EX-99.2 3 brhc10036706_ex99-2.htm EXHIBIT 99.2
Exhibit 99.2

 BSVN  Q1 2022  EARNINGS RELEASE  April 26, 2022 
 

 1  BSVN – Corporate Overview  All data as of March 31, 2022, unless indicated otherwise.  (1) Core loans is a non-GAAP financial measure and is defined as total loans less PPP loans of $14.2 and $64.7 million for March 31, 2022 and 2021 respectively  Positioned in dynamic markets, with a commercial banking emphasis that delivers services via a branch-lite model  Experienced and talented bankers focused on high-touch personalized service  Disciplined credit culture that adheres to a robust risk management framework resulting in excellent credit quality and a history of low loan losses  Shareholder alignment due to 59% insider ownership   Continued focus on organic growth in our geographic footprint, while pursuing strategic acquisitions  Consistently ranked by S & P Global Market Intelligence as one of the Top Performing Community Banks in the United States 
 

 2  Q1 2022 Overview  On a YoY Basis (Q1 2022 vs. Q1 2021)  Total loans increased $200.41 million, reaching $1.06 billion, a 23.27% increase. $110.22 million of the growth was due to loans acquired from Cornerstone Bank on December 9, 2021  Total assets increased $375.16 million, ending at $1.42 billion, a 35.86% increase. $312.25 million of the growth was due to assets acquired from Cornerstone Bank  Total deposits increased $354.25 million, reaching $1.28 billion, a 38.13% increase. $283.56 million of the growth was due to deposits acquired from Cornerstone Bank  All data as of March 31 ,2022, unless indicated otherwise.  ROATCE annualized for the three months ended March 31, 2022 and 2021.  EPS for Q1 2022 of $0.68, an increase of $0.12 per share, or 21.50% compared to $0.56 at Q1 2021  Return on average tangible common equity of 20.87%, an increase of 8.16% compared to 19.29% at Q1 2021  Consistent Balance Sheet Growth  Impressive EPS Growth and Strong Shareholder Returns 
 

 2.51%  Pro Forma  Pro Forma  Reliable Top Performer  Return on Average Assets (1)(2)  Return on Average Tangible Common Equity (1) (2)  Dollars are in millions  Financial data is as of or for the three months ended March 31, 2022  Profitability metrics are tax-adjusted as if the Company were a C Corporation at the estimated tax rates for the respective periods.   Pro Forma YTD ROAA, ROATCE and efficiency ratio are non-GAAP financial measures, see Appendix for reconciliation to the most comparable GAAP measures for these metrics.  Efficiency Ratio (2)  On a YoY basis, our 20.9% ROATCE represents an 8.16% increase compared to Q1 2021  As expected, our Q4 acquisition caused a temporary decline in our ROAA and a slight increase in our efficiency ratio. We anticipate a return to our historical ranges in the latter half of 2022  4  6-year average: 2.24%  6-year average: 21.9%  38.3%  20.9%  Pro Forma 
 

 Dollars are in millions.   Financial data is as of or for the twelve months ended December 31 of each respective year and as of and for the three months ended March 31, 2021 and 2022.  Pro Forma noninterest expense to average assets is a non-GAAP financial measure. See appendix for reconciliation to their most comparable GAAP measure.  Pro Forma 2019 is a non-GAAP financial measure which adds back the one-time, extraordinary compensation expense related to the non-cash executive stock transaction that took place during the period. See 2019 Pro Forma Net Income reconciliation table for detailed calculation of this measure.  5.98% increase YoY  Robust and Consistent Organic Growth  PPE(1)  Total Assets  4  $26.8  Pro Forma  PPE grew 5.98% YoY - Our high level of PPE is achieved in part because of our strategy of having fewer, but better, team members who excel at providing services and solutions utilizing our technology and processes, delivered through our branch-lite model  Maximizing Our Employee Base(1)   3.56%  Actual  Pro Forma  CAGR Since 2016: 17.3% 
 

 5  Proven Strong Shareholder Returns  Tangible Book Value Per Share  Dollars are in thousands, except for per share data  Pro Forma 2019 is a non-GAAP financial measure which adds back the one-time, extraordinary compensation expense related to the non-cash executive stock transaction that took place during the period. See 2019 Pro Forma Net Income reconciliation table for detailed calculation of this measure.  CAGR since 2018 = 14%  Earnings Per Share  (1)  $ 0.81  Pro Forma  21.5% increase YoY 
 

 Investment Portfolio  Available-for-Sale Securities Portfolio  Dollars are in millions.   (1) All of our mortgage-backed securities and collateralized mortgage obligations are issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored entities.  6  Weighted Average Duration : 3.17 Years  Book Yield: 1.76%  (1) 
 

 Well Positioned for a Rising Rate Environment  Loan Portfolio Repricing Reinforces Benefit of Asset Sensitivity  Dollars are in millions.  Financial data is as of or for the three months ended March 31, 2022  Fixed rate loans are defined as loans that reprice greater than 1 year   7  (1)  ($774.5m are daily floaters) 
 

 Net Interest Margin  Financial data is as of or for the three months ended March 31, 2022 and as of or for the twelve months ended of each respective year.  Net interest margin (excluding loan fee income) is a non-GAAP financial measure, see Appendix for reconciliation to the most comparable GAAP measure for this metric.  Net Interest Margin  Net interest margin decline driven by investment portfolio acquired in December 2021   Despite the slightly lower NIM, our shareholder returns remain best in class  PPP loan fee income recognized during the quarter totaled $111,000, with $157,000 remaining to be recognized; PPP loan fees recognized during the first quarter of 2021 totaled $830,000, with $757,000 remaining to be recognized  8 
 

 9  Allowance for Loan Losses to Total Loans  Asset Quality   (1) “Total Loans” excludes $44.9 million, $18.7 million and $14.2 million in PPP loans for YE 2020 , 2021 and Q1 2022, respectively. With PPP loans included, ratio is 1.15%, 1.00% and 1.00%, respectively.   (2) “Total Loans” for 2021 and Q1 2022 includes acquired Cornerstone loans of $115 million $110 million marked to market, respectively. With Cornerstone loans and PPP loans excluded, ratio is 1.15% and 1.13% for YE 2021 and Q1 2022, respectively.  (1)  Energy Portfolio as a % of Total Loans  (1)  Nonperforming Assets to Total Loans  (2)  Continued broadening and deepening of the loan portfolio with less dependency on energy and hospitality lending activity  Although we intentionally reduced our energy loan portfolio as a percentage of total loans, we remain active in the energy space with a robust deal pipeline  Continued improvement in NPA levels after peaking in Q3 2020. Currently at 0.91% and concentrated 70% in a single credit   ALLL level remains acceptable as NPA levels have quickly reduced after peaking in 2020  (2) 
 

 Dollars are in millions  Energy Portfolio Potential Exposure  10 
 

 Hospitality Loan Portfolio Detail  11  Blue collar portfolio that is well-protected by the “cycle-down” effect of a recession   Loans personally guaranteed by experienced owner/operators with decades of history that spans multiple recessions  Geographically concentrated in TX (81%) and other markets with few remaining COVID restrictions  Diversified lending to many reputable brands serving mostly low to moderate price points  Buy, sell, and refinance activity has returned to the hospitality segment with 3 portfolio property sales and 1 refinance which paid off during Q1 2022  Dollars are in millions.  Hotel Portfolio Exposure by Class  Hotel Portfolio Exposure by Flag 
 

 12  Hospitality Loan Portfolio Detail  Portfolio Metrics – 35 Operating Properties  Dollars are in millions except per room data. Data as of March 31, 2022.  (1) per Source Strategies Inc. 2nd , 3rd , and 4th Quarter Factbook  Significant rebound in revenue throughout Texas with Q2, Q3, and Q4 2021 hospitality revenue exceeding Q2, Q3, and Q4 2019(1)   Concentrated primarily in “Drive-To” markets in the Dallas/Fort Worth metropolitan area   No exposure to towns or cities that are heavily dependent on the energy space, or that are “gateway” cities that depend on airline traffic  Consistent underwriting fundamentals with disciplined equity requirements, debt coverage ratio requirements, personal recourse, and rapid amortization 
 

 13  Income Statement as a Percentage of Average Assets  Dollars are in thousands  Peer group is defined as exchange-traded banks nationwide with assets between $500mm-$5bn (162 banks); Source: S&P Global Market Intelligence.  Excludes one-time, non-cash executive stock transfer compensation expense of $11.8 million.  As of Q1 2022, the latest data available.   (3)  Peer Analysis : PPE to Average Assets 
 

 14  Earnings-driven cushion far exceeds regulatory capital minimums as illustrated over a two-year period, consistent with DFAST parameters(1)  Dollars are in thousands  The above assumes no cash dividends and is simply an illustration and should not be considered a projection or forward-looking guidance of any kind.   DFAST = Dodd-Frank Act Stress Test.  Excess capital to target ratio expressed in % is the difference between the actual ratio and regulatory minimum divided by the regulatory minimum.  Excess capital to target ratio expressed in $ is the excess capital % multiplied by either average assets or risk-weighted assets, assuming a static balance sheet over the next 24 months.   Trailing twelve months PPE of $35.6 million extrapolated over two years.   Earnings-driven Capital Shock-absorption 
 

 Deposit Composition  Historical Deposit Growth  Compound Annual Growth Rate = 18.4%  Deposit Composition as of March 31, 2022  Deposits totaled $1.3 billion as of March 31, 2022, of which $282.6 million were acquired from Cornerstone   Core deposits represented $1.24 billion of total deposits as of March 31, 2022 compared to $857 million as of March 31, 2021  Total core deposit growth YoY was $384.2 million, or 44.85%  Dollars are in millions.  Financial data is as of or for the three months ended March 31 2021 and 2022 and as of or for the twelve months ended of each respective year.  (1) We define core deposits as deposits obtained directly from the depositor and exclude deposits obtained from listing services and brokered deposits that are obtained through an intermediary.  Core Deposits(1)  15 
 

 Appendix  16 
 

 17  Bank7 Corp. Financials  Net income and earnings per share are tax-adjusted as if the Company were a C Corporation at the estimated tax rates for the respective periods. EPS calculation is based on diluted shares. Combined federal and state effective tax rates for the three months ended March 31, 2022 and 2021 of 24.5% and 25.3%, respectively.  Represents a non-GAAP financial measure. See non-GAAP reconciliations table for reconciliation to most comparable GAAP measure for this metric.   All pro forma amounts relate to the one-time, non-cash executive stock transfer which occurred in September 2019. These amounts remove the compensation and related tax impact from net income. See detail and reconciliation on slide 21 of this presentation. 
 

 18  Bank7 Corp. Performance Ratios  Return on average assets and shareholders’ equity are tax-adjusted as if the Company were a C Corporation at the estimated tax rates for the respective periods.  Efficiency ratio is calculated by dividing noninterest expense by the sum of net interest income on a tax equivalent basis and noninterest income.     Represents a non-GAAP financial measure, see non-GAAP reconciliations table for reconciliation to the most comparable GAAP measure for this metric.   Ratios are based on Bank level financial information rather than consolidated information. At March 31, 2022, Tier 1 leverage ratio, Tier 1 risk based capital ratio, and total risk-based capital ratios were 9.27%, 11.54%, and 12.54% respectively for the Company.  All pro forma amounts relate to the one-time, non-cash executive stock transfer which occurred in September 2019. These amounts remove the compensation expense and related tax impact from net income. See detail and reconciliation on slide 21 of this presentation. 
 

 19  Non-GAAP Reconciliations 
 

 Loan Portfolio Distribution  Dollars are in millions. Data as of March 31, 2022.  Gross Loan Portfolio Composition by Purpose Type  20 
 

 21  2019 Pro Forma Net Income Reconciliation   On September 5, 2019, our largest shareholders, the Haines Family Trusts, contributed approximately 6.5% of their shares (656,925 shares) to the Company.  Subsequently, the Company immediately issued those shares to certain executive officers, which was charged as compensation expense of $11.8 million, including payroll taxes, through the income statement of the Company. Additionally, at the discretion of the employees receiving shares to assist in paying tax withholdings, 149,425 shares were withheld and subsequently canceled, resulting in a charge to retained earnings of $2.6 million. 
 

Legal Information and Disclaimer This presentation and oral statements made regarding the subject of this presentation contain forward-looking statements.  These forward-looking statements are subject to significant uncertainties because they are based upon:  the amount and timing of future changes in interest rates, market behavior, and other economic conditions; future laws, regulations, and accounting principles; changes in regulatory standards and examination policies, and a variety of other matters.  These other matters include, among other things, the impact of COVID-19 on the United States economy and our operations, the direct and indirect effect of economic conditions on interest rates, credit quality, loan demand, liquidity, and monetary and supervisory policies of banking regulators.  These forward-looking statements reflect Bank7 Corp.’s current views with respect to, among other things, future events and Bank7 Corp.’s financial performance. Any statements about Bank7 Corp.’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Any or all of the forward-looking statements in (or conveyed orally regarding) this presentation may turn out to be inaccurate. The inclusion of or reference to forward-looking information in this presentation should not be regarded as a representation by Bank7 Corp. or any other person that the future plans, estimates or expectations contemplated by Bank7 Corp. will be achieved. Bank7 Corp. has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that Bank7 Corp. believes may affect its financial condition, results of operations, business strategy and financial needs. Bank7 Corp.’s actual results could differ materially from those anticipated in such forward-looking statements as a result of risks, uncertainties and assumptions that are difficult to predict. If one or more events related to these or other risks or uncertainties materialize, or if Bank7 Corp.’s underlying assumptions prove to be incorrect, actual results may differ materially from what Bank7 Corp. anticipates. You are cautioned not to place undue reliance on forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made and Bank7 Corp. undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as may be required by law. All forward-looking statements herein are qualified by these cautionary statements. Within this presentation, we reference certain market, industry and demographic data, forecasts and other statistical information. We have obtained this data, forecasts and information from various independent, third party industry sources and publications. Nothing in the data, forecasts or information used or derived from third party sources should be construed as advice. Some data and other information are also based on our good faith estimates, which are derived from our review of industry publications and surveys and independent sources. We believe that these sources and estimates are reliable, but have not independently verified them. Statements as to our market position are based on market data currently available to us. Although we are not aware of any misstatements regarding the economic, employment, industry and other market data presented herein, these estimates involve inherent risks and uncertainties and are based on assumptions that are subject to change. This presentation includes certain non-GAAP financial measures, including pro forma net income, tax-adjusted net income, tax-adjusted earnings per share, tax-adjusted return on average assets and tax-adjusted return on average shareholders’ equity. These non-GAAP financial measures and any other non-GAAP financial measures that we discuss in this presentation should not be considered in isolation, and should be considered as additions to, and not substitutes for or superior to, measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Bank7 Corp.’s non-GAAP financial measures as tools for comparison. See the table in the appendix of this presentation for a reconciliation of the non-GAAP financial measures used in (or conveyed orally during) this presentation to their most directly comparable GAAP financial measures.