Bank7 Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Woody Lee - KBW - Analyst : Hey, good morning guys.

Question: Woody Lee - KBW - Analyst : Wanted to start on the loan growth side. I mean, the growth was great to see in the third quarter. I know there was some commentary last quarter that there was some funding delayed, but I was just curious how the pipeline is looking entering the fourth quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 11, 2024 / 3:00PM, BSVN.OQ - Q3 2024 Bank7 Corp Earnings Call Jason Estes - Bank7 Corp - Executive Vice President, Chief Credit Officer, President and Chief Credit Officer of the Bank Yeah. So thanks for the question. Last quarter, we were very confident that we had a lot of fundings coming. This quarter, I would say I would expect us to finish more in line with where we are now I wouldn't expect another nice growth quarter. But I think here we are kind of ending up in that range. We've talked about for the full year -- kind of a moderate to high single digit loan growth for the year. And I think we're going to be right in line with that. I think in general, there are certain segments we restrict to just continue to mitigate the risk in our portfolio. And so we continue to see opportunities there and we're passing on more deals specifically in the hospitality space, the energy space, those two components, we continue to really sift through opportunities to make sure we're optimizing the portfolio return with those dollars that we restrict by our own intent. So all in all should fall right in line with what we thought at the beginning of the year.

Question: Woody Lee - KBW - Analyst : Yeah. That's really helpful color. I guess shifting over to more than deposit side, I really appreciate the color you provided on the loan betas and the deposit betas and how that has shifted with the recent rate cuts. And I was a little surprised to see the deposit betas sort of go in lockstep with the loan beta. Did you see any deposit runoff when you made those rate adjustments and with future cut, do you think you can continue to cut deposit rates as aggressively?

Question: Woody Lee - KBW - Analyst : Yeah. Well, that's all for me. Congrats on the great quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 11, 2024 / 3:00PM, BSVN.OQ - Q3 2024 Bank7 Corp Earnings Call

Question: Woody Lee - KBW - Analyst : It was a great quarter. So let's see where it goes from that.

Question: Woody Lee - KBW - Analyst : Yeah, of course. Thanks, guys.

Question: Nathan Race - Piper Sandler - Analyst : Hey, guys, good morning. Thanks for taking the questions.

Question: Nathan Race - Piper Sandler - Analyst : Just going back to the margin commentary previously, I appreciate you still expect the margin to remain kind of within that historical range, but just given you guys posted, 20%-plus NII growth as short term rates are going up the last couple of years. Just curious how you're thinking about NII growth prospects in the next year, just given that short-term rates are expected to decline from here? Jason Estes - Bank7 Corp - Executive Vice President, Chief Credit Officer, President and Chief Credit Officer of the Bank So Nate, I think the one of the things that's not really been spoken about on this call yet is the fact that banks in general in 2023 after what happened in March really tightened up on lending money. And so our net interest income and our NIM, that's been helped because we've been able to be more stubborn on giving in negotiations on loan rates, okay. And that's allowed us to give in a little more on deposit rates. And so there's different, I would say, variables involved as we're negotiating loans and deposits and trying to attract new clients and take care of our existing clients. But in general, I hear you yes, there's been pressure, but we've been able to navigate that because they're really -- in our market, you still have good healthy economic growth. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 11, 2024 / 3:00PM, BSVN.OQ - Q3 2024 Bank7 Corp Earnings Call And you have, I would say, fewer banks really pursuing loans. There's always competition but I think the level of competition for loans, it shifted a little bit last year, really in the second half of the year. And yeah, I'm sure that's going to normalize. And it wouldn't surprise me as we continue to try to grow both loans and deposits going into next year, if some of that restriction or governance that we've seen on some of these competing banks if they start to return to more normal competing levels. And so I think we've talked about this now for several quarters in a row that we could see our NIM gradually sliding down, but we're fighting every data maximize it.

Question: Nathan Race - Piper Sandler - Analyst : Okay, great. And then just in terms of thinking about the future of provisioning levels, growth kind of reverts to the mid-single-digit range going forward. Any thoughts on just the provision and kind of where you'd like the reserve to kind of trend over time going forward relative to think of one in the quarter coming out of 3Q. Jason Estes - Bank7 Corp - Executive Vice President, Chief Credit Officer, President and Chief Credit Officer of the Bank Yeah. This quarter, depending on what happens with the economy in the fourth quarter, I still expect us to operate in the same ranges, as long as the portfolio holds up and the economic activity stays similar, knock on wood, it's been really good in Texas and Oklahoma. And so we're hopeful that it continues kind of in the same ranges.

Question: Nathan Race - Piper Sandler - Analyst : Got it. That's helpful. And one last one for me. Tom, as you describe, you guys are accreting capital at pretty strong clips to say the least. So just curious how you're thinking about the M&A environment today and just kind of the acquisition prospects going forward.

Question: Nathan Race - Piper Sandler - Analyst : Got it. That's great color. I appreciate the commentary. Thanks, guys. Congrats on the great quarter.

Question: Matt Olney - Stephens Inc - Analyst : Hey, good morning. Tom, on the last comments on the M&A front, just remind us of the characteristics of an M&A partner that you're looking for as it relates to size and geography and just the type -- the type of bank you're looking to partner with? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 11, 2024 / 3:00PM, BSVN.OQ - Q3 2024 Bank7 Corp Earnings Call

Question: Matt Olney - Stephens Inc - Analyst : Okay, that's great, Tom, appreciate that. And I guess on the sticking with the M&A theme that there's lots of financial metrics to consider as you review these in your view and the Board's view, what's the -- what are the more important financial metrics to review as you kind of go through these various M&A options?

Question: Matt Olney - Stephens Inc - Analyst : Okay, great. Appreciate the commentary, Tom, and I guess just stepping away from M&A, going back to the core margin discussion. You talked about kind of maintaining that historical range, regardless of what the fed does in the near term. Any general commentary about the core margin as it relates to the fed so if we were to see a very active fed cutting each meeting 25 bps or 50 bps versus a more methodical, slower-moving fed cutting, maybe every other meetings? Any commentary about kind of directionally what that would mean for the core margin? Thanks.

Question: Matt Olney - Stephens Inc - Analyst : Okay. Thanks, guys.

Question: Nathan Race - Piper Sandler - Analyst : Thanks for taking the follow-up. Maybe a question for Kelly, just in terms of thinking about the impact within fees and expenses from the oil and gas assets going forward?

Question: Nathan Race - Piper Sandler - Analyst : Got it. That's helpful. And then one last one. I know there's some noise in there (technical difficulty)

Question: Nathan Race - Piper Sandler - Analyst : Did you not hear my question?

Question: Nathan Race - Piper Sandler - Analyst : I apologize. Just the last question around non-interest bearing deposit levels. I know there's some noise, the last couple of quarters tied to some legal matters. So just curious how you're thinking about that trajectory going forward?

Question: Nathan Race - Piper Sandler - Analyst : Okay. So it seems like some of the mix shift changes have largely slowed across the client base lately but not entirely. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 11, 2024 / 3:00PM, BSVN.OQ - Q3 2024 Bank7 Corp Earnings Call

Question: Nathan Race - Piper Sandler - Analyst : Okay, great. I appreciate you guys taking the follow-ups. Thanks again.