Bank7 Corp.

Welcome to Bank 7 Corp's fourth quarter and full year earnings call. Before we get started, I'd like to highlight the legal information and disclaimer on page 22 of the investor presentation. For those who do not have access to the presentation, management is going to discuss certain topics that contain forward-looking information, which is based on management's beliefs as well as assumptions made by and information currently available to management. Although management believes that the expectations reflected in such forward-looking statements are reasonable, they can give no assurance that such expectations will prove to be correct. Such statements are subject to certain risks, uncertainties, and assumptions including, among other things, the direction and direct effects of economic conditions on interest rates, credit quality, loan demand, liquidity, and monetary and supervisory policies of banking regulators. Should one or more of these risks materialize or should underlying assumptions prove incorrect, actual results may vary materially from those expected. Also, please note that this conference call contains references to non-GAAP financial measures. You can find reconciliations of these non-GAAP financial measures to GAAP financial measures in an 8K that was filed this morning by the company. Representing the company on today's call, we have Brad Haynes, Chairman, Tom Travis, Chief Executive Officer, J.T. Phillips, Chief Operating Officer, Jason Estes, Chief Credit Officer, Kelly Harris, Chief Financial Officer. With that, I'd like to turn the call over to Tom Travis.

Thank you very much. We are excited about our year and our recap. For those of you that have been on the call with us before, we generally don't spend a lot of time with comments. But since we're recapping the year, we'll take a few minutes here to highlight some of the things that excite us. So once again, we delivered strong results. We're very happy about that. And we must acknowledge and we do acknowledge and thank our team members for their contributions They not only grew our loan and deposit portfolios in a meaningful way, they did it while satisfying our customers. As we recap our results for the year, we begin with record earnings. And again, we acknowledge our commercial banking team. And we have to give credit where credit is due because our record earnings is a function of a loan growth. And it should not be confused or attributed with the Fed rate hike. It's pure organic loan growth. We didn't buy loans. The team went out and captured new loans and deposits. So to best understand what occurred last year, we look back to the quarterly timeline and we start with the first quarter. The first Fed rate increase didn't occur until mid to late March. and then was followed by the next few rate increases during the second quarter. So in those first two quarters, we had very little benefit from the rate hikes because we had many loan floors. And also at the same time, our loan growth had not yet materialized in a meaningful way. In essence, we spent the first quarter and most of the second quarter filling up our loan floors. Beginning in late May and early June and continuing into the third quarter, loan growth was exceptional, and we posted a strong third quarter. Although we finally did start seeing some benefit from the rate hikes in the third quarter, it was not much. In fact, we refer you to page 35 of our prior third quarter 10Q as it illustrates the nine-month period ending September 30th, and it clearly shows that our income increase was attributable to the growth of the loan portfolio which had grown significantly compared to the prior period end. In fact, the data shows that our gross loan yield through that period was actually three basis points lower than the prior period, further highlighting the growth contribution and component that caused the income lift. We cannot emphasize enough how pleased we are with our commercial banking team and all the people who support them. Wrapping up the year, As you look into Q4, we continued to increase the loan book. And when combined with the Fed rate hikes, the full benefit of a higher loan book and strong rates in the NIM can be seen, you can see how well we've done. Regarding our NIM and reflecting back on the full year, it is a similar story regarding the steady increase throughout the year. In late 21 and early 22, we had signaled and discussed the expected NIM compression associated with our December 21 acquisition due largely to the low yield on the incoming bond portfolio. Our expectation of a lower NIM was realized, and we began in Q1 with a core NIM of 3.91. As the loan book began to grow in the late spring and into the summer and fall, the NIM began to recover, Then late in the year, as the Fed rate hikes were being more fully realized, we grew our loans even more and the core NIM returned to exactly where it was for the prior year. So from an earnings and NIM perspective, it was a great story and a story based on our commercial banking team and their ability to price loans properly and to grow loans. And so I think that's a good start with the with the income and the NIM component. And I'd like to ask Jason if he would cover the asset quality aspect of that loan portfolio.

Thanks, Tom. We're very pleased with our loan portfolio as the calendar turns. We've not seen a change in past due levels or problem credits as rates have increased. NCOs were minimal for the year. And our discipline underwriting combined with seasoned lending teams will continue to serve us well as we operate in this higher interest rate environment. You know, construction loan balances have started to decline. Our hospitality construction activities have significantly reduced. And the home building industry, they've started to lower their inventory levels to match current demand. And just as a reminder, Our home builder portfolio is primarily starter homes in the Oklahoma City and Dallas metro areas, with very little lot and land lending activity. We're not concerned with this segment. Our energy portfolio has grown over the past year, but we continue to closely monitor that growth as we selectively remain active, originating high-quality new loans. Overall, we continue to lend money the same way we have for decades. The economies in Oklahoma and Texas are healthy, and our credit quality continues to benefit from both. And Tom, I'll hand it back to you.