CrossFirst Bankshares, Inc.

Thank you for standing by and welcome to Cross First Q2 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your touchtone telephone. Please be advised that today's conference may be recorded. Should you require any further assistance, please press star 0. I would now like to hand the conference over to your host, Matt Needham, Director of Investor Relations. Please go ahead.

Welcome, and thank you for joining us today. On the call are Mike Maddox, our President and CEO, Dave O'Toole, our Chief Investment Officer and former Chief Financial Officer, and Randy Rapp, our Chief Credit and Chief Risk Officer. Our new Chief Financial Officer, Ben Klaus, will also be available during the Q&A portion of the call. As a reminder, a telephonic replay of this call will be available on our investor relations website. Before we get underway, let me remind you that our release, quarterly investor update, and presentation slides that accompany this call are available on the investor relations website. Slide two is a cautionary statement. I want to point out that in our remarks this afternoon, we will be discussing forward-looking information, which involves a number of risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review. Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures are included in the release and presentation, copies of which are also available on our IR website. All earnings per share metrics discussed on today's call are provided on a diluted per share basis. I'd now like to turn the call over to Mike Maddox.

Thank you, Matt. And thank you to everyone for joining the call. Before we get into the quarterly performance, I do want to take a moment to honor our former CEO, George Jones. We are deeply saddened by George's passing, and we are lucky to have had him with our company. George's leadership and mentorship have played a critical role in our company's success. George taught me and many of us so much. One of his greatest strengths was his ability to connect with people. We will remember his extraordinary service across our entire company and throughout our industry for years to come. We will offer our deepest condolences to Miriam, his kids, and the rest of George's family. As we begin to look forward, I'd like to introduce the newest member of our management team who is joining us today. I am pleased that with the hiring of our new chief financial officer, as we have filled out our management team, After conducting a nationwide search, we found a terrific and well-qualified CFO right here in Kansas City. Our new CFO, Ben Klaus, recently started with us on July 12th and will be a key part of our leadership team. I know Ben will be instrumental in helping us grow strategically while also meeting the evolving and changing needs of our clients. Ben has over 20 years of experience and is joining us from Waddell and Reed where he was Senior Vice President and CFO for the last three-plus years. I'm glad to have Ben here with us today and on the team. After a challenging 2020, our first quarter of 2021 demonstrated great strength in our core operating business, and we are excited to announce that our second quarter produced the best quarterly earnings in companies' history. As we move into discussing our strong quarterly results, our operating revenue grew 6% during the second quarter and combined with reduced provisioning led to a record $15.6 million of net income and pre-tax pre-provision profit of $22.3 million, earnings per share of $0.30. With these strong results, we achieved a return on average assets of 1.10% and return on average common equity of 9.86%. We also managed our balance sheet to reduce asset size, which improved net interest margin to 3.12% for the quarter. I'm extremely proud of the team's focus, performance, and progress toward our strategic goals. The team has been laser-focused on improving our profitability, and their efforts can be seen in the numbers. During the second quarter, we thoughtfully improved the company's balance sheet efficiency and strengthened our profitability metrics. CrossFirst is committed to helping our local businesses and communities we serve, especially during the pandemic. Our dedication to our customers led to holding low-margin PPP loans and excess cash from economic stimulus pumped into the economy. During the quarter, we were able to assist our customers in obtaining forgiveness for $161 million of PPP loans and had nearly $100 million of CNI paydowns. and reduced our excess cash balance. In managing our deposits, we allowed non-relationship and institutional deposits that were a drag-on margin to roll off the balance sheet. While our overall growth metrics were impacted, we increased our margin by 12 basis points from the previous quarter. We also continued to execute on our strategy of growing non-interest bearing deposits and were able to increase demand deposits by 3% from the previous quarter and by 9% over last year's second quarter. These steps contributed to a stronger deposit mix that now has 19% of our total deposits in demand deposit accounts. While there is still some residual impact on our loan growth from pandemic-related activity, we expect our continued expansion efforts to help us drive loan and balance sheet growth in future quarters. As the economy reopens and oil prices stabilize, we are seeing significant improvement in our credit metrics. While we added to the reserve during the quarter, I am pleased to announce a substantial decline in our classified assets, lower non-performing assets, and reduced charge-off activity. We expect to see continued improvement throughout the second half of the year, which should lead to further upgrades in our loan portfolio. We also completed the $20 million share repurchase program at a weighted average price of $12.68 per share. The combination of the share repurchase program ending, adjustments to the balance sheet, and improved performance led to increased capital ratios during the second quarter. Our strong capital position allows us to continue to evaluate growth and expansion opportunities. Our path to success is grounded in the ideals of one team, one bank with a shared vision of success. We remain focused and dedicated to our purpose of serving people in extraordinary ways and to our promise to contribute to the well-being of our employees, clients, and communities. Attracting and retaining the highest quality talent is of utmost importance. It is the key to our successful execution of our plan. In June, we announced our entry into the Phoenix, Arizona market. I am pleased to announce that we recently received regulatory approval for our full-service Phoenix location. Like all of our expansion efforts, the decision to enter the market was opportunistic and centered around finding the right talent, the people who fit our culture, our relationship banking model, and who will effectively compete and grow our presence in the market. Our new Arizona market president, Kevin Halloran, comes to us with over 35 years of experience in the Phoenix banking community. we were able to take advantage of market disruption that allowed us to land the right leader for the market. Kevin has also hired two experienced commercial bankers with long tenure in Phoenix. We believe this team can grow to scale in a short period of time. The decision to go to Arizona was also a natural extension of our current customer base. We already have a number of customers located in Phoenix. We will continue to expand into other metropolitan markets to fill in our geographic footprint over time. It will be driven by hiring great talent or through the right strategic acquisition. We know how to grow organically, and that will continue to be our primary focus. We remain excited about our growth in the Dallas-Fort Worth area. As a part of that growth, we are making progress in Frisco as we build out our team. Texas continues to be a strategic focus for the company. We will continue to add market talent and look to expand our presence across Texas where there is tremendous opportunity. Before we get into the detail of our financial performance, I'd again like to thank Dave O'Toole for his hard work and dedication to Cross First on what will be his last earnings call with the company. Dave will continue to be with the team for the next year as Chief Investment Officer, and I look forward to a successful transition of the CFO role to Ben. Thank you, Dave, for your contributions to the company over the last 13 years. I'll now turn the call over to Dave to take everyone through the financial details of our results.