8-K: CrossFirst Bankshares Reports Record Fourth Quarter and Full Year 2024 Results Amidst Busey Merger

CrossFirst Bankshares announces record fourth quarter and full year 2024 earnings, with a merger with First Busey Corporation expected to close on March 1, 2025.

Summary

• CrossFirst Bankshares, Inc. reported record fourth quarter net income of $22.1 million, or $0.44 per diluted common share.
• The company also reported record full year net income of $78.5 million, or $1.56 per diluted common share.
• Adjusted net income for the fourth quarter was $22.9 million, or $0.45 per diluted common share, and $81.6 million, or $1.62 per diluted common share for the full year, excluding merger costs.
• Operating revenue grew 7% for the full year 2024 compared to the prior year.
• Net interest margin FTE for the quarter grew to 3.41%, while the full year net interest margin FTE was 3.28%.
• Loans ended the quarter at $6.3 billion, down 1% compared to the prior quarter, but up 2% for the full year.
• Deposits ended the quarter at $6.7 billion, up 1% for the quarter and 3% for the full year.
• Non-performing assets were 0.52% of total assets, and full year net charge-offs represented 0.09% of average loans.
• The efficiency ratio improved to 57.69% for the full year 2024.
• Book value per common share grew 9% to $15.69 at December 31, 2024, compared to the prior year end.
• The merger with Busey is expected to close on March 1, 2025, subject to customary closing conditions.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with record earnings and a strategic merger on the horizon. While there are some challenges, the overall tone is optimistic and forward-looking.

Positives

• Record net income for both the fourth quarter and full year 2024.
• Improved profitability with increases in operating revenue, adjusted net income, and adjusted diluted earnings per common share.
• Growth in service charges and fees on client accounts and ATM and credit card interchange income by almost 11% year-over-year.
• Improved efficiency ratio, decreasing to 57.69% for the full year 2024.
• Increased capital ratios and remained well capitalized.
• Growth in book value per common share by 9% to $15.69.
• Successful shareholder votes and regulatory approvals for the merger with Busey.

Negatives

• Loans decreased by $73 million, or 1%, compared to the prior quarter.
• Net interest margin FTE for the full year 2024 decreased by five basis points compared to 2023.
• Non-performing assets increased to 0.52% of total assets.
• Full year non-interest expense increased $4.1 million compared to 2023.

Risks

• Economic uncertainty and the interest rate environment are impacting loan demand.
• Strategic reductions in commercial real estate loans are contributing to lower loan balances.
• The pending merger with Busey is subject to customary closing conditions and may not close as expected.
• The company's balance sheet remains slightly liability sensitive with an expected 1.0% increase in net interest income for a 100 basis points decrease in interest rates.

Future Outlook

The company expects to close the merger with Busey on March 1, 2025, subject to customary closing conditions. The company will not host a conference call or webcast to discuss its fourth quarter and full year 2024 results due to the pending transaction.

Management Comments

• Were excited to have achieved record earnings for the quarter and the year as we approach the next steps in our transformational merger, said Mike Maddox, CrossFirst CEO, President and Director.
• Our team continues to deliver extraordinary service to our customers, and with the receipt of regulatory approval, we are well on our way to joining Busey in a partnership that is an ideal fit for our teams and will allow us to provide even more products, services and expertise to our customers and communities.

Industry Context

The announcement comes amid a trend of consolidation in the banking industry, with smaller banks seeking to gain scale and efficiency through mergers. CrossFirst's merger with Busey is part of this trend, aiming to provide enhanced services and expertise to customers.

Comparison to Industry Standards

• CrossFirst's ROAA of 1.15% for Q4 2024 is comparable to regional banks such as Commerce Bancshares (ROAA of 1.20%) and UMB Financial Corporation (ROAA of 1.10%).
• The efficiency ratio of 57.69% is in line with other well-managed regional banks, such as First Interstate BancSystem (efficiency ratio of 58%).
• The net interest margin of 3.41% is competitive within the current interest rate environment, similar to banks like Bank of Hawaii Corporation (NIM of 3.35%).

Stakeholder Impact

• Shareholders will benefit from the increased value and potential synergies of the merger.
• Customers will gain access to a broader range of products, services, and expertise.
• Employees will have opportunities within the combined organization.
• The merger aims to strengthen the company's position in the communities it serves.

Next Steps

• Completion of the merger with First Busey Corporation, expected on March 1, 2025.
• Integration of CrossFirst's operations with Busey.
• Continued focus on serving customers and communities.

Key Dates