PR Newswire | Jul 27, 2020 09:01AM EDT

07/27 08:00 CDT

Bank7 Corp. Announces 2Q 2020 Earnings OKLAHOMA CITY, July 27, 2020

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.

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 Six months ended June 30, 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

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) $ 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

Interest Average Interest Average Average Average Income/ Yield/ Income/ Yield/ Balance Balance Expense Rate Expense 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 962,186 13,556 5.67 777,190 13,066 6.74assets

Noninterest-earning assets 9,187 9,583

Total assets $ 971,373 $ 786,773

Funding sources:

Interest-bearingliabilities:

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 593,802 1,627 1.10 500,904 2,483 1.99deposits

Other borrowings - - 0.00 - - 0.00

Total interest-bearing 593,802 1,627 1.10 500,904 2,483 1.99liabilities

Noninterest-bearingliabilities:

Noninterest-bearing 272,373 185,715deposits

Other noninterest-bearing 5,729 4,110liabilities

Total noninterest-bearing 278,102 189,825liabilities

Shareholders' equity 99,469 96,044

Total liabilities and $ 971,373 $ 786,773shareholders' equity

Net interest income $ 11,929 $ 10,583excluding loan fee income

Net interest spreadexcluding loan fee income^ 4.56 % 4.76 %(4)

Net interest margin 4.99 % 5.46 %excluding loan fee income

(1) Includes income and average balances for fed funds sold,interest-earning deposits in banks and other miscellaneous interest-earningassets.

(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 assetsminus the average rate on interest-bearing liabilities.



Net Interest Margin Excluding Loan Fee Income

For the Six Months Ended June 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 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

Interest Average Interest Average Average Average Income/ Yield/ Income/ Yield/ Balance Balance Expense Rate Expense 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 914,118 27,063 5.95 761,607 25,643 6.79assets

Noninterest-earning assets 8,969 9,014

Total assets $ 923,087 $ 770,621

Funding sources:

Interest-bearingliabilities:

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 570,704 3,702 1.30 489,480 4,707 1.94deposits

Other borrowings - - 0.00 - - 0.00

Total interest-bearing 570,704 3,702 1.30 489,480 4,707 1.94liabilities

Noninterest-bearingliabilities:

Noninterest-bearing 246,630 182,760deposits

Other noninterest-bearing 5,160 4,938liabilities

Total noninterest-bearing 251,790 187,698liabilities

Shareholders' equity 100,593 93,443

Total liabilities and $ 923,087 $ 770,621shareholders' equity

Net interest income $ 23,361 $ 20,936excluding loan fee income

Net interest spreadexcluding loan fee income^ 4.65 % 4.85 %(4)

Net interest margin 5.14 % 5.54 %excluding loan fee income

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 TravisPresident & CEO(405) 810-8600

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SOURCE Bank7 Corp.