Bank7 Corp. Announces Record 4Q and Full Year 2018 Earnings
PR Newswire
OKLAHOMA CITY

OKLAHOMA CITY, Jan. 30, 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 and year ended December 31, 2018.  "We are pleased to announce record pre-tax income for our 4Q and also for our full year results.  Our 4Q and YTD results show continued balance sheet growth, especially in our core deposits.  That growth, combined with our excellent efficiency ratio and asset quality, continues to produce outstanding return on average assets and return on average tangible common equity," said Thomas L. Travis, President and CEO of the Company.

Three months ended December 31, 2018 compared to three months ended December 31, 2017:

  • Pre-tax income of $6.8 million, a 47.83% increase
  • Adjusted income of $5.9 million, a 138.55% increase
  • Diluted earnings per share of $0.57, a 68.42% increase
  • Interest income on loans, including loan fee income, totaled $11.8 million, a 25.43% increase
  • Average loans of $600.4 million, a 9.29% increase
  • Net interest margin, excluding loan fee income, of 4.85%, a 34 basis point increase
  • Adjusted return on average assets of 3.05%, a 162 basis point increase
  • Adjusted return on average tangible common equity of 27.38%, a 1,295 basis point increase

Twelve months ended December 31, 2018 compared to twelve months ended December 31, 2017

  • Pre-tax income of $25.8 million, an 8.44% increase
  • Adjusted income of $20.1 million, a 40.60% increase
  • Diluted earnings per share of $2.44, a 24.37% increase
  • Interest income on loans, including loan fee income, totaled $44.3 million, a 6.83% increase
  • Average loans of $583.8 million, an 8.30% increase
  • Core deposits of $615.9 million, a 27.22% increase
  • Net interest margin, excluding loan fee income, of 4.78%, a 19 basis point increase
  • Efficiency ratio of 37.04%, compared to 37.24%
  • Adjusted return on average assets of 2.75%, a 58 basis point increase
  • Adjusted return on average tangible common equity of 25.69%, a 322 basis point increase

Our results for the three and twelve months ended December 31, 2018 were positively impacted by a decrease in the federal tax rate to 21%, from 35%, as a result of the passing of the Tax Cuts and Jobs act at the end of 2017.  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 December 31, 2018 the Tier 1 leverage ratio, common equity Tier 1 risk-based capital ratio, Tier 1 risk based capital ratio, and total risk-based capital ratios were 11.26%, 14.78%, 14.78%, and 16.03% respectively for the Bank.  At December 31, 2018 the Tier 1 leverage ratio, common equity Tier 1 risk-based capital ratio, Tier 1 risk based capital ratio, and total risk-based capital ratios were 11.13%, 14.61%, 14.61%, and 15.86% 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 adjusted net income, return on average assets, return on average equity, and per share amounts by using a combined C Corporation effective tax rate for federal and state income taxes of 22.2% in 2018 and 40.0% in 2017.  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

December 31,



For the Year Ended

December 31,


(Dollars in thousands, except per share data)

2018



2017



2018



2017


Loan interest income (excluding loan fees)












Total loan interest income, including loan fee income

$

11,789



$

9,399



$

44,279



$

41,450


Loan fee income


(1,229)




(732)




(5,121)




(8,331)


Loan interest income excluding loan fee income

$

10,560



$

8,667



$

39,158



$

33,119


















Average total loans

$

600,400



$

549,367



$

583,821



$

539,078


Yield on loans (including loan fee income)


7.79

%



6.79

%



7.58

%



7.69

%

Yield on loans (excluding loan fee income)


6.98

%



6.26

%



6.71

%



6.14

%

















Net interest margin (excluding loan fees)
















Net interest income

$

10,530



$

8,489



$

39,631



$

38,131


Loan fee income


(1,229)




(732)




(5,121)




(8,331)


Net interest income excluding loan fees

$

9,301



$

7,757



$

34,510



$

29,800


















Average earning assets

$

760,869



$

682,664



$

721,935



$

649,757


Net interest margin (including loan fee income)


5.49

%



4.93

%



5.49

%



5.87

%

Net interest margin (excluding loan fee income)


4.85

%



4.51

%



4.78

%



4.59

%

















Pre-tax, pre-provision net earnings
















Net income before income taxes

$

6,753



$

4,568



$

25,796



$

23,789


Plus: Provision (reversal of) for loan losses


(100)




(150)




(200)




(1,246)


Pre-tax, pre-provision net earnings

$

6,853



$

4,718



$

25,996



$

25,035


















Adjusted provision for income tax
















Net income before income taxes

$

6,753



$

4,568



$

25,796



$

23,789


Total effective adjusted tax rate


12.3

%



45.7

%



22.2

%



40.0

%

Adjusted provision for income taxes

$

833



$

2,086



$

5,719



$

9,509


















Adjusted net income
















Net income before income taxes

$

6,753



$

4,568



$

25,796



$

23,789


Adjusted provision for income taxes


833




2,086




5,719




9,509


Adjusted net income

$

5,920



$

2,482



$

20,077



$

14,280


















Adjusted ratios and per share data
















Adjusted net income (numerator)

$

5,920



$

2,482



$

20,077



$

14,280


















Average assets (denominator)

$

769,170



$

689,283



$

730,564



$

657,568


Adjusted return on average assets


3.05

%



1.43

%



2.75

%



2.17

%

















Average stockholders' equity (denominator)

$

85,790



$

68,236



$

78,148



$

63,558


Adjusted return on average stockholders' equity


27.38

%



14.43

%



25.69

%



22.47

%

















Average tangible common equity (denominator)

$

83,763



$

66,009



$

75,484



$

61,254


Adjusted return on average tangible common equity


28.04

%



14.92

%



26.60

%



23.31

%

















Weighted average common shares outstanding basic (denominator)


10,187,500




7,287,500




8,105,856




7,287,500


Adjusted net income per common share--basic


0.58




0.34




2.48




1.96


















Weighted average common shares outstanding diluted (denominator)


10,322,193




7,287,500




8,238,753




7,287,500


Adjusted net income per common share--diluted


0.57




0.34




2.44




1.96


















Tangible assets
















Total assets

$

770,511



$

703,594










Less: Goodwill


(1,995)




(2,201)










Tangible assets

$

768,516



$

701,393


























Tangible stockholders' equity
















Total stockholders' equity

$

88,467



$

69,176










Less: Goodwill


(1,995)




(2,201)










Tangible stockholders' equity

$

86,472



$

66,975


























Tangible stockholders' equity
















Tangible stockholders' equity (numerator)

$

86,472



$

66,975










Tangible assets (denominator)

$

768,516



$

701,393










Tangible common equity to tangible assets


11.25

%



9.55

%



















Net Interest Margin Excluding Loan Fee Income


For the Three Months Ended December 31,

2018



2017

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)

$

159,215



$

795




1.98

%


$

131,940



$

443




1.33

%

Investment securities(2)


1,055




—




0.00




1,047




—




0.00


Loans held for sale


199




—




0.00




310




—




0.00


Total loans(3)


600,400




10,560




6.98




549,367




8,667




6.26


Total interest-earning assets


760,869




11,355




5.92




682,664




9,110




5.72


Noninterest-earning assets


8,301












6,619










Total assets

$

769,170











$

689,283


































Funding sources:
























Interest-bearing liabilities:
























Deposits:
























Transaction accounts

$

259,614




1,155




1.77

%


$

201,257




499




0.98

%

Time deposits


196,696




899




1.81




246,543




795




1.28


Total interest-bearing deposits


456,310




2,054




1.79




447,800




1,294




1.15


Other borrowings


—




—




0.00




5,600




59




4.18


Total interest-bearing liabilities


456,310




2,054




1.79




453,400




1,353




1.18


























Noninterest-bearing liabilities:
























Noninterest-bearing deposits


221,716












163,680










Other noninterest-bearing liabilities


5,354












3,967










Total noninterest-bearing liabilities


227,070












167,647










Shareholders' equity


85,790












68,236










Total liabilities and shareholders' equity

$

769,170











$

689,283


































Net interest income excluding loan fee income





$

9,301











$

7,757






Net interest spread excluding loan fee income(4)










4.13

%











4.11

%

Net interest margin excluding loan fee income










4.85

%











4.51

%



(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 Years Ended December 31,

2018



2017

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)

$

136,880



$

2,521




1.84

%


$

109,410



$

1,420




1.30

%

Investment securities(2)


1,052




—




0.00




1,045




—




0.00


Loans held for sale


182




—




0.00




224




—




0.00


Total loans(3)


583,821




39,158




6.71




539,078




33,119




6.14


Total interest-earning assets


721,935




41,679




5.77




649,757




34,539




5.32


Noninterest-earning assets


8,629












7,811










Total assets

$

730,564











$

657,568


































Funding sources:
























Interest-bearing liabilities:
























Deposits:
























Transaction accounts

$

240,881




3,584




1.49

%


$

242,790




2,214




0.91

%

Time deposits


220,023




3,410




1.55




200,513




2,288




1.14


Total interest-bearing deposits


460,904




6,994




1.52




443,303




4,502




1.02


Other borrowings


3,652




175




4.79




5,740




237




4.13


Total interest-bearing liabilities


464,556




7,169




1.54




449,043




4,739




1.06


























Noninterest-bearing liabilities:
























Noninterest-bearing deposits


183,750












142,035










Other noninterest-bearing liabilities


4,110












2,932










Total noninterest-bearing liabilities


187,860












144,967










Shareholders' equity


78,148












63,558










Total liabilities and shareholders' equity

$

730,564











$

657,568


































Net interest income excluding loan fee income





$

34,510











$

29,800






Net interest spread excluding loan fee income(4)










4.23

%











4.26

%

Net interest margin excluding loan fee income










4.78

%











4.59

%



(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 December 31,

2018



2017

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)

$

159,215



$

795




1.98

%


$

131,940



$

443




1.33

%

Investment securities(2)


1,055




—




0.00




1,047




—




0.00


Loans held for sale


199




—




0.00




310




—




0.00


Total loans(3)


600,400




11,789




7,79




549,367




9,399




6.79


Total interest-earning assets


760,869




12,584




6.56




682,664




9,842




5.72


Noninterest-earning assets


8,301












6,619










Total assets

$

769,170











$

689,283


































Funding sources:
























Interest-bearing liabilities:
























Deposits:
























Transaction accounts

$

259,614




1,155




1.77

%


$

201,257




499




0.98

%

Time deposits


196,696




899




1.81




246,543




795




1.28


Total interest-bearing deposits


456,310




2,054




1.79




447,800




1,294




1.15


Other borrowings


—




—




0.00




5,600




59




4.18


Total interest-bearing liabilities


456,310




2,054




1.79




453,400




1,353




1.18


























Noninterest-bearing liabilities:
























Noninterest-bearing deposits


221,716












163,680










Other noninterest-bearing liabilities


5,354












3,967










Total noninterest-bearing liabilities


227,070












167,647










Shareholders' equity


85,790












68,236










Total liabilities and shareholders' equity

$

769,170











$

689,283


































Net interest income excluding loan fee income





$

10,530











$

8,489






Net interest spread excluding loan fee income(4)










4.78

%











4.54

%

Net interest margin excluding loan fee income










5.49

%











4.93

%



(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 Years Ended December 31,

2018



2017

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)

$

136,880



$

2,521




1.84

%


$

109,410



$

1,420




1.30

%

Investment securities(2)


1,052




—




0.00




1,045




—




0.00


Loans held for sale


182




—




0.00




224




—




0.00


Total loans(3)


583,821




44,279




7.58




539,078




41,450




7.69


Total interest-earning assets


721,935




46,800




6.48




649,757




42,870




6.60


Noninterest-earning assets


8,629












7,811










Total assets

$

730,564











$

657,568


































Funding sources:
























Interest-bearing liabilities:
























Deposits:
























Transaction accounts

$

240,881




3,584




1.49

%


$

242,790




2,214




0.91

%

Time deposits


220,023




3,410




1.55




200,513




2,288




1.14


Total interest-bearing deposits


460,904




6,994




1.52




443,303




4,502




1.02


Other borrowings


3,652




175




4.79




5,740




237




4.13


Total interest-bearing liabilities


464,556




7,169




1.54




449,043




4,739




1.06


























Noninterest-bearing liabilities:
























Noninterest-bearing deposits


183,750












142,035










Other noninterest-bearing liabilities


4,110












2,932










Total noninterest-bearing liabilities


187,860












144,967










Shareholders' equity


78,148












63,558










Total liabilities and shareholders' equity

$

730,564











$

657,568


































Net interest income excluding loan fee income





$

39,631











$

38,131






Net interest spread excluding loan fee income(4)










4.94

%











5.54

%

Net interest margin excluding loan fee income










5.49

%











5.87

%



(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



Unaudited as of





Assets

2018



2017



December 31



September 30



December 31











Cash and due from banks

$

128,090



$

127,248



$

100,054


Interest-bearing time deposits in other banks


31,759




29,767




30,168


Loans, net


592,078




577,111




555,347


Loans held for sale


512




0




388


Premises and equipment, net


7,753




7,767




9,602


Nonmarketable equity securities


1,055




1,055




1,049


Foreclosed assets held for sale


110




110




100


Goodwill and intangibles


1,995




2,046




2,201


Interest receivable and other assets


7,159




6,069




4,685














Total assets

$

770,511



$

751,173



$

703,594














Liabilities and Shareholders' Equity
























Deposits












Noninterest-bearing

$

201,159



$

222,675



$

165,911


Interest-bearing


474,743




441,638




459,920














Total deposits


675,902




664,313




625,831














Borrowings


-




-




5,600


Interest payable and other liabilities


6,142




4,095




2,987














Total liabilities


682,044




668,408




634,418














Common stock


102




102




73


Additional paid-in capital


80,275




80,136




6,987


Retained earnings


8,090




2,527




62,116














Total shareholders' equity


88,467




82,765




69,176














Total liabilities and shareholders' equity

$

770,511



$

751,173



$

703,594





Bank7 Corp.

Consolidated Quarterly Statements of Income



Unaudited as of






Quarter Ended



Year Ended



2018



2017



2018



2017



December 31



September 30



December 31



December 31



December 31


Interest Income















Loans, including fees

$

11,789



$

11,082



$

9,399



$

44,279



$

41,450


Interest-bearing time deposits in other banks


150




147




176




588




592


Interest-bearing deposits in other banks


645




510




268




1,933




828






















Total interest income


12,584




11,739




9,843




46,800




42,870






















Interest Expense




















Deposits


2,054




1,881




1,294




6,994




4,502


Other borrowings


-




57




60




175




237






















Total interest expense


2,054




1,938




1,354




7,169




4,739






















Net Interest Income


10,530




9,801




8,489




39,631




38,131






















Provision for Loan Losses


100




-




150




200




1,246






















Net Interest Income After Provision for Loan Losses


10,430




9,801




8,339




39,431




36,885






















Noninterest Income




















Secondary market income


39




95




50




212




183


Service charges on deposit accounts


86




88




81




347




336


Other


137




136




12




772




916






















Total noninterest income


262




319




143




1,331




1,435






















Noninterest Expense




















Salaries and employee benefits


2,035




2,082




2,011




8,112




7,611


Furniture and equipment


193




182




241




684




831


Occupancy


207




319




285




1,105




1,049


Data and item processing


250




248




233




966




891


Accounting, marketing and legal fees


87




74




69




305




284


Regulatory assessments


146




145




(8)




542




450


Advertising and public relations


140




63




169




553




433


Travel, lodging and entertainment


81




260




269




699




1,041


Other


800




432




645




2,000




1,941






















Total noninterest expense


3,939




3,805




3,914




14,966




14,531






















Income Before Taxes


6,753




6,315




4,568




25,796




23,789


Income tax expense


1,192




(395)








797




-


Net Income

$

5,561



$

6,710



$

4,568



$

24,999



$

23,789






















Basic earnings per common share

$

0.55



$

0.88



$

0.63



$

3.08



$

3.26


Diluted earnings per common share


0.54




0.87




0.63




3.03




3.26


Weighted average common shares outstanding - basic


10,187,500




7,634,239




7,287,500




8,105,856




7,287,500


Weighted average common shares outstanding - diluted


10,322,193




7,669,348




7,287,500




8,238,753




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 seven full-service branches 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 fourth quarter 2018 results, which will be broadcast live over the Internet, on Thursday, January 31, 2019 at 4:30 p.m. Eastern Time. To participate in the call, dial 1-888-317-6016, or access it live over the Internet at https://services.choruscall.com/links/bsvn190138-K1.html.  For those who cannot listen to the live call, a replay will be available through February 14, 2019 and may be accessed by dialing 1-877-344-7529 and using pass code 10127728. Also, an archive of the webcast will be available shortly after the call at https://services.choruscall.com/links/bsvn190131.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 adjusted net income, adjusted earnings per share, adjusted return on average assets and 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.