Bank7 Corp. (NASDAQ:BSVN) a Coronavirus Winner

Bank7 Corp. (NASDAQ:BSVN)  a Coronavirus Winner

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
June 30,
Six months ended
June 30,
(Dollars in thousands, except per share data)2020201920202019
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 rate24.9%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 taxes1,6711,7043,3793,409
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 assets2.09%2.61%2.20%2.68%
Average shareholders’ equity (denominator)$        99,469$        96,044$      100,593$       93,443
Tax-adjusted return on average shareholders’ equity20.36%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 equity20.72%21.84%20.52%22.57%
Weighted average common shares outstanding basic (denominator)9,232,50910,187,5009,598,23210,187,500
Tax-adjusted net income per common share–basic$            0.54$           0.50$            1.05$           1.00
Weighted average common shares outstanding diluted (denominator)9,232,50910,192,6499,598,23210,187,500
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 assets9.97%12.20%
End of period common shares outstanding9,226,25210,187,500
Book value per share$          11.01$           9.72
Tangible book value per share$          10.83$           9.54
Total shareholders’ equity to total assets10.12%12.40%
Net Interest Margin Excluding Loan Fee Income
For the Three Months Ended June 30,
20202019
Average BalanceInterest Income/ Expense  Average Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ Rate
(Dollars in thousands)
Interest-earning assets:
Short-term investments(1)$134,764$1560.47%$162,056$9412.33%
Investment securities(2)1,089155.541,063249.06
Loans held for sale2220.001790.00
Total loans(3)826,11111,7535.72613,89210,7327.01
Total interest-earning assets962,18611,9244.98777,19011,6976.04
Noninterest-earning assets9,1879,583
Total assets$971,373$786,773
Funding sources:
Interest-bearing liabilities:
Deposits:
Transaction accounts$373,8127040.76%$294,9261,3881.89%
Time deposits219,9909231.69205,9781,0952.13
Total interest-bearing deposits593,8021,6271.10500,9042,4831.99
Other borrowings0.000.00
Total interest-bearing liabilities593,8021,6271.10500,9042,4831.99
Noninterest-bearing liabilities:
Noninterest-bearing deposits272,373185,715
Other noninterest-bearing liabilities5,7294,110
Total noninterest-bearing liabilities278,102189,825
Shareholders’ equity99,46996,044
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 income4.30%4.76%
Net Interest Margin With Loan Fee Income
For the Three Months Ended June 30,
20202019
Average BalanceInterest Income/ ExpenseAverage Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ Rate
(Dollars in thousands)
Interest-earning assets:
Short-term investments(1)$134,764$1560.47%$162,056$9412.33%
Investment securities(2)1,089155.541,063249.06
Loans held for sale2220.001790.00
Total loans(3)826,11113,3856.52613,89212,1017.91
Total interest-earning assets962,18613,5565.67777,19013,0666.74
Noninterest-earning assets9,1879,583
Total assets$971,373$786,773
Funding sources:
Interest-bearing liabilities:
Deposits:
Transaction accounts$373,8127040.76%$294,9261,3881.89%
Time deposits219,9909231.69205,9781,0952.13
Total interest-bearing deposits593,8021,6271.10500,9042,4831.99
Other borrowings0.000.00
Total interest-bearing liabilities593,8021,6271.10500,9042,4831.99
Noninterest-bearing liabilities:
Noninterest-bearing deposits272,373185,715
Other noninterest-bearing liabilities5,7294,110
Total noninterest-bearing liabilities278,102189,825
Shareholders’ equity99,46996,044
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 income4.99%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,
20202019
Average BalanceInterest Income/ ExpenseAverage Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ Rate
(Dollars in thousands)
Interest-earning assets:
Short-term investments(1)$125,906$5540.88%$160,129$1,8962.39%
Investment securities(2)1,095183.311,059244.57
Loans held for sale1740.001950.00
Total loans(3)786,94323,5996.03600,22421,0657.08
Total interest-earning assets914,11824,1715.32761,60722,9856.09
Noninterest-earning assets8,9699,014
Total assets$923,087$770,621
Funding sources:
Interest-bearing liabilities:
Deposits:
Transaction accounts$358,1671,7140.96%$290,2042,6871.87%
Time deposits212,5371,9881.88199,2762,0202.04
Total interest-bearing deposits570,7043,7021.30489,4804,7071.94
Other borrowings0.000.00
Total interest-bearing liabilities570,7043,7021.30489,4804,7071.94
Noninterest-bearing liabilities:
Noninterest-bearing deposits246,630182,760
Other noninterest-bearing liabilities5,1604,938
Total noninterest-bearing liabilities251,790187,698
Shareholders’ equity100,59393,443
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 income4.50%4.84%
Net Interest Margin With Loan Fee Income
For the Six Months Ended June 30,
20202019
Average BalanceInterest Income/ ExpenseAverage Yield/ RateAverage BalanceInterest Income/ ExpenseAverage Yield/ Rate
(Dollars in thousands)
Interest-earning assets:
Short-term investments(1)$125,906$5540.88%$160,129$1,8962.39%
Investment securities(2)1,095183.311,059244.57
Loans held for sale1740.001950.00
Total loans(3)786,94326,4916.77600,22423,7237.97
Total interest-earning assets914,11827,0635.95761,60725,6436.79
Noninterest-earning assets8,9699,014
Total assets$923,087$770,621
Funding sources:
Interest-bearing liabilities:
Deposits:
Transaction accounts$358,1671,7140.96%$290,2042,6871.87%
Time deposits212,5371,9881.88199,2762,0202.04
Total interest-bearing deposits570,7043,7021.30489,4804,7071.94
Other borrowings0.000.00
Total interest-bearing liabilities570,7043,7021.30489,4804,7071.94
Noninterest-bearing liabilities:
Noninterest-bearing deposits246,630182,760
Other noninterest-bearing liabilities5,1604,938
Total noninterest-bearing liabilities251,790187,698
Shareholders’ equity100,59393,443
Total liabilities and shareholders’ equity$923,087$770,621
Net interest income excluding loan fee income$23,361$20,936
Net interest spread excluding loan fee income(4)4.65%4.85%
Net interest margin excluding loan fee income5.14%5.54%
Bank7 Corp.
Consolidated Balance Sheets
Dollars in thousands, except per share dataUnaudited as of
AssetsJune 30,December 31,
202020192019
Cash and due from banks$              127,780$             123,763$           117,128
Interest-bearing time deposits in other banks27,86532,63230,147
Loans, net828,065623,614699,458
Loans held for sale50081,031
Premises and equipment, net9,5198,7579,624
Nonmarketable equity securities1,0951,0691,100
Foreclosed assets held for sale1880
Goodwill and intangibles1,6861,8921,789
Interest receivable and other assets7,5756,5256,115
Total assets$           1,004,085$             798,448$           866,392
Liabilities and Shareholders’ Equity
Deposits
Noninterest-bearing$              254,735$             190,092$           219,221
Interest-bearing639,496505,963538,262
Total deposits894,231696,055757,483
Income taxes payable4,02220357
Interest payable and other liabilities4,2143,3368,426
Total liabilities902,467699,411766,266
Common stock92102101
Additional paid-in capital92,76180,60492,391
Retained earnings8,76518,3317,634
Total shareholders’ equity101,61899,037100,126
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 data2020201920202019
Interest Income
Loans, including fees$              13,385$              12,101$              26,491$              23,723
Interest-bearing time deposits in other banks133497295914
Interest-bearing deposits in other banks384682771,006
Total interest income13,55613,06627,06325,643
Interest Expense
Deposits1,6272,4833,7024,707
Total interest expense1,6272,4833,7024,707
Net Interest Income11,92910,58323,36120,936
Provision for Loan Losses1,4002,050
Net Interest Income After Provision for Loan Losses10,52910,58321,31120,936
Noninterest Income
Secondary market income39407777
Service charges on deposit accounts95109214169
Other167146340272
Total noninterest income301295631518
Noninterest Expense
Salaries and employee benefits2,5972,3655,0714,536
Furniture and equipment218218434377
Occupancy413378874721
Data and item processing269276545538
Accounting, marketing and legal fees77142203289
Regulatory assessments943111763
Advertising and public relations2992298278
Travel, lodging and entertainment439296134
Other383454838867
Total noninterest expense4,1234,0488,4767,803
Income Before Taxes6,7076,83013,46613,651
Income tax expense1,6711,7043,3793,409
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 share0.540.501.051.00
Weighted average common shares outstanding – basic9,232,50910,187,5009,598,23210,187,500
Weighted average common shares outstanding – diluted9,232,50910,192,6499,598,23210,187,500

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.

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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