BSVN - Earnings call transcript Q2 2022

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Operator

Welcome to the Bank7 Corp.

Second Quarter Earnings Call.

Before we get started, I'd like to highlight the legal information and disclaimer on Page 19 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 its assumptions made by information currently available to management although management believes that its expectations reflected in such forward-looking statements are reasonable, they can give no assurance that expectations will prove to be correct. They're 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 and filed financial GAAP that You can Phillips, company Harris, Officer; Chief in by on Estes, these to X-K the find the morning have CEO Tom Chief the Kelly measures Operating President non-GAAP Officer. turn Officer; to and financial Representing that, With this the call, was today's over Travis. call Financial I'll

Tom Travis

And Thank of into a growth. lot. delighted our make see it about largely helped you. by you And We're a to recent couple it can acquisition then questions call. can in and as to and Welcome our the of quarter. quarter. was course, was I strong the get driven loan want we And materials, comments, answers. just record a

Jason results, that. granted, of can't look loan at think out And bankers, to thanks to in you sometimes the business shout the some -- think and we strength depth teams. when the I I and of take specifically his and give that commercial growth need take us world BankX's of of and and team for the our we the be it of comments a One granted for big the would

breadth more and with maybe been lot to be there's years, been that together just have what's think or years, by for in have the people it's half you there's basis. the operate and comforting just probably we get set geographic or together another when and very a the in, are we marry comforting, that half weekly dozen and and the of XX territory We group earnings is have dynamic just stronger and our comforted dozen skill a of to I to on group depth turnover, earnings bankers don't a in they that and with that have you a when XX-plus that really and have stronger commercial that. the little we have, the the -- are banking at look truly core so engaged. continues a XX about bit And

strength a so And of company. real it's our

sizes, BankX. The a experience And make second acquisition. prior is gone since this had different although would I that lot we've in public, was with our it we wasn't and different of point areas first

we so was early that our integrating manager and Mathews at and integration of a together our the team a and a did delighted systems. team Darrell broad fine team job and large and and conversion it the had deep a And and came are and system we June, IT, in really operations he elements is completed and of

as we've we sit the have the customer acquisition. highly achieved maintained objectives confident so at we our base that And that out same And we're stood the to achieve. time, here from today, we

thankful and be core our come strengths really have company really it's for to a And through, see and to lot so nice good that. just of

that we'll So questions up any it have. being you with might open that for said,

Operator

KBW. The from [Operator Gailey question Brady Instructions] of comes

Brady Gailey

out you done? funds is in you'll move to think excess I second bond the to put liquidity as guys So cash some you mostly the there. bond Is still use look you that have at Do the -- portfolio? some portfolio. quarter, into that Or continue

Tom Travis

the bond decline to as going loans. the in we see portfolio continually redeploy You're

Brady Gailey

Okay. move And then ton. did cost of a funds really

points to up was basis XX total your think only I deposits basis points. cost of X

you going deposit thinking with rates, what thinking how of sure we're pace seeing deposits about you are beta is are the how that? us cost going in go I'm remind about Just your forward? of higher, to

Tom Travis

having competition. raised Fed course, has would the to and -- our and, and Well, what rapidly, no costs of say they're I be profile. and the we're liability has we're doing on whole all as our agile a not The different, and liquidity dependent and do the it nimble to deposit with banking industry and

entire And said, half you're that the from being with expect but to I see for back substantial only us year. increases, the of so would more going not in the industry

for what you very continue to And is and been a we're But disciplined, can't going very tell can deposit noninterest-bearing? XX% that give be it, disciplined. we beta still I so number. have, us, I you to we've And

Unidentified Company Representative

Yes.

Tom Travis

so probably half back obviously, little than in liability And the wasn't we half. most front the of have would costs what, And driven mid-March. a is the say Fed in of the year the increase by that that larger first fact increase until, rate I we'll for did

little moving it do here But NIM back a it in so And be baked will of reinvesting more the the to lot A normal our expect has securities head of loans. forward. fully range. towards in we continue to to with still our and

Brady Gailey

kind us normal your you net range for of And interest consider remind do just what a margin?

Tom Travis

on we put there. Well, the in slide? what I does average think it that say

that think X% the I guess in it's put we be that I average. range. But going -- in it's low to didn't

But excluding first X%. the over in It's would If low fee a you talk quarter. of the I up say back -- X.XX% point I was always range income.

what grow, a X% that to range in we've consistent we so down to somewhere expect high But And we still or NIM little is X% come bit. low maintain with expect been we range. our as

Brady Gailey

other little there expenses Was onetime All heavy lastly $XXX,XXX. in then nature anything right. this expenses? They And quarter. seems other in for a it me, like almost were ran

Kelly Harris

the Brady, onetime Cornerstone, Yes, that in conversion that of think alluded $XXX,XXX this was there to approximately related Kelly. is was to I we QX.

Brady Gailey

Okay.

$XXX,XXX said it So you the was quarter? second in

Kelly Harris

Correct.

Brady Gailey

benefits in onetime burdens Any quarter? the or other

Tom Travis

general, I mean, it see cost you wage in definitely the over and you definitely look, it. all hear there's place, the expenses There's pressure, increases.

were, in than expenses still running where our want to just ratios. XX%? higher don't go we're be we factors. any give efficiency to going due certainly to And I increase going to a we're And guidance back that we slight those so And to, expect

Kelly Harris

Yes.

Tom Travis

was surprise back But I do those do into if to wouldn't we inflationary we down it know can me XX% in. or levels, when get to but difficult don't you're the recognize it it's environment XX%. at XX%. But the we're if that

Operator

from And of Stephens. our will next question Thomas come Wendler

Thomas Wendler

In normal the slides, to are you going back levels. guys mentioning profitability

you that. it? thinking towards assets Just that clarity get XXXX, of up wondering Are little drift return-on-average if Is I to the bank a average about should could that -- XXXX be X.X%. on I how expecting

Tom Travis

back don't we're number. to it's mean I that know absolute -- Yes. I that to going get

cash you're just interest portfolio, look those bond the income to into the to loan right back you in in any portfolio and were to without redeploy the if historical just numbers. be levels, going lift However, change expense simply at that

the cost So as the of mind doubt becomes balance no that What there's change the question of which what acquisition of is get we the that lift. look is to the we're benefits the one sheet, like? in on But the does curve look funds yield like? a our mix going

Thomas Wendler

right. you this around we then softer color than little me Can give bit All in a that? fees any quarter. were expecting And came

Unidentified Company Representative

of generation excess our very of say were very strong would the in loan We sound fee I quarter and loan metrics. internal was had our new fees the budget. component a by

QX. were I fee on that. the... in very the pleased all really give that's so you with our income can We About color And

Unidentified Company Representative

Yes, what -- run XX yes. the in bps range. it, in Historically, that was bps quarter, around bps versus first that XX XX we XX

Operator

Sandler. And of the Race next Piper question will be from Nathan

Nathan Race

your on deposit highlights core One lot growth of quarter a the in XQ that the -- We in of was the earnings thus seen peers far you haven't from a season. basis.

just clients winning full there? coming be curious it on would or new get some drivers of Is So board? Any there. kind to relationships just of more the color

Tom Travis

deep say of some we we it we And success I a team large we to the the talk at go you think is regarding about the sales to couple we our loan rate and opening and And look the where them broad we relationship are when balances, attribute commitment I relationships aware And that. every in to and when really I comments and dogged we company. and on would we the a meet that talk pursuit asset that on strictly focus person back terms, in we're have wouldn't deposits. immediately specifically a of just relationships. their to that in loan, had goes of focus tie the sheet but we it's true and get term growth banking and carrying particular keeping every and loans, specifically deposit the the we than give deposits that commitments. of week terms, in the some our

our not it talking about on on it And in And a in the billion team that started people from to of commercial investors here. interviewing bankers want one deposits your a for make I think so I person is I team or the take really I'll as the top this experienced you "Well, I you don't bank. but was, banking And the critical. almost a the an deposits." basis comment to a keeping dialed And of the doing our strength. response really are in lender. focused that tell they're say And it banking in awareness there's lender. we certainly world. is because just person works a And and I'm critical a long-time that our And $XX person can regular -- granted, or is so tell for to interview, maybe person's a lender. analysts I was I'm mind a it add and the that fact markets

Nathan Race

nonperformers charge-offs double-digit need you in appreciate I thinking growth and to Got right is nice environment of credit. that. forward? no assuming quarter. turning of it. That's charge-offs continue provide kind the guess going helpful in the low How It's this today. of still just to I direction. the to kind then for again, doable trend And to And kind remain about assuming see guys fairly color. low growth loan in are

Unidentified Company Representative

second We'll in adoption. And surprised the up the of with were year. loan Yes. see we a pleasantly CECL would in the I the ends we're how process teens. the production of growth say in half the

see us full from testing quarter so lots implementation you're going and modeling of continued to this And coming soon. and

portfolio the attention story. to of be performance overall, So provision a the nice but to we're paying metrics credit really continues certainly just it and the

Nathan Race

balance loan And sounds like it. much outflows expecting and to kind going it growth forward. largely just pace Got way keep deposit of then the dynamic with aren't in should guys back of going Okay. overall growth you sheet deposit

here guys the off coming forward? just growth bond imply So book does from that as kind the kind earning cash going kind flat of flows asset in remix a loan of you based of

Kelly Harris

Nate, this is Kelly.

loan overall the I would think of just a it be growth. result direct

the be And with we will the -- driver of main can the so that keep pace will growth. loan assets. It earning

Tom Travis

-- I fill in Kelly, the on but add the the between increase that for that the time it would I today, some guess recent took to it of us it of time and the March I will -- in period most would well, be daily took also say, some floors period Fed up floaters.

so I think growth. loan half that year solely of back And is the the of don't function a

has in lot do floors mid-June. will hit the be interest accruals mainly there think from we with now I day a every because fully fact to we higher benefiting that those

Kelly Harris

Correct.

Tom Travis

the have So half every days I condition exist and not day if I'm Kelly, floor you didn't filled you quarter not second benefiting that because or were the were up, that wrong, have me because correct didn't we will where being you would there... even didn't you is of say the have --

Kelly Harris

quarter. third the In

Tom Travis

Makes sense.

Operator

from [Coley [Indiscernible] [Operator comes of Instructions] Sam Partners]. and question Next

Unidentified Analyst

portfolio look asset bit you little at nonperformers bit at energy might how the and I'm underwriting source of XX% competition percent shows the looking about in quality, But since were be XXXX or I different could here and at you please? XX point some under another. the better portfolio of talk like back or XXXX, is loans, at as should total energy Slide it a a a perhaps a

Tom Travis

nonperformers. and Can I clarification. said energy in you Sam, ask something a question about

Unidentified Analyst

Yes, slide be total like of and a an as you a an asset quality percent energy portfolio have you just -- energy portfolio focus have the quality. asset for loans, should

Tom Travis

Street and or I -- of Well, to into if any the whether segments. a that that of on is speak losses the historical have on isn't, Street, believes we is belief don't risky but behalf you more getting inherently my response energy that want to debate it kind not that is the compare certainly it

partly so And because questions going we're Oklahoma becoming have we energy to is after Texas. what company a and in come that realize to the publicly-traded on get we're

just and well as might it's put doing. can we this see so information the what so is And deck people in where that portfolio the

that's reason relates it it's quality, And asset so as the there. I to think

Unidentified Analyst

Right.

looking really this underwriting and more But competition, -- ago, scores the is that get of last just we I'm call. than what touched little years percentage. favorable what is That's a because industry. I raw it bit on mainly banks trying perception the was so and was backdrop really And get is at X, have the My your you X quarterly at. on left to

Tom Travis

That's correct.

been this really It are also is same ever vehicles in correct. the Fair use I'm remarkable certain have. are opportunities really lenders, time, the the frankly, the are exit stronger. in energy the power to the And and You sure I energy great that of of borrowers not investment space the banks because the space. that a -- of time, they've same requirements the from, would the at word say underwriting lot and strong. pricing are at understanding

And And saying, banks. that extend really to what we're haven't the so company. the terms I why is space. I if commitments, energy think and to the this left best been for we think That's we totally that's continue are the since we a of loan can favorable the remember, quality why the agree, it's going strength the probably and good really energy is it's thesis you're today

Unidentified Analyst

your the Right. you shareholder, no if even XX%. Well, have And I then X-year appreciate as back average if a I'd to or that. of that's above got problem case,

Tom Travis

discussion over last, And the -- many XX days, Jason had times. I Jason? what, XX, this we and Well,

Jason Estes

sir. Yes,

Tom Travis

to, number And the part it opportunities respectfully ignore the of that trying of of gosh, business And part running our Sam. is driven we a in by it manner have. chatter, is prudent and

Operator

This Mr. like back to Tom conference remarks. concludes the Travis question-and-answer session. to for I'd closing over turn the

Tom Travis

hope interest, see their the all and forward you of to Bye-bye. the for rest and everyone, look soon. Thanks, to we year

Operator

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

disconnect. now may You

Bank7 (BSVN) 27 Jul 222022 Q2 Earnings call transcript