Bank7 Corp. Announces 3Q 2020 Earnings

Rhea-AI Summary

Bank7 Corp. (NASDAQ: BSVN) reported strong Q3 2020 earnings with pre-tax, pre-provision earnings of $7.4 million, a 7.57% increase year-over-year. Interest income from loans rose to $12.8 million, up 4.91%. Total assets increased by 17.72% to $973.4 million, with total loans growing by 30.40% to $869.4 million. The company has maintained solid capital ratios, exceeding regulatory requirements. However, it has increased loan loss reserves due to ongoing pandemic uncertainties. Net income for Q3 stood at $4.44 million, with earnings per share at $0.48.

Positive

• Pre-tax, pre-provision earnings increased by 7.57%, reaching $7.4 million.
• Total loans rose by 30.40% to $869.4 million.
• Total assets increased by 17.72% to $973.4 million.
• Strong capital ratios, with Tier 1 leverage ratio at 10.72%.

Negative

• Increased loan loss reserves due to pandemic uncertainties.

OKLAHOMA CITY, Oct. 29, 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 September 30, 2020.  "We are pleased with our third quarter results.  Clearly, the pandemic and election dynamics continue to create extreme uncertainty and that is why we continue to increase our loan loss reserves.  With that being said, we have a high degree of confidence in our asset quality, and we know our strong PPE will carry us through the few potential issues we might encounter," said Thomas L. Travis, President and CEO of the Company. 

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

• Pre-tax, pre-provision earnings of $7.4 million, an increase of 7.57%, excluding the one-time, non-cash executive stock transaction expense in Q3 2019.
• Interest income on loans, including loan fee income, totaled $12.8 million, an increase of 4.91%
• Total assets of $973.4 million, an increase of 17.72%
• Total loans of $869.4 million, an increase of 30.40%
• Total deposits of $863.7 million, an increase of 14.02%

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

• Pre-tax, pre-provision earnings of $22.9 million, an increase of 11.63%, excluding the one-time, non-cash executive stock transaction expense in Q3 2019.
• Interest income on loans, including loan fee income, totaled $39.3 million, an increase of 9.38%
• Cost of funds was 0.81%, a decrease of 42.56%
• Average loans of $807.1 million, an increase of 30.73%
• Core deposits of $820.3 million, an increase of 27.87%

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 September 30, 2020 the Tier 1 leverage ratio, Tier 1 risk based capital ratio, and total risk-based capital ratios were 10.72%, 12.85%, and 14.10% respectively for the Bank.  At September 30, 2020 the Tier 1 leverage ratio, Tier 1 risk based capital ratio, and total risk-based capital ratios were 10.72%, 12.84%, and 14.09% 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 27.3% and (31.4%) in the third 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 September 30,				Nine months ended September 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		$   12,777		$     12,179		$   39,268		$     35,902
Loan fee income		(1,078)		(841)		(3,969)		(3,498)
Loan interest income excluding loan fee income		$   11,699		$     11,338		$   35,299		$      32,404
Average total loans		$ 847,076		$   651,186		$ 807,134		$   617,398
Yield on loans (including loan fee income)		6.00%		7.42%		6.50%		7.77%
Yield on loans (excluding loan fee income)		5.49%		6.91%		5.84%		7.02%
Pre-tax, pre-provision net earnings
Net income before income taxes		$     6,101		$     (4,963)		$   19,567		$       8,688
Plus: Provision (reversal of) for loan losses		(1,250)		-		(3,300)		-
Pre-tax, pre-provision net earnings		$     7,351		$     (4,963)		$   22,867		$       8,688
Adjusted provision for income tax
Net income before income taxes		$     6,101		$     (4,963)		$   19,567		$       8,688
Total effective adjusted tax rate		27.2%		-31.4%		25.8%		57.2%
Adjusted provision for income taxes		$     1,661		$       1,556		$     5,040		$       4,965
Tax-adjusted net income
Net income before income taxes		$     6,101		$     (4,963)		$   19,567		$       8,688
Adjusted provision for income taxes		1,661		1,556		5,040		4,965
Tax-adjusted net income		$     4,440		$     (6,519)		$   14,527		$       3,723
Pro Forma Pre-tax, pre-provision net earnings
Net income before income taxes		$     6,101		$     (4,963)		$   19,567		$       8,688
Plus: Provision (reversal of) loan losses		(1,250)		-		(3,300)		-
Plus: Stock Transfer Compensation Expense		-		11,797		-		11,797
Pro Forma Pre-tax, pre-provision net earnings		$     7,351		$       6,834		$   22,867		$     20,485
Tax-adjusted ratios and per share data
Tax-adjusted net income (numerator)		$     4,440		$     (6,519)		$   14,527		$       3,723
Average assets (denominator)		$ 967,044		$   806,440		$ 937,849		$   782,694
Tax-adjusted return on average assets		1.83%		-3.21%		3.11%		0.64%
Average shareholders' equity (denominator)		$  102,929		$    100,012		$  101,377		$      95,655
Tax-adjusted return on average shareholders' equity		17.16%		-25.86%		19.14%		5.20%
Average tangible common equity (denominator)		$ 101,269		$     98,145		$   99,667		$     93,736
Tax-adjusted return on average tangible common equity		17.44%		-26.35%		19.47%		5.31%
Weighted average common shares outstanding basic (denominator)		9,228,128		10,149,007		9,483,540		10,174,528
Tax-adjusted net income per common share--basic		$       0.48		$       (0.64)		$       1.53		$         0.37
Weighted average common shares outstanding diluted (denominator)		9,228,128		10,161,778		9,483,540		10,176,360
Tax-adjusted net income per common share--diluted		$       0.48		$       (0.64)		$       1.53		$         0.37
Tangible assets
Total assets		$ 973,354		$   826,821
Less: Goodwill and intangibles		(1,634)		(1,840)
Tangible assets		$ 971,720		$   824,981
Tangible shareholders' equity
Total shareholders' equity		$ 105,230		$    100,615
Less: Goodwill and intangibles		(1,634)		(1,840)
Tangible shareholders' equity		$ 103,596		$      98,775
Tangible shareholders' equity
Tangible shareholders' equity (numerator)		$ 103,596		$      98,775
Tangible assets (denominator)		$ 971,720		$    824,981
Tangible common equity to tangible assets		10.66%		11.97%
End of period common shares outstanding		9,241,689		10,057,506
Book value per share		$     11.39		$        10.00
Tangible book value per share		$     11.21		$          9.82
Total shareholders' equity to total assets		10.81%		12.17%

 

					Net Interest Margin Excluding Loan Fee Income
					For the Three Months Ended September 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)		$	111,019					$				147					0.53			%		$	145,147				$			888					2.43					%
Investment securities(2)			1,138									2					0.70						1,069							4					1.48
Loans held for sale			425									—					0.00						265							—					0.00
Total loans(3)			847,076									11,699					5.49						651,186							11,338					6.91
Total interest-earning assets			959,658									11,848					4.91						797,667							12,230					6.08
Noninterest-earning assets			7,386																				8,773
Total assets		$	967,044																			$	806,440
Funding sources:
Interest-bearing liabilities:
Deposits:
Transaction accounts		$	381,572									545					0.57			%		$	287,241							1,234					1.70					%
Time deposits			200,961									780					1.54						220,935							1,237					2.22
Total interest-bearing deposits			582,533									1,325					0.90						508,176							2,471					1.93
Other borrowings			—									—					0.00						—							—					0.00
Total interest-bearing liabilities			582,533									1,325					0.90						508,176							2,471					1.93
Noninterest-bearing liabilities:
Noninterest-bearing deposits			276,219																				193,785
Other noninterest-bearing liabilities			5,363																				4,467
Total noninterest-bearing liabilities			281,582																				198,252
Shareholders' equity			102,929																				100,012
Total liabilities and shareholders' equity		$	967,044																			$	806,440
Net interest income including loan fee income								$				10,523															$			9,759
Net interest spread including loan fee income(4)																	4.01			%															4.15					%
Net interest margin including loan fee income																	4.36			%															4.85					%

 

		Net Interest Margin With Loan Fee Income
		For the Three Months Ended September 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)				$	111,019						$	147					0.53	%					$	145,147						$	888							2.43			%
Investment securities(2)					1,138							2					0.70							1,069							4							1.48
Loans held for sale					425							—					0.00							265							—							0.00
Total loans(3)					847,076							12,777					6.00							651,186							12,179							7.42
Total interest-earning assets					959,658							12,926					5.36							797,667							13,071							6.50
Noninterest-earning assets					7,386																			8,773
Total assets				$	967,044																		$	806,440
Funding sources:
Interest-bearing liabilities:
Deposits:
Transaction accounts				$	381,572							545					0.57	%					$	287,241							1,234							1.70			%
Time deposits					200,961							780					1.54							220,935							1,237							2.22
Total interest-bearing deposits					582,533							1,325					0.90							508,176							2,471							1.93
Other borrowings					—							—					0.00							—							—							0.00
Total interest-bearing liabilities					582,533							1,325					0.90							508,176							2,471							1.93
Noninterest-bearing liabilities:
Noninterest-bearing deposits					276,219																			193,785
Other noninterest-bearing liabilities					5,363																			4,467
Total noninterest-bearing liabilities					281,582																			197,252
Shareholders' equity					102,929																			100,012
Total liabilities and shareholders' equity				$	967,044																		$	806,440
Net interest income excluding loan fee income											$	11,601																		$	10,600
Net interest spread excluding loan fee income(4)																	4.45	%																				4.57			%
Net interest margin excluding loan fee income																	4.81	%																				5.27			%

(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 Nine Months Ended September 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)		$	120,909					$				701					0.77			%			$		155,073				$			2,785					2.40					%
Investment securities(2)			1,109									21					2.53								1,062							27					3.40
Loans held for sale			258									—					0.00								219							—					0.00
Total loans(3)			807,134									35,299					5.84								617,398							32,404					7.02
Total interest-earning assets			929,410									36,021					5.18								773,752							35,216					6.09
Noninterest-earning assets			8,439																						8,942
Total assets		$	937,849																				$		782,694
Funding sources:
Interest-bearing liabilities:
Deposits:
Transaction accounts		$	366,162									2,259					0.82			%			$		289,306							3,924					1.81					%
Time deposits			208,650									2,769					1.77								206,575							3,254					2.11
Total interest-bearing deposits			574,812									5,028					1.17								495,881							7,178					1.94
Other borrowings			—									—					0.00								—							—					0.00
Total interest-bearing liabilities			574,812									5,028					1.17								495,881							7,178					1.94
Noninterest-bearing liabilities:
Noninterest-bearing deposits			256,429																						186,379
Other noninterest-bearing liabilities			5,231																						4,779
Total noninterest-bearing liabilities			261,660																						191,158
Shareholders' equity			101,377																						95,655
Total liabilities and shareholders' equity		$	937,849																				$		782,694
Net interest income including loan fee income								$				30,993																	$			28,038
Net interest spread including loan fee income(4)																	4.01			%																	4.15					%
Net interest margin including loan fee income																	4.45			%																	4.84					%

 

		Net Interest Margin With Loan Fee Income
		For the Nine Months Ended September 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)				$	120,909						$	701			0.77		%		$	155,073						$	2,785							2.40			%
Investment securities(2)					1,109							21			2.53					1,062							27							3.40
Loans held for sale					258							—			0.00					219							—							0.00
Total loans(3)					807,134							39,268			6.50					617,398							35,902							7.77
Total interest-earning assets					929,410							39,990			5.75					773,752							38,714							6.69
Noninterest-earning assets					8,439															8,942
Total assets				$	937,849														$	782,694
Funding sources:
Interest-bearing liabilities:
Deposits:
Transaction accounts				$	366,162							2,259			0.82		%		$	289,306							3,924							1.81			%
Time deposits					208,650							2,769			1.77					206,575							3,254							2.11
Total interest-bearing deposits					574,812							5,028			1.17					495,881							7,178							1.94
Other borrowings					—							—			0.00					—							—							0.00
Total interest-bearing liabilities					574,812							5,028			1.17					495,881							7,178							1.94
Noninterest-bearing liabilities:
Noninterest-bearing deposits					256,429															186,379
Other noninterest-bearing liabilities					5,231															4,779
Total noninterest-bearing liabilities					261,660															191,158
Shareholders' equity					101,377															95,655
Total liabilities and shareholders' equity				$	937,849														$	782,694
Net interest income excluding loan fee income											$	34,962														$	31,536
Net interest spread excluding loan fee income(4)															4.58		%																	4.75			%
Net interest margin excluding loan fee income															5.02		%																	5.45			%

 

Bank7 Corp.
Consolidated Balance Sheets
Dollars in thousands, exceper per share data	Unaudited as of
Assets	September 30,				December 31,
	2020		2019		2019
Cash and due from banks	$   60,718		$ 110,594		$             117,128
Interest-bearing time deposits in other banks	23,384		31,890		30,147
Loans, net	869,448		666,755		699,458
Loans held for sale	315		-		1,031
Premises and equipment, net	9,387		8,395		9,624
Nonmarketable equity securities	1,165		1,072		1,100
Foreclosed assets held for sale	-		77		0
Goodwill and intangibles	1,634		1,840		1,789
Interest receivable and other assets	7,303		6,198		6,115
Total assets	$ 973,354		$ 826,821		$             866,392
Liabilities and Shareholders' Equity
Deposits
Noninterest-bearing	$ 272,008		$ 202,989		$             219,221
Interest-bearing	591,661		519,145		538,262
Total deposits	863,669		722,134		757,483
Income taxes payable	565		-		357
Interest payable and other liabilities	3,890		4,072		8,426
Total liabilities	868,124		726,206		766,266
Common stock	92		101		101
Additional paid-in capital	92,960		92,353		92,391
Retained earnings	12,178		8,161		7,634
Total shareholders' equity	105,230		100,615		100,126
Total liabilities and shareholders' equity	$ 973,354		$ 826,821		$             866,392

 

Bank7 Corp.
Consolidated Statements of Income
		Unaudited as of
		Three Months Ended				Nine Months Ended
		September 30,				September 30,
Dollars in thousands, exceper per share data		2020		2019		2020		2019
Interest Income
Loans, including fees		$    12,777		$      12,179		$    39,268		$      35,902
Interest-bearing time deposits in other banks		124		500		419		1,414
Interest-bearing deposits in other banks		26		392		303		1,398
Total interest income		12,927		13,071		39,990		38,714
Interest Expense
Deposits		1,326		2,471		5,028		7,178
Total interest expense		1,326		2,471		5,028		7,178
Net Interest Income		11,601		10,600		34,962		31,536
Provision for Loan Losses		1,250		-		3,300		-
Net Interest Income After Provision for Loan Losses		10,351		10,600		31,662		31,536
Noninterest Income
Secondary market income		57		69		134		146
Service charges on deposit accounts		104		110		318		279
Other		173		330		513		602
Total noninterest income		334		509		965		1,027
Noninterest Expense
Salaries and employee benefits		2,505		14,256		7,576		18,792
Furniture and equipment		224		229		658		606
Occupancy		543		436		1,417		1,157
Data and item processing		276		276		821		814
Accounting, marketing and legal fees		135		218		338		507
Regulatory assessments		164		31		281		94
Advertising and public relations		62		71		360		349
Travel, lodging and entertainment		50		153		146		287
Other		625		402		1,463		1,269
Total noninterest expense		4,584		16,072		13,060		23,875
Income Before Taxes		6,101		(4,963)		19,567		8,688
Income tax expense		1,661		1,556		5,040		4,965
Net Income		$      4,440		$      (6,519)		$    14,527		$        3,723
Earnings per common share - basic		$        0.48		$        (0.64)		$        1.53		$          0.37
Diluted earnings per common share		0.48		(0.64)		1.53		0.37
Weighted average common shares outstanding - basic		9,228,128		10,149,007		9,483,540		10,174,528
Weighted average common shares outstanding - diluted		9,228,128		10,161,778		9,483,540		10,176,360

 

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 Thursday, October 29, 2020 at 4:30 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/2179/38169. 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/2179/38169 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.