Bank7 Corp. Announces 2Q 2020 Earnings

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. 

Bank7 Logo (PRNewsfoto/Bank7 Corp.)

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.

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