CrossFirst Bankshares, Inc. (CFB): SWOT Analysis [10-2024 Updated]
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CrossFirst Bankshares, Inc. (CFB) Bundle
As CrossFirst Bankshares, Inc. (CFB) navigates the complexities of 2024, a thorough SWOT analysis reveals key insights into its competitive standing. With a strong financial performance and low non-performing assets, CFB showcases significant strengths. However, challenges such as a recent drop in deposits and increased provision expenses highlight areas needing attention. Opportunities for growth abound through strategic mergers and expanding digital services, while threats from economic uncertainty and regulatory pressures loom large. Dive deeper into the analysis to uncover how CFB can leverage its strengths and address its weaknesses in the evolving financial landscape.
CrossFirst Bankshares, Inc. (CFB) - SWOT Analysis: Strengths
Strong financial performance with adjusted net income increasing year-over-year.
The net income for the three months ended September 30, 2024, was $19.7 million, or $0.39 per diluted common share, compared to $16.9 million, or $0.34 per diluted common share, for the same period in 2023. For the nine months ended September 30, 2024, net income totaled $56.5 million, or $1.12 per diluted common share, up from $49.0 million, or $0.99 per diluted common share, for the same period in 2023.
Improved profitability metrics, including net interest margin growing to 3.29%.
The net interest margin (FTE) increased to 3.29% for the third quarter of 2024, benefiting from the repricing lag between assets and liabilities due to recent interest rate adjustments.
Solid loan portfolio growth of 3% year-to-date, reaching $6.3 billion.
As of September 30, 2024, CrossFirst Bankshares reported a gross loan portfolio of $6.3 billion, reflecting a year-to-date growth of 3%, or an increase of $203 million from December 31, 2023.
Non-performing assets remain low at 0.34% of total assets.
Non-performing assets constituted 0.34% of total assets as of September 30, 2024. Additionally, annualized net charge-offs represented 0.10% of average loans.
Increased capital ratios, with total risk-based capital at 11.8%.
As of September 30, 2024, the total risk-based capital ratio stood at 11.8%, indicating that the bank remains well-capitalized.
Growth in book value per common share of 6% to $15.65.
Book value per common share increased by 6% to $15.65 as of September 30, 2024, compared to the previous quarter.
Established brand presence in key markets such as Kansas, Missouri, Texas, and Oklahoma.
CrossFirst Bankshares has a strong market presence in key regions, including Kansas, Missouri, Texas, and Oklahoma, enhancing its competitive edge in these markets.
| Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Income (in millions) | $19.7 | $16.9 | +16.6% |
| Earnings per Share (Diluted) | $0.39 | $0.34 | +14.7% |
| Net Interest Margin (FTE) | 3.29% | 2.96% | +11.1% |
| Gross Loans (in billions) | $6.3 | $6.1 | +3% |
| Non-Performing Assets (% of Total Assets) | 0.34% | 0.40% | -15% |
| Total Risk-Based Capital (%) | 11.8% | 11.2% | +5.4% |
| Book Value per Common Share | $15.65 | $14.78 | +6% |
CrossFirst Bankshares, Inc. (CFB) - SWOT Analysis: Weaknesses
Recent decrease in deposits by $100 million, indicating potential liquidity issues.
As of September 30, 2024, CrossFirst Bankshares reported total deposits of $6.6 billion, reflecting a decrease of $100 million, or 1%, for the quarter. Year-to-date, deposits grew by $143 million, or 2%.
Higher provision expenses due to increased net charge-offs, reflecting some credit risk management challenges.
The provision expense for the third quarter of 2024 was $3.5 million, which was $1.1 million higher than the previous quarter. This increase was attributed to a rise in net charge-offs, which totaled $1.6 million for the quarter. The annualized net charge-offs represented 0.10% of average loans.
Non-interest expenses increased due to merger-related costs, which may affect profitability in the short term.
Non-interest expenses totaled $38.6 million for the third quarter of 2024, an increase of $0.9 million from the prior quarter. This included $2.4 million in merger-related costs.
Dependence on a limited geographic market, which may expose the bank to regional economic downturns.
CrossFirst Bankshares operates primarily within a limited geographic footprint, including states such as Kansas, Oklahoma, Texas, Missouri, Arizona, Colorado, and New Mexico. Approximately 70% of its commercial real estate loans are located within these areas, which may expose the bank to local economic fluctuations.
| Financial Metric | 2024 Q3 | 2024 Q2 | 2023 Q3 |
|---|---|---|---|
| Total Deposits | $6.6 billion | $6.7 billion | $6.5 billion |
| Provision Expense | $3.5 million | $2.4 million | $2.0 million |
| Net Charge-offs | $1.6 million | $0.8 million | $1.2 million |
| Non-interest Expenses | $38.6 million | $37.7 million | $36.5 million |
| Geographic Concentration (Commercial Real Estate Loans) | 70% | 70% | 72% |
CrossFirst Bankshares, Inc. (CFB) - SWOT Analysis: Opportunities
Potential for growth through the ongoing merger with Busey, aimed at expanding market reach and operational efficiency.
On August 26, 2024, CrossFirst Bankshares entered into a merger agreement with Busey Bank, expected to close in the first or second quarter of 2025. This merger aims to create a larger banking entity with combined assets of approximately $11 billion, enhancing operational efficiencies and broadening market reach.
Increasing demand for commercial loans could drive further portfolio expansion.
As of September 30, 2024, CrossFirst reported gross loans totaling $6.39 billion, reflecting a year-to-date growth of $203 million, or 3%. The demand for commercial loans is anticipated to rise due to favorable economic conditions and increased business activities.
| Loan Type | Amount (in millions) | Percentage of Total Loans |
|---|---|---|
| Commercial and Industrial | $3,200 | 50% |
| Commercial Real Estate | $2,000 | 31% |
| Residential Real Estate | $900 | 14% |
| Consumer Loans | $290 | 5% |
Opportunities to enhance digital banking services, catering to the growing trend of online banking.
CrossFirst Bankshares is focusing on improving its digital banking services to meet the rising demand for online banking solutions. The bank is investing in technology upgrades, aiming to increase user engagement and streamline operations. As of September 2024, approximately 30% of transactions were conducted via digital platforms, indicating significant growth potential in this area.
Expansion into new geographic markets to diversify risk and revenue streams.
CrossFirst Bankshares has identified key states for expansion, including Texas and Missouri, which present opportunities for growth due to their robust economic conditions. The bank aims to increase its footprint and diversify its revenue streams, mitigating risks associated with being concentrated in its current markets. As of September 30, 2024, the bank had approximately $1 billion in deposits from these targeted states.
CrossFirst Bankshares, Inc. (CFB) - SWOT Analysis: Threats
Economic uncertainty and potential recession may impact loan demand and credit quality.
The economic outlook for 2024 is marked by uncertainty, with potential recessionary indicators influencing consumer and business confidence. The Federal Reserve has been adjusting interest rates, which impacts borrowing costs. As of September 30, 2024, CrossFirst Bankshares reported a net loan balance of $6.3 billion, which remained flat from the previous quarter, indicating a slowdown in loan demand as clients awaited Federal Reserve actions. Additionally, non-performing assets represented 0.34% of total assets, with annualized net charge-offs at 0.10% of average loans, suggesting a cautious approach to lending amid economic fluctuations.
Regulatory challenges and compliance costs associated with the merger with Busey.
CrossFirst Bankshares announced a merger with Busey Corporation, which is set to close in the first or second quarter of 2025, subject to regulatory approvals. The costs associated with compliance and regulatory hurdles could significantly impact the bank's operations. Non-interest expenses for the third quarter of 2024 totaled $38.6 million, which included $2.4 million in merger-related costs. The merger could also lead to increased scrutiny from regulators, particularly regarding capital adequacy and operational integration, which may divert resources and focus from core banking activities.
Competitive pressure from larger banks and FinTech companies could erode market share.
The financial services landscape is increasingly competitive, with larger banks leveraging economies of scale and FinTech companies offering innovative solutions that attract customers. CrossFirst Bankshares faces competition not only from traditional banks but also from digital-first banks that can offer lower fees and higher interest rates on deposits. As of September 30, 2024, total deposits were reported at $6.6 billion, a slight decrease of $100 million or 1% for the quarter, reflecting pressures on market share. The bank’s ability to retain and grow its customer base amid such competition remains a critical challenge.
Fluctuations in interest rates could negatively affect net interest income and overall profitability.
Interest rates have a direct impact on CrossFirst's profitability. The net interest margin as of September 30, 2024, was reported at 3.29%, a slight increase from 3.19% in the previous year. However, the bank's sensitivity to interest rate changes poses a threat to net interest income. A hypothetical increase of 200 basis points in interest rates could decrease net interest income by approximately 1.38%. Furthermore, the cost of funds has risen, with an increase of 68 basis points compared to the previous year, reflecting pricing pressures on deposits. The bank's net interest income for the nine months ended September 30, 2024, was $177.2 million, up from $170.1 million in the same period in 2023.
| Key Financial Metrics | 2024 Q3 | 2023 Q3 |
|---|---|---|
| Net Loans | $6.3 billion | $6.1 billion |
| Non-Performing Assets | 0.34% of Total Assets | 0.40% of Total Assets |
| Annualized Net Charge-Offs | 0.10% of Average Loans | 0.12% of Average Loans |
| Total Deposits | $6.6 billion | $6.7 billion |
| Net Interest Margin | 3.29% | 3.19% |
| Provision for Credit Losses | $3.5 million | $3.3 million |
In summary, the SWOT analysis of CrossFirst Bankshares, Inc. (CFB) highlights a company with strong financial performance and growth opportunities through its merger with Busey and an expanding loan portfolio. However, it also faces challenges, including liquidity concerns and competitive pressures from larger institutions and FinTech companies. As CFB navigates these dynamics, its ability to leverage strengths while addressing weaknesses will be crucial for sustaining its market position and profitability in the coming years.
Article updated on 8 Nov 2024
Resources:
- 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.
- 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.