Bank7 Corp (BSVN) is a well-established bank holding company headquartered in Oklahoma City, Oklahoma. The company's primary subsidiary, Bank7, has been serving the financial needs of businesses and individuals across Oklahoma, Texas, and Kansas for over a decade. With a focus on providing personalized banking solutions, Bank7 Corp has carved out a niche as a trusted community bank known for its exceptional customer service and disciplined approach to growth.

Company History and Background

Founded in 2007, Bank7 Corp has demonstrated remarkable resilience and adaptability in the face of evolving market conditions. The company's history is marked by a steadfast commitment to prudent risk management, strong credit quality, and strategic expansion within its target markets. Bank7's roots trace back to 1952 when it was established as a community bank serving the Oklahoma City area. The bank experienced steady growth in its early years, establishing several branch locations to better serve its customer base.

The 2008 financial crisis presented significant challenges for Bank7, but the management team's implementation of prudent risk management practices and conservative approach to lending allowed the bank to emerge from the crisis in a strong financial position. This resilience set the stage for future growth and expansion. In 2018, Bank7 transitioned to a bank holding company structure by forming Bank7 Corp., the current parent company.

Over the past decade, Bank7 has continued to grow its footprint, expanding into Texas and Kansas through strategic branch openings and acquisitions. The bank has developed a strong reputation for its commitment to customer service, risk management, and financial stability. Today, Bank7 operates twelve locations across Oklahoma, Texas, and Kansas, serving business owners, entrepreneurs, and individual customers with a full range of banking and financial services.

Financial Performance

As of September 30, 2024, Bank7 Corp reported total assets of $1.74 billion, a slight decrease from the $1.77 billion reported as of December 31, 2023. This modest decline can be attributed to the company's disciplined approach to balance sheet management, which has prioritized maintaining a well-capitalized and highly liquid position. The bank's total loans, net of unearned income, stood at $1.44 billion as of September 30, 2024, up from $1.36 billion at the end of the previous year, reflecting a 3.2% increase.

One of the hallmarks of Bank7 Corp's success is its ability to navigate interest rate cycles with remarkable dexterity. The company's net interest margin (NIM) has remained remarkably stable, averaging 5.10% for the nine months ended September 30, 2024, compared to 5.01% for the same period in 2023. This consistency can be attributed to the bank's disciplined approach to asset-liability management, which has allowed it to effectively mitigate the impact of interest rate fluctuations on its financial performance.

Asset Quality

Bank7 Corp's commitment to credit quality is evident in its strong asset quality metrics. As of September 30, 2024, the company's ratio of nonperforming assets to total assets stood at a mere 0.44%, down from 1.64% at the end of 2023. This impressive improvement can be credited to the bank's rigorous underwriting standards and proactive management of its loan portfolio.

Capital Position

The bank's capital position remains exceptionally robust, with a total risk-based capital ratio of 14.12% and a Tier 1 leverage ratio of 11.64% as of September 30, 2024. These ratios not only exceed the regulatory thresholds for a "well-capitalized" designation but also provide the bank with ample flexibility to pursue strategic growth opportunities.

Financials

Bank7 Corp's financial performance has been nothing short of exceptional, with the company reporting record earnings for the third quarter of 2024. Net income for the three months ended September 30, 2024, reached $11.8 million, up 49.97% from the same period in 2023. Earnings per share (EPS) also set a new record, reaching $1.24, a 45.88% increase year-over-year.

For the nine months ended September 30, 2024, Bank7 Corp reported net income of $34.59 million, representing a 27.1% increase compared to the same period in the prior year. This strong performance was driven by continued loan growth, increases in net interest income, and improved efficiency. The bank's efficient operations are evidenced by its impressive efficiency ratio of 37.58% for the nine-month period, which has significantly contributed to its profitability.

Looking at the most recent fiscal year (2023), Bank7 Corp reported revenue of $91.79 million, net income of $28.27 million, operating cash flow of $49.12 million, and free cash flow of $46.29 million. The third quarter of 2024 saw impressive year-over-year growth across key financial metrics, with revenue growing 16.67% to $37.17 million, net income increasing 49.97% to $11.78 million, operating cash flow rising 21.73% to $13.36 million, and free cash flow growing 19.08% to $12.75 million.

The company's strong profitability has enabled it to reward shareholders through a steadily increasing dividend. In July 2024, Bank7 Corp's Board of Directors approved a 14.2% increase in the quarterly cash dividend to $0.24 per common share, marking the fifth consecutive annual dividend hike.

Liquidity

Despite the challenges posed by the evolving macroeconomic landscape, Bank7 Corp remains well-positioned for continued success. The company's conservative risk appetite, diversified loan portfolio, and unwavering commitment to operational excellence have allowed it to navigate uncertainties with confidence.

Bank7 Corp's liquidity position is particularly strong, with no debt on its balance sheet as evidenced by a debt-to-equity ratio of 0. As of the third quarter of 2024, the company held $186.72 million in cash and had access to $192 million in borrowing availability with the Federal Home Loan Bank (FHLB). Additionally, the bank maintained $367.7 million in liquidity with the Federal Reserve Bank. The company's current ratio and quick ratio both stand at an impressive 589.88, further underscoring its robust liquidity position.

Future Outlook

Looking ahead, investors can expect Bank7 Corp to maintain its focus on organic growth, strategically expanding its presence within its existing markets while exploring selective acquisition opportunities that align with its long-term vision. The bank's strong capital position, ample liquidity, and disciplined approach to decision-making position it as a formidable player in the banking industry, poised to deliver sustainable value for its shareholders.

Bank7 Corp has provided guidance indicating that they expect to finish the year with moderate to high single-digit loan growth, in line with their earlier projections. The company anticipates that their net interest margin will remain within historical ranges, even in the face of potential future rate cuts by the Federal Reserve. While they do not expect another strong loan growth quarter in Q4 2024, they remain cautiously optimistic about the future, acknowledging potential near-term challenges but expressing confidence in their strong capital, liquidity, and credit quality positions.

The company operates through two main product segments: Commercial Banking and Consumer Banking. The Commercial Banking segment, which serves business owners and entrepreneurs, accounts for over 90% of the bank's total loan balance, with the commercial loan portfolio growing by 3.2% year-over-year to $1.44 billion as of the end of the third quarter of 2024. Commercial deposits also saw growth, increasing by 4.4% to $1.20 billion over the same period.

The Consumer Banking segment, which offers various loan and deposit products to individual customers, represented about 9% of the bank's total loan balance with $129.81 million in consumer loans as of September 30, 2024. Consumer deposits stood at $322.48 million, accounting for 21.2% of the bank's total deposit base.

Bank7 Corp's diversified business model, with a strong focus on commercial banking while maintaining a consumer banking presence, has contributed significantly to its financial success. The company's specialized focus on certain commercial segments like commercial real estate and energy has allowed it to capture market share in its target markets, outperforming the industry average in terms of loan growth.

In conclusion, Bank7 Corp's impressive track record, robust financial metrics, and prudent management make it a compelling investment proposition for those seeking exposure to a well-run community bank with a proven ability to navigate dynamic market conditions. As the company continues to build on its legacy of excellence, investors can take comfort in its rock-solid foundation and its unwavering commitment to delivering long-term shareholder value.