PR Newswire | Oct 29, 2020 09:01AM EDT

10/29 08:00 CDT

Bank7 Corp. Announces 3Q 2020 Earnings OKLAHOMA CITY, Oct. 29, 2020

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 Nine months ended September 30, 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 Interest Average Average Interest Average Yield/ Income/ Yield/ Balance Income/ Balance Rate Expense Rate Expense

(Dollars in thousands)

Interest-earningassets:

Short-term $ 111,019 $ 147 0.53 % $ 145,147 $ 888 2.43 %investments^(1)

Investment 1,138 2 0.70 1,069 4 1.48securities^(2)

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

Totalinterest-earning 959,658 11,848 4.91 797,667 12,230 6.08assets

Noninterest-earning 7,386 8,773assets

Total assets $ 967,044 $ 806,440

Funding sources:

Interest-bearingliabilities:

Deposits:

Transaction $ 381,572 545 0.57 % $ 287,241 1,234 1.70 %accounts

Time deposits 200,961 780 1.54 220,935 1,237 2.22

Totalinterest-bearing 582,533 1,325 0.90 508,176 2,471 1.93deposits

Other borrowings - - 0.00 - - 0.00

Totalinterest-bearing 582,533 1,325 0.90 508,176 2,471 1.93liabilities

Noninterest-bearingliabilities:

Noninterest-bearing 276,219 193,785deposits

Othernoninterest-bearing 5,363 4,467liabilities

Totalnoninterest-bearing 281,582 198,252liabilities

Shareholders' 102,929 100,012equity

Total liabilitiesand shareholders' $ 967,044 $ 806,440equity

Net interest incomeincluding loan fee $ 10,523 $ 9,759income

Net interest spreadincluding loan fee 4.01 % 4.15 %income^(4)

Net interest marginincluding loan fee 4.36 % 4.85 %income

Net Interest Margin With Loan Fee Income

For the Three Months Ended September 30,

2020 2019

Interest Average Interest Average Average Average Income/ Yield/ Income/ Yield/ Balance Balance Expense Rate Expense Rate

(Dollars in thousands)

Interest-earningassets:

Short-term $ 111,019 $ 147 0.53 % $ 145,147 $ 888 2.43 %investments^(1)

Investment 1,138 2 0.70 1,069 4 1.48securities^(2)

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

Totalinterest-earning 959,658 12,926 5.36 797,667 13,071 6.50assets

Noninterest-earning 7,386 8,773assets

Total assets $ 967,044 $ 806,440

Funding sources:

Interest-bearingliabilities:

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

Totalinterest-bearing 582,533 1,325 0.90 508,176 2,471 1.93deposits

Other borrowings - - 0.00 - - 0.00

Totalinterest-bearing 582,533 1,325 0.90 508,176 2,471 1.93liabilities

Noninterest-bearingliabilities:

Noninterest-bearing 276,219 193,785deposits

Othernoninterest-bearing 5,363 4,467liabilities

Totalnoninterest-bearing 281,582 197,252liabilities

Shareholders' equity 102,929 100,012

Total liabilitiesand shareholders' $ 967,044 $ 806,440equity

Net interest incomeexcluding loan fee $ 11,601 $ 10,600income

Net interest spreadexcluding loan fee 4.45 % 4.57 %income^(4)

Net interest marginexcluding loan fee 4.81 % 5.27 %income

(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

Interest Interest Average Average Average Average Income/ Income/ Yield/ Balance Yield/ Balance Expense Expense Rate 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 574,812 5,028 1.17 495,881 7,178 1.94liabilities

Noninterest-bearing liabilities:

Noninterest-bearing deposits 256,429 186,379

Other noninterest-bearing 5,231 4,779liabilities

Total noninterest-bearing 261,660 191,158liabilities

Shareholders' equity 101,377 95,655

Total liabilities and $ 937,849 $ 782,694shareholders' equity

Net interest income including $ 30,993 $ 28,038loan fee income

Net interest spread including 4.01 % 4.15 %loan fee income^(4)

Net interest margin including 4.45 % 4.84 %loan fee income

Net Interest Margin With Loan Fee Income

For the Nine Months Ended September 30,

2020 2019

Interest Average Interest Average Average Average Income/ Yield/ Income/ Yield/ Balance Balance Expense Rate Expense Rate

(Dollars in thousands)

Interest-earning assets:

Short-term $ 120,909 $ 701 0.77 % $ 155,073 $ 2,785 2.40 %investments^(1)

Investment 1,109 21 2.53 1,062 27 3.40securities^(2)

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

Totalinterest-earning 929,410 39,990 5.75 773,752 38,714 6.69assets

Noninterest-earning 8,439 8,942assets

Total assets $ 937,849 $ 782,694

Funding sources:

Interest-bearingliabilities:

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

Totalinterest-bearing 574,812 5,028 1.17 495,881 7,178 1.94deposits

Other borrowings - - 0.00 - - 0.00

Totalinterest-bearing 574,812 5,028 1.17 495,881 7,178 1.94liabilities

Noninterest-bearingliabilities:

Noninterest-bearing 256,429 186,379deposits

Othernoninterest-bearing 5,231 4,779liabilities

Totalnoninterest-bearing 261,660 191,158liabilities

Shareholders' equity 101,377 95,655

Total liabilitiesand shareholders' $ 937,849 $ 782,694equity

Net interest incomeexcluding loan fee $ 34,962 $ 31,536income

Net interest spreadexcluding loan fee 4.58 % 4.75 %income^(4)

Net interest marginexcluding loan fee 5.02 % 5.45 %income

Bank7 Corp.

Consolidated Balance Sheets

Dollars in thousands, exceper per Unaudited as ofshare data

Assets September 30, December 31,

2020 2019 2019

Cash and due from banks $ 60,718 $ 110,594 $ 117,128

Interest-bearing time deposits in 23,384 31,890 30,147other banks

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 7,303 6,198 6,115assets

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 3,890 4,072 8,426liabilities

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 $ 973,354 $ 826,821 $ 866,392shareholders' equity

Bank7 Corp.

Consolidated Statements of Income

Unaudited as of

Three Months Ended Nine Months Ended

September 30, September 30,

Dollars inthousands, 2020 2019 2020 2019exceper pershare data

Interest Income

Loans, including $ 12,777 $ 12,179 $ 39,268 $ 35,902fees

Interest-bearingtime deposits in 124 500 419 1,414other banks

Interest-bearingdeposits in 26 392 303 1,398other banks

Total interest 12,927 13,071 39,990 38,714income

Interest Expense

Deposits 1,326 2,471 5,028 7,178

Total interest 1,326 2,471 5,028 7,178expense

Net Interest 11,601 10,600 34,962 31,536Income

Provision for 1,250 - 3,300 -Loan Losses

Net InterestIncome After 10,351 10,600 31,662 31,536Provision forLoan Losses

NoninterestIncome

Secondary market 57 69 134 146income

Service chargeson deposit 104 110 318 279accounts

Other 173 330 513 602

Totalnoninterest 334 509 965 1,027income

NoninterestExpense

Salaries andemployee 2,505 14,256 7,576 18,792benefits

Furniture and 224 229 658 606equipment

Occupancy 543 436 1,417 1,157

Data and item 276 276 821 814processing

Accounting,marketing and 135 218 338 507legal fees

Regulatory 164 31 281 94assessments

Advertising and 62 71 360 349public relations

Travel, lodgingand 50 153 146 287entertainment

Other 625 402 1,463 1,269

Totalnoninterest 4,584 16,072 13,060 23,875expense

Income Before 6,101 (4,963) 19,567 8,688Taxes

Income tax 1,661 1,556 5,040 4,965expense

Net Income $ 4,440 $ (6,519) $ 14,527 $ 3,723

Earnings percommon share - $ 0.48 $ (0.64) $ 1.53 $ 0.37basic

Diluted earnings 0.48 (0.64) 1.53 0.37per common share

Weighted averagecommon shares 9,228,128 10,149,007 9,483,540 10,174,528outstanding -basic

Weighted averagecommon shares 9,228,128 10,161,778 9,483,540 10,176,360outstanding -diluted

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 TravisPresident & CEO(405) 810-8600

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SOURCE Bank7 Corp.