Bank7(US:BSVN)2021-11-04 16:00PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Bank7 Corp.'s unaudited condensed consolidated financial statements and notes for the period ended September 30, 2021 Unaudited Condensed Consolidated Balance Sheet Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and due from banks | $205,762 | $153,901 | | Loans, net | $915,393 | $826,974 | | Total Assets | $1,146,230 | $1,016,669 | | Liabilities & Equity | | | | Total Deposits | $1,018,374 | $905,514 | | Total Liabilities | $1,023,821 | $909,350 | | Total Shareholders' Equity | $122,409 | $107,319 | | Total Liabilities & Equity | $1,146,230 | $1,016,669 | Unaudited Condensed Consolidated Statements of Income Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $13,279 | $11,601 | $39,256 | $34,962 | | Provision for Loan Losses | $750 | $1,250 | $3,325 | $3,300 | | Net Income | $6,264 | $4,440 | $17,473 | $14,527 | | Earnings per share - basic | $0.69 | $0.48 | $1.93 | $1.53 | | Earnings per share - diluted | $0.69 | $0.48 | $1.92 | $1.53 | Unaudited Condensed Consolidated Statements of Shareholders' Equity - Total shareholders' equity increased to $122.4 million at September 30, 2021, from $105.2 million at September 30, 2020, driven by $17.5 million in net income, partially offset by $3.0 million in cash dividends15 - Cash dividends declared were $0.11 per share for the three months ended September 30, 2021, and $0.33 per share for the nine months ended September 30, 202115 Unaudited Condensed Consolidated Statements of Cash Flows Consolidated Cash Flow Highlights (in thousands) | Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $22,820 | $18,516 | | Net cash used in investing activities | ($80,832) | ($167,015) | | Net cash provided by financing activities | $109,873 | $92,089 | | Increase (Decrease) in Cash | $51,861 | ($56,410) | Notes to Unaudited Condensed Consolidated Financial Statements - On October 6, 2021, the Company entered into a definitive agreement to acquire Cornerstone Bank for an estimated cash consideration of $32.0 million, with closing expected in Q4 202148 - As of September 30, 2021, the Company held 73 Paycheck Protection Program (PPP) loans totaling $27.3 million, fully guaranteed by the Small Business Administration (SBA)46 - The Company's share repurchase program expired on September 5, 2021, and a new plan authorizing the repurchase of up to 750,000 shares was adopted on October 28, 2021, with no shares repurchased during the nine months ended September 30, 20212397 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes Bank7 Corp.'s financial condition and results of operations for Q3 and nine months of 2021 Results of Operations Performance Summary | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Pre-tax Income | $8.3M | $6.1M | $23.2M | $19.6M | | Provision for Loan Losses | $750k | $1.25M | $3.3M | $3.3M | | Return on Average Assets | 2.36% | 1.83% | 2.29% | 2.07% | | Return on Average Equity | 20.86% | 17.16% | 20.53% | 19.14% | | Efficiency Ratio | 34.49% | 38.40% | 34.84% | 36.35% | - Net interest margin for Q3 2021 was 5.04%, up from 4.81% in Q3 2020, and 5.18% for the first nine months of 2021 compared to 5.02% for the same period in 2020168173 - Noninterest income increased by 72.8% to $577,000 in Q3 2021 compared to Q3 2020, driven by higher secondary market income and other fees182 - Noninterest expense rose 4.25% to $4.8 million in Q3 2021, primarily due to a 17.6% increase in salaries and employee benefits183 Financial Condition - Total assets grew 12.7% to $1.1 billion as of September 30, 2021, from $1.0 billion at year-end 2020, driven by organic loan and deposit growth186 Loan Portfolio Composition (Gross Loans, in thousands) | Loan Category | Sep 30, 2021 | % of Total | Dec 31, 2020 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Commercial Real Estate | $463,948 | 50.0% | $427,423 | 50.9% | | Commercial & Industrial | $396,974 | 42.8% | $351,248 | 41.9% | | Agricultural | $59,343 | 6.4% | $50,519 | 6.0% | | Other | $46,416 | 0.8% | $38,977 | 1.2% | | Total Gross Loans | $928,048 | 100.0% | $839,088 | 100.0% | - The Allowance for Loan Losses (ALL) as a percentage of loans decreased to 1.01% at September 30, 2021, from 1.15% at December 31, 2020, primarily due to a $3.8 million charge-off on a single substandard loan relationship180194 - Total nonperforming loans decreased to $9.9 million (1.07% of total loans) at September 30, 2021, from $16.5 million (1.98% of total loans) at December 31, 2020206 - Total deposits increased to $1.0 billion at September 30, 2021, from $905.5 million at year-end 2020, with noninterest-bearing deposits growing to 32.7% of total deposits from 27.2%224225 Liquidity and Capital Resources - As of September 30, 2021, the company had borrowing availability with the FHLB of $76.1 million and no outstanding advances on unsecured fed funds lines232 Bank Capital Ratios | Ratio | Sep 30, 2021 | Dec 31, 2020 | "Well-Capitalized" Minimum | | :--- | :--- | :--- | :--- | | CET 1 Capital Ratio | 13.76% | 13.51% | 6.50% | | Tier 1 Capital Ratio | 13.76% | 13.51% | 8.00% | | Total Capital Ratio | 14.82% | 14.75% | 10.00% | | Tier 1 Leverage Ratio | 11.51% | 10.78% | 5.00% | - Total shareholders' equity increased by 14.1% to $122.4 million as of September 30, 2021, from $107.3 million at year-end 2020, primarily driven by retained earnings239 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk disclosures were reported since the prior annual report - There have been no significant changes in disclosures regarding market risk since the last annual report on Form 10-K for the year ended December 31, 2020262 Item 4. Controls and Procedures Management confirmed effective disclosure controls and procedures, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2021263 - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, such controls264 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in routine legal actions, none expected to materially impact financial statements - The company is involved in routine legal actions incidental to its business, but management believes none would have a material adverse effect on its financial statements266 Item 1A. Risk Factors No material changes to risk factors were reported since the prior annual report - No material changes were reported from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020267 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds A new share repurchase plan was approved in October 2021, following the expiration of the previous plan - The stock repurchase plan from September 2019 expired on September 5, 2021269 - On October 28, 2021, the Board of Directors approved a new repurchase plan authorizing up to 750,000 shares of common stock269 - No shares were purchased under the company's repurchase plan during the nine months ended September 30, 2021269 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL data