Bank7 completes Century acquisition for cash and shares
The completed merger also vested Century phantom stock units, which Bank7 will settle for approximately $5.2 million in cash.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Bank7 Corp. (BSVN) reported third-quarter 2026 net income of $10.203 million, compared with $10.844 million in the same quarter of 2025; diluted earnings per share were $1.06 versus $1.13. For the first nine months of 2026, net income was $30.555 million, compared with $32.285 million in 2025. Third-quarter net interest income was $22.301 million, versus $23.026 million.
As of September 30, assets totaled $2.007 billion and deposits were $1.721 billion. On November 1, 2026, Bank7 completed its acquisition of Century Financial Services Corporation, parent of Century Bank. Century shareholders’ consideration was $70.0 million in cash and 1,232,657 common shares, valued at approximately $142.3 million using Bank7’s October 30 closing price of $58.63. The acquisition added approximately $1.2 billion of deposits; Century Bank is expected to merge with and into the Bank on or about January 1, 2027.
1 point · 1 major0 major · 1 point
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Major pointCentury acquisition added approximately $1.2 billion in deposits.
Negative
- Moderate pointThird-quarter net income was $10.203 million, versus $10.844 million a year earlier.
Key Figures
Net income: $10.203 million; $10.844 million
Net income: $30.555 million; $32.285 million
Diluted earnings per share: $1.06; $1.13
+5 more
8 metrics
Net income
$10.203 million; $10.844 million
Three months ended September 30, 2026; same quarter of 2025
Net income
$30.555 million; $32.285 million
Nine months ended September 30, 2026; same period of 2025
Diluted earnings per share
$1.06; $1.13
Three months ended September 30, 2026; same quarter of 2025
Net interest income
$22.301 million; $23.026 million
Three months ended September 30, 2026; same quarter of 2025
Total assets
$2.007 billion
As of September 30, 2026
Total deposits
$1.721 billion
As of September 30, 2026
Century acquisition value
Approximately $142.3 million
Based on Bank7’s October 30, 2026 closing share price
Deposits added in Century acquisition
Approximately $1.2 billion
Century acquisition completed November 1, 2026
Key Terms
allowance for credit losses, stalking horse bidder, capital conservation buffer, acquisition method of accounting
4 terms
allowance for credit losses financial
"Loans, net of allowance for credit losses"
Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.
stalking horse bidder financial
"to serve as a “stalking horse” bidder to acquire approximately 71%"
A stalking horse bidder is a company or investor that makes the first formal purchase offer for assets being sold in a bankruptcy process, setting a baseline price and key terms for a future auction. It matters to investors because that opening bid establishes a floor price and can encourage or deter competing offers, while often including protections that affect how much value creditors and shareholders may recover—think of it as the first bid at an estate sale that sets expectations for everyone else.
capital conservation buffer regulatory
"capital conservation buffers that allow the Company and Bank to avoid limitations"
A capital conservation buffer is an extra layer of a bank's own money held above minimum capital rules so the bank can absorb losses and keep lending during tough times. Think of it like an emergency savings account for a bank: it lowers the chance of sudden dividend cuts, forced stock sales, or government support, and therefore affects investor views of a bank’s safety, earnings stability and valuation.
acquisition method of accounting financial
"using the acquisition method of accounting"
An accounting method used when one company obtains control of another; the acquirer records the purchase by measuring the fair value of the consideration it gives up, identifying and measuring the acquiree’s identifiable assets and liabilities at their fair values, and recognizing either goodwill for excess purchase price or a gain if the fair value of net assets exceeds consideration. Measurement-period adjustments are allowed to revise provisional amounts as more information becomes available; the method applies only when control is obtained and replaces earlier approaches that combined owners’ interests without fair-value measurement.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were BSVN’s third-quarter 2026 earnings?
Bank7 Corp. reported net income of $10.203 million for the three months ended September 30, 2026, versus $10.844 million in 2025. Diluted earnings per share were $1.06, compared with $1.13.
What did Bank7 pay for Century Financial Services Corporation?
Century shareholders’ aggregate merger consideration comprised $70.0 million in cash and 1,232,657 Bank7 common shares. Based on Bank7’s $58.63 closing share price on October 30, 2026, the consideration was valued at approximately $142.3 million.
How will Bank7 settle Century’s phantom stock units?
Century’s outstanding phantom stock units vested upon completion of the merger on November 1, 2026, and Bank7 will settle them in cash for approximately $5.2 million.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 001-38656
(Exact name of registrant as specified in its charter)
| | | |
| (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
| | | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (405 ) 810-8600
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| | | The |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an “emerging growth company”. See
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | | ☒ |
| Non-accelerated filer | ☐ | Smaller reporting company | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of November 9, 2026, the registrant had 10,733,548 shares of common stock, par value $0.01, outstanding.
TABLE OF CONTENTS
|
Page
|
||
|
PART I.
|
FINANCIAL INFORMATION
|
|
|
Item 1.
|
Financial Statements
|
|
|
Unaudited Condensed Consolidated Balance Sheets
|
2
|
|
|
Unaudited Condensed Consolidated Statements of Comprehensive Income
|
3
|
|
|
Unaudited Condensed Consolidated Statements of Shareholders’ Equity
|
4
|
|
|
Unaudited Condensed Consolidated Statements of Cash Flows
|
5
|
|
|
Notes to Unaudited Condensed Consolidated Financial Statements
|
6
|
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
37
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
55
|
|
Item 4.
|
Controls and Procedures
|
56
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|
PART II.
|
OTHER INFORMATION
|
57
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|
Item 1.
|
Legal Proceedings
|
57
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|
Item 1A.
|
Risk Factors
|
57
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
57
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Item 3.
|
Defaults Upon Senior Securities
|
57
|
|
Item 4.
|
Mine Safety Disclosures
|
58
|
|
Item 5.
|
Other Information
|
58
|
|
Item 6.
|
Exhibits
|
58
|
|
Signatures
|
58
|
Table of
Contents
Forward-Looking Statements
This Form 10-Q contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our
financial performance. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not
always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or
phrases. Any or all of the forward-looking statements in (or conveyed orally regarding) this report may turn out to be inaccurate. The inclusion of or reference to forward-looking information in this report should not be regarded as a
representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events
and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements as a result
of risks, uncertainties and assumptions that are difficult to predict. Factors that could cause such differences are discussed in the section titled “Risk Factors” in our most recent Annual Report on Form 10-K, and may be discussed from time to
time in our other SEC filings, including our Quarterly Reports. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from
what we anticipate. You are cautioned not to place undue reliance on forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made and we undertake no obligation to update or revise any
forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as may be required by law. All forward-looking statements herein are qualified
by these cautionary statements.
Table of
Contents
Bank7 Corp.
Condensed Consolidated Balance Sheets
(Dollar amounts in thousands, except par value and share data)
|
Assets
|
September 30,
2026
(unaudited)
|
December 31,
2025
|
||||||
|
Cash and due from banks
|
$
|
|
$
|
|
||||
|
Interest-bearing time deposits in other banks
|
|
|
||||||
| Available-for-sale debt securities (amortized cost of $ |
|
|
||||||
| Loans, net of allowance for credit losses of $ |
|
|
||||||
|
Loans held for sale
|
|
|
||||||
|
Premises and equipment, net
|
|
|
||||||
|
Nonmarketable equity securities
|
|
|
||||||
|
Core deposit intangibles
|
|
|
||||||
|
Goodwill
|
|
|
||||||
|
Interest receivable and other assets
|
|
|
||||||
|
Total assets
|
$
|
|
$
|
|
||||
|
Liabilities and Shareholders’ Equity
|
||||||||
|
Deposits
|
||||||||
|
Noninterest-bearing
|
$
|
|
$
|
|
||||
|
Interest-bearing
|
|
|
||||||
|
Total deposits
|
|
|
||||||
|
Income taxes payable
|
|
|
||||||
|
Interest payable and other liabilities
|
|
|
||||||
|
Total liabilities
|
|
|
||||||
|
Shareholders’ equity
|
||||||||
| Common stock, $ |
|
|
||||||
|
Additional paid-in capital
|
|
|
||||||
|
Retained earnings
|
|
|
||||||
|
Accumulated other comprehensive loss
|
( |
)
|
( |
)
|
||||
|
Total shareholders’ equity
|
|
|
||||||
|
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
||||
See accompanying notes to Condensed Consolidated Financial Statements
2
Table of
Contents
Bank7 Corp.
Unaudited Condensed Consolidated Statements of Comprehensive Income
(Dollar amounts in thousands, except share and per share data)
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
|
2026
|
2025
|
2026
|
2025
|
|||||||||||||
|
Interest Income
|
||||||||||||||||
|
Loans, including fees
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Interest-bearing time deposits in other banks
|
|
|
|
|
||||||||||||
|
Debt securities, taxable
|
|
|
|
|
||||||||||||
|
Debt securities, tax-exempt
|
|
|
|
|
||||||||||||
|
Other interest and dividend income
|
|
|
|
|
||||||||||||
|
Total interest income
|
|
|
|
|
||||||||||||
|
Interest Expense
|
||||||||||||||||
|
Deposits
|
|
|
|
|
||||||||||||
|
Total interest expense
|
|
|
|
|
||||||||||||
|
Net Interest Income
|
|
|
|
|
||||||||||||
|
Provision for Credit Losses
|
|
|
|
|
||||||||||||
|
Net Interest Income After Provision for Credit Losses
|
|
|
|
|
||||||||||||
|
Noninterest Income
|
||||||||||||||||
|
Mortgage lending income
|
|
|
|
|
||||||||||||
|
Loss on sales, prepayments, and calls of available-for-sale debt securities
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
||||||||
|
Service charges on deposit accounts
|
|
|
|
|
||||||||||||
|
Other
|
|
|
|
|
||||||||||||
|
Total noninterest income
|
|
|
|
|
||||||||||||
|
Noninterest Expense
|
||||||||||||||||
|
Salaries and employee benefits
|
|
|
|
|
||||||||||||
|
Furniture and equipment
|
|
|
|
|
||||||||||||
|
Occupancy
|
|
|
|
|
||||||||||||
|
Data and item processing
|
|
|
|
|
||||||||||||
|
Accounting, marketing and legal fees
|
|
|
|
|
||||||||||||
|
Regulatory assessments
|
|
|
|
|
||||||||||||
|
Advertising and public relations
|
|
|
|
|
||||||||||||
|
Travel, lodging and entertainment
|
|
|
|
|
||||||||||||
|
Other
|
|
|
|
|
||||||||||||
|
Total noninterest expense
|
|
|
|
|
||||||||||||
|
Income Before Taxes
|
|
|
|
|
||||||||||||
|
Income tax expense
|
|
|
|
|
||||||||||||
|
Net Income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Earnings per common share - basic
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Earnings per common share - diluted
|
|
|
|
|
||||||||||||
|
Weighted average common shares outstanding - basic
|
|
|
|
|
||||||||||||
|
Weighted average common shares outstanding - diluted
|
|
|
|
|
||||||||||||
|
Other Comprehensive (Loss) Income
|
||||||||||||||||
| Unrealized (losses) gains on securities, net of tax (benefit) expense of ($ |
$ |
( |
) |
$ |
|
$ |
( |
) |
$ |
|
||||||
| Reclassification adjustment for realized losses included in net income net of tax of $ |
|
|
|
|
||||||||||||
|
Other comprehensive (loss) income
|
$
|
( |
)
|
$
|
|
$
|
( |
)
|
$
|
|
||||||
|
Comprehensive Income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
See accompanying notes to Condensed Consolidated Financial Statements
3
Table of
Contents
Bank7 Corp.
Unaudited Condensed Consolidated Statements of Shareholders’ Equity
(Dollar amounts in thousands, except share and per share data)
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
|
2026
|
2025
|
2026
|
2025
|
|||||||||||||
|
Common Stock (Shares)
|
||||||||||||||||
|
Balance at beginning of period
|
|
|
|
|
||||||||||||
|
Exercise of employee stock options
|
|
|
|
|
||||||||||||
|
Shares issued for restricted stock units
|
|
|
|
|
||||||||||||
|
Shares acquired and retired
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
||||||||
|
Balance at end of period
|
|
|
|
|
||||||||||||
|
Common Stock (Amount)
|
||||||||||||||||
|
Balance at beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Net shares purchased and retired for restricted stock units and issued for stock options
|
|
|
|
|
||||||||||||
|
Balance at end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Additional Paid-in Capital
|
||||||||||||||||
|
Balance at beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Shares purchased and retired for restricted stock units
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
||||||||
|
Exercise of stock options
|
|
|
|
|
||||||||||||
|
Stock-based compensation expense
|
|
|
|
|
||||||||||||
|
Balance at end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Retained Earnings
|
||||||||||||||||
|
Balance at beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Net income
|
|
|
|
|
||||||||||||
| Cash dividends declared ($ |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
|
Balance at end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Accumulated Other Comprehensive Loss
|
||||||||||||||||
|
Balance at beginning of period
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
||||
|
Comprehensive (loss) income
|
( |
)
|
|
( |
)
|
|
||||||||||
|
Balance at end of period
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
||||
|
Total Shareholders’ equity
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
See accompanying notes to Condensed Consolidated Financial Statements
4
Table of
Contents
Bank7 Corp.
Unaudited Condensed Consolidated Statements of Cash Flows
(Dollar amounts in thousands)
|
Nine Months Ended
September 30, |
||||||||
|
2026
|
2025
|
|||||||
|
Operating Activities
|
||||||||
|
Net income
|
$
|
|
$
|
|
||||
|
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||
|
Depreciation and amortization
|
|
|
||||||
|
Provision for credit losses
|
|
|
||||||
|
Amortization of premiums on securities
|
|
|
||||||
|
Gain on sales of loans held for sale
|
( |
)
|
( |
)
|
||||
|
Net loss on sale of available-for-sale debt securities
|
|
|
||||||
|
Stock-based compensation expense
|
|
|
||||||
|
Gain on sale of premises and equipment
|
( |
)
|
|
|||||
|
Cash receipts from the sale of loans originated for sale
|
|
|
||||||
|
Cash disbursements for loans originated for sale
|
( |
)
|
( |
)
|
||||
|
Deferred income tax expense
|
|
|
||||||
|
Loss on disposition of oil and gas assets
|
|
|
||||||
|
Changes in
|
||||||||
|
Interest receivable and other assets
|
|
|
||||||
|
Interest payable and other liabilities
|
|
|
||||||
|
Net cash provided by operating activities
|
|
|
||||||
|
Investing Activities
|
||||||||
|
Net cash paid for acquisition
|
|
( |
)
|
|||||
|
Deposit paid for pending acquisition
|
( |
)
|
|
|||||
|
Proceeds from sale of oil and gas assets
|
|
|
||||||
|
Maturities of interest-bearing time deposits in other banks
|
|
|
||||||
|
Purchases of interest-bearing time deposits in other banks
|
|
( |
)
|
|||||
|
Maturities, prepayments and calls of available-for-sale debt securities
|
|
|
||||||
|
Purchases of available-for-sale debt securities
|
|
( |
)
|
|||||
|
Net change in loans
|
( |
)
|
( |
)
|
||||
|
Purchases of premises and equipment
|
( |
)
|
( |
)
|
||||
|
Proceeds from sale of premises and equipment
|
|
|
||||||
|
Purchase of nonmarketable equity securities
|
( |
)
|
|
|||||
|
Change in nonmarketable equity securities
|
( |
)
|
|
|||||
|
Net cash (used in) investing activities
|
( |
)
|
( |
)
|
||||
|
Financing Activities
|
||||||||
|
Net change in deposits
|
|
|
||||||
|
Cash dividends paid
|
( |
)
|
( |
)
|
||||
|
Shares purchased and retired for restricted stock units
|
( |
)
|
( |
)
|
||||
|
Net settlement of stock options
|
|
|
||||||
|
Common stock issued for restricted stock units
|
|
|
||||||
|
Net cash provided by financing activities
|
|
|
||||||
|
Net Increase in Cash and Due from Banks
|
|
|
||||||
|
Cash and Due from Banks, Beginning of Period
|
|
|
||||||
|
Cash and Due from Banks, End of Period
|
$
|
|
$
|
|
||||
|
Supplemental Disclosure of Cash Flows Information
|
||||||||
|
Interest paid
|
$
|
|
$
|
|
||||
|
Income taxes paid
|
$
|
|
$
|
|
||||
|
Dividends declared and not paid
|
$
|
|
$
|
|
||||
See accompanying notes to Condensed Consolidated Financial Statements
5
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1: Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Bank7 Corp. (the “Company”) is a bank holding company whose principal activity is the ownership and management of its wholly owned subsidiary, Bank7 (the “Bank”). The Bank is primarily
engaged in providing a full range of banking and financial services to individual and corporate customers located in Oklahoma, Texas, and Kansas. The Bank is subject to competition from other financial institutions. The Company is subject to the
regulation of certain federal agencies and undergoes periodic examinations by those regulatory authorities.
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements contained herein reflect all adjustments which are, in the opinion of management, necessary to provide a fair statement of the financial
position, results of operations, and cash flows of the Company for the interim periods presented. All such adjustments are of a normal and recurring nature. There have been no significant changes in the accounting policies of the Company since
December 31, 2025, the date of the most recent annual report. The condensed consolidated balance sheet of the Company as of December 31, 2025 has been derived from the audited consolidated balance sheet of the Company as of that date. Certain
information and notes normally included in the Company’s annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The information contained in the financial statements and
footnotes included in the Company’s annual report for the year ended December 31, 2025, should be referred to in connection with these unaudited interim consolidated financial statements. Operating results for the interim periods disclosed herein
are not necessarily indicative of the results that may be expected for a full year or any future period.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company, the Bank and its wholly-owned subsidiaries: First American Mortgage, LLC, which provides
residential mortgage lending services, 1039 NW 63rd, LLC, which holds real estate utilized by the Bank, and, through the date of its dissolution in the second quarter of 2026, Giddings Production, LLC, which was engaged in the production of oil,
natural gas and natural gas liquid (“NGL”) reserves in Texas. All significant intercompany accounts and transactions have been eliminated in consolidation.
Segments
The Company continues to operate as a single reportable segment, as described in Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The Company’s chief operating decision-maker (“CODM”) is the Chief Executive Officer. The Company’s operations are managed and financial performance is evaluated on a Company-wide basis. The CODM uses net income and total assets to allocate resources across the Company and assess performance.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses.
6
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Recent Accounting Pronouncements
Standards Adopted During Current Period:
In December 2025, the FASB issued ASU 2025-12, Codification Improvements. This update includes a wide range of amendments to clarify, correct errors in, and make minor improvements to the Accounting Standards
Codification. The Company early adopted this ASU effective January 1, 2026. The adoption did not have a material impact on the Company’s consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update provides a practical expedient
allowing entities to assume that current economic conditions will remain unchanged for the life of short-term financial assets, such as trade receivables, that arise from contracts with customers. The Company adopted this ASU effective January 1,
2026. The adoption did not have a material impact on the Company’s consolidated financial statements.
In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. This ASU clarifies the requirements for determining
whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The Company adopted this ASU effective January 1, 2026. The Company does not currently have any convertible debt instruments; therefore,
the adoption did not have a material impact on the Company’s consolidated financial position, results of operations, or disclosures.
Standards Not Yet Adopted:
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This update is intended to improve the clarity and consistency of interim reporting requirements. The
amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its
consolidated financial statements.
In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. This update aims to better align hedge accounting with an entity’s risk management activities. The
amendments are effective for fiscal years beginning after December 15, 2026. The Company does not apply formal hedge accounting and therefore does not expect the adoption of this ASU to have a material impact on its consolidated financial
statements.
In November 2025, the FASB issued ASU 2025-08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans. This ASU modifies the accounting for expected credit losses for purchased financial assets, including
extending the gross-up approach currently applied to purchased credit-deteriorated assets to most loans acquired in a business combination, which eliminates the recognition of credit loss expense at acquisition for those loans. The standard is
effective for fiscal years beginning after December 15, 2026, with early adoption permitted. As discussed under Subsequent Events below, the Company completed its acquisition of Century Financial Services Corporation (“Century”) on November 1,
2026, which included the acquisition of loans. The Company is evaluating the early adoption of this ASU, including its application to the loans acquired from Century.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606). This update provides targeted refinements to the scope of derivative
accounting. The standard is effective for annual periods beginning after December 15, 2026. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. This ASU requires public business entities to disclose disaggregated information
about certain expense captions, including compensation costs, depreciation and amortization, advertising costs, shipping and handling costs, and research and development costs, in the notes to their financial statements. The amendments are
effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statement disclosures.
7
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Subsequent Events
On November 1, 2026, the Company completed its acquisition of Century Financial Services Corporation (“Century”), the parent company of Century Bank, headquartered in Santa Fe, New Mexico, pursuant to the Agreement and Plan of Merger dated September 16, 2026 (the “Merger Agreement”). Under the Merger Agreement, Century merged with and into the Company, with the Company as the surviving entity. The aggregate consideration to Century shareholders under the Merger Agreement consisted of $70.0 million in cash and 1,232,657 shares of the Company’s common stock, with cash paid in lieu of fractional shares and of shares otherwise issuable to non-accredited shareholders. Shares not yet issued will be issued upon receipt of the remaining shareholders’ letters of transmittal. Based on the closing price of the Company’s common stock of $58.63 on October 30, 2026, the last trading day before the acquisition date, the aggregate consideration was valued at approximately $142.3 million. In addition, Century’s outstanding phantom stock units vested upon completion of the merger and will be settled by the Company in cash for approximately $5.2 million. The $7.25 million good-faith deposit discussed in Note 2 was applied toward the cash consideration at closing. In connection with the merger, the Company assumed Century’s junior subordinated debentures and subordinated notes with an aggregate principal balance of approximately $39.5 million. The acquisition extends the Company’s franchise into New Mexico and adds approximately $1.2 billion of deposits. Century Bank is expected to merge with and into the Bank on or about January 1, 2027.
The acquisition will be accounted for as a business combination using the acquisition method of accounting. Due to the timing of the acquisition, the initial accounting for the business combination, including the
determination of the fair values of the assets acquired and liabilities assumed and the resulting goodwill, was incomplete at the time these condensed consolidated financial statements were issued. As a result, the Company is unable to disclose the
amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed, the amount of goodwill, or the supplemental pro forma revenue and earnings of the combined entity. These disclosures will be included in
the Company’s Annual Report on Form 10-K for the year ending December 31, 2026.
8
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 2: Recent Events, Including Mergers and Acquisitions
Acquisition and Disposition of Oil and Natural Gas Properties
On October 31, 2023, the Company entered into an asset purchase and sale agreement, effective September 1, 2023 , to acquire proved oil and natural gas properties from HB2 Origination, LLC for a total purchase price of $15.1 million, after closing adjustments.
On April 10, 2026, the Company completed the sale of these proved oil and natural gas properties for a base purchase price of $5.2 million. The transaction had an effective date of April 1, 2026 . After customary closing adjustments, the Company received net cash proceeds of $5.2 million. At the time of the sale, the assets had a remaining net book value of $7.8 million. In connection with the sale, the purchaser assumed the associated asset retirement obligations of $0.3 million, which, along with miscellaneous adjustments of $0.2 million, resulted in a recognized pre-tax loss of $2.1 million during the second quarter of 2026. The disposition did not represent a strategic shift that will have a major effect on the Company’s operations and financial results. As such, the transaction did not qualify for discontinued operations reporting, and the loss on sale, along with the historical results of the oil and gas operations, are included within continuing operations.
Following the sale, the Company had no oil and gas assets or related asset retirement obligations remaining on its consolidated balance sheets as of September 30, 2026. For comparison, the Company had oil and gas assets and related receivables included in interest receivable and other assets on the consolidated balance sheets of $8.9 million, and asset retirement obligations and oil and gas related liabilities included in interest payable and other liabilities of $0.8 million as of December 31, 2025.
The Company had oil and gas related revenues included in “Other” noninterest income on the consolidated statements of comprehensive income of $0 and $0.9 million for the three and nine months ended September 30, 2026, respectively, compared to $1.3 million and $4.0 million for the three and nine months ended September 30, 2025.
The Company had oil and gas related expenses included in “Other” noninterest expense on the consolidated statements of comprehensive income of $0 and $2.6 million for the three and nine months ended September 30, 2026, respectively, compared to $1.4 million and $3.4 million for the three and nine months ended September 30, 2025. The oil and gas related expenses for the three and nine months ended September 30, 2026, include the $2.1
Acquisition of Century Financial Services Corporation
On July 1, 2026, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with a court-appointed receiver to serve as a “stalking horse” bidder to acquire approximately 71 % of the outstanding shares of Century for a cash purchase price of $68.0 million. In connection with the Purchase Agreement, the Company funded a required good-faith deposit of $7.25 million during the third quarter of 2026. The deposit is included in interest receivable and other assets on the consolidated balance sheet as of September 30, 2026.
On September 3, 2026, following a court-supervised auction at which the Company was the successful bidder, the Company and the receiver entered into a First Amendment to the Purchase Agreement, which increased the purchase price to approximately $89.0 million.
On September 16, 2026, the Company entered into the Merger Agreement with Century, which replaced the stock purchase contemplated by the Purchase Agreement. The Company reserved its rights under the Purchase Agreement in the event the merger was not completed. The Company incurred acquisition-related expenses of $0.7 million and $1.0 million for the three and nine months ended September 30, 2026, respectively, which are included in accounting, marketing and legal fees and other noninterest expense on the consolidated statements of comprehensive income. The merger was completed on November 1, 2026. See “Subsequent Events” in Note 1.
9
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 3: Earnings per Share
Basic earnings per common share represents the amount of earnings for the period available to each share of common stock outstanding during the reporting period. Basic earnings per share (“EPS”) is computed based
upon net income divided by the weighted average number of common shares outstanding during the period.
Diluted EPS represents the amount of earnings for the period available to each share of common stock outstanding including common stock that would have been outstanding assuming the issuance of common shares for all
dilutive potential common shares outstanding during each reporting period. Diluted EPS is computed based upon net income divided by the weighted average number of common shares outstanding during each period, adjusted for the effect of dilutive
potential common shares, such as restricted stock awards and nonqualified stock options, calculated using the treasury stock method.
The following table shows the computation of basic and diluted earnings per share:
| As of and for the three months ended September 30, |
As of and for the nine months ended September 30, |
|||||||||||||||
|
|
2026 |
2025 |
2026 |
2025 |
||||||||||||
| (Dollars in thousands, except share and per share amounts) |
||||||||||||||||
|
Numerator
|
||||||||||||||||
|
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
|
||||||||||||||||
|
Denominator
|
||||||||||||||||
|
Weighted-average shares outstanding for basic earnings per share
|
|
|
|
|
||||||||||||
|
Dilutive effect of stock compensation(1)
|
|
|
|
|
||||||||||||
|
Denominator for diluted earnings per share
|
|
|
|
|
||||||||||||
|
|
||||||||||||||||
|
Earnings per common share
|
||||||||||||||||
|
Basic
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Diluted
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
(1) The following have not been included in diluted earnings per share because to do so would have been antidilutive for the periods presented: Restricted stock units of 0 0
On November 1, 2026, in connection with the acquisition of Century Financial Services Corporation, the Company issued or will issue approximately 1.23 million shares of common stock, which are not included in the weighted-average shares outstanding for any period presented. See “Subsequent Events” in Note 1.
10
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 4: Debt Securities
The following table summarizes the amortized cost and fair value of debt securities available-for-sale at September 30, 2026 and December 31, 2025 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:
|
|
Gross Unrealized |
Gross Unrealized |
||||||||||||||
| (in thousands) |
Amortized Cost |
Gains |
Losses |
Fair Value |
||||||||||||
| Available-for-sale as of September 30, 2026 |
||||||||||||||||
|
Mortgage-backed securities(1)(2)
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
|||||||
|
State and political subdivisions
|
|
|
( |
)
|
|
|||||||||||
|
U.S. treasuries
|
|
|
( |
)
|
|
|||||||||||
|
Corporate debt securities
|
|
|
( |
)
|
|
|||||||||||
|
Total available-for-sale
|
|
|
( |
)
|
|
|||||||||||
|
Total debt securities
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
|||||||
|
|
Gross Unrealized |
Gross Unrealized |
||||||||||||||
| (in thousands) |
Amortized Cost |
Gains |
Losses |
Fair Value |
||||||||||||
| Available-for-sale as of December 31, 2025 |
||||||||||||||||
|
U.S. federal agencies
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Mortgage-backed securities(1)(2)
|
|
|
( |
)
|
|
|||||||||||
|
State and political subdivisions
|
|
|
( |
)
|
|
|||||||||||
|
U.S. treasuries
|
|
|
( |
)
|
|
|||||||||||
|
Corporate debt securities
|
|
|
( |
)
|
|
|||||||||||
|
Total available-for-sale
|
|
|
( |
)
|
|
|||||||||||
|
Total debt securities
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
|||||||
(1) All mortgage-backed securities and collateralized mortgage obligations are issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored entities.
(2)Included in amortized cost of mortgage-backed securities is $17.33 million and $19.09 million of residential mortgage-backed securities and $7.64 million and $8.22 million of commercial mortgage-backed securities as of September 30, 2026 and December 31, 2025, respectively.
(2)
11
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
The amortized cost and estimated fair value of investment securities at September 30, 2026 and December 31, 2025, by contractual maturity, are shown below. The expected life of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans with or without call or prepayment penalties.
|
(in thousands)
|
Amortized Cost
|
Fair Value
|
||||||
|
Available-for-sale as of September 30, 2026
|
||||||||
|
Due in one year or less
|
$
|
|
$
|
|
||||
|
Due after one year through five years
|
|
|
||||||
|
Due after five years through ten years
|
|
|
||||||
|
Due after ten years
|
|
|
||||||
|
Mortgage-backed securities
|
|
|
||||||
|
Total available-for-sale
|
$
|
|
$
|
|
||||
|
(in thousands)
|
Amortized Cost
|
Fair Value
|
||||||
|
Available-for-sale as of December 31, 2025
|
||||||||
|
Due in one year or less
|
$
|
|
$
|
|
||||
|
Due after one year through five years
|
|
|
||||||
|
Due after five years through ten years
|
|
|
||||||
|
Due after ten years
|
|
|
||||||
|
Mortgage-backed securities
|
|
|
||||||
|
Total available-for-sale
|
$
|
|
$
|
|
||||
There were no holdings of securities of issuers in an amount greater than 10% of shareholders’ equity at September 30, 2026.
The following table presents a summary of realized gains and losses from the sale, prepayment and call of debt securities for the three and nine months ended September 30, 2026 and September 30, 2025.
|
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||||
|
|
2026
|
2025
|
2026
|
2025
|
||||||||||||
|
(in thousands)
|
||||||||||||||||
|
Proceeds from sales, maturities, prepayments and calls
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
|
||||||||||||||||
|
Gross realized gains on sales, prepayments and calls
|
|
|
|
|
||||||||||||
|
Gross realized losses on sales, prepayments and calls
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
||||||||
|
Total realized (losses), net
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
||||
The following table details book value of pledged securities as of September 30, 2026 and December 31, 2025:
|
|
September 30,
|
December 31,
|
||||||
|
(in thousands)
|
2026
|
2025
|
||||||
|
Book value of pledged securities
|
$
|
|
$
|
|
||||
12
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed 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 September 30, 2026 and December 31, 2025. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying debt securities were purchased or acquired. The fair value of those debt securities having unrealized losses is expected to recover as the securities approach their maturity date or repricing date, or if market yields for such investments decline. As of September 30, 2026, the Company did not intend to sell these securities, and it was not more likely than not that the Company would be required to sell them before recovery of their amortized cost basis. As of September 30, 2026 and December 31, 2025, there was no
|
|
Less than Twelve Months |
Twelve Months or Longer |
Total |
|||||||||||||||||||||||||
|
|
Number of |
Gross Unrealized |
Gross Unrealized |
Gross Unrealized |
||||||||||||||||||||||||
|
|
Investments |
Fair Value |
Losses |
Fair Value |
Losses |
Fair Value |
Losses |
|||||||||||||||||||||
| (in thousands) |
||||||||||||||||||||||||||||
| Available-for-sale as of September 30, 2026 |
||||||||||||||||||||||||||||
|
Mortgage-backed securities
|
|
$
|
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
$
|
( |
) |
|||||||||||||
|
State and political subdivisions(1)
|
|
|
( |
)
|
|
( |
)
|
|
( |
) |
||||||||||||||||||
|
U.S. treasuries
|
|
|
|
|
( |
)
|
|
( |
) |
|||||||||||||||||||
|
Corporate debt securities(2)
|
|
|
|
|
( |
)
|
|
( |
) |
|||||||||||||||||||
|
Total available-for-sale
|
|
$
|
|
$
|
( |
)
|
$
|
|
$
|
( |
)
|
$
|
|
$
|
( |
) |
||||||||||||
|
|
Less than Twelve Months |
Twelve Months or Longer |
Total |
|||||||||||||||||||||||||
|
|
Number of |
Gross Unrealized |
Gross Unrealized |
Gross Unrealized |
||||||||||||||||||||||||
|
|
Investments |
Fair Value |
Losses |
Fair Value |
Losses |
Fair Value |
Losses |
|||||||||||||||||||||
| (in thousands) |
||||||||||||||||||||||||||||
| Available-for-sale as of December 31, 2025 |
||||||||||||||||||||||||||||
|
U.S. federal agencies
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||
|
Mortgage-backed securities
|
|
|
|
|
( |
)
|
|
( |
) |
|||||||||||||||||||
|
State and political subdivisions(1)
|
|
|
|
|
( |
)
|
|
( |
) |
|||||||||||||||||||
|
U.S. treasuries
|
|
|
|
|
( |
)
|
|
( |
) |
|||||||||||||||||||
|
Corporate debt securities(2)
|
|
|
|
|
( |
)
|
|
( |
) |
|||||||||||||||||||
|
Total available-for-sale
|
|
$
|
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
$
|
( |
) |
|||||||||||||
(1) The state and political subdivision securities, $12.78 million and $16.33 million are rated BBB+ or better and $1.44 million and $1.45 million are not rated as of September 30, 2026 and December 31, 2025, respectively.
(2)The corporate debt securities are not rated.
(2)
13
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 5: Loans and Allowance for Credit Losses
A summary of loans at September 30, 2026 and December 31, 2025, are as follows (dollars in thousands):
|
|
September 30,
|
December 31,
|
||||||
|
|
2026
|
2025
|
||||||
|
|
||||||||
|
Construction & development
|
$
|
|
$
|
|
||||
|
1 - 4 family real estate
|
|
|
||||||
|
Commercial real estate - other
|
|
|
||||||
|
Total commercial real estate
|
|
|
||||||
|
|
||||||||
|
Commercial & industrial
|
|
|
||||||
|
Agricultural
|
|
|
||||||
|
Consumer
|
|
|
||||||
|
|
||||||||
|
Gross loans
|
|
|
||||||
|
|
||||||||
|
Less allowance for credit losses
|
( |
)
|
( |
)
|
||||
|
Less deferred loan fees
|
( |
)
|
( |
)
|
||||
|
|
||||||||
|
Net loans
|
$
|
|
$
|
|
||||
14
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
The following table presents, by portfolio segment, the activity in the allowance for credit losses for the three months ended September 30, 2026 and 2025 (dollars in thousands):
|
Commercial
|
||||||||||||||||||||||||||||
|
Construction &
|
1 - 4 Family
|
Real Estate -
|
Commercial
|
|||||||||||||||||||||||||
|
Development
|
Real Estate
|
Other
|
& Industrial
|
Agricultural
|
Consumer
|
Total
|
||||||||||||||||||||||
|
September 30, 2026
|
||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||
|
Balance, beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Charge-offs
|
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
||||||||||||||||||
|
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Net (charge-offs) recoveries
|
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
||||||||||||||||||
|
Provision (credit) for credit losses
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
|
||||||||||||||||||
|
Balance, end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Unfunded Commitments
|
||||||||||||||||||||||||||||
|
Balance, beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Provision (credit) for credit losses
|
( |
)
|
|
|
|
|
|
|
||||||||||||||||||||
|
Balance, end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Total allowance for credit losses and
reserve for unfunded commitments
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Total provision (credit) for credit losses
|
$
|
( |
)
|
$
|
( |
)
|
$
|
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
|||||||||||
|
Commercial
|
||||||||||||||||||||||||||||
|
Construction &
|
1 - 4 Family
|
Real Estate -
|
Commercial
|
|||||||||||||||||||||||||
|
Development
|
Real Estate
|
Other
|
& Industrial
|
Agricultural
|
Consumer
|
Total
|
||||||||||||||||||||||
|
September 30, 2025
|
||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||
|
Balance, beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Charge-offs
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Net (charge-offs) recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Provision (credit) for credit losses
|
( |
)
|
( |
)
|
( |
)
|
|
( |
)
|
( |
)
|
|
||||||||||||||||
|
Balance, end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Unfunded Commitments
|
||||||||||||||||||||||||||||
|
Balance, beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Provision (credit) for credit losses
|
( |
)
|
|
( |
)
|
|
( |
)
|
|
|
||||||||||||||||||
|
Balance, end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Total allowance for credit losses and
reserve for unfunded commitments
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Total provision (credit) for credit losses
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
|
$
|
( |
)
|
$
|
( |
)
|
$
|
|
|||||||||
15
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
The following table presents, by portfolio segment, the activity in the allowance for credit losses for the nine months ended September 30, 2026 and 2025 (dollars in thousands):
|
|
Commercial
|
|||||||||||||||||||||||||||
|
|
Construction &
|
1 - 4 Family
|
Real Estate -
|
Commercial
|
||||||||||||||||||||||||
|
|
Development
|
Real Estate
|
Other
|
& Industrial
|
Agricultural
|
Consumer
|
Total
|
|||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
September 30, 2026
|
||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||
|
Balance, beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Charge-offs
|
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
||||||||||||||||||
|
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Net (charge-offs) recoveries
|
|
|
|
|
( |
)
|
|
( |
)
|
|||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Provision (credit) for credit losses
|
( |
)
|
( |
)
|
( |
)
|
|
( |
)
|
( |
)
|
|
||||||||||||||||
|
Balance, end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Unfunded Commitments
|
||||||||||||||||||||||||||||
|
Balance, beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Provision (credit) for credit losses
|
( |
)
|
|
( |
)
|
|
( |
)
|
|
|
||||||||||||||||||
|
Balance, end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Total allowance for credit losses and
reserve for unfunded commitments
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Total provision (credit) for credit losses
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
|
$
|
( |
)
|
$
|
( |
)
|
$
|
|
|||||||||
|
|
Commercial
|
|||||||||||||||||||||||||||
|
|
Construction &
|
1 - 4 Family
|
Real Estate -
|
Commercial
|
||||||||||||||||||||||||
|
|
Development
|
Real Estate
|
Other
|
& Industrial
|
Agricultural
|
Consumer
|
Total
|
|||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
September 30, 2025
|
||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||
|
Balance, beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Charge-offs
|
|
|
( |
)
|
|
|
( |
)
|
( |
)
|
||||||||||||||||||
|
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Net (charge-offs) recoveries
|
|
|
( |
)
|
|
|
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Provision (credit) for credit losses
|
( |
)
|
( |
)
|
|
|
( |
)
|
( |
)
|
|
|||||||||||||||||
|
Balance, end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Unfunded Commitments
|
||||||||||||||||||||||||||||
|
Balance, beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Provision (credit) for credit losses
|
( |
)
|
|
|
|
|
|
|
||||||||||||||||||||
|
Balance, end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Total allowance for credit losses and
reserve for unfunded commitments
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Total provision (credit) for credit losses
|
$
|
( |
)
|
$
|
( |
)
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
( |
)
|
$
|
|
||||||||||
16
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Internal Risk Categories
Each loan segment is made up of loan categories possessing similar risk characteristics.
Risk characteristics applicable to each segment of the loan portfolio are described as follows:
Real Estate – The real estate portfolio consists of residential and commercial properties. Residential loans are generally secured by owner occupied 1–4 family residences.
Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers. Credit risk in these loans can be impacted by economic conditions within the Company’s market areas that might impact either property values
or a borrower’s personal income. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers. Commercial real estate (CRE) loans in this category typically involve larger principal
amounts and are repaid primarily from the cash flow of a borrower’s principal business operation, the sale of the real estate or income independent of the loan purpose. Credit risk in these loans is driven by the creditworthiness of a borrower,
property values, the local economy and other economic conditions impacting a borrower’s business or personal income. Construction and development loans introduce additional risks, as repayment is generally dependent on the successful completion of
the project and the subsequent sale or permanent financing of the property. Credit risk in these loans is primarily driven by potential construction delays, cost overruns, and shifts in market conditions or interest rates that could impact the
ultimate value of the project or the borrower’s ability to secure permanent financing.
Commercial & Industrial – The commercial portfolio includes loans to commercial customers for use in financing working capital needs, equipment purchases and expansions.
The loans in this category are repaid primarily from the cash flow of a borrower’s principal business operation. Credit risk in these loans is driven by creditworthiness of a borrower and the economic conditions that impact the cash flow stability
from business operations.
Agricultural – Loans secured by agricultural assets are generally made for the purpose of acquiring land devoted to crop production, cattle or poultry or the operation of a
similar type of business on the secured property. Sources of repayment for these loans generally include income generated from operations of a business on the property, rental income or sales of the property. Credit risk in these loans may be
impacted by crop and commodity prices, the creditworthiness of a borrower, and changes in economic conditions which might affect underlying property values and the local economies in the Company’s market areas.
Consumer – The consumer loan portfolio consists of various term and line of credit loans such as automobile loans and loans for other personal purposes. Repayment for these types of loans will come from a borrower’s income sources that are typically independent of the loan purpose. 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.
17
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Loan grades are numbered 1 through 4. Grade 1 is considered satisfactory. The grades of 2 and 3, or Watch and Special Mention, respectively, represent loans of lower quality and are considered criticized. Grade of
4, or Substandard, refers to loans that are classified.
| • |
Grade 1 (Pass) – These loans generally conform to Bank policies, and are characterized by policy conforming advance rates on collateral, and have
well-defined repayment sources. In addition, these credits are extended to borrowers and/or guarantors with a strong balance sheet and either substantial liquidity or a reliable income history.
|
| • |
Grade 2 (Watch) – These loans are still considered “Pass” credits; however, various factors such as industry stress, material changes in cash flow or financial conditions, or deficiencies in loan
documentation, or other risk issues determined by the Lending Officer, Commercial Loan Committee (CLC), or Credit Quality Committee (CQC) warrant a heightened sense and frequency of monitoring.
|
| • |
Grade 3 (Special Mention) – These loans must have observable weaknesses or evidence of imprudent handling or structural issues. The weaknesses require close attention and the remediation of those
weaknesses is necessary. No risk of probable loss exists. Credits in this category are expected to quickly migrate to a “2” or a “4” as this is viewed as a transitory loan grade.
|
| • |
Grade 4 (Substandard) – These loans are not adequately protected by the sound worth and debt service capacity of the borrower, but may be well secured. They have defined weaknesses relative to cash
flow, collateral, financial condition, or other factors that might jeopardize repayment of all of the principal and interest on a timely basis. There is the possibility that a future loss will occur if weaknesses are not remediated.
|
The Company evaluates the definitions of loan grades and the allowance for credit losses methodology on an ongoing basis. No changes were made to either during the period ended
September 30, 2026.
18
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
The following tables present the amortized cost of the Company’s loan portfolio by year of origination based on internal rating category as of September 30, 2026 and December 31, 2025, respectively (dollars in thousands).
|
As of September 30, 2026
|
2026
|
2025
|
2024
|
2023
|
2022
|
Prior
|
Revolving Loans Amortized Cost Basis
|
Total
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Construction & development
|
||||||||||||||||||||||||||||||||
|
Grade
|
||||||||||||||||||||||||||||||||
|
1 (Pass)
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
2 (Watch)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
3 (Special Mention)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
4 (Substandard)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total construction & development
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
1 - 4 family real estate
|
||||||||||||||||||||||||||||||||
|
Grade
|
||||||||||||||||||||||||||||||||
|
1 (Pass)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
2 (Watch)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
3 (Special Mention)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
4 (Substandard)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total 1 - 4 family real estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial real estate - other
|
||||||||||||||||||||||||||||||||
|
Grade
|
||||||||||||||||||||||||||||||||
|
1 (Pass)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
2 (Watch)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
3 (Special Mention)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
4 (Substandard)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total commercial real estate - other
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial and industrial
|
||||||||||||||||||||||||||||||||
|
Grade
|
||||||||||||||||||||||||||||||||
|
1 (Pass)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
2 (Watch)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
3 (Special Mention)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
4 (Substandard)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total commercial and industrial
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Agricultural
|
||||||||||||||||||||||||||||||||
|
Grade
|
||||||||||||||||||||||||||||||||
|
1 (Pass)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
2 (Watch)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
3 (Special Mention)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
4 (Substandard)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total agricultural
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Consumer
|
||||||||||||||||||||||||||||||||
|
Grade
|
||||||||||||||||||||||||||||||||
|
1 (Pass)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
2 (Watch)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
3 (Special Mention)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
4 (Substandard)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total consumer
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Total loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
19
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
|
As of December 31, 2025
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Revolving Loans Amortized Cost Basis
|
Total
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Construction & development
|
||||||||||||||||||||||||||||||||
|
Grade
|
||||||||||||||||||||||||||||||||
|
1 (Pass)
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
2 (Watch)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
3 (Special Mention)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
4 (Substandard)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total construction & development
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
1 - 4 family real estate
|
||||||||||||||||||||||||||||||||
|
Grade
|
||||||||||||||||||||||||||||||||
|
1 (Pass)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
2 (Watch)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
3 (Special Mention)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
4 (Substandard)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total 1 - 4 family real estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial real estate - other
|
||||||||||||||||||||||||||||||||
|
Grade
|
||||||||||||||||||||||||||||||||
|
1 (Pass)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
2 (Watch)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
3 (Special Mention)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
4 (Substandard)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total commercial real estate - other
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial and industrial
|
||||||||||||||||||||||||||||||||
|
Grade
|
||||||||||||||||||||||||||||||||
|
1 (Pass)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
2 (Watch)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
3 (Special Mention)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
4 (Substandard)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total commercial and industrial
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Agricultural
|
||||||||||||||||||||||||||||||||
|
Grade
|
||||||||||||||||||||||||||||||||
|
1 (Pass)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
2 (Watch)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
3 (Special Mention)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
4 (Substandard)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total agricultural
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Consumer
|
||||||||||||||||||||||||||||||||
|
Grade
|
||||||||||||||||||||||||||||||||
|
1 (Pass)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
2 (Watch)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
3 (Special Mention)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
4 (Substandard)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total consumer
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Total loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
20
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
The following tables present the gross charge-offs of the Company’s loan portfolio by year of origination based on internal rating category for the nine months ended September 30, 2026 and September 30, 2025, respectively (dollars in thousands).
|
For the nine months ended September 30, 2026
|
2026
|
2025
|
2024
|
2023
|
2022
|
Prior
|
Revolving Loans Amortized Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Construction & development
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
1 - 4 family real estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial real estate - other
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial and industrial
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Agricultural
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Consumer
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total current-period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
For the nine months ended September 30, 2025
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Revolving Loans Amortized Cost Basis
|
Total
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Construction & development
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
1 - 4 family real estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial real estate - other
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial and industrial
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Agricultural
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Consumer
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total current-period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
21
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
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 September 30, 2026 and December 31, 2025 (dollars in thousands):
|
|
Past Due
|
Total Loans
|
||||||||||||||||||||||||||
|
|
30–59
|
60–89
|
Greater than
|
Total
|
> 90 Days &
|
|||||||||||||||||||||||
|
|
Days
|
Days
|
90 Days
|
Total
|
Current
|
Loans
|
Accruing
|
|||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
September 30, 2026
|
||||||||||||||||||||||||||||
|
Construction & development
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
1 - 4 family real estate
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Commercial real estate - other
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Commercial & industrial
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Agricultural
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Consumer
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
|
||||||||||||||||||||||||||||
|
December 31, 2025
|
||||||||||||||||||||||||||||
|
Construction & development
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
1 - 4 family real estate
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Commercial real estate - other
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Commercial & industrial
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Agricultural
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Consumer
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
22
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Nonaccrual Loans
The following table presents information regarding nonaccrual loans as of September 30, 2026 and December 31, 2025 (dollars in thousands):
|
|
With an Allowance
|
No Allowance
|
Total Non-Accrual Loans
|
Related Allowance
|
||||||||||||
|
September 30, 2026
|
||||||||||||||||
|
Construction & development
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
1 - 4 family real estate
|
|
|
|
|
||||||||||||
|
Commercial real estate - other
|
|
|
|
|
||||||||||||
|
Commercial & industrial
|
|
|
|
|
||||||||||||
|
Agricultural
|
|
|
|
|
||||||||||||
|
Consumer
|
|
|
|
|
||||||||||||
|
|
||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
|
With an Allowance
|
No Allowance
|
Total Non-Accrual Loans
|
Related Allowance
|
||||||||||||
|
December 31, 2025
|
||||||||||||||||
|
Construction & development
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
1 - 4 family real estate
|
|
|
|
|
||||||||||||
|
Commercial real estate - other
|
|
|
|
|
||||||||||||
|
Commercial & industrial
|
|
|
|
|
||||||||||||
|
Agricultural
|
|
|
|
|
||||||||||||
|
Consumer
|
|
|
|
|
||||||||||||
|
|
||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Interest income recognized on the nonaccrual loans for the three and nine months ended September 30, 2026, and 2025 was considered immaterial.
23
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Collateral Dependent Loans
A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. During the
three months ended September 30, 2026 and September 30, 2025, 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.
The following table summarizes collateral-dependent gross loans held for investment by collateral type and the related specific allocation as follows (dollars in thousands):
|
|
Collateral Type
|
|||||||||||||||
|
|
Real Estate
|
Business
Assets
|
Total
|
Specific
Allocation
|
||||||||||||
|
|
||||||||||||||||
|
September 30, 2026
|
||||||||||||||||
|
Construction & development
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
1 - 4 family real estate
|
|
|
|
|
||||||||||||
|
Commercial real estate - other
|
|
|
|
|
||||||||||||
|
Commercial & industrial
|
|
|
|
|
||||||||||||
|
Agricultural
|
|
|
|
|
||||||||||||
|
Consumer
|
|
|
|
|
||||||||||||
|
|
||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
|
Collateral Type
|
|||||||||||||||
|
|
Real Estate
|
Business Assets
|
Total
|
Specific Allocation
|
||||||||||||
|
|
||||||||||||||||
|
December 31, 2025
|
||||||||||||||||
|
Construction & development
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
1 - 4 family real estate
|
|
|
|
|
||||||||||||
|
Commercial real estate - other
|
|
|
|
|
||||||||||||
|
Commercial & industrial
|
|
|
|
|
||||||||||||
|
Agricultural
|
|
|
|
|
||||||||||||
|
Consumer
|
|
|
|
|
||||||||||||
|
|
||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
24
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Loan Modifications to Borrowers Experiencing Financial Difficulty
As part of the Company’s ongoing risk management practices, the Company attempts to work with borrowers experiencing financial difficulty and when necessary to extend or modify loan terms to better align with their
current ability to repay. Modifications could include extension of the maturity date, reductions of the interest rate, reduction or forgiveness of accrued interest, or principal forgiveness. Combinations of these modifications may also be made
for individual loans. Extensions and modifications to loans are made in accordance with internal policies and guidelines which conform to regulatory guidance. Principal reductions may be made in limited circumstances, typically for specific
commercial loan workouts, and in the event of borrower bankruptcy. Each occurrence is unique to the borrower and is evaluated separately. A change to the allowance for credit losses is generally not recorded upon modification because the effect
of most modifications made to borrowers experiencing financial difficulty is already included in the allowance methodology.
The assessment of whether a borrower is experiencing financial difficulty can be subjective in nature and management’s judgment may be required in making this determination. 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.
During the three months ended September 30, 2026, the Company modified four loans for borrowers experiencing financial difficulty. Three of these modifications were related to a single borrower relationship and consisted of two 1–4 family real estate loans and one commercial and industrial loan; two of the loans received a term extension and a payment delay, while the third received a payment delay. The remaining modification involved one commercial real estate loan, which received a payment delay. As of September 30, 2026, the period-end amortized cost basis of these modified loans was as follows:
| • | The modified commercial and industrial loan had an amortized cost basis of $ |
| • | The modified commercial real estate loan had an amortized cost basis of $ |
| • | The modified 1–4 family real estate loans consisted of |
During the three months ended September 30, 2025, the Company modified no loans to borrowers experiencing financial difficulty.
25
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
During the nine months ended September 30, 2026, the Company modified eight loans for borrowers experiencing financial difficulty, two of which were paid off prior to September 30, 2026. Of the six modified loans outstanding as of September 30, 2026, three were related to a single borrower relationship and consisted of two 1–4 family real estate loans and one commercial and industrial loan; two of these loans received a term extension and a payment delay, while the third received a payment delay. The remaining three modifications involved one commercial real estate loan and two commercial and industrial loans; the two commercial and industrial loans received term extensions, while the commercial real estate loan received a payment delay. As of September 30, 2026, the period-end amortized cost basis of these modified loans was as follows:
| • | The modified 1–4 family real estate loans consisted of |
| • | The modified commercial real estate loan had an amortized cost basis of $ |
| • | The modified commercial and industrial loans consisted of |
During the nine months ended September 30, 2025, the Company modified eight loans for borrowers experiencing financial difficulty. Six of these modifications were related to a single borrower relationship and consisted of one construction and development loan and five commercial and industrial loans, all of which received term extensions. The remaining two modifications involved one commercial real estate loan and one commercial and industrial loan, both of which received a term extension and a payment delay. As of September 30, 2025, the period-end amortized cost basis of these modified loans was as follows:
| • | The modified construction and development loan had an amortized cost basis of $ |
| • | The modified commercial real estate loan had an amortized cost basis of $ |
| • | The modified commercial and industrial loans consisted of |
The Company closely monitors the performance of loans modified for borrowers experiencing financial difficulty. There were no loans modified for borrowers experiencing financial difficulty that subsequently
defaulted during the 12-month period ended September 30, 2026.
26
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 6: Shareholders’ Equity
On October 26, 2023, the Company adopted a Repurchase Plan (the “Plan”) authorizing the repurchase of up to 750,000 shares of the Company’s stock. On August 20, 2025, the Board of Directors approved the renewal of the Plan. Stock repurchases under the Plan take place pursuant to a Rule 10b5-1 Plan with pricing and purchasing parameters established by management. The Plan may be suspended or discontinued at any time. There were no share repurchases under the Plan during the period ended September 30, 2026.
A summary of the activity under the repurchase plan is as follows:
|
|
Nine Months Ended
September 30, |
|||||||
|
|
2026
|
2025
|
||||||
|
Number of shares repurchased
|
|
|
||||||
|
Average price of shares repurchased
|
$
|
|
$
|
|
||||
|
Shares remaining to be repurchased
|
|
|
||||||
The Company and Bank are subject to risk-based capital guidelines issued by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the
Company and Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under GAAP, regulatory reporting requirements and regulatory capital standards.
The Company’s and Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore, the Company’s and the Bank’s regulators could require
adjustments to regulatory capital not reflected in these financial statements.
Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios (set forth in the following table) of total, Tier I, and Common Equity
capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined). Management believes, as of September 30, 2026, 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.
As of September 30, 2026, 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. There are no conditions or events since that notification that management believes have changed the
Bank’s category.
27
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
The Company’s and Bank’s actual capital amounts and ratios are presented in the following table (dollars in thousands):
|
|
Minimum
|
|||||||||||||||||||||||||||||||
|
|
To Be Well Capitalized
|
|||||||||||||||||||||||||||||||
|
|
Minimum
|
With Capital
|
Under Prompt
|
|||||||||||||||||||||||||||||
|
|
Actual
|
Capital Requirements
|
Conservation Buffer
|
Corrective Action
|
||||||||||||||||||||||||||||
|
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
As of September 30, 2026
|
||||||||||||||||||||||||||||||||
|
Total capital to risk-weighted assets
|
||||||||||||||||||||||||||||||||
|
Company
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||||
|
Bank
|
|
|
%
|
|
|
%
|
|
|
%
|
$
|
|
|
%
|
|||||||||||||||||||
|
Tier I capital to risk-weighted assets
|
||||||||||||||||||||||||||||||||
|
Company
|
|
|
%
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
|||||||||||||||||||||
|
Bank
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
||||||||||||||||||||
|
Common equity tier I capital to risk-weighted assets
|
||||||||||||||||||||||||||||||||
|
Company
|
|
|
%
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
|||||||||||||||||||||
|
Bank
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
||||||||||||||||||||
|
Tier I capital to average assets
|
||||||||||||||||||||||||||||||||
|
Company
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
N/A
|
N/A
|
||||||||||||||||||||||
|
Bank
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
|
|
%
|
|||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
As of December 31, 2025
|
||||||||||||||||||||||||||||||||
|
Total capital to risk-weighted assets
|
||||||||||||||||||||||||||||||||
|
Company
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||||
|
Bank
|
|
|
%
|
|
|
%
|
|
|
%
|
$
|
|
|
%
|
|||||||||||||||||||
|
Tier I capital to risk-weighted assets
|
||||||||||||||||||||||||||||||||
|
Company
|
|
|
%
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
|||||||||||||||||||||
|
Bank
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
||||||||||||||||||||
|
Common equity tier I capital to risk-weighted assets
|
||||||||||||||||||||||||||||||||
|
Company
|
|
|
%
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
|||||||||||||||||||||
|
Bank
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
||||||||||||||||||||
|
Tier I capital to average assets
|
||||||||||||||||||||||||||||||||
|
Company
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
N/A
|
N/A
|
||||||||||||||||||||||
|
Bank
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
|
|
%
|
|||||||||||||||||||||
28
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
The federal banking agencies require that banking organizations meet several risk-based capital adequacy requirements. The current risk-based capital standards applicable to the Company and the Bank are based on
the Basel III Capital Rules established by the Basel Committee on Banking Supervision (the “Basel Committee”). The Basel Committee is a committee of central banks and bank supervisors/regulators from the major industrialized countries that
develops broad policy guidelines for use by each country’s supervisors in determining the supervisory policies they apply. The requirements are intended to ensure that banking organizations have adequate capital given the risk levels of assets
and off-balance sheet financial instruments.
The Basel III Capital Rules require the Bank and the Company to comply with four minimum capital standards: a Tier 1 leverage ratio of at least 4.0%; a Common Equity Tier 1 (“CET1”) capital to risk-weighted assets
of 4.5%; a Tier 1 capital to risk-weighted assets of at least 6.0%; and a total capital to risk-weighted assets of at least 8.0%. The calculation of all types of regulatory capital is subject to definitions, deductions and adjustments specified
in the regulations.
The Basel III Capital Rules also require a “capital conservation buffer” of 2.5% above the regulatory minimum risk-based capital requirements. The capital conservation buffer is designed to absorb losses during
periods of economic stress and effectively increases the minimum required risk-weighted capital ratios. Banking institutions with a ratio of CET1 to risk-weighted assets below the effective minimum (4.5% plus the capital conservation buffer) are
subject to limitations on certain activities, including payment of dividends, share repurchases and discretionary bonuses to executive officers based on the amount of the shortfall.
As of September 30, 2026, 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. At September 30, 2026, approximately $93.3 million of retained earnings was available for dividend declaration from the Bank without prior regulatory approval.
Note 7: Related-Party Transactions
At September 30, 2026 and December 31, 2025, the Company had loans outstanding to executive officers, directors, significant shareholders and their affiliates (related parties) in the amount of $9.9 million and $10.5 million, respectively. A summary of these loans is as follows (dollars in thousands):
|
|
Balance
|
Balance
|
||||||||||||||
|
|
Beginning of
|
Collections/
|
End of
|
|||||||||||||
|
|
the Period
|
Additions
|
Terminations
|
the Period
|
||||||||||||
|
|
||||||||||||||||
|
For the nine months ended September 30, 2026
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
|||||||
|
Year ended December 31, 2025
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
|||||||
The Company holds deposits from related parties, including directors, executive officers, and their related interests. Related party deposits totaled $64.4 million and $66.6 million as of September 30, 2026, and December 31, 2025, respectively. These deposit balances represented 23.54 % and 26.55 % of total shareholders’ equity at September 30, 2026 and December 31, 2025, respectively. All such deposits were made in the ordinary course of business on substantially the same terms, including interest rates, as those prevailing at the time for comparable transactions with other persons.
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 payments totaled $108,000 and $82,000 for the three months ended September 30, 2026 and 2025, respectively and $273,000 and $245,000 for the nine months ended September 30, 2026 and 2025, respectively. In addition, payroll and office sharing arrangements were in place between the Company and certain of its affiliates.
29
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 8: Employee Benefits
401(k) Savings Plan
The Company has a retirement savings 401(k) plan covering substantially all employees. Employees may contribute up to the maximum legal limit with the Company matching up to 5 % of the employee’s salary. Employer contributions charged to expense for the three months ended September 30, 2026 and 2025 totaled $99,000 and $89,000 , respectively. Employer contributions charged to expense for the nine months ended September 30, 2026 and 2025 totaled $371,000 and $338,000 , respectively.
Stock-Based Compensation
The Company adopted the Bank7 Corp. 2018 Equity Incentive Plan (the “Incentive Plan”) in September 2018. The Incentive Plan permits the grant of restricted stock units and nonqualified incentive stock options. The Incentive Plan will terminate in September 2028, if not extended. Compensation expense related to the Incentive Plan for the three months ended September 30, 2026 and 2025 totaled $803,000 and $842,000 , respectively. Compensation expense related to the Incentive Plan for the nine months ended September 30, 2026 and 2025 totaled $2.1 million and $2.3 million, respectively. There were 641,189 shares available for future grants as of September 30, 2026.
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 RSUs are considered fixed awards as the number of shares and fair value are known at the date of grant and the fair value at the grant date is amortized over the vesting and/or service period.
The Company uses newly issued shares for granting RSUs and stock options.
The following table is a summary of the stock option activity under the Bank7 Corp. 2018 Equity Incentive Plan:
| | Options | Wgtd. Avg. Exercise Price | Wgtd. Avg. Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||
| Nine Months Ended September 30, 2026 | ||||||||||||||||
| Outstanding at December 31, 2025 | | $ | | |||||||||||||
| Options granted | | | ||||||||||||||
| Options exercised | ( | ) | | |||||||||||||
| Options forfeited | | | ||||||||||||||
| Outstanding at September 30, 2026 | | | | $ | | |||||||||||
| Exercisable at September 30, 2026 | | $ | | | $ | | ||||||||||
| | Options | Wgtd. Avg. Exercise Price | Wgtd. Avg. Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||
| Nine Months Ended September 30, 2025 | ||||||||||||||||
| Outstanding at December 31, 2024 | | $ | | |||||||||||||
| Options granted | | | ||||||||||||||
| Options exercised | ( | ) | | |||||||||||||
| Options forfeited | | | ||||||||||||||
| Outstanding at September 30, 2025 | | | | $ | | |||||||||||
| Exercisable at September 30, 2025 | | $ | | | $ | | ||||||||||
30
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model and is based on certain assumptions including risk-free rate of return, dividend yield, stock price
volatility and the expected term. The fair value of each option is expensed over its vesting period.
There were no
The following table summarizes share information about RSUs for the nine months ended September 30, 2026 and 2025:
|
|
Number of Shares
|
Wgtd. Avg.
Grant Date
Fair Value
|
||||||
|
Nine Months Ended September 30, 2026
|
||||||||
|
Outstanding at December 31, 2025
|
|
$
|
|
|||||
|
Shares granted
|
|
|
||||||
|
Shares vested
|
( |
)
|
|
|||||
|
Shares forfeited
|
( |
)
|
|
|||||
|
End of the period balance
|
|
$
|
|
|||||
|
|
Number of Shares
|
Wgtd. Avg.
Grant Date
Fair Value
|
||||||
|
Nine Months Ended September 30, 2025
|
||||||||
|
Outstanding at December 31, 2024
|
|
$
|
|
|||||
|
Shares granted
|
|
|
||||||
|
Shares vested
|
( |
)
|
|
|||||
|
Shares forfeited
|
|
|
||||||
|
End of the period balance
|
|
$
|
|
|||||
As of September 30, 2026, there was approximately $8.3 million of unrecognized compensation expense related to 239,868 unvested RSUs and $362 of unrecognized compensation expense related to 500 unvested stock options. The RSU expense is expected to be recognized over a weighted average period of 3.41 years. The stock option expense is expected to be recognized over a weighted average period of 0.07 years.
As of September 30, 2025, there was approximately $7.3 million of unrecognized compensation expense related to 268,954 unvested RSUs and $9,000 of unrecognized compensation expense related to 66,375 unvested and/or unexercised stock options. The RSU expense is expected to be recognized over a weighted average period of 3.80 years. The stock option expense is expected to be recognized over a weighted average period of 0.91 years.
31
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 9: Disclosures About Fair Value of Assets and Liabilities
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize
the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:
| Level 1 |
Quoted prices in active markets for identical assets or liabilities
|
| Level 2 |
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data
for substantially the full term of the assets or liabilities
|
| Level 3 |
Unobservable inputs supported by little or no market activity and significant to the fair value of the assets or liabilities
|
Recurring Measurements
Assets and liabilities measured at fair value on a recurring basis include the following:
Available-for-sale securities: Debt securities classified as available-for-sale, as discussed in Note 4, are reported at fair value utilizing Level 2 inputs. For those debt
securities classified as Level 2, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U. S. Treasury
yield curve, live trading levels, trade execution data for similar securities, market consensus prepayments speeds, credit information and the security’s terms and conditions, among other things.
32
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
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 September 30, 2026 and December 31, 2025 (dollars in thousands):
|
|
Fair Value
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
|
September 30, 2026
|
||||||||||||||||
|
Collateral-dependent loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
|
||||||||||||||||
|
December 31, 2025
|
||||||||||||||||
|
Collateral-dependent loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the
general classification of such assets pursuant to the valuation hierarchy. 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 loans is based on fair value, less estimated cost to sell. Collateral-dependent loans are classified within Level 3 of the fair value hierarchy.
Collateral-dependent loans are included in the table above only when they have a specific allocation of the allowance for credit losses or have been charged down to the fair value of the collateral. Collateral-dependent loans whose collateral
value exceeds their amortized cost are not measured at fair value and are excluded from the table.
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. Values of the collateral
underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by executive management and loan administration. Values are reviewed for accuracy and consistency by
executive management and loan administration. The ultimate collateral values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the
collateral.
33
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements at September 30, 2026 and December 31, 2025 (dollars in thousands):
Fair Value
|
Valuation
Technique
|
Unobservable
Inputs
|
|||||
|
September 30, 2026
|
|
||||||
|
Collateral-dependent loans
|
$ |
Estimated cash to be received pending liquidation of collateral
|
Estimated cost to sell
|
||||
| |
|
||||||
|
December 31, 2025
|
|
||||||
|
Collateral-dependent loans
|
$ | |
Estimated cash to be received pending liquidation of collateral
|
Estimated cost to sell
|
|||
The following table presents estimated fair values of the Company’s financial instruments not recorded at fair value at September 30, 2026 and December 31, 2025 (dollars in thousands):
|
|
Carrying
|
Fair Value Measurements
|
||||||||||||||||||
|
|
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||||
|
September 30, 2026
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
Financial Assets
|
||||||||||||||||||||
|
Cash and due from banks
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Loans, net
|
|
|
|
|
|
|||||||||||||||
|
Loans held for sale
|
|
|
|
|
|
|||||||||||||||
|
Nonmarketable equity securities
|
|
|
|
|
|
|||||||||||||||
|
Interest receivable
|
|
|
|
|
|
|||||||||||||||
|
|
||||||||||||||||||||
|
Financial Liabilities
|
||||||||||||||||||||
|
Deposits
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Interest payable
|
|
|
|
|
|
|||||||||||||||
|
|
||||||||||||||||||||
|
December 31, 2025
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
Financial Assets
|
||||||||||||||||||||
|
Cash and due from banks
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Interest-bearing time deposits in other banks
|
|
|
|
|
|
|||||||||||||||
|
Loans, net
|
|
|
|
|
|
|||||||||||||||
|
Loans held for sale
|
|
|
|
|
|
|||||||||||||||
|
Nonmarketable equity securities
|
|
|
|
|
|
|||||||||||||||
|
Interest receivable
|
|
|
|
|
|
|||||||||||||||
|
|
||||||||||||||||||||
|
Financial Liabilities
|
||||||||||||||||||||
|
Deposits
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Interest payable
|
|
|
|
|
|
|||||||||||||||
34
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value:
Cash and Due from Banks, Interest-Bearing Time Deposits in Other Banks, Nonmarketable Equity Securities, Interest Receivable, Interest Payable
The carrying amount approximates fair value.
Loans
The Company determines fair value of loans by using exit market price assumptions including factors such as liquidity, credit quality and risk of nonperformance. The fair value is estimated by discounting the
future cash flows using the market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the
calculations.
Loans Held for Sale
Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any,
are recognized through a valuation allowance by charges to income. Because these loans are typically sold shortly after origination, their carrying value generally approximates fair value.
Deposits
Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The carrying amount of these deposits approximates fair value. The fair value of fixed-maturity time
deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.
Commitments to Extend Credit, Lines of Credit and Standby Letters of Credit
The fair values of unfunded commitments are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present
creditworthiness of the counterparties. The fair values of standby letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations
with the counterparties at the reporting date. The estimated fair values of the Company’s commitments to extend credit, lines of credit and standby letters of credit were not material at September 30, 2026 and
December 31, 2025.
35
Table of
Contents
Bank7 Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 10: Financial Instruments with Off-Balance Sheet Risk
The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the accompanying consolidated balance sheets. The following summarizes those financial instruments with contract amounts representing credit risk as of September 30, 2026 and December 31, 2025 (dollars in thousands):
|
|
September 30,
2026
|
December 31,
2025
|
||||||
|
|
||||||||
|
Commitments to extend credit
|
$
|
|
$
|
|
||||
|
Financial and performance standby letters of credit
|
|
|
||||||
|
|
||||||||
|
|
$
|
|
$
|
|
||||
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. Each instrument generally has fixed expiration dates or other
termination clauses. Since many of the instruments are expected to expire without being drawn upon, total commitments to extend credit amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s
creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary, by the Company upon extension of credit is based on management’s credit evaluation of the customer. Standby letters of credit are
irrevocable conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan
facilities to customers.
The reserve for unfunded loan commitments totaled $464,000
Note 11: Concentrations
GAAP requires disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Estimates related to the allowance for credit losses are reflected
in Note 5 regarding loans.
As of September 30, 2026, hospitality loans were 19.3 % of gross total loans with outstanding balances of $316.1 million and unfunded commitments of $15.1 million; energy loans were 7.6 % of gross total loans with outstanding balances of $124.6 million and unfunded commitments of $56.9 million.
36
Table of
Contents
ITEM 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes
included elsewhere in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2025.
Unless the context indicates otherwise, references in this management’s discussion and analysis to “we,” “our,” and “us,” refer to
Bank7 Corp. and its consolidated subsidiaries. All references to “the Bank” refer to Bank7, our wholly owned subsidiary.
General
We are Bank7 Corp., a bank holding company headquartered in Oklahoma City, Oklahoma. Through our wholly-owned subsidiary, Bank7, we operate twelve full-service branches in Oklahoma, the Dallas/Fort Worth,
Texas metropolitan area and Kansas. We are focused on serving business owners and entrepreneurs by delivering fast, consistent and well-designed loan and deposit products to meet their financing needs. We intend to grow organically by
selectively opening additional branches in our target markets and we will also pursue strategic acquisitions.
As a bank holding company, we generate most of our revenue from interest income on loans and from short-term investments. The primary source of funding
for our loans and short-term investments are deposits held by our subsidiary, Bank7. We measure our performance by our return on average assets, return on average equity, earnings per share, capital ratios, and efficiency ratio, which is
calculated by dividing noninterest expense by the sum of net interest income on a tax equivalent basis and noninterest income.
Recent Developments
Acquisition of Century Financial Services Corporation
On November 1, 2026, we completed our acquisition of Century Financial Services Corporation (“Century”), the parent company of Century Bank,
headquartered in Santa Fe, New Mexico, pursuant to the Agreement and Plan of Merger dated September 16, 2026. Century merged with and into the Company, with the Company as the surviving entity. The aggregate consideration to Century
shareholders under the Merger Agreement consisted of $70.0 million in cash and 1,232,657 shares of our common stock, with cash paid in lieu of fractional shares and of shares otherwise issuable to non-accredited shareholders, and was valued
at approximately $142.3 million based on the closing price of our common stock on October 30, 2026. Shares not yet issued will be issued upon receipt of the remaining shareholders’ letters of transmittal. The $7.25 million good-faith
deposit we funded during the third quarter of 2026 was applied toward the cash consideration at closing. In addition, Century’s outstanding phantom stock units vested upon completion of the merger and will be settled in cash for
approximately $5.2 million. In connection with the merger, the Company assumed Century’s junior subordinated debentures and subordinated notes with an aggregate principal balance of approximately $39.5 million. The acquisition extends our
franchise into New Mexico and adds approximately $1.2 billion of deposits. Century Bank is expected to merge with and into the Bank on or about January 1, 2027.
Because the acquisition was completed after September 30, 2026, the financial condition and results of operations presented in this report do not
include Century. Century’s results will be included in our consolidated results beginning November 1, 2026. The acquisition will be accounted for under the acquisition method of accounting, and the initial accounting for the business
combination, including the fair values of the assets acquired and liabilities assumed, was incomplete as of the date of this report. We incurred acquisition-related expenses of $0.7 million and $1.0 million for the three and nine months
ended September 30, 2026, respectively. See Notes 1 and 2 to the condensed consolidated financial statements.
Q3 2026 Overview
We reported total loans of $1.63 billion as of September 30, 2026, an increase of $98.7 million, or 6.4%, from September 30, 2025. Total deposits were $1.72 billion as of
September 30, 2026, an increase of $84.2 million, or 5.1%, from September 30, 2025.
Income before taxes was $13.6 million, a decrease of $0.6 million, or 4.0%, for the three months ended September 30, 2026 as compared
to income before taxes of $14.2 million for the same period in 2025. Income before taxes was $40.5 million, a decrease of $2.2 million, or 5.1%, for the nine
months ended September 30, 2026 as compared to income before taxes of $42.6 million for the same period in 2025.
Pre-tax return on average assets and pre-tax return on average equity were 2.85% and 19.91%, respectively for the three months ended September 30, 2026, as compared to 3.05% and 23.69%, respectively, for the same period in 2025. Pre-tax return on average assets and pre-tax return on average equity were 2.86% and 20.51%,
respectively for the nine months ended September 30, 2026, as compared to 3.17% and 25.02%, respectively, for the same period in 2025.
Our efficiency ratio for the three months ended September 30, 2026 was 41.60% as compared to 41.12% for the same period in 2025. Our efficiency ratio for the nine
months ended September 30, 2026 was 44.02% as compared to 39.94% for the same period in 2025. The increase in the efficiency ratio for the nine months ended September 30, 2026 was primarily driven by
the disposition of the Company’s oil and gas assets in the second quarter, which resulted in a $2.1 million pre-tax loss recorded in noninterest expense and a corresponding reduction in oil and gas related noninterest income.
37
Table of
Contents
Results of Operations
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.
|
|
Net Interest Margin
|
|||||||||||||||||||||||
|
|
For the Three Months Ended September 30,
|
|||||||||||||||||||||||
|
|
2026
|
2025
|
||||||||||||||||||||||
|
|
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
|
$
|
234,057
|
$
|
2,119
|
3.59
|
%
|
$
|
228,755
|
$
|
2,477
|
4.30
|
%
|
||||||||||||
|
Debt securities, taxable
|
40,889
|
243
|
2.36
|
45,853
|
266
|
2.30
|
||||||||||||||||||
|
Debt securities, tax exempt(1)
|
10,695
|
57
|
2.11
|
11,972
|
60
|
1.99
|
||||||||||||||||||
|
Loans held for sale
|
3,519
|
33
|
3.72
|
1,780
|
-
|
-
|
||||||||||||||||||
|
Total loans(2)
|
1,566,740
|
29,480
|
7.46
|
1,512,147
|
30,914
|
8.11
|
||||||||||||||||||
|
Total interest-earning assets
|
1,855,900
|
$
|
31,932
|
6.83
|
1,800,507
|
$
|
33,717
|
7.43
|
||||||||||||||||
|
Noninterest-earning assets
|
40,508
|
42,578
|
||||||||||||||||||||||
|
Total assets
|
$
|
1,896,408
|
$
|
1,843,085
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Funding sources:
|
||||||||||||||||||||||||
|
Interest-bearing liabilities:
|
||||||||||||||||||||||||
|
Deposits:
|
||||||||||||||||||||||||
|
Transaction accounts
|
$
|
1,012,427
|
$
|
7,015
|
2.75
|
%
|
$
|
1,040,322
|
$
|
8,388
|
3.20
|
%
|
||||||||||||
|
Time deposits
|
292,564
|
2,616
|
3.55
|
233,433
|
2,303
|
3.91
|
||||||||||||||||||
|
Total interest-bearing deposits
|
1,304,991
|
9,631
|
2.93
|
1,273,755
|
10,691
|
3.33
|
||||||||||||||||||
|
Total interest-bearing liabilities
|
1,304,991
|
9,631
|
2.93
|
1,273,755
|
10,691
|
3.33
|
||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Noninterest-bearing liabilities:
|
||||||||||||||||||||||||
|
Noninterest-bearing deposits
|
308,711
|
320,238
|
||||||||||||||||||||||
|
Other noninterest-bearing liabilities
|
11,377
|
11,501
|
||||||||||||||||||||||
|
Total noninterest-bearing liabilities
|
320,088
|
331,739
|
||||||||||||||||||||||
|
Shareholders’ equity
|
271,329
|
237,591
|
||||||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$
|
1,896,408
|
$
|
1,843,085
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net interest income
|
$
|
22,301
|
$
|
23,026
|
||||||||||||||||||||
|
Net interest spread
|
3.90
|
%
|
4.10
|
%
|
||||||||||||||||||||
|
Net interest margin
|
4.77
|
%
|
5.07
|
%
|
||||||||||||||||||||
| (1) |
Taxable-equivalent yield of 2.82% as of September 30, 2026, applying a 25.1% effective tax rate.
|
| (2) |
Average loan balances include monthly average nonaccrual loans of $6.6 million and $5.4 million for the three months ended September 30, 2026 and September 30, 2025, respectively.
|
For the three months ended September 30, 2026 compared to the three months ended September 30, 2025:
| - |
Total interest income on loans decreased $1.4 million, or 4.6%, to $29.5 million, due to decreased loan yields as discussed below;
|
| - |
Yields on our interest-earning assets totaled 6.83%, a decrease of 60 basis points which was primarily attributable to lower loan yields of 65 basis points, and a decrease in yield on short-term investments of 71 basis points;
and
|
| - |
Net interest margin was 4.77% compared to 5.07%.
|
38
Table of
Contents
|
|
Net Interest Margin
|
|||||||||||||||||||||||
|
|
For the Nine Months Ended September 30,
|
|||||||||||||||||||||||
|
|
2026
|
2025
|
||||||||||||||||||||||
|
|
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
|
$
|
209,553
|
$
|
5,620
|
3.59
|
%
|
$
|
238,118
|
$
|
7,721
|
4.34
|
%
|
||||||||||||
|
Debt securities, taxable
|
42,196
|
742
|
2.35
|
47,248
|
827
|
2.34
|
||||||||||||||||||
|
Debt securities, tax exempt(1)
|
10,906
|
176
|
2.16
|
12,327
|
187
|
2.03
|
||||||||||||||||||
|
Loans held for sale
|
2,506
|
93
|
4.96
|
1,453
|
-
|
-
|
||||||||||||||||||
|
Total loans(2)
|
1,583,699
|
90,012
|
7.60
|
1,453,557
|
87,207
|
8.02
|
||||||||||||||||||
|
Total interest-earning assets
|
1,848,860
|
$
|
96,643
|
6.99
|
1,752,703
|
$
|
95,942
|
7.32
|
||||||||||||||||
|
Noninterest-earning assets
|
39,059
|
41,871
|
||||||||||||||||||||||
|
Total assets
|
$
|
1,887,919
|
$
|
1,794,574
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Funding sources:
|
||||||||||||||||||||||||
|
Interest-bearing liabilities:
|
||||||||||||||||||||||||
|
Deposits:
|
||||||||||||||||||||||||
|
Transaction accounts
|
$
|
1,024,563
|
$
|
20,958
|
2.73
|
%
|
$
|
1,001,583
|
$
|
23,182
|
3.09
|
%
|
||||||||||||
|
Time deposits
|
273,187
|
7,286
|
3.57
|
235,278
|
7,152
|
4.06
|
||||||||||||||||||
|
Total interest-bearing deposits
|
1,297,750
|
28,244
|
2.91
|
1,236,861
|
30,334
|
3.28
|
||||||||||||||||||
|
Total interest-bearing liabilities
|
1,297,750
|
28,244
|
2.91
|
1,236,861
|
30,334
|
3.28
|
||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Noninterest-bearing liabilities:
|
||||||||||||||||||||||||
|
Noninterest-bearing deposits
|
316,459
|
319,346
|
||||||||||||||||||||||
|
Other noninterest-bearing liabilities
|
10,023
|
10,657
|
||||||||||||||||||||||
|
Total noninterest-bearing liabilities
|
326,482
|
330,003
|
||||||||||||||||||||||
|
Shareholders’ equity
|
263,687
|
227,710
|
||||||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$
|
1,887,919
|
$
|
1,794,574
|
||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net interest income
|
$
|
68,399
|
$
|
65,608
|
||||||||||||||||||||
|
Net interest spread
|
4.08
|
%
|
4.04
|
%
|
||||||||||||||||||||
|
Net interest margin
|
4.95
|
%
|
5.00
|
%
|
||||||||||||||||||||
| (1) |
Taxable-equivalent yield of 2.86% as of September 30, 2026, applying a 24.5% effective tax rate.
|
| (2) |
Average loan balances include monthly average nonaccrual loans of $7.1 million and $5.9 million for the nine months ended September 30, 2026 and September 30, 2025, respectively.
|
For the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025:
| - |
Total interest income on loans increased $2.8 million, or 3.2%, to $90.0 million, due to an increase in the average loan balance of $130.1 million, partially offset by the decreased loan yields as
discussed below;
|
| - |
Interest income on short-term investments decreased by $2.1 million, driven by a $28.6 million decline in average balances combined with lower yields;
|
| - |
Yields on our total interest-earning assets decreased by 33 basis points to 6.99%, which was driven predominantly by a 42 basis point decline in loan yields, and to a lesser extent, a 75 basis point decrease in yields on
short-term investments; and
|
| - |
Net interest margin was 4.95% compared to 5.00%.
|
39
Table of
Contents
Increases and decreases in interest income and interest expense result from changes in average balances, or volume, of interest-earning assets and interest-bearing liabilities, as
well as changes in average interest rates. The following tables set forth the effects of changing rates and volumes on our net interest income during the period shown. Information is provided with respect to (i) effects on interest income
attributable to changes in volume (change in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume).
|
|
Analysis of Changes in Interest Income and Expenses
|
|||||||||||
|
|
For the Three Months Ended
|
|||||||||||
|
|
September 30, 2026 vs 2025
|
|||||||||||
|
|
Change due to:
|
|||||||||||
|
|
Volume(1)
|
Rate(1)
|
Interest
Variance
|
|||||||||
|
|
||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||
|
Increase (decrease) in interest income:
|
||||||||||||
|
Short-term investments
|
$
|
57
|
$
|
(415
|
)
|
$
|
(358
|
)
|
||||
|
Debt securities
|
(35
|
)
|
9
|
(26
|
)
|
|||||||
|
Loans held for sale
|
-
|
33
|
33
|
|||||||||
|
Total loans
|
1,116
|
(2,550
|
)
|
(1,434
|
)
|
|||||||
|
Total increase (decrease) in interest income
|
1,138
|
(2,923
|
)
|
(1,785
|
)
|
|||||||
|
|
||||||||||||
|
Increase (decrease) in interest expense:
|
||||||||||||
|
Deposits:
|
||||||||||||
|
Transaction accounts
|
(225
|
)
|
(1,148
|
)
|
(1,373
|
)
|
||||||
|
Time deposits
|
583
|
(270
|
)
|
313
|
||||||||
|
Total interest-bearing deposits
|
358
|
(1,418
|
)
|
(1,060
|
)
|
|||||||
|
Total increase (decrease) in interest expense
|
358
|
(1,418
|
)
|
(1,060
|
)
|
|||||||
|
|
||||||||||||
|
Increase (decrease) in net interest income
|
$
|
780
|
$
|
(1,505
|
)
|
$
|
(725
|
)
|
||||
|
|
Analysis of Changes in Interest Income and Expenses
|
|||||||||||
|
|
For the Nine Months Ended
|
|||||||||||
|
|
September 30, 2026 vs 2025
|
|||||||||||
|
|
Change due to:
|
|||||||||||
|
|
Volume(1)
|
Rate(1)
|
Interest
Variance
|
|||||||||
|
|
||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||
|
Increase (decrease) in interest income:
|
||||||||||||
|
Short-term investments
|
$
|
(926
|
)
|
$
|
(1,175
|
)
|
$
|
(2,101
|
)
|
|||
|
Debt securities
|
(110
|
)
|
14
|
(96
|
)
|
|||||||
|
Loans held for sale
|
-
|
93
|
93
|
|||||||||
|
Total loans
|
7,808
|
(5,003
|
)
|
2,805
|
||||||||
|
Total increase (decrease) in interest income
|
6,772
|
(6,071
|
)
|
701
|
||||||||
|
|
||||||||||||
|
Increase (decrease) in interest expense:
|
||||||||||||
|
Deposits:
|
||||||||||||
|
Transaction accounts
|
532
|
(2,756
|
)
|
(2,224
|
)
|
|||||||
|
Time deposits
|
1,152
|
(1,018
|
)
|
134
|
||||||||
|
Total interest-bearing deposits
|
1,684
|
(3,774
|
)
|
(2,090
|
)
|
|||||||
|
Total increase (decrease) in interest expense
|
1,684
|
(3,774
|
)
|
(2,090
|
)
|
|||||||
|
|
||||||||||||
|
Increase (Decrease) in net interest income
|
$
|
5,088
|
$
|
(2,297
|
)
|
$
|
2,791
|
|||||
| (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.
|
40
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
September 30, 2026. The following table presents securities at their expected maturities, which may differ from contractual maturities. 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 September 30, 2026
|
|||||||||||||||||||||||||||||||||||||||
|
|
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)
|
|||||||||||||||||||||||||||||||||||||||
|
Mortgage-backed securities
|
$
|
4,077
|
1.62
|
%
|
$
|
3,304
|
1.40
|
%
|
$
|
1,315
|
1.37
|
%
|
$
|
13,874
|
1.73
|
%
|
$
|
22,570
|
1.64
|
%
|
||||||||||||||||||||
|
State and political subdivisions
|
2,392
|
1.65
|
8,707
|
1.74
|
3,119
|
1.67
|
-
|
-
|
14,218
|
1.71
|
||||||||||||||||||||||||||||||
|
U.S. treasuries
|
998
|
0.97
|
4,514
|
1.10
|
-
|
-
|
-
|
-
|
5,512
|
1.08
|
||||||||||||||||||||||||||||||
|
Corporate debt securities
|
-
|
-
|
-
|
-
|
5,239
|
3.36
|
-
|
-
|
5,239
|
3.36
|
||||||||||||||||||||||||||||||
|
Total
|
$
|
7,467
|
1.55
|
%
|
$
|
16,525
|
1.49
|
%
|
$
|
9,673
|
2.51
|
%
|
$
|
13,874
|
1.73
|
%
|
$
|
47,539
|
1.78
|
%
|
||||||||||||||||||||
|
Percentage of total
|
15.71
|
%
|
34.76
|
%
|
20.35
|
%
|
29.18
|
%
|
100.00
|
%
|
||||||||||||||||||||||||||||||
*Yield is on a taxable-equivalent basis using 21% tax rate
Provision for Credit Losses
For the three months ended September 30, 2026 compared to the three months ended September 30, 2025:
| - |
The provision for credit losses decreased from $0.7 million to $0.
|
For the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025:
| - |
The provision for credit losses decreased from $0.7 million to $0.
|
Income Taxes
We file a consolidated income tax return and recognize deferred taxes based upon the future tax consequences of temporary differences between the carrying amounts and tax basis of assets and
liabilities. The process of determining the accruals for income taxes involves the exercise of considerable judgment regarding tax rates, laws, and the implementation of tax planning strategies.
For the three and nine months ended September 30, 2026, and 2025, all of our income before income taxes was generated from domestic operations. We do not currently have exposure to foreign tax
jurisdictions; as such, our jurisdictional tax mix remains concentrated within the United States and specific state jurisdictions, primarily Oklahoma.
Our provision for income taxes was $3.4 million for the three months ended September 30, 2026, compared to $3.3 million for same period in 2025. This resulted in an effective tax rate of
25.06% in 2026, compared to 23.56% in 2025. The effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to the effect of state income taxes (net of federal benefit) and nondeductible expenses. The year-over-year
rate change was primarily driven by the impact of Oklahoma state taxes and certain nondeductible reconciling items. Cash taxes paid for the three months ended September 30, 2026 and 2025 totaled $3.8 million and $3.2 million, respectively,
reflecting our domestic jurisdictional profile and the timing of estimated tax payments.
Our provision for income taxes was $9.9 million for the nine months ended September 30, 2026, compared to $10.3 million for the same period in 2025. This resulted in an effective tax rate of
24.46% in 2026, compared to 24.23% in 2025. The effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to the effect of state income taxes (net of federal benefit) and nondeductible expenses. The year-over-year
rate change was primarily driven by the impact of Oklahoma state taxes and certain nondeductible reconciling items. Cash taxes paid for the nine months ended September 30, 2026 and 2025 totaled $9.9 million and $10.4 million, respectively,
reflecting our domestic jurisdictional profile and the timing of estimated tax payments.
41
Table of
Contents
Noninterest Income
The following tables set forth the major components of our noninterest income for the periods indicated:
|
|
For the Three Months Ended
|
|||||||||||||||
|
|
September 30,
|
|||||||||||||||
|
|
2026
|
2025
|
$ Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||||||
|
|
||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||
|
Noninterest income:
|
||||||||||||||||
|
Mortgage lending income
|
$
|
492
|
$
|
391
|
$
|
101
|
25.83
|
%
|
||||||||
|
Loss on sales of available-for-sale debt securities
|
(5
|
)
|
(10
|
)
|
5
|
-50.00
|
%
|
|||||||||
|
Service charges on deposit accounts
|
235
|
248
|
(13
|
)
|
-5.24
|
%
|
||||||||||
|
Other income and fees
|
347
|
1,581
|
(1,234
|
)
|
-78.05
|
%
|
||||||||||
|
Total noninterest income
|
$
|
1,069
|
$
|
2,210
|
$
|
(1,141
|
)
|
-51.63
|
%
|
|||||||
Noninterest income for the three months ended September 30, 2026 was $1.1 million compared to $2.2 million for the same period in 2025, a decrease of $1.1 million, or 51.6%. The decrease was primarily driven
by a $1.2 million decline in ‘Other income and fees’, which was attributable to the absence of oil and gas related revenues during the third quarter of 2026 following the disposition of the Company’s oil and gas assets. For comparison, the
Company recognized $1.3 million of oil and gas related revenues during the same period in 2025.
|
|
For the Nine Months Ended
|
|||||||||||||||
|
|
September 30,
|
|||||||||||||||
|
|
2026
|
2025
|
$ Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||||||
|
|
||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||
|
Noninterest income:
|
||||||||||||||||
|
Mortgage lending income
|
$
|
1,343
|
$
|
1,000
|
$
|
343
|
34.30
|
%
|
||||||||
|
Loss on sales of available-for-sale debt securities
|
(5
|
)
|
(10
|
)
|
5
|
-50.00
|
%
|
|||||||||
|
Service charges on deposit accounts
|
699
|
697
|
2
|
0.29
|
%
|
|||||||||||
|
Other income and fees
|
2,000
|
4,976
|
(2,976
|
)
|
-59.81
|
%
|
||||||||||
|
Total noninterest income
|
$
|
4,037
|
$
|
6,663
|
$
|
(2,626
|
)
|
-39.41
|
%
|
|||||||
Noninterest income for the nine months ended September 30, 2026 was $4.0 million compared to $6.7 million for the same period in 2025, a decrease of $2.6 million, or 39.4%. The decrease was primarily driven
by a $3.0 million decline in ‘Other income and fees’, which was largely attributable to a reduction in oil and gas related revenues following the disposition of the Company’s oil and gas assets early in the second quarter of 2026. The
Company recognized $0.9 million of oil and gas related revenues during the nine months ended September 30, 2026, compared to $4.0 million for the same period in 2025.
42
Table of
Contents
Noninterest Expense
The following tables set forth the major components of our noninterest expense for the periods indicated:
|
|
For the Three Months Ended
|
|||||||||||||||
|
|
September 30,
|
|||||||||||||||
|
|
2026
|
2025
|
$ Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||||||
|
|
||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||
|
Noninterest expense:
|
||||||||||||||||
|
Salaries and employee benefits
|
$
|
5,740
|
$
|
5,829
|
$
|
(89
|
)
|
-1.53
|
%
|
|||||||
|
Furniture and equipment
|
362
|
342
|
20
|
5.85
|
%
|
|||||||||||
|
Occupancy
|
659
|
668
|
(9
|
)
|
-1.35
|
%
|
||||||||||
|
Data and item processing
|
562
|
515
|
47
|
9.13
|
%
|
|||||||||||
|
Accounting, marketing, and legal fees
|
902
|
221
|
681
|
308.14
|
%
|
|||||||||||
|
Regulatory assessments
|
259
|
248
|
11
|
4.44
|
%
|
|||||||||||
|
Advertising and public relations
|
171
|
212
|
(41
|
)
|
-19.34
|
%
|
||||||||||
|
Travel, lodging and entertainment
|
185
|
112
|
73
|
65.18
|
%
|
|||||||||||
|
Other expense
|
915
|
2,203
|
(1,288
|
)
|
-58.47
|
%
|
||||||||||
|
Total noninterest expense
|
$
|
9,755
|
$
|
10,350
|
$
|
(595
|
)
|
-5.75
|
%
|
|||||||
Noninterest expense for the three months ended September 30, 2026 was $9.8 million compared to $10.4 million for the same period in 2025, a decrease of $0.6 million, or 5.7%. Accounting, marketing, and legal fees expense was $0.9 million for the three months ended September 30, 2026 compared to $0.2 million for the same period in 2025, an increase
of $0.7 million, or 308.1%. The increase in accounting, marketing, and legal fees was primarily attributable to an increase in consulting and legal fees tied to the acquisition of Century Financial Services Corporation. Additionally,
‘Other expense’ decreased by $1.3 million, which was primarily driven by the disposition of the Company’s oil and gas assets during the second quarter of 2026.
|
|
For the Nine Months Ended
|
|||||||||||||||
|
|
September 30,
|
|||||||||||||||
|
|
2026
|
2025
|
$ Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||||||
|
|
||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||
|
Noninterest expense:
|
||||||||||||||||
|
Salaries and employee benefits
|
$
|
18,267
|
$
|
16,829
|
$
|
1,438
|
8.54
|
%
|
||||||||
|
Furniture and equipment
|
1,126
|
954
|
172
|
18.03
|
%
|
|||||||||||
|
Occupancy
|
2,069
|
1,890
|
179
|
9.47
|
%
|
|||||||||||
|
Data and item processing
|
1,650
|
1,615
|
35
|
2.17
|
%
|
|||||||||||
|
Accounting, marketing, and legal fees
|
1,924
|
484
|
1,440
|
297.52
|
%
|
|||||||||||
|
Regulatory assessments
|
777
|
545
|
232
|
42.57
|
%
|
|||||||||||
|
Advertising and public relations
|
441
|
629
|
(188
|
)
|
-29.89
|
%
|
||||||||||
|
Travel, lodging and entertainment
|
359
|
289
|
70
|
24.22
|
%
|
|||||||||||
|
Other expense
|
5,372
|
5,729
|
(357
|
)
|
-6.23
|
%
|
||||||||||
|
Total noninterest expense
|
$
|
31,985
|
$
|
28,964
|
$
|
3,021
|
10.43
|
%
|
||||||||
Noninterest expense for the nine months ended September 30, 2026 was $32.0 million compared to $29.0 million for the same period in 2025, an increase of $3.0 million, or 10.4%. Salaries and
employee benefits expense was $18.3 million for the nine months ended September 30, 2026 compared to $16.8 million for the same period in 2025, an increase of $1.4 million, or 8.5%. The increase in salaries and employee benefits was
primarily attributable to overall increases in compensation related to Company performance and efforts to effectively compete for executive and non-executive talent. Additionally, accounting, marketing, and legal fees increased by $1.4
million, which was primarily attributable to an increase in consulting and legal fees tied to the acquisition of Century Financial Services Corporation.
43
Table of
Contents
Financial Condition
The following discussion of our financial condition compares September 30, 2026 and December 31, 2025.
Total Assets
Total assets increased $43.3 million, or 2.2%, to $2.01 billion as of September 30, 2026, compared to $1.96 billion as of December 31, 2025.
Loan Portfolio
Our loans represent the largest portion of our earning assets. The quality and diversification of the loan portfolio is an important consideration when reviewing our financial condition. As of September 30, 2026, and December 31, 2025, our gross loans were $1.64 billion and $1.61 billion, respectively.
The following table presents the balance and associated percentage of each major category in our loan portfolio as of September 30, 2026 and December 31, 2025:
|
|
As of September 30,
|
As of December 31,
|
||||||||||||||
|
|
2026
|
2025
|
||||||||||||||
|
|
Amount
|
% of Total
|
Amount
|
% of Total
|
||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||
|
Construction & development
|
$
|
250,732
|
15.3
|
%
|
$
|
224,566
|
14.0
|
%
|
||||||||
|
1-4 family real estate
|
135,519
|
8.3
|
%
|
126,122
|
7.8
|
%
|
||||||||||
|
Commercial real estate - other
|
628,229
|
38.4
|
%
|
587,597
|
36.5
|
%
|
||||||||||
|
Total commercial real estate
|
1,014,480
|
62.0
|
%
|
938,285
|
58.3
|
%
|
||||||||||
|
|
||||||||||||||||
|
Commercial & industrial
|
536,427
|
32.8
|
%
|
567,280
|
35.2
|
%
|
||||||||||
|
Agricultural
|
72,863
|
4.5
|
%
|
90,908
|
5.7
|
%
|
||||||||||
|
Consumer
|
12,164
|
0.7
|
%
|
12,894
|
0.8
|
%
|
||||||||||
|
Gross loans
|
1,635,934
|
100.0
|
%
|
1,609,367
|
100.0
|
%
|
||||||||||
|
Less: unearned income, net
|
(3,046
|
)
|
(2,936
|
)
|
||||||||||||
|
Total Loans, net of unearned income
|
1,632,888
|
1,606,431
|
||||||||||||||
|
Less: Allowance for credit losses
|
(19,367
|
)
|
(19,407
|
)
|
||||||||||||
|
Net loans
|
$
|
1,613,521
|
$
|
1,587,024
|
||||||||||||
We have established internal concentration limits in the loan portfolio for CRE loans, hospitality loans, energy loans, and construction loans, among others. 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. Discussion of credit risk as it relates to commercial lending, which is primarily comprised of hospitality and energy loans, is
discussed under Item 1A. Risk Factors on our most recent Annual Report on Form 10-K.
44
Table of
Contents
The following tables show the contractual maturities of our gross loans as of the periods below:
|
|
As of September 30, 2026
|
|||||||||||||||||||||||||||||||||||
|
|
Due in One Year or Less
|
Due after One Year
Through Five Years
|
Due after Five Years
Through Fifteen Years
|
Due after Fifteen Years
|
Total
|
|||||||||||||||||||||||||||||||
|
|
Fixed
Rate
|
Adjustable
Rate
|
Fixed
Rate
|
Adjustable
Rate
|
Fixed
Rate
|
Adjustable
Rate
|
Fixed
Rate
|
Adjustable
Rate
|
||||||||||||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||||||
|
Construction & development
|
$
|
10,846
|
$
|
153,692
|
$
|
1,528
|
$
|
82,859
|
$
|
-
|
$
|
550
|
$
|
1,257
|
$
|
-
|
$
|
250,732
|
||||||||||||||||||
|
1-4 family real estate
|
11,063
|
29,066
|
28,012
|
59,590
|
693
|
6,001
|
1,094
|
-
|
135,519
|
|||||||||||||||||||||||||||
|
Commercial real estate - other
|
29,618
|
108,800
|
49,030
|
402,192
|
128
|
34,446
|
4,015
|
-
|
628,229
|
|||||||||||||||||||||||||||
|
Total commercial real estate
|
51,527
|
291,558
|
78,570
|
544,641
|
821
|
40,997
|
6,366
|
-
|
1,014,480
|
|||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||
|
Commercial & industrial
|
42,719
|
237,686
|
11,883
|
235,473
|
471
|
8,195
|
-
|
-
|
536,427
|
|||||||||||||||||||||||||||
|
Agricultural
|
22,838
|
22,230
|
6,353
|
19,317
|
104
|
1,767
|
254
|
-
|
72,863
|
|||||||||||||||||||||||||||
|
Consumer
|
1,851
|
15
|
4,410
|
178
|
702
|
3,800
|
1,208
|
-
|
12,164
|
|||||||||||||||||||||||||||
|
Gross loans
|
$
|
118,935
|
$
|
551,489
|
$
|
101,216
|
$
|
799,609
|
$
|
2,098
|
$
|
54,759
|
$
|
7,828
|
$
|
-
|
$
|
1,635,934
|
||||||||||||||||||
|
|
As of December 31, 2025
|
|||||||||||||||||||||||||||||||||||
|
|
Due in One Year or Less
|
Due after One Year
Through Five Years
|
Due after Five Years
Through Fifteen Years
|
Due after Fifteen Years
|
Total
|
|||||||||||||||||||||||||||||||
|
|
Fixed
Rate
|
Adjustable
Rate
|
Fixed
Rate
|
Adjustable
Rate
|
Fixed
Rate
|
Adjustable
Rate
|
Fixed
Rate
|
Adjustable
Rate
|
||||||||||||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||||||
|
Construction & development
|
$
|
638
|
$
|
116,658
|
$
|
10,497
|
$
|
95,444
|
$
|
-
|
$
|
399
|
$
|
930
|
$
|
-
|
$
|
224,566
|
||||||||||||||||||
|
1-4 family real estate
|
7,281
|
21,031
|
32,503
|
56,599
|
775
|
5,533
|
2,400
|
-
|
126,122
|
|||||||||||||||||||||||||||
|
Commercial real estate - other
|
22,817
|
41,301
|
66,266
|
412,436
|
139
|
38,515
|
6,123
|
-
|
587,597
|
|||||||||||||||||||||||||||
|
Total commercial real estate
|
30,736
|
178,990
|
109,266
|
564,479
|
914
|
44,447
|
9,453
|
-
|
938,285
|
|||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||
|
Commercial & industrial
|
47,266
|
293,406
|
14,097
|
173,586
|
107
|
38,246
|
572
|
-
|
567,280
|
|||||||||||||||||||||||||||
|
Agricultural
|
31,633
|
10,926
|
6,560
|
37,162
|
-
|
3,253
|
1,374
|
-
|
90,908
|
|||||||||||||||||||||||||||
|
Consumer
|
1,747
|
2
|
4,866
|
258
|
806
|
3,714
|
1,501
|
-
|
12,894
|
|||||||||||||||||||||||||||
|
Gross loans
|
$
|
111,382
|
$
|
483,324
|
$
|
134,789
|
$
|
775,485
|
$
|
1,827
|
$
|
89,660
|
$
|
12,900
|
$
|
-
|
$
|
1,609,367
|
||||||||||||||||||
Allowance for Credit Losses
The allowance is based on management’s estimate of expected credit losses in the loan portfolio. In the opinion of management, the allowance is adequate to absorb estimated losses in the portfolio as of each
balance sheet date. While management uses available information to analyze losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral
part of their examination process, periodically review the Company’s allowance. In analyzing the adequacy of the allowance, a comprehensive loan grading system to determine risk potential in loans is utilized together with the results of
internal credit reviews.
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. 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. In addition to the segment evaluations, substandard 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. 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.
The allowance was $19.4 million at September 30, 2026, compared to $19.4 million at December 31, 2025.
45
Table of
Contents
The following table provides an analysis of the activity in our allowance for the periods indicated:
|
|
For the Nine Months Ended
September 30, |
|||||||
|
|
2026
|
2025
|
||||||
|
|
(Dollars in thousands)
|
|||||||
|
Balance at beginning of the period
|
$
|
19,407
|
$
|
17,918
|
||||
|
Provision for credit losses for loans
|
-
|
700
|
||||||
|
Charge-offs:
|
||||||||
|
Construction & development
|
-
|
-
|
||||||
|
1-4 family real estate
|
-
|
-
|
||||||
|
Commercial real estate - other
|
(36
|
)
|
(197
|
)
|
||||
|
Commercial & industrial
|
-
|
-
|
||||||
|
Agricultural
|
(112
|
)
|
-
|
|||||
|
Consumer
|
-
|
(3
|
)
|
|||||
|
Total charge-offs
|
(148
|
)
|
(200
|
)
|
||||
|
Recoveries:
|
||||||||
|
Construction & development
|
-
|
-
|
||||||
|
1-4 family real estate
|
-
|
-
|
||||||
|
Commercial real estate - other
|
43
|
17
|
||||||
|
Commercial & industrial
|
62
|
963
|
||||||
|
Agricultural
|
-
|
4
|
||||||
|
Consumer
|
3
|
3
|
||||||
|
Total recoveries
|
108
|
987
|
||||||
|
Net recoveries (charge-offs)
|
(40
|
)
|
787
|
|||||
|
Balance at end of the period
|
$
|
19,367
|
$
|
19,405
|
||||
|
Net recoveries (charge-offs) to average loans
|
0.00
|
%
|
0.07
|
%
|
||||
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 September 30,
|
As of December 31,
|
||||||||||||||
|
|
2026
|
2025
|
||||||||||||||
|
|
Amount
|
Percent
|
Amount
|
Percent
|
||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||
|
Construction & development
|
$
|
1,208
|
6.2
|
%
|
$
|
1,222
|
6.3
|
%
|
||||||||
|
1-4 family real estate
|
901
|
4.7
|
%
|
964
|
5.0
|
%
|
||||||||||
|
Commercial real estate - other
|
6,461
|
33.4
|
%
|
6,855
|
35.3
|
%
|
||||||||||
|
Commercial & industrial
|
10,090
|
52.1
|
%
|
9,369
|
48.2
|
%
|
||||||||||
|
Agricultural
|
374
|
1.9
|
%
|
612
|
3.2
|
%
|
||||||||||
|
Consumer
|
333
|
1.7
|
%
|
385
|
2.0
|
%
|
||||||||||
|
Total
|
$
|
19,367
|
100.0
|
%
|
$
|
19,407
|
100.0
|
%
|
||||||||
46
Table of
Contents
Nonaccrual Loans and Nonperforming Assets
Loans are considered delinquent when principal or interest payments are past due 30 days or more. Delinquent loans may remain on accrual status between 30 days and 90 days past due. Loans on which the accrual
of interest has been discontinued are designated as nonaccrual loans. Typically, the accrual of interest on loans is discontinued when principal or interest payments are past due 90 days or when, in the opinion of management, there is a
reasonable doubt as to collectability of the obligation. When loans are placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. 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. 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. 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. 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. 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. Changes
in the allowance for credit losses, whether increases or decreases, are recorded in current period earnings as provision for credit losses.
Real estate we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as other real estate owned, or OREO, until sold, and is initially recorded at fair value less costs to sell
when acquired, establishing a new cost basis.
Nonperforming loans include nonaccrual loans and loans past due 90 days or more and still accruing interest. Nonperforming assets consist of nonperforming loans plus OREO. Loans
accounted for on a nonaccrual basis were $7.4 million as of September 30, 2026, and $6.5 million as of December 31, 2025. OREO was $0, and $461,000 as of September 30, 2026, and December 31, 2025, respectively.
The following table presents information regarding nonperforming assets as of the dates indicated:
|
|
As of
September 30,
2026 |
As of
December 31, 2025
|
||||||
|
|
(Dollars in thousands)
|
|||||||
|
Nonaccrual loans(1)
|
$
|
7,388
|
$
|
6,460
|
||||
|
Accruing loans 90 or more days past due
|
38
|
-
|
||||||
|
Total nonperforming loans
|
7,426
|
6,460
|
||||||
|
Total nonperforming assets(2)
|
$
|
7,426
|
$
|
6,460
|
||||
|
Ratio of nonperforming loans to total loans
|
0.45
|
%
|
0.40
|
%
|
||||
|
Ratio of nonaccrual loans to total loans
|
0.45
|
%
|
0.40
|
%
|
||||
|
Ratio of allowance for credit losses to total loans
|
1.19
|
%
|
1.21
|
%
|
||||
|
Ratio of allowance for credit losses to nonaccrual loans
|
262.14
|
%
|
300.42
|
%
|
||||
|
Ratio of nonperforming assets to total assets
|
0.37
|
%
|
0.33
|
%
|
||||
(1) Includes nonaccrual financial difficulty modifications of $2.5 and $0 million as of September 30, 2026 and December 31, 2025, respectively. See note 5 of the financial statements.
(2) Excludes OREO of $0 and $461,000 as of September 30, 2026 and December 31, 2025, respectively, as the balances are not considered material for separate disclosure.
(2) Excludes OREO of $0 and $461,000 as of September 30, 2026 and December 31, 2025, respectively, as the balances are not considered material for separate disclosure.
47
Table of
Contents
The following tables present an aging analysis of loans as of the dates indicated:
|
|
As of September 30, 2026
|
|||||||||||||||||||||||||||
|
|
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
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
250,732
|
$
|
250,732
|
||||||||||||||
|
1-4 family real estate
|
272
|
-
|
38
|
38
|
310
|
135,209
|
135,519
|
|||||||||||||||||||||
|
Commercial real estate - other
|
-
|
-
|
-
|
-
|
-
|
628,229
|
628,229
|
|||||||||||||||||||||
|
Commercial & industrial
|
-
|
372
|
-
|
-
|
372
|
536,055
|
536,427
|
|||||||||||||||||||||
|
Agricultural
|
-
|
-
|
-
|
-
|
-
|
72,863
|
72,863
|
|||||||||||||||||||||
|
Consumer
|
-
|
-
|
-
|
-
|
-
|
12,164
|
12,164
|
|||||||||||||||||||||
|
Total
|
$
|
272
|
$
|
372
|
$
|
38
|
$
|
38
|
$
|
682
|
$
|
1,635,252
|
$
|
1,635,934
|
||||||||||||||
|
|
As of December 31, 2025
|
|||||||||||||||||||||||||||
|
|
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
|
$
|
79
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
79
|
$
|
224,487
|
$
|
224,566
|
||||||||||||||
|
1-4 family real estate
|
47
|
-
|
-
|
-
|
47
|
126,075
|
126,122
|
|||||||||||||||||||||
|
Commercial real estate - other
|
-
|
1,423
|
-
|
-
|
1,423
|
586,174
|
587,597
|
|||||||||||||||||||||
|
Commercial & industrial
|
1,702
|
80
|
3,429
|
-
|
5,211
|
562,069
|
567,280
|
|||||||||||||||||||||
|
Agricultural
|
-
|
-
|
-
|
-
|
-
|
90,908
|
90,908
|
|||||||||||||||||||||
|
Consumer
|
30
|
-
|
-
|
-
|
30
|
12,864
|
12,894
|
|||||||||||||||||||||
|
Total
|
$
|
1,858
|
$
|
1,503
|
$
|
3,429
|
$
|
-
|
$
|
6,790
|
$
|
1,602,577
|
$
|
1,609,367
|
||||||||||||||
48
Table of
Contents
In addition to the past due and nonaccrual criteria, we also evaluate loans according to our internal risk grading system. Loans are segregated between pass, watch, special mention, and substandard
categories. The definitions of those categories are as follows:
Pass: These loans generally conform to Bank policies, are characterized by policy-conforming advance rates on collateral, and have well-defined repayment sources. In
addition, these credits are extended to borrowers and guarantors with a strong balance sheet and either substantial liquidity or a reliable income history.
Watch: These loans are still considered “Pass” credits; however, various factors such as industry stress, material changes in cash flow or financial conditions, or
deficiencies in loan documentation, or other risk issues determined by the lending officer, Commercial Loan Committee or Credit Quality Committee warrant a heightened sense and frequency of monitoring.
Special mention: These loans have observable weaknesses or evidence of imprudent handling or structural issues. The weaknesses require close attention, and the
remediation of those weaknesses is necessary. No risk of probable loss exists. Credits in this category are expected to quickly migrate to “Watch” or “Substandard” as this is viewed as a transitory loan grade.
Substandard: These loans are not adequately protected by the sound worth and debt service capacity of the borrower, but may be well-secured. The loans have defined
weaknesses relative to cash flow, collateral, financial condition or other factors that might jeopardize repayment of all of the principal and interest on a timely basis. There is the possibility that a future loss will occur if weaknesses
are not remediated.
Outstanding loan balances categorized by internal risk grades as of the periods indicated are summarized as follows:
|
|
As of September 30, 2026
|
|||||||||||||||||||
|
|
Pass
|
Watch
|
Special
mention
|
Substandard
|
Total
|
|||||||||||||||
|
|
||||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
|
Construction & development
|
$
|
245,911
|
$
|
-
|
$
|
-
|
$
|
4,821
|
$
|
250,732
|
||||||||||
|
1-4 family real estate
|
134,320
|
-
|
-
|
1,199
|
135,519
|
|||||||||||||||
|
Commercial real estate - other
|
608,915
|
17,704
|
-
|
1,610
|
628,229
|
|||||||||||||||
|
Commercial & industrial
|
495,151
|
37,000
|
2,660
|
1,616
|
536,427
|
|||||||||||||||
|
Agricultural
|
70,200
|
-
|
-
|
2,663
|
72,863
|
|||||||||||||||
|
Consumer
|
12,164
|
-
|
-
|
-
|
12,164
|
|||||||||||||||
|
Total
|
$
|
1,566,661
|
$
|
54,704
|
$
|
2,660
|
$
|
11,909
|
$
|
1,635,934
|
||||||||||
|
|
As of December 31, 2025
|
|||||||||||||||||||
|
|
Pass
|
Watch
|
Special
mention
|
Substandard
|
Total
|
|||||||||||||||
|
|
||||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
|
Construction & development
|
$
|
222,688
|
$
|
-
|
$
|
1,323
|
$
|
555
|
$
|
224,566
|
||||||||||
|
1-4 family real estate
|
126,122
|
-
|
-
|
-
|
126,122
|
|||||||||||||||
|
Commercial real estate - other
|
561,134
|
18,077
|
6,893
|
1,493
|
587,597
|
|||||||||||||||
|
Commercial & industrial
|
505,252
|
37,285
|
18,908
|
5,835
|
567,280
|
|||||||||||||||
|
Agricultural
|
87,129
|
-
|
3,779
|
-
|
90,908
|
|||||||||||||||
|
Consumer
|
12,894
|
-
|
-
|
-
|
12,894
|
|||||||||||||||
|
Total
|
$
|
1,515,219
|
$
|
55,362
|
$
|
30,903
|
$
|
7,883
|
$
|
1,609,367
|
||||||||||
49
Table of
Contents
Deposits
We gather deposits primarily through our twelve branch locations and online through our website. We offer a variety of deposit products including demand deposit accounts and interest-bearing products, such as
savings accounts and certificates of deposit. We put continued effort into gathering noninterest-bearing demand deposit accounts through loan production cross-selling, customer referrals, marketing efforts and various involvement with
community networks. To manage liquidity and provide expanded FDIC insurance for customer funds, we participate in reciprocal deposit programs, including the Certificate of Deposit Account Registry Service (“CDARS”) and the Insured Cash
Sweep (“ICS”) service. These programs place customer funds into multiple accounts, each under the standard FDIC insurance maximum of $250,000, at a network of banks across the United States. We also participate in the One-Way Buy ICS
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.
Of our interest-bearing deposits, some were obtained through brokered transactions. As of September 30, 2026 and December 31, 2025, brokered deposits were $95.2 million, and $205.6 million,
respectively. Reciprocal deposits totaled $698.3 million and $576.5 million as of September 30, 2026 and December 31, 2025, respectively.
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. Total uninsured deposits were $385.6 million and $391.7 million as of September 30, 2026 and December 31, 2025, respectively, as
calculated per regulatory guidance. These amounts were approximately 22.4% and 23.2% of deposits at September 30, 2026 and December 31, 2025, respectively.
Total deposits as of September 30, 2026 and December 31, 2025 were $1.72 billion and $1.70 billion, respectively. 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.
|
|
As of September 30,
|
As of December 31,
|
||||||||||||||
|
|
2026
|
2025
|
||||||||||||||
|
|
Amount
|
Percentage of
Total
|
Amount
|
Percentage of
Total
|
||||||||||||
|
|
||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||
|
Noninterest-bearing demand
|
$
|
328,111
|
19.1
|
%
|
$
|
341,416
|
20.1
|
%
|
||||||||
|
Interest-bearing transaction deposits
|
1,015,124
|
59.0
|
%
|
1,023,325
|
60.1
|
%
|
||||||||||
|
Savings deposits
|
84,736
|
4.9
|
%
|
92,604
|
5.4
|
%
|
||||||||||
|
Time deposits (less than $250,000)
|
190,097
|
11.0
|
%
|
147,263
|
8.7
|
%
|
||||||||||
|
Time deposits ($250,000 or more)
|
102,990
|
6.0
|
%
|
96,225
|
5.7
|
%
|
||||||||||
|
Total interest-bearing deposits
|
1,392,947
|
80.9
|
%
|
1,359,417
|
79.9
|
%
|
||||||||||
|
Total deposits
|
$
|
1,721,058
|
100.0
|
%
|
$
|
1,700,833
|
100.0
|
%
|
||||||||
The following tables set forth the maturity of time deposits as of the dates indicated below:
|
|
As of September 30, 2026 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)
|
$
|
71,186
|
$
|
60,134
|
$
|
55,009
|
$
|
3,768
|
$
|
190,097
|
||||||||||
|
Time deposits ($250,000 or more)
|
26,773
|
56,019
|
19,212
|
986
|
102,990
|
|||||||||||||||
|
Total time deposits
|
$
|
97,959
|
$
|
116,153
|
$
|
74,221
|
$
|
4,754
|
$
|
293,087
|
||||||||||
|
|
As of December 31, 2025 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)
|
$
|
56,951
|
$
|
45,791
|
$
|
37,766
|
$
|
6,755
|
$
|
147,263
|
||||||||||
|
Time deposits ($250,000 or more)
|
37,413
|
21,015
|
20,278
|
17,519
|
96,225
|
|||||||||||||||
|
Total time deposits
|
$
|
94,364
|
$
|
66,806
|
$
|
58,044
|
$
|
24,274
|
$
|
243,488
|
||||||||||
50
Table of
Contents
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. We continuously
monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements. We manage our liquidity position to meet the daily cash flow needs of customers,
while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders.
Our liquidity position is supported by management of liquid assets and access to alternative sources of funds. Our liquid assets include cash, interest-bearing deposits in correspondent banks and fed funds sold. Other available sources
of liquidity include wholesale deposits and borrowings from correspondent banks and FHLB advances.
Our short-term and long-term liquidity requirements are primarily met through cash flow from operations, redeployment of prepaying and maturing balances in our loan portfolios, and increases in customer deposits. Other alternative
sources of funds will supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis.
As of September 30, 2026, we had no unsecured fed funds lines with correspondent depository institutions, with no amounts advanced. In addition, based on the values of loans pledged as collateral, we had borrowing
availability with the FHLB of $254.8 million as of September 30, 2026 and $213.8 million as of December 31, 2025, and we had access to approximately $263.7 million in liquidity with the Federal Reserve Bank as of September 30, 2026 and
$288.6 million as of December 31, 2025.
On November 1, 2026, we paid approximately $63 million in cash for the Century acquisition, net of the $7.25 million good-faith deposit funded during the third quarter. We also assumed Century’s junior subordinated debentures and
subordinated notes with an aggregate principal balance of approximately $39.5 million. The acquisition added approximately $1.2 billion of deposits.
Capital Requirements
The Bank is subject to various regulatory capital requirements administered by the federal and state banking regulators. Failure to meet regulatory capital requirements may result in certain mandatory and possible additional
discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for “prompt corrective action” (described below), we
must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting policies. The capital amounts and classifications are subject
to qualitative judgments by the federal banking regulators about components, risk weightings and other factors. Qualitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios of
CET1 capital, Tier 1 capital, total capital to risk-weighted assets, and Tier 1 capital to average consolidated assets, referred to as the “leverage ratio.”
As of September 30, 2026, the FDIC categorized the Bank as “well-capitalized” under the prompt corrective action framework. There have been no conditions or events since September 30,
2026 that management believes would change this classification.
The table below presents our applicable capital requirements, as well as our capital ratios as of September 30, 2026 and December 31, 2025. The
Company exceeded all regulatory capital requirements and the Bank was considered to be “well-capitalized” as of the dates reflected in the tables below.
Under the Basel III Capital Rules, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking
organization must hold a capital conservation buffer composed of CET1 capital above its minimum risk-based capital requirements. As of September 30, 2026, the Company and the Bank met all capital adequacy requirements under the Basel III
Capital Rules.
The capital amounts and ratios presented below do not reflect the Century acquisition, which was completed on November 1, 2026. The shares of common stock issued in the acquisition will
increase shareholders’ equity, while the goodwill and core deposit intangibles recorded in the acquisition will be deducted in calculating regulatory capital.
51
Table of
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|
|
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 September 30, 2026
|
||||||||||||||||||||||||
|
Total capital (to risk-weighted assets)
|
||||||||||||||||||||||||
|
Company
|
$
|
284,900
|
16.29
|
%
|
$
|
183,615
|
10.50
|
%
|
N/A
|
N/A
|
||||||||||||||
|
Bank
|
284,860
|
16.30
|
%
|
183,509
|
10.50
|
%
|
$
|
174,771
|
10.00
|
%
|
||||||||||||||
|
Tier 1 capital (to risk-weighted assets)
|
||||||||||||||||||||||||
|
Company
|
265,069
|
15.16
|
%
|
148,641
|
8.50
|
%
|
N/A
|
N/A
|
||||||||||||||||
|
Bank
|
265,028
|
15.16
|
%
|
148,555
|
8.50
|
%
|
139,816
|
8.00
|
%
|
|||||||||||||||
|
CET 1 capital (to risk-weighted assets)
|
||||||||||||||||||||||||
|
Company
|
265,069
|
15.16
|
%
|
122,410
|
7.00
|
%
|
N/A
|
N/A
|
||||||||||||||||
|
Bank
|
265,028
|
15.16
|
%
|
122,339
|
7.00
|
%
|
113,601
|
6.50
|
%
|
|||||||||||||||
|
Tier 1 capital (to average assets)
|
||||||||||||||||||||||||
|
Company
|
265,069
|
14.07
|
%
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||||||||
|
Bank
|
265,028
|
14.06
|
%
|
N/A
|
N/A
|
94,227
|
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, 2025
|
||||||||||||||||||||||||
|
Total capital (to risk-weighted assets)
|
||||||||||||||||||||||||
|
Company
|
$
|
261,451
|
15.24
|
%
|
$
|
180,076
|
10.50
|
%
|
N/A
|
N/A
|
||||||||||||||
|
Bank
|
261,411
|
15.25
|
%
|
179,970
|
10.50
|
%
|
$
|
171,400
|
10.00
|
%
|
||||||||||||||
|
Tier 1 capital (to risk-weighted assets)
|
||||||||||||||||||||||||
|
Company
|
241,580
|
14.09
|
%
|
145,776
|
8.50
|
%
|
N/A
|
N/A
|
||||||||||||||||
|
Bank
|
241,540
|
14.09
|
%
|
145,690
|
8.50
|
%
|
137,120
|
8.00
|
%
|
|||||||||||||||
|
CET 1 capital (to risk-weighted assets)
|
||||||||||||||||||||||||
|
Company
|
241,580
|
14.09
|
%
|
120,051
|
7.00
|
%
|
N/A
|
N/A
|
||||||||||||||||
|
Bank
|
241,540
|
14.09
|
%
|
119,980
|
7.00
|
%
|
111,410
|
6.50
|
%
|
|||||||||||||||
|
Tier 1 capital (to average assets)
|
||||||||||||||||||||||||
|
Company
|
241,580
|
12.82
|
%
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||||||||
|
Bank
|
241,540
|
12.82
|
%
|
N/A
|
N/A
|
94,213
|
5.00
|
%
|
||||||||||||||||
Shareholders’ equity provides a source of permanent funding, allows for future growth and provides a cushion to withstand unforeseen adverse developments.
Total shareholders’ equity increased $22.7 million as of September 30, 2026 to $273.7 million, compared to $251.0 million as of December 31, 2025.
52
Table of
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Contractual Obligations
The following tables contain supplemental information regarding our total contractual obligations as of September 30, 2026, and December 31, 2025:
|
|
Payments Due as of September 30, 2026
|
|||||||||||||||||||
|
|
Within One
Year
|
One to Three
Years
|
Three to Five
Years
|
After Five
Years
|
Total
|
|||||||||||||||
|
|
||||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
|
Deposits without a stated maturity
|
$
|
1,427,971
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,427,971
|
||||||||||
|
Time deposits
|
288,333
|
4,445
|
292
|
17
|
293,087
|
|||||||||||||||
|
Operating lease commitments
|
210
|
1,092
|
368
|
399
|
2,069
|
|||||||||||||||
|
Total contractual obligations
|
$
|
1,716,514
|
$
|
5,537
|
$
|
660
|
$
|
416
|
$
|
1,723,127
|
||||||||||
|
|
Payments Due as of December 31, 2025
|
|||||||||||||||||||
|
|
Within One
Year
|
One to Three
Years
|
Three to Five
Years
|
After Five
Years
|
Total
|
|||||||||||||||
|
|
||||||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
|
Deposits without a stated maturity
|
$
|
1,457,345
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,457,345
|
||||||||||
|
Time deposits
|
219,214
|
23,893
|
381
|
-
|
243,488
|
|||||||||||||||
|
Operating lease commitments
|
621
|
798
|
368
|
359
|
2,146
|
|||||||||||||||
|
Total contractual obligations
|
$
|
1,677,180
|
$
|
24,691
|
$
|
749
|
$
|
359
|
$
|
1,702,979
|
||||||||||
We believe that we will be able to meet our contractual obligations as they come due through the maintenance of adequate cash levels. We expect to maintain adequate cash levels through profitability, loan
repayment and maturity activity and continued deposit gathering activities. We have in place various borrowing mechanisms for both short-term and long-term liquidity needs.
Off-Balance Sheet Arrangements
We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend
credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheet. The contractual or notional amounts of
those instruments reflect the extent of involvement we have in particular classes of financial instruments. To control this credit risk, the Company uses the same underwriting standards as it uses for loans recorded on the balance sheet.
Loan commitments are agreements to lend to a customer, as long as there is no violation of any condition established in the contract. Standby letters of credit are conditional commitments issued by the Bank
to guarantee the performance of the customer to a third party. They are intended to be disbursed, subject to certain conditions, upon request of the borrower.
The following table summarizes commitments as of the dates presented.
|
|
September 30,
2026 |
December 31,
2025
|
||||||
|
|
(Dollars in thousands)
|
|||||||
|
Commitments to extend credit
|
$
|
330,717
|
$
|
324,748
|
||||
|
Standby letters of credit
|
15,475
|
19,540
|
||||||
|
Total
|
$
|
346,192
|
$
|
344,288
|
||||
53
Table of
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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. To prepare financial statements in conformity with GAAP, management makes
estimates, assumptions and judgments based on available information. These estimates, assumptions and judgments affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions and judgments are
based on information available as of the date of the financial statements and, as this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statement. In particular,
management has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements.
The following is a discussion of the critical accounting policies and significant estimates that we believe require us to make the most complex or subjective decisions or assessments. Additional information
about these policies can be found in Note 1 of the Company’s consolidated financial statements included in the Annual Report on the Form 10-K.
Allowance for Credit Losses
The allowance for credit losses represents management’s estimate of expected credit losses over the contractual lives of financial assets measured at amortized cost. In the opinion of management, the
allowance is adequate to absorb estimated losses in the portfolio as of each balance sheet date. While management uses available information to analyze losses on loans, future additions to the allowance may be necessary based on changes in
economic conditions and changes in the composition of the loan portfolio. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance. In analyzing the adequacy of the
allowance, a comprehensive loan grading system to determine risk potential in loans is utilized together with the results of internal credit reviews.
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. These historical loss
factors and adjustments are regularly evaluated and updated based on the evolving composition of each loan segment. 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. 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 credit losses in the portfolio.
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.
54
Table of
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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Sensitivity and Market Risk
As a financial institution, our primary component of market risk is interest rate volatility. Our financial management policy provides management with the guidelines for effective funds
management, and we have established a measurement system for monitoring our net interest rate sensitivity position. We have historically managed our sensitivity position within our established guidelines.
Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most of our assets and liabilities, and the market value of all interest-earning assets
and interest-bearing liabilities, other than those which have a short term to maturity. Interest rate risk is the potential of economic losses due to future interest rate changes. These economic losses can be reflected as a loss of future
net interest income and/or a loss of current fair market values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent risk while at the same time maximizing income.
We manage our exposure to interest rates by structuring our balance sheet in the ordinary course of business. We do not enter into instruments such as leveraged derivatives, financial options
or financial future contracts to mitigate interest rate risk from specific transactions. Based upon the nature of our operations, we are not subject to foreign exchange or commodity price risk. We do not own any trading assets.
Our exposure to interest rate risk is managed by the Asset/Liability Committee, or the ALCO Committee, in accordance with policies approved by the Company’s board of directors. The ALCO
Committee formulates strategies based on appropriate levels of interest rate risk. In determining the appropriate level of interest rate risk, the ALCO Committee considers the impact on earnings and capital on the current outlook on
interest rates, potential changes in interest rates, regional economies, liquidity, business strategies and other factors. The ALCO Committee meets regularly to review, among other things, the sensitivity of assets and liabilities to
interest rate changes, the book and market values of assets and liabilities, commitments to originate loans and the maturities of investments and borrowings. Additionally, the ALCO Committee reviews liquidity, cash flow flexibility,
maturities of deposits and consumer and commercial deposit activity. Management employs methodologies to manage interest rate risk, which include an analysis of relationships between interest-earning assets and interest-bearing liabilities
and an interest rate shock simulation model.
We use interest rate risk simulation models and shock analyses to test the interest rate sensitivity of net interest income and fair value of equity, and the impact of changes in interest
rates on other financial metrics. Contractual maturities and re-pricing opportunities of loans are incorporated in the model. The average lives of non-maturity deposit accounts are based on decay assumptions and are incorporated into the
model. We utilize third-party experts to periodically evaluate the performance of our non-maturity deposit accounts to develop the decay assumptions. All of the assumptions used in our analyses are inherently uncertain and, as a result, the
model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model’s simulated results due to timing,
magnitude and frequency of interest rate changes as well as changes in market conditions and the application and timing of various management strategies.
On a quarterly basis, we run various simulation models including a static balance sheet and dynamic growth balance sheet. These models test the impact on net interest income and fair value of
equity from changes in market interest rates under various scenarios. Under the static model and dynamic growth models, rates are shocked instantaneously and ramped rates change over a 12-month and 24-month horizon based upon parallel and
non-parallel yield curve shifts. Parallel shock scenarios assume instantaneous parallel movements in the yield curve compared to a flat yield curve scenario. Non-parallel simulation involves analysis of interest income and expense under
various changes in the shape of the yield curve. Our internal policy regarding internal rate risk simulations currently specifies that for gradual parallel shifts of the yield curve, estimated net interest income at risk for the subsequent
one-year period should not decline by more than 20% for a -200 basis point shift, 10% for a -100 basis point shift, 10% for a 100 basis point shift, 20% for a 200 basis point shift, 30% for a 300 basis point shift, and 30% for a 400 basis
point shift.
55
Table of
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The following table summarizes the simulated change in net interest income and the fair value of equity ratio over a 12-month horizon as of the dates indicated:
|
September 30,
2026
|
December 31,
2025
|
||||||||||||||||
| 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
|
|||||||||||||
|
+400
|
24.44
|
%
|
23.23
|
%
|
24.80
|
%
|
20.66
|
%
|
|||||||||
|
+300
|
18.65
|
%
|
22.53
|
%
|
19.28
|
%
|
19.58
|
%
|
|||||||||
|
+200
|
12.72
|
%
|
21.78
|
%
|
13.51
|
%
|
18.45
|
%
|
|||||||||
|
+100
|
6.41
|
%
|
20.97
|
%
|
7.41
|
%
|
17.25
|
%
|
|||||||||
|
Base
|
0.05
|
%
|
20.11
|
%
|
1.06
|
%
|
15.98
|
%
|
|||||||||
|
-100
|
-6.36
|
%
|
19.18
|
%
|
-4.27
|
%
|
14.84
|
%
|
|||||||||
|
-200
|
-10.00
|
%
|
18.00
|
%
|
-6.12
|
%
|
13.48
|
%
|
|||||||||
The results are primarily due to behavior of demand, money market and savings deposits during such rate fluctuations. We have found that, historically, interest rates on these deposits change
more slowly than changes in the discount and fed funds rates. This assumption is incorporated into the simulation model and is generally not fully reflected in a gap analysis. The assumptions incorporated into the model are inherently
uncertain and, as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model’s simulated
results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and the application and timing of various strategies.
Impact of Inflation
Our consolidated financial statements and related notes included elsewhere in this Form 10-Q have been prepared in accordance with GAAP. These require the measurement of financial position and operating
results in terms of historical dollars, without considering changes in the relative value of money over time due to inflation or recession.
Unlike many industrial companies, substantially all of our assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the effects of
general levels of inflation. Interest rates may not necessarily move in the same direction or in the same magnitude as the prices of goods and services. However, other operating expenses do reflect general levels of inflation.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934) as of September 30, 2026.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2026. This conclusion is due to
the material weaknesses in our internal control over financial reporting that were previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, which have not yet been fully remediated.
Changes in Internal Control over Financial Reporting
As disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2025, management identified the following material weaknesses in our internal control over financial reporting:
| • |
Deposit operations;
|
| • |
Related party transactions;
|
| • |
Reconciliations;
|
| • |
Financial statement disclosures;
|
| • |
Segregation of duties;
|
| • |
Completeness and accuracy of information produced by the entity;
|
| • |
Information technology general controls; and
|
| • |
The control activities component of internal control.
|
56
Table of
Contents
Management is committed to the remediation of these material weaknesses. During the quarter ended September 30, 2026, we continued to implement our remediation plan, and these ongoing efforts represent a
change in our internal control over financial reporting. Specific remediation activities undertaken during the quarter include:
| • |
Continued engagement of third-party consultants to assist in the implementation of our remediation plan and control testing.
|
| • |
Began management’s testing of the operating effectiveness of the redesigned controls over deposit operations, account reconciliations, related party transactions and the financial statement disclosure process.
|
| • |
Completed the implementation of enhancements to our information technology general controls, including processes related to access management and change management.
|
| • |
Performed user access reviews over key financial systems, including the core banking system, and refined user roles and system permissions to enforce appropriate segregation of duties within the accounting and finance functions.
|
| • |
Enhanced procedures to validate the completeness and accuracy of key reports and spreadsheets used in the operation of controls, including adding reconciliations and automated tie-out checks to key financial reporting schedules.
|
| • |
Continued to formalize documentation of control activities across the processes noted above, including defined control owners, frequency, and evidence of review, to address the control activities component of internal control.
|
| • |
Developed a plan to complete management’s testing of the operating effectiveness of the remediated controls, which we expect to complete in the fourth quarter of 2026, with the objective of concluding on the remediation of the
material weaknesses as of December 31, 2026.
|
The material weaknesses will not be considered fully remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that the controls are
operating effectively. Other than these ongoing remediation efforts, there were no other changes in our internal control over financial reporting during the quarter ended September 30, 2026, that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
PART II
Item 1. Legal Proceedings
From time to time, the Company or the Bank is a party to claims and legal proceedings arising in the ordinary course of business. Management does not believe any
present litigation or the resolution thereof will have a material adverse effect on the business, consolidated financial condition or results of operations of the Company.
Item 1A. Risk Factors
Except as set forth below, there have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025. The following risk factor
supplements, and should be read in conjunction with, the risk factors disclosed in that report.
The integration of Century involves risks that could affect our results of operations.
On November 1, 2026, we completed our acquisition of Century, which added approximately $1.2 billion of deposits and extended our operations into New Mexico, a market in which we had not previously operated.
The success of the acquisition will depend on our ability to integrate Century’s operations, systems, personnel and customer relationships, including the planned merger of Century Bank into the Bank on or about January 1, 2027 and the
subsequent core system conversion, while retaining customers and deposits. Century’s loans were originated under its own underwriting standards, and the fair values assigned to the assets acquired and liabilities assumed are preliminary and
subject to change. If integration does not proceed as planned, if acquired deposits run off or acquired loans experience greater credit losses than expected, or if goodwill and other intangible assets recorded in the acquisition become
impaired, our financial condition and results of operations could be adversely affected.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On October 26, 2023, the Company adopted a repurchase plan that authorizes the repurchase of up to 750,000 shares of the Company’s stock. The plan was renewed by the Board of Directors on August 20, 2025.
Stock repurchases under the plan will take place pursuant to a Rule 10b5-1 Plan with pricing and purchasing parameters established by management. The Company may repurchase shares of common stock on the open market or through privately
negotiated transactions at times and prices considered appropriate, at the discretion of the Company, and subject to its assessment of alternative uses of capital, stock trading price, general market conditions and regulatory factors. The
stock repurchase plan does not obligate the Company to acquire any specific number of shares and will continue in effect until terminated by the Board of Directors of the Company. Shares of common stock repurchased under this plan will be
retired subsequent to acquisition. During the three months ended September 30, 2026, there were no shares purchased under the Company’s repurchase plan.
Item 3. Defaults Upon Senior Securities
None
57
Table of
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Item 4. Mine Safety Disclosures
None
Item 5. Other Information
During the three months ended September 30, 2026, none
Item 6. Exhibits
|
2.1
|
Stock Purchase Agreement by and between Bank7 Corp. and MCA Financial Group, LTD., dated July 1, 2026 (1)
|
|
2.2
|
First Amendment to Stock Purchase Agreement by and between Bank7 Corp. and MCA Financial Group, LTD., dated September 3, 2026 (2)
|
|
2.3**
|
Agreement and Plan of Merger, dated September 16, 2026, by and between Bank7 Corp. and Century Financial Services Corporation (3)
|
|
31.1
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1*
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101.INS
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XBRL Instance Document.
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101.SCH
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XBRL Taxonomy Extension Schema Document.
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document.
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document.
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document.
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document.
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104
|
Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101)
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(1) Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on July 2, 2026.
(2) Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on September 10, 2026.
(3) Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on September 17, 2026.
* This exhibit is furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any
filing under the Securities Act or the Exchange Act.
** Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish a copy of any omitted schedule or similar attachment to the SEC upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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BANK7 CORP.
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DATED:
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November 9, 2026
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By: /s/ Thomas L. Travis
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Thomas L. Travis
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Vice Chairman and Chief Executive Officer
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DATED:
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November 9, 2026
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By: /s/ Kelly J. Harris
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Kelly J. Harris
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Executive Vice President and Chief Financial Officer
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58