Bank7 Q2 2025 Earnings Report

Bank7 EPS Results

• Actual EPS: $1.16
• Consensus EPS: $0.98
• Beat/Miss: Beat by +$0.18
• One Year Ago EPS: N/A

Bank7 Revenue Results

• Actual Revenue: $24.44 million
• Expected Revenue: $22.70 million
• Beat/Miss: Beat by +$1.74 million
• YoY Revenue Growth: N/A

Bank7 Announcement Details

• Quarter: Q2 2025
• Date: 7/17/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, July 17, 2025
• Conference Call Time: 10:00AM ET

Bank7 (NASDAQ:BSVN) operates as a bank holding company for Bank7 that provides banking and financial services to individual and corporate customers. It offers commercial deposit, commercial checking, money market, and other deposit accounts; and retail deposit services, such as certificates of deposit, money market accounts, checking accounts, negotiable order of withdrawal accounts, savings accounts, and automated teller machine access. The company also provides commercial real estate, hospitality, energy, and commercial and industrial lending services; consumer lending services to individuals for personal and household purposes comprising residential real estate loans and mortgage banking services, personal lines of credit, loans for the purchase of automobiles, and other installment loans, as well as secured and unsecured term loans and home improvement loans. It operates through a network of full-service branches in Oklahoma, the Dallas/Fort Worth, Texas metropolitan area, and Kansas. The company was formerly known as Haines Financial Corp. Bank7 Corp. was founded in 1901 and is headquartered in Oklahoma City, Oklahoma.

Bank7 Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Achieved one of the company’s best quarters ever with robust loan and deposit growth, maintained NIM at the high end of its historical range, and sustained a low efficiency ratio driving strong core earnings.
• Neutral Sentiment: Loan origination momentum remains strong with a healthy pipeline in Texas and Oklahoma, though payoff unpredictability from large deals could cause lumpiness in future quarters.
• Neutral Sentiment: Deposit costs held relatively stable in Q2 but may edge up to fund growth, with management expecting minor NIM degradation while remaining within historical norms.
• Positive Sentiment: Asset quality continues to improve with declining NPAs and solid underwriting standards, and management expects credit quality to remain strong given favorable economic conditions.
• Positive Sentiment: The bank has recovered approximately 75% of its oil & gas investment cash outlay and projects full recovery by mid-next year, substantially reducing this segment’s impact on the portfolio.

Presentation

[Operator]

Welcome to the Bank Seven Corp. Second Quarter twenty twenty five Earnings Call. Before we get started, I'd like to highlight the legal information and disclaimer on Page 27 of the investor presentation. For those who do not have access to the presentation, management is going to discuss certain topics that contain forward looking information, which is based on management's beliefs as well as assumptions made by and information currently available to management. Although management believes that the expectations reflected in such forward looking statements are reasonable, they can give no assurance that such expectations will prove to be correct.

[Operator]

Such statements are subject to certain risks, uncertainties and assumptions, including among other things, the direct and indirect effect of economic conditions on interest rates, credit quality, loan demand, liquidity, monetary and supervisory policies of banking regulators. Should one or more of these risks materialize or should underlying assumptions prove incorrect, actual results may vary materially from those expected. Also, note that this conference call contains references to non GAAP financial measures. You can find reconciliations of these non GAAP financial measures to GAAP financial measures in an eight ks that was filed this morning by the company. Representing the company on today's call, we have Tom Travis, President and CEO J.

[Operator]

T. Phillips, Chief Operating Officer Jason Estes, Chief Credit Officer Kelly Harris, Chief Financial Officer and Paul Timmons, Director of Accounting. With that, I'll turn the call over to Tom Travis.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

Thank you. Welcome to the call. We obviously had a great quarter, as you can see in the results. Before we get to that, a couple of weeks ago today, there was a really bad flood in my hometown of Kerrville, Texas. And so anyone on the call that has money left in their budgets for relief fund, there's a great organization there, Kerr County Relief Fund, they really need support.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

So consider that when you're looking at your expenditures in that area. I'm sure that the people down there will put it to good use. Back to the call. It was one of our best quarters ever. And we always have to recognize that those results happen because of our talented group of bankers.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

They drove strong loan and deposit growth, and we thank them very, very much. As you can see, we maintained our NIM on the higher end of our historical range, and we also continue to benefit from that low efficiency ratio. And when you put those factors together with the solid loan growth, we experienced nice, strong core earnings. We're very comfortable with our asset quality, and I always give a shout out to Jason Estes and his team. They've done an excellent job of maintaining a high quality credit book while at the same time growing that portfolio.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

So we're very proud of our results. We're pleased to continue to provide shareholders with excellent top tier results. And without further ado, I guess we're standing by for any questions you may have. Thank you.

[Operator]

We'll now begin the question and answer session. And your first question today will come from Woody Lay with KBW. Please go ahead.

[Woody Lay, Vice President at Keefe, Bruyette & Woods (KBW)]

Hey, good morning guys.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

Good morning, I

[Woody Lay, Vice President at Keefe, Bruyette & Woods (KBW)]

Wanted to start on loan growth. Obviously, really strong quarter on the growth front and it's been a really successful first half of the year when many other in the industry have kind of flagged in growth. I know your growth can be a little bit lumpy quarter to quarter, but how are you thinking about the growth momentum in the back half of the year?

[Jason Estes, President & Chief Credit Officer at Bank7]

Always depends on the lumpy paydowns. I think our deal pipeline, it looks solid right now. I think we've signaled that the last couple of quarters in a row that things in Oklahoma, things in Texas, economically are they're just in a really good spot. We're thankful to do business where we do business. And going into Q3, again, pipeline looks strong.

[Jason Estes, President & Chief Credit Officer at Bank7]

But you just never know on the chunky paydowns what's really coming. I think it was fourth quarter of last year. We just had a big wave of companies selling, people selling assets, various things that lead to a little bit of unpredictability there in the payoff side. But from the origination side, Q1 was strong, Q2 was stronger slightly. And I think Q3 is lining up to be similar, but we'll see.

[Woody Lay, Vice President at Keefe, Bruyette & Woods (KBW)]

And then how do you think about the NIM outlook given the growth? Deposit costs were relatively stable in the quarter. Just given the expectation for strong growth, could we see deposit costs start to move up to fund the growth? And how does that impact the NIM?

[Jason Estes, President & Chief Credit Officer at Bank7]

Yes. I think that's a fair way to state what we see real time is that to keep up on the deposit side, it does cost a little bit more money. We're always focused on offsetting some of that higher priced money with the transaction accounts, the zero cost accounts. And so bankers have done a really nice job of dragging that business in. And hopefully, we can continue to do so.

[Jason Estes, President & Chief Credit Officer at Bank7]

But I think we've been talking for a few quarters in a row about, yes, we expect a slight degradation, but we do expect to remain in our historical ranges. And that holds true today.

[Woody Lay, Vice President at Keefe, Bruyette & Woods (KBW)]

Got it. And then last for me. We've seen deal activity pick up in your backyard. Just any update on the M and A front for you all?

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

Woody, we've come close a couple of times over the last twelve months. We've actually had a couple of signed LOIs. And we're very disciplined in our approach. And for various reasons, those didn't happen. We continue to meet with various potential partners.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

We're very focused on we'd love to do an MOE, but we just continue to have a lot of meetings and do a lot of evaluations. And I think the tendency for people now as they've improved their AOCIs somewhat, which is going to loosen up the market. But we're going to just continue to evaluate opportunities in what we consider to be dynamic markets and common cultures. And it's just hard to predict when one of those might break loose.

[Woody Lay, Vice President at Keefe, Bruyette & Woods (KBW)]

All right. That's all for me. Thanks for taking my questions.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

Thank you.

[Operator]

And your next question today will come from Nathan Race with Piper Sandler. Please go ahead.

[Nathan Race, MD & Senior Research Analyst at Piper Sandler Companies]

Hey guys, good morning. Thanks for taking the questions.

[Jason Estes, President & Chief Credit Officer at Bank7]

Good morning, Good morning.

[Nathan Race, MD & Senior Research Analyst at Piper Sandler Companies]

Just following up on the margin commentary, curious maybe Jason, if you can kind of touch on some of the competitive pricing dynamics you're seeing and just kind of where you're seeing new loans come on the portfolio relative to the 7.6% kind of core yield in the second quarter?

[Jason Estes, President & Chief Credit Officer at Bank7]

Yes, I think it would be slightly lower than the 7.6%, but still I think if you go back a year ago or two years ago, there were fewer banks really aggressively looking for loans, especially after March. And I would consider today's environment very historically normal from a pricing standpoint within the competitive set here in Texas and Oklahoma. It just seems pretty benign. And that's nice to see some return to normalcy. So yes, there's always pricing pressure, Nate.

[Jason Estes, President & Chief Credit Officer at Bank7]

But right now, feels like people have kind of settled in on the deposit and the loan side, which is part of what led to the results.

[Nathan Race, MD & Senior Research Analyst at Piper Sandler Companies]

Got it. That's helpful. And then just kind of thinking about the appetite to maybe add some producers going forward. There's obviously been some M and A announcements within two of your key MSAs recently. So just curious kind of what the upside is, maybe add some talent, maybe relative to the existing capacity across the teams?

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

Nate, I met with a person in Dallas on Monday, and we've looked at a few lift out possibilities. And those are delicate things, as you can imagine. And I think the dynamic when you look at a lift out or people coming out of those situations is always the credit comes first, and then the deposits to help fund that growth seems to be a slower dynamic. And so we evaluate those, and you may see us do something in the North Texas region. But I don't know that it's going to be anything that's materially dynamic at first. We're very, very careful, and culture is very, very important to us. And so we'll see how that goes in the next couple of months.

[Nathan Race, MD & Senior Research Analyst at Piper Sandler Companies]

Okay, great. Maybe one last one for me for Kelly. If I strip out some of the oil and gas impacts within expenses, think you run around $8,800,000 coming out of the quarter. So just curious how you're thinking about kind of expense run rate over the back half of this year?

[Kelly Harris, EVP & CFO at Bank7]

Yes, Nate. I believe Q2 is probably a solid guide. Internally, are showing a little bit of expense creep. So you could increase that slightly, but it's probably a good start. Think from a Q3 perspective, fees $2,000,000 split evenly with oil and gas and core.

[Kelly Harris, EVP & CFO at Bank7]

And then on the expense side, we're using 10,000,000 with $1,000,000 in oil and gas and $9,000,000 on the expenses.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

But I don't think it's had a real meaningful impact to our efficiency ratio.

[Kelly Harris, EVP & CFO at Bank7]

Correct.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

It's we're still in that core 36% or 37%, 38% core.

[Kelly Harris, EVP & CFO at Bank7]

Core.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

Right.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

And so I guess I would argue it's probably splitting hairs at this point, Nate.

[Nathan Race, MD & Senior Research Analyst at Piper Sandler Companies]

Right. And then can you just remind us what the remaining life is on the oil and gas assets? Should that largely run off by the end of or should the recovery pretty much conclude by the end of next year or before then?

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

I think when I read your piece, you said that we had recovered 75% of our cash outlay. Is that what you said in your piece this morning, Nate?

[Nathan Race, MD & Senior Research Analyst at Piper Sandler Companies]

Correct. Versus, I think, 68% at the end of last quarter.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

Right. And I think that's pretty accurate.

[Jason Estes, President & Chief Credit Officer at Bank7]

Yes. We should recover fully cash on cash middle of next year, I think, is what we're projecting.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

So three to four more quarters. We've achieved our goal there, Nate. It's working really, really well, and we've achieved our goal on that. And so it's going to just continue to perform that way and become it's really not material anymore and that's a good thing.

[Nathan Race, MD & Senior Research Analyst at Piper Sandler Companies]

Right. Got it. I appreciate all the color. Congrats on a great quarter, guys. Thank you.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

Thank you.

[Operator]

And your next question today will come from Matt Olney with Stephens. Please go ahead.

[Matt Olney, Managing Director at Stephens Inc]

Yes. Thanks for taking the question guys. Just a few follow ups here. Kelly, think I missed your commentary you just made about the fees for the third quarter with and without the oil and gas revenue. Can you just go over that again?

[Kelly Harris, EVP & CFO at Bank7]

Yes. We're internally projecting $2,000,000 in fees, Matt, split evenly between the oil and gas and the core.

[Matt Olney, Managing Director at Stephens Inc]

Got it. Okay. That's helpful. Thank you, Kelly. And then going back to the loan growth discussion, it looks like a portion of that growth was within energy lending.

[Matt Olney, Managing Director at Stephens Inc]

Just looking for any more color on kind of the opportunities you see on that side. And then just overall growth that you're seeing in 2Q in the pipeline, just any color on the overall granularity of these loans? I think some of these loans can be smaller singles and doubles, but I think also you're opened to some larger chunkier loans. Just any more color on the granularity what you're seeing these days?

[Jason Estes, President & Chief Credit Officer at Bank7]

Sure. Matt, it's always a mix with us. And I would say, going back to the first of this year, I think if you look our production loans, that's really where we're up, 30,000,000, 35,000,000, in that energy bucket. And what's happened in our energy portfolio really since we went public is just this shift away from service, the service deals we're in are big fund deals typically. And it shifted a lot more to production.

[Jason Estes, President & Chief Credit Officer at Bank7]

Just think hedged oil and gas production. And so that's kind of the story for this first half of the year as well. And then from a C and I standpoint, there's some strength there this year that's getting a little bit clouded by some exits within that portfolio. And so we've really had a nice origination year in the C and I portfolio. And then owner occupied real estate, we've had a good year there.

[Jason Estes, President & Chief Credit Officer at Bank7]

We're up about $19,000,000 net net. And then a little bit of growth in our dollars outstanding in the hospitality portfolio. But again, that's another one, like energy and like C and I, those and the hospitality between those three portfolios, there's just a lot of churn. And so lots of exits, lots of asset sales, and then we're constantly trying to reload that customer base. And so we're benefiting from some of these exits on the deposit side.

[Jason Estes, President & Chief Credit Officer at Bank7]

And so we like to stay real active in those three books because it's really helped us grow the company here over the last ten years.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

I would add to Jason's comments that if you look at a long term horizon going back to for the last seven or eight years, the energy exposure today is almost half what it was seven or eight years ago. And because of the growth in the other segments and the other the hospitality segment is down exposure wise from a percentage basis. And so we haven't expanded those verticals. And in fact, in the energy, it's come down quite a bit. And I really as Jason said, it doesn't have anything to do with us exiting a segment.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

It has everything to do with the ability to grow the other parts of the portfolio and specifically in the Dallas Fort Worth region. So I think it's important to remember the long term dynamics that are in play there.

[Matt Olney, Managing Director at Stephens Inc]

Yes. Okay. Well, I appreciate the color on that. And then I guess going back to the margin discussion, I think you kind of hit on some a little bit of pressure in the third quarter we already discussed. Just remind us of your rate sensitivity and I guess the market is currently expecting a September Fed funds cut.

[Matt Olney, Managing Director at Stephens Inc]

And I guess with that on your balance sheet, I'm just now assuming there could be a little bit more incremental margin headwind in the fourth quarter if that's the case, but just remind me of your overall sensitivity to rates?

[Kelly Harris, EVP & CFO at Bank7]

Matt, this is Kelly. The first few rate cuts we were able to keep the loan beta and deposit beta one for one. We anticipate more of the same for the next couple of rate cuts and as floors kick in, we'll definitely help out on the liability side.

[Matt Olney, Managing Director at Stephens Inc]

Okay. That's great.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

I think you can see some of that dynamic on Page 10. We tried to illustrate the floors and what the dynamics are. I would say generally that we always talk about our NIM. And when we talk about NIM, we're looking at the net NIM without loan fee income. And historically, we're very close to the high end of our historical range.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

And so I think it's a natural thing that we are very well positioned for when rates do come down. And we're not concerned about it because we have so many floaters and floors, and we're funding it on the other side properly. But I think that it's important that we all remember the long term averages that we experience in that net NIM. And I'm delighted that we've been able to keep it where it is. I mean, I got a little bit of bone to pick with Nate.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

I saw Nate did say he I didn't realize Nate's last quarter that you had predicted us to be even higher than where we are. I feel like a pole vaulter that just pole vaulted 20 feet. And Nate's like, well, you should have done 21. But I'm half kidding, Nate. But seriously, I think when you look at NIM, it's really important to remember the long term dynamics of the matched balance sheet, the floors and that, look, if we bleed down into the more typical historical range, that's okay. And it wouldn't surprise us.

[Matt Olney, Managing Director at Stephens Inc]

Okay, guys. Thanks for the color. Appreciate it.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

Thank you.

[Kelly Harris, EVP & CFO at Bank7]

Thank you.

[Operator]

And your next question today will come from Nathan Race with Piper Sandler. Please go ahead.

[Nathan Race, MD & Senior Research Analyst at Piper Sandler Companies]

Unrelated question to your last comment, Tom, but just wondering if Jason can maybe just comment on what he's seen in terms of criticized, classified migration in the quarter and just how you're thinking about credit quality and charge offs over the balance of this year and into next?

[Jason Estes, President & Chief Credit Officer at Bank7]

Yes. I'd say, if you go look back over the last several quarters, it's just kind of this continuous path toward a little cleaner, a little smaller NPA number. Really, nothing has changed over the last, I'd say, six to nine months internally. Our past dues are very clean. Economic environment here is good.

[Jason Estes, President & Chief Credit Officer at Bank7]

We stick to our underwriting fundamentals. We're not adding new business lines. It's just more of the same. And it's there's a little bit of uncertainty, I think, in the economy. If you just look at the headlines and see the tariffs and different things going on with immigration policy, it's pretty remarkable as we talk to our clients and these business owners and how they operate.

[Jason Estes, President & Chief Credit Officer at Bank7]

And you'll see someone have to deal with an issue here or there. But all in all, it's just been a really good run of multiple quarters here where we operate. I mean, the economy is strong.

[Nathan Race, MD & Senior Research Analyst at Piper Sandler Companies]

Okay, great. That's helpful. And Tom, I'll be sure to set a low core margin bar for you in the future. Appreciate it.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

We appreciate it, Nate. We it's easier to meet low expectations. You know that.

[Nathan Race, MD & Senior Research Analyst at Piper Sandler Companies]

Indeed. Thanks, guys.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

Thank you.

[Operator]

This will conclude our question and answer session. I would like to turn the conference back over to Tom Travis for any closing remarks.

[Thomas Travis, Vice Chairman, President & CEO at Bank7]

Well, again, we're delighted with the quarter, with the first half of the year. We're cautiously excited about the rest of the year, just the great markets that we operate in and the great team of bankers that we have. And we're just delighted to continue to provide shareholders with absolute top tier results, and we're going to keep doing what we've always done. And so thank you. Bye bye.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Thomas Travis, Vice Chairman, President & CEO
• Kelly Harris, EVP & CFO

Analysts

• Woody Lay, Vice President at Keefe, Bruyette & Woods (KBW)
• Jason Estes, President & Chief Credit Officer at Bank7
• Nathan Race, MD & Senior Research Analyst at Piper Sandler Companies
• Matt Olney, Managing Director at Stephens Inc