Bank7 Corp. Announces Record 2Q 2019 Earnings

By: via PR Newswire

OKLAHOMA CITY, July 26, 2019 /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, 2019. "We are pleased to announce record pre-tax income for our second quarter results. Our second quarter performance shows continued balance sheet growth, especially in our core deposits and total loans. That growth, combined with our excellent efficiency ratio and asset quality, continues to produce outstanding returns in both average assets and average tangible common equity. These results were achieved despite incurring additional costs related to our status as a public company as well as the addition of our Tulsa location and a second Dallas area location," said Thomas L. Travis, President and CEO of the Company.

Bank7 Logo (PRNewsfoto/Bank7 Corp.)

Three months ended June 30, 2019 compared to three months ended June 30, 2018:

  • Pre-tax income of $6.8 million, a 7.07% increase
  • Tax-adjusted income of $5.1 million, a 5.88% increase
  • Interest income on loans, including loan fee income, totaled $12.1 million, a 14.34% increase
  • Average loans of $613.9 million, a 7.32% increase

Six months ended June 30, 2019 compared to six month ended June 30, 2018:

  • Pre-tax income of $13.7 million, a 7.26% increase
  • Tax-adjusted income of $10.2 million, a 7.37% increase
  • Interest income on loans, including loan fee income, totaled $23.7 million, a 10.81% increase
  • Average loans of $600.2 million, a 5.50% increase
  • Total loans of $631.5 million, a 7.16% increase
  • Core deposits of $615.4 million, a 18.84% increase
  • Efficiency ratio of 36.4%, compared to 36.6%

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, 2019 the Tier 1 leverage ratio, Tier 1 risk based capital ratio, and total risk-based capital ratios were 12.35%, 15.91%, and 17.16% respectively for the Bank. At June 30, 2019 the Tier 1 leverage ratio, Tier 1 risk based capital ratio, and total risk-based capital ratios were 12.22%, 15.75%, and 17.00% 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 net income 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, which some investors may consider to be a more appropriate comparison given our S Corporation status prior to September 2018. We calculate our tax-adjusted net income, return on average assets, and return on average equity, and per share amounts by using a combined C Corporation effective tax rate for federal and state income taxes of 25.0% and 24.1% in the second quarter of 2019 and 2018, respectively. This calculation illustrates only the change from our status as a S Corporation into a C Corporation and does not give effect to any other transaction. However, 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)


2019



2018



2019



2018


Loan interest income (excluding loan fees)













Total loan interest income, including loan fee income


$

12,101



$

10,583



$

23,723



$

21,408


Loan fee income



(1,369)




(1,117)




(2,658)




(2,949)


Loan interest income excluding loan fee income


$

10,732



$

9,466



$

21,065



$

18,459



















Average total loans


$

613,892



$

572,003



$

600,224



$

569,082


Yield on loans (including loan fee income)



7.91

%



7.42

%



7.97

%



7.53

%

Yield on loans (excluding loan fee income)



7.01

%



6.64

%



7.08

%



6.49

%


















Net interest margin (excluding loan fees)

















Net interest income


$

10,583



$

9,439



$

20,936



$

19,300


Loan fee income



(1,369)




(1,117)




(2,658)




(2,949)


Net interest income excluding loan fees


$

9,214



$

8,322



$

18,278



$

16,351



















Average earning assets


$

777,190



$

704,245



$

761,607



$

697,905


Net interest margin (including loan fee income)



5.46

%



5.38

%



5.54

%



5.53

%

Net interest margin (excluding loan fee income)



4.76

%



4.74

%



4.84

%



4.69

%


















Pre-tax, pre-provision net earnings

















Net income before income taxes


$

6,830



$

6,379



$

13,651



$

12,728


Plus: Provision (reversal of) for loan losses



-




-




-




(100)


Pre-tax, pre-provision net earnings


$

6,830



$

6,379



$

13,651



$

12,828



















Adjusted provision for income tax

















Net income before income taxes


$

6,830



$

6,379



$

13,651



$

12,728


Total effective adjusted tax rate



25.0

%



24.1

%



25.0

%



25.1

%

Adjusted provision for income taxes


$

1,704



$

1,538



$

3,409



$

3,189



















Tax-adjusted net income

















Net income before income taxes


$

6,830



$

6,379



$

13,651



$

12,728


Adjusted provision for income taxes



1,704




1,538




3,409




3,189


Tax-adjusted net income


$

5,126



$

4,841



$

10,242



$

9,539



















Tax-adjusted ratios and per share data

















Tax-adjusted net income (numerator)


$

5,126



$

4,841



$

10,242



$

9,539



















Average assets (denominator)


$

786,773



$

712,827



$

770,621



$

706,560


Tax-adjusted return on average assets



2.61

%



2.72

%



2.68

%



2.72

%


















Average shareholders' equity (denominator)


$

96,044



$

75,350



$

93,443



$

73,395


Tax-adjusted return on average shareholders' equity



21.41

%



25.77

%



22.10

%



25.99

%


















Average tangible common equity (denominator)


$

94,128



$

73,223



$

91,498



$

71,241


Tax-adjusted return on average tangible common equity



21.84

%



26.52

%



22.57

%



27.00

%


















Weighted average common shares outstanding basic (denominator)



10,187,500




7,287,500




10,187,500




7,287,500


Tax-adjusted net income per common share--basic



0.50




0.66




1.00




1.31



















Weighted average common shares outstanding diluted (denominator)



10,192,649




7,287,500




10,187,500




7,287,500


Tax-adjusted net income per common share--diluted



0.50




0.66




1.00




1.31



















Tangible assets

















Total assets


$

798,448



$

727,607










Less: Goodwill and intangibles



(1,892)




(2,098)










Tangible assets


$

796,556



$

725,509



























Tangible shareholders' equity

















Total shareholders' equity


$

99,037



$

77,553










Less: Goodwill and intangibles



(1,892)




(2,098)










Tangible shareholders' equity


$

97,145



$

75,455



























Tangible shareholders' equity

















Tangible shareholders' equity (numerator)


$

97,145



$

75,455










Tangible assets (denominator)


$

796,556



$

725,509










Tangible common equity to tangible assets



12.20

%



10.40

%


























End of period common shares outstanding



10,187,500




7,287,500










Book value per share


$

9.72



$

10.64










Tangible book value per share


$

9.54



$

10.35










Total shareholders' equity to total assets



12.40

%



10.66

%









 



Net Interest Margin Excluding Loan Fee Income




For the Three Months Ended June 30,




2019



2018




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)


$

162,056



$

941




2.33

%


$

131,084



$

554




1.70

%

Investment securities(2)



1,063




24




9.06




1,051







0.00


Loans held for sale



179







0.00




107







0.00


Total loans(3)



613,892




10,732




7.01




572,003




9,466




6.64


Total interest-earning assets



777,190




11,697




6.04




704,245




10,020




5.71


Noninterest-earning assets



9,583












8,582










Total assets


$

786,773











$

712,827



































Funding sources:

























Interest-bearing liabilities:

























Deposits:

























Transaction accounts


$

294,926




1,388




1.89

%


$

232,128




794




1.37

%

Time deposits



205,978




1,095




2.13




232,925




846




1.46


Total interest-bearing deposits



500,904




2,483




1.99




465,053




1,640




1.41


Other borrowings









0.00




4,800




58




4.85


Total interest-bearing liabilities



500,904




2,483




1.99




469,853




1,698




1.45



























Noninterest-bearing liabilities:

























Noninterest-bearing deposits



185,715












163,815










Other noninterest-bearing liabilities



4,110












3,809










Total noninterest-bearing liabilities



189,825












167,624










Shareholders' equity



96,044












75,350










Total liabilities and shareholders' equity


$

786,773











$

712,827



































Net interest income excluding loan fee income






$

9,214











$

8,322






Net interest spread excluding loan fee income(4)











4.05

%











4.26

%

Net interest margin excluding loan fee income











4.76

%











4.74

%


























(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 With Loan Fee Income




For the Three Months Ended June 30,




2019



2018




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)


$

162,056



$

941




2.33

%


$

131,084



$

554




1.70

%

Investment securities(2)



1,063




24




9.06




1,051







0.00


Loans held for sale



179







0.00




107







0.00


Total loans(3)



613,892




12,101




7.91




572,003




10,583




7.42


Total interest-earning assets



777,190




13,066




6.74




704,245




11,137




6.34


Noninterest-earning assets



9,583












8,582










Total assets


$

786,773











$

712,827



































Funding sources:

























Interest-bearing liabilities:

























Deposits:

























Transaction accounts


$

294,926




1,388




1.89

%


$

232,128




794




1.37

%

Time deposits



205,978




1,095




2.13




232,925




846




1.46


Total interest-bearing deposits



500,904




2,483




1.99




465,053




1,640




1.41


Other borrowings









0.00




4,800




58




4.85


Total interest-bearing liabilities



500,904




2,483




1.99




469,853




1,698




1.45



























Noninterest-bearing liabilities:

























Noninterest-bearing deposits



185,715












163,815










Other noninterest-bearing liabilities



4,110












3,809










Total noninterest-bearing liabilities



189,825












167,624










Shareholders' equity



96,044












75,350










Total liabilities and shareholders' equity


$

786,773











$

712,827



































Net interest income including loan fee income






$

10,583











$

9,439






Net interest spread including loan fee income(4)











4.75

%











4.89

%

Net interest margin including loan fee income











5.46

%











5.38

%


























(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,




2019



2018




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)


$

160,129



$

1,896




2.39

%


$

127,773



$

1,069




1.67

%

Investment securities(2)



1,059




24




4.57




1,050







0.00


Loans held for sale



195







0.00




143







0.00


Total loans(3)



600,224




21,065




7.08




568,939




18,459




6.49


Total interest-earning assets



761,607




22,985




6.09




697,905




19,528




5.60


Noninterest-earning assets



9,014












8,655










Total assets


$

770,621











$

706,560



































Funding sources:

























Interest-bearing liabilities:

























Deposits:

























Transaction accounts


$

290,204




2,687




1.87

%


$

221,490




1,406




1.27

%

Time deposits



199,276




2,020




2.04




238,093




1,653




1.39


Total interest-bearing deposits



489,480




4,707




1.94




459,583




3,059




1.33


Other borrowings









0.00




5,083




118




4.64


Total interest-bearing liabilities



489,480




4,707




1.94




464,666




3,177




1.37



























Noninterest-bearing liabilities:

























Noninterest-bearing deposits



182,760












164,934










Other noninterest-bearing liabilities



4,938












3,565










Total noninterest-bearing liabilities



187,698












168,499










Shareholders' equity



93,443












73,395










Total liabilities and shareholders' equity


$

770,621











$

706,560



































Net interest income excluding loan fee income






$

18,278











$

16,351






Net interest spread excluding loan fee income(4)











4.15

%











4.23

%

Net interest margin excluding loan fee income











4.84

%











4.69

%


























(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 With Loan Fee Income




For the Six Months Ended June 30,




2019



2018




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)


$

160,129



$

1,896




2.39

%


$

127,773



$

1,069




1.67

%

Investment securities(2)



1,059




24




4.57




1,050







0.00


Loans held for sale



195







0.00




143







0.00


Total loans(3)



600,224




23,723




7.97




568,939




21,408




7.53


Total interest-earning assets



761,607




25,643




6.79




697,905




22,477




6.44


Noninterest-earning assets



9,014












8,655










Total assets


$

770,621











$

706,560



































Funding sources:

























Interest-bearing liabilities:

























Deposits:

























Transaction accounts


$

290,204




2,687




1.87

%


$

221,490




1,406




1.27

%

Time deposits



199,276




2,020




2.04




238,093




1,653




1.39


Total interest-bearing deposits



489,480




4,707




1.94




459,583




3,059




1.33


Other borrowings









0.00




5,083




118




4.64


Total interest-bearing liabilities



489,480




4,707




1.94




464,666




3,177




1.37



























Noninterest-bearing liabilities:

























Noninterest-bearing deposits



182,760












164,934










Other noninterest-bearing liabilities



4,938












3,565










Total noninterest-bearing liabilities



187,698












168,499










Shareholders' equity



93,443












73,395










Total liabilities and shareholders' equity


$

770,621











$

706,560



































Net interest income including loan fee income






$

20,936











$

19,300






Net interest spread including loan fee income(4)











4.85

%











5.07

%

Net interest margin including loan fee income











5.54

%











5.53

%


























(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.

 

Bank7 Corp.

Consolidated Balance Sheets


Dollars in thousands, exceper per share data


Unaudited as of





Assets


June 30,



June 30,



December 31,




2019



2018



2018












Cash and due from banks


$

123,763



$

96,935



$

128,090


Interest-bearing time deposits in other banks



32,632




30,663




31,759


Loans, net



623,614




581,551




592,078


Loans held for sale



8




840




512


Premises and equipment, net



8,757




9,282




7,753


Nonmarketable equity securities



1,069




1,053




1,055


Foreclosed assets held for sale



188




150




110


Goodwill and intangibles



1,892




2,098




1,995


Interest receivable and other assets



6,525




5,035




7,159















Total assets


$

798,448



$

727,607



$

770,511















Liabilities and Shareholders' Equity


























Deposits













Noninterest-bearing


$

190,092



$

168,920



$

201,159


Interest-bearing



505,963




472,899




474,743















Total deposits



696,055




641,819




675,902















Borrowings



-




4,800




-


Income taxes payable



20




-




1,913


Interest payable and other liabilities



3,336




3,435




4,229















Total liabilities



699,411




650,054




682,044















Common stock



102




73




102


Additional paid-in capital



80,604




6,987




80,275


Retained earnings



18,331




70,493




8,090















Total shareholders' equity



99,037




77,553




88,467















Total liabilities and shareholders' equity


$

798,448



$

727,607



$

770,511


 

Bank7 Corp.

Consolidated Statements of Income




Unaudited as of




Three Months Ended



Six Months Ended




June 30,



June 30,


Dollars in thousands, exceper per share data


2019



2018



2019



2018


Interest Income




Loans, including fees


$

12,101



$

10,583



$

23,723



$

21,408


Interest-bearing time deposits in other banks



497




142




914




291


Interest-bearing deposits in other banks



468




412




1,006




778



















Total interest income



13,066




11,137




25,643




22,477



















Interest Expense

















Deposits



2,483




1,640




4,707




3,059


Other borrowings



-




58




-




118



















Total interest expense



2,483




1,698




4,707




3,177



















Net Interest Income



10,583




9,439




20,936




19,300



















Provision for Loan Losses



-




-




-




100



















Net Interest Income After Provision for Loan Losses



10,583




9,439




20,936




19,200



















Noninterest Income

















Secondary market income



40




38




77




78


Service charges on deposit accounts



109




93




169




173


Other



146




355




272




499



















Total noninterest income



295




486




518




750



















Noninterest Expense

















Salaries and employee benefits



2,365




1,845




4,536




3,995


Furniture and equipment



218




152




377




309


Occupancy



378




288




721




579


Data and item processing



276




235




538




468


Accounting, marketing and legal fees



142




110




289




144


Regulatory assessments



31




125




63




251


Advertising and public relations



92




163




278




350


Travel, lodging and entertainment



92




165




134




358


Other



454




463




867




768



















Total noninterest expense



4,048




3,546




7,803




7,222



















Income Before Taxes



6,830




6,379




13,651




12,728


Income tax expense



1,704




-




3,409




-


Net Income


$

5,126



$

6,379



$

10,242



$

12,728



















Earnings per common share - basic


$

0.50



$

0.88



$

1.00



$

1.75


Diluted earnings per common share



0.50




0.88




1.00




1.75


Weighted average common shares outstanding - basic



10,187,500




7,287,500




10,187,500




7,287,500


Weighted average common shares outstanding - diluted



10,192,649




7,287,500




10,187,500




7,287,500


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 second quarter 2019 results, which will be broadcast live over the Internet, on Friday, July 26, 2019 at 12:00 p.m. Eastern Time. To participate in the call, dial 1-888-348-6421, or access it live over the Internet at https://services.choruscall.com/links/bsvn190726.html. For those who cannot listen to the live call, a replay will be available through August 9, 2019 and may be accessed by dialing 1-877-344-7529 and using pass code 10133291. Also, an archive of the webcast will be available shortly after the call at https://services.choruscall.com/links/bsvn190726.html 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 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

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