Welcome to the Bank7 Corp. Third Quarter 2025 Earnings Call. Before we get started, I would like to highlight the legal information and disclaimer on Page 27 of the investor presentation. For those who do not have access to the presentation, management is going to discuss certain topics that contain forward-looking information, based on management's beliefs, as well as assumptions made by and information currently available to management. Although management believes that the expectations reflected in such forward-looking statements are reasonable, they can give no assurance that such expectations will prove to be correct. Such statements are subject to certain risks, uncertainties, and assumptions, including, among other things, the direct and indirect effect of economic conditions on interest rates, credit quality, loan demand, liquidity, and monetary and supervisory policies of banking regulators. Should one or more of these risks materialize or should underlying assumptions prove incorrect, actual results may vary materially from those expected. Also, please note that this conference call contains references to non-GAAP financial measures. You can find reconciliations of these non-GAAP financial measures to GAAP financial measures in an 8-K that was filed this morning by the company. Representing the company on today's call, we have Brad Haynes, Chairman; Thomas L. Travis, President and CEO; JT Phillips, Chief Operating Officer; Jason E. Estes, Chief Credit Officer; Kelly J. Harris, Chief Financial Officer; and Paul Timmons, Director of Accounting. With that, I will turn the call over to Thomas L. Travis. Good morning. Thank you for joining us.

As you can see, we had a very solid quarter. Essentially, we are a broken record, but it's a shout-out to our banker. If you look at the organic growth in both the loan and deposit portfolios, we had a very, very good quarter, and it's not a surprise. Again, we do not take them for granted, but I think sometimes people take our great results for granted. Organic growth has just been really good all year and is continuing to drive the institution forward. When you look at our income and strong capital accumulation, you can see the effects on the capital ratios, which are really, really strong and have us well positioned. All the elements of the bank look fantastic. The liquidity, the capital, earnings, and the margin, and we're excited about where we are. We're excited about the markets we operate in, and we're just delighted with the results. With that said, we're here for any questions.

We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Nathan Race with Piper Sandler. Please go ahead.

Good morning, and thank you for taking my questions. So maybe just to start on loan growth, you know, you guys obviously had another really strong quarter in terms of growth. I'd just be curious how the pipeline stands today and how you're thinking about growth in the fourth quarter and into '26?

Yes. Thanks, Adam. This is Jason. The quarter was outstanding. As Tom mentioned, the team of bankers just keep delivering, and it's not just loans. It's deposits as well, which are so vital to us continuing to be able to expand like this. The current pipeline is good, but, again, as we caution each quarter, we’re prone to lumpy paydowns as people exit. There's a lot of conversations about what kind of economy we're going to have here in the near term, so you see a lot of people exiting businesses or specific assets. We're not immune to that. We've been able to overcome significant exits this year just with robust growth. I think continuing the theme that we've had here for really the whole year. I expect kind of a high single-digit year-over-year growth. That's our target. That's our goal. I think we'll be able to deliver on that. So right now, the pipeline still has plenty of activity in it. But, again, we're always careful with those lumpy paydowns.

Got it. I really appreciate that. And kind of going off of that, I'd be curious if you could touch on what you're seeing in terms of the loan pricing dynamics among competition and what you're seeing new loans come on the portfolio relative to maybe that 7.4% or so that you've signed in September.

Yeah. I think if you look at the average, we'd be slightly below that 7.4%, somewhere in between seven and seven and a quarter for the bulky new funding. There's more pressure. You talk about the competitors from a loan standpoint, seems to be less pressing than the deposit side, which should ebb and flow, but that seems to be the flavor of the week right now. There's a little more pressure on the deposit side than the loan side.

Got it. And then last one for me is, you know, obviously, there's been plenty of deal activity within your market. So just any update on the M&A front?

You know, we're constantly out there, and we've had opportunities over the last few months and looked at various transactions, and we're active in that space. We continue to proceed with a nod towards strategic combinations, and that hasn't really changed. One of these days, we're going to find something that works. Really, our posture hasn't changed.

Got it. Thank you for taking my questions.

Thank you.

The next question comes from Woody Lay with KBW. Please go ahead.

Hey. Good morning, guys. I wanted to touch on the net interest margin to start. Really strong quarter in the third quarter, but it did look like with the rate cut in September, the quarter-end margin was a little bit lower than where it was in the third quarter. Can you just talk about how we should think about the trajectory of the margin from here?

Yeah. Woody, this is Kelly. We did the quarter at 4.55 from a quarter-end perspective. As Jason mentioned, we did experience some deposit upward pressure on the cost of funds towards the end of the quarter. If you look at the first rate cut in Q4, you could see further NIM compression slightly down to 4.50. That starts to slow with additional rate cuts. Towards the latter half of the quarter, that could creep down to 4.47 as those loan floors kick in. But then also assuming that we can keep pace on the liability side.

Got it. That's helpful. And then I also wanted to touch on the loan fee income. It's the past couple quarters, it's come up pretty nicely, and it now represents about 40 basis points of the margin. Could you just talk about the dynamic there on what's been driving that income up? How sticky can that be going forward?

Yeah. I think, again, that goes back to successful efforts by the sales team and a robust deal market. We've just seen a lot of activity, a lot of opportunities. Our salespeople have done a fantastic job of converting. As for how sticky it is, it feels like we've really beat the mean here for a couple quarters in a row. I think you'll see it trend back toward normal though in the fourth quarter. Who knows, the pipeline is strong. But it definitely feels like a bit of outperformance the last couple of quarters.

Got it. And then lastly, just on credit. I mean, credit trends were really strong in the quarter, but you did elect to increase the reserve some just on a percentage basis. Can you just walk through the decision there and any broader thoughts on credit?

Yeah. I think this is Tom. The real key here is the growth in the portfolio. When you look at the macro events in the world right now, it's frightening in a lot of areas. It has increased what I think is the volatility of just the overall credit markets. When we grow the portfolio and we see increased volatility in the macro world, we believe it's prudent to put the hay in the barn, so to speak, relative to all those factors. It gives us a lot of comfort in our really strong capital levels. It's always been fascinating to me that when people around the world in our space talk about blame loss reserves, there isn't really much discussion on the capital levels. One could argue why do you even need to worry about anything if you're going to maintain capital levels the way you are. The importance for us is the Rubik's cube, so to speak, and we stay really focused on the loan book, the macro factors. So when you look at that growth, we felt like it was prudent to maintain the integrity of our process. That's why we did it.

Got it. So just as a follow-up, was it driven by some changes in the scenario weighting? If that's the case, do you think we could see some additional reserve build from here?

I think it was driven by all of the above. Could we see us increasing and putting more provision? It's possible. It depends on the macro factors, and it depends on the growth. But I would say that I don't want to signal anything, but we're pretty set right now for the foreseeable future. If macro conditions change, adjustments need to be made, or if we have additional growth, then you could see more provisioning.

Yep. Alright. Well, I appreciate all the color. Thanks for taking my questions.

Again, if you have a question, please press star then 1. The next question comes from Matt Olney with Stephens.

Yes. Hey, guys. Thanks for taking the question. Just wanted to ask about the outlook for fees and expenses. I know this can be impacted by the oil and gas revenue, so just any kind of call you can give with and without that. Thanks.

Hey, Matt. This is Kelly. I think we got pretty close on the core fee income from Q3, and we anticipate a similar run rate both on the core fee and the expense side, the million core fee and then $9.5 million on the non-interest expense side. You're correct. The oil and gas is a little bit less predictable, but we're also utilizing the Q3 as a good guide for Q4.

Okay. Thanks for that, Kelly. And then on what about the expectations around mortgage? I know you guys made an investment there recently. I would love to get your updated thoughts about expectations for this investment, especially within 2026?

Thanks. I think right now, the mortgage business, at least here locally, is pretty slow still. Maybe not as bad for the mortgage lenders as it is for the realtors. But, you know, until you see something give, whether it's discounts or lower rates, I think we're kind of expecting more of the same where it’s covering itself. It makes a little bit of money, but it’s definitely not what we think is possible if you see a real change in the rate scenario. There are a lot of headwinds against that business, and it’s not just rates. The affordability of housing is a big deal. It’s hard for us to handicap, but I’d be surprised if '26 isn't better than '25. Who knows? There’s so much going on across the globe that impacts our economy and people's ability to get wage gains and afford a new house. We're as curious as you are. I wish I had a more specific answer, but I think next year would be a little bit better for us in the mortgage business. The pipeline has picked up compared to what it was six months ago. We're sitting here with probably three times the number of transactions and dollar volume that will close in the next sixty days than what we had. I’ll also tell you the fallout rate's quite high. We're seeing a lot more contracts break and people not close than historically has been the case.

This is Tom. I would add also just a reminder on who we are and what we are. Specifically, as it relates to mortgage, it was an important acquisition for us, and it was obviously a relatively small amount of dollars given our earnings and the size of the company. We're more of a rifle shooter than a shotgun shooter in the business. The strategic implication of buying that company, and Dale built a really fine mortgage operation. We're really glad to have him. We feel like we're a professional mortgage provider now. When you look at what the mortgage space will be for us going forward, we're delighted that we have the ability to deliver to our high net worth clients and other people. I don't want to minimize mortgage at all because it's a wonderful, nice little segment, but it's always going to be more niche specialized service that we provide our customers and hopefully, one day, it'll grow into a much more significant income provider, but I think that's going to take some time. In the meantime, we're really, really happy with the acquisition.

Yep. Okay. Well, appreciate the commentary on mortgage. And if I could just circle back to the M&A topic. It sounds like there's still conversations with potential candidates, and I guess, Tom, I'm curious, kind of what do you see as the major challenge for M&A today? What do we need to see to see just improved volumes within the region?

I would say that we still have the overhang of the AOCI that's keeping some sellers on the bench. It's a slow boat to China. It's not just the AOCI in the bond portfolio, but it's disappointing how many bankers booked really long maturity, lower fixed rate loans. It's just going to take some time to work out. That has a dampening effect on sellers; they all think they're worth whatever. They think they're worth one and a half to two times. When you factor all those purchase accounting marks into the equation, it makes it more difficult. We own more than 50% of the shares of this company. We act like owners every day. Especially in the M&A space, our disciplined approach makes it a little more challenging as compared to some recent transactions that raised eyebrows. I think the landscape has excitement out there. But those factors are always gonna make it more challenging for Bank7. That said, I can't get into specifics on what we've looked at over the last nine months or so, but we've come close on a few transactions. I don't want anyone to think that we're not competitive, because we are. There's going to be continued eagerness in the M&A space in our industry, and eventually, we'll find something that works strategically for us.

Okay. Well, thanks for the commentary, and it feels like Bank7's in a nice spot for M&A. So appreciate it.

We have a follow-up from Nathan Race with Piper Sandler. Please go ahead.

Yeah. Just to follow up on credit. You obviously had really strong credit performance during the quarter. But, Tom, you mentioned the concerns within the macro environment. I was just curious if you're seeing anything in terms of criticized or classified migrations during the quarter.

No. It was very benign in the quarter migrations. We had a couple move down, a couple move up, a couple pay off that were on our special mention rating. All in all, very, very neutral. If I had to cap it, was it slightly positive or slightly negative? I would say it was slightly positive, but in general, I couldn't be happier with the credit situation within the whole portfolio.

Got it. Thank you for taking my question.

This concludes our question and answer session. I would like to turn the conference back over to Thomas L. Travis for any closing remarks.

Thank you again for joining us. We're happy with our quarter. Looking forward to our near future, and thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.