Bank7 Corp. Announces Q1 2024 Earnings
- Net income rose by 17.50% to $11.3 million compared to the same period last year.
- Earnings per share increased by 16.35% to $1.21.
- Total assets grew by 6.89% to $1.8 billion.
- Total loans saw a 7.39% increase to $1.4 billion.
- Pre-tax, pre-provision earnings (PPE) surged by 14.22% to $14.9 million.
- Total interest income jumped by 21.57% to $33.3 million.
- Both the Bank's and the Company's capital levels are well above 'well-capitalized' thresholds.
- Non-GAAP measure PPE is used by management for performance analysis.
- The Company's credit quality remains strong with minimal exposure to certain sectors.
- Comprehensive income for Q1 2024 reached $11.7 million.
- None.
Insights
Bank7 Corp's reported financial results indicate a robust performance, with a significant uptick in net income and earnings per share. The year-over-year increase in net income by 17.50% and earnings per share by 16.35% is a reflection of the bank's operational efficiency and growing loan portfolio, which has expanded by 7.39%. Such solid financial metrics are indicative of a strong revenue-generating capability and may positively influence investor sentiment.
Moreover, the bank's total assets have grown by 6.89%, suggesting effective asset management and potential for future earnings growth. This growth, coupled with a disciplined cost control strategy, has resulted in a 14.22% increase in pre-tax, pre-provision earnings (PPE), a key metric for assessing a bank's core earnings and financial health. As PPE is adjusted for taxes and provision for credit losses, it provides a clearer picture of operational performance, which in this case, is on an upward trajectory.
From a risk management perspective, the bank's minimal exposure to office and retail commercial real estate is commendable, especially considering the volatile nature of these sectors in recent times. Additionally, the bank's well-capitalized status, with capital ratios comfortably above regulatory requirements, offers a cushion against potential financial shocks and instills confidence in stakeholders about the bank's stability and compliance with regulatory standards.
The banking industry is highly sensitive to interest rate fluctuations, economic cycles and regulatory environments. Bank7 Corp's reported increase in total interest income by 21.57% is a positive sign, particularly in a competitive banking landscape. This rise is likely due to increased loan activity and higher yielding assets, which can be attributed to strategic positioning in dynamic geographic markets and robust deposit relationships.
However, the bank's net interest margin (NIM) remains unchanged at 5.14%, despite the net interest spread decreasing from 4.10% to 3.70%. This suggests that while the bank is generating more interest income, the cost of funding is also rising, which could squeeze margins if not managed effectively. Stakeholders should monitor future reports to see if the bank can sustain its NIM amidst changing interest rates.
The bank's noninterest income and noninterest expenses also provide insights into its diversified revenue streams and cost management. An increase in noninterest income, albeit modest, combined with controlled noninterest expenses, supports the bank's profitability. The increase in total noninterest expense is relatively low compared to the rise in total assets, indicating scalability and operational leverage.
Bank7 Corp's financial report mentions that being designated as 'well-capitalized' does not constitute a recommendation or endorsement by bank regulators. This is an important distinction for investors, as it underscores the fact that regulatory capital ratios are merely a baseline for stability and not necessarily a marker of investment quality. Investors should not interpret high capital ratios as an implicit approval by regulators but rather as one of many factors to consider when evaluating a bank's financial condition.
The bank's adherence to regulatory capital requirements, while expected, is essential for compliance and risk mitigation. Yet, the absence of any legal or regulatory issues in the report is just as significant. It suggests that the bank is not only managing its financials well but is also maintaining good standing with regulatory bodies, which is important for long-term operational sustainability.
For the three months ended March 31, 2024 compared to the three months ended March 31, 2023:
- Net income of
$11.3 million $9.6 million 17.50% - Earnings per share of
$1.21 $1.04 16.35% - Total assets of
$1.8 billion $1.7 billion 6.89% - Total loans of
$1.4 billion $1.3 billion 7.39% - PPE of
$14.9 million $13.0 million 14.22% - Total interest income of
$33.3 million $27.4 million 21.57%
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. On March 31, 2024, the Bank's Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratios were
Non-GAAP Financial Measures:
This earnings release contains the non-GAAP financial measure pre-provision pre-tax earnings ("PPE"). The Company's management uses this non-GAAP measure in their analysis of the Company's performance. This measure adjusts GAAP performance to exclude from net income, income tax expense, provision for credit losses, and loss on sales and calls of available-for-sale debt securities.
For the Three Months Ended | |||
Mar 31, 2024 | Mar 31, 2023 | ||
Calculation of Pre-Provision Pre-Tax Earnings ("PPE") | (Dollars in thousands) | ||
Net Income | $ 3,595 | $ 2,947 | |
Income Tax Expense | 14,883 | 12,554 | |
Pre-tax net income | 14,883 | 12,554 | |
Add back: Provision for credit losses | - | 1 | |
Add back: (Gain)Loss on sales/calls of AFS debt securities | 14,883 | 13,030 | |
Pre-provision pre-tax earnings | 14,883 | 13,030 | |
Bank7 Corp. | ||||
Consolidated Balance Sheets | ||||
Assets | March 31, 2024 | December 31, | ||
Cash and due from banks | $ 193,218 | $ 181,042 | ||
Interest-bearing time deposits in other banks | 17,181 | 17,679 | ||
Available-for-sale debt securities | 151,872 | 169,487 | ||
Loans, net of allowance for credit losses of | ||||
1,354,195 | 1,341,148 | |||
Loans held for sale, at fair value | - | 718 | ||
Premises and equipment, net | 15,376 | 14,942 | ||
Nonmarketable equity securities | 1,278 | 1,283 | ||
Core deposit intangibles | 970 | 1,031 | ||
Goodwill | 8,458 | 8,458 | ||
Interest receivable and other assets | 32,435 | 35,878 | ||
Total assets | $ 1,774,983 | $ 1,771,666 | ||
Liabilities and Shareholders' Equity | ||||
Deposits | ||||
Noninterest-bearing | $ 452,326 | $ 482,349 | ||
Interest-bearing | 1,127,846 | 1,109,042 | ||
Total deposits | 1,580,172 | 1,591,391 | ||
Income taxes payable | 3,946 | 302 | ||
Interest payable and other liabilities | 10,483 | 9,647 | ||
Total liabilities | 1,594,601 | 1,601,340 | ||
Shareholders' equity | ||||
Common stock, | ||||
issued and outstanding: 9,238,206 and 9,197,696 at March 31, 2024 | ||||
and December 31, 2023, respectively | 92 | 92 | ||
Additional paid-in capital | 97,669 | 97,417 | ||
Retained earnings | 88,310 | 78,962 | ||
Accumulated other comprehensive loss | (5,689) | (6,145) | ||
Total shareholders' equity | 180,382 | 170,326 | ||
Total liabilities and shareholders' equity | $ 1,774,983 | $ 1,771,666 | ||
Three Months Ended | ||||
March 31, | ||||
2024 | 2023 | |||
Interest Income | ||||
Loans, including fees | $ 30,117 | $ 25,352 | ||
Interest-bearing time deposits in other banks | 253 | 49 | ||
Debt securities, taxable | 1,012 | 706 | ||
Debt securities, tax-exempt | 73 | 87 | ||
Other interest and dividend income | 1,832 | 1,186 | ||
Total interest income | 33,287 | 27,380 | ||
Interest Expense | ||||
Deposits | 11,277 | 7,374 | ||
Total interest expense | 11,277 | 7,374 | ||
Net Interest Income | 22,010 | 20,006 | ||
Provision for Credit Losses | - | 475 | ||
Net Interest Income After Provision for Credit Losses | 22,010 | 19,531 | ||
Noninterest Income | ||||
Mortgage lending income | 51 | 54 | ||
Loss on sales, prepayments, and calls of available-for-sale debt securities | - | (1) | ||
Service charges on deposit accounts | 249 | 235 | ||
Other | 1,708 | 384 | ||
Total noninterest income | 2,008 | 672 | ||
Noninterest Expense | ||||
Salaries and employee benefits | 5,289 | 4,680 | ||
Furniture and equipment | 230 | 249 | ||
Occupancy | 661 | 719 | ||
Data and item processing | 458 | 386 | ||
Accounting, marketing and legal fees | 99 | 298 | ||
Regulatory assessments | 386 | 394 | ||
Advertsing and public relations | 145 | 148 | ||
Travel, lodging and entertainment | 51 | 61 | ||
Other | 1,816 | 714 | ||
Total noninterest expense | 9,135 | 7,649 | ||
Income Before Taxes | 14,883 | 12,554 | ||
Income tax expense | 3,595 | 2,947 | ||
Net Income | $ 11,288 | $ 9,607 | ||
Earnings per common share - basic | $ 1.22 | $ 1.05 | ||
Earnings per common share - diluted | 1.21 | 1.04 | ||
Weighted average common shares outstanding - basic | 9,220,154 | 9,146,932 | ||
Weighted average common shares outstanding - diluted | 9,317,813 | 9,264,247 | ||
Other Comprehensive Income | ||||
Unrealized gains on securities, net of tax expense of | ||||
ended March 31, 2024 and 2023, respectively | $ 456 | $ 1,755 | ||
Reclassification adjustment for realized losses included in net income net of tax of | ||||
for the three months ended March 31, 2024 and 2023, respectively | - | 1 | ||
Other comprehensive income | $ 456 | $ 1,756 | ||
Comprehensive Income | $ 11,744 | $ 11,363 | ||
Net Interest Margin | ||||||||||||
For the Three Months Ended March 31, | ||||||||||||
2024 | 2023 | |||||||||||
Average | Interest | Average | Average | Interest | Average | |||||||
(Dollars in thousands) | ||||||||||||
Interest-Earning Assets: | ||||||||||||
Short-term investments | $ 176,072 | $ 2,085 | 4.75 % | $ 134,650 | $ 1,235 | 3.72 % | ||||||
Debt securities, taxable-equivalent | 153,468 | 1,012 | 2.64 | 153,533 | 706 | 1.86 | ||||||
Debt securities, tax exempt | 18,269 | 73 | 1.60 | 20,318 | 87 | 1.74 | ||||||
Loans held for sale | 238 | - | - | 43 | - | - | ||||||
Total loans(1) | 1,369,692 | 30,117 | 8.82 | 1,271,081 | 25,352 | 8.09 | ||||||
Total interest-earning assets | 1,717,739 | 33,287 | 7.77 | 1,579,625 | 27,380 | 7.03 | ||||||
Noninterest-earning assets | 39,769 | 23,542 | ||||||||||
Total assets | $ 1,757,508 | $ 1,603,167 | ||||||||||
Funding sources: | ||||||||||||
Interest-bearing liabilities: | ||||||||||||
Deposits: | ||||||||||||
Transaction accounts | $ 845,129 | 8,196 | 3.89 % | $ 803,618 | 5,753 | 2.90 % | ||||||
Time deposits | 264,973 | 3,081 | 4.66 | 213,760 | 1,621 | 3.08 | ||||||
Total interest-bearing deposits | 1,110,102 | 11,277 | 4.07 | 1,017,378 | 7,374 | 2.94 | ||||||
Total interest-bearing liabilities | $ 1,110,102 | 11,277 | 4.07 | $ 1,017,378 | 7,374 | 2.94 | ||||||
Noninterest-bearing liabilities: | ||||||||||||
Noninterest-bearing deposits | $ 460,028 | $ 425,640 | ||||||||||
Other noninterest-bearing liabilities | 10,970 | 11,131 | ||||||||||
Total noninterest-bearing liabilities | 470,998 | 436,771 | ||||||||||
Shareholders' equity | 176,408 | 149,018 | ||||||||||
Total liabilities and shareholders' equity | $ 1,757,508 | $ 1,603,167 | ||||||||||
Net interest income | $ 22,010 | $ 20,006 | ||||||||||
Net interest spread | 3.70 % | 4.10 % | ||||||||||
Net interest margin | 5.14 % | 5.14 % | ||||||||||
(1) | Nonaccrual loans are included in total loans |
About Bank7 Corp.
We are Bank7 Corp., a bank holding company headquartered in
Conference Call
Bank7 Corp. has scheduled a conference call to discuss its first quarter results, which will be broadcast live over the Internet, on Friday, April 12, 2024 at 9:00 a.m. central standard time. To participate in the call, dial 1-888-348-6421, or access it live over the Internet at https://app.webinar.net/w8qEpOZ7G6v. For those not able to participate in the live call, an archive of the webcast will be available at https://app.webinar.net/w8qEpOZ7G6v 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 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.
Contact:
Thomas Travis
President & CEO
(405) 810-8600
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SOURCE Bank7 Corp.
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