Bank7 (BSVN) 26 Jan 232022 Q4 Earnings call transcript

Welcome to Bank7 Corp.'s Fourth Quarter and Full-Year Earnings Call.

Before we get started, I'd like to highlight the legal information and disclaimer on Page 22 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 direction in direct effect of economic conditions on interest rates, credit quality, loan demand, liquidity, and monetary and suppository policies of banking regulators.

of actual materialize from results more assumptions should those or incorrect, prove may one these or risks underlying expected. Should vary materially to note financial please that conference contains Also, this measures. references call non-GAAP

measures company. reconciliations of filed financial GAAP that You can in by these X-K the find an morning measures non-GAAP to financial this was

Officer. Jason Travis, Officer; J.T. Financial Phillips, Representing the we call, Harris, Executive today's Credit have Brad Kelly Operating Chief Officer; Estes, company on Haines, Chief Officer; Chairman; Tom Chief Chief

that, turn Tom With to Travis. to like call over I'd the

you Thank very much.

We are year and recap. our excited about our

those on don't us the things For to of time we're call you us. lot take excite a that year, been that with generally here the a we the some but minutes since have recapping highlight before, of of comments, with spend we'll few

So, team customers. strong once happy and and way, it a meaningful and we our We're do while for they acknowledge only did portfolios about in our members thank not their that, very acknowledge again, and They grew we satisfying delivered must our deposit results. we loan contributions.

and it out As function again, loan went growth. we organic where commercial pure because acknowledge record not results of recap buy team. with be The loan rate we growth, team give hikes. That's should banking loans we the We a to we earnings And new and have confused Fed and or attributed our loans. a captured credit didn't deposits. record earnings. is the began credit year, with our due is And our for

with time the we year, look line, occurred to to So what quarter. best and start we first understand quarterly the last back

the was rate until and then didn't next second during Fed mid-to-late the first followed rate increase quarter. occur few The increases March by

a same from had hikes in also, not yet the the So, had materialized first we little loan many And quarters, we because at meaningful our rate floors. loan time, had two benefit very way. in those growth

June quarter and strong quarter, quarter growth most loan the in first up our spent third Beginning we essence, continuing a floors. was filling we early quarter. second third of the posted In and the into and and May exceptional, loan late

did was third Although much. seeing from in it quarter, finally start the some the not hikes rate we benefit

refer had income XX and of end. our to the increase prior we period nine-month attributable to as in quarter ending clearly XX, you grown it fact, to was compared XX-Q In shows the third significantly the Page period our that prior the portfolio, September it which loan growth illustrates

support yield who that X people are We In lift. fact, with and enough the period, the loan through caused that than gross how our the pleased team actually emphasize basis cannot period points and was the data prior all growth income lower shows the banking our that highlighting contribution component commercial we further them.

QX, look see the Fed up into and full the year, with seen, Wrapping book. combined you increase benefit to can can you be we done. rate the book the a and well higher continued the of when NIM rates how in strong we've loan loan as And hikes,

year. on back throughout similar the reflecting and full-year NIM regarding a increase steady our Regarding the is story

to In associated the our portfolio. with bond late the the XXXX XXXX, and signaled incoming XXXX acquisition, we due yield and largely discussed expected NIM December loan early had – on compression low to yield the

in QX NIM [ph]. of lower with a a realized, core [X.XX] of and expectation NIM Our was began we

more it the the exactly returned and year. NIM summer were grew the the NIM in prior the core begin to late our was being loan more fall, Fed the realized, to recover, the loans in the and year, then grow late where to fully hikes rate book into we As began spring for and even

banking and ability team story So, and it our commercial to loans. was loans perspective, price a based NIM and an earnings great their a and to on from properly story grow

like good Jason I NIM portfolio. a think income start the and I'd And component. so, the that aspect that's if the ask asset he loan quality to with of And would cover

Tom. loan levels We've calendar pleased rates with our as were seen our past combined minimal to in increased. credits a portfolio rate And well year. environment. in the have problem change started turns. very of the have loan will NCOs with disciplined we seasoned We're higher Thanks, decline. serve due teams lending as to for interest Construction operate not as balances us underwriting continue this

construction the industry, current they've hospitality match significantly inventory started to lower activities Our homebuilding And demand. levels have to reduced. their

is very little portfolio not our Oklahoma lending metro homebuilder and activity. land the City in a segment. concerned and as this Dallas Just with locked primarily starter homes with reminder, areas We're

and portfolio credit quality has from energy we and monitor Texas we originating year, way money in continues continue that high-quality remain we closely Overall, economies Oklahoma past the grown as our growth to healthy, for decades. but loans. over continue The have lend same to are both. Our selectively active, the benefit to we new

And it you. back Tom, I'll hand to

for commercial Jason, team to shout all real thanks banking that and a those And just out efforts. the again, report.

So, increase to time quickly it and as back done, the at especially capital. we a we're dividend. record levels, have to while XX% our to move our into experiencing was risk-based our And same considering our capital, reestablish higher we're pleased growth

is us earnings, has still might the in comforting X%. I capital come below it average build BankX earnings numbers all even strong because even believe especially And in for ratio once we the for that be ratio enables consistently of those top payout the year, to the payout all gratifying banks. rapidly. and top dividend, significantly dividend earnings. X% XX% our paying with our the dividend It's increase, and Regarding strong

acquisition, real company dividend provides to our as is It of payouts for growth. it a for simply flexibility source share or are repurchases strength support

IP based strong, stress Cornerstone future We and strength earnings buffer examiner industry moving to as will the growth. acquisition then XX into provides liquidity, remained runway it's this it meaningful parameters. and the refer based our for shows of you and Page on great DFAST And additional

Cornerstone very members of job done some Our we deposit in retaining have growing from cases, core outstanding our much. an thank team base and and, them

core day of take from so their and off deposits a our XXXX. rarely evidenced Our by deposit noninterest-bearing strong it's was core growth focus in on our bankers even component when healthy gathering

So benefit in-spite of had the provide part and we're returns pleased remain to members a optimistic year, blessed country. strong at in macroeconomic we headwinds, the current very our to conclusion, we cautiously a such And future. we We're in exceptional near team great have located BankX, therefore, to of and dynamic from the being shareholders. for

for might with you by so that, have. stand we'll any questions And Thank you.

Please Nathan Piper first Sandler. Our you. from go Thank ahead. Race [Operator with Instructions] comes question

Good on promotion guys, Jason, morning congratulations, to and Hi President. the

you. Thank

question, from growth of just the had about, First Obviously, of kind maybe, still sheet deposit trajectory ratio kind thinking core loan is nice growth kind guys deposit the south you balance here. overall quarter XX%. in loan of of on and

guys curious, [indiscernible] loan just today in are kind expectations just XXXX? XXXX for and the core how both seeing you entering So, and deposits pipeline of overall

and we thank year. the That for growth question. the some think growth that exceptional would coming you in overcome the portfolio able that for what year. Nate, did loan say an was And the just we There I show will be full-year. Yes, to are we last known exactly payoffs to wouldn't be expect

double-digit I years, overall, flat It probably or that throughout even low a probably on most This I this the to wouldn't growth maybe we had book. saying the a as should I'd couch mid-single-digit but growth, year. high-single-digit year, grow but – you loan it we even surprise quarter year, down think that think me if or were we're during two expect a do

several have focus initiatives with to on side. on generate side, growth enough that loan And keep deposit up deposit we're continue we to to the continuing to the

few side the team as on is on deposits this new the new loans and do, been we at relationships. years both new very from grabbing very both. loan successful could And we very, with existing banking year. as hopefully, the deposits So, over and they've focused do well The last

be So, to wouldn't year, to optimistic won't last I this as much year. last able much as it as expect be be as year. we'll but grow

that this spot probably environment we say, And most is four with. Jason is remarked weeks last I I have is the difficult on. would budget Nate, And over that to five that faced say been on would Tom, we've the this

And based uncertainty economic Fed those on and the just for do. headwinds to budgeted have around the growth we going more muted and so, what they're

budgeting we're as budget matching nice a do, we do echo factors. lower increase So, those all still I that, regarding comments even always expectations slightly given but up with the Jason's to

couple and next you are are next in I Fed a thinking the XX kind think year, for guys take, of about kind Got margin how of the color. investors banks of the give on raises the about kind between pauses this the how of if lot and couple kind and out now And basis quarters? thereafter? assuming peak another of is trajectory you trajectory of the, it. NII? of these or points margin And months, over middle margin thinking of Fed, And peak plays just, just think timing days do one the of That's guys, the by theme, great kind of NII

What about? talking are you margin

NIM. Net gross margin.

want you to Do that, Kelly? take NIM. Oh

Yes.

year a cost the we're obviously, side. fourth seeing quarter faster core funds at already than So, ended the is clip X.XX% the we projecting, increasing and at we're that of loan NIM,

on ends what something in know QX, seeing Fed the does, NIM are would unless we we but you based else that's so, to say, And some changes. reached that determined QX in NIM peak I be compression, where

loan I back add relates push to long-time and challenge the would customers Yes. say really enough had we've quality that across is the And enough. industry that and to that

of tactically customers matter not it's customers. deposit a and negotiating beta, so, it's And those keep matter loan to with of just a and strategically

actually mature percentage we budgeted those downward though priced for budgeted loans would for customers. the a a bit year, certain of budget, of when loans retention even this of certain And did so, portfolio, we be not to percentage loan our we the a actually

it, back the we're last and of to year case. can that comments we're why instead of be very low-double-digit, loan to goes that. coin not tougher But so, and us addition And slower sure that you and we're to calculating from we're a comforting and is that's Kelly telling we into factors, uses guess deposit of usual saying regarding beta, the back not the factor these high-single-digits, hedging the group would of growth, the earnings just factors the in it's Jason's in and because year absolutely match kind I when another side because

XXXX? or if of loans just Fed] cut maybe this were terms you kind the having new on And in may, are this guys you of [dovish maybe or about year success, originations floors or Understood. lower more that XXXX, exploring then a into derivatives loan year to Okay. maybe hedging repricing impact getting Fed into are guys, any potential thinking [ph] lessen of kind the later later

programs. presenting some great looked We've does you at of your material. job know, those us with still, as of a Nate, And firm and there's

a bit you there's of As speculation that. know, involved still in

And is so spend. insurance," money but it could that yes, you "hedging and don't be need to some also buying of it

us, asset-sensitive We that's we for a starting those aggressively high to for loan are on healthy so what-if. a nice because we pursue instruments some higher normally floaters be. that than like of take and cost where of so that margin And we're don't book feel really need and with would we

a that with the increase versus XX. more of XX budgeted say We point the we actually Now, basis expectation.

didn't two I until the think really weeks. emerge the last XX

some like time April to And those right and worry reevaluate, that on we the need so, into the clearly, something if not get frame landscape, about looks we instruments and and built-in could March because current now, really we have for but based it's help defenses. it we bank the

established. mentioning worth the it's as our not been it's of long floors, because have so well heavy variable the loan floors interest think I portfolio that's on that concept new, rates,

a now, And floors, end kind into the higher few floors environment if some of environment, up operated up lifted. are the last And down moving but the yes, the get may in in of rates. same, have past, some the you of for those, well, as with rate those you seen they rate years, we in we've way as we've the back get renegotiate on to

in just from Great. And of one of, reserve the That's outlook Okay. if could kind more, helpful. I just ask here. terms

degree, adopting of some zero I the guys You in the which methodology think are kind to quarter, last I believe, [ph], complicates reserving were year. first charge-offs [fees]

support to guys a the at loan adjusted clip You still healthy reserve pretty growth.

absolute So, dollar reserve meaningful about within high you kind earlier? seeing I would an curious growth the either on charge-offs to was single-digit kind foreseeable that described horizon that loans if outlook thinking you're anything basis I'm loan just on trajectory the increase cause of guess how relative are guys and in or a just, just of that,

then headwinds start out into get the macro we'd with and foolish me specifics. Let be that the to can are Jason understand not Listen, there.

it's And we loan which motivated in make low that which increased we're made a and to reserve, so, as our operating story, us X.X to comfortable sure yes, in. really area, X.XX growth we're that

And so, see. overall and eye think CECL. I the from what going those color some have a conditions, a we're may on then on I to perspective, to Jason of think might we relative our few keep And macro ball course, credits on

Yes.

two new in been important totally if XXX% that twice years, go and the seven some that had stung team Anything that that there. us. we've really They've is last five you a you behind we're one back us for and the results, has you better. last look know encouraging think over that been I left thing, deal well credit There's And still but the it's quarters, looking and not results is would be green reserved got positive shoots. for. sure the

a concern in the that's one the don't there cause some future. have balance, of but out specific that's would the reserve remaining me level We loan that on

earlier of healthy portfolio about we really And in we very, portfolio, the overall. we to a For book, just deal – and performing stated rest see pipeline, the comments, well. I as the very my feel continue is good the

out really on of I tail credit] And green up that [loan the just shoot. follow [ph]. would in-spite risk that further It's

and greener two were they're ago. they we quarters than feel longer So,

other as that cycle-in it So, we're COVID that to one close and that's didn't X%, it's but we're matter we're still prudence which risk we on materialize the relative that encouraged, to that risk, nonaccrual, credit, doing but a at always we've tail keeping a way number, of things was haven't really went and on cycle-out, that X%, for hit if and tail-end unknown small to it. but the said

could if us remind Speakers]? that you ask today credit just I And Can kind what to Understood. one of reserves on exist that last that were credit we one relative specific that just specific the on [Multiple discussing.

no specific reserve on that today. is credit There

you already charged-off good you. believe Got I But it? a chunk of

Yes.

amount that [no-value] originally? what us remind you is to relative Can [ph]

It's in total related approximately to credit. been $X that that charged-off has million

And that credit was how large, Jason?

$XX million] million, [$XX.X [ph].

Please go comes Wendler with from Thomas question Stephens Our next Inc. ahead.

everyone. morning good Hey,

Good morning.

salary growth is, maybe final already we one you're my of large pretty about Most give can last quarter, have XXXX? there? but some questions expense been asked, saw how a one for you in expense commentary step-up for me us then And thinking

was – the We evaluated we on our in best around to organic pleased the was that XX% hitting end industry And were loan and net all somewhere you I employee said, and did it deposit we call set, going When year, the to and to, banking a one-off. very team it we and say growth base. a cylinders. When our of so increase X% we'll as a everyone estimate and function a close at we I year, with the think, industry look X%. were was or competitive of relative at the income,

made And the decision a labor. money people sharing so, towards the to end fruit pay year the we expense for of and that of

decreases or And disjointed really don't number so, we're payout was our based we to This expenses. We've that don't have reverting, know company. salary a but in increases already expect what the – is, on managed I we phenomenon. – purely would our

my I That question. Alright. color. the Thanks guys. only appreciate was

Please Woody Instructions] go Lee ahead. comes with from Our [Operator question KBW. next

Hey guys. good morning

morning. Good

competition are on competing deposit you if hoping is the of color institutions? could more treasury other just pricing market, I more sort dynamics just, local it Is – mean give your any in you it with markets. the that just Was some there?

all really It's over the board.

to think it about when have segment you it. You

XXX XXX are got portion million I a space. or more real You've that million it’s small or [indiscernible] – million The CDs portion. that your smaller our are older retiree-based think more XXX a CD only XXX of in funding,

profile, you then you and really a roll bank bank. about the commercial when So and and think into we're our

high-net-worth have and tend individuals And a market be and to in entrepreneurs, they money so, of accounts. lot we

the so, factors. different when you balance section the there's sheet, And of segment liability just

And one not. competitor so, it's or really hard to down nail

I'll and like the ads small high the towns in they retirees look look, and paying run tell Raymond mean, newspaper they bank so so they're I you, James, and that the constantly rates into at lobbies. come

do centered credit. deposit Fortunately, are the with of for our us, betas that deposits a the to shows good data on of funds that our and is based great a cost ability around fact job our maintain percentage

side, as to by And relationship board. side, they just responsive so, a us don't on the on credit and something we basis every very the but that deposit that customers fight it's across the it's we we're when on day have hard relationship push

That's there growth Yes. growth sense the any XXXX? a would you growth makes pullback sort [Technical you're loan any bit. in concentrations And are And color. be to then seeing great there growth? to switching Difficulty] outlook, little to, expect it a coming in drive Are segments that down of the

see say that is of activity. by the clear part buying in cost, can home would driven a I that's pullback our driven of you construction by market. Part it

that see that you're in change starting those this numbers can for to see change. pretty show last you So, quarter, clearly the

very, Our one to. still that energy concentration left closely. I watch There's that little very is mentioned sticking we're there, but of room bit a we growth

to want far into get don't markets. energy too We the

doing amortization. that with very on we're rapid a so, basis And selective

growth. significantly. high two I a look our hospitality last areas been you you That changed balance the three if good activity, years, would pretty And you're go say shift. at and are so, that's pretty those has And a seeing

point keep – intending – that that far whole as at with of overall kind more as kind and range of And with move in we're of so, portfolio the to percentage the portfolio that for it'll mix. at a this in-line it's our

I so, would And those areas the are few highlight.

you parts the said, on growth almost the loan broad and slide deep in Jason the that loan story our And growth, to in the the and of to XX% of and one was energy portfolio grow the grow as we got you that can delightful That's about disciplined your at where can when categories, XXXX concerned have see go slide, can at you're the get concentration. back very that always as the look of you're the max book. I And deck, your and or header. you can that how you we when we're And how in portfolio. XXXX, and it's on few

And as then of exactly stayed of it and you year-end, it the where was. look and hospitality was it XX% book at

it's so, grow the that team it's And to those ability grown the have would really to And and ability to in testament book and we've if hospitality didn't very run for in disciplined stay focused as it have the continue we're XX% to and didn't comforting it. to our that, has know us do easy XX% that discipline, broaden stay and a XX% to to I would that other we because focus, bank think segments. that just have we have to going a energy or we argue been Jason, to to I not

Sure. Very easy.

me. from helpful. Alright. guys. all That’s very That’s Thanks

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

excited the We're excited excited about on with be we've continuing the the we're to acquisition of limited this the even NIM but our issues our still to the more in We're XX% increase securities We're the in look really the to the ratio, headwinds, one-off and and country. to that mark-to-market year. the opportunities back you They're of good-old-fashioned portfolio, ratio. In-spite about really blessed in reverted numbers pleased. We're salary, efficiency due we're Thank below truly at year. again. space. we're the efficiency on part

we're is about So, the say, think I committed these excited would team with they're delighted, records new and it. more I same, comforting, our of and to,

you. thank So, we

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

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