Going through an IPO with Thomas McDermott

Financial Reporting

Thomas McDermott started with KPMG and now calls CrossFirst Bank home. The company has grown rapidly since its formation in 2007 and went public in 2019.


  • Evaluating your next career move
  • Working in a private vs. public environment
  • Building Internal Control processes
  • Benefits of organic business growth

Welcome, Tom. Tell us about your career background.

I grew up in Johnson County, Kansas. After finishing high school, I attended the University of Missouri in Columbia and graduated with a Master’s degree in Accounting in 2010. Shortly after I started working for KPMG in Kansas City in the audit practice where I got to work on a lot of great publicly held and privately held clients. After about 3 years with KPMG, I joined CrossFirst Bank as a credit analyst.

Let’s jump right into it. Can you explain your journey at CrossFirst so far?

CrossFirst was established in 2007 as a small but growing bank. When I joined – the Company was about $500mm in assets. Over the next several years our asset size grew and led to a significant number of job opportunities. A few years in, I decided to search for a job in accounting. I inquired about job openings in CrossFirst’s accounting department and was lucky enough to start working as the assistant controller.
For a bank to grow rapidly, it needs capital either through issuing shares or net income. We had done private placements every year for the last several years, so one of the main reasons I was able to join the accounting department was to get the Company ready for an IPO and tackle some of the technical accounting and research that came along with that. After about a year or so they promoted me to controller of the holding company where my position and responsibilities remained the same, preparing for an IPO. We officially went public and rang the bell in 2019, which was fantastic. After the IPO, my responsibilities transformed into preparing all publicly required filings, so 10-K’s, 10-Q’s, 8-K’s.

How did you evaluate the decision to leave KPMG and join CrossFirst?

I really appreciated those public accounting years, but most of my roles required travel and a lot of hours. I realized that I wasn't ready to continue to put in the hours over the long-term.
I had a good understanding of the financial services industry based on my KPMG client base, so that was one thing that I thought I could parlay into a job in that industry. Working on the credit analyst side of things wasn’t something I wanted to do long term, but it provided a way to get my foot into the industry that I wanted to be in. CrossFirst was small at the time, so if everything went right, it provided opportunities for advancement with the expected growth and the great executive management team that was in place already.
The pieces were all there. By getting in on what I would call the ground floor, I got to see a lot of the things that if people joined now would never see. We were always involved in credit decisions which involved us sitting in meetings with the CEO and CFO. We got to listen to them talk about these different lenders, different borrowers and what they were trying to do. I was able to provide accounting insight that wasn’t currently at the bank. We were going after small to mid-sized companies that were producing financial reports and trying to understand potential risks and I was able to assist with that analysis.
It just felt like a good fit. The credit team was great - very young, very ambitious - and all of them have gone on to bigger and better things. It was a great jumping off point.

Your job as a Controller has probably changed quite a bit since CrossFirst went public. Can you dive into that a bit?

One, we've had to become more rigorous on our policies and procedures. From an accounting standpoint, obviously that means implementing SOX controls and getting us ready for the external audit.  We were able to use the emerging growth company (EGC) status going into the IPO, which gives the Company additional time to implement and address certain public company requirements, including SOX compliance. Pre-IPO controls are important, but they're not as focused on, and were not as rigorous.
Another change is timing. The deadlines for reporting have shortened tremendously between a private and public company. Most of my focus has transitioned from working through the audit as a private company and going along with the flow to preparing and ensuring our filings meet the timing requirements.
Nonetheless, we’re in this weird spot where you have to prepare yourself in case we ever eclipse the threshold and qualify as a large accelerated filer, in which case all of our accounting standards and controls would have to be up to date as of 1/1 of that year. Overall, there's a lot of moving parts that we have to continuously review. 

Testing controls as a public accountant vs. designing and implementing controls as a controller for a company are two entirely different processes in my mind. How did you gain the confidence with both yourself and your company to carry out that process?

There are two things - first is trust. Throughout my time at CrossFirst prior to the IPO, I built up a reputation of doing appropriate research, coming to a conclusion, and standing by it. It doesn’t always mean it was going to be correct, but I built up that trust that I was at least going about it in the right way. I was able to use that to go on different educational trips - KPMG’s executive education for example - where we were able to visit with others in the banking and financial services industry and walk through the process with them.
So that is my second point, which is to lean on your peers. As long as you’re not the first in your whole industry to IPO, there’s always going to be an example out there. Our goal was to talk to as many people within the industry that had gone through the process to try to get a perspective of what went right and what went wrong. Ultimately, you work with your management team to determine what material information should be disclosed to the investors. So research and documentation skills are must have.

To take a step back, you’ve seen a lot of growth at CrossFirst since you’ve joined - from $500mm to $4.5b AUM. Have you seen significant changes to how the accounting department operates?

I’d say I’ve had it easy from that standpoint. Our growth is primarily organic, not from mergers or acquisitions. From that aspect, we don’t have to deal with the pains of integrating different accounting systems and teams, and can instead rely on the software products we’ve already put in place.
We haven’t really hired a lot of new people since I started here because we are able to keep leveraging software and automation. For example, as we grew in the Dallas, Texas market, we leveraged our automated processes to account for increased activity. We have benefited from SaaS products that can store and process data using third-party servers.
The biggest change has probably been from a research perspective. As we’ve entered into new investments or people have new ideas on how to create non-interest income or reduce expenses, that requires us to dig into the accounting matters to make sure we are GAAP compliant.

Any current challenges your team is facing?

From a financial reporting perspective, we’ve had two annual filings since going public. We feel pretty comfortable about our process and procedures there. The big thing for us on the horizon, since we are still under this EGC umbrella, is becoming compliant with the Current Expected Credit Losses (CECL) and Lease accounting standards. 
We’re trying to finalize our approach once we make the transition to public company guidance and make sure everybody’s aware of what that means. You can’t wait until year-end to clean all of that up.
Our challenges going forward will be keeping up with new accounting guidance and disclosures. The reporting landscape is always evolving, and we need to be prepared to plan and account for those required changes. 

Let’s end on a note about you. Where do you see yourself taking your career from here?

I’m definitely happy with where I’m at right now. We have a great team going forward. My immediate goal is to educate those reporting to me. I want to make sure that they have all the knowledge and education based on my experiences to make them advance in their careers - whether it be in this organization or somewhere else.
At the same time, I want to be able to continuously improve my knowledge and experience when it comes to both financial reporting and US GAAP. I will say as an auditor turned credit analyst that then switched back to accounting, I am always searching for opportunities, challenges, and possibilities 
My hope is to continue to find somewhere where I can benefit and provide value in return to the company. If that’s this company or a different one down the road, who knows.
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