Inc. (CFB): Business Model Canvas [10-2024 Updated]

In the competitive landscape of banking, understanding a company's business model is crucial for investors and analysts alike. CrossFirst Bankshares, Inc. (CFB) stands out with its unique approach that emphasizes personalized banking solutions and a strong community presence. This blog post delves into the Business Model Canvas of CFB, exploring its key components—from customer segments to revenue streams—providing insights into how the bank operates and thrives in its market. Discover the strategic elements that drive CrossFirst's success below.

CrossFirst Bankshares, Inc. (CFB) - Business Model: Key Partnerships

Collaboration with regulatory bodies

CrossFirst Bankshares, Inc. collaborates closely with various regulatory bodies to ensure compliance with federal and state banking regulations. As of September 30, 2024, the company's total risk-based capital ratio was 11.8%, while the common equity Tier 1 capital ratio stood at 10.6%. These figures indicate that CrossFirst maintains a strong capital base in alignment with regulatory requirements, which helps mitigate risk and enhance stability.

Partnerships with financial technology firms

CrossFirst Bankshares has engaged in partnerships with financial technology firms to enhance its service offerings and streamline operations. Notably, the bank has announced a proposed merger with Busey Corporation, which will expand its technological capabilities through Busey’s payment technology solutions subsidiary, FirsTech, Inc. This merger is expected to provide additional opportunities for growth in wealth management services.

Additionally, the bank has been focusing on improving its digital banking platforms, which is crucial in today's competitive landscape. The integration of fintech solutions aims to enhance customer experience and operational efficiency.

Engagement with local businesses and communities

CrossFirst Bankshares actively engages with local businesses and communities across its operational footprint, which includes states such as Kansas, Oklahoma, Texas, Missouri, Arizona, Colorado, and New Mexico. As of September 30, 2024, the total deposits for the bank reached $6.6 billion, reflecting a year-to-date increase of $143 million or 2%. This growth is attributed to new clients and increased engagement with local businesses, particularly in time deposits, which saw a rise of $156 million.

The bank's community involvement includes offering tailored financial products that cater to the specific needs of local businesses, which further strengthens its partnerships in the region. By fostering these relationships, CrossFirst Bankshares aims to build a loyal customer base and enhance its market presence.

Partnership Type	Description	Impact
Regulatory Bodies	Collaboration to ensure compliance with banking regulations.	Maintains strong capital ratios: Total risk-based capital of 11.8%, Common equity Tier 1 capital of 10.6%.
Financial Technology Firms	Partnership with Busey Corporation and integration of fintech solutions.	Enhances service offerings and operational efficiency.
Local Businesses	Engagement through tailored financial products and services.	Total deposits of $6.6 billion; YTD increase of $143 million.

CrossFirst Bankshares, Inc. (CFB) - Business Model: Key Activities

Providing commercial and consumer banking services

CrossFirst Bankshares, Inc. (CFB) offers a range of commercial and consumer banking services, focusing on high-quality service and customer satisfaction. As of September 30, 2024, CFB reported total assets of $7.6 billion, with loans totaling $6.3 billion, reflecting a year-to-date growth of 3%.

The bank's deposit base stood at $6.6 billion, representing a slight decrease of $100 million for the quarter but an increase of $143 million year-to-date. CFB's net interest income for the third quarter of 2024 was $61.2 million, an increase of $6 million compared to the previous year.

Managing loan origination and servicing

Loan origination and servicing are critical activities for CFB. The bank's gross loans, net of unearned income, were reported at $6.39 billion as of September 30, 2024. The average interest yield on these loans was 7.38%. CFB's loan portfolio includes a variety of segments, with commercial and industrial loans being a significant component.

For the three months ended September 30, 2024, the bank recorded net charge-offs of $1.6 million, primarily related to three commercial and industrial loans. The allowance for credit losses increased to $78 million, reflecting the bank's proactive approach to managing credit risk.

Conducting risk management and compliance

Risk management and compliance are integral to CFB's operations, ensuring adherence to regulatory requirements and safeguarding the bank's assets. The bank's non-performing assets were 0.34% of total assets as of September 30, 2024, with total non-performing loans amounting to $20.6 million. The annualized net charge-offs represented 0.10% of average loans, indicating a manageable level of credit losses.

CFB maintains a strong capital position, with total risk-based capital at 11.8% and common equity Tier 1 capital at 10.6%. The effective tax rate for the bank is projected to remain between 20% to 22% for the remainder of 2024.

Key Metrics	As of September 30, 2024	As of December 31, 2023
Total Assets	$7.6 billion	$7.4 billion
Total Loans	$6.3 billion	$6.1 billion
Total Deposits	$6.6 billion	$6.5 billion
Net Interest Income	$61.2 million	$55.2 million
Non-Performing Loans	$20.6 million	$24.8 million
Net Charge-Offs	$1.6 million	$4.0 million
Risk-Based Capital Ratio	11.8%	11.5%

CrossFirst Bankshares, Inc. (CFB) - Business Model: Key Resources

Experienced banking personnel

CrossFirst Bankshares, Inc. (CFB) employs a highly skilled workforce with a focus on providing personalized banking services. As of September 30, 2024, the bank had approximately 300 employees dedicated to various banking operations, including lending, customer service, and compliance. The bank emphasizes training and development, ensuring that staff are well-versed in the latest banking regulations and customer service practices. This skilled workforce is essential for maintaining strong client relationships and effectively managing the bank's operations.

Robust IT infrastructure and platforms

CFB has invested significantly in its IT infrastructure to support its operations and enhance customer experience. The bank's technology investments include advanced banking software and secure online platforms, which facilitate seamless transactions and provide clients with access to their accounts 24/7. As of September 30, 2024, CFB reported a total IT expenditure of approximately $5 million for system upgrades and cybersecurity measures, ensuring both efficiency and security in its operations. This robust IT framework supports the bank's digital banking initiatives, enabling it to compete effectively in the evolving financial landscape.

Capital reserves for lending activities

As of September 30, 2024, CrossFirst Bankshares maintained total assets of $7.6 billion, with total deposits amounting to $6.6 billion. The bank's capital reserves, essential for lending activities, included approximately $868 million in total capital, resulting in a total risk-based capital ratio of 11.8%, which exceeds regulatory requirements. This strong capital base allows CFB to support a loan portfolio of $6.3 billion, reflecting year-to-date growth of $203 million, or 3%. The allowance for credit losses was reported at $78 million, representing 1.23% of total loans, indicating a prudent approach to risk management and lending practices.

Key Metric	Value
Total Assets	$7.6 billion
Total Deposits	$6.6 billion
Total Capital	$868 million
Risk-Based Capital Ratio	11.8%
Loan Portfolio	$6.3 billion
Allowance for Credit Losses	$78 million
Net Charge-Offs	$1.6 million

CrossFirst Bankshares, Inc. (CFB) - Business Model: Value Propositions

Personalized banking solutions for businesses and individuals

CrossFirst Bankshares, Inc. (CFB) offers tailored banking solutions designed to meet the unique needs of both businesses and individuals. The bank emphasizes personalized service, allowing relationship managers to cater to specific client requirements, thereby enhancing customer satisfaction and loyalty. As of September 30, 2024, CFB had gross loans of $6.4 billion, representing a 3% increase year-to-date, which reflects the bank's commitment to understanding and serving its clients' financial needs effectively.

Competitive interest rates and fees

CFB is positioned to offer competitive interest rates across its product offerings. As of September 30, 2024, the bank reported a net interest margin of 3.29%, which has benefited from the repricing lag between assets and liabilities. The average yield on gross loans was recorded at 7.38%, up from 6.96% in the previous year. Additionally, the bank has structured its fee schedules to remain competitive, which helps attract and retain customers.

Product Type	Average Rate	Deposit Amount (in billions)	Loan Amount (in billions)
Time Deposits	5.14%	2.0	N/A
Money Market Accounts	4.41%	3.0	N/A
Gross Loans	7.38%	N/A	6.4

Strong community presence and local expertise

CFB has established a robust community presence across its operational regions, including Kansas, Oklahoma, Texas, Missouri, Arizona, Colorado, and New Mexico. As of September 30, 2024, the bank reported total deposits of $6.6 billion, reflecting a growth of 2% from the previous year. This growth is attributed to the bank's local expertise and commitment to community engagement, which allows it to better serve the financial needs of its customers. The bank's approach includes active participation in local events and initiatives, further solidifying its position as a trusted financial partner in the communities it serves.

CrossFirst Bankshares, Inc. (CFB) - Business Model: Customer Relationships

Focus on relationship banking and personalized service

CrossFirst Bankshares, Inc. prioritizes relationship banking, which emphasizes personal connections with clients. As of September 30, 2024, the bank had approximately $6.6 billion in deposits, reflecting a growth of $143 million or 2% year-to-date. This growth is partially attributed to the establishment of long-term relationships with clients, which encourages customer loyalty and retention.

Regular communication through various channels

CrossFirst maintains regular communication with its customers through multiple channels such as phone, email, and digital platforms. As of September 30, 2024, the bank's average client account balance was less than $250,000 for both individual and business accounts. This indicates a broad customer base that benefits from consistent engagement and tailored communication strategies.

Customer feedback mechanisms to enhance services

The bank employs various customer feedback mechanisms to improve service offerings. As of the third quarter of 2024, CrossFirst reported a non-interest expense of $38.6 million, which included costs associated with enhancing customer service platforms. Additionally, the bank's efficiency ratio stood at 57.52% for Q3 2024, indicating effective management of operational costs while focusing on customer service improvements.

Metric	Value
Total Deposits	$6.6 billion
Year-to-Date Deposit Growth	$143 million (2%)
Average Client Account Balance	Less than $250,000
Non-Interest Expense	$38.6 million
Efficiency Ratio (Q3 2024)	57.52%

CrossFirst Bankshares, Inc. (CFB) - Business Model: Channels

Physical branches in strategic locations

As of September 30, 2024, CrossFirst Bankshares operates a network of physical branches strategically located in key markets, including Kansas, Oklahoma, Texas, Missouri, Arizona, Colorado, and New Mexico. The bank's total assets reached approximately $7.49 billion, with total deposits totaling $6.6 billion, reflecting a year-to-date increase of $143 million, or 2%.

In 2024, CrossFirst entered into a lease agreement for a new bank branch in Oklahoma City, expected to commence in the fourth quarter. The bank's focus on physical presence allows it to effectively engage with customers and deliver personalized services, enhancing customer retention and acquisition.

Online and mobile banking platforms

CrossFirst Bankshares has invested in robust online and mobile banking platforms to provide customers with convenient access to banking services. As of September 30, 2024, the bank reported an annualized return on average assets of 1.02% and an annualized return on average common equity of 10.54%. The digital platforms facilitate a range of services, including account management, funds transfer, and loan applications, catering to the growing demand for online banking solutions.

The bank's net interest income for the third quarter of 2024 was reported at $372.57 million, attributed significantly to the enhanced digital banking capabilities that drive customer engagement and retention.

Direct marketing and community events

CrossFirst engages in direct marketing initiatives and community events to foster relationships and promote its services. The bank's advertising expenditure for the third quarter of 2024 was $723,000, reflecting its commitment to brand visibility and customer engagement. Community events are strategically planned to enhance local presence and build trust among potential customers.

By leveraging direct marketing and community outreach, CrossFirst aims to strengthen its brand and increase customer acquisitions, which is critical for sustaining its growth trajectory in a competitive banking landscape.

Channel Type	Details	Financial Impact
Physical Branches	Strategically located in key markets	Total deposits: $6.6 billion
Online Banking	Robust digital banking platforms	Net interest income: $372.57 million
Community Events	Direct marketing and local engagements	Advertising expense: $723,000

CrossFirst Bankshares, Inc. (CFB) - Business Model: Customer Segments

Small to medium-sized businesses

CrossFirst Bankshares, Inc. (CFB) primarily targets small to medium-sized businesses (SMBs) with a range of financial products tailored to meet their operational and growth needs. As of September 30, 2024, CFB's loan portfolio included $2.2 billion in commercial and industrial loans, accounting for approximately 35% of the total loans. The bank focuses on providing lines of credit, equipment financing, and term loans, which are essential for SMBs to manage cash flow, invest in new projects, and expand their operations.

• Loan terms typically range from one to three years.
• Repayment primarily relies on the cash flow generated by the business operations of these SMBs.

Individual consumers in local markets

CFB also serves individual consumers in local markets, offering personal banking services, including checking and savings accounts, personal loans, and mortgage products. As of September 30, 2024, the bank reported a total of $476 million in residential real estate loans, representing about 8% of its overall loan portfolio. The average client account balance for individual accounts was less than $250,000, indicating a broad base of retail customers.

Consumer Banking Product	Loan Amount (in millions)	Percentage of Total Loans
Residential Real Estate Loans	$476	8%
Consumer Loans	$23.4	0.4%

High-net-worth individuals seeking tailored services

CFB targets high-net-worth individuals (HNWIs) by offering customized financial solutions that cater to their investment and wealth management needs. The bank's wealth management services include investment advisory, trust services, and private banking. As of September 30, 2024, CFB's total assets reached $7.6 billion, with a significant portion attributed to affluent clients seeking personalized financial services. The bank's growth strategy includes expanding its wealth management capabilities to attract more HNWIs, particularly in high-growth metropolitan areas.

• Investment advisory services tailored to individual financial goals.
• Trust services designed for estate planning and asset protection.

CrossFirst Bankshares, Inc. (CFB) - Business Model: Cost Structure

Employee salaries and benefits

As of September 30, 2024, CrossFirst Bankshares, Inc. reported total non-interest expenses of $38.6 million for the third quarter, which includes employee salaries and benefits. The specific allocation for salaries and benefits is not detailed, but it significantly contributes to the overall non-interest expenses. The total provision for credit losses was $3.5 million, reflecting operational costs related to employee management and compliance.

Operational costs for branches and technology

The operational costs for branches and technology, as part of the total non-interest expenses, amounted to approximately $38.6 million for the quarter ended September 30, 2024. This figure includes costs associated with maintaining physical branch locations and investments in technology infrastructure to support banking operations. Moreover, the company incurred $2.4 million in merger-related costs, which impacted the operational cost structure.

Cost Category	Q3 2024 Amount (in millions)
Total Non-Interest Expenses	$38.6
Merger-Related Costs	$2.4
Estimated Salaries and Benefits	Included in Total Non-Interest Expenses
Operational Costs (Branches & Technology)	Included in Total Non-Interest Expenses

Marketing and customer acquisition expenses

Marketing and customer acquisition expenses are also included within the total non-interest expenses of $38.6 million. The specific breakdown of these marketing expenses is not provided, but they are crucial for driving customer growth and retention. CrossFirst Bankshares continues to adapt its marketing strategies to enhance customer outreach and engagement.

Expense Type	Details
Marketing Expenses	Included in Total Non-Interest Expenses
Customer Acquisition Costs	Included in Total Non-Interest Expenses

CrossFirst Bankshares, Inc. (CFB) - Business Model: Revenue Streams

Interest income from loans and mortgages

For the three months ended September 30, 2024, CrossFirst Bankshares reported interest income from gross loans, net of unearned income, amounting to $118.57 million, compared to $103.63 million in the same period in 2023. The average yield on loans for the third quarter of 2024 was 7.38%, an increase from 6.96% in the prior year quarter. Total loans stood at $6.39 billion as of September 30, 2024, reflecting a year-to-date growth of $203 million, or 3%.

Fees from banking services and transactions

Non-interest income for the three months ended September 30, 2024, was approximately $7.25 million, which includes fees from banking services and transactions. This represents an increase from $6.8 million in the corresponding period of 2023. The main components of non-interest income include:

• Service charges on deposit accounts: $3.1 million
• Loan fees: $13 million for the nine months ended September 30, 2024
• Other service fees: $4.15 million

Investment income from securities and other assets

Investment income for the three months ended September 30, 2024, was reported at $5.29 million, an increase from $3.22 million in the same quarter of 2023. As of September 30, 2024, the total investment portfolio was valued at $784 million, with $487.26 million in taxable securities generating an interest income of $5.29 million at a yield of 4.34%. The tax-exempt securities generated $2.93 million in income at a yield of 3.11%.

Revenue Stream	Q3 2024 ($ million)	Q3 2023 ($ million)	Change (%)
Interest Income from Loans	118.57	103.63	14.5%
Fees from Banking Services	7.25	6.80	6.6%
Investment Income	5.29	3.22	64.4%

Overall, CrossFirst Bankshares continues to enhance its revenue streams through increased interest income from loans, growing fees from banking services, and expanding investment income, positioning itself for sustained financial performance.

Article updated on 8 Nov 2024

Resources:

1. CrossFirst Bankshares, Inc. (CFB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of CrossFirst Bankshares, Inc. (CFB)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View CrossFirst Bankshares, Inc. (CFB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.