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What changed in Bank7 Corp.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Bank7 Corp.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+299 added−321 removedSource: 10-K (2025-03-12) vs 10-K (2024-03-25)

Top changes in Bank7 Corp.'s 2024 10-K

299 paragraphs added · 321 removed · 251 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAs an Oklahoma state-chartered bank, the Bank is subject to limits on the amount of loans it can make to one borrower.
Biggest changeFurthermore, the Bank must periodically report all loans made to directors and other insiders to the bank regulators. As of December 31, 2024, the Bank had no outstanding loans to insiders. Limits on Loans to One Borrower . As an Oklahoma state-chartered bank, the Bank is subject to limits on the amount of loans it can make to one borrower.
Source of Strength . Federal Reserve policy historically required bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. The Dodd-Frank Act codified this policy as a statutory requirement.
Federal Reserve policy historically required bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. The Dodd-Frank Act codified this policy as a statutory requirement.
These regulatory agencies have broad discretion to impose restrictions and limitations on the operations of a regulated entity and exercise enforcement powers over a regulated entity (including terminating deposit insurance, imposing orders, fines and other civil and criminal penalties, removing officers and directors and appointing supervisors and conservators) where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law or are otherwise inconsistent with laws and regulations or with the supervisory policies of these agencies.
These regulatory agencies have broad discretion to impose restrictions and limitations on the operations of a regulated entity and exercise enforcement powers over a regulated entity (including terminating deposit insurance, imposing orders, fines and other civil and criminal penalties, removing officers and directors and appointing supervisors and conservators) where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law or regulations, or are otherwise inconsistent with the supervisory policies of these agencies.
We also focus on providing customers with exceptional service and meeting their banking needs through a wide variety of commercial and retail financial services. The Bank has a particular focus in the following loan categories (i) commercial real estate lending, (ii) hospitality lending, (iii) energy lending, and (iv) commercial and industrial lending.
We also focus on providing customers with exceptional service and meeting their banking needs through a wide variety of commercial and retail financial services. The Bank has a particular focus in the following loan categories (i) commercial real estate lending (“CRE”), (ii) hospitality lending, (iii) energy lending, and (iv) commercial and industrial lending.
As of December 31, 2023, the Bank met the requirements for being deemed “well-capitalized” for purposes of the prompt corrective action regulations. The Company General . As a bank holding company, the Company is subject to regulation and supervision by the Federal Reserve under the Bank Holding Company Act of 1956, as amended (the “BHCA”).
As of December 31, 2024, the Bank met the requirements for being deemed “well-capitalized” for purposes of the prompt corrective action regulations. The Company General . As a bank holding company, the Company is subject to regulation and supervision by the Federal Reserve under the Bank Holding Company Act of 1956, as amended (the “BHCA”).
As described above, the Bank exceeded its minimum capital requirements under applicable regulatory guidelines as of December 31, 2023. Transactions with Affiliates . The Bank is subject to sections 23A and 23B of the Federal Reserve Act (the “Affiliates Act”), and the Federal Reserve’s implementing Regulation W.
As described above, the Bank exceeded its minimum capital requirements under applicable regulatory guidelines as of December 31, 2024. Transactions with Affiliates . The Bank is subject to sections 23A and 23B of the Federal Reserve Act (the “Affiliates Act”), and the Federal Reserve’s implementing Regulation W.
Although the federal bank regulatory agencies proposed additional rules in 2016 related to incentive compensation for all banks with more than $1.0 billion in assets, which would include the Company and the Bank, those rules have not been finalized and the scope and content of the U.S. banking regulators’ policies on executive compensation are continuing to develop and are likely to continue evolving in the near future.
Although the federal bank regulatory agencies proposed additional rules in June of 2016 and again in May of 2024 related to incentive compensation for all banks with more than $1.0 billion in assets, which would include the Company and the Bank, those rules have not been finalized and the scope and content of the U.S. banking regulators’ policies on executive compensation are continuing to develop and are likely to continue evolving in the near future.
The BHCA provides that in the event of a bank holding company’s bankruptcy any commitment by a bank holding company to a federal bank regulatory agency to maintain the capital of its subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment. 4 Table of Contents Safe and Sound Banking Practices .
The BHCA provides that in the event of a bank holding company’s bankruptcy any commitment by a bank holding company to a federal bank regulatory agency to maintain the capital of its subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment. Safe and Sound Banking Practices .
Human Capital Our corporate culture is defined by core values which include integrity, accountability, professionalism, community-focus and efficiency. As of December 31, 2023, we had 123 full time employees. We value our employees by investing in competitive compensation and benefit packages and fostering a team environment centered on professional service and open communication.
Human Capital Our corporate culture is defined by core values which include integrity, accountability, professionalism, community-focus and efficiency. As of December 31, 2024, we had 124 full time employees. We value our employees by investing in competitive compensation and benefit packages and fostering a team environment centered on professional service and open communication.
During the year ended December 31, 2023, the Bank paid examination assessments to the OBD totaling $197,000. Capital Requirements . Banks are generally required to maintain minimum capital ratios. For a discussion of the capital requirements applicable to the Bank, see “—Regulatory Capital Requirements” above. Bank Reserves .
During the year ended December 31, 2024, the Bank paid examination assessments to the OBD totaling $246,000. Capital Requirements . Banks are generally required to maintain minimum capital ratios. For a discussion of the capital requirements applicable to the Bank, see “—Regulatory Capital Requirements” above. Bank Reserves .
Federal and state laws, and the related regulations of the bank regulatory agencies, affect, among other things, the scope of business, the kinds and amounts of investments banks may make, reserve requirements, capital levels relative to operations, the nature and amount of collateral for loans, the establishment of branches, the ability to merge, consolidate and acquire, dealings with insiders and affiliates. the payment of dividends and redemption of securities.
Federal and state laws, and the related regulations of the bank regulatory agencies, affect, among other things, the scope of business, the kinds and amounts of permissible investments, reserve requirements, capital levels relative to assets, the nature and amount of collateral for loans, the establishment of branches, the ability to merge, consolidate and acquire, dealings with insiders and affiliates. the payment of dividends and redemption of securities.
The Federal Reserve has the power to order any bank holding company or its subsidiaries to terminate any activity or to terminate its ownership or control of any subsidiary when the Federal Reserve has reasonable grounds to believe that continuing such activity, ownership or control constitutes a serious risk to the financial soundness, safety or stability of any bank subsidiary of the bank holding company.
The Federal Reserve has the power to order any bank holding company or its subsidiaries to terminate any activity or to terminate its ownership or control of any subsidiary when the Federal Reserve has reasonable grounds to believe that continuing such activity, ownership or control constitutes a serious risk to the financial soundness, safety or stability of any bank subsidiary of the bank holding company. 4 Table of Contents Source of Strength .
The Bank’s legal lending limit to any one borrower was $55.5 million as of December 31, 2023. 6 Table of Contents Safety and Soundness Standards/Risk Management . The federal banking agencies have adopted guidelines establishing operational and managerial standards to promote the safety and soundness of federally insured depository institutions.
The Bank’s legal lending limit to any one borrower was $68.2 million as of December 31, 2024. 6 Table of Contents Safety and Soundness Standards/Risk Management . The federal banking agencies have adopted guidelines establishing operational and managerial standards to promote the safety and soundness of federally insured depository institutions.
As of December 31, 2023, the Company’s and the Bank’s capital ratios exceeded the minimum capital adequacy guideline percentage requirements under the Basel III Capital Rules on a fully phased-in basis. 3 Table of Contents Prompt Corrective Action The Federal Deposit Insurance Act requires federal banking agencies to take “prompt corrective action” with respect to depository institutions that do not meet minimum capital requirements.
As of December 31, 2024, the Company’s and the Bank’s capital ratios exceeded the minimum capital adequacy guideline percentage requirements under the Basel III Capital Rules. 3 Table of Contents Prompt Corrective Action The Federal Deposit Insurance Act requires federal banking agencies to take “prompt corrective action” with respect to depository institutions that do not meet minimum capital requirements.
Bank holding companies must consult with the Federal Reserve before redeeming any equity or other capital instrument included in Tier 1 or Tier 2 capital (or, for small bank holding companies like the Company, before redeeming any instruments included in equity as defined under GAAP) prior to stated maturity, if such redemption could have a material effect on the level or composition of the organization’s capital base.
Bank holding companies must consult with the Federal Reserve before redeeming any equity or other capital instrument included in Tier 1 or Tier 2 capital prior to stated maturity, if such redemption could have a material effect on the level or composition of the organization’s capital base.
We are focused on serving business owners and entrepreneurs by delivering fast, consistent and well-designed banking solutions. As of December 31, 2023, we had total assets of $1.77 billion, total loans of $1.36 billion, total deposits of $1.59 billion and total shareholders’ equity of $170.3 million. Our website is: www.bank7.com.
We are focused on serving business owners and entrepreneurs by delivering fast, consistent and well-designed banking solutions. As of December 31, 2024, we had total assets of $1.74 billion, total loans of $1.40 billion, total deposits of $1.52 billion and total shareholders’ equity of $213.2 million. Our website is: www.bank7.com.
Federal Banking Agency Incentive Compensation Guidance The federal bank regulatory agencies have issued comprehensive guidance intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of those organizations by encouraging excessive risk-taking.
Banks and savings institutions with $10 billion or less in assets, like the Bank, will continue to be examined by their applicable bank regulators. 8 Table of Contents Federal Banking Agency Incentive Compensation Guidance The federal bank regulatory agencies have issued comprehensive guidance intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of those organizations by encouraging excessive risk-taking.
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Furthermore, the Bank must periodically report all loans made to directors and other insiders to the bank regulators.
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As of December 31, 2023, the Bank had one line of credit for loans to an insider with a maximum credit of $500,000 and an outstanding balance of $203,000; as of December 31, 2023, the Bank had no other loans outstanding to insiders. Limits on Loans to One Borrower .
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Banks and savings institutions with $10 billion or less in assets, like the Bank, will continue to be examined by their applicable bank regulators. 8 Table of Contents The consumer protection provisions of the Dodd-Frank Act and the examination, supervision and enforcement of those laws and implementing regulations by the CFPB have created a more intense and complex environment for consumer finance regulation.
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The CFPB has significant authority to implement and enforce federal consumer protection laws and new requirements for financial services products provided for in the Dodd-Frank Act, as well as the authority to identify and prohibit UDAAP.
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The review of products and practices to prevent such acts and practices is a continuing focus of the CFPB, and of banking regulators more broadly. The ultimate impact of this heightened scrutiny is uncertain but could result in changes to pricing, practices, products and procedures.
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It could also result in increased costs related to regulatory oversight, supervision and examination, additional remediation efforts and possible penalties.
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In addition, the Dodd-Frank Act provides the CFPB with broad supervisory, examination and enforcement authority over various consumer financial products and services, including the ability to require reimbursements and other payments to customers for alleged legal violations and to impose significant penalties, as well as injunctive relief that prohibits lenders from engaging in allegedly unlawful practices.
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The CFPB also has the authority to obtain cease and desist orders providing for affirmative relief or monetary penalties. The Dodd-Frank Act does not prevent states from adopting stricter consumer protection standards. State regulation of financial products and potential enforcement actions could also adversely affect our business, financial condition or results of operations.
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The CFPB has examination and enforcement authority over providers with more than $10 billion in assets. Banks and savings institutions with $10 billion or less in assets, like the Bank, will continue to be examined by their applicable bank regulators.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs is the case with all financial institutions, the profitability of the Bank is subject to the fluctuating cost and availability of money, changes in interest rates and in economic conditions in general.
Biggest changeAs is the case with all financial institutions, the profitability of the Bank is subject to the fluctuating cost and availability of money, changes in interest rates and in economic conditions in general. In addition, various federal and state statutes limit the amount of dividends that the Bank may pay to the Company without regulatory approval. 18 Table of Contents
Bureau of Labor Statistics reported that the 12-month percent change in the Consumer Price Index for All Urban Consumers (not seasonally adjusted) for all items was 3.4% for December 2022 to December 2023, 6.5% for December 2021 to December 2022, 7.0% for December 2020 to December 2021, 1.4% for December 2019 to December 2020, and 2.3% for December 2018 to December 2019.
Bureau of Labor Statistics reported that the 12-month percent change in the Consumer Price Index for All Urban Consumers (not seasonally adjusted) for all items was 2.9% for December 2023 to December 2024, 3.4% for December 2022 to December 2023, 6.5% for December 2021 to December 2022, 7.0% for December 2020 to December 2021, 1.4% for December 2019 to December 2020, and 2.3% for December 2018 to December 2019.
As of December 31, 2023, the substantial majority of the loans in our loan portfolio were made to borrowers who live and/or conduct business in our markets and the substantial majority of our secured loans were secured by collateral located in our markets.
As of December 31, 2024, the substantial majority of the loans in our loan portfolio were made to borrowers who live and/or conduct business in our markets and the substantial majority of our secured loans were secured by collateral located in our markets.
So long as the Haines Family Trusts continue to control more than 50% of our outstanding shares of common stock, they will have the ability, if they vote in the same manner, to determine the outcome of all matters requiring shareholder approval, including the election of directors, the approval of mergers, material acquisitions and dispositions and other extraordinary transactions, and amendments to our certificate of incorporation, bylaws and other corporate governance documents.
So long as insiders continue to control more than 50% of our outstanding shares of common stock, they will have the ability, if they vote in the same manner, to determine the outcome of all matters requiring shareholder approval, including the election of directors, the approval of mergers, material acquisitions and dispositions and other extraordinary transactions, and amendments to our certificate of incorporation, bylaws and other corporate governance documents.
As of December 31, 2023, we had $55.1 million in unfunded commitments to borrowers in the oil and gas industry. 10 Table of Contents We have credit exposure to the hospitality industry. The Company has loan exposure to the hospitality industry, primarily through loans made to construct or finance the operation of hotels.
As of December 31, 2024, we had $39 million in unfunded commitments to borrowers in the oil and gas industry. 10 Table of Contents We have credit exposure to the hospitality industry. The Company has loan exposure to the hospitality industry, primarily through loans made to construct or finance the operation of hotels.
As of December 31, 2023, approximately 40.0% of our gross loans were maturing within one year, compared to approximately 37.6% of our gross loans that were maturing within one year as of December 31, 2022. As a result, we will either need to renew or replace these loans during the course of the year.
As of December 31, 2024, approximately 40.3% of our gross loans were maturing within one year, compared to approximately 40.0% of our gross loans that were maturing within one year as of December 31, 2023. As a result, we will either need to renew or replace these loans during the course of the year.
Our largest deposit relationships currently make up a material percentage of our deposits and the withdrawal of deposits by our largest depositors could force us to fund our business through more expensive and less stable sources. At December 31, 2023, our 20 largest deposit relationships accounted for 24.0% of our total deposits.
Our largest deposit relationships currently make up a material percentage of our deposits and the withdrawal of deposits by our largest depositors could force us to fund our business through more expensive and less stable sources. At December 31, 2024, our 20 largest deposit relationships accounted for 29.3% of our total deposits.
Our largest loan relationships make up a material percentage of our total loan portfolio . As of December 31, 2023, our 20 largest borrowing relationships ranged from approximately $16.7 million to $38.7 million (including unfunded commitments) and totaled approximately $533.1 million in total commitments (representing, in the aggregate, 32.8% of our total outstanding commitments as of December 31, 2023).
Our largest loan relationships make up a material percentage of our total loan portfolio . As of December 31, 2024, our 20 largest borrowing relationships ranged from approximately $16.8 million to $45.1 million (including unfunded commitments) and totaled approximately $552.1 million in total commitments (representing, in the aggregate, 32.8% of our total outstanding commitments as of December 31, 2024).
As of December 31, 2023, we had approximately $1.35 billion of commercial purpose loans, which include general commercial, energy, agricultural, and CRE loans, representing approximately 98.9% of our gross loan portfolio. Commercial purpose loans are often larger and involve greater risks than other types of lending.
As of December 31, 2024, we had approximately $1.38 billion of commercial purpose loans, which include general commercial, energy, agricultural, and CRE loans, representing approximately 99.0% of our gross loan portfolio. Commercial purpose loans are often larger and involve greater risks than other types of lending.
In addition, as of December 31, 2023 approximately 56.7% of our outstanding common stock is beneficially owned by our principal shareholders, executive officers and directors.
In addition, as of December 31, 2024 approximately 55.8% of our outstanding common stock is beneficially owned by our principal shareholders, executive officers and directors.
As of December 31, 2023, our energy loans, which include loans to exploration and production companies, midstream companies, purchasers of mineral and royalty interests and service providers totaled $190.6 million, or 14.0% of total loans, as compared to $182.8 million, or 14.4% of total loans as of December 31, 2022.
As of December 31, 2024, our energy loans, which include loans to exploration and production companies, midstream companies, purchasers of mineral and royalty interests and service providers totaled $133.3 million, or 9.5% of total loans, as compared to $190.6 million, or 14.0% of total loans as of December 31, 2023.
At December 31, 2023, this exposure was approximately $298.5 million, or 21.9%, of the total loan portfolio, along with an additional $5.7 million in unfunded debt, as compared to $244.3 million, or 19.2%, of the total loan portfolio, along with an additional $15.5 million in unfunded debt as of December 31, 2022.
At December 31, 2024, this exposure was approximately $259.1 million, or 18.5%, of the total loan portfolio, along with an additional $2.9 million in unfunded debt, as compared to $298.5 million, or 21.9%, of the total loan portfolio, along with an additional $5.7 million in unfunded debt as of December 31, 2023.
The sale of these shares could impair our ability to raise capital through the sale of additional equity securities. We are controlled by trusts established for the benefit of members of the Haines family, whose interests may not coincide with our other shareholders. As of December 31, 2023, the Haines Family Trusts control approximately 50.5% of our common stock.
The sale of these shares could impair our ability to raise capital through the sale of additional equity securities. We are controlled by insiders, whose interests may not coincide with our other shareholders. As of December 31, 2024, the Haines Family Trusts, management, and the board of directors control approximately 55.8% of our common stock.
As of December 31, 2023, our Regulatory CRE represented 290.69% of our total Bank capital and our construction, land development and other land loans represented 73.97% of our total Bank capital, as compared to 304.72% and 101.20% as of December 31, 2022, respectively. During the prior 36-month period, our Regulatory CRE has decreased 53.10%.
As of December 31, 2024, our Regulatory CRE represented 254.04% of our total Bank capital and our construction, land development and other land loans represented 74.82% of our total Bank capital, as compared to 290.69% and 73.97% as of December 31, 2023, respectively. During the prior 36-month period, our Regulatory CRE has decreased 48.43%.
As of December 31, 2023, approximately $1.33 billion, or 83.9%, of our deposits consisted of demand, savings, money market and negotiable order of withdrawal, or NOW, accounts. Approximately $256.8 million of the remaining balance of deposits consists of certificates of deposit, of which approximately $224.8 million, or 87.6% of remaining deposits, was due to mature within one year.
As of December 31, 2024, approximately $1.28 billion, or 84.2%, of our deposits consisted of demand, savings, money market and negotiable order of withdrawal, or NOW, accounts. Approximately $239.2 million of the remaining balance of deposits consists of certificates of deposit, of which approximately $231.7 million, or 96.9% of remaining deposits, was due to mature within one year.
If we ever become subject to significant environmental liabilities, our business, financial condition, liquidity and results of operations could be materially and adversely affected. 15 Table of Contents Inflationary pressures and rising prices may affect our results of operations and financial condition.
If we ever become subject to significant environmental liabilities, our business, financial condition, liquidity and results of operations could be materially and adversely affected. 15 Table of Contents Inflationary pressures and rising prices may affect our results of operations and financial condition. Inflation reached a near 40-year high in late 2021 and persisted at elevated levels during 2022 and 2023.
Inflationary pressures are currently expected to remain elevated throughout 2024. Small to medium -sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses.
Inflationary pressures have begun to moderate during 2024, and current economic forecasts suggest a further easing in 2025. Small to medium -sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses.
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Inflation reached a near 40-year high in late 2021, and high levels of inflation persisted during 2022 and 2023, and may continue in 2024. The U.S.
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While inflationary pressures have begun to moderate, their effects continued into 2024. The U.S.
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We are a “controlled company” within the meaning of the rules of NASDAQ, and qualify for exemptions from certain corporate governance requirements. As a result, our shareholders do not have the same protections afforded to shareholders of companies that are subject to such requirements.
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We are a “controlled company” under NASDAQ’s corporate governance listing standards, meaning that more than 50% of the voting power for the election of our board of directors will be held by a single person, entity or group.
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As a controlled company, we are exempt from the obligation to comply with certain corporate governance requirements, including the requirements: • that a majority of our board of directors consists of “independent directors,” as defined under NASDAQ rules; • that director nominations are selected, or recommended for the board of directors’ selection, by either (i) the independent directors constituting a majority of the board of directors’ independent directors in a vote in which only independent directors participate, or (ii) a nominating and corporate governance committee that is composed entirely of independent directors; and • that we have a compensation committee that is composed entirely of independent directors.
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Even though we are a “controlled company,” we currently intend to comply with each of these requirements.
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However, we may avail ourselves of certain of these other exemptions for as long as we remain a “controlled company.” Accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of NASDAQ’s corporate governance requirements, which could make our stock less attractive to investors or otherwise harm our stock price.
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In addition, various federal and state statutes limit the amount of dividends that the Bank may pay to the Company without regulatory approval. 18 Table of Contents Item 1B. Unresolved Staff Comments Not applicable.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe also maintain a Cyber Incident Response Team, which includes a board representative and an executive officer representative and is chaired by our Senior Vice President/ Operations & IT Manager.
Biggest changeWe also maintain a Cyber Incident Response Team, which includes a board representative and an executive officer representative and is chaired by our COO/IT Manager. The Cyber Incident Response Team is charged with developing and implementing incident response and recovery plans to guide our employees, management and the Board in their response to a cybersecurity incident.
Employees receive regular virtual and in-person security awareness training through simulated tests, company communications, and in-person training. We also maintain a third-party vendor management program to identify and assess risks of our third-party service providers.
Employees receive regular virtual and in-person security awareness training through simulated tests, company communications, and in-person training. We also maintain a vendor management program to identify and assess risks of our third-party service providers.
IT functions are also managed through our IT Committee which is comprised of several senior level executive officers and other Company employees and chaired by our Senior Vice President/ Operations & IT Manager. The IT Committee governs all IT functions at the Company and selects, monitors and manages our third-party IT service providers that implement and maintain our cybersecurity functions.
IT functions are also managed through our IT Committee which is comprised of several senior level executive officers and other Company employees and chaired by our COO/ IT Manager. The IT Committee governs all IT functions at the Company and selects, monitors and manages our third-party IT service providers that implement and maintain our cybersecurity functions.
Risk Factors. We are exposed to cybersecurity risks associated with our internet-based systems and online commerce security, including ‘hacking’ and ‘identify theft.’” Governance Our cybersecurity function is overseen by our Senior Vice President/ Operations & IT Manager who has over 9 years’ experience managing such functions.
Risk Factors. We are exposed to cybersecurity risks associated with our internet-based systems and online commerce security, including ‘hacking’ and ‘identify theft.’” Governance Our cybersecurity function is overseen by our COO/ IT Manager who has over 9 years’ experience managing such functions.
The full Board receives a network health report at each board meeting from our Senior Vice President/ Operations & IT Manager, which addresses our overall network risk including any relevant cybersecurity threats and incidents.
Our Board of Directors is responsible for overseeing our enterprise risk management activities in general, including cybersecurity risks. The full Board receives a network health report at each board meeting from our COO/ IT Manager, which addresses our overall network risk including any relevant cybersecurity threats and incidents.
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The Cyber Incident Response Team is charged with developing and implementing incident response and recovery plans to guide our employees, management and the Board in their response to a cybersecurity incident. Our Board of Directors is responsible for overseeing our enterprise risk management activities in general, including cybersecurity risks.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe paid quarterly dividends of $0.16 per share with respect to each of the first two quarters of 2023, increasing to $0.21 per share for the third and fourth quarters. We currently expect to continue quarterly dividends of $0.21 per share in the future.
Biggest changeWe paid quarterly dividends of $0.21 per share with respect to each of the first two quarters of 2024, increasing to $0.24 per share for the third and fourth quarters. We currently expect to continue quarterly dividends of $0.24 per share in the future.
Set forth below is information as of December 31, 2023 regarding securities authorized for issuance under the equity compensation plans. The plan that has been approved by the shareholders is the Bank7 Corp. 2018 Equity Incentive Plan.
Set forth below is information as of December 31, 2024 regarding securities authorized for issuance under the equity compensation plans. The plan that has been approved by the shareholders is the Bank7 Corp. 2018 Equity Incentive Plan.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on The NASDAQ Global Select Market under the symbol “BSVN”. The approximate number of holders of record of the Company’s common stock as of March 25, 2024 was 4.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on The NASDAQ Global Select Market under the symbol “BSVN”. The approximate number of holders of record of the Company’s common stock as of March 12, 2025 was 5.
Plan Number of securities to be issued upon exercise of outstanding options and rights Weighted average exercise price Number of securities remaining available for issuance under plan Equity compensation plans approved by shareholders 432,400 $ 17.52 637,371 Equity compensation plans not approved by shareholders - - -
Plan Number of securities to be issued upon exercise of outstanding options and rights Weighted average exercise price Number of securities remaining available for issuance under plan Equity compensation plans approved by shareholders 311,927 $ 16.79 636,430 Equity compensation plans not approved by shareholders - - -

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFinancial and performance covenants are used in commercial lending to allow us to react to a borrower’s deteriorating financial condition, should that occur. 28 Table of Contents The following tables show the contractual maturities of our gross loans as of the periods below: As of December 31, 2023 Due in One Year or Less Due after One Year Through Five Years Due after Five Years Through Fifteen Years Due after Fifteen Years Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Total (Dollars in thousands) Construction & development $ 11,431 $ 70,040 $ 8,970 $ 44,935 $ - $ 1,438 $ 392 $ - $ 137,206 1-4 family real estate 13,628 13,015 41,602 21,451 26 5,443 5,411 - 100,576 Commercial real estate - other 50,251 65,120 152,250 219,260 129 21,283 10,329 - 518,622 Total commercial real estate 75,310 148,175 202,822 285,646 155 28,164 16,132 - 756,404 Commercial & industrial 20,389 263,564 41,520 186,776 3,276 10,041 619 - 526,185 Agricultural 13,250 22,615 13,935 13,032 - 810 2,853 - 66,495 Consumer 2,170 14 5,490 121 595 3,604 2,523 - 14,517 Gross loans $ 111,119 $ 434,368 $ 263,767 $ 485,575 $ 4,026 $ 42,619 $ 22,127 $ - $ 1,363,601 As of December 31, 2022 Due in One Year or Less Due after One Year Through Five Years Due after Five Years Through Fifteen Years Due after Fifteen Years Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Total (Dollars in thousands) Construction & development $ 11,749 $ 81,002 $ 7,556 $ 57,439 $ - $ 1,160 $ - $ 4,297 $ 163,203 1-4 family real estate 10,550 12,664 24,741 15,782 314 6,606 - 6,271 76,928 Commercial real estate - other 2,680 59,870 131,105 207,819 6,635 17,146 - 13,746 439,001 Total commerical real estate 24,979 153,536 163,402 281,040 6,949 24,912 - 24,314 679,132 Commercial & industrial 43,823 234,573 60,275 159,571 3,745 10,390 - 634 513,011 Agricultural 1,798 17,514 8,767 33,270 469 980 140 3,207 66,145 Consumer 1,683 22 6,310 156 587 2,860 82 3,249 14,949 Gross loans $ 72,283 $ 405,645 $ 238,754 $ 474,037 $ 11,750 $ 39,142 $ 222 $ 31,404 $ 1,273,237 As of December 31, 2021 Due in One Year or Less Due after One Year Through Five Years Due after Five Years Through Fifteen Years Due after Fifteen Years Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Fixed Rate Adjustable Rate Total (Dollars in thousands) Construction & development $ 7,283 $ 71,551 $ 10,148 $ 74,052 $ - $ 2,243 $ - $ 4,045 $ 169,322 1-4 family real estate 3,259 21,322 11,979 11,674 926 7,375 - 6,436 62,971 Commercial real estate - other 5,156 97,309 59,227 143,906 413 19,230 - 14,414 339,655 Total real estate 15,698 190,182 81,354 229,632 1,339 28,848 - 24,895 571,948 Commercial & industrial 24,249 142,553 16,346 145,654 20,474 12,047 - 651 361,974 Agricultural 2,529 17,441 5,156 39,305 623 1,587 - 6,369 73,010 Consumer 4,870 29 10,825 172 1,554 2,458 84 4,054 24,046 Gross loans $ 47,346 $ 350,205 $ 113,681 $ 414,763 $ 23,990 $ 44,940 $ 84 $ 35,969 $ 1,030,978 29 Table of Contents Allowance for Credit Losses The allowance is based on management’s estimate of probable losses inherent in the loan portfolio.
Biggest changeRisk Factors. 28 Table of Contents The following tables show the contractual maturities of our gross loans as of the periods below: As of December 31, 2024 Due after One Year Due after Five Years Due in One Year or Less Through Five Years Through Fifteen Years Due after Fifteen Years Fixed Adjustable Fixed Adjustable Fixed Adjustable Fixed Adjustable Total Rate Rate Rate Rate Rate Rate Rate Rate (Dollars in thousands) Construction & development $ 9,378 $ 76,709 $ 2,050 $ 78,786 $ - $ 564 $ 198 $ - $ 167,685 1-4 family real estate 15,426 20,085 43,558 31,566 964 4,826 4,622 - 121,047 Commercial real estate - other 47,737 61,482 103,484 271,156 153 18,303 8,989 - 511,304 Total commercial real estate 72,541 158,276 149,092 381,508 1,117 23,693 13,809 - 800,036 Commercial & industrial 36,062 263,026 13,639 175,729 8,232 9,738 597 - 507,023 Agricultural 22,768 8,991 16,581 26,677 - 1,054 1,851 - 77,922 Consumer 1,661 4 5,641 170 602 3,570 2,664 - 14,312 Gross loans $ 133,032 $ 430,297 $ 184,953 $ 584,084 $ 9,951 $ 38,055 $ 18,921 $ - $ 1,399,293 As of December 31, 2023 Due after One Year Due after Five Years Due in One Year or Less Through Five Years Through Fifteen Years Due after Fifteen Years Fixed Adjustable Fixed Adjustable Fixed Adjustable Fixed Adjustable Total Rate Rate Rate Rate Rate Rate Rate Rate (Dollars in thousands) Construction & development $ 11,431 $ 70,040 $ 8,970 $ 44,935 $ - $ 1,438 $ 392 $ - $ 137,206 1-4 family real estate 13,628 13,015 41,602 21,451 26 5,443 5,411 - 100,576 Commercial real estate - other 50,251 65,120 152,250 219,260 129 21,283 10,329 - 518,622 Total commerical real estate 75,310 148,175 202,822 285,646 155 28,164 16,132 - 756,404 Commercial & industrial 20,389 263,564 41,520 186,776 3,276 10,041 619 - 526,185 Agricultural 13,250 22,615 13,935 13,032 - 810 2,853 - 66,495 Consumer 2,170 14 5,490 121 595 3,604 2,523 - 14,517 Gross loans $ 111,119 $ 434,368 $ 263,767 $ 485,575 $ 4,026 $ 42,619 $ 22,127 $ - $ 1,363,601 As of December 31, 2022 Due after One Year Due after Five Years Due in One Year or Less Through Five Years Through Fifteen Years Due after Fifteen Years Fixed Adjustable Fixed Adjustable Fixed Adjustable Fixed Adjustable Total Rate Rate Rate Rate Rate Rate Rate Rate (Dollars in thousands) Construction & development $ 11,749 $ 81,002 $ 7,556 $ 57,439 $ - $ 1,160 $ - $ 4,297 $ 163,203 1-4 family real estate 10,550 12,664 24,741 15,782 314 6,606 - 6,271 76,928 Commercial real estate - other 2,680 59,870 131,105 207,819 6,635 17,146 - 13,746 439,001 Total real estate 24,979 153,536 163,402 281,040 6,949 24,912 - 24,314 679,132 Commercial & industrial 43,823 234,573 60,275 159,571 3,745 10,390 - 634 513,011 Agricultural 1,798 17,514 8,767 33,270 469 980 140 3,207 66,145 Consumer 1,683 22 6,310 156 587 2,860 82 3,249 14,949 Gross loans $ 72,283 $ 405,645 $ 238,754 $ 474,037 $ 11,750 $ 39,142 $ 222 $ 31,404 $ 1,273,237 29 Table of Contents Allowance for Credit Losses The allowance is based on management’s estimate of probable losses in the loan portfolio.
See Note (6) of the financial statements for further disclosure and discussion. 23 Table of Contents Results of Operations Years Ended December 31, 2023, December 31, 2022, and December 31, 2021 Net Interest Income and Net Interest Margin The following table presents, for the periods indicated, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets, and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities, and the resultant average rates; (iii) net interest income; and (iv) the net interest margin.
See Note (6) of the financial statements for further disclosure and discussion. 23 Table of Contents Results of Operations Years Ended December 31, 2024, December 31, 2023, and December 31, 2022 Net Interest Income and Net Interest Margin The following table presents, for the periods indicated, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets, and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities, and the resultant average rates; (iii) net interest income; and (iv) the net interest margin.
There have been no conditions or events since December 31, 2023 that management believes would change this classification. 37 Table of Contents The table below also summarizes the capital requirements applicable to the Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as the Bank’s capital ratios as of December 31, 2023, 2022, and 2021.
There have been no conditions or events since December 31, 2024 that management believes would change this classification. 37 Table of Contents The table below also summarizes the capital requirements applicable to the Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as the Bank’s capital ratios as of December 31, 2024, 2023, and 2022.
The Company manages its debt securities portfolio for liquidity, as a tool to execute its asset/liability management strategy, and for pledging requirements for public funds: As of December 31, 2023 Within One Year After One Year But Within Five Years After Five Years But Within Ten Years After Ten Years Total Amount Yield * Amount Yield * Amount Yield * Amount Yield * Amount Yield * Available-for-sale (Dollars in thousands) U.S.
The Company manages its debt securities portfolio for liquidity, as a tool to execute its asset/liability management strategy, and for pledging requirements for public funds: As of December 31, 2024 After One Year But After Five Years But Within One Year Within Five Years Within Ten Years After Ten Years Total Amount Yield * Amount Yield * Amount Yield * Amount Yield * Amount Yield * Available-for-sale (Dollars in thousands) U.S.
We also participate in the One-Way Buy Insured Cash Sweep service and similar services, which provide for one-way buy transactions among banks for the purpose of purchasing cost-effective floating-rate funding without collateralization or stock purchase requirements. As of December 31, 2023, 2022, and 2021 brokered deposits were $273.5 million, $249.9 million, and $71.7 million, respectively.
We also participate in the One-Way Buy Insured Cash Sweep service and similar services, which provide for one-way buy transactions among banks for the purpose of purchasing cost-effective floating-rate funding without collateralization or stock purchase requirements. As of December 31, 2024, 2023, and 2022 brokered deposits were $336.7 million, $273.5 million, and $249.9 million, respectively.
The increase was primarily attributable to expenses related to the operation of oil and gas assets acquired during the fourth quarter of 2023, see Note 2 of the financial statements.
The increase was primarily attributable to income related to the operation of oil and gas assets acquired during the fourth quarter of 2023, see Note 2 of the financial statements.
The FED influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. Our loan portfolio is significantly affected by changes in the prime interest rate. For the three-year period between January 1, 2021 and December 31, 2023, the prime rate fluctuated between a high of 8.50%, and a low of 3.25%.
The FED influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. Our loan portfolio is significantly affected by changes in the prime interest rate. For the three-year period between January 1, 2022 and December 31, 2024, the prime rate fluctuated between a high of 8.50%, and a low of 3.25%.
As of December 31, 2023, we had no unsecured fed funds lines with correspondent depository institutions with no amounts advanced.
As of December 31, 2024, we had no unsecured fed funds lines with correspondent depository institutions with no amounts advanced.
As of December 31, 2023, the FDIC categorized the Bank as “well-capitalized” under the prompt corrective action framework.
As of December 31, 2024, the FDIC categorized the Bank as “well-capitalized” under the prompt corrective action framework.
The quality and diversification of the loan portfolio is an important consideration when reviewing our financial condition. As of December 31, 2023, 2022 and 2021, our gross loans were $1.36 billion, $1.27 billion and $1.03 billion, respectively.
The quality and diversification of the loan portfolio is an important consideration when reviewing our financial condition. As of December 31, 2024, 2023, and 2022, our gross loans were $1.40 billion, $1.36 billion and $1.27 billion, respectively.
The increase was primarily attributable to income related to the operation of oil and gas assets acquired during the fourth quarter of 2023, see Note 2 of the financial statements. 26 Table of Contents Noninterest Expense Noninterest expense for the year ended December 31, 2023 was $33.4 million compared to $28.6 million for the year ended December 31, 2022, an increase of $4.8 million or 16.7%.
The increase was primarily attributable to income related to the operation of oil and gas assets acquired during the fourth quarter of 2023, see Note 2 of the financial statements. 26 Table of Contents For the year ended December 31, 2023 compared to the year ended December 31, 2022: - Other noninterest income was $8.1 million compared to $1.7 million, an increase of $6.4 million, or 380%.
The following table provides an analysis of the activity in our allowance for the periods indicated: For the Year Ended December 31, 2023 2022 2021 (Dollars in thousands) Balance at beginning of the period $ 14,734 $ 10,316 $ 9,639 Impact of CECL adoption 250 - - Provision for credit losses for loans 21,181 4,468 4,175 Charge-offs: Construction & development - - - 1-4 family real estate - - - Commercial real estate - other - - - Commercial & industrial (16,500 ) (2 ) (3,750 ) Agricultural (7 ) (50 ) - Consumer (17 ) (22 ) (68 ) Total charge-offs (16,524 ) (74 ) (3,818 ) Recoveries: Construction & development - - - 1-4 family real estate - - - Commercial real estate - other - - - Commercial & industrial 40 10 16 Agricultural 2 4 300 Consumer 8 10 4 Total recoveries 50 24 320 Net recoveries (charge-offs) (16,474 ) (50 ) (3,498 ) Balance at end of the period $ 19,691 $ 14,734 $ 10,316 Net recoveries (charge-offs) to average loans 1.25 % 0.00 % 0.39 % 30 Table of Contents While the entire allowance is available to absorb losses from any and all loans, the following table represents management’s allocation of the allowance by loan category, and the percentage of allowance in each category, for the periods indicated: As of December 31, 2023 2022 2021 Amount Percent Amount Percent Amount Percent (Dollars in thousands) Construction & development $ 1,417 7.2 % $ 1,889 12.8 % $ 1,695 16.4 % 1-4 family real estate 1,271 6.5 % 890 6.0 % 630 6.1 % Commercial real estate - Other 6,889 35.0 % 5,080 34.5 % 3,399 32.9 % Commercial & industrial 9,237 46.8 % 5,937 40.3 % 3,621 35.2 % Agricultural 628 3.2 % 765 5.2 % 730 7.1 % Consumer 249 1.3 % 173 1.2 % 241 2.3 % Total $ 19,691 100.0 % $ 14,734 100.0 % $ 10,316 100.0 % 31 Table of Contents Nonperforming Assets Loans are considered delinquent when principal or interest payments are past due 30 days or more.
The following table provides an analysis of the activity in our allowance for the periods indicated: For the Year Ended December 31, 2024 2023 2022 (Dollars in thousands) Balance at beginning of the period $ 19,691 $ 14,734 $ 10,316 Impact of CECL adoption - 250 - Provision for credit losses for loans - 21,181 4,468 Charge-offs: Construction & development - - - 1-4 family real estate - - - Commercial real estate - other (275 ) - - Commercial & industrial (2,000 ) (16,500 ) (2 ) Agricultural - (7 ) (50 ) Consumer - (17 ) (22 ) Total charge-offs (2,275 ) (16,524 ) (74 ) Recoveries: Construction & development - - - 1-4 family real estate - - - Commercial real estate - other - - - Commercial & industrial 495 40 10 Agricultural 7 2 4 Consumer - 8 10 Total recoveries 502 50 24 Net recoveries (charge-offs) (1,773 ) (16,474 ) (50 ) Balance at end of the period $ 17,918 $ 19,691 $ 14,734 Net recoveries (charge-offs) to average loans -0.13 % 1.25 % 0.00 % 30 Table of Contents While the entire allowance is available to absorb losses from any and all loans, the following table represents management’s allocation of the allowance by loan category, and the percentage of allowance in each category, for the periods indicated: As of December 31, 2024 2023 2022 Amount Percent Amount Percent Amount Percent (Dollars in thousands) Construction & development $ 1,223 6.8 % $ 1,417 7.2 % $ 1,889 12.8 % 1-4 family real estate 1,313 7.3 % 1,271 6.5 % 890 6.0 % Commercial real estate - other 6,992 39.0 % 6,889 35.0 % 5,080 34.5 % Commercial & industrial 6,797 38.0 % 9,237 46.8 % 5,937 40.3 % Agricultural 1,106 6.2 % 628 3.2 % 765 5.2 % Consumer 487 2.7 % 249 1.3 % 173 1.2 % Total $ 17,918 100.0 % $ 19,691 100.0 % $ 14,734 100.0 % 31 Table of Contents Nonperforming Assets Loans are considered delinquent when principal or interest payments are past due 30 days or more.
The total net increase in 2023 as compared to 2022, is comprised of a net increase in commercial and industrial substandard loans primarily related to an increase in one relationship comprised of three notes totaling $18.4 million with a $2.0 million specific reserve and a decrease in one relationship comprised of one note totaling $6.6 million with no specific reserve, and a net decrease in commercial real estate substandard loans primarily related to one relationship comprised of one note totaling $1.2 million with no specific reserves.
The total net decrease in substandard loans in 2024 as compared to 2023, is comprised of a net decrease in commercial and industrial substandard loans primarily related to a decrease in one relationship comprised of three notes totaling $18.4 million with a $2.0 million specific reserve, and a net increase in commercial real estate primarily related to two relationships comprised of one note totaling $3.0 million with a $0.2 million specific reserve, and one note totaling $1.45 million with no specific reserve.
Goodwill and Intangibles Intangible assets totaled $1.0 million and goodwill, net of accumulated amortization totaled $8.5 million for the year ended December 31, 2023, compared to intangible assets of $1.3 million and goodwill, net of accumulated amortization of $8.6 million for the year ended December 31, 2022.
Goodwill and Intangibles Intangible assets totaled $878,000 and goodwill, net of accumulated amortization totaled $8.5 million for the year ended December 31, 2024, compared to intangible assets of $1.0 million and goodwill, net of accumulated amortization of $8.5 million for the year ended December 31, 2023.
Other considerations include volumes and trends of delinquencies, nonaccrual loans, levels of bankruptcies, criticized and classified loan trends, expected losses on real estate secured loans, new credit products and policies, economic conditions, concentrations of credit risk and the experience and abilities of our lending personnel.
Other considerations in our current expected credit loss estimation process include current volumes and trends of delinquencies, nonaccrual loans, levels of bankruptcies, trends in criticized and classified loans, expected losses on real estate secured loans, impact of new credit products and policies, current and forecasted economic conditions, concentrations of credit risk, and the experience and abilities of our lending personnel in the current environment.
As of December 31, 2023 2022 2021 (Dollars in thousands) Commitments to extend credit $ 256,888 $ 198,027 $ 200,393 Standby letters of credit 4,247 1,043 5,809 Total $ 261,135 $ 199,070 $ 206,202 39 Table of Contents Critical Accounting Policies and Estimates Our accounting and reporting policies conform to GAAP and conform to general practices within the industry in which we operate.
As of December 31, 2024 2023 2022 (Dollars in thousands) Commitments to extend credit $ 272,261 $ 256,888 $ 198,027 Standby letters of credit 11,333 4,247 1,043 Total $ 283,594 $ 261,135 $ 199,070 39 Table of Contents Critical Accounting Policies and Estimates Our accounting and reporting policies conform to GAAP and conform to general practices within the industry in which we operate.
The increase was related to the cost of interest-bearing deposits increasing to 3.60% for the year ended December 31, 2023 from 1.05% for the year ended December 31, 2022. Interest expense on interest-bearing deposits totaled $9.3 million for the year ended December 31, 2022, compared to $3.1 million for 2021, an increase of $6.2 million, or 205.3%.
Interest expense on interest-bearing deposits totaled $39.0 million for the year ended December 31, 2023, compared to $9.3 million for 2022, an increase of $29.7 million, or 318.3%. The increase was related to the cost of interest-bearing deposits increasing to 3.60% for the year ended December 31, 2023 from 1.05% for the year ended December 31, 2022.
In addition, based on the values of loans pledged as collateral, we had borrowing availability with the FHLB of $159.2 million as of December 31, 2023 and $129.2 million as of December 31, 2022. 36 Table of Contents Capital Requirements The Bank is subject to various regulatory capital requirements administered by the federal and state banking regulators.
In addition, based on the values of loans pledged as collateral, we had borrowing availability with the FHLB of $190.9 million as of December 31, 2024 and $159.2 million as of December 31, 2023, and we had access to approximately $336.1 million in liquidity with the Federal Reserve Bank as of December 31, 2024 and $0 as of December 31, 2023. 36 Table of Contents Capital Requirements The Bank is subject to various regulatory capital requirements administered by the federal and state banking regulators.
Tax-adjusted return on average assets and return on average equity was 1.68% and 17.83%, respectively for the year ended December 31, 2023, as compared to 2.02% and 23.92%, respectively, for the same period in 2022. Our efficiency ratio for the year ended December 31, 2023 was 36.07% as compared to 39.29% for the same period in 2022.
Tax-adjusted return on average assets and return on average equity was 2.65% and 23.78%, respectively, for the year ended December 31, 2024, as compared to 1.68% and 17.83%, respectively, for the same period in 2023. Our efficiency ratio for the year ended December 31, 2024 was 37.90% as compared to 36.07% for the same period in 2023.
Pre-tax return on average assets and return on average equity was 2.21% and 23.47%, respectively for the year ended December 31, 2023, as compared to 2.68% and 29.32%, respectively, for the same period in 2022.
Pre-tax return on average assets and return on average equity was 3.50% and 31.41%, respectively, for the year ended December 31, 2024, as compared to 2.21% and 23.47%, respectively, for the same period in 2023.
We continued to experience strong asset growth for the year ended December 31, 2023 compared to the year ended December 31, 2022: - Total interest income on loans increased $35.4 million, or 47.6%, to $109.8 million, which was attributable to a $172.2 million increase in the average balance of loans to $1.32 billion during the year ended 2023 as compared with the average balance of loans of $1.14 billion for the year ended 2022, and increased loan yields as discussed below; - Yields on our interest-earning assets totaled 7.31%, an increase of 185 basis points which was attributable to higher loan rates of 184 basis points, an increase in yield on short term investments of 362 basis points, and an increase in yield on taxable debt securities of 25 basis points; and - Net interest margin for the years ended 2023 and 2022 was 4.97% and 4.82%, respectively. 24 Table of Contents We experienced strong asset growth for the year ended December 31, 2022 compared to the year ended December 31, 2021: - Total interest income on loans increased $18.6 million, or 33.4%, to $74.4 million, which was attributable to a $237.6 million increase in the average balance of loans to $1.14 billion during the year ended 2022 as compared with the average balance of $905.8 million for the year ended 2021; - Yields on our interest-earning assets totaled 5.46%, an increase of 4 basis points which was attributable to higher loan rates of 35 basis points, an increase in yield on short term investments of 104 basis points, and a decrease in yield on taxable debt securities of 225 basis points; and - Net interest margin for the years ended 2022 and 2021 was 4.82% and 5.12%, respectively.
For the year ended December 31, 2024 compared to the year ended December 31, 2023: - Total interest income on loans increased $9.6 million, or 8.7%, to $119.4 million, which was attributable to a $76.0 million increase in the average balance of loans to $1.39 billion during the year ended 2024 as compared with the average balance of loans of $1.32 billion for the year ended 2023, and increased loan yields as discussed below; - Yields on our interest-earning assets totaled 7.79%, an increase of 48 basis points which was attributable to higher loan rates of 21 basis points, an increase in yield on short term investments of 13 basis points, and an increase in yield on taxable debt securities of 96 basis points; and - Net interest margin for the years ended 2024 and 2023 was 5.11% and 4.97%, respectively. 24 Table of Contents We experienced strong asset growth for the year ended December 31, 2023 compared to the year ended December 31, 2022: - Total interest income on loans increased $35.4 million, or 47.6%, to $109.8 million, which was attributable to a $172.2 million increase in the average balance of loans to $1.32 billion during the year ended 2023 as compared with the average balance of $1.14 billion for the year ended 2022, and increased loan yields as discussed below; - Yields on our interest-earning assets totaled 7.31%, an increase of 185 basis points which was attributable to higher loan rates of 184 basis points, an increase in yield on short term investments of 362 basis points, and an increase in yield on taxable debt securities of 25 basis points; and - Net interest margin for the years ended 2023 and 2022 was 4.97% and 4.82%, respectively.
A loan is considered collateral dependent when repayment of the loan is based solely on the liquidation of the collateral. Fair value, where possible, is determined by independent appraisals, typically on an annual basis.
A loan is considered collateral-dependent when the expected source of repayment is primarily the liquidation of the collateral. Fair value, where utilized, is determined by independent appraisals, typically on an annual basis.
Nonperforming assets consist of nonperforming loans plus OREO. Loans accounted for on a nonaccrual basis were $21.2 million as of December 31, 2023, $8.0 million as of December 31, 2022 and $9.9 million as of December 31, 2021. OREO was $0 as of December 31, 2023, December 31, 2022 and December 31, 2021.
Nonperforming assets consist of nonperforming loans plus OREO. Loans accounted for on a nonaccrual basis were $7.2 million as of December 31, 2024, $18.9 million as of December 31, 2023 and $8.0 million as of December 31, 2022. OREO was $321,000, $0, and $0 as of December 31, 2024, December 31, 2023, and December 31, 2022, respectively.
Income on a nonaccrual loan is subsequently recognized only to the extent that cash is received and the loan’s principal balance is deemed collectible. Loans are restored to accrual status when loans become well-secured and management believes full collectability of principal and interest is probable.
Income on a nonaccrual loan is subsequently recognized only to the extent that cash is received and the loan’s principal balance is deemed collectible. Loans are restored to accrual status when loans become well-secured and management believes full collectability of principal and interest is probable. Loans are evaluated for expected credit losses over their contractual term, reflecting management’s current estimate.
As of December 31, 2023, we had total assets of $1.77 billion, total loans of $1.36 billion, total deposits of $1.59 billion and total shareholders’ equity of $170.3 million. The U.S. economy experienced widespread volatility throughout 2020 and 2021 as a result of the COVID-19 pandemic and government responses to the pandemic.
As of December 31, 2024, we had total assets of $1.74 billion, total loans of $1.40 billion, total deposits of $1.52 billion and total shareholders’ equity of $213.2 million. The U.S. economy experienced widespread volatility throughout 2020 and 2021 as a result of the COVID-19 pandemic and government responses to the pandemic.
During the year ended December 31, 2023, we had a single loan customer file for bankruptcy, and as a result, we recorded a charge-off of $16.5 million, increased nonaccrual loans by $18.4 million, and recorded an additional specific reserve to the allowance for credit losses and provision for loan losses of $2.0 million.
The provision expense for the year ended December 31, 2023 was related to loan growth in the first quarter of 2023, the impact of updated economic assumptions, and we had a single loan customer that filed for bankruptcy, and as a result, we recorded a charge-off of $16.5 million, increased nonaccrual loans by $18.4 million, and recorded an additional specific reserve to the allowance for credit losses and provision for loan losses of $2.0 million.
Total Assets Total assets increased $187.5 million, or 11.8%, to $1.77 billion as of December 31, 2023, as compared to $1.58 billion as of December 31, 2022 and $1.35 billion as of December 31, 2021. Loan Portfolio Our loans represent the largest portion of our earning assets.
Total Assets Total assets decreased $31.9 million, or 1.8%, to $1.74 billion as of December 31, 2024, as compared to $1.77 billion as of December 31, 2023 and $1.58 billion as of December 31, 2022. Loan Portfolio Our loans represent the largest portion of our earning assets.
Noninterest expense for the year ended December 31, 2022 was $28.6 million compared to $20.4 million for the year ended December 31, 2021, an increase of $8.2 million or 40.4%.
Noninterest expense for the year ended December 31, 2023 was $33.4 million compared to $28.6 million for the year ended December 31, 2022, an increase of $4.8 million or 16.7%.
The following table presents the balance and associated percentage of each major category in our loan portfolio as of December 31, 2023, December 31, 2022 and December 31, 2021: As of December 31 2023 2022 2021 Amount % of Total Amount % of Total Amount % of Total (Dollars in thousands) Construction & development $ 137,206 10.1 % $ 163,203 12.8 % $ 169,322 16.4 % 1-4 family real estate 100,576 7.4 % 76,928 6.0 % 62,971 6.1 % Commercial real estate - other 518,622 38.0 % 439,001 34.5 % 339,655 32.9 % Total commercial real estate 756,404 55.5 % 679,132 53.3 % 571,948 55.5 % Commercial & industrial 526,185 38.5 % 513,011 40.3 % 361,974 35.1 % Agricultural 66,495 4.9 % 66,145 5.2 % 73,010 7.1 % Consumer 14,517 1.1 % 14,949 1.2 % 24,046 2.3 % Gross loans 1,363,601 100.0 % 1,273,237 100.0 % 1,030,978 100.0 % Less: unearned income, net (2,762 ) (2,781 ) (2,577 ) Total Loans, net of unearned income 1,360,839 1,270,456 1,028,401 Less: Allowance for credit losses (19,691 ) (14,734 ) (10,316 ) Net loans $ 1,341,148 $ 1,255,722 $ 1,018,085 We have established internal concentration limits in the loan portfolio for CRE loans, hospitality loans, energy loans, and construction loans, among others.
The following table presents the balance and associated percentage of each major category in our loan portfolio as of December 31, 2024, December 31, 2023 and December 31, 2022: As of December 31, 2024 2023 2022 Amount % of Total Amount % of Total Amount % of Total (Dollars in thousands) Construction & development $ 167,685 12.0 % $ 137,206 10.1 % $ 163,203 12.8 % 1-4 family real estate 121,047 8.7 % 100,576 7.4 % 76,928 6.0 % Commercial real estate - other 511,304 36.5 % 518,622 38.0 % 439,001 34.5 % Total commercial real estate 800,036 57.2 % 756,404 55.5 % 679,132 53.3 % Commercial & industrial 507,023 36.2 % 526,185 38.5 % 513,011 40.3 % Agricultural 77,922 5.6 % 66,495 4.9 % 66,145 5.2 % Consumer 14,312 1.0 % 14,517 1.1 % 14,949 1.2 % Gross loans 1,399,293 100.0 % 1,363,601 100.0 % 1,273,237 100.0 % Less: unearned income, net (1,910 ) (2,762 ) (2,781 ) Total Loans, net of unearned income 1,397,383 1,360,839 1,270,456 Less: Allowance for credit losses (17,918 ) (19,691 ) (14,734 ) Net loans $ 1,379,465 $ 1,341,148 $ 1,255,722 We have established internal concentration limits in the loan portfolio for CRE loans, hospitality loans, energy loans, and construction loans, among others.
Analysis of Changes in Interest Income and Expenses For the Year Ended December 31, 2023 vs 2022 For the Year Ended December 31, 2022 vs 2021 Change due to: Change due to: Volume (1) Rate (1) Interest Variance Volume (1) Rate (1) Interest Variance (Dollars in thousands) (Dollars in thousands) Increase (decrease) in interest income: Short-term investments $ 580 $ 6,327 $ 6,907 $ 10 $ 1,485 $ 1,495 Debt securities 61 387 448 7,633 (5,303 ) 2,330 Total loans 11,210 24,230 35,440 14,635 4,000 18,635 Total increase (decrease) in interest income 11,851 30,944 42,795 22,278 182 22,460 Increase (decrease) in interest expense: Deposits: Transaction accounts 1,086 19,654 20,740 942 5,504 6,446 Time deposits 809 8,127 8,936 (322 ) 145 (177 ) Total interest-bearing deposits 1,895 27,781 29,676 620 5,649 6,269 Total increase (decrease) in interest expense 1,895 27,781 29,676 620 5,649 6,269 Increase (Decrease) in net interest income $ 9,956 $ 3,163 $ 13,119 $ 21,658 $ (5,467 ) $ 16,191 (1) Variances attributable to both volume and rate are allocated on a consistent basis between rate and volume based on the absolute value of the variances in each category. 25 Table of Contents Weighted Average Yield of Debt Securities The following table summarizes the maturity distribution schedule with corresponding weighted average taxable equivalent yields of the debt securities portfolio at December 31, 2023.
Analysis of Changes in Interest Income and Expenses For the Year Ended For the Year Ended December 31, 2024 vs 2023 December 31, 2023 vs 2022 Change due to: Change due to: Volume (1) Rate (1) Interest Volume (1) Rate (1) Interest Variance Variance (Dollars in thousands) (Dollars in thousands) Increase (decrease) in interest income: Short-term investments $ 478 $ 262 $ 740 $ 580 $ 6,327 $ 6,907 Debt securities (1,186 ) 869 (317 ) 61 387 448 Total loans 6,344 3,229 9,573 11,210 24,230 35,440 Total increase (decrease) in interest income 5,636 4,360 9,996 11,851 30,944 42,795 Increase (decrease) in interest expense: Deposits: Transaction accounts 1,977 2,849 4,826 1,086 19,654 20,740 Time deposits (106 ) 1,627 1,521 809 8,127 8,936 Total interest-bearing deposits 1,871 4,476 6,347 1,895 27,781 29,676 Total increase (decrease) in interest expense 1,871 4,476 6,347 1,895 27,781 29,676 Increase (Decrease) in net interest income $ 3,765 $ (116 ) $ 3,649 $ 9,956 $ 3,163 $ 13,119 (1) Variances attributable to both volume and rate are allocated on a consistent basis between rate and volume based on the absolute value of the variances in each category. 25 Table of Contents Weighted Average Yield of Debt Securities The following table summarizes the maturity distribution schedule with corresponding weighted average taxable equivalent yields of the debt securities portfolio at December 31, 2024.
Net Interest Margin For the Year Ended December 31, 2023 2022 2021 Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate (Dollars in thousands) Interest-Earning Assets: Short-term investments $ 174,600 $ 8,580 4.91 % $ 129,624 $ 1,673 1.29 % $ 126,136 $ 178 0.25 % Debt securities, taxable 152,094 2,791 1.84 145,915 2,313 1.59 4,663 312 3.84 Debt securities, tax exempt (1) 19,430 330 1.70 21,635 360 1.66 1,852 31 1.62 Loans held for sale 158 - - 586 - - 318 - - Total loans (2) 1,315,578 109,843 8.35 1,143,380 74,403 6.51 905,804 55,768 6.16 Total interest-earning assets 1,661,860 121,544 7.31 1,441,140 78,749 5.46 1,038,773 56,289 5.42 Noninterest-earning assets 25,943 23,532 7,361 Total assets $ 1,687,803 $ 1,464,672 $ 1,046,134 Funding sources: Interest-bearing liabilities: Deposits: Transaction accounts $ 825,169 28,582 3.46 % $ 724,617 7,842 1.08 % $ 430,268 1,396 0.32 % Time deposits 256,672 10,416 4.06 165,735 1,480 0.89 205,437 1,657 0.81 Total interest-bearing deposits 1,081,841 38,998 3.60 890,352 9,322 1.05 635,705 3,053 0.48 Total interest-bearing liabilities 1,081,841 38,998 3.60 890,352 9,322 1.05 635,705 3,053 0.48 Noninterest-bearing liabilities: Noninterest-bearing deposits 433,603 432,901 288,446 Other noninterest-bearing liabilities 10,423 7,520 4,930 Total noninterest-bearing liabilities 444,026 440,421 293,376 Shareholders' equity 161,936 133,899 117,053 Total liabilities and shareholders' equity $ 1,687,803 $ 1,464,672 $ 1,046,134 Net interest income $ 82,546 $ 69,427 $ 53,236 Net interest spread 3.71 % 4.42 % 4.94 % Net interest margin 4.97 % 4.82 % 5.12 % (1) Taxable-equivalent yield of 2.24% as of December 31, 2023, applying a 24.0% effective tax rate (2) Average loan balances include monthly average nonaccrual loans of $18.8 million, $8.8 million and $12.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Net Interest Margin For the Year Ended December 31, 2024 2023 2022 Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate (Dollars in thousands) Interest-Earning Assets: Short-term investments $ 184,328 $ 9,320 5.04 % $ 174,600 $ 8,580 4.91 % $ 129,624 $ 1,673 1.29 % Debt securities, taxable 90,184 2,531 2.80 152,094 2,791 1.84 145,915 2,313 1.59 Debt securities, tax exempt (1) 16,651 273 1.64 19,430 330 1.70 21,635 360 1.66 Loans held for sale 343 - - 158 - - 586 - - Total loans (2) 1,391,552 119,416 8.56 1,315,578 109,843 8.35 1,143,380 74,403 6.51 Total interest-earning assets 1,683,058 131,540 7.79 1,661,860 121,544 7.31 1,441,140 78,749 5.46 Noninterest-earning assets 39,555 25,943 23,532 Total assets $ 1,722,613 $ 1,687,803 $ 1,464,672 Funding sources: Interest-bearing liabilities: Deposits: Transaction accounts $ 882,314 33,408 3.78 % $ 825,169 28,582 3.46 % $ 724,617 7,842 1.08 % Time deposits 254,057 11,937 4.69 256,672 10,416 4.06 165,735 1,480 0.89 Total interest-bearing deposits 1,136,371 45,345 3.98 1,081,841 38,998 3.60 890,352 9,322 1.05 Total interest-bearing liabilities 1,136,371 45,345 3.98 1,081,841 38,998 3.60 890,352 9,322 1.05 Noninterest-bearing liabilities: Noninterest-bearing deposits 381,660 433,603 432,901 Other noninterest-bearing liabilities 12,419 10,423 7,520 Total noninterest-bearing liabilities 394,079 444,026 440,421 Shareholders’ equity 192,163 161,936 133,899 Total liabilities and shareholders’ equity $ 1,722,613 $ 1,687,803 $ 1,464,672 Net interest income $ 86,195 $ 82,546 $ 69,427 Net interest spread 3.81 % 3.71 % 4.42 % Net interest margin 5.11 % 4.97 % 4.82 % (1) Taxable-equivalent yield of 2.16% as of December 31, 2024, applying a 24.3% effective tax rate (2) Average loan balances include monthly average nonaccrual loans of $12.4 million, $18.8 million and $8.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Noninterest Income The following table sets forth the major components of our noninterest income for the years ended December 31, 2023, 2022 and 2021: For the Years Ended For the Years Ended December 31, December 31, 2023 2022 $ Increase (Decrease) % Increase (Decrease) 2022 2021 $ Increase (Decrease) % Increase (Decrease) (Dollars in thousands) (Dollars in thousands) Noninterest income: Mortgage lending income $ 331 $ 486 $ (155 ) -31.89 % $ 486 $ 435 $ 51 11.72 % Gain (Loss) on sales, prepayments, and calls of available-for-sale debt securities (16 ) (127 ) 111 -87.40 % (127 ) - (127 ) -100.00 % Service charges on deposit accounts 869 900 (31 ) -3.44 % 900 550 350 63.64 % Other 8,058 1,680 6,378 379.64 % 1,680 1,265 415 32.81 % Total noninterest income $ 9,242 $ 2,939 $ 6,303 214.46 % $ 2,939 $ 2,250 $ 689 30.62 % For the year ended December 31, 2023 compared to the year ended December 31, 2022: - Other noninterest income was $8.1 million compared to $1.7 million, an increase of $6.4 million, or 380%.
Noninterest Income The following table sets forth the major components of our noninterest income for the years ended December 31, 2024, 2023 and 2022: For the Years Ended For the Years Ended December 31, December 31, 2024 2023 $ Increase % Increase 2023 2022 $ Increase % Increase (Decrease) (Decrease) (Decrease) (Decrease) (Dollars in thousands) (Dollars in thousands) Noninterest income: Mortgage lending income $ 370 $ 331 $ 39 11.78 % $ 331 $ 486 $ (155 ) -31.89 % Gain (Loss) on sales, prepayments, and calls of available-for-sale debt securities (6 ) (16 ) 10 -62.50 % (16 ) (127 ) 111 -87.40 % Service charges on deposit accounts 975 869 106 12.20 % 869 900 (31 ) -3.44 % Other 9,915 8,058 1,857 23.05 % 8,058 1,680 6,378 379.64 % Total noninterest income $ 11,254 $ 9,242 $ 2,012 21.77 % $ 9,242 $ 2,939 $ 6,303 214.46 % For the year ended December 31, 2024 compared to the year ended December 31, 2023: - Other noninterest income was $9.9 million compared to $8.1 million, an increase of $1.9 million, or 23.1%.
The increases were driven by retained capital from net income during the periods. 38 Table of Contents Contractual Obligations The following tables contain supplemental information regarding our total contractual obligations as of December 31, 2023: Payments Due as of December 31, 2023 Within One Year One to Three Years Three to Five Years After Five Years Total (Dollars in thousands) Deposits without a stated maturity $ 1,334,615 $ - $ - $ - $ 1,334,615 Time deposits 224,811 31,345 620 - 256,776 Operating lease commitments 553 627 308 850 2,338 Total contractual obligations $ 1,559,979 $ 31,972 $ 928 $ 850 $ 1,593,729 We believe that we will be able to meet our contractual obligations as they come due through the maintenance of adequate cash levels.
Contractual Obligations The following tables contain supplemental information regarding our total contractual obligations as of December 31, 2024 and December 31, 2023: Payments Due as of December 31, 2024 Within One Year One to Three Years Three to Five Years After Five Years Total (Dollars in thousands) Deposits without a stated maturity $ 1,276,316 $ - $ - $ - $ 1,276,316 Time deposits 231,710 6,746 699 - 239,155 Operating lease commitments 646 516 236 476 1,874 Total contractual obligations $ 1,508,672 $ 7,262 $ 935 $ 476 $ 1,517,345 Payments Due as of December 31, 2023 Within One Year One to Three Years Three to Five Years After Five Years Total (Dollars in thousands) Deposits without a stated maturity $ 1,334,615 $ - $ - $ - $ 1,334,615 Time deposits 224,811 31,345 620 - 256,776 Operating lease commitments 553 627 308 850 2,338 Total contractual obligations $ 1,559,979 $ 31,972 $ 928 $ 850 $ 1,593,729 We believe that we will be able to meet our contractual obligations as they come due through the maintenance of adequate cash levels.
For the Year Ended December 31, 2023 2022 2021 Amount Percentage of Total Amount Percentage of Total Amount Percentage of Total (Dollars in thousands) Noninterest-bearing demand $ 482,349 30.4 % $ 441,509 30.9 % $ 366,705 30.1 % Interest-bearing transaction deposits 702,150 44.1 % 669,852 46.8 % 583,389 47.9 % Savings deposits 150,116 9.4 % 136,537 9.5 % 89,778 7.4 % Time deposits (less than $250,000) 168,690 10.6 % 140,929 9.8 % 132,690 10.9 % Time deposits ($250,000 or more) 88,086 5.5 % 42,573 3.0 % 44,909 3.7 % Total interest-bearing deposits 1,109,042 69.6 % 989,891 69.1 % 850,766 69.9 % Total deposits $ 1,591,391 100.0 % $ 1,431,400 100.0 % $ 1,217,471 100.0 % The following table summarizes our average deposit balances and weighted average rates for the years ended December 31, 2023, 2022, and 2021: For the Year Ended December 31, 2023 2022 2021 Average Balance Weighted Average Rate Average Balance Weighted Average Rate Average Balance Weighted Average Rate (Dollars in thousands) Non interest-bearing demand $ 433,603 0.00 % $ 432,901 0.00 % $ 288,446 0.00 % Interest-bearing transaction deposits 705,891 3.42 % 613,799 1.11 % 375,048 0.34 % Savings deposits 119,278 3.74 % 110,818 0.92 % 55,220 0.23 % Time deposits 256,672 4.06 % 165,735 0.89 % 205,437 0.81 % Total interest-bearing deposits 1,081,841 3.60 % 890,352 1.05 % 635,705 0.48 % Total deposits $ 1,515,444 2.57 % $ 1,323,253 0.70 % $ 924,151 0.33 % 35 Table of Contents The following tables set forth the maturity of time deposits as of the dates indicated below: As of December 31, 2023 Maturity Within: Three Months Three to Six Months Six to 12 Months After 12 Months Total (Dollars in thousands) Time deposits (less than $250,000) $ 52,423 $ 55,570 $ 50,047 $ 10,650 $ 168,690 Time deposits ($250,000 or more) 30,807 18,472 17,492 21,315 88,086 Total time deposits $ 83,230 $ 74,042 $ 67,539 $ 31,965 $ 256,776 As of December 31, 2022 Maturity Within: Three Months Three to Six Months Six to 12 Months After 12 Months Total (Dollars in thousands) Time deposits (less than $250,000) $ 58,184 $ 25,333 $ 38,844 $ 18,568 $ 140,929 Time deposits ($250,000 or more) 12,292 5,579 17,001 7,701 42,573 Total time deposits $ 70,476 $ 30,912 $ 55,845 $ 26,269 $ 183,502 Liquidity Liquidity refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs, all at a reasonable cost.
As of December 31, 2024 2023 2022 Amount Percentage of Total Amount Percentage of Total Amount Percentage of Total (Dollars in thousands) Noninterest-bearing demand $ 313,258 20.7 % $ 482,349 30.4 % $ 441,509 30.9 % Interest-bearing transaction deposits 889,679 58.70 % 702,150 44.10 % 669,852 46.80 % Savings deposits 73,379 4.80 % 150,116 9.40 % 136,537 9.50 % Time deposits (less than $250,000) 146,814 9.70 % 168,690 10.60 % 140,929 9.80 % Time deposits ($250,000 or more) 92,341 6.10 % 88,086 5.50 % 42,573 3.00 % Total interest-bearing deposits 1,202,213 79.3 % 1,109,042 69.6 % 989,891 69.1 % Total deposits $ 1,515,471 100.0 % $ 1,591,391 100.0 % $ 1,431,400 100.0 % The following table summarizes our average deposit balances and weighted average rates for the years ended December 31, 2024, 2023, and 2022: For the Year Ended December 31, 2024 2023 2022 Average Balance Weighted Average Rate Average Balance Weighted Average Rate Average Balance Weighted Average Rate (Dollars in thousands) Noninterest-bearing demand $ 381,660 0.00 % $ 433,603 0.00 % $ 432,901 0.00 % Interest-bearing transaction deposits 776,141 3.81 % 705,891 3.42 % 613,799 1.11 % Savings deposits 106,173 3.63 % 119,278 3.74 % 110,818 0.92 % Time deposits 254,057 4.69 % 256,672 4.06 % 165,735 0.89 % Total interest-bearing deposits 1,136,371 3.98 % 1,081,841 3.60 % 890,352 1.05 % Total deposits $ 1,518,031 2.99 % $ 1,515,444 2.57 % $ 1,323,253 0.70 % 35 Table of Contents The following tables set forth the maturity of time deposits as of the dates indicated below: As of December 31, 2024 Maturity Within: Three Months Three to Six Months Six to 12 Months After 12 Months Total (Dollars in thousands) Time deposits (less than $250,000) $ 62,577 $ 38,514 $ 41,345 $ 4,378 $ 146,814 Time deposits ($250,000 or more) 45,667 25,552 18,055 3,067 92,341 Total time deposits $ 108,244 $ 64,066 $ 59,400 $ 7,445 $ 239,155 As of December 31, 2023 Maturity Within: Three Months Three to Six Months Six to 12 Months After 12 Months Total (Dollars in thousands) Time deposits (less than $250,000) $ 52,423 $ 55,570 $ 50,047 $ 10,650 $ 168,690 Time deposits ($250,000 or more) 30,807 18,472 17,492 21,315 88,086 Total time deposits $ 83,230 $ 74,042 $ 67,539 $ 31,965 $ 256,776 Liquidity Liquidity refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs, all at a reasonable cost.
The following table sets forth the major components of our noninterest expense for the years ended December 31, 2023, 2022 and 2021: For the Years Ended For the Years Ended December 31, December 31, 2023 2022 $ Increase (Decrease) % Increase (Decrease) 2022 2021 $ Increase (Decrease) % Increase (Decrease) (Dollars in thousands) (Dollars in thousands) Noninterest expense: Salaries and employee benefits $ 17,385 $ 17,040 $ 345 2.02 % $ 17,040 $ 11,983 $ 5,057 42.20 % Furniture and equipment 995 1,468 (473 ) -32.22 % 1,468 883 585 66.25 % Occupancy 2,689 2,329 360 15.46 % 2,329 1,899 430 22.64 % Data and item processing 1,730 2,068 (338 ) -16.34 % 2,068 1,237 831 67.18 % Accounting, marketing, and legal fees 543 984 (441 ) -44.82 % 984 800 184 23.00 % Regulatory assessments 1,537 1,344 193 14.36 % 1,344 604 740 122.52 % Advertising and public relations 427 477 (50 ) -10.48 % 477 282 195 69.15 % Travel, lodging and entertainment 374 363 11 3.03 % 363 409 (46 ) -11.25 % Other expense 7,740 2,568 5,172 201.40 % 2,568 2,300 268 11.65 % Total noninterest expense $ 33,420 $ 28,641 $ 4,779 16.69 % $ 28,641 $ 20,397 $ 8,244 40.42 % For the year ended December 31, 2023 compared to the year ended December 31, 2022: - Other expense was $7.7 million compared to $2.6 million, an increase of $5.2 million, or 200%.
The following table sets forth the major components of our noninterest expense for the years ended December 31, 2024, 2023 and 2022: For the Years Ended For the Years Ended December 31, December 31, 2024 2023 $ Increase % Increase 2023 2022 $ Increase % Increase (Decrease) (Decrease) (Decrease) (Decrease) (Dollars in thousands) (Dollars in thousands) Noninterest expense: Salaries and employee benefits $ 20,783 $ 17,385 $ 3,398 19.55 % $ 17,385 $ 17,040 $ 345 2.02 % Furniture and equipment 1,070 995 75 7.54 % 995 1,468 (473 ) -32.22 % Occupancy 2,640 2,689 (49 ) -1.82 % 2,689 2,329 360 15.46 % Data and item processing 1,897 1,730 167 9.65 % 1,730 2,068 (338 ) -16.34 % Accounting, marketing, and legal fees 836 543 293 53.96 % 543 984 (441 ) -44.82 % Regulatory assessments 1,196 1,537 (341 ) -22.19 % 1,537 1,344 193 14.36 % Advertising and public relations 549 427 122 28.57 % 427 477 (50 ) -10.48 % Travel, lodging and entertainment 431 374 57 15.24 % 374 363 11 3.03 % Other expense 7,693 7,740 (47 ) -0.61 % 7,740 2,568 5,172 201.40 % Total noninterest expense $ 37,095 $ 33,420 $ 3,675 11.00 % $ 33,420 $ 28,641 $ 4,779 16.69 % For the year ended December 31, 2024 compared to the year ended December 31, 2023: - Salaries and employee benefits expense was $20.8 million compared to $17.4 million, an increase of $3.4 million, or 19.6%.
All loan types are within our established limits. We use underwriting guidelines to assess each borrower’s historical cash flow to determine debt service, and we further stress test the debt service under higher interest rate scenarios.
All loan types are within our established limits. We use underwriting guidelines to assess each borrower’s historical cash flow to determine debt service, and we further stress test the debt service under higher interest rate scenarios. Financial and performance covenants are used in commercial lending to allow us to react to a borrower’s deteriorating financial condition, should that occur.
Substandard loans totaled $31.1 million as of December 31, 2023, an increase of $10.1 million compared to December 31, 2022. Substandard loans totaled $21.0 million as of December 31, 2022, a decrease of $3.7 million compared to December 31, 2021.
Substandard loans totaled $15.2 million as of December 31, 2024, a decrease of $15.9 million compared to December 31, 2023. Substandard loans totaled $31.1 million as of December 31, 2023, an increase of $10.1 million compared to December 31, 2022.
Total deposits were $1.59 billion as of December 31, 2023, an increase of $160.0 million, or 11.2%, from December 31, 2022. Pre-tax net income was $37.2 million, a decrease of $2.0 million, or 5.2%, for the year ended December 31, 2023 as compared to pre-tax net income of $39.3 million for the same period in 2022.
Total deposits were $1.52 billion as of December 31, 2024, a decrease of $75.9 million, or 4.8%, from December 31, 2023. Pre-tax net income was $60.4 million, an increase of $23.1 million, or 62.1%, for the year ended December 31, 2024 as compared to pre-tax net income of $37.2 million for the same period in 2023.
Outstanding loan balances categorized by internal risk grades as of the periods indicated are summarized as follows: As of December 31, 2023 Pass Watch Special mention Substandard Total (Dollars in thousands) Construction & development $ 136,417 $ - $ 789 $ - $ 137,206 1-4 family real estate 100,576 - - - 100,576 Commercial real estate - Other 502,795 - 15,701 126 518,622 Commercial & industrial 485,433 4,094 5,767 30,891 526,185 Agricultural 66,495 - - - 66,495 Consumer 14,437 - - 80 14,517 Total $ 1,306,153 $ 4,094 $ 22,257 $ 31,097 $ 1,363,601 As of December 31, 2022 Pass Watch Special mention Substandard Total (Dollars in thousands) Construction & development $ 163,203 $ - $ - $ - $ 163,203 1-4 family real estate 76,928 - - - 76,928 Commercial real estate - Other 397,295 14,976 24,747 1,983 439,001 Commercial & industrial 493,412 - 584 19,015 513,011 Agricultural 65,857 288 - - 66,145 Consumer 14,927 - - 22 14,949 Total $ 1,211,622 $ 15,264 $ 25,331 $ 21,020 $ 1,273,237 As of December 31, 2021 Pass Watch Special mention Substandard Total (Dollars in thousands) Construction & development $ 169,322 $ - $ - $ - $ 169,322 1-4 family real estate 62,971 - - - 62,971 Commercial real estate - Other 282,268 14,976 27,112 15,299 339,655 Commercial & industrial 341,661 4,658 6,300 9,355 361,974 Agricultural 72,295 255 460 - 73,010 Consumer 24,000 - - 46 24,046 Total $ 952,517 $ 19,889 $ 33,872 $ 24,700 $ 1,030,978 34 Table of Contents Deposits We gather deposits primarily through our twelve branch locations and online though our website.
Outstanding loan balances categorized by internal risk grades as of the periods indicated are summarized as follows: As of December 31, 2024 Pass Watch Special mention Substandard Total (Dollars in thousands) Construction & development $ 165,863 $ - $ 1,259 $ 563 $ 167,685 1-4 family real estate 121,047 - - - 121,047 Commercial real estate - other 498,835 - 7,493 4,976 511,304 Commercial & industrial 493,512 - 3,817 9,694 507,023 Agricultural 74,896 - 3,026 - 77,922 Consumer 14,312 - - - 14,312 Total $ 1,368,465 $ - $ 15,595 $ 15,233 $ 1,399,293 As of December 31, 2023 Pass Watch Special mention Substandard Total (Dollars in thousands) Construction & development $ 136,417 $ - $ 789 $ - $ 137,206 1-4 family real estate 100,576 - - - 100,576 Commercial real estate - other 502,795 - 15,701 126 518,622 Commercial & industrial 485,433 4,094 5,767 30,891 526,185 Agricultural 66,495 - - - 66,495 Consumer 14,437 - - 80 14,517 Total $ 1,306,153 $ 4,094 $ 22,257 $ 31,097 $ 1,363,601 As of December 31, 2022 Pass Watch Special mention Substandard Total (Dollars in thousands) Construction & development $ 163,203 $ - $ - $ - $ 163,203 1-4 family real estate 76,928 - - - 76,928 Commercial real estate - other 397,295 14,976 24,747 1,983 439,001 Commercial & industrial 493,412 - 584 19,015 513,011 Agricultural 65,857 288 - - 66,145 Consumer 14,927 - - 22 14,949 Total $ 1,211,622 $ 15,264 $ 25,331 $ 21,020 $ 1,273,237 34 Table of Contents Deposits We gather deposits primarily through our twelve branch locations and online though our website.
Actual With Capital Conservation Buffer Minimum to be "Well- Capitalized" Under Prompt Corrective Action Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of December 31, 2023 Total capital (to risk-weighted assets) Company $ 185,171 12.74 % $ 152,579 10.50 % N/A N/A Bank 185,118 12.75 % 152,472 10.50 % $ 145,211 10.00 % Tier 1 capital (to risk-weighted assets) Company 166,982 11.49 % 123,516 8.50 % N/A N/A Bank 166,942 11.50 % 123,429 8.50 % 116,169 8.00 % CET 1 capital (to risk-weighted assets) Company 166,982 11.49 % 101,719 7.00 % N/A N/A Bank 166,942 11.50 % 101,648 7.00 % 94,387 6.50 % Tier 1 capital (to average assets) Company 166,982 9.50 % N/A N/A N/A N/A Bank 166,942 9.50 % N/A N/A 87,897 5.00 % Actual With Capital Conservation Buffer Minimum to be "Well- Capitalized" Under Prompt Corrective Action Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of December 31, 2022 Total capital (to risk-weighted assets) Company $ 158,158 12.41 % $ 133,862 10.50 % N/A N/A Bank 158,158 12.42 % 133,756 10.50 % $ 127,387 10.00 % Tier 1 capital (to risk-weighted assets) Company 143,424 11.25 % 108,365 8.50 % N/A N/A Bank 143,424 11.26 % 108,279 8.50 % 101,909 8.00 % CET 1 capital (to risk-weighted assets) Company 143,424 11.25 % 89,241 7.00 % N/A N/A Bank 143,424 11.26 % 89,171 7.00 % 82,801 6.50 % Tier 1 capital (to average assets) Company 143,424 9.19 % N/A N/A N/A N/A Bank 143,424 9.18 % N/A N/A 78,111 5.00 % Actual With Capital Conservation Buffer Minimum to be "Well- Capitalized" Under Prompt Corrective Action Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of December 31, 2021: Total capital (to risk-weighted assets) Bank7 Corp. $ 127,946 12.54 % $ 107,126 10.50 % N/A N/A Bank 127,844 12.54 % 107,020 10.50 % $ 101,924 10.00 % Tier 1 capital (to risk-weighted assets) Bank7 Corp. 117,631 11.53 % 86,721 8.50 % N/A N/A Bank 117,528 11.53 % 86,635 8.50 % 81,539 8.00 % CET 1 capital (to risk-weighted assets) Bank7 Corp. 117,631 11.53 % 71,417 7.00 % N/A N/A Bank 117,528 11.53 % 71,347 7.00 % 66,250 6.50 % Tier 1 capital (to average assets) Bank7 Corp. 117,631 10.56 % N/A N/A N/A N/A Bank 117,528 10.55 % N/A N/A 55,714 5.00 % Shareholders’ equity provides a source of permanent funding, allows for future growth and provides a cushion to withstand unforeseen adverse developments.
Actual With Capital Conservation Buffer Minimum to be “Well- Capitalized” Under Prompt Corrective Action Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of December 31, 2024 Total capital (to risk-weighted assets) Company $ 227,229 15.21 % $ 156,830 10.50 % N/A N/A Bank 227,189 15.22 % 156,723 10.50 % $ 149,260 10.00 % Tier 1 capital (to risk-weighted assets) Company 208,847 13.98 % 126,957 8.50 % N/A N/A Bank 208,807 13.99 % 126,871 8.50 % 119,408 8.00 % CET 1 capital (to risk-weighted assets) Company 208,847 13.98 % 104,553 7.00 % N/A N/A Bank 208,807 13.99 % 104,482 7.00 % 97,019 6.50 % Tier 1 capital (to average assets) Company 208,847 12.19 % N/A N/A N/A N/A Bank 208,807 12.18 % N/A N/A 85,698 5.00 % Actual With Capital Conservation Buffer Minimum to be “Well- Capitalized” Under Prompt Corrective Action Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of December 31, 2023 Total capital (to risk-weighted assets) Company $ 185,171 12.74 % $ 152,579 10.50 % N/A N/A Bank 185,118 12.75 % 152,472 10.50 % $ 145,211 10.00 % Tier 1 capital (to risk-weighted assets) Company 166,982 11.49 % 123,516 8.50 % N/A N/A Bank 166,942 11.50 % 123,429 8.50 % 116,169 8.00 % CET 1 capital (to risk-weighted assets) Company 166,982 11.49 % 101,719 7.00 % N/A N/A Bank 166,942 11.50 % 101,648 7.00 % 94,387 6.50 % Tier 1 capital (to average assets) Company 166,982 9.50 % N/A N/A N/A N/A Bank 166,942 9.50 % N/A N/A 87,897 5.00 % Actual With Capital Conservation Buffer Minimum to be “Well- Capitalized” Under Prompt Corrective Action Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of December 31, 2022 Total capital (to risk-weighted assets) Bank7 Corp. $ 158,158 12.41 % $ 133,862 10.50 % N/A N/A Bank 158,158 12.42 % 133,756 10.50 % $ 127,387 10.00 % Tier 1 capital (to risk-weighted assets) Bank7 Corp. 143,424 11.25 % 108,365 8.50 % N/A N/A Bank 143,424 11.26 % 108,279 8.50 % 101,909 8.00 % CET 1 capital (to risk-weighted assets) Bank7 Corp. 143,424 11.25 % 89,241 7.00 % N/A N/A Bank 143,424 11.26 % 89,171 7.00 % 82,801 6.50 % Tier 1 capital (to average assets) Bank7 Corp. 143,424 9.19 % N/A N/A N/A N/A Bank 143,424 9.18 % N/A N/A 78,111 5.00 % 38 Table of Contents Shareholders’ equity provides a source of permanent funding, allows for future growth and provides a cushion to withstand unforeseen adverse developments.
As of December 31, 2023 Loans 30-59 days past due Loans 60-89 days past due Loans 90+ days past due Loans 90+ days past due and accruing Total past due loans Current Total loans (Dollars in thousands) Construction & development $ - $ - $ - $ - $ - $ 137,206 $ 137,206 1-4 family real estate - - - - - 100,576 100,576 Commercial real estate - - - - - 518,622 518,622 Commercial & industrial 472 10,969 9,946 9,946 21,387 504,798 526,185 Agricultural - - - - - 66,495 66,495 Consumer - 27 80 80 107 14,410 14,517 Total $ 472 $ 10,996 $ 10,026 $ 10,026 $ 21,494 $ 1,342,107 $ 1,363,601 As of December 31, 2022 Loans 30-59 days past due Loans 60-89 days past due Loans 90+ days past due Loans 90+ days past due and accruing Total Past Due Loans Current Total loans (Dollars in thousands) Construction & development $ - $ - $ - $ - $ - $ 163,203 $ 163,203 1-4 family real estate - - - - - 76,928 76,928 Commercial real estate - 617 - - 617 438,384 439,001 Commercial & industrial 21 - 9,923 9,923 9,944 503,067 513,011 Agricultural 4 - - - 4 66,141 66,145 Consumer 291 82 22 18 395 14,554 14,949 Total $ 316 $ 699 $ 9,945 $ 9,941 $ 10,960 $ 1,262,277 $ 1,273,237 As of December 31, 2021 Loans 30-59 days past due Loans 60-89 days past due Loans 90+ days past due Loans 90+ days past due and accruing Total Past Due Loans Current Total loans (Dollars in thousands) Construction & development $ - $ - $ - $ - $ - $ 169,322 $ 169,322 1-4 family commerical - - - - - 62,971 62,971 Commercial real estate - Other - 174 - - 174 339,481 339,655 Commercial & industrial - 19 501 401 520 361,454 361,974 Agricultural - - 77 77 77 72,933 73,010 Consumer 48 15 18 18 81 23,965 24,046 Total $ 48 $ 208 $ 596 $ 496 $ 852 $ 1,030,126 $ 1,030,978 In addition to the past due and nonaccrual criteria, the Company also evaluates loans according to its internal risk grading system.
As of December 31, 2024 Loans 30-59 days past due Loans 60-89 days past due Loans 90+ days past due Loans 90+ days past due and accruing Total past due loans Current Gross loans (Dollars in thousands) Construction & development $ - $ - $ - $ - $ - $ 167,685 $ 167,685 1-4 family real estate - - - - - 121,047 121,047 Commercial real estate - other 103 - 3,426 - 3,529 507,775 511,304 Commercial & industrial 403 5 - - 408 506,615 507,023 Agricultural - - - - - 77,922 77,922 Consumer 97 - - - 97 14,215 14,312 Total $ 603 $ 5 $ 3,426 $ - $ 4,034 $ 1,395,259 $ 1,399,293 As of December 31, 2023 Loans 30-59 days past due Loans 60-89 days past due Loans 90+ days past due Loans 90+ days past due and accruing Total Past Due Loans Current Gross loans (Dollars in thousands) Construction & development $ - $ - $ - $ - $ - $ 137,206 $ 137,206 1-4 family real estate - - - - - 100,576 100,576 Commercial real estate - other - - - - - 518,622 518,622 Commercial & industrial 472 10,969 9,946 9,946 21,387 504,798 526,185 Agricultural - - - - - 66,495 66,495 Consumer - 27 80 80 107 14,410 14,517 Total $ 472 $ 10,996 $ 10,026 $ 10,026 $ 21,494 $ 1,342,107 $ 1,363,601 As of December 31, 2022 Loans 30-59 days past due Loans 60-89 days past due Loans 90+ days past due Loans 90+ days past due and accruing Total Past Due Loans Current Gross loans (Dollars in thousands) Construction & development $ - $ - $ - $ - $ - $ 163,203 $ 163,203 1-4 family commerical - - - - - 76,928 76,928 Commercial real estate - other - 617 - - 617 438,384 439,001 Commercial & industrial 21 - 9,923 9,923 9,944 503,067 513,011 Agricultural 4 - - - 4 66,141 66,145 Consumer 291 82 22 18 395 14,554 14,949 Total $ 316 $ 699 $ 9,945 $ 9,941 $ 10,960 $ 1,262,277 $ 1,273,237 In addition to the past due and nonaccrual criteria, the Company also evaluates loans according to its internal risk grading system.
For the year ended December 31, 2022 compared to the year ended December 31, 2021: - The provision for credit losses increased from $4.2 million to $4.5 million; and - The allowance as a percentage of loans increased by 16 basis points to 1.16%.
For the year ended December 31, 2023 compared to the year ended December 31, 2022: - The provision for credit losses increased from $4.5 million to $21.1 million; and - The allowance as a percentage of loans increased by 29 basis points to 1.44%. - Increases are related to the single loan customer discussed in the 2024 Overview.
As of December 31, 2023 2022 2021 (Dollars in thousands) Nonaccrual loans (1) $ 18,941 $ 8,039 $ 9,885 Accruing loans 90 or more days past due 10,026 9,941 496 Total nonperforming assets $ 28,967 $ 17,980 $ 10,381 Ratio of nonperforming loans to total loans 2.13 % 1.42 % 1.01 % Ratio of nonaccrual loans to total loans 1.39 % 0.63 % 0.96 % Ratio of allowance for credit losses to total loans 1.45 % 1.16 % 1.00 % Ratio of allowance for credit losses to nonaccrual loans 103.96 % 183.28 % 104.36 % Ratio of nonperforming assets to total assets 1.64 % 1.13 % 0.77 % (1) Includes $10.12 million of loans modified to borrowers experiencing financial difficulty, see Note 6 of the financial statements. 32 Table of Contents The following tables present an aging analysis of loans as of the dates indicated.
As of December 31, 2024 2023 2022 (Dollars in thousands) Nonaccrual loans (1) $ 7,170 $ 18,941 $ 8,039 Accruing loans 90 or more days past due - 10,026 9,941 Total nonperforming assets $ 7,170 $ 28,967 $ 17,980 Ratio of nonperforming loans to total loans 0.51 % 2.13 % 1.42 % Ratio of nonaccrual loans to total loans 0.51 % 1.39 % 0.63 % Ratio of allowance for credit losses to total loans 1.28 % 1.45 % 1.16 % Ratio of allowance for credit losses to nonaccrual loans 249.90 % 103.96 % 183.28 % Ratio of nonperforming assets to total assets 0.41 % 1.64 % 1.13 % (1) Included in the nonaccrual loans balance are $0 and $10.12 million of loans modified to borrowers experiencing financial difficulty as of December 31, 2024 and December 31, 2023, respectively.
The provision for credit losses for the year ended December 31, 2023 increased $16.7 million, or 373.5%, from $4.5 million compared to the same period in 2022.
The provision for credit losses for the year ended December 31, 2024 decreased $21.1 million, or 100%, from $21.1 million compared to the same period in 2023.
Income from a loan on nonaccrual status is recognized to the extent cash is received and when the loan’s principal balance is deemed collectible.
Income from loans placed on nonaccrual status continues to be recognized to the extent cash is received and when the collectability of the loan’s principal balance is reasonably assured.
Depending on a particular loan’s circumstances, we measure impairment of a loan based upon either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral less estimated costs to sell if the loan is collateral dependent.
Depending on a particular loan’s risk characteristics, we estimate expected credit losses using methods such as present value of expected future cash flows discounted at the loan’s effective interest rate, observable market prices for similar assets if available, or the fair value of collateral less estimated costs to sell for collateral-dependent loans.
Interest income on short-term investments increased $1.5 million, or 839.9%, to $1.7 million for year ended December 31, 2022 compared to 2021, due to yield increase of 104 basis points. Interest expense on interest-bearing deposits totaled $39.0 million for the year ended December 31, 2023, compared to $9.3 million for 2022, an increase of $29.7 million, or 318.3%.
Interest income on short-term investments increased $740,000, or 8.6%, to $9.3 million for year ended December 31, 2024 compared to 2023, due to an increase in the average balances of $9.7 million, or 5.6% and a yield increase of 13 basis points.
The following table sets forth the effects of changing rates and volumes on our net interest income during the period shown.
Net interest margin for the years ended December 31, 2024, 2023 and 2022 was 5.11%, 4.97% and 4.82%, respectively. The following table sets forth the effects of changing rates and volumes on our net interest income during the period shown.
Total deposits as of December 31, 2023, 2022, and 2021 were $1.59 billion, $1.43 billion and $1.22 billion, respectively. The increase was primarily due to acquired deposits and organic deposit growth. The following table sets forth deposit balances by certain categories as of the dates indicated and the percentage of each deposit category to total deposits.
The following table sets forth deposit balances by certain categories as of the dates indicated and the percentage of each deposit category to total deposits.
Total shareholders’ equity increased to $170.3 million as of December 31, 2023, compared to $144.1 million as of December 31, 2022 and $127.4 million as of December 31, 2021.
Total shareholders’ equity increased to $213.2 million as of December 31, 2024, compared to $170.3 million as of December 31, 2023 and $144.1 million as of December 31, 2022. The increases were driven by retained capital from net income during the periods.
Treasuries 99,325 1.19 2,780 1.04 2,552 1.12 - - 104,657 1.18 Corporate debt securities - - - - 4,337 3.36 - - 4,337 3.36 Total $ 105,669 1.18 % $ 24,360 1.29 % $ 17,450 1.97 % $ 22,008 1.71 % $ 169,487 1.36 % Percentage of total 62.35 % 14.36 % 10.30 % 12.99 % 100.00 % *Yield is on a taxable-equivalent basis using 21% tax rate Provision for Credit Losses For the year ended December 31, 2023 compared to the year ended December 31, 2022: - The provision for credit losses increased from $4.5 million to $21.1 million; and - The allowance as a percentage of loans increased by 29 basis points to 1.44%. - Increases are related to the single loan customer discussed in the 2023 Overview.
Treasuries - - 3,687 1.05 1,639 1.12 - - 5,326 1.08 Corporate debt securities - - - - 4,629 3.36 - - 4,629 3.36 Total $ 4,681 1.44 % $ 23,717 1.37 % $ 12,402 2.26 % $ 19,141 1.70 % $ 59,941 1.68 % Percentage of total 7.81 % 39.57 % 20.69 % 31.93 % 100.00 % *Yield is on a taxable-equivalent basis using 21% tax rate Provision for Credit Losses For the year ended December 31, 2024 compared to the year ended December 31, 2023: - The provision for credit losses decreased from $21.1 million to $0; and - The allowance as a percentage of loans decreased by 16 basis points to 1.28%. - Decreases are related to the single loan customer discussed in the 2024 Overview.
Between appraisal periods, the fair value may be adjusted based on specific events, such as if deterioration of quality of the collateral comes to our attention as part of our problem loan monitoring process, or if discussions with the borrower lead us to believe the last appraised value no longer reflects the actual market for the collateral.
Between appraisal periods, the estimated fair value may be adjusted based on specific events, such as identified deterioration of collateral quality through our credit risk monitoring, or discussions with the borrower indicating the appraised value may no longer reflect current market conditions. The estimated credit losses are recognized as an allowance for credit losses, which is a valuation account.
For the year ended December 31, 2022 compared to the year ended December 31, 2021: - Salaries and employee benefits expense was $17.0 million compared to $12.0 million, an increase of $5.1 million, or 42.2%.
Noninterest Expense Noninterest expense for the year ended December 31, 2024 was $37.1 million compared to $33.4 million for the year ended December 31, 2023, an increase of $3.7 million or 11.0%.
These actions positively impacted growth in net interest income in for 2023 and 2022, but the higher rates could negatively impact loan customers in a slowing economy. 2023 Overview We reported total loans of $1.36 billion as of December 31, 2023, an increase of $90.4 million, or 7.1%, from December 31, 2022.
These monetary policy actions, along with the impact of the elevated interest rate environment experienced earlier in 2024, influenced our net interest income and credit quality throughout the year. 2024 Overview We reported total loans of $1.40 billion as of December 31, 2024, an increase of $36.5 million, or 2.7%, from December 31, 2023.
The allowance was $19.7 million at December 31, 2023, $14.7 million at December 31, 2022 and $10.3 million at December 31, 2021. The increasing trend was related to loan growth and the single loan customer discussed in the 2023 Overview.
The allowance was $17.9 million at December 31, 2024, $19.7 million at December 31, 2023 and $14.7 million at December 31, 2022. See the 2024 Overview for the discussion of the decrease in allowance in 2024.
To determine the adequacy of the allowance, the loan portfolio is broken into segments based on loan type. Historical loss experience factors by segment, adjusted for changes in trends and conditions, are used to determine an indicated allowance for each portfolio segment. These factors are evaluated and updated based on the composition of the specific loan segment.
These historical loss factors and adjustments are regularly evaluated and updated based on the evolving composition of each loan segment.
The increase was related to the cost of interest-bearing deposits increasing to 1.05% for the year ended December 31, 2022 from 0.48% for the year ended December 31, 2021. Net interest margin for the years ended December 31, 2023, 2022 and 2021 was 4.97%, 4.82% and 5.12%, respectively.
Interest expense on interest-bearing deposits totaled $45.3 million for the year ended December 31, 2024, compared to $39.0 million for 2023, an increase of $6.3 million, or 16.3%. The increase was related to the cost of interest-bearing deposits increasing to 3.98% for the year ended December 31, 2024 from 3.60% for the year ended December 31, 2023.
The increase was attributable to overall increases in compensation to remain competitive, and due to our acquisition of Cornerstone Bank in late 2021, which increased employee headcount. 27 Table of Contents Financial Condition The following discussion of our financial condition compares December 31, 2023, 2022, and 2021.
The increase was primarily attributable to expenses related to the operation of oil and gas assets acquired during the fourth quarter of 2023, see Note 2 of the financial statements. 27 Table of Contents Financial Condition The following discussion of our financial condition compares December 31, 2024, 2023, and 2022.
Removed
Federal agencies $ 33 2.29 % $ 102 2.89 % $ - 0 % $ - 0 % $ 135 2.74 % Mortgage-backed securities 483 1.03 9,685 1.32 2,470 1.54 21,864 1.71 34,502 1.59 State and political subdivisions 5,828 1.08 11,793 1.32 8,091 1.52 144 1.66 25,856 1.34 U.S.
Added
In 2024, the Federal Reserve began to adjust monetary policy, ultimately lowering the federal funds rate three times, ending the year with a target range of 4.25% to 4.5%.
Removed
A loan is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans include loans on nonaccrual status and loans modified in a troubled debt restructuring, or TDR.
Added
Federal agencies $ - 0.00 % $ 64 2.78 % $ - 0.00 % $ - 0.00 % $ 64 2.78 % Mortgage-backed securities 2,653 1.72 8,402 1.37 - - 19,141 1.70 30,196 1.61 State and political subdivisions 2,028 1.09 11,564 1.47 6,134 1.70 - - 19,726 1.51 U.S.
Removed
The impairment amount on a collateral dependent loan is charged off to the allowance if deemed not collectible and the impairment amount on a loan that is not collateral dependent is set up as a specific reserve.
Added
The increase was primarily attributable to overall increases in compensation due to the performance of the Company and to remain competitive. For the year ended December 31, 2023 compared to the year ended December 31, 2022: - Other expense was $7.7 million compared to $2.6 million, an increase of $5.2 million, or 200%.
Removed
In addition to the segment evaluations, impaired loans with a balance of $250,000 or more are individually evaluated based on facts and circumstances of the loan to determine if a specific allowance amount may be necessary.
Added
Discussion of credit risk as it relates to commercial lending, which is primarily comprised of hospitality and energy loans, is discussed under Item 1A.
Removed
Specific allowances may also be established for loans whose outstanding balances are below the $250,000 threshold when it is determined that the risk associated with the loan differs significantly from the risk factor amounts established for its loan segment.
Added
Loans placed on nonaccrual status and loan modifications granted to borrowers experiencing financial difficulty are considered to have elevated credit risk and are carefully considered within our current expected credit loss methodology.
Added
Changes in the allowance for credit losses, whether increases or decreases, are recorded in current period earnings as provision for credit losses.
Added
See Note 6 of the financial statements. 32 Table of Contents The following tables present an aging analysis of loans as of the dates indicated.
Added
Uninsured deposits are defined as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit and amounts in any other uninsured investment or deposit account that are classified as deposits and are not subject to any federal or state deposit insurance regimes.
Added
Total uninsured deposits were $354.2 million and $448.7 million at December 31, 2024 and December 31, 2023, respectively, as calculated per regulatory guidance. This was approximately 23.4% and 28.2% of deposits at December 31, 2024 and December 31, 2023, respectively. Total deposits as of December 31, 2024, 2023, and 2022 were $1.52 billion, $1.59 billion and $1.43 billion, respectively.
Added
To estimate the allowance for credit losses, the loan portfolio is segmented based on shared risk characteristics, primarily by loan type. Historical credit loss experience for each segment, adjusted for relevant current conditions and reasonable and supportable forecasts, is a significant input in determining the expected credit losses for each portfolio segment under the current expected credit loss methodology.
Added
In addition to these segment-level estimations, loans with larger balances or unique risk profiles may be further analyzed based on specific facts and circumstances to refine the overall expected credit loss estimate. This individual analysis helps ensure the allowance for credit losses appropriately reflects the expected losses inherent in the portfolio.
Added
Adjustments to the segment-level or portfolio-level expected credit loss estimates may be necessary when specific loan characteristics warrant a different loss expectation than indicated by the segment risk factors.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

150 edited+35 added−48 removed173 unchanged
Biggest changeNotes to Consolidated Financial Statements The following table presents the amortized cost of the Company’s loan portfolio with the gross charge-offs for the twelve months ended by year of origination based on internal rating category as of December 31, 2023 (dollars in thousand s): As of December 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total Construction & development Grade 1 (Pass) $ 26,915 $ 2,266 $ 3,182 $ 201 $ 98 $ 44 $ 103,711 $ 136,417 2 (Watch) - - - - - - - - 3 (Special Mention) 563 - - - - - 226 789 4 (Substandard) - - - - - - - - Total construction & development 27,478 2,266 3,182 201 98 44 103,937 137,206 Current-period gross charge-offs - - - - - - - - 1 - 4 family real estate Grade 1 (Pass) 48,275 22,573 13,305 3,928 1,808 1,069 9,618 100,576 2 (Watch) - - - - - - - - 3 (Special Mention) - - - - - - - - 4 (Substandard) - - - - - - - - Total 1 - 4 family real estate 48,275 22,573 13,305 3,928 1,808 1,069 9,618 100,576 Current-period gross charge-offs - - - - - - - - Commercial real estate - other Grade 1 (Pass) 187,086 153,764 32,641 36,278 2,613 4,043 86,370 502,795 2 (Watch) - - - - - - - - 3 (Special Mention) 14,612 - - - - 1,089 - 15,701 4 (Substandard) - - - - - 126 - 126 Total Commercial real estate - other 201,698 153,764 32,641 36,278 2,613 5,258 86,370 518,622 Current-period gross charge-offs - - - - - - - - Commercial and industrial Grade 1 (Pass) 158,062 59,265 38,093 2,777 1,706 4,059 221,471 485,433 2 (Watch) - - - - - - 4,094 4,094 3 (Special Mention) 4,151 - - - - - 1,616 5,767 4 (Substandard) 20,660 7,937 98 8 - - 2,188 30,891 Total Commercial and industrial 186,967 67,202 38,191 2,785 1,706 4,059 225,275 526,185 Current-period gross charge-offs 16,500 - - - - - - 16,500 Agriculural Grade 1 (Pass) 9,283 5,789 23,205 4,283 927 1,104 21,904 66,495 2 (Watch) - - - - - - - - 3 (Special Mention) - - - - - - - - 4 (Substandard) - - - - - - - - Total agriculural 9,283 5,789 23,205 4,283 927 1,104 21,904 66,495 Current-period gross charge-offs - 7 - - - - - 7 Consumer Grade 1 (Pass) 4,415 1,545 2,171 2,554 663 1,819 1,270 14,437 2 (Watch) - - - - - - - - 3 (Special Mention) - - - - - - - - 4 (Substandard) - - - - - 80 - 80 Total consumer 4,415 1,545 2,171 2,554 663 1,899 1,270 14,517 Current-period gross charge-offs 17 - - - - - - 17 Total loans held for investment $ 478,116 $ 253,139 $ 112,695 $ 50,029 $ 7,815 $ 13,433 $ 448,374 $ 1,363,601 Total current-period gross charge-offs $ 16,517 $ 7 $ - $ - $ - $ - $ - $ 16,524 74 Table of Contents Bank7 Corp.
Biggest changeNotes to Consolidated Financial Statements The following table presents the amortized cost of the Company’s loan portfolio with the gross charge-offs for the twelve months ended by year of origination based on internal rating category as of December 31, 2023 (dollars in thousands): As of December 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total Construction & development Grade 1 (Pass) $ 26,915 $ 2,266 $ 3,182 $ 201 $ 98 $ 44 $ 103,711 $ 136,417 2 (Watch) - - - - - - - - 3 (Special Mention) 563 - - - - - 226 789 4 (Substandard) - - - - - - - - Total construction & development 27,478 2,266 3,182 201 98 44 103,937 137,206 Current-period gross charge-offs - - - - - - - - 1 - 4 family real estate Grade 1 (Pass) 48,275 22,573 13,305 3,928 1,808 1,069 9,618 100,576 2 (Watch) - - - - - - - - 3 (Special Mention) - - - - - - - - 4 (Substandard) - - - - - - - - Total 1 - 4 family real estate 48,275 22,573 13,305 3,928 1,808 1,069 9,618 100,576 Current-period gross charge-offs - - - - - - - - Commercial real estate - other Grade 1 (Pass) 187,086 153,764 32,641 36,278 2,613 4,043 86,370 502,795 2 (Watch) - - - - - - - - 3 (Special Mention) 14,612 - - - - 1,089 - 15,701 4 (Substandard) - - - - - 126 - 126 Total Commercial real estate - other 201,698 153,764 32,641 36,278 2,613 5,258 86,370 518,622 Current-period gross charge-offs - - - - - - - - Commercial and industrial Grade 1 (Pass) 162,156 59,265 38,093 2,777 1,706 4,059 217,377 485,433 2 (Watch) - - - - - - 4,094 4,094 3 (Special Mention) 4,151 - - - - - 1,616 5,767 4 (Substandard) 20,660 7,937 98 8 - - 2,188 30,891 Total Commercial and industrial 186,967 67,202 38,191 2,785 1,706 4,059 225,275 526,185 Current-period gross charge-offs 16,500 - - - - - - 16,500 Agriculural Grade 1 (Pass) 9,283 5,789 23,205 4,283 927 1,104 21,904 66,495 2 (Watch) - - - - - - - - 3 (Special Mention) - - - - - - - - 4 (Substandard) - - - - - - - - Total agriculural 9,283 5,789 23,205 4,283 927 1,104 21,904 66,495 Current-period gross charge-offs - 7 - - - - - 7 Consumer Grade 1 (Pass) 4,415 1,545 2,171 2,554 663 1,819 1,270 14,437 2 (Watch) - - - - - - - - 3 (Special Mention) - - - - - - - - 4 (Substandard) - - - - - 80 - 80 Total consumer 4,415 1,545 2,171 2,554 663 1,899 1,270 14,517 Current-period gross charge-offs 17 - - - - - - 17 Total loans held for investment $ 478,116 $ 253,139 $ 112,695 $ 50,029 $ 7,815 $ 13,433 $ 448,374 $ 1,363,601 Total current-period gross charge-offs $ 16,517 $ 7 $ - $ - $ - $ - $ - $ 16,524 Aged Analysis of Past Due Loans Receivable The following table presents the Company’s loan portfolio aging analysis of the recorded investment in loans as of December 31, 2024 and December 31, 2023 (dollars in thousands): Past Due Total Loans 30–59 Days 60–89 Days Greater than 90 Days Total Current Total Loans > 90 Days & Accruing December 31, 2024 Construction & development $ - $ - $ - $ - $ 167,685 $ 167,685 $ - 1 - 4 family real estate - - - - 121,047 121,047 - Commercial real estate - other 103 - 3,426 3,529 507,775 511,304 - Commercial & industrial 403 5 - 408 506,615 507,023 - Agricultural - - - - 77,922 77,922 - Consumer 97 - - 97 14,215 14,312 - Total $ 603 $ 5 $ 3,426 $ 4,034 $ 1,395,259 $ 1,399,293 $ - December 31, 2023 Construction & development $ - $ - $ - $ - $ 137,206 $ 137,206 $ - 1 - 4 family real estate - - - - 100,576 100,576 - Commercial real estate - other - - - - 518,622 518,622 - Commercial & industrial (1) 472 10,969 9,946 21,387 504,798 526,185 9,946 Agricultural - - - - 66,495 66,495 - Consumer (2) - 27 80 107 14,410 14,517 80 Total $ 472 $ 10,996 $ 10,026 $ 21,494 $ 1,342,107 $ 1,363,601 $ 10,026 (1) The $ 9.95 million that is greater than 90 days past due as of December 31, 2023, primarily consists of a single borrower that is well collateralized and for which collection is being diligently pursued .
The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life and applies the same estimated loss rate as determined for current outstanding loan balances by segment. Premises and equipment are stated at cost, less accumulated depreciation.
The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life and applies the same estimated loss rate as determined for current outstanding loan balances by segment. Premises and Equipment Premises and equipment are stated at cost, less accumulated depreciation.
For debt securities the Company does not intend to sell or is not more likely than not required to sell, prior to expected recovery of amortized cost basis, the credit portion of the impairment is recognized through earnings, with a corresponding entry to an allowance for credit losses, and the noncredit portion is recognized through accumulated other comprehensive loss.
For debt securities the Company does not intend to sell and is not more likely than not required to sell, prior to expected recovery of amortized cost basis, the credit portion of the impairment is recognized through earnings, with a corresponding entry to an allowance for credit losses, and the noncredit portion is recognized through accumulated other comprehensive loss.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
The Company grants to employees and directors restricted stock units (RSUs) which vest ratably over one , three , four , five , or eight years and stock options which vest ratably over four years. All RSUs and stock options are granted at the fair value of the common stock at the time of the award.
The Company grants to employees and directors restricted stock units (“RSU’s”) which vest ratably over one , three , four , five , or eight years and stock options which vest ratably over four years. All RSUs and stock options are granted at the fair value of the common stock at the time of the award.
Loans That Share Similar Risk Characteristics (Pooled Loans) The general steps in determining expected credit losses for the pooled loan component of the allowance are as follows: • Segment loans into pools according to similar risk characteristics; • Develop historical loss rates for each loan pool segment; • Incorporate the impact of forecasts; • Incorporate the impact of other qualitative factors; and • Calculate and review pool specific allowance for credit loss estimate. 54 Table of Contents Bank7 Corp.
Loans That Share Similar Risk Characteristics (Pooled Loans) The general steps in determining expected credit losses for the pooled loan component of the allowance are as follows: • Segment loans into pools according to similar risk characteristics; • Develop historical loss rates for each loan pool segment; • Incorporate the impact of forecasts; • Incorporate the impact of other qualitative factors; and • Calculate and review pool specific allowance for credit loss estimate. 53 Table of Contents Bank7 Corp.
As of December 31, 2023, the Company had oil and gas assets and related receivables of $16.8 million included in “interest receivable and other assets” on the consolidated balance sheets, assets retirement obligations and oil and gas related liabilities of $1.3 million included in “interest payable and other liabilities” on the consolidated balance sheets, oil and gas related revenues of $6.0 million included in “Other” noninterest income on the consolidated statements of comprehensive income, and oil and gas related expenses of $4.8 million included in “Other” noninterest expense on the consolidated statements of comprehensive income. 65 Table of Contents Bank7 Corp.
As of December 31, 2023, the Company had oil and gas assets and related receivables of $16.8 million included in “interest receivable and other assets” on the consolidated balance sheets, assets retirement obligations and oil and gas related liabilities of $1.3 million included in “interest payable and other liabilities” on the consolidated balance sheets, oil and gas related revenues of $6.0 million included in “Other” noninterest income on the consolidated statements of comprehensive income, and oil and gas related expenses of $4.8 million included in “Other” noninterest expense on the consolidated statements of comprehensive income. 62 Table of Contents Bank7 Corp.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
Notes to Consolidated Financial Statements Note 5: Debt Securities The following table summarizes the amortized cost and fair value of debt securities available-for-sale at December 31, 2023 and December 31, 2022, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income: (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available-for-sale as of December 31, 2023 U.S.
Notes to Consolidated Financial Statements Note 5: Debt Securities The following table summarizes the amortized cost and fair value of debt securities available-for-sale at December 31, 2024 and December 31, 2023, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income: (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available-for-sale as of December 31, 2024 U.S.
Credit risk is driven by consumer economic factors, such as unemployment and general economic conditions in the Company’s market area and the creditworthiness of a borrower. 72 Table of Contents Bank7 Corp. Notes to Consolidated Financial Statements Loan grades are numbered 1 through 4. Grade 1 is considered satisfactory.
Credit risk is driven by consumer economic factors, such as unemployment and general economic conditions in the Company’s market area and the creditworthiness of a borrower. 69 Table of Contents Bank7 Corp. Notes to Consolidated Financial Statements Loan grades are numbered 1 through 4. Grade 1 is considered satisfactory.
Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize all benefits related to these deductible differences as of December 31, 2023.
Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize all benefits related to these deductible differences as of December 31, 2024.
As of December 31, 2023, the Company’s and the Bank’s capital ratios exceeded the minimum capital adequacy guideline percentage requirements under the Basel III Capital Rules on a fully phased-in basis. The Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval.
As of December 31, 2024, the Company’s and the Bank’s capital ratios exceeded the minimum capital adequacy guideline percentage requirements under the Basel III Capital Rules on a fully phased-in basis. The Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval.
For unfunded commitment liabilities, lease liabilities, interest payable on deposits, dividends payable, and other accrued liabilities carrying amount approximates fair value.For the determination of fair value of oil and gas liabilities, see discussion in Note 1, Summary of Significant Accounting Policies--Specific to Production of Oil and Natural Gas Reserves Operations . 92 Table of Contents Bank7 Corp.
For unfunded commitment liabilities, lease liabilities, interest payable on deposits, dividends payable, and other accrued liabilities carrying amount approximates fair value.For the determination of fair value of oil and gas liabilities, see discussion in Note 1, Summary of Significant Accounting Policies--Specific to Production of Oil and Natural Gas Reserves Operations . 89 Table of Contents Bank7 Corp.
The calculation of all types of regulatory capital is subject to definitions, deductions and adjustments specified in the regulations. 86 Table of Contents Bank7 Corp. Notes to Consolidated Financial Statements The Basel III Capital Rules also require a “capital conservation buffer” of 2.5% above the regulatory minimum risk-based capital requirements.
The calculation of all types of regulatory capital is subject to definitions, deductions and adjustments specified in the regulations. 82 Table of Contents Bank7 Corp. Notes to Consolidated Financial Statements The Basel III Capital Rules also require a “capital conservation buffer” of 2.5% above the regulatory minimum risk-based capital requirements.
Notes to Consolidated Financial Statements Note 3: Restriction on Cash and Due from Banks On March 26, 2020, the Federal Reserve Board reduced reserve requirement ratios to zero percent, effectively eliminating reserve requirements for all depository institutions. There was no reserve requirement as of December 31, 2023.
Notes to Consolidated Financial Statements Note 3: Restriction on Cash and Due from Banks On March 26, 2020, the Federal Reserve Board reduced reserve requirement ratios to zero percent, effectively eliminating reserve requirements for all depository institutions. There was no reserve requirement as of December 31, 2024.
As of December 31, 2023, the Company had the ability and intent to hold the debt securities classified as available-for-sale for a period of time sufficient for a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying debt securities were purchased and acquired.
As of December 31, 2024, the Company had the ability and intent to hold the debt securities classified as available-for-sale for a period of time sufficient for a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying debt securities were purchased and acquired.
In addition, payroll and office sharing arrangements were in place between the Company and certain of its affiliates. 87 Table of Contents Bank7 Corp. Notes to Consolidated Financial Statements Note 15: Employee Benefits 401(k) Savings Plan The Company has a retirement savings 401(k) plan covering substantially all employees.
In addition, payroll and office sharing arrangements were in place between the Company and certain of its affiliates. 83 Table of Contents Bank7 Corp. Notes to Consolidated Financial Statements Note 15: Employee Benefits 401(k) Savings Plan The Company has a retirement savings 401(k) plan covering substantially all employees.
Risk factors management considers in this assessment include trends in underwriting standards, nature/volume/terms of loan originations, past due loans, loan review systems, collateral valuations, concentrations, legal/regulatory/political conditions, and the unforeseen impact of natural disasters. 55 Table of Contents Bank7 Corp.
Risk factors management considers in this assessment include trends in underwriting standards, nature/volume/terms of loan originations, past due loans, loan review systems, collateral valuations, concentrations, legal/regulatory/political conditions, and the unforeseen impact of natural disasters. 54 Table of Contents Bank7 Corp.
The estimated fair values of the Company’s commitments to extend credit, lines of credit and standby letters of credit were not material at December 31, 2023 or December 31, 2022. Interest Receivable and Other Assets Interest receivable and other assets include prepaid expenses, right-of-use lease assets, interest receivable on loans, deferred tax assets, and oil and gas related assets.
The estimated fair values of the Company’s commitments to extend credit, lines of credit and standby letters of credit were not material at December 31, 2024 or December 31, 2023. Interest Receivable and Other Assets Interest receivable and other assets include prepaid expenses, right-of-use lease assets, interest receivable on loans, deferred tax assets, and oil and gas related assets.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date. 53 Table of Contents Bank7 Corp.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date. 52 Table of Contents Bank7 Corp.
Management believes, as of December 31, 2023, that the Company and Bank meet all capital adequacy requirements to which it is subject and maintains capital conservation buffers that allow the Company and Bank to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to certain executive officers.
Management believes, as of December 31, 2024, that the Company and Bank meet all capital adequacy requirements to which it is subject and maintains capital conservation buffers that allow the Company and Bank to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to certain executive officers.
Specifically, a bank may exclude all PPP loans pledged as collateral to the PPP Facility from its average total consolidated assets for the purposes of calculating its leverage ratio, while PPP loans that are not pledged as collateral to the PPP Facility will be included. 85 Table of Contents Bank7 Corp.
Specifically, a bank may exclude all PPP loans pledged as collateral to the PPP Facility from its average total consolidated assets for the purposes of calculating its leverage ratio, while PPP loans that are not pledged as collateral to the PPP Facility will be included. 81 Table of Contents Bank7 Corp.
Notes to Consolidated Financial Statements The following table details gross unrealized losses and fair values of investment securities aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2023 and December 31, 2022.
Notes to Consolidated Financial Statements The following table details gross unrealized losses and fair values of investment securities aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2024 and December 31, 2023.
For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2023, 2022 and 2021, the Company recognized no interest and penalties.
For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2024, 2023 and 2022, the Company recognized no interest and penalties.
As of December 31, 2023, the most recent notification from the Federal Deposit Insurance Corporation (FDIC) categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain capital ratios as set forth in the table.
As of December 31, 2024, the most recent notification from the Federal Deposit Insurance Corporation (FDIC) categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain capital ratios as set forth in the table.
(2) The $80,000 that is greater than 90 days past due as of December 31, 2023, consists of a single borrower that is well secured and for which collection is being diligently pursued. 75 Table of Contents Bank7 Corp.
(2) The $80,000 that is greater than 90 days past due as of December 31, 2023, consists of a single borrower that is well secured and for which collection is being diligently pursued. 72 Table of Contents Bank7 Corp.
For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below. Collateral-Dependent Impaired Loans, Net of Allowance for Loan Losses The estimated fair value of collateral-dependent impaired loans is based on fair value, less estimated cost to sell.
For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below. Collateral-Dependent Loans, Net of Allowance for Credit Losses The estimated fair value of collateral-dependent impaired loans is based on fair value, less estimated cost to sell.
Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy. The Company considers evaluation analysis as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value.
Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy. The Company considers appraisal analysis as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value.
(“Company”) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).
(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).
Notes to Consolidated Financial Statements The provision for income taxes for the years ended December 31, 2023, 2022 and 2021 differs from the federal rate of 21% due to the following: Year Ended December 31, 2023 2022 2021 Statutory U.S.
Notes to Consolidated Financial Statements The provision for income taxes for the years ended December 31, 2024, 2023 and 2022 differs from the federal rate of 21% due to the following: Year Ended December 31, 2024 2023 2022 Statutory U.S.
Financial Statements and Supplementary Data Consolidated Financial Statements Index Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 686 ) 45 Consolidated Financial Statements: Consolidated Balance Sheets at December 31, 2023 and 2022 48 Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2023 49 Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended December 31, 2023 50 Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2023 51 Notes to Consolidated Financial Statements 52 44 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders, Board of Directors, and Audit Committee Bank7 Corp.
Financial Statements and Supplementary Data Consolidated Financial Statements Index Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 686 ) 45 Consolidated Financial Statements: Consolidated Balance Sheets at December 31, 2024 and 2023 47 Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2024 48 Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended December 31, 2024 49 Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2024 50 Notes to Consolidated Financial Statements 51 44 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders, Board of Directors, and Audit Committee Bank7 Corp.
The Company does not have any net operating loss or tax credit carryforwards as of December 31, 2023. The Company is not presently under examination by the Internal Revenue Service or any state tax authority.
The Company does not have any net operating loss or tax credit carryforwards as of December 31, 2024. The Company is not presently under examination by the Internal Revenue Service or any state tax authority.
Notes to Consolidated Financial Statements The amortized cost and estimated fair value of investment securities at December 31, 2023 and December 31, 2022, by contractual maturity, are shown below.
Notes to Consolidated Financial Statements The amortized cost and estimated fair value of investment securities at December 31, 2024 and December 31, 2023, by contractual maturity, are shown below.
Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. They are included in noninterest income or expense and, when applicable, are reported as a reclassification adjustment in other comprehensive income. 52 Table of Contents Bank7 Corp.
Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. They are included in noninterest income or expense and, when applicable, are reported as a reclassification adjustment in other comprehensive income(loss). 51 Table of Contents Bank7 Corp.
Accrued interest receivable totaled $8.7 million and $7.2 million at December 31, 2023 and December 31, 2022, respectively, and was reported in interest receivable and other assets on the consolidated balance sheets. The Company has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses.
Accrued interest receivable totaled $8.8 million and $8.7 million at December 31, 2024 and December 31, 2023, respectively, and was reported in interest receivable and other assets on the consolidated balance sheets. The Company has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses.
Upon adoption, the Company estimated an allowance for credit losses on off-balance sheet credit exposures, which resulted in recording a reserve for unfunded loan commitments of $500,000. The reserve for unfunded loan commitments totaled $464,000 and $0 at December 31, 2023 and December 31, 2022, respectively.
Upon adoption, the Company estimated an allowance for credit losses on off-balance sheet credit exposures, which resulted in recording a reserve for unfunded loan commitments of $500,000. The reserve for unfunded loan commitments totaled $464,000 and $464,000 at December 31, 2024 and December 31, 2023, respectively.
Less than Twelve Months Twelve Months or Longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses (in thousands) Available-for-sale as of December 31, 2023 U.S.
Less than Twelve Months Twelve Months or Longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses (in thousands) Available-for-sale as of December 31, 2024 U.S.
At December 31, 2023, goodwill of $8.5 million was recorded on the consolidated balance sheet. 93 Table of Contents Bank7 Corp. Notes to Consolidated Financial Statements Note 19: Operating Leases Lessee On January 1, 2022, the Company adopted ASU No. 2016-02, Leases (Topic 842), which requires the recognition of the Company’s operating leases on its balance sheet.
At December 31, 2024, goodwill of $8.5 million was recorded on the consolidated balance sheet. 90 Table of Contents Bank7 Corp. Notes to Consolidated Financial Statements Note 19: Operating Leases Lessee On January 1, 2022, the Company adopted ASU No. 2016-02, Leases (Topic 842), which requires the recognition of the Company’s operating leases on its balance sheet.
Legislative and Regulatory Developments In April 2020, the Company began originating loans to qualified small businesses under the Paycheck Protection Program (PPP) administered by the Small Business Administration (SBA). PPP loans are fully guaranteed by the SBA and thus have a zero percent risk weight under applicable risk-based capital rules.
Notes to Consolidated Financial Statements Legislative and Regulatory Developments In April 2020, the Company began originating loans to qualified small businesses under the Paycheck Protection Program (PPP) administered by the Small Business Administration (SBA). PPP loans are fully guaranteed by the SBA and thus have a zero percent risk weight under applicable risk-based capital rules.
The Bank leases office and retail banking space in Oklahoma City and Woodward, Oklahoma from Central Park on Lincoln, LLC and Haines Realty Investments Company, LLC, respectively, both related parties of the Company. Lease expense totaled $251,000, $155,000 and $175,000 for the years ended December 31, 2023, 2022 and 2021, respectively.
The Bank leases office and retail banking space in Oklahoma City and Woodward, Oklahoma from Central Park on Lincoln, LLC and Haines Realty Investments Company, LLC, respectively, both related parties of the Company. Lease expense totaled $286,000, $251,000 and $155,000 for the years ended December 31, 2024, 2023 and 2022, respectively.
Note 12: Advances and Borrowings The Bank has a blanket floating lien security agreement with a maximum borrowing capacity of $159.2 million and $129.2 million at December 31, 2023 December 31, 2022, respectively, with the FHLB, under which the Bank is required to maintain collateral for any advances, including its stock in the FHLB, as well as qualifying first mortgage and other loans.
Note 12: Advances and Borrowings The Bank has a blanket floating lien security agreement with a maximum borrowing capacity of $190.9 million and $159.2 million at December 31, 2024 and December 31, 2023, respectively, with the FHLB, under which the Bank is required to maintain collateral for any advances, including its stock in the FHLB, as well as qualifying first mortgage and other loans.
On October 30, 2023, the Company adopted a new Repurchase Plan (the “New RP”) that authorizes the repurchase of up to 750,000 shares of the Company’s stock. Stock repurchases under the New RP will take place pursuant to a Rule 10b5-1 Plan with pricing and purchasing parameters established by management. There were no repurchases as of December 31, 2023.
There were no share repurchases under this plan. On October 30, 2023, the Company adopted a new Repurchase Plan (the “New RP”) that authorizes the repurchase of up to 750,000 shares of the Company’s stock. Stock repurchases under the New RP will take place pursuant to a Rule 10b5-1 Plan with pricing and purchasing parameters established by management.
Notes to Consolidated Financial Statements Summary of Significant Accounting Policies--Specific to Production of Oil and Natural Gas Reserves Operations Use of Estimates Significant items subject to estimates and assumptions include, the proved oil, and natural gas and NGL reserves used in the valuation of oil and gas properties, asset retirement obligations, fair value of derivatives and revenue accruals.
Summary of Significant Accounting Policies--Specific to Production of Oil and Natural Gas Reserves Operations Use of Estimates Significant items subject to estimates and assumptions include, the proved oil, and natural gas and NGL reserves used in the valuation of oil and gas properties, asset retirement obligations, fair value of derivatives and revenue accruals.
During the nine months ended December 31, 2023, no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent. At a minimum, the estimated value of the collateral for loan equals the current book value.
During the twelve months ended December 31, 2024 and December 31, 2023, no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent. At a minimum, the estimated value of the collateral for loan equals the current book value.
Employees may contribute up to the maximum legal limit with the Bank matching up to 5% of the employee’s salary. Employer contributions charged to expense for the years ended December 31, 2023, 2022 and 2021 totaled $399,000, $366,000 and $267,000, respectively.
Employees may contribute up to the maximum legal limit with the Bank matching up to 5% of the employee’s salary. Employer contributions charged to expense for the years ended December 31, 2024, 2023 and 2022 totaled $434,000, $399,000 and $366,000, respectively.
The Company evaluates the definitions of loan grades and the allowance for loan losses methodology on an ongoing basis. No changes were made to either during the period ended December 31, 2023. 73 Table of Contents Bank7 Corp.
The Company evaluates the definitions of loan grades and the allowance for loan losses methodology on an ongoing basis. No changes were made to either during the period ended December 31, 2024. 70 Table of Contents Bank7 Corp.
There were no uncertain tax positions as of December 31, 2023 and 2022, and there were no interest or penalties related to uncertain tax positions reflected in the consolidated statements of income for the years ended December 31, 2023, 2022, and 2021. 83 Table of Contents Bank7 Corp.
There were no uncertain tax positions as of December 31, 2024 and 2023, and there were no interest or penalties related to uncertain tax positions reflected in the consolidated statements of income for the years ended December 31, 2024, 2023, and 2022. 79 Table of Contents Bank7 Corp.
Notes to Consolidated Financial Statements Oil and Gas Property (Successful Efforts Method of Accounting) The Company uses the successful efforts method of accounting for its oil and gas production activities. Costs incurred by the Company related to the acquisition of oil and gas properties and the cost of drilling development wells are capitalized.
Oil and Gas Property (Successful Efforts Method of Accounting) The Company uses the successful efforts method of accounting for its oil and gas production activities. Costs incurred by the Company related to the acquisition of oil and gas properties and the cost of drilling development wells are capitalized.
Accounts Payable The Company’s oil and gas related accounts payable balance primarily consists of trade payables owed to vendors that provide services and equipment for the wells and assets that we operate. The oil and gas related accounts payable balance is included in “Interest payable and other liabilities” on the consolidated balances sheets.
Accounts Payable The Company’s oil and gas related accounts payable balance primarily consists of trade payables owed to vendors that provide services and equipment for the wells and assets that we operate. The oil and gas related accounts payable balance is included in “Interest payable and other liabilities” on the consolidated balances sheets. 58 Table of Contents Bank7 Corp.
Interest-Bearing Time Deposits in Other Banks Interest-bearing time deposits in other banks totaled $17.7 million and $5.5 million at December 31, 2023 and December 31, 2022 respectively, and have original maturities generally ranging from three months to five years.
Interest-Bearing Time Deposits in Other Banks Interest-bearing time deposits in other banks totaled $6.7 million and $17.7 million at December 31, 2024 and December 31, 2023 respectively, and have original maturities generally ranging from three months to five years.
Revenue Recognition We recognize revenue from the sale of oil, natural gas and NGLs in the period that the performance obligations are satisfied in accordance with ASC 606. Our performance obligations are primarily comprised of the delivery of oil, natural gas or NGLs at a delivery point (pipeline, railcar or truck).
Notes to Consolidated Financial Statements Revenue Recognition We recognize revenue from the sale of oil, natural gas and NGLs in the period that the performance obligations are satisfied in accordance with ASC 606. Our performance obligations are primarily comprised of the delivery of oil, natural gas or NGLs at a delivery point (pipeline, railcar or truck).
No impairment expense recorded for the year ended December 31, 2023. There were no costs of unproved properties at December 31, 2023, and during the year ended December 31, 2023, the Company recognized no abandonment expense. 60 Table of Contents Bank7 Corp.
No impairment expense recorded for the year ended December 31, 2024. There were no costs of unproved properties at December 31, 2024, and during the year ended December 31, 2024, the Company recognized no abandonment expense. 59 Table of Contents Bank7 Corp.
Rental expense on all operating leases, including those rented on a monthly or temporary basis were as follows (Dollars in thousands): Year Ending December 31: 2023 $ 1,001 2022 777 2021 799 As of December 31, 2023, a right of use lease asset included in interest receivable and other assets on the balance sheet totaled $2.0 million, and a related lease liability included in accrued interest payable and other liabilities on the balance sheet totaled $2.0 million.
Rental expense on all operating leases, including those rented on a monthly or temporary basis were as follows (Dollars in thousands): Year Ending December 31: 2024 $ 1,068 2023 1,001 2022 777 As of December 31, 2024, a right of use lease asset included in interest receivable and other assets on the balance sheet totaled $1.7 million, and a related lease liability included in accrued interest payable and other liabilities on the balance sheet totaled $1.9 million.
The following table summarizes the simulated change in net interest income and fair value of equity over a 12-month horizon as of the dates indicated: As of December 31, 2023 2022 2021 Change in Interest Rates (Basis Points) Percent Change in Net Interest Income Percent Change in Fair Value of Equity Percent Change in Net Interest Income Percent Change in Fair Value of Equity Percent Change in Net Interest Income Percent Change in Fair Value of Equity +400 23.35 % 17.72 % 13.41 % 20.90 % 32.34 % 23.35 % +300 19.04 % 16.63 % 9.96 % 20.13 % 23.63 % 21.37 % +200 14.74 % 15.45 % 6.50 % 19.17 % 14.88 % 19.21 % +100 10.42 % 14.20 % 2.99 % 18.04 % 6.07 % 16.86 % Base 5.76 % 12.72 % -0.77 % 16.91 % -2.80 % 14.33 % -100 0.73 % 11.22 % -4.82 % 15.25 % -5.38 % 11.30 % The results are primarily due to behavior of demand, money market and savings deposits during such rate fluctuations.
The following table summarizes the simulated change in net interest income and fair value of equity over a 12-month horizon as of the dates indicated: As of December 31, 2024 2023 2022 Change in Interest Rates (Basis Points) Percent Change in Net Interest Income Percent Change in Fair Value of Equity Percent Change in Net Interest Income Percent Change in Fair Value of Equity Percent Change in Net Interest Income Percent Change in Fair Value of Equity +400 17.71 % 23.27 % 23.35 % 17.72 % 13.41 % 20.90 % +300 13.65 % 22.34 % 19.04 % 16.63 % 9.96 % 20.13 % +200 9.54 % 21.30 % 14.74 % 15.45 % 6.50 % 19.17 % +100 5.15 % 20.15 % 10.42 % 14.20 % 2.99 % 18.04 % Base 0.24 % 18.82 % 5.76 % 12.72 % -0.77 % 16.91 % -100 -4.92 % 17.37 % 0.73 % 11.22 % -4.82 % 15.25 % The results are primarily due to behavior of demand, money market and savings deposits during such rate fluctuations.
The RSU expense is expected to be recognized over a weighted average period of 3.85 years, the stock option expense is expected to be recognized over a weighted average period of 1.29 years. 89 Table of Contents Bank7 Corp.
The RSU expense is expected to be recognized over a weighted average period of 3.17 years, the stock option expense is expected to be recognized over a weighted average period of 1.51 years. 85 Table of Contents Bank7 Corp.
Revenue is recognized when the transactions occur or as services are performed over primarily monthly or quarterly periods. Payment is typically received in the period the transactions occur, or in some cases, within 90 days of the service period.
Revenue is recognized when the transactions occur or as services are performed over primarily monthly or quarterly periods. Payment is typically received in the period the transactions occur, or in some cases, within 90 days of the service period. 57 Table of Contents Bank7 Corp.
Revenue from the sale of oil, natural gas and NGLs is included in “Other” noninterest income on the consolidated statements of comprehensive income, and taxes assessed by governmental authorities on oil, natural gas and NGL sales are included in “Other” noninterest expense on the consolidated statements of comprehensive income. 59 Table of Contents Bank7 Corp.
Revenue from the sale of oil, natural gas and NGLs is included in “Other” noninterest income on the consolidated statements of comprehensive income, and taxes assessed by governmental authorities on oil, natural gas and NGL sales are included in “Other” noninterest expense on the consolidated statements of comprehensive income.
Notes to Consolidated Financial Statements Note 9: Interest-Bearing Deposits The aggregate amount of interest-bearing time deposits in denominations that meet or exceed the insured limit were $88.1 million and $42.6 million at December 31, 2023 and 2022, respectively.
Notes to Consolidated Financial Statements Note 9: Interest-Bearing Deposits The aggregate amount of interest-bearing time deposits in denominations that meet or exceed the insured limit were $92.3 million and $88.1 million at December 31, 2024 and 2023, respectively.
At December 31, 2023, approximately $65.5 million of retained earnings was available for dividend declaration from the Bank without prior regulatory approval. Note 14: Related-Party Transactions At December 31, 2023 and December 31, 2022, the Company had loans outstanding to executive officers, directors, significant shareholders and their affiliates (related parties) approximating $203,000 and $132,000, respectively.
At December 31, 2024, approximately $83.7 million of retained earnings was available for dividend declaration from the Bank without prior regulatory approval. Note 14: Related-Party Transactions At December 31, 2024 and December 31, 2023, the Company had loans outstanding to executive officers, directors, significant shareholders and their affiliates (related parties) approximating $0 and $203,000, respectively.
Depletion, depreciation, and amortization expense related to proved oil and gas properties was $3.6 million for the year ended December 31, 2023, and is included in “Other” noninterest expense on the consolidated statements of comprehensive income.
Depletion, depreciation, and amortization expense related to proved oil and gas properties was $2.7 million and $3.6 million for the years ended December 31, 2024 and December 31, 2023, respectively, and is included in “Other” noninterest expense on the consolidated statements of comprehensive income.
Nonrecurring Measurements The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2023 and December 31, 2022 (dollars in thousands): Fair Value (Level 1) (Level 2) (Level 3) December 31, 2023 Impaired loans (collateral- dependent) $ 16,370 $ - $ - $ 16,370 Asset retirement obligations 361 - - 361 December 31, 2022 Impaired loans (collateral- dependent) $ 6,553 $ - $ - $ 6,553 90 Table of Contents Bank7 Corp.
Nonrecurring Measurements The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2024 and December 31, 2023 (dollars in thousands): Fair Value (Level 1) (Level 2) (Level 3) December 31, 2024 Collateral-dependent loans $ 3,209 $ - $ - $ 3,209 Asset retirement obligations 292 - - 292 December 31, 2023 Collateral-dependent loans $ 16,370 $ - $ - $ 16,370 Asset retirement obligations 361 - - 361 86 Table of Contents Bank7 Corp.
Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements which was communicated or is required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
The following table presents, by portfolio segment, the activity in the allowance for credit losses for the years ended December 31, 2023 and 2022 (dollars in thousands): Construction & Development 1 - 4 Family Real Estate Commercial Real Estate - Other Commercial & Industrial Agricultural Consumer Total December 31, 2023 Loans Balance, beginning of period $ 1,889 $ 890 $ 5,080 $ 5,937 $ 765 $ 173 $ 14,734 Impact of CECL adoption 44 (138 ) (168 ) 716 (149 ) (55 ) 250 Charge-offs - - - (16,500 ) (7 ) (17 ) (16,524 ) Recoveries - - - 40 2 8 50 Net (charge-offs) recoveries - - - (16,460 ) (5 ) (9 ) (16,474 ) Provision (credit) for credit losses (516 ) 519 1,977 19,044 17 140 21,181 Balance, end of period $ 1,417 $ 1,271 $ 6,889 $ 9,237 $ 628 $ 249 $ 19,691 Unfunded Commitments Balance, beginning of period $ - $ - $ - $ - $ - $ - $ - Impact of CECL adoption 171 4 24 274 25 2 500 Provision (credit) for credit losses (13 ) - (16 ) 6 (14 ) 1 (36 ) Balance, end of period $ 158 $ 4 $ 8 $ 280 $ 11 $ 3 $ 464 Total Allowance for Credit Losses $ 1,575 $ 1,275 $ 6,897 $ 9,517 $ 639 $ 252 $ 20,155 Total Provision for Credit Losses $ (529 ) $ 519 $ 1,961 $ 19,050 $ 3 $ 141 $ 21,145 Construction & Development 1 - 4 Family Real Estate Commercial Real Estate - Other Commercial & Industrial Agricultural Consumer Total December 31, 2022 Balance, beginning of period $ 1,695 $ 630 $ 3,399 $ 3,621 $ 730 $ 241 $ 10,316 Charge-offs - - - (2 ) (50 ) (22 ) (74 ) Recoveries - - - 10 4 10 24 Net (charge-offs) recoveries - - - 8 (46 ) (12 ) (50 ) Provision (credit) for credit losses 194 260 1,681 2,308 81 (56 ) 4,468 Balance, end of period $ 1,889 $ 890 $ 5,080 $ 5,937 $ 765 $ 173 $ 14,734 71 Table of Contents Bank7 Corp.
The following table presents, by portfolio segment, the activity in the allowance for credit losses for the years ended December 31, 2024, 2023, and 2022 (dollars in thousands): Construction & Development 1 - 4 Family Real Estate Commercial Real Estate - Other Commercial & Industrial Agricultural Consumer Total December 31, 2024 Loans Balance, beginning of period $ 1,417 $ 1,271 $ 6,889 $ 9,237 $ 628 $ 249 $ 19,691 Charge-offs - - (275 ) (2,000 ) - - (2,275 ) Recoveries - - - 495 7 - 502 Net (charge-offs) recoveries - - (275 ) (1,505 ) 7 - (1,773 ) Provision (credit) for credit losses (194 ) 42 378 (935 ) 471 238 - Balance, end of period $ 1,223 $ 1,313 $ 6,992 $ 6,797 $ 1,106 $ 487 $ 17,918 Unfunded Commitments Balance, beginning of period $ 158 $ 4 $ 8 $ 280 $ 11 $ 3 $ 464 Provision (credit) for credit losses 44 2 1 (50 ) 3 - - Balance, end of period $ 202 $ 6 $ 9 $ 230 $ 14 $ 3 $ 464 Total Allowance for Credit Losses $ 1,425 $ 1,319 $ 7,001 $ 7,027 $ 1,120 $ 490 $ 18,382 Total Provision for Credit Losses $ (150 ) $ 44 $ 379 $ (985 ) $ 474 $ 238 $ - Construction & Development 1 - 4 Family Real Estate Commercial Real Estate - Other Commercial & Industrial Agricultural Consumer Total December 31, 2023 Loans Balance, beginning of period $ 1,889 $ 890 $ 5,080 $ 5,937 $ 765 $ 173 $ 14,734 Impact of CECL adoption 44 (138 ) (168 ) 716 (149 ) (55 ) 250 Charge-offs - - - (16,500 ) (7 ) (17 ) (16,524 ) Recoveries - - - 40 2 8 50 Net (charge-offs) recoveries - - - (16,460 ) (5 ) (9 ) (16,474 ) Provision (credit) for credit losses (516 ) 519 1,977 19,044 17 140 21,181 Balance, end of period $ 1,417 $ 1,271 $ 6,889 $ 9,237 $ 628 $ 249 $ 19,691 Unfunded Commitments Balance, beginning of period $ - $ - $ - $ - $ - $ - $ - Impact of CECL adoption 171 4 24 274 25 2 500 Provision (credit) for credit losses (13 ) - (16 ) 6 (14 ) 1 (36 ) Balance, end of period $ 158 $ 4 $ 8 $ 280 $ 11 $ 3 $ 464 Total Allowance for Credit Losses $ 1,575 $ 1,275 $ 6,897 $ 9,517 $ 639 $ 252 $ 20,155 Total Provision for Credit Losses $ (529 ) $ 519 $ 1,961 $ 19,050 $ 3 $ 141 $ 21,145 Construction & Development 1 - 4 Family Real Estate Commercial Real Estate - Other Commercial & Industrial Agricultural Consumer Total December 31, 2022 Balance, beginning of period $ 1,695 $ 630 $ 3,399 $ 3,621 $ 730 $ 241 $ 10,316 Charge-offs - - - (2 ) (50 ) (22 ) (74 ) Recoveries - - - 10 4 10 24 Net (charge-offs) recoveries - - - 8 (46 ) (12 ) (50 ) Provision (credit) for credit losses 194 260 1,681 2,308 81 (56 ) 4,468 Balance, end of period $ 1,889 $ 890 $ 5,080 $ 5,937 $ 765 $ 173 $ 14,734 68 Table of Contents Bank7 Corp.
Compensation expense, net of settlement of shares for payroll withholding related to the Plan for the years ended December 31, 2023, 2022 and 2021 totaled $2,164,000, $1,384,000 and $1,040,000, respectively. There were 637,371 shares available for future grants as of December 31, 2023.
Compensation expense, net of settlement of shares for payroll withholding related to the Plan for the years ended December 31, 2024, 2023 and 2022 totaled $2,467,000, $2,164,000 and $1,384,000, respectively. There were 636,430 shares available for future grants as of December 31, 2024.
Goodwill and Intangible Assets Intangible assets totaled $1.0 million and goodwill, net of accumulated amortization totaled $8.5 million for the year ended December 31, 2023, compared to intangible assets of $1.3 million and goodwill, net of accumulated amortization of $8.6 million for the year ended December 31, 2022.
Goodwill and Intangible Assets Intangible assets totaled $878,000 and goodwill, net of accumulated amortization totaled $8.5 million for the year ended December 31, 2024, compared to intangible assets of $1.0 million and goodwill, net of accumulated amortization of $8.5 million for the year ended December 31, 2023.
The Company recognized $50,000 in fee income during the year ended December 31, 2023, with $0 remaining to be recognized, as compared to $219,000 recognized and $50,000 to be recognized as of December 31, 2022. Subsequent Events The Company evaluated subsequent events through the date the consolidated financial statements were issued.
The Company recognized $0 in fee income during the year ended December 31, 2024, with $0 remaining to be recognized, as compared to $50,000 recognized and $0 to be recognized as of December 31, 2023. Subsequent Events The Company evaluated subsequent events through the date the consolidated financial statements were issued. There were no subsequent events requiring recognition or disclosure.
Outstanding letters of credit to secure these public funds at December 31, 2023 and 2022 were $400,000 and $800,000, respectively. Loans with a collateral value of approximately $159.6 million and $130.0 million were used to secure the letters of credit at December 31, 2023 and 2022, respectively.
Outstanding letters of credit to secure these public funds at December 31, 2024 and 2023 were $750,000 and $400,000, respectively. Loans with a collateral value of approximately $191.7 million and $159.6 million were used to secure the letters of credit at December 31, 2024 and 2023, respectively.
A summary of the activity under the RP is as follows: Year Ended December 31, 2023 2022 Number of shares repurchased - - Average price of shares repurchased $ - $ - Shares remaining to be repurchased 750,000 750,000 84 Table of Contents Bank7 Corp.
There were no repurchases as of December 31, 2024. A summary of the activity under the RP is as follows: Year Ended December 31, 2024 2023 Number of shares repurchased - - Average price of shares repurchased $ - $ - Shares remaining to be repurchased 750,000 750,000 80 Table of Contents Bank7 Corp.
The following summarizes those financial instruments with contract amounts representing credit risk as of December 31, 2023 and December 31, 2022 (dollars in thousands): December 31, 2023 December 31, 2022 Commitments to extend credit $ 256,888 $ 198,027 Financial and performance standby letters of credit 4,247 1,043 $ 261,135 $ 199,070 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.
The following summarizes those financial instruments with contract amounts representing credit risk as of December 31, 2024 and December 31, 2023 (dollars in thousands): December 31, 2024 December 31, 2023 Commitments to extend credit $ 272,261 $ 256,888 Financial and performance standby letters of credit 11,333 4,247 $ 283,594 $ 261,135 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.
Notes to Consolidated Financial Statements Standards Not Yet Adopted: In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), primarily focused on income tax disclosures regarding effective tax rates and cash income taxes paid.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), primarily focused on income tax disclosures regarding effective tax rates and cash income taxes paid.
As of December 31, 2023, our operating leases have a weighted-average remaining lease term of 16.0 years and a weighted-average discount rate of 3.8 percent.
As of December 31, 2024, our operating leases have a weighted-average remaining lease term of 15.8 years and a weighted-average discount rate of 3.7 percent.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.
The following table shows the computation of basic and diluted earnings per share: As of and for the Years ended December 31, 2023 2022 2021 (Dollars in thousands, except per share amounts) Numerator Net income $ 28,275 $ 29,638 $ 23,159 Denominator Weighted-average shares outstanding for basic earnings per share 9,161,565 9,101,523 9,056,117 Dilutive effect of stock compensation (1) 102,742 103,193 35,419 Denominator for diluted earnings per share 9,264,307 9,204,716 9,091,536 Earnings per common share Basic $ 3.09 $ 3.26 $ 2.56 Diluted $ 3.05 $ 3.22 $ 2.55 (1) The following have not been included in diluted earnings per share because to do so would have been antidilutive for the periods presented: Nonqualified stock options outstanding of 5,000, 5,000, and 264,000 as of December 31, 2023, 2022, and 2021, respectively; Restricted stock units outstanding of 156,186, 0, and 0 as of December 31, 2023, 2022, and 2021, respectively. 66 Table of Contents Bank7 Corp.
The following table shows the computation of basic and diluted earnings per share: As of and for the Years ended December 31, 2024 2023 2022 (Dollars in thousands, except per share amounts) Numerator Net income $ 45,698 $ 28,275 $ 29,638 Denominator Weighted-average shares outstanding for basic earnings per share 9,290,051 9,161,565 9,101,523 Dilutive effect of stock compensation (1) 157,700 102,742 103,193 Denominator for diluted earnings per share 9,447,751 9,264,307 9,204,716 Earnings per common share Basic $ 4.92 $ 3.09 $ 3.26 Diluted $ 4.84 $ 3.05 $ 3.22 (1) The following have not been included in diluted earnings per share because to do so would have been antidilutive for the periods presented: Nonqualified stock options outstanding of 0, 5,000, and 5,000 as of December 31, 2024, 2023, and 2022, respectively; Restricted stock units outstanding of 0, 156,186, and 0 as of December 31, 2024, 2023, and 2022, respectively. 63 Table of Contents Bank7 Corp.
Qualitative Factors Loss rates are further adjusted to account for other risk factors that impact loan defaults and losses. These basis point adjustments are based on management’s assessment of trends and conditions that impact credit risk and resulting credit losses, more specifically internal and external factors that are independent of and not reflected in the quantitative loss rate calculations.
These basis point adjustments are based on management’s assessment of trends and conditions that impact credit risk and resulting credit losses, more specifically internal and external factors that are independent of and not reflected in the quantitative loss rate calculations.
Other intangible assets consist of core deposit intangible assets and are amortized on a straight-line basis based on an estimated useful life of 10 years. Such assets are periodically evaluated as to the recoverability of their carrying values.
Other intangible assets consist of core deposit intangible assets and are amortized on a straight-line basis based on an estimated useful life of 10 years. Such assets are periodically evaluated as to the recoverability of their carrying values. Segments The Company’s chief operating decision-maker (“CODM”) is the Chief Executive Officer.
LGD rates generally reflect the historical average net loss rate by loan pool. Expected cash flows are further adjusted to incorporate the impact of loan prepayments which will vary by loan segment and interest rate conditions. In general, prepayment rates are based on observed prepayment rates occurring in the loan portfolio and consideration of forecasted interest rates.
LGD rates generally reflect the historical average net loss rate by loan pool. Expected cash flows are further adjusted to incorporate the impact of loan prepayments which will vary by loan segment and interest rate conditions.
Consolidated Statements of Shareholders’ Equity (Dollar amounts in thousands, except per share data) Year Ended December 31, 2023 2022 2021 Common Stock (Shares) Balance at beginning of period 9,131,973 9,071,417 9,044,765 Exercise of employee stock options 28,423 17,450 - Shares issued for restricted stock units 57,354 61,902 35,582 Shares acquired and canceled (20,054 ) (18,796 ) (8,930 ) Balance at end of period 9,197,696 9,131,973 9,071,417 Common Stock (Amount) Balance at beginning of period $ 91 $ 91 $ 90 Shares issued for restricted stock units 1 - 1 Balance at end of period $ 92 $ 91 $ 91 Additional Paid-in Capital Balance at beginning of period $ 95,263 $ 94,024 $ 93,162 Shares purchased and retired for restricted stock units (513 ) (454 ) (178 ) Exercise of stock options 503 309 - Stock-based compensation expense 2,164 1,384 1,040 Balance at end of period $ 97,417 $ 95,263 $ 94,024 Retained Earnings Balance at beginning of period $ 58,049 $ 33,149 $ 14,067 Net income 28,275 29,638 23,159 Cumulative effect of change in accounting principle, net of tax of $178 (Note 1) (572 ) - - Cash dividends declared ($ 0.74 , $ 0.52 , and $ 0.45 per share for the years ended December 31, 2023, 2022, and 2021, respectively) (6,790 ) (4,738 ) (4,077 ) Balance at end of period $ 78,962 $ 58,049 $ 33,149 Accumulated Other Comprehensive Income(Loss) Balance at beginning of period $ (9,303 ) $ 144 $ - Comprehensive income(loss) 3,158 (9,447 ) 144 Balance at end of period $ (6,145 ) $ (9,303 ) $ 144 Total Shareholders’ equity $ 170,326 $ 144,100 $ 127,408 See accompanying notes to Consolidated Financial Statements 50 Table of Contents Bank7 Corp.
Consolidated Statements of Shareholders Equity (Dollar amounts in thousands, except par value) Year Ended December 31, 2024 2023 2022 Common Stock (Shares) Balance at beginning of period 9,197,696 9,131,973 9,071,417 Exercise of employee stock options 144,813 28,423 17,450 Shares issued for restricted stock units 68,578 57,354 61,902 Shares acquired and canceled (20,876 ) (20,054 ) (18,796 ) Balance at end of period 9,390,211 9,197,696 9,131,973 Common Stock (Amount) Balance at beginning of period $ 92 $ 91 $ 91 Net shares purchased and retired for restricted stock units and issue for stock options 2 1 - Balance at end of period $ 94 $ 92 $ 91 Additional Paid-in Capital Balance at beginning of period $ 97,417 $ 95,263 $ 94,024 Shares purchased and retired for restricted stock units (666 ) (513 ) (454 ) Exercise of stock options 2,591 503 309 Stock-based compensation expense 2,467 2,164 1,384 Balance at end of period $ 101,809 $ 97,417 $ 95,263 Retained Earnings Balance at beginning of period $ 78,962 $ 58,049 $ 33,149 Net income 45,698 28,275 29,638 Cumulative effect of change in accounting principle, net of tax of $178 - (572 ) - Cash dividends declared ($ 0.89 , $ 0.74 and $ 0.52 per share for the years ended December 31, 2024, 2023, and 2022, respectively) (8,379 ) (6,790 ) (4,738 ) Balance at end of period $ 116,281 $ 78,962 $ 58,049 Accumulated Other Comprehensive Loss Balance at beginning of period $ (6,145 ) $ (9,303 ) $ 144 Comprehensive income(loss) 1,174 3,158 (9,447 ) Balance at end of period $ (4,971 ) $ (6,145 ) $ (9,303 ) Total Shareholders’ equity $ 213,213 $ 170,326 $ 144,100 See accompanying notes to Consolidated Financial Statements 49 Table of Contents Bank7 Corp.
Discounts are accreted into interest income over the estimated life of the related security and premiums are amortized against income to the earlier of the call date or weighted average life of the related security using the interest method.
Interest income is recognized at the coupon rate adjusted for amortization and accretion of premiums and discounts. Discounts are accreted into interest income over the estimated life of the related security and premiums are amortized against income to the earlier of the call date or weighted average life of the related security using the interest method.
Notes to Consolidated Financial Statements Allowance for Credit Losses On January 1, 2023, the Company was required to adopt a new credit loss methodology, the Current Expected Credit Losses (“CECL”) methodology. See Note 1, Recent Accounting Pronouncements, for additional information regarding adoption.
Notes to Consolidated Financial Statements Allowance for Credit Losses On January 1, 2023, the Company was required to adopt a new credit loss methodology, the Current Expected Credit Losses (“CECL”) methodology.
The Company may determine that a borrower is experiencing financial difficulty if the borrower is currently in default on any of its debt, or if it is probable that a borrower may default in the foreseeable future absent a modification.
The Company may determine that a borrower is experiencing financial difficulty if the borrower is currently in default on any of its debt, or if it is probable that a borrower may default in the foreseeable future absent a modification. Many aspects of a borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty.

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