Bank7 (BSVN) 29 Jan 242023 Q4 Earnings call transcript

Welcome to Bank7 Corp.'s Fourth Quarter and Full Year Earnings Call. [Operator Instructions] Please note this event is being recorded.

Before we get started, I'd like to highlight the legal information and disclaimer on Page 24 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. quality, to the uncertainties of materially of direct on prove rates, results subject among assumptions, economic actual banking are and incorrect, or interest things, liquidity those should more from other and credit risks regulators. Should statements one certain supervisory vary of and risks, expected. including, conditions monetary or Such and demand, these policies materialize loan may indirect assumptions effect underlying to that non-GAAP note conference this contains references measures. please financial Also, call

Kelly You an filed financial the measures by can we and Vice And these to measures CEO; non-GAAP company. Representing turn call Tom that, Officer. J.T. call, the find reconciliations X-K of Chairman have I'll Credit GAAP financial Chairman; Brad with Jason company to the this go in on Travis, ahead. today's Officer; was Please Chief Haines, Tom Harris, Travis. that over Operating Financial Chief morning Officer; Phillips, Estes, Chief

here a weather that the Thank country. of a spell you. to around Good cold to day We've are It's morning, had beautiful it's of in that City everyone. over you with. be those nice Oklahoma

can subsequent quarter that, in effect As we earnings post back in we see did affect had the late significantly -- closing And third events had you October in numbers. our you call the as that were that to last signaled see, can going happen. quarter fourth fact,

it of our with the a pretty because ago, was actually, phenomenal And before, common a say that the did we're much the year, we common reminds almost tangible be how at And the we you of tangible the is large company charge average it a but suppose comment heard at what one the heard so to even the equity, today year. to one company credit, year, And fundamentals everyone that's that for Lincoln? phenomenal the event, that for when analytics related Mrs. on still evaluate you some one XX% is I and totality for country me equity. And on not when return first before I've X X XX.X% about but I on how we banks used weeks months call play, in has of And was look that's months X equity. except event, view and think of -- the not first the the average of and make XX.X% year. the about or common did tangible return the we morbid,

we of kept call, as in way, this in as So we out the took event right forward. negative one-off earnings the moving on and highlighted fact just perverse as and can the last that you significantly a character mentioned strength see the of company, by

that. comfort it, the And in so view take we way that's and we

difficult company not If net can you the look you done the of of components interest its at the averages margin. company managing the just the that see earnings return net and pretty an and are prior the pretty been we metrics that or credit. credit did had not one where than year and today. better strong X. The are for a really through environment, rate margin And the other job of historical equity, excellent we even much but The interest has they that on for are

a slightly in our of comment we result one a one wells. noninterest part slightly much couple operating specific as see and about credit, a for maintaining expenses inflated efficiency And the expense also The income ratio. I wells. And intact, did so you'll acquired We gas would company. is that, interest make you'll gas that the number, company number. oil as book. The of see of far not of handfuls good a company oil of a we acquired feel We acquire as and inflated really interest working noninterest as very the that the a are

those out you income would so range a that that XX% of X you still statement, items seen remove efficiency of be if to you will the in the XX% ratio And would XX% instead have have range. --

we when that eighth of feel so regard and credit, in litigation. seventh look the fundamentals one And the company, to at it. I about the we would are process of bankruptcy the the good inning really one-off say we with or particular

to going feel money that's strong about We about feel We having the do don't good optics amount relative either have we to think into clarity some been expensed it. real where and end we good certainty. Clearly, set good to aside it's of up. or

However, we are credit, every with need confident bankruptcy, litigation, regard the company, with regard And question we very to answer for. regard the account to that to a that we we've accounted always with for can. we're transparent what we to

realm to cannot need we much However, here we in really respectful are and specifics it, speak be public fact and that to today. the the details of

what's comment we're beyond said we properly. feel going for we've been than so not much other really And like to it accounted today

and And our And open move so that, with we're good with feel we all that forward we'll being it for up into to company, excited this really questions. said, about new year.

[Operator Gailey Instructions] will question Brady come And our of KBW. first from

expenses. while? and going up it's Is pushing owning a anticipate So these I long of short-term understand pushing for is this something anticipate thing? you assets, up a income, impact the be owning How owning that it's you Or assets? do this to these energy fee

Tom. you got the exact -- easy approximate but I'll This to lap, the give in my I numbers. you. it numbers I've have make just is And for

sheet. cash value of X of and started wells September on of date the million flow last So year. And we booked approximately the balance asset $XX.X effective the an

of we the $X.X $XX.X look point on the the X at million, collected sheet And balance when starting so million. have you months, for first will

the is So that million. results $XX.X cash actual that flow asset the or new about from

collected we have will have months X and collected, of asset we first that most of the value. So XX% for which

year flow be to cash XX%. the think end at XXXX, cumulative for is cash of projected -- you for when about then flow So this the

of So roll XXXX, through we means the have is that not for we wells And familiar, you call, more recent gas million, collected of will XX% on million will have the of linear cash skewed producing forward collected million. from a $XX.X is $XX.X not anyone that $XX.X oil towards in that's cash and the want the decline the the flow. $XX.X which about million And then heavily if flows curve. math, more It's months. to

flow, cash And asset you early much the quickly down and value as in months so collect more out. come will smooth then the the

of the line XX%. by will now we is beginning again, so collected over cash a value by then that end asset of bottom flows And the have little the and that, XX% the of year,

but already And -- we we relative so it's of be will expect a expect end year to the by pretty immaterial. to the material company, the amount not

Okay. All right.

simply more So that's near term? these just the assets plan, of there's thought selling not a and

tell you we It's the -- will about, Jason? I XX%? possible. that hedged was it, have

Of the oil. The Oil Revenue.

natural So predominantly gas. oil this is not and

can so to sure not most have flows, we that And cash if of receive hedged all we the make it. of

it is value market increase if would so the we higher, the sell. prices possible assets commodity and in And an the saw could it's possible you

the of margin? the outlook fundamentals impressive And net then guys And about you growth the the -- interest quarter. in loan thinking Okay. or bank, for core How core maybe what's All the were which are back from at looking right. pretty here?

Jason. is this Brady,

like I this more a it we coming and in think hey, off sitting year. think, be really a kind We -- single going to growth this year again, digit. time, we be at will rapid last moderate were XXXX, like signaled, here of different is of a mid

I think we ended up at X%.

is probably range year. to something I reasonable for this that think in expect

of pipeline We think got quarter. nice of about I the quarter, is year, still which nice. payoffs. solid in payoffs was booked $XX a we've half million deal known the the fundings fair a of coming quantified The known, new expected, in amount fourth first

first it second like payoffs, And those pick in so and in But be up the the of think decent. half. half with I is the known it year muted pipeline quarter pretty we'll first looks

off energy because been we the down to that would has also that somewhat large delayed I note the pay of have and would credit pay signal bankruptcy.

due could normally likely you higher payoff first a see would bit that you see. amount quarter to the So in little than

core about around for how could Is back And it's X.XX% be should the there? half 'XX. some helpful. That's the slippage it that going consistent that margin, think there Or you forward? right. All been we pretty of think then do

Brady, this is Kelly.

at you the that, December assuming large end at a NIM, were matured for February X.XX%, have U.S. higher-yielding If do X.XX% average look X.XX%, core at of We the move NIM, Fed. that asset, the treasuries of to will that tranche we a quarter.

in March, color fighting occur And to will NIM. well positive during the -- lift as Feds see do going that that should some That events pay the so will are downs. no there's on what you said, than as quarter

use would not a word That's I good the delighted, Kelly. but recap, surprised.

the with the swings rate through cycle. We with very delighted we're wild caught balance our interest hard to are to so not We it. work company's rate have We're purposely the NIM match about not and sheet surprised managed that ability fluctuations. interest

say the we that basis, NIM, rate changing. regular don't ability with a the and irrespective And changes steady, that's markets, so, interest as to in are on our pleased to of prone see a we're very illustrate we

there? me, And for rolling right. are the that rate off? Kelly, size And the All treasuries then those finally what's of just what's

million $XXX A at X.X%.

Piper Sandler. from The Nathan next comes of question Race

securities clarify that Is want plan cash? it Jason maturing just do on securities powder I for last guys are earlier? you loans just in redeploy the the redeploying of described half just the Or the leave the that point into as plan in leaving some quarter. around to dry first the to or year to those in first the on

of to going believe at to speculate the know. we And for thing all that that not I think not it's and obviously, cycle. a think, anyone we're to to do speculate. know, you rate -- the It's is wise as tempting however, end We're

is going curve I the somewhere is X.X% we're so and X%. And inversion. what to XX-year over think it, Fed of the around, is take yield the today, advantage still And

any we'll Fed in dropping. our to anticipate away and I it put rates is kind trying belief of at the fixing So and stay of think that from kind

I is and important also function think real of remember the the bank that you liquidity of cube. Rubik's a part

of not to relative balance the And like it's lot liquidity. sounds really and but loans on movements a to sheet relative so money, $XXX the million

benefit the also and us cash short and that liquidity for on it will yield keeping flexibility cash. maintains side curve strength and then and So

Okay. That's helpful. Got it.

about way guys that some down. few We kind a Just the deposit curious see pricing overall, How betas how at this in over you just the the cuts course impacting get year. margin and Fed rate and XXXX? the trajectory of do NII, on you are thinking of point

Jason, mean, talk similar we we want or you I I Kelly where to pretty about from don't are... -- budgeted

Yes.

rate various down. being through think at you NIM I I we've foresee to don't if look been up and able it different. it cycles, manage historical our manage this any

the And cut, the push with tandem the in side. so then Fed's be we'll to deposit if rates asset down able

add Anything to you that, Jason? want to

No. a if think and you Other at of than we not on things. we're important for proven margins about spend calls these NIM I talking we've willing the they're and that sacrifice history, very sake growth And of rates look our time to lot growth.

to right? you're top-tier our And be company. to We're grow year, it was we maintain going same, to going going the profitability can, just as see this work so to it's like last as there hard we to I continue discipline, while think

capital Makes one priorities Got excess just one it. sense. for And Very year. of last on me into this helpful. kind

healthy pretty with operating across board. are guys levels capital the You

kind you're your level So what just and on front? terms just of of curious in acquisition opportunities that optimism seeing

are say sale. that call still because conversations. to we there's we've healthy the laser We're would and do, takes amount -- a what continue banks, are we too, for I have people we calls it We're seeds. that on that I on acquisition think planting guys you opportunities, focus making zombie laser-focused of and not

of We sell. we I or next say. And environment, do to and it's should some start may for evaluating "zombie to environment months constantly -- tough down, rates a are just probably X an ability X if coming then be have everything banks" as the the for can, or tougher going or X

a you in there see And might so come the year, if little the the back half flurry rates of down.

we to in so so there, ourselves we have are we mindset when -- And we definitely buy. definitely to that. can can do to And our a to be goal is position that try

if And one last actually great. could That's it. squeeze in. Got one I

criticized one in Jason, curious, the Just migration in energy quarter, outside of terms that the in maybe trends overall and touched we've loan, on? of classified

Yes.

they of that another outside in But if quarter, mentioned credit actually couple So improved I of recall comments, the his the of the quarter, ago, the bad book, not years loan metrics charge-off. have of the That as Tom it. this we credit in remainder had deal. were opening a one you this during full think than quality the other paid

all balance of balance And we've first the at been it's we and that the NPA year. the that's the carrying so had have another then we're could gone. And NPA, paid list the that even And of left in off about optimistic of that, quarter. maybe end be is we've here, off thing XX%

the seeing And and so negative for more stressed it's but couple of being medical credit. one the altogether, we've it's that has migrated we're has million going not the last there than got That positive throughout of portfolio. been a about outside down said, $XX quarters relationship

end kind of Or of year that the year? of level credit of where last you. you do just just Got kind context, as to loans? of was within see kind out kind guys it overinflated some late you the events reserve that occurred the relative given come remaining, it envisioned And the of

I probably historical it's in couple would where the quarters. strive we it's what's overinflated it, say but think on to last I of based transpired range warranted keep and of our

from question Matt Olney of next Stephens. The comes

dollar have see the of the charge-off for Do one. didn't fourth I you the amount guys quarter? that

Matt, the Kelly. the NCO is was quarter total $XX.X this for million. Yes,

to for side, the then And deposits strong balances on really the betas Perfect. year? deposit you the deposit Any fourth the just Okay. color growth in but on hit on the And the quarter. then there? appetite earlier, grow noninterest-bearing

little the early in a of down come bit part will year. noninterest-bearing the the Well,

in of a have expect few that last some significant year, off. the and large run noninterest-bearing later We occurred to we deposits that

absolute in the show that year year. don't much the to because And in so prior we came from late believe that deposits the going noninterest-bearing that inflated growth of are last number

in do -- we've our deposit deposits. to deposits done, if those always we what that nice growth would our relative out, to is book now a and take and So few you expect steady relationship

doing are relationships. loans, of bankers deposit job new a making really we nice Our have when

much And if be different, operate in forward. at so going we don't expect all, to way we there the

some are say ongoing it's still to over probably been think cycle some I where -- too, And rate migration, into interest-bearing noninterest-bearing since what accounts this ever seeing moving were we're fair, moving products. last people rate the started. that's up

Yes.

assets you details just like as sense. as Slide far rate of gave good earning X. year. us on XX% repriced makes That first some then the looks sensitivity, about in Okay. And there that It your

those within are to few reprice Just that going it the on a the Is loans kind cut. that that's are loans, floaters? first -- in of what after any right? reprice and Fed year floaters of color those that seems like a percent most the be of first Or weeks

Yes.

daily than that I same think are and floaters loans the got ceiling. first you million $XX if that that footnote the million look of in on Matt, that of page, $X.XXX in less at at year, billion you've $XXX a

total? that of XX% what, roughly, So

you loans are in that -- there's was that floaters? said That billion $X

$XXX million.

saying remember people are have don't, we look, our And think to always I that managing in not very we but active floors. Yes.

that's the stability historical illustration And the and in that ability you that we to NIM the part NIM. maintain parcel show so of to our and

So flow and component we at but yes, bank. of big some they'll a down, floors, started point, having that's our

Yes.

that if XXXX, fees, oil And that mentioned expenses and the you gas you're points. then way and thinking we Good in about Okay. the remove any color on on before? just assets

our am ratio? of it you impact, and We're I if you the XX% is bank to size and good for really of gas at to right, if been expense about the that's out think We to feel ability nothing and Kelly, that. the was And we you the look and I and manage the over our the take proven years proud expenses efficiency the look load over the expenses, bank, -- at oil and change. going

until won't while very a because money show a next a We really branches. upgrade just that until few really year few to up takes assets, the construct of not and bit it are spending year a little and to in but relocate late probably fixed

don't the flow the that, with So -- expect expense even change way. to a bank to but meaningful in we

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

Thank and track right that and those excited to And to back and results, and we're ability we pleased with about company and results. really excited numbers, and through event, get everyone's our we're you. that rearview it's involvement. of this our still in year on and produce Again, position the mirror move to pleased especially one-off shown truly our really past and appreciate strong, to manage the participation strong we've good just we're

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