• Earnings: Continued strong earnings contributing to high levels of capital.
• Capital Base: Strong capital base maintained.
• Liquidity: Reliable and steady liquidity reported.
• Credit Quality: Strong credit book with good asset quality.

Release Date: April 10, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bank7 Corp (NASDAQ:BSVN) reported strong earnings, contributing to high levels of capital and liquidity.
• The company experienced notable loan growth, particularly in the hospitality sector, with a diverse portfolio that includes C&I bookings.
• Bank7 Corp (NASDAQ:BSVN) maintains a strong credit book with good asset quality and low levels of non-performing assets.
• The bank operates in high-growth areas such as Oklahoma City, Tulsa, and Texas, which are characterized by strong and diverse economies.
• The company has a robust capital position, allowing flexibility in strategic decisions, including potential share buybacks and acquisitions.

Negative Points

• The economic environment is volatile, with concerns about tariffs, trade wars, and their potential inflationary impact on consumers.
• Consumer sentiment has weakened, and there is uncertainty about the impact of tariffs on the economy and Main Street.
• The government is operating at unsustainable deficit levels, issuing debt at a record pace, which poses risks to the financial environment.
• The energy portfolio, although well-managed, is subject to commodity price risks, requiring careful underwriting and hedging strategies.
• The market volatility and economic uncertainty have led to a cautious approach towards share buybacks and potential acquisition opportunities.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Signs with CGEAF.

Q: Can you provide insights on the loan growth observed in the quarter, particularly in the hospitality portfolio, and how should we view growth amid macroeconomic uncertainties? A: Jason Estes, Chief Credit Officer, noted that while hospitality stood out, there was also strength in C&I bookings, which was masked by some payoffs. The bank enters the second quarter with a strong deal flow and backlog, particularly in high-growth areas like Oklahoma City, Tulsa, and Texas. Thomas Travis, CEO, added that the growth in hospitality is within their norms, and they have self-imposed limits on each category.

Q: Are there any trends in the hospitality portfolio that might indicate consumer trends, especially given the cautious consumer sentiment and tariff impacts? A: Thomas Travis, CEO, explained that hospitality is seasonal, with the first quarter typically being the weakest. Recent discussions with large groups in Dallas showed no unusual trends, and the portfolio remains steady, with a good mix of business and leisure properties at lower price points.

Q: How is Bank7 approaching share buybacks, especially considering market volatility and historical activity in 2020? A: Thomas Travis, CEO, stated that the bank does not need to rely on share buybacks to boost EPS due to strong capital levels and a 20% return on equity. The bank is cautiously optimistic and prefers to maintain high capital levels amid current uncertainties, although they remain flexible to act if share prices decline significantly.

Q: What is the outlook for the energy portfolio, given its 9-10% share of overall loans, and how do you assess the risk from commodity prices? A: Jason Estes, Chief Credit Officer, emphasized the importance of underwriting and hedging strategies. Large energy borrowers are active in hedging, and the bank's underwriting includes sensitivity cases to protect against price fluctuations. The service side of the portfolio is aligned with well-capitalized management, prepared for industry cycles.

Q: Could you provide an update on net interest margin trends and expectations for the coming quarters? A: Kelly Harris, CFO, reported that the cost of funds decreased from 2.70% to 2.58%, supporting the net interest margin (NIM). The NIM bottomed out at around 4.60%, and the bank anticipates it to hold up well into the second and third quarters.

Q: How are tariffs and international dependencies affecting your commercial clients, and what measures are they taking? A: Jason Estes, Chief Credit Officer, noted that while broad-based tariffs could challenge clients, many are seeking alternative suppliers and solutions. Larger companies are proactive, and smaller ones are exploring options. The bank is closely monitoring these developments, although it's still early and fluid.

Q: What is the current status and future outlook for oil and gas-related revenue and expenses? A: Kelly Harris, CFO, indicated that oil and gas-related revenue and expenses are trending downward. The Q1 run rate is a good template for Q2, with core fee income and expenses expected to stabilize. The remaining asset value is close to $10 million, with full recovery expected within the next 12 months.

Q: What are your thoughts on the M&A environment, considering your excess capital levels and recent activity in your region? A: Thomas Travis, CEO, acknowledged the challenges posed by AOCI overhangs on banks, which dampen M&A activity. While the bank remains disciplined and actively explores opportunities, quality banks without AOCI issues are challenging to acquire. The bank continues to analyze and model potential acquisitions while maintaining a cautious approach.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.