Bank7 Corp.’s 2026 Loan Growth Outlook Turns Cautious, NIM Trajectory Dulls, and M&A Priorities Shift in Q4 Call

Date of Call: Jan 15, 2026

Business Commentary:

Strong Loan Growth and Asset Quality:

• Bank7 Corp reported a significant increase in loan growth for 2025, with strong loan fee income and solid organic deposit growth.
• This growth was achieved without sacrificing underwriting standards, leading to improved asset quality.
• The growth was driven by outstanding performance in Oklahoma and Texas, with increased demand and loan opportunities in these regions.

Net Interest Margin and Rate Cuts:

• The company experienced a slight net interest margin compression in Q4 2025, moving from an all-time high.
• This compression was anticipated due to previous rate cuts and loans reaching their floors.
• Further rate cuts may lead to a potential slight decline in the margin, but it is expected to remain within a high band, supported by repricing of time deposits.

Deposit Growth and Cost Management:

• Bank7 Corp achieved strong deposit growth, particularly in Q4 2025, which exceeded loan growth.
• The deposit growth was driven by successful efforts in Oklahoma and Texas, with a focus on capturing market share.
• The cost of funds decreased to a run rate of 2.40%, aided by new deposit inflows and strategic pricing adjustments.

Capital Accumulation and M&A Strategy:

• The company continues to build capital at a significant clip, which provides more optionality for future opportunities.
• Despite potential M&A opportunities, the bank remains disciplined due to high pricing expectations and asset quality concerns among sellers.
• The capital accumulation allows the bank to stay competitive and patient, waiting for the right acquisition opportunity.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed being 'delighted with our 2025 results' and acknowledged 'outstanding loan growth, strong loan fee income and very solid organic deposit growth.' They stated they are 'well positioned to continue performing at a very high level.'

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, with strong annual growth expected to continue. However, maintaining similar loan growth in 2026 would be a stretch due to pricing pressure, and the company will balance growth with margin discipline.

• 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: Management believes it would be a stretch to replicate 2025's loan growth in 2026 due to pricing pressure and the need to balance growth with maintaining loan margins.

• Question from Wood Lay (Keefe, Bruyette, & Woods, Inc.): ...can you talk about how you expect the margin to trend if we get a couple of additional cuts from here and remind us sort of the historical ranges you would expect on the NIM?
  Response: The current NIM is around 4.5%, with potential slight compression if more rate cuts occur. The historical low is approximately 4.35%. The company's loan floors provide some support, but further cuts could bring the NIM down toward historical lows.

• Question from Nathan Race (Piper Sandler & Co.): Just thinking about the direction of deposit costs going forward... wondering if you could speak to the non-maturity side of the deposit equation... what that implies for deposit competition these days?
  Response: The cost of funds is currently around 2.40%, driven by new deposits. Recent rate cuts have not translated into typical deposit betas, indicating depositors are more rate-sensitive now, but competition remains tough.

• Question from Nathan Race (Piper Sandler & Co.): ...just curious what you're seeing across the ground [on deposit pricing competition].
  Response: The last two rate cuts did not flow into deposit betas as strongly as earlier cuts, suggesting depositors are more aware of interest rates, and the company is focused on maintaining market share.

• Question from Nathan Race (Piper Sandler & Co.): ...just zooming out a bit. I think 2025 was a tough year... So just curious, you guys are still building capital at nice clips... So just curious if you're thinking more about buybacks to support the stock these days or just more broadly, how you're thinking about excess capital?
  Response: The company is not focused on share buybacks to support the stock; instead, they are focused on producing top-tier results, believing the market will respond over time.

• Question from Jordan Ghent (Stephens Inc.): I had a question kind of following up on that capital. And regarding M&A. In the past, you guys have mentioned sellers having high pricing valuation expectations along with an AOCI overhang. 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 company remains disciplined, views excess capital as a positive for optionality, and is not opposed to an MOE.

• 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. And could you kind of maybe give a little color on that? And then maybe remind us of any seasonality that we should be expecting with -- on the deposit side in 1Q?
  Response: The decline in noninterest-bearing accounts is due to increased depositor awareness of rates. Seasonality is primarily related to public funds; otherwise, the deposit portfolio is not heavily seasonal.

• 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 on kind of what you're seeing? And then maybe just remind us of how many more cores we can expect to see impact from the oil and gas revenues?
  Response: Expense control remains strong. The impact from oil and gas revenues is minimal, expected to be a gradual decline and a rounding error. For Q4, $1 million in oil & gas and $9.1 million in core expense were reported.

Contradiction Point 1

Loan Growth Expectations for 2026

The company's outlook on 2026 loan growth shifted from achievable to a stretch target.

Were 2025 payoff activities below expectations, and what are forward loan growth expectations? Will 2026 mirror 2025's growth momentum? - Wood Lay (Keefe, Bruyette, & Woods, Inc.)

2025Q4: The company is positioned for continued strong loan and deposit growth in 2026... 2026 loan growth at 2025’s pace is considered a stretch due to pricing pressures. - Jason Estes(Executive VP & Chief Credit Officer)

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

2025Q3: The goal is to achieve high single-digit year-over-year loan growth, which is expected to be delivered. Organic growth in loans and deposits has been strong... - Jason Estes(Executive VP & Chief Credit Officer)

Contradiction Point 2

Net Interest Margin (NIM) Trajectory

NIM forward guidance became more conservative, indicating a potential for a sharper decline.

How do you expect NIM to trend with potential rate cuts and what are its historical ranges? - Wood Lay (Keefe, Bruyette, & Woods, Inc.)

2025Q4: With loan growth and some time deposits repricing, the NIM is expected to remain around the high end of the 4.5% range. ...If rates fall by 75 bps, the NIM could dip toward or slightly below historical lows. - Kelly Harris(Executive VP & CFO) & Thomas Travis(CEO)

How will the net interest margin (NIM) trajectory evolve post-September rate cut and potential year-end cuts? - Wood Lay (Keefe, Bruyette, & Woods, Inc.)

2025Q3: With the first rate cut in Q4, NIM is expected to compress slightly to around 4.50%, and with additional cuts, it could further decline to approximately 4.47%, assuming the bank can keep pace on the liability side. - Kelly Harris(CFO)

Contradiction Point 3

Outlook on M&A and Capital Allocation

The stance on M&A funding shifted from active pursuit to capital preservation.

Are seller expectations and AOCI overhang still the main challenges in M&A? - Jordan Ghent (Stephens Inc.)

2025Q4: The company remains disciplined and sees excess capital as an advantage for future opportunities. Buybacks are not currently pursued to preserve capital for M&A. - Thomas Travis(CEO)

Any recent updates on M&A activity and strategy? - Adam Kroll (Piper Sandler & Co.)

2025Q3: The company is actively engaged in M&A discussions and continues to pursue strategic combinations... the posture remains unchanged, and the company is eager to find a suitable transaction. - Thomas Travis(CEO)

Contradiction Point 4

Impact and Timeline of Oil & Gas Revenue

Contradiction on the significance and remaining life of oil & gas revenue.

Can you comment on the expense and fee guidance and how long oil and gas revenue will impact results? - Jordan Ghent (Stephens Inc.)

2025Q4: Oil & gas revenue is a rounding error going forward... It may cause small GAAP fluctuations but is strategically insignificant. - Kelly Harris(Executive VP & CFO) & Thomas Travis(CEO)

What's your approach to the expense run rate and remaining life of oil & gas assets? - Nathan James Race (Piper Sandler)

2025Q2: Oil & gas asset recovery is on track... full cash recovery expected by mid-2026 (3-4 more quarters). - Thomas Travis(CEO)

Contradiction Point 5

Share Buyback Strategy

Strategy shifts from cautious optimism to dismissing buybacks entirely.

Are you considering buybacks to support the stock or how are you allocating excess capital? - Nathan Race (Piper Sandler & Co.)

2025Q4: Share buybacks are not the objective; the focus is on delivering top-tier results. - Thomas Travis(CEO)

What is the company's approach to share buybacks? - Wood Lay (KBW)

2025Q1: The company is in a strong capital position... there is no internal pressure to buy back shares. The approach is cautious optimism; they will monitor the market and may act if share prices decline significantly. - Thomas Travis(CEO)