BC
Bank7 Corp. (BSVN)·Q1 2025 Earnings Summary
Executive Summary
- Q1 2025 delivered core profitability with diluted EPS of $1.08 and net income of $10.3M; net interest margin (NIM) was 4.98% and efficiency ratio 39.45%, with management emphasizing deposit cost reductions and a “properly matched” balance sheet as key drivers .
- EPS and revenue modestly beat S&P Global consensus: EPS $1.08 vs $0.99 (+8.7%) and revenue $22.6M vs $22.6M (+0.2%); beats were aided by lower average cost of funds (2.58% vs 2.70%) and steady loan demand entering April .
- Credit and capital remained strong: CET1 14.02%, Tier 1 leverage 12.39%, NPLs/Total Loans 0.50%, and liquidity covering adjusted uninsured deposits by 2.81x; 85% of earning assets reprice within one year .
- Near-term guidance: NIM “bottomed” in the 4.60% range and is expected to “hold up” in Q2–Q3; core noninterest expense targeted at ~$8.5M and core fees ~$0.75M in Q2 as oil & gas income declines toward the tail .
- Catalysts: disciplined loan/deposit pricing, improving cost of funds, and potential M&A optionality; management remains cautious on buybacks but open to opportunistic deployment if equity markets reset further .
What Went Well and What Went Wrong
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What Went Well
- Lower average cost of funds (from 2.70% to 2.58%) supported margin resilience; “we’ve really bottomed out in that 4.60% range… anticipate NIM to hold up… into Q2 and Q3” .
- Loan growth momentum and backlog entering Q2, with hospitality and C&I mix managed within internal limits and historical norms; “we didn’t step out of our norms” .
- Capital, liquidity, and asset quality remain top-tier, enabling flexibility without reliance on buybacks; “we’re… close to record levels of capital… and we’re still posting… ~20% ROE” .
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What Went Wrong
- YoY pressure on NII and EPS: net income down 8.4% YoY ($10.3M vs $11.3M) and NIM down to 4.98% vs 5.14% YoY amid rate dynamics and mix shifts .
- Noninterest income declined YoY ($1.76M vs $2.01M) as oil & gas contribution tapered per plan, creating a “nuisance noise factor” despite being not material .
- Macro uncertainties (tariffs, deficits, consumer sentiment) cited as headwinds; “we are in a very volatile environment… consumer sentiment is definitely not as strong” .
Financial Results
Segment breakdown – Interest income components
Segment breakdown – Noninterest income components
Key KPIs and balance sheet
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- Strategic posture: “Our continued strong earnings will rapidly add to our already high levels of capital, and we’ll continue to operate without debt while maintaining strong liquidity” .
- Margin and funding: “We were able to lower our cost of funds from 2.70% to 2.58%… we’ve really bottomed out in that 4.60% range… anticipate NIM to hold up… going into Q2 and Q3” .
- Loan growth and discipline: “We had nice growth in the hospitality space… well within our norms… we do have internal self-imposed limits on each category” .
- Capital deployment: “We’re… close to record levels of capital… there’s really not internal pressures… to quickly [buy back shares]… we think it’s time to take a pause” .
- Macro vigilance: “Clearly, the narrative related to tariffs… capital markets… large outflows from equities… It’s a very volatile environment” .
Q&A Highlights
- Loan growth outlook: Hospitality and C&I bookings were solid; April backlog healthy, though macro volatility may affect new bookings .
- Energy risk management: Borrowers actively hedge; underwriting sensitivity cases (e.g., $45 oil/$2 gas) support cash flows and debt service .
- Credit metrics: NPAs moved lower; migration clean; past dues “very, very low”; well-capitalized with ample reserves .
- NIM trajectory: Cost of funds fell; NIM trough ~4.60% with expected stability through Q2–Q3 .
- Capital actions/M&A: Buybacks remain a cautionary tool; disciplined approach to targets (AOCI overhang persists); strategic fit over price .
Estimates Context
Q1 2025 actual vs S&P Global consensus
Values marked with “*” retrieved from S&P Global. EPS consensus mean: 0.993 (3 estimates); Revenue consensus mean: $22.553M (3 estimates). Revenue actual (S&P definition: NII + noninterest income) $22.595M [GetEstimates]. [Values retrieved from S&P Global]
Where estimates may need to adjust: modest upward EPS/Revenue revisions if cost of funds continues declining and NIM holds; oil & gas income tailing off should be modeled conservatively given management’s “tail” commentary .
Key Takeaways for Investors
- Margin durability: Management lowered average cost of funds and expects NIM to hold through Q2–Q3, supporting earnings stability even as headline NIM dips YoY .
- Core efficiency intact: Efficiency ratio ~39% and ROAA 2.41% reflect disciplined pricing and expense control, sustaining top-tier profitability .
- Strong defense: CET1 14%, leverage 12.4%, NPLs 0.50%, and liquidity covering adjusted uninsured deposits 2.81x offer robust downside protection .
- Loan growth within limits: Hospitality/C&I growth remains inside self-imposed segment caps; diversity and daily repricing support asset sensitivity in changing rates .
- Oil & gas tail: Expect continued income/expense fade from the oil & gas asset as cash recovery completes over ~12 months; model core trends accordingly .
- Capital deployment optionality: Management prioritizes prudence over buybacks near 1.6–1.7x TBV; remains active on M&A where culture/funding fit and valuation align .
- Trading lens: Near-term beats likely hinge on further cost-of-funds relief and stable NIM; macro tariff/deficit volatility is the swing factor for loan demand and spreads .
Citations: Press release and 8‑K exhibit details ; Q1 2025 call transcript ; Prior quarters Q3/Q4 2024 press/calls ; Dividend release .