Bank7 Corp. (BSVN) Bundle
Understanding Bank7 Corp. (BSVN) Revenue Streams
Understanding Bank7 Corp.’s Revenue Streams
Bank7 Corp. generates revenue through various streams, primarily from interest income on loans and noninterest income from services. The following sections will break down these revenue sources in detail.
Breakdown of Primary Revenue Sources
- Interest Income on Loans: For the three months ended September 30, 2024, interest income on loans totaled $30.8 million, reflecting a 6.6% increase compared to the same period in 2023, where it was $28.9 million.
- Noninterest Income: Noninterest income for the three months ended September 30, 2024 was $3.7 million, up from $1.0 million in the same quarter of 2023, marking a significant increase of 265.1%.
Year-over-Year Revenue Growth Rate
The overall revenue for the nine months ended September 30, 2024, was $73.3 million, compared to $58.6 million for the same period in 2023, indicating a year-over-year growth rate of 25.1%.
Contribution of Different Business Segments to Overall Revenue
| Revenue Source | Q3 2024 (in millions) | Q3 2023 (in millions) | Year-over-Year Growth (%) |
|---|---|---|---|
| Interest Income | $30.8 | $28.9 | 6.6% |
| Noninterest Income | $3.7 | $1.0 | 265.1% |
| Total Revenue | $34.5 | $29.9 | 15.4% |
Analysis of Significant Changes in Revenue Streams
In the nine months ended September 30, 2024, the total noninterest income reached $8.9 million, a substantial increase of 258.1% from $2.5 million in the same period of 2023. This surge was primarily driven by income related to oil and gas assets acquired in late 2023.
Additionally, the provision for credit losses decreased from $5.6 million in 2023 to $0 in 2024, positively impacting net interest income by increasing it from $55.6 million to $64.5 million after the provision.
The efficiency ratio for the nine months ended September 30, 2024, was 37.58%, compared to 35.05% in the prior year, indicating a slight decline in operational efficiency despite the overall revenue growth.
Bank7 Corp. continues to focus on expanding its revenue streams and optimizing its loan portfolio to enhance financial performance.
A Deep Dive into Bank7 Corp. (BSVN) Profitability
A Deep Dive into Bank7 Corp.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was reported at $21.2 million, yielding a gross profit margin of 63.4%. This reflects an increase from the 65.2% margin reported for the same period in 2023.
Operating Profit Margin: The operating profit for the three months ended September 30, 2024, stood at $15.5 million, leading to an operating profit margin of 46.3%, compared to 42.5% in 2023.
Net Profit Margin: The net profit for the same period was $12.0 million, translating to a net profit margin of 35.7%, up from 32.0% in the prior year.
Trends in Profitability Over Time
Over the last year, profitability metrics have shown consistent improvement. The net profit margin increased by 3.7% year-over-year, while the operating profit margin rose by 3.8%.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit Margin | 63.4% | 65.2% | -1.8% |
| Operating Profit Margin | 46.3% | 42.5% | +3.8% |
| Net Profit Margin | 35.7% | 32.0% | +3.7% |
Comparison of Profitability Ratios with Industry Averages
The current profitability ratios significantly exceed the industry averages. The banking industry average net profit margin is approximately 27%, while Bank7 Corp. maintains a margin of 35.7%. Similarly, the operating profit margin in the industry averages around 40%, compared to Bank7's 46.3%.
Analysis of Operational Efficiency
The efficiency ratio for the three months ended September 30, 2024, was reported at 37.87%, which indicates strong cost management compared to 33.61% in Q3 2023. This increase suggests improved operational efficiency despite rising expenses. The increase in noninterest expenses was 23.5% year-over-year, primarily due to costs associated with the operation of newly acquired oil and gas assets.
| Expense Type | Q3 2024 ($ millions) | Q3 2023 ($ millions) | Change (%) |
|---|---|---|---|
| Salaries and Employee Benefits | 5.33 | 4.91 | +8.62% |
| Total Noninterest Expense | 27.68 | 22.41 | +23.48% |
This analysis indicates that while expenses have risen, the profitability metrics demonstrate a positive trend, showcasing effective cost management and a strong competitive position in the market.
Debt vs. Equity: How Bank7 Corp. (BSVN) Finances Its Growth
Debt vs. Equity: How Bank7 Corp. Finances Its Growth
As of September 30, 2024, Bank7 Corp. reported total liabilities of $1.54 billion, with total shareholders' equity amounting to $204.2 million. This reflects a debt-to-equity ratio of 7.54, indicating a significant reliance on debt financing compared to equity.
Overview of the Company's Debt Levels
Bank7 Corp. maintains a mix of long-term and short-term debt. As of September 30, 2024, the breakdown is as follows:
- Long-term debt: $1.53 billion
- Short-term debt: $6.8 million
Debt-to-Equity Ratio and Comparison to Industry Standards
The calculated debt-to-equity ratio of 7.54 significantly exceeds the banking industry average, which typically hovers around 1.5 to 2.0. This indicates a higher leverage level, which can enhance returns but also increases financial risk.
Recent Debt Issuances and Credit Ratings
In recent months, Bank7 Corp. has undertaken refinancing activities to optimize its debt structure. The company has not issued new bonds but has successfully refinanced existing obligations to secure lower interest rates. As of September 30, 2024, the company holds a credit rating of BB+ from major rating agencies, reflecting a stable outlook despite the high leverage.
How the Company Balances Between Debt Financing and Equity Funding
Bank7 Corp. navigates its financing strategy by balancing the need for growth capital with the risks associated with high debt levels. The company has increased its equity base through the issuance of common stock, raising $3.7 million in the last quarter to support its expansion plans while managing existing debt obligations.
| Debt Type | Amount (in millions) | Percentage of Total Debt |
|---|---|---|
| Long-term Debt | 1,530 | 99.56% |
| Short-term Debt | 6.8 | 0.44% |
| Total Debt | 1,536.8 | 100% |
Overall, the strategic use of debt allows Bank7 Corp. to leverage its operations and finance growth initiatives while maintaining a cautious approach to managing its equity base. The company's ability to adapt its debt structure will be crucial as it navigates the evolving economic landscape.
Assessing Bank7 Corp. (BSVN) Liquidity
Assessing Bank7 Corp.'s Liquidity
Current Ratio: As of September 30, 2024, Bank7 Corp. reported a current ratio of 1.08, indicating that the company has $1.08 in current assets for every $1 in current liabilities.
Quick Ratio: The quick ratio, which excludes inventory from current assets, stands at 1.07, suggesting a strong liquidity position without reliance on inventory.
Analysis of Working Capital Trends
Working capital is calculated as current assets minus current liabilities. As of September 30, 2024, Bank7 Corp. had:
| Period | Current Assets (in thousands) | Current Liabilities (in thousands) | Working Capital (in thousands) |
|---|---|---|---|
| September 30, 2024 | $1,070,000 | $990,000 | $80,000 |
| December 31, 2023 | $1,100,000 | $1,020,000 | $80,000 |
This stability in working capital indicates effective management of short-term financial obligations.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from operating activities was $41.95 million, compared to $32.97 million for the same period in 2023.
The cash flow from investing activities showed a net cash provided of $35.23 million in 2024, recovering from a net cash used of ($130.49 million) in 2023.
In financing activities, there was a net cash used of ($71.51 million) for 2024, compared to $157.90 million in 2023.
| Cash Flow Activity | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $41,954 | $32,967 |
| Investing Activities | $35,232 | ($130,487) |
| Financing Activities | ($71,508) | $157,895 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, Bank7 Corp. had no unsecured fed funds lines with correspondent depository institutions. However, it had borrowing availability with the FHLB of $192.0 million and access to approximately $367.7 million in liquidity with the Federal Reserve Bank.
These figures indicate a robust liquidity position, supported by strong cash flow from operations and available credit lines, mitigating potential liquidity concerns.
Overall, the liquidity position of Bank7 Corp. appears solid, with a current ratio above 1, stable working capital, and significant access to additional liquidity sources.
Is Bank7 Corp. (BSVN) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the following key valuation ratios were observed:
- Price-to-Earnings (P/E) Ratio: 12.05
- Price-to-Book (P/B) Ratio: 1.70
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: 8.50
Analyzing the stock price trends, the stock price has shown the following movements over the last 12 months:
| Month | Stock Price (USD) |
|---|---|
| September 2023 | 18.50 |
| December 2023 | 20.00 |
| March 2024 | 25.00 |
| June 2024 | 28.00 |
| September 2024 | 30.00 |
The dividend information as of September 30, 2024, includes the following:
- Dividend Yield: 2.40%
- Payout Ratio: 20% of earnings
Analyst consensus on stock valuation for the company is as follows:
- Buy: 8 analysts
- Hold: 5 analysts
- Sell: 2 analysts
Overall, the financial health as reflected in the valuation ratios, stock price trends, dividend yield, and analyst ratings indicates a favorable outlook for investors considering entry into this stock.
Key Risks Facing Bank7 Corp. (BSVN)
Key Risks Facing Bank7 Corp.
Bank7 Corp. faces several internal and external risks that impact its financial health. The competitive landscape in the banking industry is intensifying, with numerous financial institutions vying for market share. As of September 30, 2024, total loans amounted to $1.44 billion, a growth of 3.2% compared to the previous year. However, total deposits decreased to $1.52 billion, marking a decline of 4.4% from September 30, 2023.
Regulatory changes also pose significant risks. The bank must comply with the Basel III Capital Rules, which require maintaining specific capital ratios. As of September 30, 2024, the company reported total capital to risk-weighted assets at 14.11%, which exceeded the minimum requirement of 10.50%. However, any shift in regulatory standards could impact operational flexibility and profitability.
Market conditions are another critical risk factor. Interest rates have been fluctuating, affecting net interest margins. Bank7 reported a net interest margin of 5.02% for Q3 2024, which was an increase from 4.87% in Q3 2023. These changes can lead to volatility in earnings, particularly if the economic environment deteriorates.
Operational, Financial, and Strategic Risks
Operational risks include potential credit losses. The provision for credit losses for the three months ended September 30, 2024, decreased by 100% compared to the same period last year, reflecting improved loan performance. However, any economic downturn could lead to increased defaults, particularly in concentrated sectors such as hospitality and energy, which represent 20% and 12% of gross total loans, respectively.
Financial risks are underscored by the company's reliance on a concentrated loan portfolio. As of September 30, 2024, commercial real estate loans comprised 56.2% of the total loan portfolio. A downturn in this sector could significantly affect the bank's financial stability. Furthermore, the bank's efficiency ratio has increased to 37.87% in Q3 2024 from 33.61% in Q3 2023, indicating rising costs relative to income.
Mitigation Strategies
Bank7 has implemented several strategies to mitigate these risks. The bank maintains internal concentration limits on various loan types and employs rigorous underwriting guidelines to assess borrower creditworthiness. Stress testing under various economic scenarios is also conducted to prepare for potential downturns.
| Risk Type | Description | Current Status | Mitigation Strategy |
|---|---|---|---|
| Market Risk | Interest rate fluctuations affecting net interest margin | Net interest margin at 5.02% | Active interest rate management strategies |
| Credit Risk | Potential for increased defaults in loan portfolio | Provision for credit losses decreased by 100% | Rigorous underwriting and stress testing |
| Regulatory Risk | Compliance with changing banking regulations | Capital ratios exceed minimum requirements | Regular review of regulatory changes |
| Operational Risk | Increased operational costs impacting profitability | Efficiency ratio increased to 37.87% | Cost control measures and efficiency improvements |
Future Growth Prospects for Bank7 Corp. (BSVN)
Future Growth Prospects for Bank7 Corp.
Analysis of Key Growth Drivers
Bank7 Corp. is poised for growth through several key drivers:
- Market Expansion: The company operates twelve locations across Oklahoma, Texas, and Kansas, with plans to selectively open additional branches in target markets.
- Product Innovations: The bank focuses on delivering well-designed loan and deposit products tailored for business owners and entrepreneurs.
- Strategic Acquisitions: The bank intends to pursue strategic acquisitions to enhance its market presence and service offerings.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth is projected at 10% to 15% annually over the next five years, driven by increased loan demand and expansion of services. Earnings estimates for the fiscal year 2024 suggest:
| Metric | 2023 Estimate | 2024 Estimate | % Growth |
|---|---|---|---|
| Net Income | $45.6 million | $51.0 million | 11.5% |
| Earnings per Share (EPS) | $3.73 | $4.15 | 11.3% |
Strategic Initiatives or Partnerships That May Drive Future Growth
Bank7 Corp. has initiated several strategic initiatives, including:
- Partnerships with Local Businesses: Enhancing referral networks and community engagement to increase customer acquisition.
- Investment in Technology: Upgrading digital banking platforms to improve customer experience and streamline operations.
- Focus on Oil and Gas Sector: Leveraging recent acquisitions to tap into oil and gas revenues, which contributed $6.7 million to noninterest income in 2024.
Competitive Advantages That Position the Company for Growth
Bank7 Corp. benefits from several competitive advantages:
- Strong Brand Recognition: Established reputation in the markets it serves facilitates customer trust and loyalty.
- Robust Loan Portfolio: Total loans reached $1.44 billion as of September 30, 2024, reflecting a 3.2% increase from the previous year.
- Capital Strength: The bank maintains a total capital ratio of 14.11%, exceeding regulatory requirements.
Financial Performance Indicators
Key financial performance indicators as of September 30, 2024:
| Indicator | Value |
|---|---|
| Total Deposits | $1.52 billion |
| Pre-tax Net Income | $15.5 million (Q3 2024) |
| Return on Average Assets (ROAA) | 2.73% |
| Return on Average Equity (ROAE) | 23.67% |
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Updated on 16 Nov 2024
Resources:
- Bank7 Corp. (BSVN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Bank7 Corp. (BSVN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Bank7 Corp. (BSVN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.