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Bank7 Corp., a $435 million market cap regional bank, reported robust second-quarter earnings for 2025, surpassing analyst expectations with an EPS of $1.16 against a forecast of $1.00, a surprise of 16%. Revenue also exceeded projections, coming in at $24.44 million compared to the anticipated $22.7 million, marking a 7.67% surprise. Following the announcement, Bank7’s stock saw a modest increase of 0.92%, closing at $45.58. According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value calculation.
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Key Takeaways
- Bank7’s EPS and revenue both exceeded expectations, showcasing strong financial performance.
- The company maintained a high net interest margin and reported low efficiency ratios.
- Stock price rose by 0.92% following the earnings announcement.
- Bank7’s strategic focus on loan diversification and market expansion continues to drive growth.
Company Performance
Bank7 Corp. delivered one of its best quarters, maintaining a high net interest margin and benefiting from a low efficiency ratio. The company’s strong core earnings were driven by growth in loans and deposits, alongside a high-quality credit book, with impressive revenue growth of 29% over the last twelve months. Trading at a P/E ratio of 9.6 and delivering a return on equity of 22%, the bank demonstrates strong operational efficiency. This performance aligns with the company’s strategic focus on diversifying its loan portfolio and expanding its presence in competitive markets such as Texas and Oklahoma.
Financial Highlights
- Revenue: $24.44 million, surpassing expectations and reflecting strong YoY growth.
- Earnings per share: $1.16, a significant beat over the forecasted $1.00.
- Net Interest Margin: Maintained at the higher end of its historical range.
Earnings vs. Forecast
Bank7’s actual EPS of $1.16 exceeded the forecasted $1.00 by 16%, while revenue of $24.44 million was 7.67% above expectations. This marks a positive deviation from projections and highlights the company’s strong financial footing compared to previous quarters.
Market Reaction
Following the earnings release, Bank7’s stock price rose by 0.92%, closing at $45.58. This movement reflects investor confidence in the company’s financial health and strategic direction. The stock has demonstrated strong momentum with a 29.7% return over the past year, and currently trades between its 52-week range of $32.49 to $50.26. InvestingPro data shows the company maintains a "GREAT" Financial Health Score of 3.46, indicating robust operational performance.
Outlook & Guidance
Looking ahead, Bank7 remains cautiously optimistic about the remainder of 2025. The company anticipates continued loan growth in the third quarter, with a slight expected degradation in net interest margin while staying within historical ranges. Strategic initiatives include potential talent acquisitions and market expansions, particularly in the North Texas region. The bank has demonstrated its commitment to shareholder returns with a 14.3% dividend growth in the last twelve months.
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Executive Commentary
CEO Tom Travis expressed confidence in the company’s asset quality, stating, "We’re very comfortable with our asset quality." Chief Credit Officer Jason Estes emphasized the positive economic environment, adding, "The economic environment here is good. We stick to our underwriting fundamentals." Travis also noted, "We’re cautiously excited about the rest of the year," highlighting the company’s optimistic outlook.
Risks and Challenges
- Potential economic uncertainties from tariffs and immigration policies could impact market conditions.
- Competitive pressures in the lending landscape may affect margins.
- The anticipated slight degradation in net interest margin requires careful management to maintain profitability.
- Market expansion efforts pose challenges in terms of resource allocation and integration.
Q&A
During the earnings call, analysts focused on loan growth momentum, net interest margin outlook, and deposit cost dynamics. The discussion also covered potential M&A activities and the recovery of oil & gas assets, projected for full recovery by mid-next year. The company addressed concerns about credit quality and emphasized its strong position in a favorable economic environment.
Full transcript - Bank7 Corp (BSVN) Q2 2025:
Moderator/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.
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.
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.
Tom Travis, President and CEO, Bank Seven Corp.: 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.
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.
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.
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.
Moderator/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, Analyst, KBW: Hey, good morning guys.
Tom Travis, President and CEO, Bank Seven Corp.: Good morning, I
Woody Lay, Analyst, 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?
J.T. Phillips, Chief Operating Officer, Bank Seven Corp.: 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.
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, Analyst, 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?
J.T. Phillips, Chief Operating Officer, Bank Seven Corp.: 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.
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, Analyst, 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?
Tom Travis, President and CEO, Bank Seven Corp.: 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.
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, Analyst, KBW: All right. That’s all for me. Thanks for taking my questions. Thank you.
Moderator/Operator: And your next question today will come from Nathan Race with Piper Sandler. Please go ahead.
Nathan Race, Analyst, Piper Sandler: Hey guys, good morning. Thanks for taking the questions.
Tom Travis, President and CEO, Bank Seven Corp.: Good morning,
Matt Olney, Analyst, Stephens: Good morning.
Nathan Race, Analyst, Piper Sandler: 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?
J.T. Phillips, Chief Operating Officer, Bank Seven Corp.: 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.
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, Analyst, Piper Sandler: 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?
Tom Travis, President and CEO, Bank Seven Corp.: 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
Matt Olney, Analyst, Stephens: credit comes first, and
Tom Travis, President and CEO, Bank Seven Corp.: 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, Analyst, Piper Sandler: 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, Chief Financial Officer, Bank Seven Corp.: 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.
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.
Nathan Race, Analyst, Piper Sandler: But I don’t
Tom Travis, President and CEO, Bank Seven Corp.: think it’s had a real meaningful impact to our efficiency ratio. Correct. It’s we’re still in that core 36% or 37%, 38% core. Core. Right.
And so I guess I would argue it’s probably splitting hairs at this point, Nate.
Nathan Race, Analyst, Piper Sandler: 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?
Tom Travis, President and CEO, Bank Seven Corp.: 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, Analyst, Piper Sandler: Correct. Versus, I think, 68% at the end of last quarter.
Tom Travis, President and CEO, Bank Seven Corp.: Right. And I think that’s pretty accurate.
J.T. Phillips, Chief Operating Officer, Bank Seven Corp.: Yes. We should recover fully cash on cash middle of next year, I think, is what we’re
Tom Travis, President and CEO, Bank Seven Corp.: projecting. 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, Analyst, Piper Sandler: Right. Got it. I appreciate all the color. Congrats on a great quarter, guys. Thank you.
Tom Travis, President and CEO, Bank Seven Corp.: Thank you.
Moderator/Operator: And your next question today will come from Matt Olney with Stephens. Please go ahead.
Matt Olney, Analyst, Stephens: 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, Chief Financial Officer, Bank Seven Corp.: Yes. We’re internally projecting $2,000,000 in fees, Matt, split evenly between the oil and gas and the core.
Matt Olney, Analyst, Stephens: 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.
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?
J.T. Phillips, Chief Operating Officer, Bank Seven Corp.: 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.
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.
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.
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.
Tom Travis, President and CEO, Bank Seven Corp.: 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.
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, Analyst, Stephens: 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.
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, Chief Financial Officer, Bank Seven Corp.: 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, Analyst, Stephens: Okay. That’s great.
Tom Travis, President and CEO, Bank Seven Corp.: 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.
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.
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, Analyst, Stephens: Okay, guys. Thanks for the color. Appreciate it.
Tom Travis, President and CEO, Bank Seven Corp.: Thank you. Thank you.
Moderator/Operator: And your next question today will come from Nathan Race with Piper Sandler. Please go ahead.
Nathan Race, Analyst, Piper Sandler: 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?
J.T. Phillips, Chief Operating Officer, Bank Seven Corp.: 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.
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.
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, Analyst, Piper Sandler: 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.
Tom Travis, President and CEO, Bank Seven Corp.: We appreciate it, Nate. We it’s easier to meet low expectations. You know that.
Nathan Race, Analyst, Piper Sandler: Indeed. Thanks, guys.
Tom Travis, President and CEO, Bank Seven Corp.: Thank you.
Moderator/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.
Tom Travis, President and CEO, Bank Seven Corp.: 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.
Moderator/Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
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