BSVN - Earnings call transcript Q1 2022

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Operator

Good afternoon, everyone and welcome to Bank7 Corp's First Quarter Earnings Conference Call.

Before we get started, I would 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 direct and indirect effect of economic conditions on interest rates, credit quality, loan demand, liquidity and monetary and supervisory 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 Credit Company. J.T. reconciliations Tom of Chief Travis, we Jason Kelly filed financial GAAP that You can Phillips, Company Chief Officer; Financial in by on Estes, these Tom X-K the find an morning have CEO; Travis. Chief the Harris, measures Operating President non-GAAP With the Officer; to and financial Representing I'll that, this call call was today's to over Officer. turn

Thomas Travis

Good afternoon. Thanks for us. joining

our We with really the are to the robust excited today benefit we earnings for pleased in we year. of our our are are company environment, really are the pro-business first where and and pleased continues about with quarter, we from rest and markets the very geographic

we'll so open it that, questions. for up And with

Operator

begin first And question-and-answer KBW. ladies and the question. Gailey ahead today from Please Instructions] question [Operator go from with session. Brady gentlemen, at your comes this time we'll Our

Brady Gailey

Good afternoon, Hey. Thanks. guys.

Thomas Travis

afternoon, Good Brady.

Brady Gailey

margin embedded. a I X.XX%. I loan last to are start with acquisition is the from about How was X%. that the outlook know So the year little here? down you pretty first bit, full margin just but fees now with your the I were know your quarter thinking over It's margin. want this And like about regularly

Thomas Travis

wants to one? Who that take

Kelly Harris

the Brady, really. quarter, March this million middle extra $XXX in debt is We first securities in an Kelly. picked up of

so… And

Thomas Travis

on And top that was of…

Kelly Harris

million. the On other $XXX top of

Thomas Travis

in up picked we That December.

Kelly Harris

XXX. is $XXX about yield XXX, million book

and to would think expand out say, we of well NIM bucket, as fair in will really when growth securities has that you that weighted So loan up levels. to NIM mature our our debt overall those be more fund see as to as move QX. historical I And it down continue

Brady Gailey

which is margin, of get but end still been you say about it's I for we've to still I component fees that the higher NIM guys PPP fee slower just Okay. will points, roughly the the know, talked basis to will that mean, I basis loan I level? normalize keep than And XX component think hearing XX years of that as know of but now. down here, a nearing that you point kind the the about

Thomas Travis

Yes.

number. the I back data downward go What can definite – you on this X you that a levels, at to Brady, think look is see Slide if see is if historical you'll Tom. in trend you

COVID. XXXX really by And so, obviously interrupted was

time some as happens life been think And what we've in us XX basis you that to so grow. I for point surprise points saying if cycle, it that our at number some it the wouldn't got just

was temporary downward I So that belief on anything, there's that think don't that our but March COVID related. case any

Brady Gailey

had pretty here? quarter run Is quarter. all that you any reason from growth is there good about all a that nice loan annualized. rate? think slow Then at Ex-PPP was will a Okay. XX% that Or linked to

Jason Estes

growth quarter double-digit new provide think is, kind fundings expect banks, by low and payoffs, this we like would And all really especially pipeline get size where was really of our heavy you go What going get and It's don't through quarter. had kind feel Obviously, to that masks interesting. we into good good. today. that this feedback because input quarter lumpy about kind year-over-year. I our fourth through rates lumpy continuously we first of or first of I and paydowns. go I phases We really the quarter-to-quarter-to-quarter

it then you through generation. nice And want the acquisition to able offset and so overcome organic those, however, were to just we through describe it, loan

than half in there of to I portion second of loan growth pressure in going there's year the has be lot the the And year. been more think a first on so the

that beat the little in So shock stand double-digit for the kind of it. if year. if me we low growth a end Wouldn't came of bit, that on low wouldn't I by we still shock me

Brady Gailey

grow for quarter. Okay. the merger is base? I you about $X.X off from of any expenses Is of or base or kind finally, don't $X.X any question that there's And of expenses, noise expenses cost that – in but some one-time a saves, million know upcoming that is are the I charges me how know thinking the with good if million all with to last then noise maybe here? first

Kelly Harris

and/or something was similar one-time QX, some probably related of But in about I and XXX,XXX related there expect would it noise acquisition normalize. then QX. should in the to to say QX, see to after

Brady Gailey

Great. for right. color Okay. Thanks guys. the All

Thomas Travis

Thank you.

Operator

comes next with question Race from ahead Nathan Sandler. Piper Please from question. Our your go

Nathan Race

Yes. Hi, guys. afternoon. Good

Thomas Travis

Nat. Hi,

Nathan Race

so appreciate back I into forward. yields basis like going in versus the down quarter. fourth the outlook discussion, Going deck characteristics kind margin came to kind Looks of loan loan or of the just of around by XX drilling And loan the for the yields book. the disclosures points ex-fees, repricing

of the loan higher you as rate kind the are of guys the just And originations higher? on expecting some quarter. be offset short-end by goes book what just the repricing new of loan weighted to pressures if curious average kind volumes pricing new So the were on in

Jason Estes

Yes.

had what big I think and don't in in changes what we've we're I now historically. booking see general,

an where I result originations new that some on There loans whether interest achieve most last, some far on our repayment first they business. were some well been was in mix. some three think in gone. had that those, in fresh hospitality. yielding some decrease loan were shuffling new really had consistent assets that for some first change happened were be had and little that sold a new then loans the as in C&I say, rate as fourth to the able maybe of that quarter refinanced that companies seem a through book bookings for and We you higher quarters a priced we're of I'd quarter our fee as and on And higher in we have what seeing or cases the the to you're as

I And will the I our to going but of there don't enough the sensitive rates, second benefits year of asset that half to in still interest be positive on think interest portfolio. and overcome it's be pressure think some so rates rising the

Thomas Travis

is But to I next guess, pipeline in it, – fundings say every about an week, new sitting XX thinking net going new at a fees that the at range. X.XX I'm over our to on as we all stab I'm take average the here Jason. that I'm the days, look in going excluding

Jason Estes

lift, a probably guesstimate. starting to And I but Yes. that's think it's good

Thomas Travis

Yes.

think don't going you're was that degradation. to everything on that X.XX you'd us. If seeing I us XX see compares how So range. know points yes, see booking that to I basis But static, what in you're Nat

Nathan Race

And just increase looks that It growth the loan driver it. like Jason clients new then bank? in just that was nice adding manualization the Was Got in discussion. on the quarter. or of to function Okay. a a

Jason Estes

a was of It combination nice both.

Nathan Race

quarter. Okay. energy well Great. like in And the was driver it side also on a E&P looks as the

in are Just some there. What these arena days? opportunistic you the guys seeing energy clients

Jason Estes

that what And opportunities. stay robust is production there that very with with we the rapid all a think know, favorable support go of terms field deal with kinds some seeing will frankly, NIM secondary that significant loans you're hedge and along I pressure. out some very cases that, There's for bank. but production, some us amortization, to with And for the help segment of in and

Thomas Travis

it's feel to we that sorry for is materially space regard add space the don't by space to certain don't go I the we fascinating the industry and should swiftly of quite describe energy look ESG to for to is are. Jason's with And more hard say, segments high. that prices the you same ESG impacted energy. the want pressure, on would has just reasons. how But I at suggest dying into to comments, want the energy because if say, there side, time, their Nat, world especially so It that the capital at for equity the we been are

have is remarkable and as I high magnitude the it quite and and want at really incredibly couch broad to how of riskless it that X%, you charge you quality. much it's today borrowers if transactions deep And what And would stunning energy X.X% so because the or hedging. is. is pretty that

that's And though Jason so XX% of buffer, when Jason is talks or XX% a – about how even what that's somewhat a now. portfolio of it the

Jason Estes

That's about right.

Thomas Travis

– very good there. it Yes. a to at book is a it's If the and are substantial opportunities, But isn't yet because very, we premium credits have and we going risk few we quite energy

it's dynamic. so And interesting an

Nathan Race

Got it.

zero quarter. terms charge-offs And just maybe of one one last Okay. just here, trajectory thinking me, from for the in obviously in about the reserve then

it of of balances you what on in guys for there, seems provided one guess there way still out based overall non-performers NPAs. some content, is like the XX% constitutes much I growth. that see You guys within loss

So about lines. reserve just appreciate trying here, along the to trajectory of those think I from thoughts any would the

Jason Estes

Yes.

I We at anything many haven't quarters five say meaningful improves lot remember would going turns least that's size. six I where nothing you there's any that's seen quarter, changed can't but and a any it like any a economy. negative improves, there's the or credits of how of in on the just or but row, each happened outlook really that, feel it's obviously in

we're adequately and reserved a keep we'll it at so all And close sure eye times. on make

Kelly Harris

I think that we XXX the I living XX company I been range and bps think we're are between our and know our range always that is – within in bps.

juice up really end any to think end And range because isn't there lower the range presently and the the at so to see back don't for we of it we're higher any stress. need I of us the

pretty, this or that allowance I pretty X.X%. in think gets don't in X.XX%, budget know I to that And stay provided our to for it had we the constant year, X% X% low to so

Nathan Race

Very appreciate Okay. the step all Thank color. I I back. will helpful. you.

Thomas Travis

you. Thank

Operator

Our go with Matt Olney question. from Instructions] next comes [Operator ahead from Please your Stephens. question

Matthew Olney

you about or some I fund loan grow with expectations Do Hey. more excess your growth Thanks the guys. to funding this that year. deposits ask to liquidity? the of growth want just of expect in

Thomas Travis

Yes.

growth think we've past. I you'll with what consistent seen the in deposit see

still a quite think bit I there. out there's

Matthew Olney

any And deposit thinking what on disclosures guess increasing some deposit seeing some are Page just far? then repricing X, side? you deposit expectations maybe markets core side the on rates about loan are pricing but I and discipline I'm rates, so what overall gave how commentary much is, us of the great and on that far part curious about Thanks. second about and so higher and the you with you're your

Thomas Travis

it. When We going times do to Yes. initially XX was to budgeting, do people revise think along belief many however, timeframe, our back Fed points December with basis in were had was were most there we the budget. the actually I going that they to and

our went then of finished December and February. early January and we things budget in So and kind late bonkers

when And did we our mix the XX. so – we our And business another and we beta then think bps then we on did and in and basically revised we I of XX June our exactly deposits it's put went on as in you almost what versus budget week maybe XX-XX look XX in then at budget we – purpose base, consumer. budgeted by for carefully deposit next – customer our

focused And of apparatus. on getting a of credit from deposit really substantial credit benefits the side are more then and focused bank we the rates so on that dynamic, and really that have entrepreneurs book our they're less the

kept took we that the funds process, we in so mind. that therefore, when And – cost attack in mind of budgeting

our And dynamic. have deposit our really and expect we're I good in because to betas betas would us confident favorable that to, ability of so very deposit

our in slide, And one that displayed at of impact you with on so and we're pricing bullish regard and funds we really down. would XQ in cost to we're conjunction look asset XQ. to with on of that when that bullish – I and that hold the sensitivity very the XQ our say ability very, on bullish XQ assets XQ very the up

Matthew Olney

Okay. That's great.

Thomas Travis

great the also loan bank, you loan noted that that in the of that talked growth thinking about add when start the quarter. great that growth the would related it's percentage Jason somewhat late that occurred very I about, you

didn't of about quarter, of is books. which benefit more another we full blown so deposit really only asset the And the good have that the growth but betas the factor the effect that and for makes putting loans not full feel sensitivity, on the us

Matthew Olney

Yes.

to noise again in in Earlier think mentioned in there appreciate NII Kelly Okay. anything acquisition Perfect. trying deal with kind possibly XQ expenses accretion? number. some of of respect with one-time the in quarter Was kind any to call, any the from accretion and the – I accounting that Just there's XQ. purchase of unusual first

Thomas Travis

was took sell goodwill. with that, price There that And we Yukon a increased against adjustments – We March. gain purchase also $XXX,XXX then that the there did branch goodwill in goodwill. lowered was some accounting

outside the at think was net $XXX,XXX. goodwill was I increase of So I that the… mean,

Kelly Harris

goodwill. Net decreased to

Thomas Travis

increase. It a was net

Kelly Harris

Increase which the one, on on gain? you mean

Thomas Travis

$XXX,XXX goodwill, adjustments. then accounting purchase price lowered some gain but there was

Kelly Harris

Yes, I sorry. didn't Oh, those. focus on

Thomas Travis

And The at $XXX,XXX. I non-interest ongoing related ops net increase the outside looking XXX,XXX $XXX,XXX, deconversion QX. net acquisition and cost that with you're on QX really the to, to of was that conversion expense and in spoke

Kelly Harris

I think of any material. But don't was considered it

Thomas Travis

Correct.

Kelly Harris

Right.

Matthew Olney

ratio guess it. Got and I thinking efficiency Okay. improvement signal here. And about from then more the

of Can what roadmap we range last need get were jumped to in think I kind mid-XX% back the guys there? that deal to talk year, back mid-XX% with get to M&A to up. see you the the of kind obviously you range, about

Thomas Travis

Yes.

both at the we going to it and a did fruition those other that to it and and two NIM felt were to I because like we think a reasons, going happen. of now factors. lot the the changes. were we've was One acquisition it's for decrease is was ratio be And efficiency because acquisition the negative because securities we the up to ROE then tried to obviously the events We other signal coming have. of some like going when in going really temporary

always that but more it XX%, take little we'll XX% really to in or just you sheet back it's a balance depends our XX% if would we said remix live and the be that, but And on in range, at don't the to look gets ratio our I that if to say XX%, we've going and too. XX% so to – difficult which know settles specifically securities revenue. I if think the can maybe get efficiency XX% I and But more at expectations, it's it realistic budget

the way say to So it. best I think probably that's

Matthew Olney

Yes.

Thanks Okay. guys.

Thomas Travis

you. Thank

Operator

a from is question with next Please our Sandler. Nathan ahead go And Piper Race follow-up your follow-up. from

Nathan Race

Yes. Thanks follow-up. the taking for

like quarter on question really wasn't impacted a because most large Just peers book. capital. a securities have don't really PE you guys this

your been just kind obviously, So over appetite from some to the here, thoughts stock get buyback has few of most pressure we'd updated the on under months. like love last peers

opportunities to are versus So deploy curious of guys you just how excess kind capital? weighing opportunities buyback other

Thomas Travis

I PE record but if I pretty word broken far and trade somewhat but on in for Nat, with have listen, of much book get and always the says dynamic, a we we're a making peer too – money. penalized line we're much we know we unique – a don't tangible should Brad basis use we on basis, value below

that beholder, And of interesting. It's so I eyes know the quite the it's right.

we're your our and where ratio, remind less, priced and So or tangible question value consciously you if multiple so. trading, if at if stock if ask more you you subconsciously look book But the either is by then PE like bye-bye-bye. less driven more that mind driven by and it's is it's

perspective. appreciate and we ignore so we factors And people's those don't

consistent bought opportunistic purchasers one anybody that the that this However, like we're stock stock day in or we've may or from our anybody have call market. that on just maybe already else been

is on a And think so book should higher rush get not And any it's repurchase First value and to environment comfortable book And think there, And but a do we they longer and out be not that public for the start in others increase it anticipate that jump that we from to a anytime when thing we're that were we are benefiting we saying, we the been – we on we stock share we that multiples they're just based valuation wouldn't, should other kind go per and really really think that where Abilene we're that PE it. lot stock doing then had PE, And pre-determined a – stock that on stock buy it's say and less our but a XX% the Bank. the a if really few strategy we a can multiple. are opportunistic the performance, not anyway, can you of estimate, Frost basis that totally into because with out to to buy produce would we that market, we're higher return going for doesn't believing that there's opportunistic. PE we're right. think tangible that you are, on there cheap that's basis. lot equity, been to an value generate because higher been prone eager really any on that discount us, we've maybe the annualized try valuation mean I strong and like which in PE that earnings I double-digit have belief be if hurry we're then number, and not then buying say and if why but out of to extrapolate Financial in And look, don't that company easier tangible to

And for and thing. think there's I Rubik's that no a good And as buy reasons we we Cube don't do the price it's guess the the about. that rush a type so pressure stock – talked to But is just we I stock today said, it. believe

Nathan Race

all appreciate Understood. I Tom. color agree. again. the And I Thanks,

Operator

like any showing floor ladies closing this the gentlemen, And back for questions. to turn remarks. I no and over would at additional time, to management I'm

Thomas Travis

quarter. again, with Well, happy our we're very

and broadening company our deepening day and is every strong. Our fundamentals are

markets get of from the the about is really analysts we're appreciate excited we're and the we're bankers we the being other especially that our and rest in we're and the our in. year, and market team the and we each with team management happy and proud lending of Our really support intact

you very So much. thank

Operator

we'll with gentlemen, today's presentation. We thank conclude you that and do joining. for ladies And

You disconnect may your now lines.

Thomas Travis	President and Chief Executive Officer
Jason Estes	Executive Vice President, Chief Credit Officer and Commercial Loan Manager
Kelly Harris	Executive Vice President and Chief Financial Officer
John Phillips	Vice Chairman, Senior Executive Vice President and Chief Operating Officer
Brady Gailey	Keefe, Bruyette, & Woods, Inc.
Nathan Race	Piper Sandler & Co.
Matthew Olney	Stephens Inc.

Bank7 (BSVN) 26 Apr 222022 Q1 Earnings call transcript