Bank7 Corp. Announces 2Q 2020 Earnings

Rhea-AI Summary

Bank7 Corp. (NASDAQ: BSVN) reported a robust fiscal quarter ending June 30, 2020, showcasing pre-tax pre-provision earnings of $8.1 million, up 18.7% year-over-year. Interest income rose to $13.4 million (+10.6%). Total assets grew by 25.8% to $1 billion, with loans increasing 32.7% to $837.9 million and deposits up 28.5% to $894.2 million. Despite uncertainties, the bank strengthened loan loss reserves, maintaining confidence in its loan portfolio.

Positive

• Pre-tax, pre-provision earnings increased by 18.7% to $8.1 million.
• Total loans grew 32.7% to $837.9 million.
• Total assets rose 25.8% to $1 billion.
• Net income of $5.036 million with EPS of $0.54, higher than $0.50 in 2019.
• Efficiency ratio improved to 35.3% from 36.3%.

Negative

• Increased loan loss reserves due to economic uncertainties.
• Provision for loan losses of $1.4 million, unlike no provision in 2019.

OKLAHOMA CITY, July 27, 2020 /PRNewswire/ -- Bank7 Corp. (NASDAQ: BSVN) ("the Company"), the parent company of Oklahoma City-based Bank7 (the "Bank"), today reported unaudited results for the fiscal quarter ended June 30, 2020.  "We are happy to report strong second quarter earnings reflected by (i) record pre-tax, pre-provision earnings and (ii) net income substantially in line with previous quarters. Clearly, the future is uncertain and we are adding loan loss reserves to make sure we are prepared for possible exposures; nonetheless, we continue to have confidence in our overall loan portfolio. In addition, our team continues to perform at a high level and because of that we expect to be able to navigate through these difficult times," said Thomas L. Travis, President and CEO of the Company. 

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

• Pre-tax, pre-provision earnings of $8.1 million, an increase of 18.70%
• Interest income on loans, including loan fee income, totaled $13.4 million, an increase of 10.61%
• Total assets of $1.0 billion, an increase of 25.75%
• Total loans of $837.9 million, an increase of 32.70%
• Total deposits of $894.2 million, an increase of 28.47%

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

• Pre-tax, pre-provision earnings of $15.5 million, an increase of 13.66%
• Interest income on loans, including loan fee income, totaled $26.5 million, an increase of 11.67%
• Efficiency ratio of 35.3%, compared to 36.3%

Additional Highlights

For the six months ended June 30, 2020 compared to six months ended June 30, 2019:

• Cost of funds was 0.91%, a decrease of 35.48%
• Average loans of $786.9 million, an increase of 31.11%
• Core deposits of $802.8 million, an increase of 30.4%

Both the Bank's and the Company's capital levels continue to be significantly above the minimum levels required to be designated as "well-capitalized" for regulatory purposes.  At June 30, 2020 the Tier 1 leverage ratio, Tier 1 risk based capital ratio, and total risk-based capital ratios were 10.30%, 13.09%, and 14.34% respectively for the Bank.  At June 30, 2020 the Tier 1 leverage ratio, Tier 1 risk based capital ratio, and total risk-based capital ratios were 10.29%, 13.08%, and 14.33% respectively for the Company on a consolidated basis.  Designation as a well-capitalized institution under regulations does not constitute a recommendation or endorsement by bank regulators.

Pre-tax, pre-provision earnings is defined as income before taxes and provision for loan losses.  We believe the most directly comparable GAAP financial measure is income before taxes.  Disclosure of this measure enables you to compare our operations to those of other banking companies before consideration of taxes and provision expense.  We calculate our tax-adjusted net income, return on average assets, and return on average equity, and per share amounts by using a combined effective tax rate for federal and state income taxes of 24.9% and 25.0% in the second quarter of 2020 and 2019, respectively.  We acknowledge that our non-GAAP financial measures have a number of limitations.  As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other banking companies use.  Other banking companies may use names similar to those we use for non-GAAP financial measures we disclose, but may calculate them differently.  You should understand how we and other companies each calculate their non-GAAP financial measures when making comparisons.  The following reconciliation table provides a more detailed analysis of these non-GAAP financial measures:

		Three months ended June 30,				Six months ended June 30,
(Dollars in thousands, except per share data)		2020		2019		2020		2019
Loan interest income (excluding loan fees)
Total loan interest income, including loan fee income		$        13,385		$       12,101		$        26,491		$       23,723
Loan fee income		(1,632)		(1,369)		(2,892)		(2,658)
Loan interest income excluding loan fee income		$        11,753		$        0,732		$        23,599		$       21,065
Average total loans		$       826,111		$     613,892		$      786,943		$     600,224
Yield on loans (including loan fee income)		6.52%		7.91%		6.77%		7.97%
Yield on loans (excluding loan fee income)		5.72%		7.01%		6.03%		7.08%
Net interest margin (excluding loan fees)
Net interest income		$        11,929		$       10,583		$        23,361		$       20,936
Loan fee income		(1,632)		(1,369)		(2,892)		(2,658)
Net interest income excluding loan fees		$        10,297		$         9,214		$        20,469		$       18,278
Average earning assets		$      962,186		$     777,190		$      914,118		$     761,607
Net interest margin (including loan fee income)		4.99%		5.46%		5.14%		5.54%
Net interest margin (excluding loan fee income)		4.30%		4.76%		4.50%		4.84%
Pre-tax, pre-provision net earnings
Net income before income taxes		$          6,707		$         6,830		$        13,466		$       13,651
Plus: Provision (reversal of) for loan losses		(1,400)		-		(2,050)		-
Pre-tax, pre-provision net earnings		$          8,107		$         6,830		$        15,516		$       13,651
Adjusted provision for income tax
Net income before income taxes		$          6,707		$         6,830		$        13,466		$       13,651
Total effective adjusted tax rate		24.9%		25.0%		25.1%		25.0%
Adjusted provision for income taxes		$          1 ,671		$         1,704		$          3,379		$          3,409
Tax-adjusted net income
Net income before income taxes		$          6,707		$          6,830		$         13,466		$       13,651
Adjusted provision for income taxes		1,671		1,704		3,379		3,409
Tax-adjusted net income		$          5,036		$         5,126		$       10,087		$       10,242
Tax-adjusted ratios and per share data
Tax-adjusted net income (numerator)		$          5,036		$         5,126		$        10,087		$       10,242
Average assets (denominator)		$      971,373		$     786,773		$      923,087		$     770,621
Tax-adjusted return on average assets		2.09%		2.61%		2.20%		2.68%
Average shareholders' equity (denominator)		$        99,469		$        96,044		$      100,593		$       93,443
Tax-adjusted return on average shareholders' equity		20.36%		21.41%		20.17%		22.10%
Average tangible common equity (denominator)		$        97,760		$       94,128		$        98,858		$       91,498
Tax-adjusted return on average tangible common equity		20.72%		21.84%		20.52%		22.57%
Weighted average common shares outstanding basic (denominator)		9,232,509		10,187,500		9,598,232		10,187,500
Tax-adjusted net income per common share--basic		$            0.54		$           0.50		$            1.05		$           1.00
Weighted average common shares outstanding diluted (denominator)		9,232,509		10,192,649		9,598,232		10,187,500
Tax-adjusted net income per common share--diluted		$            0.54		$           0.50		$            1.05		$           1.00
Tangible assets
Total assets		$   1,004,085		$     798,448
Less: Goodwill and intangibles		(1,686)		(1,892)
Tangible assets		$   1,002,399		$     796,556
Tangible shareholders' equity
Total shareholders' equity		$       101,618		$        99,037
Less: Goodwill and intangibles		(1,686)		(1,892)
Tangible shareholders' equity		$        99,932		$       97,145
Tangible shareholders' equity
Tangible shareholders' equity (numerator)		$        99,932		$       97,145
Tangible assets (denominator)		$   1,002,399		$     796,556
Tangible common equity to tangible assets		9.97%		12.20%
End of period common shares outstanding		9,226,252		10,187,500
Book value per share		$          11.01		$           9.72
Tangible book value per share		$          10.83		$           9.54
Total shareholders' equity to total assets		10.12%		12.40%

 

 

					Net Interest Margin Excluding Loan Fee Income
					For the Three Months Ended June 30,
		2020																						2019
		Average Balance									Interest Income/ Expense							Average Yield/ Rate						Average Balance							Interest Income/ Expense						Average Yield/ Rate
		(Dollars in thousands)
Interest-earning assets:
Short-term investments(1)		$	134,764					$				156					0.47			%		$	162,056				$			941					2.33					%
Investment securities(2)			1,089									15					5.54						1,063							24					9.06
Loans held for sale			222									—					0.00						179							—					0.00
Total loans(3)			826,111									11,753					5.72						613,892							10,732					7.01
Total interest-earning assets			962,186									11,924					4.98						777,190							11,697					6.04
Noninterest-earning assets			9,187																				9,583
Total assets		$	971,373																			$	786,773
Funding sources:
Interest-bearing liabilities:
Deposits:
Transaction accounts		$	373,812									704					0.76			%		$	294,926							1,388					1.89					%
Time deposits			219,990									923					1.69						205,978							1,095					2.13
Total interest-bearing deposits			593,802									1,627					1.10						500,904							2,483					1.99
Other borrowings			—									—					0.00						—							—					0.00
Total interest-bearing liabilities			593,802									1,627					1.10						500,904							2,483					1.99
Noninterest-bearing liabilities:
Noninterest-bearing deposits			272,373																				185,715
Other noninterest-bearing liabilities			5,729																				4,110
Total noninterest-bearing liabilities			278,102																				189,825
Shareholders' equity			99,469																				96,044
Total liabilities and shareholders' equity		$	971,373																			$	786,773
Net interest income including loan fee income								$				10,297															$			9,214
Net interest spread including loan fee income(4)																	3.88			%															4.05					%
Net interest margin including loan fee income																	4.30			%															4.76					%

 

 

		Net Interest Margin With Loan Fee Income
		For the Three Months Ended June 30,
		2020																				2019
		Average Balance								Interest Income/ Expense						Average Yield/ Rate						Average Balance						Interest Income/ Expense						Average Yield/ Rate
		(Dollars in thousands)
Interest-earning assets:
Short-term investments(1)				$	134,764						$	156						0.47		%			$	162,056						$	941							2.33			%
Investment securities(2)					1,089							15						5.54						1,063							24							9.06
Loans held for sale					222							—						0.00						179							—							0.00
Total loans(3)					826,111							13,385						6.52						613,892							12,101							7.91
Total interest-earning assets					962,186							13,556						5.67						777,190							13,066							6.74
Noninterest-earning assets					9,187																			9,583
Total assets				$	971,373																		$	786,773
Funding sources:
Interest-bearing liabilities:
Deposits:
Transaction accounts				$	373,812							704						0.76		%			$	294,926							1,388							1.89			%
Time deposits					219,990							923						1.69						205,978							1,095							2.13
Total interest-bearing deposits					593,802							1,627						1.10						500,904							2,483							1.99
Other borrowings					—							—						0.00						—							—							0.00
Total interest-bearing liabilities					593,802							1,627						1.10						500,904							2,483							1.99
Noninterest-bearing liabilities:
Noninterest-bearing deposits					272,373																			185,715
Other noninterest-bearing liabilities					5,729																			4,110
Total noninterest-bearing liabilities					278,102																			189,825
Shareholders' equity					99,469																			96,044
Total liabilities and shareholders' equity				$	971,373																		$	786,773
Net interest income excluding loan fee income											$	11,929																		$	10,583
Net interest spread excluding loan fee income(4)																		4.56		%																		4.76			%
Net interest margin excluding loan fee income																		4.99		%																		5.46			%
(1)        Includes income and average balances for fed funds sold, interest-earning deposits in banks and other miscellaneous interest-earning assets. (2)        Includes income and average balances for FHLB and FRB stock. (3)        Non-accrual loans are included in loans. (4)        Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.

 

 

					Net Interest Margin Excluding Loan Fee Income
					For the Six Months Ended June 30,
		2020																								2019
		Average Balance									Interest Income/ Expense							Average Yield/ Rate								Average Balance							Interest Income/ Expense						Average Yield/ Rate
		(Dollars in thousands)
Interest-earning assets:
Short-term investments(1)		$	125,906					$				554					0.88			%			$		160,129				$			1,896					2.39					%
Investment securities(2)			1,095									18					3.31								1,059							24					4.57
Loans held for sale			174									—					0.00								195							—					0.00
Total loans(3)			786,943									23,599					6.03								600,224							21,065					7.08
Total interest-earning assets			914,118									24,171					5.32								761,607							22,985					6.09
Noninterest-earning assets			8,969																						9,014
Total assets		$	923,087																				$		770,621
Funding sources:
Interest-bearing liabilities:
Deposits:
Transaction accounts		$	358,167									1,714					0.96			%			$		290,204							2,687					1.87					%
Time deposits			212,537									1,988					1.88								199,276							2,020					2.04
Total interest-bearing deposits			570,704									3,702					1.30								489,480							4,707					1.94
Other borrowings			—									—					0.00								—							—					0.00
Total interest-bearing liabilities			570,704									3,702					1.30								489,480							4,707					1.94
Noninterest-bearing liabilities:
Noninterest-bearing deposits			246,630																						182,760
Other noninterest-bearing liabilities			5,160																						4,938
Total noninterest-bearing liabilities			251,790																						187,698
Shareholders' equity			100,593																						93,443
Total liabilities and shareholders' equity		$	923,087																				$		770,621
Net interest income including loan fee income								$				20,469																	$			18,278
Net interest spread including loan fee income(4)																	4.01			%																	4.15					%
Net interest margin including loan fee income																	4.50			%																	4.84					%

 

		Net Interest Margin With Loan Fee Income
		For the Six Months Ended June 30,
		2020																				2019
		Average Balance								Interest Income/ Expense						Average Yield/ Rate						Average Balance						Interest Income/ Expense						Average Yield/ Rate
		(Dollars in thousands)
Interest-earning assets:
Short-term investments(1)				$	125,906						$	554						0.88		%			$	160,129						$	1,896							2.39			%
Investment securities(2)					1,095							18						3.31						1,059							24							4.57
Loans held for sale					174							—						0.00						195							—							0.00
Total loans(3)					786,943							26,491						6.77						600,224							23,723							7.97
Total interest-earning assets					914,118							27,063						5.95						761,607							25,643							6.79
Noninterest-earning assets					8,969																			9,014
Total assets				$	923,087																		$	770,621
Funding sources:
Interest-bearing liabilities:
Deposits:
Transaction accounts				$	358,167							1,714						0.96		%			$	290,204							2,687							1.87			%
Time deposits					212,537							1,988						1.88						199,276							2,020							2.04
Total interest-bearing deposits					570,704							3,702						1.30						489,480							4,707							1.94
Other borrowings					—							—						0.00						—							—							0.00
Total interest-bearing liabilities					570,704							3,702						1.30						489,480							4,707							1.94
Noninterest-bearing liabilities:
Noninterest-bearing deposits					246,630																			182,760
Other noninterest-bearing liabilities					5,160																			4,938
Total noninterest-bearing liabilities					251,790																			187,698
Shareholders' equity					100,593																			93,443
Total liabilities and shareholders' equity				$	923,087																		$	770,621
Net interest income excluding loan fee income											$	23,361																		$	20,936
Net interest spread excluding loan fee income(4)																		4.65		%																		4.85			%
Net interest margin excluding loan fee income																		5.14		%																		5.54			%

 

Bank7 Corp.
Consolidated Balance Sheets
Dollars in thousands, except per share data	Unaudited as of
Assets	June 30,				December 31,
	2020		2019		2019
Cash and due from banks	$              127,780		$             123,763		$           117,128
Interest-bearing time deposits in other banks	27,865		32,632		30,147
Loans, net	828,065		623,614		699,458
Loans held for sale	500		8		1,031
Premises and equipment, net	9,519		8,757		9,624
Nonmarketable equity securities	1,095		1,069		1,100
Foreclosed assets held for sale	-		188		0
Goodwill and intangibles	1,686		1,892		1,789
Interest receivable and other assets	7,575		6,525		6,115
Total assets	$           1,004,085		$             798,448		$           866,392
Liabilities and Shareholders' Equity
Deposits
Noninterest-bearing	$              254,735		$             190,092		$           219,221
Interest-bearing	639,496		505,963		538,262
Total deposits	894,231		696,055		757,483
Income taxes payable	4,022		20		357
Interest payable and other liabilities	4,214		3,336		8,426
Total liabilities	902,467		699,411		766,266
Common stock	92		102		101
Additional paid-in capital	92,761		80,604		92,391
Retained earnings	8,765		18,331		7,634
Total shareholders' equity	101,618		99,037		100,126
Total liabilities and shareholders' equity	$           1,004,085		$             798,448		$           866,392

 

Bank7 Corp.
Consolidated Statements of Income
		Unaudited as of
		Three Months Ended				Six Months Ended
		June 30,				June 30,
Dollars in thousands, except per share data		2020		2019		2020		2019
Interest Income
Loans, including fees		$              13,385		$              12,101		$              26,491		$              23,723
Interest-bearing time deposits in other banks		133		497		295		914
Interest-bearing deposits in other banks		38		468		277		1,006
Total interest income		13,556		13,066		27,063		25,643
Interest Expense
Deposits		1,627		2,483		3,702		4,707
Total interest expense		1,627		2,483		3,702		4,707
Net Interest Income		11,929		10,583		23,361		20,936
Provision for Loan Losses		1,400		-		2,050		-
Net Interest Income After Provision for Loan Losses		10,529		10,583		21,311		20,936
Noninterest Income
Secondary market income		39		40		77		77
Service charges on deposit accounts		95		109		214		169
Other		167		146		340		272
Total noninterest income		301		295		631		518
Noninterest Expense
Salaries and employee benefits		2,597		2,365		5,071		4,536
Furniture and equipment		218		218		434		377
Occupancy		413		378		874		721
Data and item processing		269		276		545		538
Accounting, marketing and legal fees		77		142		203		289
Regulatory assessments		94		31		117		63
Advertising and public relations		29		92		298		278
Travel, lodging and entertainment		43		92		96		134
Other		383		454		838		867
Total noninterest expense		4,123		4,048		8,476		7,803
Income Before Taxes		6,707		6,830		13,466		13,651
Income tax expense		1,671		1,704		3,379		3,409
Net Income		$                5,036		$                5,126		$              10,087		$              10,242
Earnings per common share - basic		$                  0.54		$                  0.50		$                  1.05		$                  1.00
Diluted earnings per common share		0.54		0.50		1.05		1.00
Weighted average common shares outstanding - basic		9,232,509		10,187,500		9,598,232		10,187,500
Weighted average common shares outstanding - diluted		9,232,509		10,192,649		9,598,232		10,187,500

 

About Bank7 Corp.

We are Bank7 Corp., a bank holding company headquartered in Oklahoma City, Oklahoma. Through our wholly-owned subsidiary, Bank7, we operate nine locations in Oklahoma, the Dallas/Fort Worth, Texas metropolitan area and Kansas. We are focused on serving business owners and entrepreneurs by delivering fast, consistent and well-designed loan and deposit products to meet their financing needs. We intend to grow organically by selectively opening additional branches in our target markets as well as pursue strategic acquisitions.

Conference call

Bank7 Corp. has scheduled a conference call to discuss its first quarter results, which will be broadcast live over the Internet, on Monday, July 27, 2020 at 4:00 p.m. Eastern Time. To participate in the call, dial 1-888-348-6421, or access it live over the Internet at https://www.webcaster4.com/Webcast/Page/2179/35698.   For those not able to participate in the live call, an archive of the webcast will be available at https://www.webcaster4.com/Webcast/Page/2179/35698 shortly after the call for 1 year.

Cautionary Statements Regarding Forward-Looking Information

This communication contains a number of forward-looking statements. These forward-looking statements reflect Bank7 Corp.'s current views with respect to, among other things, future events and Bank7 Corp.'s financial performance. Any statements about Bank7 Corp.'s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believes," "can," "could," "may," "predicts," "potential," "should," "will," "estimate," "plans," "projects," "continuing," "ongoing," "expects," "intends" and similar words or phrases. Any or all of the forward-looking statements in (or conveyed orally regarding) this presentation may turn out to be inaccurate. The inclusion of or reference to forward-looking information in this presentation should not be regarded as a representation by Bank7 Corp. or any other person that the future plans, estimates or expectations contemplated by Bank7 Corp. will be achieved.

These forward-looking statements are subject to significant uncertainties because they are based upon:  the amount and timing of future changes in interest rates, market behavior, and other economic conditions; future laws, regulations, and accounting principles; changes in regulatory standards and examination policies, and a variety of other matters.  These other matters include, among other things, the impact of COVID-19 on the United States economy and our operations, the direct and indirect effect of economic conditions on interest rates, credit quality, loan demand, liquidity, and monetary and supervisory policies of banking regulators.  Bank7 Corp. has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that Bank7 Corp. believes may affect its financial condition, results of operations, business strategy and financial needs. Bank7 Corp.'s actual results could differ materially from those anticipated in such forward-looking statements as a result of risks, uncertainties and assumptions that are difficult to predict. If one or more events related to these or other risks or uncertainties materialize, or if Bank7 Corp.'s underlying assumptions prove to be incorrect, actual results may differ materially from what Bank7 Corp. anticipates. You are cautioned not to place undue reliance on forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made and Bank7 Corp. undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as may be required by law. All forward-looking statements herein are qualified by these cautionary statements.

About Non-GAAP Financial Measures

This communication includes certain non-GAAP financial measures, including tax-adjusted net income, tax-adjusted earnings per share, tax-adjusted return on average assets and tax-adjusted return on average shareholders' equity. These non-GAAP financial measures and any other non-GAAP financial measures that we discuss in this presentation should not be considered in isolation, and should be considered as additions to, and not substitutes for or superior to, measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Bank7 Corp.'s non-GAAP financial measures as tools for comparison. See the table above in this communication for a reconciliation of the non-GAAP financial measures used in (or conveyed orally during) this communication to their most directly comparable GAAP financial measures.

Contact:

Thomas Travis
President & CEO
(405) 810-8600

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SOURCE Bank7 Corp.