Bank7 Corp’s 2025 Q4 Earnings Call: Loan Growth Outlook and M&A Strategy Shifts Clash with Prior Guidance

Date of Call: Jan 15, 2026

Business Commentary:

Strong Loan and Deposit Growth:

• Bank7 Corp. reported significant loan growth and strong loan fee income for 2025, along with solid organic deposit growth.
• The growth was driven by the outstanding performance of their bankers in Oklahoma and Texas, without compromising underwriting standards, leading to better asset quality.

Net Interest Margin (NIM) Trends:

• The company experienced slight net interest margin compression in Q4 2025, coming down from an almost all-time high.
• The compression was anticipated due to high previous margins, with potential for slight further decline if additional rate cuts occur, but they have loan floors to help mitigate the impact.

Deposit Cost Management:

• Bank7 Corp. saw a reduction in their cost of funds to 2.40% due to new deposit inflows post-year-end.
• The ability to manage deposit costs is influenced by market conditions and depositor awareness of interest rates, with recent rate cuts not significantly impacting deposit betas.

Capital Accumulation and M&A Strategy:

• The company is accumulating capital at a nice clip, with a focus on maintaining discipline in potential M&A activities.
• Headwinds include high seller pricing expectations and AOCI overhang, but the accumulation provides optionality for future opportunities, with a preference for maintaining capital rather than share buybacks.

Oil and Gas Revenue Impact:

• Oil and gas revenue recognized in Q4 was $1 million, with minimal impact on overall financials.
• The revenue is a gradual decline and is considered a minor component, with potential for small fluctuations in net income but not material to the overall bank performance.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed being 'delighted with our 2025 results' and acknowledged 'the great work done by our bankers.' They highlighted 'outstanding loan growth, the strong loan fee income and very solid organic deposit growth' and noted asset quality is 'probably better than it's ever been.'

Q&A:

• Question from Wood Lay (Keefe, Bruyette, & Woods, Inc.): I wanted to start on loan growth, another really strong quarter of growth... Has payoff activity been lighter than you expected? And how should we think about forward expectations for growth?
  Response: Payoffs were lighter in Q4 than earlier quarters and some will shift into Q1, but the team is focused on capturing market share in key geographies. Growth at a similar pace to 2025 is possible but pricing discipline may limit it.

• Question from Wood Lay (Keefe, Bruyette, & Woods, Inc.): ...can growth look like '25 again in the year ahead? Or would that be a little bit of a stretch?
  Response: A repeat of 2025's growth is a stretch due to pricing pressures; the focus is on balancing growth with funding and maintaining margins.

• Question from Wood Lay (Keefe, Bruyette, & Woods, Inc.): And then last for me, just wanted to shift over to the net interest margin... can you talk about how you expect the margin to trend if we get a couple of additional cuts from here?
  Response: NIM compression was expected after a high starting point. It could potentially decline slightly with more cuts, but has support from deposit repricing; the historical low is around 4.35%.

• Question from Nathan Race (Piper Sandler & Co.): Just thinking about the direction of deposit costs going forward... what that implies for deposit competition these days?
  Response: The last two rate cuts did not translate into typical deposit betas across the industry; depositors are now more rate-aware, but the bank is managing to gain market share.

• Question from Nathan Race (Piper Sandler & Co.): ...just curious, you guys are still building capital at nice clips... how you're thinking about excess capital?
  Response: The focus remains on producing top-tier results; share repurchases are not the objective. The market will respond over time to strong performance.

• Question from Jordan Ghent (Stephens Inc.): I had a question kind of following up on that capital. And regarding M&A... Are those still some of the biggest headwinds you guys are seeing?
  Response: AOCI burdens have slightly decreased, but high quality deposit franchises command high multiples, making acquisitions challenging. The bank will stay disciplined and use accumulated capital for optionality.

• Question from Jordan Ghent (Stephens Inc.): ...just kind of one follow-up question on the deposits on the -- particularly the noninterest-bearing. Looks like it kind of went down a little bit this quarter...
  Response: The decline in noninterest-bearing accounts is due to increased customer awareness of rates; seasonality in deposits is minimal except for public funds.

• Question from Jordan Ghent (Stephens Inc.): ...just one more question on kind of the expense and fee guide. If you guys could give any additional commentary on that...
  Response: Expense control is strong. Oil & gas revenue is a minor, gradually declining 'nothing burger' and will have a small, potentially negative impact on GAAP earnings.

Contradiction Point 1

Loan Growth Expectations

Expectation for 2026 loan growth contradicts previous high single-digit target.

Will growth reach 25% again next year, or is that unrealistic? - Wood Lay (Keefe, Bruyette, & Woods, Inc.)

2025Q4: Reiterating that 2025-level growth would be a stretch. Pricing pressure is the main constraint... - [Jason Estes](Executive VP & Chief Credit Officer)

What is the current loan pipeline status and growth outlook for Q4 and 2026? - Adam Kroll (Piper Sandler & Co.)

2025Q3: The target is high single-digit year-over-year loan growth, which is expected to be achievable. - [Jason Estes](Executive VP & Chief Credit Officer)

Contradiction Point 2

M&A Strategy & Challenges

M&A focus shifts from active engagement to being disciplined and waiting for the right fit.

Are these still the major challenges you're facing? - Jordan Ghent (Stephens Inc.)

2025Q4: The bank has had several opportunities... but has remained disciplined, prioritizing asset quality. - [Thomas Travis](CEO)

What's the M&A activity update in the market? - Adam Kroll (Piper Sandler & Co.)

2025Q3: The company is actively engaging in M&A discussions and has looked at various transactions over the past few months. - [Thomas Travis](CEO)

Contradiction Point 3

Net Interest Margin (NIM) Outlook

Contradiction on the direction and drivers of NIM movement.

How do you expect the net interest margin to trend with a few more rate cuts? - Wood Lay (Keefe, Bruyette, & Woods, Inc., Research Division)

2025Q4: NIM compression in Q4 was expected after reaching an all-time high. With recent rate cuts... The forward-looking NIM is viewed positively, with potential slight decline... - [Kelly Harris](Executive VP & CFO), [Thomas Travis](President, CEO & Vice Chairman)

What's the outlook for NIM considering growth and potential deposit cost increases? - Wood Neblett Lay (Keefe, Bruyette, & Woods, Inc.)

2025Q2: Slight NIM degradation is expected but will remain within historical ranges. Efforts are ongoing to offset higher-cost deposits with transaction accounts. - [Jason Estes](Executive VP & Chief Credit Officer)

Contradiction Point 4

Deposit Cost Behavior and Leverage

Contradiction on the responsiveness of deposit costs to market rates.

What deposit pricing competition are you observing? - Nathan Race (Piper Sandler & Co., Research Division)

2025Q4: Recent rate cuts did not translate into typical deposit betas as strongly as earlier cuts, a trend seen across the industry. - [Jason Estes](Executive VP & Chief Credit Officer)

How sensitive are earnings to potential Fed funds cuts? - Nathan James Race (Piper Sandler & Co.)

2025Q2: The first few rate cuts had a 1:1 loan/deposit beta. More of the same is anticipated... - [Kelly Harris](Executive VP & CFO), [Thomas Travis](President, CEO & Vice Chairman)

Contradiction Point 5

Trajectory for Oil & Gas Revenue and Expenses

Contradiction on the near-term trend and recovery pace of the oil & gas segment.

Can you clarify the expense and fee guidance and the number of cores impacted by oil and gas revenues? - Jordan Ghent (Stephens Inc.)

2025Q4: ...Oil & gas revenue is a 'nothing burger' or rounding error, expected to decline gradually over the next 3-4 years with minimal GAAP impact. - [Thomas Travis](CEO), [Kelly Harris](EVP & CFO)

How will oil and gas revenue and expenses evolve? - Nathan Race (Piper Sandler)

2025Q1: Q1's run rate is expected to be representative of future quarters. The company is on pace to fully recover its $16 million investment in the oil & gas asset over the next 12 months. - [Kelly Harris](EVP & CFO)